The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight, the news of this day; then, a look at what President Bush put on the Social Security table last night; a picture of the congressional Republicans' budget blueprint; a report from Vietnam 30 years after the fall of Saigon; the analysis of Mark Shields and Rich Lowry, filling in for David Brooks; a conversation about the U.S.- Latin America relationship with two south American writers; plus some newly released photographs of the U.S. Military seeing to their war dead.

NEWS SUMMARY

JIM LEHRER: Insurgents in Iraq killed at least 50 people and wounded more than 100 today. Three of the dead in the series of attacks were U.S. soldiers. The worst was in and around Baghdad. Thirteen separate car bombs exploded there, including at least four suicide attacks in the center of the city. To the north, in Baqouba, another suicide bomber blew up a car at a police checkpoint. Insurgents also assaulted a town south of Baghdad. The violence erupted one day after Iraq installed its first Democratic government in more than 50 years. With today's casualties, eight Americans have died in Iraq this week. That makes a total of 44 for the month of April. More than 1,570 U.S. troops have been killed since the war began; more than 12,000 others have been wounded. A man claiming to be al-Qaida's leader in Iraq threatened more attacks today. An audio tape, said to be from Abu Musab al-Zarqawi, addressed President Bush directly. The speaker said: "We will not rest until we avenge our dignity - we will not rest while your army is here." He also urged his followers to reject any negotiations to disarm. President Bush and Democrats jousted today over his latest ideas on Social Security. Mr. Bush repeated what he said in his news conference last night. He called for benefits for low- income retirees to grow faster than those for better-off workers. Democrats said that means major cuts for the middle-class.

Sen. Byron Dorgan of North Dakota said it's unacceptable.

SEN. BYRON DORGAN: This president has a plan to take the Social Security system apart, go to private accounts, stick money in the stock market after he's borrowed trillions and then inspection, as he said last night, cut benefits for a whole lot of Social Security recipients. It's something that doesn't add up and something that we're not going to embrace.

JIM LEHRER: But House Republican leaders announced plans to work on legislation. The chairman of the House Ways and Means Committee, Bill Thomas, said he wants to draft a bill by June.

REP. BILL THOMAS: It's an attempt to solve a fundamental problem that's already been too politicized by people who've offered no solutions, just a no. And that we were waiting for the president, because, frankly, Congress cannot act if the American people don't believe there's a need to act.

JIM LEHRER: We'll have more on this story right after this News Summary. Congress narrowly approved a budget late last night. It passed by just three votes in the House and five in the Senate, with every Democrat opposed. The major point of contention was cutting the growth of Medicaid by $10 billion over four years. We'll have more on this story later in the program. The Senate confirmed two more top presidential appointees early today. They were Stephen Johnson to head the Environmental Protection Agency, and Ohio Congressman Rob Portman as U.S. Trade Representative. Two Democratic senators had delayed the nominations to protest the president's policies on trade and the environment. NASA today postponed the space shuttle's return to space for two months, until mid-July. It would be the first flight since Columbia was destroyed two years ago. Officials said Discovery needs more work so pieces of ice don't break off and damage it during launch. The work includes adding a heater to the fuel tank. NASA administrator Michael Griffin spoke at Cape Canaveral.

MICHAEL GRIFFIN: We are recovering from a major accident here, a huge national tragedy. Putting people into space is still not so routine that we can do it blithely. Every mission where we decide to launch people into space with the level of the technology we possess today is a big deal.

JIM LEHRER: Discovery had been scheduled for launch in late May. But recent testing found even small pieces of ice could do serious damage. The president of China hosted talks today with the leader of Taiwan's nationalist party. The meeting was the highest level contact since the two sides fought a civil war more than 50 years ago. They agreed today to work towards reducing tensions. The nationalists are now the political opposition in Taiwan. The island's government said today's meeting accomplished nothing. The price of oil closed below $50 a barrel today for the first time in two months. Crude oil futures fell more than $2 in New York, to just over $49.70. Wall Street welcomed the oil news, along with government reports that showed inflation is in check. The Dow Jones Industrial Average gained 122 points to close at 10,192. The NASDAQ rose 17 points to close at 1921. For the week, the Dow gained 0.3 percent. The NASDAQ fell 0.6t. And that's it for the News Summary tonight. Now it's on to: That Social Security option offered by President Bush last night; the budget blueprint; Vietnam 30 years later; Shields and Lowry; South American perspectives; and the dead of war.

FOCUS - RESHAPING SOCIAL SECURITY

JEFFREY BROWN: The idea the president is referring to is called Progressive Indexing. Its author is Robert Posen, who joins us now. Mr. Pozen is chairman of MFS Investment Management in Boston and served as a member of President Bush's Commission to Strengthen Social Security. Also with is Gene Sperling, former national economic adviser to President Clinton; he's now a senior fellow at the Center for American Progress.

Welcome to both of you.

Mr. Posen, starting with you, in general terms, why is this a good idea?

ROBERT POZEN: The Social Security system now has a huge deficit, so we have to figure out how to constrain benefit growth and do some other things. This is a fair and reasonable way to do it because we're protecting the benefits of low-waged workers who are almost entirely dependent on Social Security for their retirement income and we slow to growth of benefits of higher-wage and middle-wage workers who have IRA's and 401(k)s that are tax subsidized and they help them supplement Social Security in terms of retirement income.

JEFFREY BROWN: Mr. Sperling, your sense of it?

GENE SPERLING: I think there's a couple things that are seriously wrong with this proposal. The good thing is that we are protecting people who make $20,000 and under. But what was very deceptive about the president's portrayal last night as you might have got the impression that only well-off people, people who perhaps make over $200,000 were going to get significant reductions. What this plan does, however, is it hits the middle-class very hard. I don't think many people listening last night would have gotten the impression that somebody who makes $58,000 in today's terms would have seen their benefits cut by as much as 40 percent in the -- by 2075. So I think that we have to understand that when you have a plan that does not ask anything extra from people over $90,000 and puts all the burden on this "progressive price indexing," it hits very, very hard at people who make $50,000, $40,000, $60,000 and I don't think many of those people think of themselves as well off.

JEFFREY BROWN: Mr. Pozen, why don't you explain to us how this would work a bit. What does it mean, for example, when the president says that benefits for low-income workers would grow faster than for those who are better off? What does that mean?

ROBERT POZEN: When you compute your initial Social Security benefits, you come up with a figure for your average career earnings and then you increase it now under the current system by the amount wages have risen over your career. And we're going to continue to do that for low-wage workers. So they're going to continue to grow at that rate. But for high-wage workers, we're going to increase their benefits; we're going to increase their benefits by the amount prices have gone up over the careers, so that will protect the purchasing power of those benefits.

JEFFREY BROWN: Why --

ROBERT POZEN: I think -

JEFFREY BROWN: Excuse me. Why -

ROBERT POZEN: I think that's what the president means when he says that the -- that the value of these benefits will be at least similar for future generations as they are for current generations.

JEFFREY BROWN: So it's a question of maintaining purchasing power for those in middle and upper-income?

ROBERT POZEN: The upper-income will maintain purchasing power, the middle-income will maintain somewhere between wage power and purchasing power. Wages increase a little over 1 percent more faster than prices, so wage indexing is more favorable than price indexing. Now, of course since the system is in deficit, there will have to be some reduction of benefits relative to scheduled benefits. Scheduled benefits is this theoretical number about what people might be getting if we had enough money to finance the system. And if we take a medium-wage worker and we go out to a year like 2055, they would be getting 20 percent less than the schedule. But we can't afford theschedule and more meaningful tests are, first, what would they get if the system went insolvent, if there were no Social Security reform? And the answer is they'd get 30 percent less than the schedule in 2055. So really progressive indexing would be a better deal. And the second is: Are they going to get more in purchasing power under progressive indexing? And between 2005 and 2055, they would get about a 20 percent increase in purchasing power. So I think progressive indexing, while not perfect, deals with the problem that we can't afford schedule benefits and tries to do it in a reasonable way. Gene Sperling points out that he would like more payroll taxes in the system and if there were more payroll taxes, then we could have a little less on the benefits side and that's something that Congress will have to look into.

JEFFREY BROWN: These calculations can be difficult to understand, but try to sum up for us what your disagreement is with the idea of changing the benefit calculation.

GENE SPERLING: Well, first, I think it is very important to answer the question that you asked which is: What does it mean to just give Social Security benefits indexed to inflation, which sounds not bad, right? It protects your purchasing power. But let's think about what that would mean if we had done that 65 years ago. If all we did in 1940 was say "we're going to give you your benefit then indexed to inflation, not to how much our country growing our wages" what would that have meant? That would mean that the typical Social Security beneficiary who gets $15,000 a year now would get $6,000; because if you're just indexing to inflation, you're not getting any of the benefits from our standard of living. So you would gate 1940 retirement package not one that deals with what you would need for a dignified retirement in 2005. And I think this is the critical factor. The other easy way for people to think about it is in Social Security what you really want in retirement security is to have an income that replaces enough of your wage income so that you do not see a devastating fall in your standard of living. Nobody wants to see the retirement years mean that they're going downhill. What Social Security guarantees now for a typical worker is around 40 percent of that benefit, of their wages, then they hope they add on with pension and more savings. If you only index for inflation, we'll start seeing that Social Security only replaces 20 percent perhaps in the future of what you made in your lifetime and that would mean a much less dignified retirement for tomorrow's seniors.

JEFFREY BROWN: Mr. Pozen, do you think that under your system that 40 percent replacement would be maintained?

ROBERT POZEN: Well, I think the replacement is a key concept. 40 percent replacement will be maintained for low-wage workers, but for high-wage workers, it would drop, and many middle-wage workers it would drop to somewhere in the 25 percent to 30 percent range. And the question is, is that okay? In 1940, when Gene was referring to, there were no 401(k)s, there were no IRAS, now when we think of replacement ratios, with need to think of IRAS and 401(k)s as well as Social Security. In 2004, we've tax subsidized those programs to the tune of about $55 billion. So we're clearly pouring money into those programs and we're encouraging middle and higher-wage workers to use those programs. So I think we can no longer look at replacement ratios just in terms of Social Security. Yes, the Social Security replacement ratio for that program alone would drop modestly, but it would be more than made up by these very large tax subsidies that are going for IRAs and 401(k)s. And I think that's a fair way to do it. The low-wage worker doesn't have the 401(k)s and the IRAS so we need to protect their rate replacement ratio in Social Security alone but the high and middle wage workers do have these programs so we have to have a broader view of their replacement ratios.

JEFFREY BROWN: Mr. Sperling.

GENE SPERLING: Well, that's a very idealistic world and I wish that was the world we live in. But here is our real world. 50 percent of workers every year do not have a 401(k) or an employer-based retirement system. Over 70 percent of Hispanics, 60 percent of African Americans, over 80 percent of part-time and small business employees do not have a generous 401(k) pension and for women who tend to live longer, the Social Security is an annuity that's always there no matter how long you live. So I would like to see a world where everybody has a generous 401(k). I proposed a progressive saving account called a universal 401(k). That's the right thing to do. We should be strengthening our pension system. But until we have that pension system much, much stronger, it really is wrong to suggest that typical workers could see Social Security only replacing 20 percent of their benefit and that that's an okay risk to take. Social Security is the foundation. It's the one thing you can count on. If life takes wrong turns for you, if you become disabled, if the market goes down, you're going to be hurting your housing value, you'll be hurting your pension. Social Security is the risk-free foundation. Cutting that risk-free foundation is much too risky for tomorrow and today's seniors.

JEFFREY BROWN: Mr. Pozen, finally, the president says that that this approach, making this change would solve about 70 percent of the solvency problem. Is he right?

ROBERT POZEN: Yes. Progressive indexing alone will solve over 70 percent of the long-term deficit, reducing it from $3.8 trillion to about $1.1 trillion. Moreover, at the end of the 75-year period, which is the period that we use to measure insolvency, the system will be financially sustainable. At that point, the revenues into the system will be roughly equivalent to the benefits that are going out. So we don't really need to take draconian measures to get that other 30 percent. We need to get to a point of balance in the year 2079, which we can get through progressive indexing and perhaps a few other things. And I would agree with Gene Sperling that as part of this package, as part of the Social Security reform, we ought to have other enhancements and incentives to encourage people to use IRAS and 4 401(k)s and these can be part of a system. But the low-wage worker, in my plan, constitutes about 30 percent of workers, and those won't be able to have IRAS and 401(k)s, even if we provide more incentives. So I would suggest that we want to have is something like progressive indexing plus we want to have added incentives to encourage people to use IRAS and 401ks more.

JEFFREY BROWN: All right. Robert Pozen and Gene Sperling, thanks very much.

FOCUS - FISCAL SQUEEZE

JIM LEHRER: Now, Congress agrees on a budget. Kwame Holman reports.

KWAME HOLMAN: Moments after the House of Representatives approved a five-year budget plan last night President Bush hailed its passage as one of his top domestic priorities.

PRESIDENT GEORGE W. BUSH: There's the budget agreement, and I'm grateful for that. It shows we are making progress,

KWAME HOLMAN: But that progress was hard-fought. In the House, the budget plan prevailed narrowly, 214-211, after a range of disagreements over tax and spending policies. And in the Senate, the outcome was in doubt until just before midnight, when the budget measure passed 52-47, with Vice President Cheney standing by in case a tie-breaking vote was needed. Republicans said the votes were an affirmation of their priorities, to reduce government spending and cut taxes. House Majority Leader Tom DeLay:

REP. TOM DeLAY: This is the budget that the American people voted for when they returned a Republican House, a Republican Senate and a Republican White House last November.

KWAME HOLMAN: House Democrats, who complained they had only three hours to read the Republican budget, argued the plan will increase the deficit even while hurting programs for the poor. Steny Hoyer is the Democratic whip.

REP. STENY HOYER: Very frankly, I listened to the Republican comments about this budget, and I cannot decide whether it is George Orwell or Lewis Carroll who is writing their stuff. Up is down, down is up, black is white, huge deficits are really savings. My, my, my

KWAME HOLMAN: The budget resolution sets the framework for specific tax and spending bills Congress will take up later this year. There was wide agreement on its calls for increased defense and homeland security spending, but two other components were debated heavily in both chambers. First, the growth in spending on entitlement programs would be cut for the first time since 1997, by $35 billion. $10 billion would come from Medicaid, the primary health program for the poor. The budget plan also makes room for $106 billion in tax cuts over the next five years, including on capital gains and dividend income. Democrats assailed the idea of cutting taxes paid by the wealthy while slashing benefits to the poor. Ohio's Sherrod Brown:

REP. SHERROD BROWN: How can any member of this body go home and tell our constituents, "I took health care away from impoverished children and home care away from impoverished seniors, but don't worry; I gave Ken Lay another tax cut"?

KWAME HOLMAN: But Republicans argued that tax cuts spur growth in all economic sectors and ultimately reduce deficits. California's David Dreier:

REP. DAVID DREIER: We know that the single most important thing we can do to deal with this deficit issue is to continue to see the economy grow, and that is exactly what the tax cuts in this measure will do, as they have done.

KWAME HOLMAN: Nonetheless, Democrats bore in on the proposed reductions in Medicaid spending. House Democratic Leader Nancy Pelosi:

REP. NANCY PELOSI: Republicans must explain to the American people, who oppose Medicaid cuts by four to one why they insist on slashing funds for sick children, seniors in nursing homes, and the disabled.

KWAME HOLMAN: But Republican Joe Barton said Medicaid needs to be reformed, and that can be done without harming the poor.

REP. JOE BARTON: We are not talking about trying to do things to kick people off the rolls. We're talking about things like letting people stay at home instead of having to go to a nursing home to get long-term care. We're talking about giving the states the flexibility perhaps to decide how to price some of their pharmaceuticals.

KWAME HOLMAN: The proposed cuts to Medicaid originally were $6 billion larger, but they were scaled back to appease Republican moderates in the Senate. Oregon's Gordon Smith had called for no cuts to Medicaid, but after weeks of negotiation, Senate leaders persuaded him to accept some cuts in exchange for a promise they'd be carefully administered by the Department of Health and Human Services.

SEN. GORDON SMITH: While not perfect-- and I've got a long list of things they rather not be there-- this is a beginning and not an ending. But we don't get to the end until we finish this budget.

KWAME HOLMAN: With the Republican budget resolution in place, Senate Democrats won't be able to use the filibuster to block certain tax cuts or the long- sought plan to allow oil exploration in Alaska's Arctic National Wildlife Refuge.

JIM LEHRER: Still to come on the NewsHour tonight: Vietnam today; Shields and Lowry; the South American view; and ceremonies of death in war.

FOCUS - 30 YEARS LATER

JIM LEHRER: A report from Vietnam, 30 years after the fall of Saigon. The correspondent is Ian Williams of Independent Television News.

IAN WILLIAMS: Even the lawn in this city park has to be just right for the big day. It's been decked out with posters of a benevolent Ho Chi Minh, after whom the city was renamed when the communists took power 30 years ago. The authorities want the hammer and sickle flying high this weekend, even if the scene below bears little relation to Communist orthodoxy, with business booming in a city many still refer to as Saigon.

DAO TIEN HOAN, Market Trader (Translated): My family had always done business in this market, selling shoes and bags. Things are going well now.

IAN WILLIAMS: But it wasn't always that way; not here in Chinatown. Tien's father fled Vietnam when she was six, when private business, particularly Chinese, was targeted by the Communists. That was in 1980. Now the family businesses are booming, funded by her father, now a technician with Boeing in Seattle. He had joined the flood of boat people, tens of thousands of them, mostly ethnic Chinese, who escaped a Communist government that's now encouraging them and their money to return. Thao was rescued at sea in 1982 by a Danish container ship, and lived in Denmark until returning with his family three years ago, believing the Communists were serious about reform.

THAO HGO, Overseas Vietnamese Business Association: Well, many years ago, the money where the overseas Vietnamese sent back to Vietnam to help the families to survive. Today the money is coming to investment. I've seen so much changes. And you look at the city today-- motorized cars. Life here in Vietnam is becoming better and better.

IAN WILLIAMS: There will be no shortage of reminders this weekend about the brutality of what they call the American War. But there is today a marked ambivalence about the U.S. That's on clear display in the Noodle 2000 Restaurant, where Bill Clinton ate in 2000 when he became the first U.S. President to visit since the end of the war. His one-and-a-half-hour meal has become the restaurant's biggest selling point.

TRUNG THI PHUNG HA, Restaurant Manager (Translated): Bill Clinton was good for my business. People are curious. They want to know where he sat, what he ate. They take photographs standing in front of my pictures of him.

IAN WILLIAMS: The old southern capital is now back in business. The paradox is that the city which lost the war is again setting the economic pace, thanks in part to those who initially fled. This is where part of the celebration will take place tomorrow. It won't only be a display of Communist triumphalism. After all, the majority of Vietnam's population was born after the end of the war. On the eve of the celebrations, a rehearsal for a display by 200 models caused a big traffic snarl up in the city center. There will be plenty of Po-faced Communists on the streets tomorrow, but it's youth and enterprise that now drive the city.

FOCUS - SHIELDS & LOWRY

JIM LEHRER: Now, the analysis of Shields and Lowry: Syndicated columnist Mark Shields and Rich Lowry of the National Review. David Brooks is off tonight.

Rich, how do you read the prospects and the politics of President Bush's new proposal on Social Security?

RICH LOWRY: Well, the sales job, obviously the 60-day sales pitch around the country hasn't gone particularly well. And, as far as I can tell, the White House strategy is just by hook and crook to keep some sort of momentum going. And I think that's why last night he came out with a more detailed proposal than he has -- had until this point, a more detailed proposal, although it's obviously not a full-blown bill by any means. And he wants to appear purposeful, substantive; he wanted to float an idea that might perhaps have some appeal to more moderate Democrats. The risk, of course, the political risk, is that almost every newspaper in the country had a headline about President Bush proposing Social Security benefit cuts. And that's always difficult ground for Republicans.

JIM LEHRER: Mark, the Democrats were unanimous in condemning this today. What's going on there?

MARK SHIELDS: Yes. I mean, when you saw Max Baucus and Dianne Feinstein, two of the people I think that the president was kind of hoping might eventually enlist, be allies in this effort, I mean being the most stalwart and most adamant in their criticism. I think two things, Jim. I think Rich is absolutely right. The 60 days have been a disappointment at best. I mean, I think the White House intended to do two things. They intended to sell the idea that this was a crisis, that we have a real problem and then secondly the appeal and attraction of personal accounts, although, you know, the president finally acknowledged that the second had nothing to do with the first and, if anything, wouldn't solve it. I think the difficulty the president faces and the Republicans face at this point is this, that you saw in Kwame's piece they passed the budget by three votes in the House. They passed the budget by five votes in the Senate. It's a Republican institute body so they had to arm twist and lean and all the rest of it. Jim, this involves a cut of $10 billion in Medicaid over four years. It also includes the sweetener of $106 billion in tax cuts and they can only pass it by three votes. Rich is right. I mean, any place that... Social Security cuts, these same guys, these captains courageous are not going to line up and say "let me vote for Social Security benefit cuts."

JIM LEHRER: Okay. If everybody agrees-- and they don't-- but let's say for discussion purposes everybody agreed there's a crisis in Social Security, the Democrats don't even agree there's a crisis, but let's say that they did and if you're not going to cut benefits and you're not going to raise the payroll tax, that doesn't leave a lot of alternatives does it?

RICH LOWRY: By my quick back-of-the-envelope calculation its leaves basically nothing. So, you know, those are the two things that are necessary. And the case the Republicans will try to make in defense of this is, look, these are promised benefits that we're cutting. Those promised benefits are not going to be there because there's a huge shortfall in the system coming up, so do not use the promised benefits as the benchmark because they're a fantasy and they're not for real. Now, whether they'll be successful in making that case, I don't know.

JIM LEHRER: But what about, why isn't the president getting more credit -- I'll ask you, Mark. Why isn't the president getting more credit from Democrats over the idea that it's progressive? In other words, he is going to preserve the benefits, the "promised benefits" for the low-income people by some measure but just take it out -- but lower the benefits, the perceived benefits of those who are better off?

MARK SHIELDS: I think, Jim, there's really not a political problem here; there's a philosophical problem. Social Security has been social and it's been security. It's been equal across the board.

JIM LEHRER: Everybody gets the same.

MARK SHIELDS: And once you start -- make it sort of on a welfare plan approach, the idea that well, those -- it means the program itself is vulnerable to popular support. The universality of the program has provided near universal popular and political support. And I think that's part of it. The other reason the president had to have this press conference is right now President Bush, according to the Gallup Poll over the history, is at the lowest point of any president reelected at this point in his presidency since World War II. So, I mean, you know, there's a restlessness in the ranks. They had to do something.

JIM LEHRER: Do you agree with that, Rich, that this news conference last night had a purpose beyond floating a new idea on Social Security?

RICH LOWRY: Sure. He's been in a downdraft the last couple of weeks and a lot of it has to do with the economy and gas prices. That's conventional wisdom that happens to be correct. And the problem any president has with gas prices is there's very little or nothing you can really do about them. So President Bush is in a situation where he wants to talk about energy proposals to deliver the message that "I care about gas prices. I know they hurt and I really would love to do something about it even though these proposals won't have any effect in the short term." So he's just in a -- with the energy situation, he's just in a tight spot.

JIM LEHRER: It just goes with the territory that when gas prices go up the president gets blame nod matter what, right? Jimmy Carter can attest to that.

RICH LOWRY: Absolutely. It's not fair.

MARK SHIELDS: And it's complicated by... I mean, no other American president in recent years has invited the Saudi prince to hold hands in his front yard. I mean, so --

JIM LEHRER: That could be considered good politics.

MARK SHIELDS: It could be -

JIM LEHRER: He's trying to convince him to put some more -

MARK SHIELDS: Absolutely.

JIM LEHRER: -- pump some more oil.

MARK SHIELDS: You're absolutely right. But that then coupled with the prices and the tip off that the White House sees this as a political problem is all the president's trips to Crawford there hasn't been a single photo-op of him gassing up the pickup truck. They like that do that. They've avoided that one because they don't want to have sticker shock shown on the evening news.

JIM LEHRER: New subject but still political problems, Rich. The issue of the House ethics rules being changed this week by the Republicans. Should that be seen as a cave-in to pressure from the Democrats? How do you interpret it?

RICH LOWRY: It's certainly a cave-in and the reason they changed the rules originally was basically to protect Tom DeLay; now, partly because he's a majority leader and he has a vulnerability, partly because there's a perception on the Republican side that he's the victim of an unfair partisan attack. But obviously those rules changes weren't a matter of deep principle or you wouldn't be going back on them several weeks later. And I think the DeLay camp is after a couple months of having these ethics questions adjudicated in the media, they're thinking "You know what? Actually it's better to go back to the Ethics Committee."

JIM LEHRER: Do you think this puts DeLay in more jeopardy, or does it give him a chance to clear himself if, in fact, he can do so?

RICH LOWRY: It's hard to say and it depends on what the actual facts are of these cases. Now, my guess, knowing what we know now, is that if the Ethics Committee made some judgment on him now. it would be a lot like the judgments they made on DeLay last year where he's exonerated of violating any rules but he's admonished to be more careful. And the way those admonishments played in the press and the way they're spun very effectively by the Democrats was as if they'd been criminal indictments or something. They really hurt. So my guess at the moment would be he'd get an exoneration but with a sting and the question then is how do both sides play that sting and who wins the spin war over it?

JIM LEHRER: Now, Mark, some people have suggested the Democrats have a be careful what you wish for problem here with the rejuvenation or the reactivation, I guess I should say, of the House Ethics Committee now that some charges may be preferred against some leading Democrats as well as Tom DeLay. Do you agree?

MARK SHIELDS: I think when they open up to privately underwritten travel, that they -- there are people who have taken trips; where there's a question of whether, in fact, a legitimate institution, nonprofit institution has paid for that trip, I think they'll be open to scrutiny.

JIM LEHRER: If any Democrats did it, they're going to get caught just as --

MARK SHIELDS: I think they will.

JIM LEHRER: They'd be scrutinized at least?

MARK SHIELDS: I think DeLay has other problems. Right now you wouldn't find any Republican that says Tom DeLay is ever going to be speaker. He is not going to be speaker. I mean, I think he has just got too much baggage. And what we saw this week I think, Jim, in the repeal of the ethics rules changes was this, that Tom DeLay had always been a major asset if I'm a Republican House member. He does a lot of things, he does them well, he's effective, he's tough, he's aggressive, he deals tough with the institutions, especially downtown, K Street and all the rest. He does things --

JIM LEHRER: K Street is where the lobbyists are.

MARK SHIELDS: The lobbyists are, and things I want done for my candidacy and my party. And he's always been an asset. What we've seen in the last couple weeks and Rich described it is Tom DeLay became a little bit of an inconvenience, maybe an embarrassment and a potential political liability. There is not a single Republican House member tonight who's calling and saying "Tom, will you come into my district and campaign for me?"

JIM LEHRER: Yeah, go ahead.

RICH LOWRY: But the White House has obviously made a strategic decision to stand behind DeLay, and that's because they still think as an inside player and a legislative technician, which has always been his great strength, he is still an asset. And on the Democrats and vulnerabilities they may have on their travel, the smartest Republicans are really determined to resist the temptation to go tit for tat on this because they're operating off on the 1990s politics where Republicans went in whole hog with sort of scandal politics against Bill Clinton and it didn't help and it arguably hurt. So they're hoping to do sort of the -- a model on what Clintondid. "We're going about the people's business. You know, you can obsess about who paid for Tom DeLay's trip, you know, five years ago, we're going to talk about substance." At least that's the idea.

JIM LEHRER: And also I was reading that some of the Republicans are -- love the idea that it's gone to the Ethics Committee, can now act on Tom DeLay because that gets it off the -- gets it away.

MARK SHIELDS: I can't comment on it.

JIM LEHRER: And if the Ethics Committee rules against him, they rule against him, it's done. If they rule in favor of him, it's done. At least it gets resolved in some way.

MARK SHIELDS: I would just add one thing. This is not Tom DeLay's sole vulnerability, the travel. I mean, even though it was lavish, as David Rogers pointed out in the Wall Street Journal, $28,000 for ten days in London and Scotland. I mean, you're living like a Mexican general if you're traveling like that. Let's be very blunt about it. But Tom DeLay has other problems; I mean, the Jack Abramoff investigation, now we have the Marianna Islands and what went on there. So, I mean, he's fighting a war on a lot of different fronts.

JIM LEHRER: What's your reading, Rich, as to where the nuclear, the potential nuclear confrontation over judges stands this week in the Senate?

RICH LOWRY: We had a veritable orgy of insincerity in the Senate t his week with the various compromise offers from both sides, neither of which anyone had any notion that it would actually be taken up by the other side. But my sense is that Republicans now have the whip hand on this issue because the further they've gotten away from the Schiavo controversy, there are a lot of people, including Tom DeLay that very unwisely imported the bad politics of the Schiavo case into what had been the good politics of the judges issue for Republicans. The further away from that, the surer the Republicans are that they're going to have the 50 votes necessary to make this filibuster change and I think the attitude's going to be if you have the votes, you might as well do it. And I think Democrats may have overplayed their hands and may be looking at a situation a month from now when they basically will have an extremely difficult time blocking any Bush judges at all.

JIM LEHRER: Mark?

MARK SHIELDS: I don't know, Jim. There's too many people keeping their own counsel on this - I mean, too many Republican senators who really won't say how they're going to vote. I mean, John McCain has said he wouldn't vote for it. Rich is right, I mean, there's enough hypocrisy. There are competing public impulses here. One is the public likes extended debate. They don't want to see that ended but they believe every nominee is entitled to an up or down vote.

JIM LEHRER: Everybody, whether you're a Republican or Democrat, just an ordinary citizen, sees the fairness of both of those concepts, right?

MARK SHIELDS: I --

JIM LEHRER: Do you agree with that, Rich?

RICH LOWRY: Yes. You see it - sorry, Mark, to interrupt - but in the Washington Post poll last -- this week, "Do you support a change in the rules to make it easier for Bush to get his judges through?" Everybody says no, no, no, we don't. But you ask them do you support an up or down vote on Bush nominees, yes, yes, we all do.

MARK SHIELDS: That's the Republican mantra right now. I checked. Now, there have been ten Bush nominees, over two hundred approved who have been denied an up or down vote. Okay; fine. There were 62 Clinton nominees who were denied an up or down vote. Now, should we start with them out of a sense of fairness?

JIM LEHRER: But a different process but the same result, right?

MARK SHIELDS: That's right. They were denied. They were perfectly --

JIM LEHRER: It wasn't a filibuster but they never got out of committee.

MARK SHIELDS: That's right.

JIM LEHRER: Some of them didn't even get a hearing.

MARK SHIELDS: That's right. But were they entitled to an up or down vote? I mean, I think that's it. And Democrats historically of course have been opposed to the filibuster but I think that just trying to take off a partisan hat, the thing that concerns me most is that if a party with a fifty-two or -three vote margin in the Senate can confirm judges, I think what we'll risk is the ideological polarization of the bench. I mean, there's been sort of a tradition of presidents, whether Reagan or Clinton or whoever, you nominate judges who will be approved with seventy-five or eighty votes in the Senate. I see Democrats coming back with a Democrat in the White House on a 53-vote margin nominating -- you know, going to be stuck in the craw of Republicans and I don't think that's good for the judiciary in the long run.

JIM LEHRER: What do you think - in a few seconds?

RICH LOWRY: Well, I think days of 75 to 80 votes on anything are kind of long gone or just in this polarized era where the margins are going to be much smaller. And, I mean, it is a fact with maybe one exception that the filibuster has never been used in this way before. It hasn't.

JIM LEHRER: They've used other process bus not the filibuster.

MARK SHIELDS: Abe Fortis was the first.

JIM LEHRER: Abe Fortis was the first, right. Okay. We have to leave it there. Thank you both.

RICH LOWRY: Thanks much.

JIM LEHRER: Good to see you again, Rich.

FOCUS - SOUTHERN RELATIONS

JIM LEHRER: Next, Ray Suarez talks with two South American writers, in the wake of Secretary of State Rice's visit to their continent this week.

RAY SUAREZ: Secretary Rice is wrapping up a Latin American trip that has taken her to Brazil, Colombia, Chile and El Salvador. Democracy, terrorism and Venezuela have been on the agenda. Joining us for South American perspectives on those and other issues are two writers from the region. Ariel Dorfman of Chile is a novelist, playwright, journalist and human rights activist. His latest novel is "Burning City." He is now a professor at Duke University. Alvaro Vargas Llosa of Peru is an author, commentator and editor. His latest book is "Liberty for Latin America." He served as spokesman in the Peruvian presidential campaign of his father, Mario Vargas Llosa. He is now a senior fellow at the independent institute, an Oakland, California, think tank. Professor Dorfman, is there a prevailing opinion of the United States among those Latin American citizens who will be seeing... who have seen Secretary Rice on their TV screens on the evening news this week?

ARIEL DORFMAN: Well there used to be sort of a consensus going towards more sympathy towards the United States during the Clinton administration. Now in the last four years and now with the latest events I would say that she's got a lot of fences to mend. The prevailing attitude in Latin America has become very anti-American. Not anti-American as much as anti-Bush I would say at this point. And it's... I would say it's basically the whole continent is such. I think people themselves seem to be more angry at the United States than the governments are at this point.

RAY SUAREZ: Alvaro Vargas Llosa, do you agree that the prevailing sentiment is getting worse over time?

ALVARO VARGAS LLOSA: I think it's a very complex situation. There is an anti U.S. sentiment as regards the war on drugs, for instance. There's an anti U.S. sentiment as regards to the support the United States gave to some of the governments of the '90s that were very corrupt and under the guise of free market reform really entrenched old and powerful interests. But there's also a positive signs. I think there's a moderate left in Latin America. Dr. Rice, Secretary Rice has been visiting Brazil and Chile and both governments of the left are very moderate and are in favor of free markets, in favor of good relations with the United States. I think the Andean region poses more problems because of... there's a very complicated internal situation. A large section of the population of indigenous dissent is having a lot of trouble being a part of or playing a role in the democratic institutions and they see those democratic institutions as allied with the United States and so there is that sort of distance. But in general I would say the United States needs to work a lot harder at mending some of those fences and, yes, some of the policies of the past still create problems for that relationship.

RAY SUAREZ: Well, having said that, now that so much of the continent has a democratically elected government, is there a lot of room between the leaders and the led in these places when it comes towards the United States. Is there a big split between elected governments and what the people think?

ALVARO VARGAS LLOSA: I think there is an important split. One of the major issues in Latin America today is the divorce between official institutions, between the institutions of government and the state, and ordinary people. People have responded or reacted against this in major ways. People are turning away from the Catholic Church and embracing Protestant religion or different types of Protestant Churches. People are

turning to the informal economy, which is an economy that takes place outside of the law. There are many manifestations of this anti-official institution type of sentiment. But some of these governments are making an effort and I think Chile and Brazil are two interesting examples. Colombia might be another one, except for the drug war. It's another interesting example of official institutions trying to bridge that gap. And incorporate more and more people into some of these institutions that have been divorced from ordinary... the ordinary lives of people for a long time.

RAY SUAREZ: Professor Dorfman, in recent years in several countries in Argentina and Brazil and Uruguay, Bolivia, the axis of national politics has shifted left. What does that mean?

ARIEL DORFMAN: Well, you know, there used to be something called the Washington consensus, meaning basically an agreement about neo-liberal policies and privatization and the idea that also there were... there needed to be democratic institutions that accompanied this free market economics. And there has been a very significant shift left. I mean, the biggest shift, of course, has been that of Chavez in Venezuela. But if you look at the latest events all over Latin America, there is a very significant movement towards the left. Now, this movement towards the left is what the new president of Uruguay calls caution revolutions, you know, or revolutions that are agreed upon in some sense. And certainly that comes out of an experience of great suffering both during the military dictatorships, many of which had U.S. support-- and we don't forget that, you know-- and also because there's a sense that we have learned that we need to work within the system and we're not out to overthrow the whole system. But there is a sense that 20 years after all these neo-liberal reforms, Latin America is as poor as it used to be, especially in relation to the poorer sections of the population. There are just vast groups of people who don't feel the democracy has done very much for them. And I would agree with Alvaro in the sense that what we have now is a large group of left-wing governments of different sorts. I would say what you would call the moderate left very clearly in the driver's seat in that sense. Now, the tragedy is the United States is unable to relate... in some sense, of course, they're able to relate to those governments well. They seem to go along well with them. But they don't seem to have enough of an understanding of the desire for sovereignty, the desire for creating what I would call the Brasilia consensus. And I think that Brasilia consensus, which would have Chavez on his left and Ricardo Lagos on the moderate center left, I think there's a large group of those countries where we can see a new policy and a new... it's really a new way of looking at where the economic policies are joined with a desire for social justice and a desire to find ways of mobilizing people to solve their own problems in their own barrios, in their own shantytowns, in their cities, in the countryside.

RAY SUAREZ: Alvaro Vargas Llosa, is that left-wing shift part of a rejection of what Professor Dorfman called the Washington consensus? Is Condoleezza Rice traveling through that region that's sort of had it with the IMF and the World Bank and other institutions like that?

ALVARO VARGAS LLOSA: Well, what happened in the '90s was there was really no free-market reform. There was another way of doing exactly the same kind of stuff we had been doing forever through 200 years of republican life, three centuries of colonial life, creating a lot of kind of mercantilistic policies where politicians and bureaucrats would engage cronies and people who were close to power in corrupt type of deals and leave most people out of the great opportunities of a real free market economy. So, yes, there is a rejection now in Latin America against free markets, even in Mexico, the United States neighbor there is a rejection against free market reform and that's why Lopez Obrador might be president next year in Mexico, and, yes, that's why people like Lula in Brazil and Vazquez in Uruguay and Kirchner in Argentina have been elected. However, I would say that the interesting thing is that some of these governments have been able to understand there's a huge difference between the type of reform that took place in the '90s and the ideal type of free market reform that other countries including New Zealand and Ireland and Estonia either of the left or the right have undertaken. So these governments are more moderate than they would have been in a different type of situation. Of course, the case of Chavez who represented the loony left in Latin America is a very different case. But do I think it's important for the United States to engage this left. And I have interesting news. I don't know if you have received this news yet from Chile, but, you know, we're in the middle of an interesting process. They're selecting the new secretary general of the OAS, the Organization of American States. There was a fierce kind of competition between Mexico and Chile, the current foreign minister of Mexico was competed against a minister in Lagos' government in Chile, called Jose Miguel Insulza. Well, today we received the news that Derbez, the foreign minister of Mexico has dropped out of the race and so this makes the man from Chile the next secretary general of the OAS.

RAY SUAREZ: I'm going to have to end it there. Alvaro Vargas Llosa, Professor Dorfman, gentlemen, thank you both.

RECAP

JIM LEHRER: Again, the major developments of the day. Insurgent attacks in Iraq killed at least 41 people, including three U.S. Soldiers. And President Bush and Democrats clashed over letting social security benefits rise faster for the poor than for everyone else.

JIM LEHRER: And before we go tonight, some special photographs from war that a lawsuit recently forced the Pentagon to release. They are the withheld images of the transfer of remains of American service personnel killed in Iraq and Afghanistan. The Defense Department blacked out the faces and identifying badges of some of the military escorts. Here in silence are ten of the images.

JIM LEHRER: Washington Week can be seen later this evening on most PBS stations. We'll see you online and again here Monday evening. Have a nice weekend. I'm Jim Lehrer. Thank you and good night.