The MacNeil/Lehrer NewsHour

INTRO

ROBERT MacNEIL: Good evening. In today's news these are the top stories. The White House confirmed President Reagan is considering a budget freeze for '86. Moscow and Washington agreed on more regular talks to stop the spread of nuclear weapons. A letter bomb mailed to British Prime Minister Margaret Thatcher was intercepted. The U.S. trade deficit reached a new record high. Jim?

JIM LEHRER: In the rundown for the hour tonight, our summary of the major news of the day is first; then comes a focus segment on cutting the budget by freezing all federal spending for a year; an interview with artificial heart designer Dr. Robert Jarvik about William Schroeder's day and week; a final focus segment on this week's dramatic drug and organized crime hearings, and, since it's Friday, we also have our regular session with editorial cartoonists.News Summary

MacNEIL: President Reagan met again with key budget aides today as the White House confirmed that he's considering a freeze on federal spending at this year's level. Spokesman Larry Speakes said that in addition to the freeze possibility the President and his advisers were going line by line through the 1986 budget, making decisions whether to freeze a program, tocut it or eliminate it. White House Chief of Staff James Baker said no decisions had been made by the President. Baker met with new Senate Majority Leader-elect Robert Dole, who said he thought there was a lot of support, a majority, for the freeze concept in Congress. On Capitol Hill Budget Director David Stockman gave more details to senior House Republicans.On the Senate side, Budget Committee Chairman Pete Domenici told reporters about the President's plan.

Sen. PETE DOMENICI, (R) New Mexico: The White House and the President are obviously on the right track in looking at what things can be frozen I think when they're through with that exercise they will find that even with a freeze, if you exclude defense, and if you exclude all those programs that are within Social Security -- disability and the like -- that clearly you're going to have to dramatically reduce other programs. It's all going to be tough, and we've got to look at it. I'm interested in all the approaches. The across-the-board freeze strikes me as having much more of a chance, and we'll -- it's easier to do and we'll get a lot more deficit reduction. I would predict that there would be a substantial across-the-board freeze put on the national government for at least one year. Now, I don't know that I'm including every single solitary thing, and that's what I mean by substantial or significant. I think that's the direction we're moving.

MacNEIL: In the first focus section, right after our news summary, we'll be getting three views of how Congress reacts to the freeze idea. Jim?

LEHRER: The United States and the Soviet Union made a deal today on nuclear proliferation. The two powers agreed to meet regularly every six months to work on ways to control the spread of nuclear technology. The agreement was reached after three days of talks in Moscow.

Nuclear arms negotiations between the U.S. and the Soviets, the ones that aren't underway, were a major topic of a Washington conversation today, one between President Reagan and West German Chancellor Helmut Kohl. The two leaders discussed the upcoming meeting between Secretary of State Shultz and Soviet Foreign Minister Gromyko. Chancellor Kohl said this afterward.

HELMUT KOHL, Chancellor of West Germany [through interpreter]: The President informed me of the American ideas for the exploratory talks to be started on 7th and 8th January, 1985, between Secretary Shultz and Foreign Minister Gromyko. These talks, which are taking place on the basis of an umbrella concept developed by the United States, open up new perspectives and opportunities for arms control negotiations. Mr. President, for very good reasons, you referred in your remarks to the joint declaration which we have adopted. This declaration is intended to illustrate the link between improved East-West relations, concrete steps for arms control and disarmament and the maintenance of our security through adequate defense. Our goal: to raise the nuclear threshold in this manner and to enhance the alliance's ability to defend itself against any kind of war, be it conventional or nuclear.

LEHRER: There was also word today the Soviets might boycott the 1988 Summer Olympics in Seoul, Korea.That impression came in a letter from two Soviet officials to the Olympic Committee. The letter was released today in Switzerland. It strongly criticized Seoul as a site for the games, but Olympic officials said today all was set for Seoul; there would be no change.

MacNEIL: In London the post office found a bomb in a letter addressed to Prime Minister Margaret Thatcher, and the police defused it. A group advocating independence for Scotland said it sent the letter bomb. It arrived on the feast day of St. Andrew, the patron saint of Scotland.

In El Salvador, representatives of the government and two rebel organizations met on a hilltop near the capital to talk about how to end the civil war. The meeting today, the second one in two months, was held in a religious retreat under the auspices of the Roman Catholic Church. The doors were closed soon after the rebel negotiators arrived, but their radio station said they were demanding a role in the national government and an end to military advice and assistance from the United States. The government has rejected similar demands in the past. The public was also on hand today, and some of the bystanders were chanting, "We want peace." Several hours after the meeting began, one of the Catholic Church mediators said they'd been extended for several more hours because the two sides were making progress.But he gave no details.

LEHRER: Two stories today on the international trade front; first, that U.S. foreign trade deficit, which goes up every month, did so again in October, the Commerce Department said today. The amount was $9.2 billion and brought the total for the year to $100 billion. And even with two months left to go that will make 1984 a record deficit year.

The other item was good news. Japan's Mazda Motor Corporation announced it will build small cars in Michigan. It will be done at a new $450-million plant to be constructed in Flatrock, Michigan. Mazda will thus become the fourth Japanese carmaker to have an assembly plant in the United States.

MacNEIL: Another milestone was passed today in the development of the artificial heart. At Louisville's Humana Hospital William Schroeder was taken off the main drive unit and attached to a small portable device for 22 minutes. Doctors said they noticed a slightly softer beating of his mechanical heart, and during the switchover he lost a few heartbeats. But the 11-pound portable unit operated satisfactorily. Doctors said Schroeder did not notice any difference himself. He was reported very tired after his exertion yesterday when he got out of bed and because he'd lost sleep from coughing. Later in the program we'll have an interview from Louisville with Dr. Jarvik, designer of the heart, on the lifestyle the portable drive unit could eventually allow William Schroeder.

Senator John Stennis of Mississippi underwent surgery today to remove his left leg because of cancer. Walter Reade Army Medical Center in Washington said the 83-year-old Democrat planned to return to the Senate after a normal period of convalescence. Eleven years ago the Senator was critically wounded in a robbery attack in front of his Washington home, but recovered to return to full activity in the Senate, where he is now the dean. The Big Freeze

LEHRER: First there was a nuclear freeze to debate and ponder, now there's a budget freeze to do the same, and it is the subject of our first focus segment tonight. The idea of freezing federal spending is not brand-new, but it has been born again in the last few days with talk about it among presidential advisers and Republican leaders in Congress. Another one of those talks was held today with Budget Director David Stockman making the trip up to Capitol Hill. Robin?

MacNEIL: To fill us in one latest developments in the administration's emerging budget proposals, and to give us his own views, we have the Republican leader in the House, Robert Michel of Illinois. The minority leader met with President Reagan yesterday and today with Mr. Stockman to discuss the freeze and other proposals.

Mr. Michel, Congressman, did you get any clearer picture today of what the President intends?

Rep. ROBERT MICHEL: Well, it wasn't a question of getting from the White House through Mr. Stockman what the White House intended, but rather what we Republicans could help fashion in concert with the administration ultimately.

MacNEIL: I see. So you were giving your views today?

Rep. MICHEL: Absolutely.

MacNEIL: I see. In that exchange did you get the impression that the President has decided pretty well that the freeze is the way to go?

Rep. MICHEL: Well, not exactly, and I think that's still an option for the President. And what we were there to get brought up to date, I guess, so that we're on the same wavelength with where the White House is at this particular juncture. But there are going to be meetings next Monday and Tuesday, including up through the Cabinet, and then there'll still be another opportunity for those of us in the House, at least, and I assume the Senate, too, to have our reaction to some of the things they're talking about.

MacNEIL: What realistic option does the President have besides a freeze?

Rep. MICHEL: Well, there can be somewhat of a variation. I personally think that if you're going to make something meaningful happen there it's got to be pretty much across the board. But, you know, the freeze advocates, in my judgment, are expecting, frankly, more savings than what I see there. There are some things -- 19 programs, for example, that we froze in the last session of the Congress, and that's about $22, $23 billion that gets taken off the table. We've taken Social Security off the table. I don't take defense off the table, but to absolutely freeze there I think maybe there might have to be somewhat of -- some adjustment. I wouldn't, for example, tamper with strategic weaponry in the Department of Defense going into the Geneva talks. But there is plenty of other room in the Defense Department for making significant reductions, and that was one of the points we made yesterday at the White House.

MacNEIL: You just used the phrase across the board. That's coming to be the kind of code phrase for meaning including some defense cuts or freezing in the freeze. Is that right?

Rep. MICHEL: Oh, I would think so, yes, by all means, because I don't see how we can be credible in trying to sell that proposition without including defense in the mix, because otherwise it would be rejected out of hand.

MacNEIL: Apart from whether it would be rejected, how much could they save this year in freezing only those programs that are left over when you exclude the ones you've already mentioned because they're frozen, the ones the President has said he won't touch, like Social Security and defense? How much could be saved?

Rep. MICHEL: Well, that's why I think -- well, if you're setting for yourself a goal of roughly $40, $45 billion you have to do more than freeze. In the way I see it, if you had a zero option or a zero freeze in defense, while there's a built-in $30-some, $33 billion of automatic increase, you only save about $8 billion there at zero in the Department of Defense itself. So there have to be some other places where, frankly, you make some reductions.

MacNEIL: The White House said today -- Mr. Speakes said that they're going through it, as I just said, line by line and considering on each program whether to freeze it, whether to cut it, or whether to eliminate it. What kinds of programs do you understand they're actually considering eliminating altogether?

Rep. MICHEL: Well, none of us have made any commitments one way or another. You have a long array of options and programs there, but we haven't specifically gotten down to those that would fly, those that would not. And that's all in the area of discussion currently.

MacNEIL: I see. But there are quite a few that could be cut altogether.

Rep. MICHEL: It depends on whose ox is being gored, and of course you're going to have that kind of different mix in the House on both sides of the aisle, and in the Senate, too, for that matter.

MacNEIL: Would it be fair to say, taking up what Senator Dole was quoted as saying after talking to Mr. Baker, that there is a strong feeling in Congress that the freeze is the right way to go and that you Republican leaders are urging that on the White House?

Rep. MICHEL: Well, I think there's no question about the attractiveness of the generic term freeze because it suggests fairness all across the board in a sense. But a freeze doesn't necessarily ultimately get you to that point of being fair, and it may be that the gentleman from Pennsylvania would have some objections to some of that, and we'd be willing to respond to those objections.

MacNEIL: Well, we'll see about that. Jim?

LEHRER: Speaking of the gentleman from Pennsylvania, we get a different view of freezing now from a leading Democrat. He is Congressman William Gray of Pennsylvania, a member of the House Budget Committee and vice chairman of the Congressional Black Caucus. What do you think of the freeze idea, gentleman from Pennsylvania?

Rep. WILLIAM GRAY: Well, it's an idea that has been around. It's not a new idea. In fact, last year in the House, as Bob Michel knows, we almost had a freeze resolution passed. It lost by about two or three votes. It was supported bipartisanly. Someone said to me this week that the freeze could be the liberal proposal for budget policy in order to deal with deficit reductions. I think the real question is, what do you mean by a freeze? And that's really not clear as we hear a lot about a freeze. You can really be talking about a freeze that means a stopping of the aggregate number. In other words, you say $933 billion is the figure that we're spending for fiscal year '85. Let's hold it at that figure for '86; let's hold it at that figure for '87; and then what we'll do is we'll allocate the money within that. That's one kind of freeze. Another kind of freeze is what we call a current services freeze, where we say let's freeze everything at current services for fiscal year 1985. That means that you're going to have some growth for inflation and for increased services for some of your domestic programs --

LEHRER: Like what? Give me an example of how that might work?

Rep. GRAY: Oh, that would mean some of your entitlement programs --

LEHRER: In other words, if there were so much money being spent, say, in food stamps now, you wanted to keep the service level up, it might cost a little more money?

Rep. GRAY: Exactly, and that would be built into a current services freeze. And the same thing would apply for defense. You would say we did 5% real growth in defense at current services could mean 5% of real growth next year as well.

LEHRER: So if you wanted to buy 100,000 rifles you're still going to buy 100,000 rifles next year, but they may cost you a little more?

Rep. GRAY: Exactly. Then, finally, there is the freeze that I have heard talked about in the press where the President says, "I want a freeze but I want to leave out defense and Social Security." Now, that gets a little funny because what are you talking about in terms of leaving out defense? Are you talking about 3% real growth, 5% real growth, 7% real growth? And so when you talk about a freeze, you really have to be very careful. I think that there is in the Congress on both sides of the aisle concern that we reduce these God-Awful deficits to ensure economic growth and opportunity, and that we've got to do something dramatic and strong.

LEHRER: All right, what do you, the gentleman from Pennsylvania, favor?

Rep. GRAY: I favor, if we are looking at a freeze, a freeze where we're not going to separate one item, i.e., such as defense, and say let's have a flat freeze aggregate for everything else but then let's not freeze defense. I say if we're going to have a freeze, let's be equal in that freeze.

LEHRER: But are you in favor of freezing the services, or are you in favor of freezing the amount of money and then fighting over where the money goes?

Rep. GRAY: I think that if you're looking for huge reductions you're not going to get it, really, in any of the freezes except a flat freeze, which is an aggregate.And I don't think politically that's realistic.

LEHRER: Why not?

Rep. GRAY: Because I think what you're talking about is such a dramatic reduction without any increases in revenues that, as Bob Michel said, the oxes would be gored left and right.

LEHRER: Bob Michel said that the attractive thing about freeze is that it sounds fair. Is it fair?

Rep. GRAY: It sounds fair. It is fair depending on which version you're talking about and who's doing the talking and who's supporting it. I personally think that we may end up seeing a freeze approach that provides for some small growth in defense and some compensation for very, very low-income programs that serve the very, very poor.

LEHRER: Such as?

Rep. GRAY: Such as low-income assisted housing, women, children and infants program, child nutrition.

LEHRER: They would be exempt then from the freeze? That's what you would favor?

Rep. GRAY: I would say they would probably receive this similar kind of increase that you would do if you gave an increase to the Pentagon.

LEHRER: Are you telling me that if that's not in there you're not going for it?

Rep. GRAY: I would say then I would really have to question whether you really have a true freeze, unless you do the flat. A flat freeze would be everybody's having to be cut -- defense, social programs -- without any new revenues. But the problem that the administration faces is the fact that we want to achieve large deficit reduction with no increase in revenues. And that's going to be tough, no matter which of the three freezes you take.

LEHRER: I hear you. Thank you. Robin?

MacNEIL: Finally we hear from a Congressional supporter of a freeze on federal spending but who believes it should be an across-the-board freeze, freezing both defense and domestic programs. She's Republican Senator Nancy Kassebaum of Kansas, a leading member of the Senate Budget Committee.Senator, in the spring you sponsored a freeze including defense. Is that still your position?

Sen. NANCY KASSEBAUM: Yes, it is, and let me say we worked very hard to have that a bipartisan approach. Senator Grassley, who has long favored this support, was the leader; myself, Senator Biden and Senator Baucus on the other side of the aisle. And we felt it was important to build this particular approach, and it differs significantly, I think, from the administration's plan as it was at least floated today in that they do freeze the total to the budget. We freeze by department and agency. And I think, frankly, that's the only way you can get to an equitable approach, and it is that that's going to sell it if it can be sold.

MacNEIL: The President, as I understand, told -- were you at the White House yesterday with that group?

Sen. KASSEBAUM: No.

MacNEIL: No. The President told Republican leaders yesterday he was worried about any freeze encompassing defense because of the signal it would send to Moscow just on the eve of these new talks about nuclear weapons. What would your reaction be to that objection?

Sen. KASSEBAUM: Well, I don't see that. Let me just say a couple of things about the defense budget. I don't think any of us would want to take this approach on defense unless we felt that we must do something dramatic with budget deficits.And the defense budget would be -- it's $262 billion right now, in the fiscal year we're in, '85. It will rise by $20 billion because, what we freeze in the approach that I've worked on is budget authority, not outlay. And so that $20 billion is already in the pipeline; so you're talking about, for '86, for instance, if we do this, a $282-billion budget for defense. Half of the defense budget is in capping personnel and pension and pay. I think that there is support for that again, if this is what you're going across the board with all other pension programs, for instance. I have found strong support, really, from those on retirement income if they see the equitableness of it. So I don't think it sends a signal, but what it does send is the need for the Pentagon to establish priorities of need in their budget and be more efficient in their management, as I think it would cause everyone else.

MacNEIL: You just heard the minority leader of your party in the House, Mr. Michel, say the goal was something in the vicinity of $45 billion. Do you think realistically that $45 billion can be gotten out of the 1986 budget merely with a freeze?

Sen. KASSEBAUM: Thirty-five billion is what you achieve with the freeze proposal that I would advocate, which caps everything at the present level of funding. By everything I mean the funding to the department. Within the department's budget they can determine some of the allocations, just as Pentagon can determine the allocations within $282 billion. So it's $35 billion for one year's savings, and perhaps more importantly, is having held everything at the same base for one year, there's a cumulative savings over three years of $170, almost $200 billion, by some figures, in savings over the three years.

MacNEIL: And do you think that these savings can be made without savaging the social service programs?

Sen. KASSEBAUM: I think so, because, for instance, Social Security does expand some because everybody who is eligible will be -- new entrants of course would be coming. What it would simply do would be -- the benefit check would be the same, so you're really -- your cost of living adjustment doesn't rise. But I think if you, say, exempt Social Security, what do you do about railroad retirees and veterans' benefits and federal employees? And you start to play that game. And I think then you've lost the selling point of fairness, which I think people will accept. And I don't think we have a lot of time to play games, let me say. I don't think we can spend six to nine months deciding how we're going to snip away at the budget. I really would hope that we can hit the ground running in January with some effort to put this package together, because it would send a very strong signal if we could.

MacNEIL: Thank you, Senator. Jim?

LEHRER: Congressman Michel, what do you think about that -- go in there quickly, freeze everything, as the Senator says?

Rep. MICHEL: Well, I think we've got to move expeditiously. The sooner we get some effect and get some bite, the better. If it's delayed, as some of the other things can very well be delayed over a long period of time in the House -- and the Senate too, for that matter, the Congress, period -- why then we've lost just that much time.

LEHRER: But what about her approach?

Rep. MICHEL: Well, I think maybe some of those figures --

LEHRER: I don't think he likes it, Senator.

Rep. MICHEL: -- would appear to be ballooned from the standpoint of what you actually save. I think the Senator's view on what would be saved from defense are a little bit inflated. I don't see that much savings coming out of a flat freeze, even including the Department of Defense.

LEHRER: In other words, you don't think --

Rep. MICHEL: For example, we've got some programs that are forward-funded, you know, that there'll be no effect whatsoever this year. The effect would come -- or in the fiscal year '86, for which we're programming a budget, but in the following year, '87. As a matter of fact, the gentleman from Pennsylvania, in some of those areas of Medicaid -- you know, you wouldn't -- you could freeze and not save a dime. You can freeze and not save a dime on food stamps because there wouldn't be an effect in '86. There would be in follow-on years. And I think that's one of the things we have to thoroughly debate and aereate as to when are the years when the effect takes place under a freeze, and if it's forward funded, you don't get the -- you don't get that saving this year. It's another year hence.

LEHRER: Senator?

Sen. KASSEBAUM: Well, Bob, let me just say, as I understand the President's proposal at this point, and I guess I should say David Stockman's recommendation, you allow defense to rise at 5% increase, you've got $30 billion. You've got $20 billion in interest, which is there for all of us, no matter what plan we go with, and $20 billion in Social Security if you don't do anything with Social Security. So then, in the administration's proposal, you would have $70 billion you'd have to make up somewhere else in the budget. That's twice the amount we cut in 1981, when we thought we made some major cuts. And it would come out of non -- it would come out of the discretionary spending, where we've already cut so much.

Rep. MICHEL: Of course, the one point I made in the defense area was, you know, in the strategic area you really only got 15% of that defense budget involved there, but that ought to be somewhat -- treated somewhat special. Then I'd agree that in that other, you know, 75, 80 percent. You've got an awful lot of savings that could be made.

LEHRER: Congressman Gray, what do you think of Senator Kassebaum's idea?

Rep. GRAY: Well, I think that again you have to ask yourself if you want an absolute flat freeze, if you want an absolute flat freeze, which would mean no increases in defense, no increases in human services, and I think it has already been commented by one of the members of our own party in the Senate, I think it was Pete Domenici, who said we've got to recognize that we're talking about 40% cuts in transportation money, We're not talking about welfare or food stamps. We're really talking about some heavy programs, like transportation. You can potentially save. In three years you can get down to almost a balance. But that means keeping the same amount of budget outlays for the same period three years in a row, and that would be $933 billion. You could do it. And Bob Michel is right. You don't make a big gain in defense the first year around because you've got those outyears, but if you froze it flat right now the income would come in the second and third years.

LEHRER: But would you be willing to accept the Senator's premise that, okay, if defense will take it then you would go along with the social programs also being frozen too?

Rep. GRAY: I think my position would be is if you're going to talk about an absolute flat freeze, everybody, everything, I could possibly take that.

LEHRER: Is that going to happen, Congressman Michel?

Rep. MICHEL: Will, I don't know, but you know I have to be encouraged by what I hear the gentleman say because these people who say, you know, "We're all in gridlock, nothing's going to happen, there's too much opposition to whatever is being proposed," I think there's grounds here for our getting together. And when -- these things have not been put in concrete yet and I think the very nature of the fact that we're discussing it on reasonable terms here with the possibility that maybe we can get together, that's got to be good.

LEHRER: But will the President ever accept a freeze, the Kassebaum approach that would affect defense as well as Social Security?

Rep. MICHEL: I'm not altogether sure, but I'm sure that we made a point to the -- yesterday, particularly, a number of us, that the President got somewhat of the message and so did Cap Weinberger, that it can't be just business as usual on that one item, that there's got to be some adjustment. And I liken the case to the fact that the President wanted to rebuild the country's defenses over five years. He's got a new lease on life now for eight years, and there's no reason why that cannot be stretched out a bit and still fulfill the President's pledge that we're going to keep the country's defenses strong.

LEHRER: Senator, you talk to the folks at the White House. What do they tell you when you float your idea again and again and again?

Sen. KASSEBAUM: Well, they didn't like it last year and fought really very vigorously againt it. And there was strong support from the other side of the aisle. And actually I think a bipartisan support in the House, even at that point too, depending what would happen. But the administration didn't want to cap defense, and I don't think they're going to be very enthusiastic --

LEHRER: But you think -- excuse me. You think the liberals, the liberal Democrats in the House would go along with this if it affected everybody?

Rep. GRAY: I'm saying, as I said at the beginning, we almost had exactly that freeze pass the House by almost four votes. Liberals joined in because what they saw was a strong cutting back on what they perceived as excessive defense spending and also being fair. The problem becomes is when you say, let's have a freeze with current services or any other kind of freeze, but I'm going to exempt defense, I'm going to exempt one or two others.

LEHRER: Idle curiosity question, Congressman Michel. Stockman, Stockman, Stockman. We're hearing his name again and again. Is he back in front now? Is he running things again?

Rep. MICHEL: Well, the point is there's nobody better with the figures than he is. Now, that's the toughest job to have in Washington. I wouldn'twant it. What constituency can you have out there when you're out to try and save and bring things into balance? That's the toughest job to have in Washington.

LEHRER: Did you get the feeling when you were at the White House yesterday that he was calling the shots?

Rep. MICHEL: No.

LEHRER: No?

Rep. MICHEL: Absolutely not.

LEHRER: I don't mean in terms of final decisions, but I mean at this stage.

Rep. MICHEL: No. All he's doing is laying out options for us, and he's had to -- when he gets the President's view here and there and the President says, "David, we're not doing this," or "We're not doing that," there's no use pursuing that any further. The President's made -- he's the commander in chief.

LEHRER: Do you have an observation on that, Senator?

Sen. KASSEBAUM: No, I think that's very true. I just think as we get into this whole freeze issue we want to be careful that we don't call a turnip a rose, and it will be very interesting to try and understand what we're talking about and what type of freeze.

Rep. MICHEL: You know, one thing we haven't talked about that is very important, that we're all talking about the same baseline, however, when we begin.What are the projections of growth? What are interest rates going to be? And, what is unemployment going to be? And that we all have the same general idea about the projections before we start talking figures. --

LEHRER: I have a feeling if we had a little more time the four of us could work this out tonight.

Rep. MICHEL: Well, we just about did.

LEHRER: But we don't have enough time, so we're going to have to stop there.

Rep. GRAY: That's always the problem. We don't have enough time.

LEHRER: Congressman Gray, Congressman Michel, Senator, thank you very much. Robin? Poking Fun: Editorial Cartoons

MacNEIL: The budget dilemma President Reagan faces attracted the sympathetic consideration of some of the nation's political cartoonists, and they lead off our Friday roundup of the week's political cartoon humor -- some gentle, some not.

Pres. REAGAN, [Basset cartoon, Atlanta Journal, United Features]: Don't worry, Stockman. Have you never heard of the good fairy?

Pres. REAGAN [Brookins cartoon, Richmond Times Dispatch, News America Syndicate]: So, Stockman, what plan would be our best bet for dealing with this flood of red ink? [David Stockman presents design of Noah's ark]

RICH WOMAN [Margulies cartoon, Houston Post]: If the new tax plan eliminates our tax shelters, what can we write off this year?

RICH MAN: The yacht, the ski lodge and the Republican Party.

CONGRESS, to secretary [Ken Alexander carton, Copley News Service]: Let's get right down to business, Miss Fitt. Find out when the Christmas recess begins.

SANTA CLAUS [Beattie cartoon, Daytona Beach Morning Journal, Copley News Service]: Okay, who's the joker who put all the presents in a MIG-shaped crate?

TV VIEWER [Mike Keefe cartoon, Denver Post, News America Syndicate]: I can't stand to see millions starve in Africa. I've got to do something [switches channel].

TV ANNOUNCER: Cecil Porklips, come on down

Pres. REAGAN [Lord cartoon, Newsday, L.A. Times Syndicate]: George, this might be the most delicate negotiation my administration undertakes, but detente is a high priority for my second term.

GEORGE SHULTZ, Secretary of State: Hello, Michael? This is Mr. Shultz. Your Dad wants you to know he loves you very much.

TIN MAN, in Dr. William DeVries waiting room [S. Kelley cartoon, San Diego Union, Copley News Service]: "Just to register emotion/jealousy, devotion, and really feel a part/I could stay young and chipper/and I'd lock it with a zipper/if I only had a heart."

LEHRER: What still lies ahead tonight on the NewsHour includes an interview about William Schroeder's day and week with Dr. Robert Jarvik, plus a focus segment with Charlayne Hunter-Gault on organized crime and drugs. Hearing About Heart Beats

MacNEIL: As we mentioned earlier, doctors in Louisville today tried out the portable power pack for the first time on artificial heart recipient William Schroeder. Today's test was brief, but it was quite significant because in the long run this little power pack could determine the quality of Schroeder's life and that of all future artificial heart patients.

[voice-over] The mechanical heart that has kept Bill Schroeder alive since his operation Sunday is normally powered by a 325-pound system known as the Utah Driver. Through tubes connected through his abdomen, the power system pumps compressed air into a plastic and metal heart where diaphragms expand and contract to pump his blood. The large console, which is on a rolling cart, is equipped for emergencies with a backup pump and power system. And it also has sophisticated monitors to analyze every heartbeat. But this cumbersome system obviously would make it difficult to lead a normal life. So Dr. Peter Heimes of West Germany developed this 11-pound power pack the size of a camera bag, which was tested on Schroeder today. Before it got to this point the miniature system, known as the Heimes Portable Heart Driver, was tried out at the University of Utah on more than 50 animals since 1979. Unlike the big power system, which runs on line electricity, the portable unit operates on a battery that can last up to five hours, and the battery can be changed in seconds without interrupting the heart's function. The whole system can be carried with a shoulder strap, giving the patient enormous freedom to move around.

[on camera] With us tonight from Louisville is Dr. Robert Jarvik, the designer of the artificial heart now pumping in Mr. Schroeder's chest. Dr. Jarvik's company manufactures both the artificial heart and the portable power system, and he was at Schroeder's bedside at Humana Hospital for today's experiment.

Dr. Jarvik, what did the experiment today prove?

Dr. ROBERT JARVIK: I don't think it proved anything. I think it was the start of the use of the portable system. Everything was very stable, went very smoothly, very simple and straightforward. It worked just as we expected. It was a short test. But it was a beginning, and we are going to use it again this evening and again tomorrow, and I think our use of it will become very common.

MacNEIL: When would it be safe to put him on it for an extended period?

Dr. JARVIK: Well, it might be safe now.We have only asked for approval from the Food and Drug Administration to use it for about three hours a day. So for the time being, we won't be using it for extended periods. Perhaps in a matter of months, or six months to a year, we'd be looking at using this all day long.

MacNEIL: Dr. Heimes said that during the experiment today, the 22 minutes, that his mechanical heart beat more softly. Is that significant?

Dr. JARVIK: I think it is, particularly because the heartbeat that you get with that system is felt less, it's less severe, and that means that it does not put as much force on the heart valves. We can look towards not only more comfort, a quieter operating system, and perhaps longer durability with this device, but we can look forward to the kind of portability and real mobility that the patients want to have.

MacNEIL: Now, if that stage is reached, would he stay on the portable one all the time, or would he kind of come back at night and reconnect to the big machine?

Dr. JARVIK: Well, probably it'll go a little bit at a time, you know. First more and more use of the portable system, then using the big one at night, and then ultimately the portable system only. We think of this as the beginning of the end of the cumbersome large driver, a start at what we really want to accomplish, which is good mobility.

MacNEIL: In theory when a patient got used to it would he be able to go off by himself for several hours, or would he need to be attended all the time?

Dr. JARVIK: Oh, no. We're very sure that they would go off by themselves. It has full emergency backup systems.It will become very highly reliable, and the whole goal is to have people feel quite normal with this and to go about their lives as usual.

MacNEIL: Well, could a patient drive a car with it, things like that?

Dr. JARVIK: Sure.

MacNEIL: Play golf? Do strenous things?

Dr. JARVIK: Well, there are some things you wouldn't want to do. I wouldn't want to play tennis, because you have sudden accelerations. I wouldn't want to go sky-diving and a few things like that, but I'd say they can do many, many things.

MacNEIL: To come back to your patient, Mr. Schroeder was said to be very, very tired today. Is that worrying?

Dr. JARVIK: No. He sort of has gotten on a cycle where he's up a lot at night. I was with him about 10, 10:30 last night, and he was just as bright and awake as could be. But today he was sleeping most of the day. I think it's because he has not adjusted to the normal synchrony of day and night cycles since the surgery, and when he gets adjusted we think he'll be alert during the daytime.

MacNEIL: Apparently he lost a lot of sleep because he was coughing last night. What's the cause of that?

Dr. JARVIK: That's true. He has a lot of secretions in his lungs that he clears out, and he coughs to clear that.

MacNEIL: I see. Your colleague, Dr. Lansing, has said -- I think he said it yesterday -- that Mr. Schroeder's progress so far has been amazing. How do you explain why he's making such very rapid progress?

Dr. JARVIK: I don't know exactly how to explain it. It's a delight. You know, Dr. Clark --

MacNEIL: I mean, has it surprised you all, the speed of the recovery?

Dr. JARVIK: Yes, yes, it has. Yeah, we have all felt that his recovery would be slower. He is the kind of patient in long-term heart failure that we expected would require quite a long period of difficult nursing back to health. But he's already told me that he feels better than he felt before the surgery, better than he's felt for months. He's regaining strength, and I think he's getting well, you know. Really getting well, which is a great pleasure to me.

MacNEIL: Earlier in the week you pointed out some things -- some sort of danger signals you'll be looking for, like infection. What are the things to be worried about now in his progress?

Dr. JARVIK: Well, still we have to watch for infection. There really are no signs of any complications emerging at this point. There is this little bit of difficulty with secretions in his lungs, which is not a big surprise. We have to keep him breathing deeply. You know, one of the complications --

MacNEIL: Which must hurt a lot.

Dr. JARVIK: Yeah, and he also had thesurgery for his gall bladder, so combine that with the chest surgery and people don't want to move a lot, to breathe deeply and cough, and you have to work at that. He is working at that, and that'll be okay. I don't foresee any major complications now.

MacNEIL: Just finally, the reports yesterday said the lab test on his own human heart that was removed showed that it had been severely attacked and diminished by his own immune system. Does that give you cause for anxiety that there is some irregularity in his immune system?

Dr. JARVIK: No, I think that's a misinterpretation. The pathology of the heart showed that, due to the lack of blood supply from his heart attacks, he had a great loss of heart muscle -- death of that muscle fiber. There was also some immune complex there which was, to my understanding, not thought to be related to the death of those heart cells. So there was an interesting finding, but we don't think that that was the cause of the problem.

MacNEIL: I see. Well, Dr. Jarvik, thank you again for joining us.

Dr. JARVIK: You're welcome. Tales of Crime

LEHRER: Our final focus segment is next. It's about witnesses wearing hoods, organized crime hoods, drugs and other related things. Charlayne Hunter-Gault is in charge. Charlayne?

CHARLAYNE HUNTER-GAULT: Jim, although there was only one hooded witness, there was plenty of dramatic testimony during three days of hearings held by the President's Commission on Organized Crime. It was held in Washington and the hearings proceeded, produced wide-ranging testimony about $100-million cocaine deals and the wide network of people they touch. Testifying on Wednesday, for example, was O. Larry Hall, a pilot convicted of drug smuggling. Back in 1982 Hall was free on bond awaiting trial. Rodney Smith, the commission's deputy executive director, asked Hall how was he able to continue flying cocaine from Colombia to the United States while having to appear in person every day at the Miami courthouse?

O. LARRY HALL, drug smuggler: Well, daily meaning Monday through Friday, 8 to 5. On November 21st, 1983, or prior to that, I'd been sort of hired by Mr. Morkowski, Ronald Morkowski, to fly to Colombia and return to the United States with a quantity not to exceed 750 kilograms of cocaine, again supplied by Mr. Cabrera. It was set up on -- which did happen. I reported on November 21st to pre-trial services, signed in, no changes. That was bright and early at 8 o'clock in the morning. At 10 o'clock I departed to Miami Airport in Miami with another pilot, and we flew 12 hours in another type of aircraft, the Cessna Titan, to Colombia, in which the refueling process and spent the night and left the next morning with 864 kilos of cocaine bound for the United States. So we'd make it Friday afternoon. We'd arrive there and we left on a Saturday morning, all of it being planned at about that I could arrive and still report on Monday.

RODNEY SMITH, deputy executive director, President's Commission on Organized Crime: Did you make it back with that load of 800 kilograms of cocaine?

Mr. HALL: Eventually. We had an aircraft accident in Belize, where we were refueling, and eventually, two weeks later, we did make it back with the 864 kilos.

Mr. SMITH: And all the time that you made that flight to Colombia and made it back with almost a ton of cocaine, you were able to satisfy your reporting requirements and remain out on bond?

Mr. HALL: Yes, sir.

HUNTER-GAULT: On Thursday, an unidentified witness, the hooded one, described how he had laundered millions of dollars from cocaine trafficking by carrying suitcases stuffed with money from Colombia to banks in Miami and New York City. Speaking through an interpreter, the witness answered questions from commission director James Harmon.

JAMES HARMON, Jr., director, President's Commission on Organized Crime: Now, during the approximately four-year period that you were engaged in laundering money, approximately how much money did you personally launder on behalf of cocaine traffickers?

WITNESS [through interpreter]: In total I laundered about $250 million.

Mr. HARMON: Were you the only one that was laundering money for cocaine traffickers in Miami and New York, to your knowledge?

WITNESS [through interpreter]: No, there were more.

Mr. HARMON: Were you the biggest?

WITNESS [through interpreter]: No, I don't think so.

Mr. HARMON: Now, if I could -- approximately how much of the $250 million was transported to New York during the course of that approximately four years?

WITNESS [through interpreter]: More than $25 million.

Mr. HARMON: And once this money was transported to New York, into which bank was it deposited?

WITNESS [through interpreter]: I deposited it in the account of Deak-Perera in my fictitious account.

Mr. HARMON: Did the employees of Deak-Perera know that you had opened up an account in a fictitious name?

WITNESS [through interpreter]: Yes. Yes, they accepted it. I had six -- I'm sorry. I had five accounts there. One of them was under a fictitious name and four of them had real names.

Mr. HARMON: But they were your accounts, is that right?

WITNESS [through interpreter]: Yes, they were mine.

HUNTER-GAULT: The witness was also asked why individual deposits to the Deak-Perera accounts were regularly at least $9,000 but never more than $10,000.

WITNESS [through interpreter]: I would deposit amounts lower than $10,000 in all of the five accounts with the purpose of avoiding to filling out the form that was required by the government.

Mr. HARMON: At any point did Deak-Perera employees tell you that you had to stop that practice?

WITNESS [through interpreter]: They told me that almost a year later.

Mr. HARMON: Did they tell you why?

WITNESS [through interpreter]: No.

Mr. HARMON: Did they continue to take your money after that?

WITNESS [through interpreter]: No, and I didn't ask, either.

INTERPRETER: What was your next question?

Mr. HARMON: Did Deak-Perera continue to permit you to make deposits and use their services subsequent to that?

WITNESS [through interpreter]: Yes, and I continued depositing large sums of money.

HUNTER-GAULT: The chairman of Deak-Perera told the commission that it's hard for a teller, to decide if a depositor is a drug trafficker. In suspicious cases, he said, tellers are instructed to accept the deposit and report it to company officials. This week's hearings are the latest in a series that have highlighted a vast drug network both here and abroad. Last month the 19-member commission held hearings on Asian organized crime connections in this country, and it also called on American banks to stop laundering drug money. Here to give us some more details on the commission and to answer some criticism that its work has provoked, we have the group's executive director and chief counsel, James Harmon, whom we just heard on the tape, right?

Mr. Harmon, what exactly ws it that you were trying to get at in the hearings this week?

Mr. HARMON: Well, during the course of this week's hearings we intended to expose to the American people the cocaine business from beginning to end, the cultivation in South America through the money-laundering cycle, which you've just seen. What we also intended to expose the ways in which these networks operate and the vast sums of money that they gain by this cocaine trafficking activity.

HUNTER-GAULT: What do you think was the most important thing you learned in the three days of testimony?

Mr. HARMON: Well, I would say that there has been as serious underestimate of the amount of cocaine imported into this country as one of the most important things that we saw. In addition to that, I think we've seen that there is a myth with regard to cocaine, that it's prevalent only among the middle class and the affluent, whereas the commission heard testimony that now you could really look at cocaine as the all-American drug. It's now prevalent among those who commit street crimes and who've been arrested for committing street crimes right here in New York City.

HUNTER-GAULT: How much of an underestimate, would you say? Were you able to get at that?

Mr. HARMON: I'd say that that's not possible to say at this point. The basis for concluding that there probably is a serious underestimate of these recent large seizures of cocaine in Colombia over the past eight or nine months, I'd say.

HUNTER-GAULT: Now, this was all information that you hadn't known before?

Mr. HARMON: Well, this was information that was brought to the commission's attention by way of this particular hearing. The commission took this information, compared it with what was known previously, and this is the way it's beginning to come out.

HUNTER-GAULT: There was a small item on the front page of the Wall Street Journal today that said -- you're smiling, you saw it, right?

Mr. HARMON: I saw it.The gossip column?

HUNTER-GAULT: Right. It said --

Mr. HARMON: Front page?

HUNTER-GAULT: Yes, that's right. It said the commission really hadn't turned up anything new. Is it your belief that the commission has turned up new information?

Mr. HARMON: Well, I think we saw, especially with Asian organized crime, that there was very little known by law enforcement about Asian organized crime. We presented, for example, the first member of the Japanese Yakusa, a 125,000-member group from Japan which is operational in this country. In addition to that, presented evidence of a national Vietnamese network of gangs operating throughout this country, which had not bee disclosed before. In addition to that, took a look at the Chinese networks. There is organized crime beyond the Mafia. Somehow, cocaine, somehow heroin from Southeast Asia gets onto the streets of New York and into the hands of organized groups here.

HUNTER-GAULT: Why was it necessary for the witness that we just saw on the tape to wear a hood? Is the situation that dangerous?

Mr. HARMON: The Colombian cocaine criminals were described by one witness as sociopaths. This was an experienced law enforcement official, having worked with the FBI now for many years in local law enforcement in south Florida. I know the identity of this particular witness. I know the -- well, this witness's life is in danger should his identity be disclosed, as well as that of his family in Colombia, which he testified to, by the way. The situation is that bad.

HUNTER-GAULT: Is it also Colombia where the justice minister was also recently murdered?

Mr. HARMON: That's correct. Minister Laro Benilla was murdered at the end of April of this year --

HUNTER-GAULT: And now there are threats to have Americans murdered also if --

Mr. HARMON: These groups are so powerful that they are the only organized crime groups ever to have caused the evacuation of personnel from an American embassy. They have threatened, upon the order of the president of Colombia, to extradite Colombian criminals for the first time to the United States, to leave five Americans dead on the runways of Colombia for every Colombian criminal returned to the United States.

HUNTER-GAULT: And so it's in that context that your witness was testifying today?

Mr. HARMON: That's right, and it's one of the reasons we chose to go ahead with the hearing at this time, also.

HUNTER-GAULT: Well, overall, what is the commission trying to accomplish?

Mr. HARMON: Well, the President expects us to do an in-depth -- take an in-depth look at organized crime in all its forms. We do not make criminal cases, although we do have subpoena power, and we do have access to information from law enforcement. And, as we did on the money-laundering issue, we're to report to the President and to the attorney general, to take a fresh look, an objective look. We have no stake in the outcome of this other than the same as the ordinary person would have -- to develop new ways --

HUNTER-GAULT: Of approaching the problem?

Mr. HARMON: Yep. That's right.

HUNTER-GAULT: You know, the American Banking Association responded to your call on them to help stop laundering this money and dealing with organized crime by saying that you were leaving the country open to a witch hunt. Does this bode ill for your recommendations and the effect of the information you're getting?

Mr. HARMON: Well, there were no witches that brought money into that company that we heard about, Deak-Perera. There was testimony that $97 million was laundered through that one company, and it's an all-too-common occurrence in this country. And I think I'm familiar with that particular comment of the ABA, and I think upon reflection they might reconsider. I know they --

HUNTER-GAULT: Have you been in touch with them asking them to reconsider?

Mr. HARMON: Well, the results of that report have been presented to the secretary of the Treasury. He's asked for comments from the bank regulatory agencies, and he's planning on bringing in banks from around the country for their comments on it.

HUNTER-GAULT: All right, what do you say to the skeptics, and there are a few out there, who say that there have even been studies on the drug problem in the past; there have been studies on the cocaine problem, on organized crime. And yet cocaine, drug use, organized crime, worse than ever, more active than ever. How is it that your commission is going to be different and going to make any difference?

Mr. HARMON: Well, you're right that it is different, and you can tell the difference from the composition of the commission. It consists of a retired Supreme Court justice; the chairman, Judge Kaufman, is a judge with the Court of Appeals here in New York; there are two members of Congress, people from the academic community, as well as people with experience in law enforcement. We're supposed to take a fresh approach, and you can see that from the money-laundering report which we issued to the President, recommending for the first time, for example, to make money-laundering itself a crime.

HUNTER-GAULT: What do you think, very briefly, is going to be the most significant recommendation that you're likely to come up with by the end of this investigation?

Mr. HARMON: I really can't tell you that. You're right in thinking of it and describing it as an investigation. We're in the process of gathering the facts, stating the problem at this point. It's very difficult to answer that.

HUNTER-GAULT: Well, Judge Kaufman says that he hopes the commission will do no less than render unprofitable organized crime.

Mr. HARMON: Well, the attack upon money-laundering to prevent organized crime from getting access to the banks of this country is an important first step in that direction.

HUNTER-GAULT: All right, well, Mr. Harmon, thank you and good luck.

Mr. HARMON: Thank you, Charlayne.

HUNTER-GAULT: Robin?

MacNEIL: Once again the main stories of the day. The White House confimed President Reagan is considering a budget freeze for 1986. Moscow and Washington agreed to talk regularly about ways to stop the spread of nuclear weapons. A letter bomb mailed to British Prime Minister Margaret Thatcher was intercepted. And talks between the rebels and the government in El Salvador were reported to be making progress.

Good night, Jim.

LEHRER: Good night, Robin. Have a nice weekend. We'll see you on Monday night. I'm Jim Lehrer; thank you and good night.