The MacNeil/Lehrer NewsHour

Intro

JIM LEHRER: Good evening. The leading headlines today were these. Europe's central banks triggered an erratic nosedive in the value of the U.S. dollar. Irate farmers rallied in Iowa while Congress passed emergency farm legislation. The Soviets denied charges they violated existing arms treaties, and Israel and Egypt opened the possibility of new Middle East peace talks. Robert MacNeil is away tonight. Judy Woodruff is in Washington. Judy?

JUDY WOODRUFF: After the news summary we have four focus sections on the NewsHour, starting with the sudden drop in the U.S. dollar. An international financial expert tells us what it means. Next we have a documentary report on the continuing effort by farmers for more help from Washington, and Congress-watcher Norman Ornstein looks at their prospects for success. On the growing controversy over corporate takeovers, an analyst sizes up the effect they have on U.S. business. And, on a top government official forced to resign because of publicity over wife-beating, we talk with an expert who says it's an all-too-common phenomenon.News Summary

LEHRER: The market for U.S. dollars went crazy in Europe today. It was set off intentionally by the big central banks of Britain, West Germany, France, Italy and Belgium which together dropped and sold more than one billion dollars in dollars. The result was the dollar's largest one-day price decline in history against the West German mark, among other things, including much panic by those in the currency market. James Long of the BBC reports from London.

JAMES LONG, BBC [voice-over]: At 10 o'clock this morning the German central bank began to sell dollars heavily, leading to scenes of near panic as foreign exchange dealers rushed to get out of the dollar. The Bank of England and most European central banks joined in, unloading perhaps $1 billion. Fresh worries about falling oil prices in the Rotterdam spot market may undermine the pound when the smoke from the dollar has cleared, and it's the oil price fears that led one dealer to say today the $1 pound is still coming, but after this it's just going to take a bit longer.

LEHRER: Federal Reserve Board Chairman Paul Volcker said today the forceful intervention of the U.S. government in the world currency markets might also be necessary, but White House spokesman Larry Speakes said administration policy had not changed; the United States would step in only if the market became disorderly. He did not define disorderly or relate it directly to what happened in Europe today. Our lead focus segment tonight will be an attempt to explain what did happen today to the dollar and what it means. Judy?

WOODRUFF: The push by many of the nation's farmers for emergency credit assistance from Washington started to pay off today. The Senate passed a proposal to increase government credit help, despite loud objections from the Reagan administration. The winning votes came from Republicans who defied their party's leadership's efforts to kill the plan. Similar legislation was approved by a 318-to-103 vote in the Democratic-controlled House of Representatives. The votes today came after a delegation of congressional Democrats gathered in Lafayette Park across the street from the White House to plant small white wooden crosses to dramatize the plight of the farmers. Iowa Senator Tom Harkin said the 250 crosses represented the number of family farms that he said go out of business each day. But the big farm rally today came in Harkin's home state. Correspondent Kwame Holman was there.

KWAME HOLMAN [voice-over]: The mood was very much anti the Reagan administration as up to 20,000 farmers and their supporters converged this morning on the city of Ames in central Iowa. This national crisis action rally was designed to give farmers a chance to show solidarity and to hear old and new proposals for solving the financial crisis that threatens to put a third of the nation's farmers out of business. [pledge of allegiance by farmers]

It was one of the largest rallies since the problems of small farmers pushed their way into the headlines in recent months. Attendance was kept down, organizers say, because many farmers couldn't afford the cost of traveling here. These farmers are convinced that the rest of the nation doesn't understand how serious the farm problem is.

GALE LUDEKING, retired farmer: Say half the guys don't plant, then we have a drought on top of it. You got a food crisis next year. There isn't that much surplus commodities.

HOLMAN [voice-over]: A favorite target of speakers was President Reagan's farm policy, which many here believe is inadequate.

DIXON TERRY, Iowa Farmers United Coalition: The so-called free-market approach to agriculture coming out of Washington today, with its rock-bottom prices, would mean death for our family farming system and an increased corporate control of our food system that would be to the detriment of the great majority of this nation.

HOLMAN [voice-over]: The problems for distressed farmers are long-term ones that won't be solved this year. [on camera] The feeling at this rally is that farmers have to start organizing to get higher prices for their goods.

DEVON WOODLAND, President, National Farmers Organization: Farmers have the right to unite and then to establish prices, fair prices, with a cost of production and a profit in those and so farmers can join together without any violation of antitrust laws.

HOLMAN [voice-over]: These farmers have heard alot about policy, but they are also concerned about the human cost of farm failures.

JOAN BLUNDALL, Iowa Extension Service: We're a proud people, but our pride has been a barrier rather than an aid. Our pain has been carried in silence and that silence is choking us. The silence makes fertile ground for depression, suicide, family discord, health risks and, yes, violence.

WOODRUFF: Later in the NewsHour we'll take a documentary look at the impact a delegation of farm state legislators who've come to Washington is having and talk with Congress-watcher Norman Ornstein about the political fallout from the farm crisis.

On Capitol Hill today the man who has angered many farmers said he has no plans to leave the administration. Budget Director David Stockman, in answer to a congressman's question about a news report that quoted a White House official as saying Stockman's resignation would be welcomed and is expected, said he believes he has something to contribute and plans to stay on the job.

LEHRER: The Soviet Union today denied it was cheating on arms control treaties. A foreign ministry spokesman in Moscow said a formal note of protest had been delivered to the U.S. Embassy there, denying recent U.S. charges and making some of its own. The spokesman said the unsubstantiated, groundless allegations were poisoning the atmosphere for the new arms talks set to begin March 12 in Geneva. He also repeated the Soviet criticism of President Reagan's strategic defense initiative, also known as Star Wars.

The Soviet foreign minister, Andrei Gromyko, meanwhile, spent two hours of thisday at the Vatican talking to Pope John Paul. It was described as an unusually long audience and of a cordial nature. It was the Polish-born Pope's first visit with a Soviet official since martial law was declared in Poland in 1981 and since the attempt on his life by killers linked by some reports to the Soviet secret police.

And there was a White House response today to Nicaragua's congressional invitation. Spokesman Larry Speakes said members of Congress should accept Nicaragua President Daniel Ortega's invitation to visit. Ortega yesterday said a bipartisan congressional delegation would be welcome and would find his country's military purpose was strictly defensive. The administration has been highly critical of the military buildup in Nicaragua.

WOODRUFF: Another hijacking in the news today. Two Syrians being deported from West Germany hijacked a plane on a flight from Frankfurt to Damascus and forced it to land at the airport in Vienna. After a couple of hours of negotiations, the hijackers released all 33 passengers and eventually gave themselves up to authorities. At one point before the plane landed the Syrians had demanded political asylum in Austria, but it was denied.

On the Middle East political front there was a little bit of good news today. Israeli Prime Minister Shimon Peres and Egyptian President Hosni Mubarak had each had special envoys meet in Jerusalem. After a meeting with the Egyptian representative, Peres said both countries would intensify their contacts in an effort to get some movement toward resuming peace talks in the region.

And in Southern Lebanon, Lebanese and Israeli soldiers traded gunfire in their first clash at the new Israeli frontline in that area. Reining in the Dollar

LEHRER: We look first tonight at what happened in Europe today to the once-almighty dollar. The central banks of Britain, France, West Germany, Italy and Belgium stepped into the currency market with more than one billion of their dollars, and it set off panic selling by currency dealers. The result was a dramatic plunge in the value of the dollar against all European currencies and a lot of confusion. There are not only questions about the events of today but also about what comes next and when. Fortunately, Robert Hormats is here to clear things up for us. He is a vice president of the Wall Street investment firm of Goldman Sachs. He was the assistant secretary of state for economics and business affairs before that, and he held top economic posts in the last three administrations. First, explain what the central banks of Europe actually did today.

ROBERT HORMATS: What they did today was to take dollars which have been in their reserves and sell those dollars into the market. That added to the world supply of dollars, and they used those dollars to buy weaker currencies, thereby weakening the dollar and strengthening those formerly weak currencies.

LEHRER: How does that weaken the dollar?

Mr. HORMATS: When you put more dollars onto the market it simply adds to the supply of dollars and suppresses their value.

LEHRER: Simple supply and demand.

Mr. HORMATS: Simple supply and demand.

LEHRER: Now, where would they go to get this $1 billion?

Mr. HORMATS: Well, over the years a lot of them have accumulated dollars in their reserves and they use those dollars for such purposes as intervention in the foreign exchange market.

LEHRER: And it's just something they have on deposit somewhere?

Mr. HORMATS: They have on deposit and as a result over the years of various accumulative policies.

LEHRER: All right, now, why didthat set off such a panic among the currency market types?

Mr. HORMATS: It set off a panic because in 16 out of the last 18 days, the dollar has really reached historic highs every day, and the dollar was moving on a one-way street. It was going up. And speculators and people who simply wanted to protect their position were buying dollars expecting that it would continue to go higher. What they have done in effect is made what was a one-way street a two-way street. Now, by pushing the dollar down, they have demonstrated to the market that it's not always going to be an upward movement of the dollar, and as a result a lot of people who were in effect holding dollars expecting them to go up decided they better protect their positions, get out of their dollars and begin to buy a few other currencies to hedge themselves.

LEHRER: Now, the latest wire reports at the end of all this today said that it all ended with the dollar being stabilizied, and of course it didn't explain what stabilized meant. What does that mean?

Mr. HORMATS: Well, the dollar dropped considerably for a time and then went up a little bit toward the end of the day. So I guess that's what they mean by stabilized. In other words, the drop stopped and it began to level off and even increased a tiny bit toward the very end.

LEHRER: Is there any way to know whether the element of panic remains in the air, or are we going to have to wait 'til tomorrow?

Mr. HORMATS: It's difficult to tell. I think that it was wise for these governments to intervene to demonstrate that it's not simply a one-way street. They've made caution a note in the minds of a lot of traders and a lot of people who were in these currency markets. But we'll see. We'll see tomorrow what happens and over the next couple of weeks. It's too early to tell whether this has halted the dramatic rise of the dollar or whether it's going to push the dollar down to lower levels.

LEHRER: Is this unusual for all these central banks to get together this way?

Mr. HORMATS: It's very unusual. Most times in the past the Bundesbank of Germany has intervened, maybe the Swiss central bank. But for five European central banks to get together collectively and intervene indicates their seriousness about the objective of pushing the dollar's value down. One point that's interesting to note. The last time that the dollar and sterling came close to a one-to-one relationship was in the year 1774, a long time ago. And I think this illustrates part of the problem. This is a remarkable strengthening of the dollar, remarkable weakening of other currencies, and I think the central banks simply decided they have to stem the tide, and if they don't do it it simply won't happen.

LEHRER: President Reagan of course has said often that it's not a case of the dollar being strong; it's a case of the other currencies being weak. What's your view of that?

Mr. HORMATS: It's both. Partly the dollar is strong because a lot of people want to invest in the United States. It's a strong economy, there is a lot of business demand for money. Banks which can't lend in other parts of the world lend here because it's profitable. I think that's really one reason. But there is also a weakness on the part of other currencies because investment conditions in Western Europe are not as good as those of the United States. So you've got both ends of the problem. There's a push problem and there's a pull problem.

LEHRER: Now, these central banks in Europe obviously these are unlike our central bank. I mean, they are controlled by the governments of these five countries. I mean, this must have been a concerted effort at the highest levels of the governments, correct?

Mr. HORMATS: I'm sure it was. The only way this could happen is for the central bank presidents of these countries to get together, and I'm sure their finance ministries talked a great deal about how to do this and when to do it. And they picked a very good time to do it and they demonstrated --

LEHRER: Why? Why is this such a neat time?

Mr. HORMATS: Well, basically I think the market yesterday was beginning to demonstrate certain doubts about the upward movement of the dollar. Volcker's statement sent the dollar down a little bit, and I believe that these central bank governors felt this was the right time to hit the market and push it down further.

LEHRER: Speaking of Volcker, today Chairman Volcker said that the United States -- to paraphrase what he said -- but he said the United States might consider intervening in these currency markets. It might be useful sometime. What does he mean by that? Do you know?

Mr. HORMATS: Useful in terms of demonstrating to the market that the dollar simply can't keep going up, trying to put a bit of a lid on this rapid sharp increase in the dollar which is very harmful to American industry and American agriculture. I think he was simply saying that at some point in time governments have to take some responsibility for the exchange rate, which is woefully out of line when you look at its dramatic impact on trade.

LEHRER: The people are getting rich over all of this are the speculators, right?

Mr. HORMATS: Well, it's hard to say. Some speculators certainly are, but there are a lot of people who, simply to protect their positions, have gone along with the dollar --

LEHRER: Like what? Give me an example of somebody who's protecting a position.

Mr. HORMATS: Well, if you have a lot of money and you don't quite know what currency to put it in, you try to move out of currencies which you think are going to become weaker into currencies which are going to become stronger, simply to protect your portfolio. If you hold sterling, for instance, two months ago if you held sterling you were holding a weakening currency --

LEHRER: That's pound sterling, the British --

Mr. HORMATS: Pound sterling or deutschmarks or lira or francs. If you held any of those you were holding a currency which was declining in value vis-a-vis the dollar. So it's understandable that a lot of people who held currencies simply wanted to get out of a currency which was declining and into one which was strengthening.

LEHRER: So essentially what happened today is that the signal has been given that, as you said, to use your analogy, it's two ways. It's like everything else in life. It can go up and it can go down and not just continue to go up.

Mr. HORMATS: Exactly. And I think it was an important time to do it because this is clearly harmful to the American economy in the long run, that the overvalued dollar was undermining it.

LEHRER: Now, finally let me ask you this. Larry Speakes said today, the White House spokesman said, that the United States policy was it would not intervene in these currency markets unless the market became disorderly. He didn't define disorderly. Can you?

Mr. HORMATS: It's very hard to define, but you know it when you see it, and in my judgment the market over the last month or so has been very disorderly, and it strikes me that if the United States government is going to intervene, now is the time to do it. I am not a great believer that intervention is a panacea. You have to do a lot of other things, but when the dollar shoots up as much as this has, then I think a little bit of intervention is warranted.

LEHRER: Tomorrow could be a very interesting day, would you not agree?

Mr. HORMATS: It's worth watching.

LEHRER: Well, thank you very much.

Mr. HORMATS: My pleasure.

LEHRER: Judy?

WOODRUFF: Still ahead on the NewsHour we have a documentary report on the unusual farm lobby in Washington this week, and congressional expert Norman Ornstein sizes up the political fallout from the farm crisis. A corporate takeover analyst explains their impact on the American economy, and a top law enforcement official discusses how prevalent wife-beating is in our society. Home-Grown Lobbyists

WOODRUFF: Our next focus section brings us back to the farm credit crisis, the story that's dominating Washington this week. Much of the activity is being generated by farmers and farm-state lawmakers who descended on the nation's capital for a few days to plead their case. One such group was made up of over half the members of the Nebraska State Senate. Correspondent June Cross has been following their progress.

BILL HARRIS, Nebraska State Senator: Unless you make some noise everybody assumes everything's all right. This is history. So we're going to make a little history here.

JUNE CROSS [voice-over]: Twenty-nine came from Nebraska. South Dakota sent its entire state legislature. More than 300 state and local officials from 16 states met here in Washington. For four days this week they commanded headlines, demanded the ear of Congress and tried to grab the attention of the Reagan administration. They did it with a series of special hearings, meetings, press conferences and receptions. There was a sense of urgency to their mission. It's planting season and many farmers can't borrow the money they need to buy seed, fertilizer and fuel. They want help from their federal government. Nebraska State Senator Loran Schmit.

LORAN SCHMIT, Nebraska State Senator: We have to have that money in place in a couple of weeks' time or else farmers won't be in a position to go to the field.

CROSS [voice-over]: In their first meeting with a Washington politician at a conference conveniently arranged by a fertilizer company, the farmer-politicians did not get much encouragement. Senate Republican leader Bob Dole, from the farm state of Kansas, said there might be more federal aid, but it might not be enough.

Sen. ROBERT DOLE, (R) Kansas, Majority Leader: We're not going to be able to help every farmer in every state with a federal program. We've had a program in place. It's called debt restructuring. You know, if you don't like what we have I'm not certain you're going to get much more. And I think it's time for a little candor when we talk about the farm credit crisis. I think the bankers should know this is about it.

CROSS [voice-over]: After the bad news from Dole the legislators marched on over to the White House. They wanted to deliver a letter to President Reagan asking him for a meeting. Leading that procession was the man who initiated the idea of bringing farm state lawmakers to Washington, Nebraska State Senator Tom Vickers.

TOM VICKERS, Nebraska State Senator: When I drafted the original resolution suggesting that we do this, the comments that I gave to me colleagues were along the lines of, "Let's go to Washington and let's make certain that the decision-makers thoroughly understand the problem."

SPOKESWOMAN: We're a representative group from the representatives and senators that are meeting here in Washington, and we would like for you to give this letter to the President from us.

CROSS [voice-over]: They were met with a polite refusal.

WHITE HOUSE STAFF: We cannot.

SPOKESWOMAN: The mail room is closed on Sunday?

STAFF: Yes, it is.

SPOKESWOMAN: Are you telling me it will be open tomorrow?

STAFF: It should be, yes.

SPOKESWOMAN: We may bring this letter back to you tomorrow?

STAFF: No, you take it to the White House mail room.

CROSS: Turned away from the White House gates and told by the nation's leading farm state senator that they had gotten the best they were going to get, these politicians from the nation's breadbasket began pressing their case. Not with tractors, as they have in the past, but with Washington's most time-tested political tool, the force of the lobby.

Gov. JOHN KERRY, (D) Kansas: An hour from now I could deliver every single food product that anybody in this room wanted, and you cannot do that in any nation other than the United States of America.

CROSS [voice-over]: It began on Monday morning with a special session of the Senate Agriculture Committee, convened by Nebraskan Democrats Ed Zorinsky and James Exon. Nebraska's Democratic governor, John Kerry, called the Reagan administration proposal to let free markets determine farm prices unrealistic.

Gov. KERRY: It has taken a combination of strong government and strong individuals to do it. It is not a program that can be accomplished and it is not an effort that can be accomplished with some sort of pithy phrase about going back to a marketplace when we all know that it is an effort simply to reduce the budget.

St. Sen. VICKERS: We've been operating for the last 11 years exactly like the fedeal government.

CROSS [voice-over]: When State Senator Tom Vickers testified, he offered a personal perspective.

St. Sen. VICKERS: I'm one of those people that are in that severe economic crunch. My son is out there probably today and was out last night probably pulling calves in the cold and the mud and the slop. In our case we started going downhill about 1974, over 10 years ago. And in the beef industry people like to think that's free enterprise. If I recall, it's free to go one way; prices are free to go down.

CROSS [voice-over]: While Vickers, a Democrat, was testifying before the Democratic members of the Senate Agricultrue Committee, a group of Nebraska Republicans got in to see Vice President George Bush. Afterwards they described the Vice President as interested in the details but non-committal about major changes in farm policy. They saved their hardest questions for Agriculture Secretary John Block, the administration's point man in its running battle with the farmers.

St. Sen. SCHMIT: Does President Reagan really understand that the principal cause of the farmers' dilemma today is not really the farmer's own fault. He did not go out and spend to excess. It was the fact that every time the free market system worked on the up side, the federal government in the last 15 years stepped in and put a lid on it. Does he understand that, Mr. Secretary?

ORLIN HANSEN, Minnesota State Representative: Only thing we need is we gotta have a lower interest rate, Mr. Secretary. That's the thing that's killing the [unintelligible] man out there.

JOHN BLOCK, Secretary of Agriculture: You're absolutely right, and you can help by causing the people and encouraging the people to put the heat on Washington, D.C., and I'm talking about all of Washington -- Congress, the administration and everyone -- that that's a priority for America is to get the deficit down, which should help bring our interest rates down.

CROSS [voice-over]: Finally they met with the man who controls the interest rates farmers pay, Federal Reserve Chairman Paul Volcker. To Nebraskan State Senator Sandy Scofield he seemed even less sympathetic than Block.

SANDY SCOFIELD, Nebraska State Senator: I got the sense that Chairman Volcker thoroughly understands the problem and he thoroughly understands the situation that agriculture is facing, and yet I get the feeling that he doesn't think there's any direction coming from the administration, there's no commitment to agriculture. There isn't even a belief that it makes any difference in the overall scheme of things.

CROSS [voice-over]: If the administration seemed indifferent to the farmers' concerns, Congress was another matter. In the words of one person, Congress was "lobbyable." Farm State congressmen are understandably sympathetic; it's the urban congressmen who need to be convinced, and that's where the lobbyists put their attention next.

St. Sen. VICKERS: It's a long ways from the hills of western Nebraska; I'll tell you that.

CROSS [voice-over]: State Senator Vickers decided to pay a visit to Oakland, California's congressman, Pete Stark.

St. Sen. VICKERS: Under the mechanisms we've always had in the past I get paid the same amount for the first bushel that I get paid for the 500,000th bushel that I might raise, and I as a farmer have always thought that was stupid. It encourages overproduction. Any time that the price gets high enough I think I can make a profit, you know, I'm a businessman, you know what I do.

Rep. PETE STARK, (D) California: Row to row, yeah.

St. Sen. VICKERS: Yeah. And that's part of the trouble that we're in right now because we were encouraged to do that and we did expand and, you know, all those kinds of things. We overextended as a result of that. But furthermore it costs the taxpayers of this country a bunch of money.

Rep. STARK: My people are consumers, you know? In my district they think a milk producer is a cow. And I want to see that they're able to have reasonably priced food and that we're able to export it around the world to help our balance of trade. But I don't know as we have to help wealthy people shelter income. We just ought to perhaps let market forces run a little more and not encourage overproduction, as you say.

St. Sen. VICKERS: But be careful how you say let market forces do it, not like the President is saying, not just turn it all loose. Because if you do, hardly any of the family farmers will survive. Our government really does not use the ability that we've got to produce food in a very positive fashion, and I don't think they've really recognized that we've got one of the best machines in the world. It never has made sense to me that our government spends an inordinate amount of its time trying to figure out how to shut that machine down. It'd be like Japan trying to figure out how to shut Toyota off, it occurs to me.

CROSS [voice-over]: And what did all this lobbying get them? The House and the Senate will be determining that in debates starting today. Yesterday after meeting with the nation's governors, Senator Dole, who is on the front line of these farm negotiations, had this to say.

Sen. DOLE: He's focused something on farmers for a change. They deserve four or five days in here. And we're going to have a lot of time on the budget, probably more than we like.

CROSS [voice-over]: Dole and the administration still say that the farmers won't get any more help than they've gotten already. And that those who would fail without additional help are probably going to go bankrupt anyway. That's small comfort for State Senator Vickers.

St. Sen. VICKERS: I made decisions based on what I believed was going to happen, based on the directions the government said we were going to go. We were going to basically feed the world, is what the government has told me ever since I was 14 years old, when I started farming. In the '50s they told me that, yeah, things are tough now, but boy you're going to be feeding the world in the '60s, the population is growing, things are going to be a lot better, and I believed them. In the '60s they told me the same thing, in the '70s they told me the same thing. In the '80s they're telling me the same thing. Quite frankly, I don't believe them any more.

WOODRUFF: As we reported earlier, both the Senate and the House today did pass proposals to increase federal credit aid for farmers. Here is an excerpt of some of what the debate looked and sounded like in the House of Representatives.

Rep. THOMAS DASCHLE, (D) South Dakota: It is not going to break the budget or our commitment to reduce farm expenditures. It is not going to offer a long-term solution, which can only be brought about by a better price. What we are doing is building a bridge, a bridge we hope will lead to a vastly improved farm economy very soon. What we are going to do is to help a million farmers, the backbone of American agriculture, to survive a major crisis in their operations today.

Rep. STEVEN GUNDERSON, (R) Wisconsin: We are facing in this country today a volcano that is awaiting to erupt if we don't take proper action. If it erupts, what will happen? Well, we will destabilize American agriculture; that's obvious. But we will also destabilize our entire farm credit institutions, and I don't just mean the farm credit system, I mean our commercial banks as well. And we perhaps will destabilize all of rural America as a social institution, and we perhaps will even destabilize the economic recovery facing all of this country.

Rep. DELBERT LATTA, (R) Ohio: Mr. Speaker, this bill, according to the administration, includes provisions which would cause substantial increases in federal spending, and certainly we all know about federal spending and how it's affected the American farmer. It's caused high interest rates in the United States, it's caused a high-valued dollar which has hurt farm exports. And so the story goes.

Rep. TOMMY ROBINSON, (D) Arkansas: This is not a budget-busting bill. this is a budget-saving bill. There is a multifactor of five in farming today; that is, for every one dollar in farm output there is five dollars that goes toward the total gross national product. If we don't pass this bill, it is going to cost us billions of dollars in managing foreclosures on farms. I encourage you to stand tall and let's demonstrate to our farmers that we are responsible. Don't worry about a veto of this bill because we can override a veto.

WOODRUFF: Despite the frenzied attempts in both houses of Congress to help credit-starved farmers, the Reagan administration seems to be holding its ground against any more assistance than it's already agreed to. That became clear at a hearing of the House Budget Committee today, during an exchange between Budget Director David Stockman and House Democratic leader Jim Wright.

Rep. JIM WRIGHT, (D) Texas, Majority Leader: You are aware, are you not, that there has been more farm foreclosures in the past year than in any year since the Great Depression?

DAVID STOCKMAN, Director, Office of Management and Budget: Well, Mr. Leader, I'm aware of that and I'm aware that, as our economy struggles to move from an era of inflation to an era of low prices and high growth, that there are many sectors of the economy where these unfortunate dislocations and transition problems have occurred. We are doing what we can where we can, but I don't think we can stop the process of change, nor do we want to.

Rep. WRIGHT: We are suggesting a bill today that you indicate you oppose. Now, there are some 419,000 farmers, according to our calculations, who might be saved by these loans. Your complaint is that you don't want to give loans, you say, before we know whether there's going to be a lot of sunshine and a lot of rain. That farmer's got to make his plans and do his planting on a certain amount of faith, doesn't he?

Mr. STOCKMAN: Well, Mr. Leader, that's true, but I'm objecting very strongly to the particular provision that allows an advance of the normal CCC loan. We've never said that the commodity credit price support loan program is a general credit facility. It's been here for 40 years. It has one purpose and one purpose only, and that is to allow the farmer to harvest at the end of the cycle and get some cash while he's deciding when to market that crop and waiting for a better market opportunity. And I will suggest that in opening it up this way, because you see it as a ready way of putting your hands on some cash to get out to the farmers, you're making a very major mistake.

WOODRUFF: Joining us now to size up the prospects for credit aid for farmers and the political ramifications of this week's activity is Congress-watcher and political scientist Norman Ornstein. Dr. Ornstein is a resident fellow at the American Enterprise Institute.

Norman, we've just gotten word that the Senate has passed another amendment. That makes two proposals in the Senate, one in the House. What's the significance of all this legislation that seems to be moving through the Congress?

NORMAN ORNSTEIN: Well, what you've got is Congress essentially upping the ante on the President in three ways. They've thrown in the Senate $100 million to buy down interest rates so that farmers will pay less when they have loans. They've added in the Senate almost $2 billion in additional loan guarantees so that banks don't have to bear the responsibility if the loans go bad, and they've also thrown in some additional money by advancing payments to farmers. In both houses now they've passed this piece of legislation for crop support loans that they would otherwise get later in the year. All of those things are things that the administration has said no to. Almost certainly we're going to get a bill that comes out that will go to the President. It'll be attached to the African famine relief bill, and he is going to be sorely tempted to veto it, and I would guess he probably will.

WOODRUFF: Is this all the farmers are asking for and the farm state legislators who have been in town all this week?

Dr. ORNSTEIN: It's certainly a very large chunk of what they're asking for, and if they ever got what the House and Senate have passed as of now, I think they'd be quite satisfied in the short run.

WOODRUFF: What do you think the prospects are from the administration? I mean, do you expect a veto or do we just --

Dr. ORNSTEIN: It's going to be tough for the administration to veto a bill, but I think they probably will. Remember, we're not just talking about an immediate farm credit crunch. We're talking about the first major vote that's going to have an impact on what we do with spending issues and deficit reduction questions later on. So they're going to be sorely tempted to veto the bill, in part just simply to show Congress that they're not going to be pushed around when it comes to spending questions later on and to show the American public that they're going to be tough and hold firm on these issues.

WOODRUFF: How much of these votes in the Congress were due to the kind of lobbying pressure they're getting this week from these farmers and these legislators from out of state?

Dr. ORNSTEIN: Oh, I think that had something to do with it. It dramatized the situation that most of these legislators know about. Remember, when it comes to the Senate, the Republican Senate, where there's a three-vote majority at this point, you've got 22 of those Republicans up in 1986 and many of them -- almost a dozen, come from farm areas. They don't need to have their legislators coming here lobbying to know what the problem is. But the fact that you've got Republican legislators lobbying against the President for more aid right now underscores the problem for them.

WOODRUFF: Well, how much of all this is an attempt by the Democrats to do just that -- to put the heat on the Republicans and make them take more of the blame for what's happening in the farm community?

Dr. ORNSTEIN: Oh, a heck of a lot of it. We saw, for example, the Democratic Congressman Tommy Robinson speaking on the House floor earlier today; you've got an awful lot of Democrats who are out there trying to be the aid to the farmers and put the Republicans, in essence, in an uncomfortable position -- between the rock of a President saying no more and the hard place of their own farm constituents by offering all kinds of amendments that they know are really in the end unrealistic. That's certainly a major part of it, and, as we saw, for example, with Congressman Gunderson, the Republican from a farm district, it does make them very uncomfortable.

WOODRUFF: Well, if they are uncomfortable, then what's giving them the stomach, the courage, to stand up and vote no, which many of them are? Well, some of them are, anyway.

Dr. ORNSTEIN: What you found in the key votes here, in the Senate, at least, the Democrats all held together in support of these amendments to add more money in. And you had in the first key vote eight Republicans vote with those Democrats and that was enough with a narrowly divided Senate. Those, I'm sure, although we haven't seen a breakdown specifically, are almost all farm-state Republicans and probably all up in 1986. In the House the Republicans split almost down the middle, and I would wager as we look at those votes that what you've got is the farm state Republicans and those who represent farm districts voting for and those who don't have much to worry about voting against.

WOODRUFF: What does all this say about these efforts to hold the line on the budget, to hold the line on the deficit and not permit it to grow any bigger? I mean, that's what we're hearing from David Stockman and others.

Dr. ORNSTEIN: Sure, and I suspect that what we're going to get in the end is a little more aid going to the farmers to deal with the short term but a signal sent by the administration that when it comes to the bigger issue, the broad question of the farm program, the price-support program that the administration wants to scrap, basically, phased out over a five-year period, they're going to be even firmer, and the signal is going to go to members of Congress that it's going to be tougher to deal with the deficit a little bit further down the road. They're going to have to really work harder when it comes to the bigger farm question.

WOODRUFF: If the administration does veto much of this legislation that comes out in whatever form, what's going to happen to the farmer?

Dr. ORNSTEIN: Oh, I'm sure that what'll happen is that the bill will come back and there will be a vote on an override. My guess is they may well have the votes to override in the House. They probably wouldn't be able to do it in the Senate. Then they'll have to regroup and pass another bill. I'm sure it will include more aid than the administration wants, but they'll have to try to gauge it to be just below the level that the President will accept. We'll jockey around with that a little bit in the next week or so. And, remember, there are some time pressures here, not just because of the farmers -- they want to get out there and plant their crops, but also with the aid for famine victims in Africa. There is some real pressure to get this done quickly.

WOODRUFF: Can you say anything about what all this says about Robert Dole, the new Senate majority leader? This is, as everybody said, it's a test of his leadership. How is he coming through this?

Dr. ORNSTEIN: Oh, well, the stakes I think are greater for Dole than for anybody else. And, remember, he's up in 1986 and in the state of Kansas you've got an awful lot of farmers who represent just the kinds of crops that are in trouble right now. He's been very, very tough. He's really tried to put pressure on Republicans. By having these two amendments pass in the Senate against his desire, it's a little bit of a blow to Dole, but I think if we end up getting something through that the President finally accepts and it's less than what we've seen come through now, Dole will emerge relatively unscathed as he goes on to the next big battle. He's seen that being a leader is not all sweetness and light and attention. There are some very, very tough elements that come in.

WOODRUFF: All right, we're going to hold you to each and every one of those predictions you made, Norman. Thank you for being with us.

Dr. ORNSTEIN: My pleasure, Judy. Takeovers: Who Wins?

LEHRER: We move the focus now to the corporate takeover, the newest, toughest and most dramatic business game in town. There were two major developments today. In Bartlesville, Oklahoma, shareholders of Phillips Petroleum completed voting on a plan to fight off Carl Icahn, the New York financier and takeover specialist. In Washington Icahn appeared before a House committee investigating takeovers and vigorously defended himself. T. Boone Pickens, the other well-known oil company takeover man also testified. Pickens has launched bids for Gulf, Cities Service as well as Phillips in the last two years, all of which resulted in tremendous profits for him and his partners. But Pickens failed to win control of Phillips and withdrew from that fight. Now Icahn is doing the same thing. Today he told the House committee that takeovers make companies more efficient.

CARL ICAHN, Wall Street investor: Let's think about the big picture. And I went into this about the steel industry, the railroad industry and other industries. Nobody took over Chrysler, nobody took over the steel industries, nobody took over the railroads. What happened to the employees? What happened to the whole midsection of this country in the last 10 years? Nobody took these companies over. There were no takeover guys that you can blame for that. In fact, if you had takeover, if there were takeover activity in there, I believe that these sections and these industries would be alive today because you would have gotten rid of bureaucratic management --

Rep. CARDISS COLLINS, (D) Illinois: You know, I'm absolutely --

Mr. ICAHN: And that's what I think is the problem.

Rep. COLLINS: I'm absolutely flabbergasted at the way you rationalize this takeover thing. I mean, it's what it seems like to me that, you know, "We're the good guys and we're going to save the country by taking over these various Fortune 500 businesses and all." Actually, isn't the motive to make some money?

Mr. ICAHN: Well, is that wrong?

Rep. COLLINS: I don't think it's wrong to make money --

Mr. ICAHN: I mean, that's the whole free enterprise system. It's absolutely the motive.

Rep. COLLINS: But I do think it's wrong if in making that money --

Mr. ICAHN: Oh, wait a minute. I'm not saying I'm Robin Hood.

Rep. COLLINS: -- you put people out of jobs, you have whole communities like the one we're talking about today that are going to be just wiped off the face of the earth, etc. And I think that should be some kind of consideration.

Mr. ICAHN: But I think the main concern should be not whether I want to make a profit, and I freely admit that I'm an investor and I want to make a profit. I freely admit I'm not Robin Hood. But what I'm saying is that something has to be done with the system. Many managements in this country are extremely arrogant and treat their shareholders with a certain amount of contempt, okay?

Rep. COLLINS: Mr. Kitrell, do you agree with that statement?

CHARLES KITRELL, Vice President, Phillips Petroleum: I don't think I'm arrogant. I think I have more concern for the shareholders of Phillips Petroleum company than anybody sitting at this table. Anybody. All of them. And there are different kind of shareholders. We have shareholders who have been with us for 20, 30, 40, 50 years. We have some who are Johnny-come-latelies, and they have different aims and ambitions. But as far as the loyal, long-term stockholders who have invested in our company -- and they knew what they were investing in when they invested in Phillips Petroleum Company; nobody made them do it. Nobody made them stay with us, and they knew what kind of performance record we had. They knew what we were paying out in the way of dividends. They knew what kind of returns they were getting on their investment, and they had faith in the company and they wanted to see this company grow.

WOODRUFF: The Phillips story is only the latest in a series of major takeover attempts that have shaken the oil industry. Last year Chevron bought Gulf Oil for $13 billion; Texaco acquired Getty for $10 billion and Mobile bought Superior Oil for $5 billion. To explain the current rash of takeovers and the impact they have on companies, shareholders and the economy, we talk with Michael Klein. Mr. Klein is a leading securities lawyer in Washington who specializes in analyzing corporate takeovers.

Mr. Klein, why the rash of takeovers in the oil industry?

MICHAEL KLEIN: Well, one might ask why the rash of attention to them? In fact, the number of takeovers is roughly the same as it has been over the last half-decade, but there are larger --

WOODRUFF: Is that right, there has not been any --

Mr. KLEIN: Yes, the President recently published, as part of the Council of Economic Advisers report a piece that analyzed takeover activity. What it does suggest is that the size of takeovers has increased rather substantially, largely because, as your list just suggested, the oil companies, these multinational, multi-billion-dollar corporations have now for the first time become potential targets of takeover activity. And of course the enormous sums of money involved and the startling and derring-do that characterizes so many of them has caught the public's attention, and we're paying more time and attention to it now.

WOODRUFF: But the number, you're saying, hasn't really --

Mr. KLEIN: There are about 2,500 mergers and acquisitions, the President's report tells us, pretty much year-in and year-out. Lots of them are small, they go unnoticed. They have to do with the kinds of transactions that don't quite have the great drama of a Phillips or a Union or a Gulf or a Mobile. These are dramatic, enormous transactions, and people like Mr. Phillips have made almost three-quarters of a billion for himself and his colleagues.

WOODRUFF: Well, people like T. Boone Pickens, like Carl Icahn say that what they're doing is really good for the shareholders, that they're increasing the value of the stock. What about that argument?

Mr. KLEIN: Well, it's certainly been reasonably good for them, and it's hard to see --

WOODRUFF: For "them," meaning --

Mr. KLEIN: Them, Mr. Pickens and Mr. Icahn.

WOODRUFF: Yes.

Mr. KLEIN: It's hard to see who's gotten poorer as a result of takeovers. You have had shifts of value in the oil industry from, essentially, the incipient value in the ground of the oil and gas reserves that have basically been taken out of the ground, in effect, and show up as debts which then capitalize as the capacity to buy back stock or to finance the purchase of stock so that, for example, if you had, just looking at your own home, a house that you've had $100,000 invested in and paid off, the question is, are you richer if you go to the bank and mortgage that house for $100,000 and then buy things with it, or do you have the same value at $100,000? Pickens is taking it out of the ground and putting it into the marketplace. Whether that's good or bad is a very difficult and complex question.

WOODRUFF: Well, that is the question, though. If everybody is benefiting financially, as you're saying, then why should we be concerned about it?

Mr. KLEIN: Well, I don't suggest that everyone is benefiting financially. I'm not sure that even Mr. Pickens would suggest that everybody is benefiting financially. The people who are benefiting are shareholders who get a short-term immediate increase in their price and the arbitrageurs and major players --

WOODRUFF: The what? I'm sorry.

Mr. KLEIN: Those people who follow in after the announcement of a takeover and buy the stock in anticipation not of an increase in earnings, perhaps, but an increase in the price affected by a potential successful takeover. They are people called risk arbitrageurs. They are the real people who make this takeover business go. And those people are taking risk, as their name suggests. Some of them lose a lot of money, as they did in the Phillips transaction when Mr. Pickens abandoned them to take a profit for himself. Others of them make a great deal of money. But the fact of the matter is that there are other interests involved here and you see it very clearly in the Phillips situation, where you have, effectively, a company town and the people are devastated by the prospect of that company or its headquarters moving out of that town. You had the same situation in not such a small town, in Pittsburgh, when Gulf was essentially was taken over. There was a series of articles in The Wall Street Journal suggesting the fortunes of philanthropic contributions, direct and indirect, from Gulf that moved out of the Pittsburgh area as a consequence of Gulf being taken over.

WOODRUFF: I was going to say, what about some of the steps that these companies, these big companies like Phillips, take to avoid a hostile takeover that sometimes put them further into debt?

Mr. KLEIN: Well, they're essentially taking the hint from the marketplace, which is to say from the support that the marketplace gives to Mr. Pickens' effort and says, "All right, if you want to take your $100,000 house and mortgage it and distribute some of the cash, we'll do that because -- but we won't do it to the extent that you do it. We'll do it in a different way. We'll do it in a way that will protect some of the other interests." So that, for example, Phillips, although it is proposing to recapitalize itself in a way largely to get some of that debt money out into the hands of shareholders, is also buying a bunch of stock, making it available to its employees, who, if they are the kinds of people that Mr. Kitrell suggested, will feel not only quite happy to become owners of Phillips, but will, as he hopes, I suspect, support the management of Phillips in the future in the event some other person like Mr. Pickens or Mr. Icahn comes in an effort to take over control.

WOODRUFF: What do you think should be done about the hostile takeover epidemic? Are you one of those who agrees that we ought to just put a stop to it completely? I mean, there's legislation now in Congress to that effect.

Mr. KLEIN: There is legislation in the Congress, and what's more important, there are hearings in the Congress that are being run by some very intelligent people who understand it pretty well. I think Tim Wirth, who is heading the hearings in the Congress, probably understands it as well as anyone in the Congress, and he'll learn more. The purpose of those hearings is to learn more. There's a lot of shiboleths, a lot of one-liners, a lot of cute phrases and not as much understanding as we would like about the effect of takeovers. I think there are some abuses. Even the President's report, the report written by anti-regulators, suggests that there's hope for some change in the courts or other changes to stop abuses. But the fact of the matter is that these are very complex pieces of business as business and as they impact on human beings and lives and communities and the allocations of assets. And we can take our time before rushing in and passing legislation -- maybe the end of this session -- and maybe the decision will be to take some more time to see what the impact of some of these things are.

WOODRUFF: But for the time being you're saying Congress is probably better to stay out of this?

Mr. KLEIN: Stay in it studying it, and decide whether or not it can really detect some areas in which the Congress can be of some assistance. There are areas. I mean, there are some management kinds of activity like greenmail which are just total abuses in the views of almost everybody who looks at it, because you're essentially taking the shareholders' money in those situations and paying it to someone in order to induce them not to offer the shareholders an advantageous price. In the Phillips situation they attempted not to do that by offering a different package that was equivalent to what they offered to Mr. Pickens. A debate ensues over whether that's fair or not. A different quality and character, but an area that one needs to pay attention to.

WOODRUFF: Well, Mr. Klein, I know this is one that we're going to keep coming back to time and again. Michael Klein, thank you forbeing with us.

Mr. KLEIN: Thank you. Battered Wives

LEHRER: Our last focus segment tonight is on a most sensitive subject, wife-beating. Charlayne Hunter-Gault has more. Charlayne?

CHARLAYNE HUNTER-GAULT: Jim, wife-beating in and of itself is unfortunately nothing new, but it's a front-page story today because a top Reagan administration appointee, John Fedders, resigned late yesterday after reports of his divorce proceeding showed that he had periodically beaten his wife over the past 18 years. Fedders, who was head of enforcement at the Securities and Exchange Commission since mid-1981, had his problems disclosed in a page-one story in Monday's Wall Street Journal. By yesterday the White House had no official comment on the situation, but one unnamed aide was quoted in The New York Times as saying that the White House could not keep a man on staff who abused his wife, no matter how well he does his job. The issue is especially sensitive because President Reagan has publicly condemned domestic violence, most recently in his State of the Union address. With us tonight to discuss the issue raised by the Fedders case is an expert in the issue of domestic violence. He is Larry Sherman, professor of criminal justice at the University of Maryland and research director of the Police Foundation in Washington. Mr. Sherman, starting first with the Fedders case, here's a top government official, five children, married 18 years. Should we be surprised that something like this happened in that case?

LAWRENCE SHERMAN: Well, I don't know exactly what happened, but I do know that every survey research project on the question of domestic violence in different social classes shows that it's not just a lower-class phenomenon. The police tend to get calls on domestic violence primarily from poorer people and in poorer neighborhoods. I think that has to do with the housing condition in those neighborhoods so that neighbors are more likely to hear fights going on and more likely to call the police. And it may also be a more common custom to call the police to help with problems in those kinds of communities. But the research shows that domestic violence happens in every kind of neighborhood, among people in every income bracket. And that's not surprising.

HUNTER-GAULT: How widespread is it?

Mr. SHERMAN: Well, those estimates, I think, are a lot more questionable. Some estimates go from 20 to 40 of all American households having some kind of problem at some point in the history of the relationship. I think it's widespread enough so that we all need to be concerned with it, and I think the larger question in this case is, what role should employers play when allegations of domestic violence are presented to them?

HUNTER-GAULT: All right, we'll get to that in just a moment, but let me ask you about the length of time here. Eighteen years this allegedly has gone on periodically. Is that unusual that something would go on that long without any notice of it? I mean, this came out in a divorce hearing rather than in a police complaint or some other way.

Mr. SHERMAN: That's not at all unusual. In fact, I think one of the things that might result from this particular case is that more people in upper-income communities, upper-income families may see this as a problem that needs to be addressed. There's been a number of sort of private problems that have gotten more attention in recent years. Child abuse, certainly; drunk driving, alcoholism and drug abuse. These are all things that one, in the old days, liked to handle privately and yet thereare systems that can help. And in fact the research we did, sponsored by the National Institute of Justice, suggests that when police intervention occurs and arrest is imposed on the situation, it reduces the frequency of subsequent violence.

HUNTER-GAULT: Is there anything that we can draw from the fact that Mr. Fedders resigned so quickly? I mean, does that suggest anything to you?

Mr. SHERMAN: It suggests to me that the sensitivity threshold for this problem is much higher, obviously, for highly-placed political appointees. It's also very high for law enforcement people. Here you have somebody who is in charge of a major area of law enforcement in this country, and I think that police chiefs and others have been held to a very high standard of conduct in their personal lives because they stand for the enforcement and upholding of the law.

HUNTER-GAULT: Have the police in general changed their attitudes about it? There once was a time when domestic violence was not something police were particularly eager to deal with.

Mr. SHERMAN: That's right, and I think that has changed substantially. Our research shows that now some 10 of the police departments as a regular policy will arrest wife-beaters, and 20 years ago the Police Chiefs Association training manuals were taking the position that it wasn't even a police matter. You shouldn't even respond or try to mediate. So I think that the women's movement has helped to raise everybody's sensitivity to domestic violence as a crime rather than as a personal tragedy. It's that, but it's also a crime.

HUNTER-GAULT: What about the courts? Are they responding in kind?

Mr. SHERMAN: The courts, I think, are much more resistant and in general they're much less accountable than the police. When people are dissatisfied with the criminal justice system they bring that to the attention of the police. I think prosecutors still take the position generally that domestics are not serious and they will not prosecute them. They take that position largely because they say the victims will not come forth and testify, and that may be right. But to have the across-the-board policy that many prosecutors do that they simply won't proceed with prosecuting domestic violence, I think makes this problem a lot worse.

HUNTER-GAULT: All right. We've seen in the case of Mr. Fedders he resigned very quickly, we've heard your explanation -- he is a public official. Would a person in a private situation be held to the same standard, and how is his employer or her employer likely to respond?

Mr. SHERMAN: Well, that probably depends very much on the employer. I know that in Minneapolis a lot of the Fortune 500 companies there have paid a lot of attention to this issue. They've tried to develop counseling programs, they've tried to raise awareness of it within the company. But I think if a very highly-placed executive in that kind of company were to be accused or convicted of domestic violence that a similar response might be taken. One concern we might raise is what would be the implications of firing everybody who is accused of domestic violence, especially since the lower-income workers are much more likely to be encountered by the police and to be convicted of these offenses, whereas the upper-income workers are not? And I think that we have to be very careful to use the capital punishment of the economic workplace, which is firing people, you have to be very careful. On the one hand it might deter a lot of other people from doing it, or at least make them more careful about not getting caught. On the other hand, the person who gets fired may well go home and commit a homicide or some much more serious violence.

HUNTER-GAULT: Well, is it even desirable to have companies getting involved in this? I mean, is there a privacy matter here, or is it desirable to have them try and deal with the situation with counseling or whatever?

Mr. SHERMAN: Well, you might want to distinguish government and holding the public trust from private employment. But I think the fact that most companies are publicly held now and that the shareholders, a large number of shareholders also have some concerns about the conduct of the companies they invest in means that the standards may not be that different. And perhaps, although we're trying to stay out of private lives in some respects these days -- people's religion and sexual orientation are now much less likely to get them in trouble with their employers than they were 20 years ago -- on the other hand, we're a lot of seeing cases in which people get convicted for drug use off-duty, and generally employers are firing in that kind of situation are getting supported by the courts for taking that position.

HUNTER-GAULT: Very briefly, Mr. Fedders has said he hoped for a reconciliation with his wife. What is the hope and what are the prospects of someone who beats their spouse getting cured and being able to return to a normal life? Very briefly.

Mr. SHERMAN: I wish I knew the answer to that question. I don't think any of us know. I think we all hold out hope, and if we can keep testing therapy and counseling and other kinds of methods to find out what works, maybe it'll be possible.

HUNTER-GAULT: All right, Mr. Sherman, thank you very much for being with us.

Mr. SHERMAN: Thank you, Charlayne.

HUNTER-GAULT: Jim?

LEHRER: Again the major stories of this day. The value of the U.S. dollar plunged dramatically on European currency markets after the central banks of five major Western European nations intervened by selling more than a billion dollars' worth of dollars. Both the House and Senate passed legislation giving emergency credit to farmers, despite prospects of a presidential veto.

Good night, Judy.

WOODRUFF: Good night, Jim. That's our NewsHour for tonight. I'm Judy Woodruff. Thank you and good night.