The MacNeil/Lehrer NewsHour

INTRO

JIM LEHRER: Good evening. There was another who-won-the-debate day in the news business, and there was no one answer. Walter Mondale and his supporters said he did; President Reagan and his disagreed. The polls and the other measurements showed it close. Also today there were preliminary words from OPEC vowing not to lower oil prices. Robert MacNeil is away tonight; Judy Woodruff is in Washington. Judy?

JUDY WOODRUFF: Reaction to the debate gets most of our attention on tonight's NewsHour, first from a group of elderly voters who live near Chicago. Then from two top advisers to he Reagan and the Mondale campaigns, and finally from our own pair of pundits, David Gergen and Alan Baron. We look next at the new Chinese move toward capitalism -- supply and demand in the People's Republic. We have a profile of an American farmer who's gotten some close-up looks at the Soviet economy. And we close with a survey of the turmoil in world oil markets and an explanation of why fueld prices could soon plummet.

LEHRER: The lead item in our news summary tonight is the debate, last night's second and last Mondale-Reagan debate from Kansas City. Both combatants and their respective friends and advisers were upbeat in their assessments today; three polls show President Reagan the winner by narrow margins; a panel of debate experts assembled by the Associated Press gave it to Mr. Mondale. For the two candidates today it was business as usual. Both resumed campaigning and bashing the other. Mr. Reagan chose defense policy as his subject. He spoke to aircraft workers at a B-1 bomber factory in Palmdale, California.

Pres. RONALD REAGAN: When my opponent joined the Carter-Mondale administration he remained true to his record -- $25 billion in defense budget cuts, naval shipbuilding programs slashed by half, Trident programs slowed down, military pay kept so low that our people couldn't wait to leave the service, and, as you know all too well, the B-1 was canceled. Well, today, candidate Mondale has produced or is promising more of the same. And when you add his promise of an $85-billion tax increase, you've got two promises that he's bound to keep. Senator Glenn, a Democrat, summed it up pretty well. "The Mondale record goes far beyond a simple disagreement over specific weapons programs. I think it reveals a fundamental lack of support for an adequate national defense." I couldn't agree more. Mr. Mondale made a career out of weakening America's armed forces. Well, as long as I'm in this job, we will not short-change the security needs of America.

LEHRER: Mr. Mondale stayed on he topic of last night's debate -- foreign policy and some of the things Mr. Reagan said about it. The Democratic candidate spoke at an outdoor rally in Philadelphia.

WILSON GOODE, Mayor of Philadelphia: A man for all time, President Walter Mondale!

WALTER MONDALE, Democratic presidential candidate: Thank you. Thank you. Thank you. In Lebanon we had 300 of our wonderful Americans killed. Time and again the President was warned that they were in danger. The Joint Chiefs, the State Department, the Defense Department, even the terrorists warned them of their intentions. Last night, however, when we talked about Lebanon, what did the President say? He said, "I didn't do it. It was a local commander's fault." Well, that's not what we expert of a president. We elect a president to lead, command and take responsibility in this country.

LEHRER: We'll be back to politics and the debate aftermath story in a few minutes. Judy?

WOODRUFF: Oil producing ministers met today in Geneva and agreed to hold the line against any lowering of oil prices, but they are considering a cut of up to one-fifth of their production.That's the word from sources attending the informal talks among the OPEC ministers -- talks called to stave off further price cuts like the one announced by Nigeria last week by one to two dollars a barrel. Worry about a price collapse was triggered by that and by cuts by Britain and Norway for North Sea oil. We have a report on today's session in Geneva from Alistair Clarke of Visnews.

ALISTAIR CLARKE, Visnews [voice-over]: The ministers gathered against a backdrop of price cuts as world demand for oil falls: They met in private to consider a plan to cut production by about 15%, a plan they hope they can take to a full OPEC meeting next week, thereby preserving at least a veneer of solidarity, for one OPEC member, Nigeria, has already broket ranks by dropping its prices in line with non-members Britain and Norway. Other non-members were at the Geneva meeting to hear the foreign ministers try to persuade them they'll be better off in the long run by a cut in production.

WOODRUFF: Today's talks are in preparation for a formal OPEC meeting one week from today. Later in the NewsHour we'll have more on oil prices both on the world market and at U.S. gas pumps.

In Nicaragua, the largest opposition party still on the ballot has decided to pull out of the November 4th elections. The head of the independent Liberal Party, which has protested frequently the pro-government mobs that tried to disrupt its campaigning, said the party was withdrawing because the elections as proposed won't resolve the problem of peace in the country.This pullout leaves the ruling leftist Sandinistas with little significant opposition since the largest opposition coalition, the Nicaraguan Democratic Coordinate, has already decided to boycott the elections.

Jim?

LEHRER: Secretary of State Shultz had some tough words today for the Soviet Union. He told a Washington conference on Soviet Jewry that persecution of Jews in Russia seems to be getting worse. He accused the Soviets of a cynical manipulation of human lives for political purposes in its human rights policies.

And one final international item. A Polish government spokesman today suggested the kidnapping of an anti-government, pro-Solidarity Catholic priest may have been a put-up job. The 37-year-old priest disappeared Friday, and witnesses said he was seen being pushed into a car by a man in a police uniform. The government official today said it may have all been staged as a provocation against the government. Judy?

WOODRUFF: Secretary of Education Terrel Bell said today that a new report on the status of America's colleges shows they have the sniffles and need to take precautions to avoid getting a bad cold or even pneumonia. But Bell added that the verdict rendered by a team of scholars was not as harsh as he had anticipated, and he stressed that the nation's colleges are not in as bad shape as are the elementary and secondary schools. Bell called a news conference to report on some of the scholarly team's findings on American higher education.

TERREL BELL, Secretary of Education: The test scores of college graduates applying to graduate ane professional schools have declined, and some by very substantial amounts, although I'd quickly emphasize that this applies not to some institutions but applies to American higher education generally. And then, secondly, more students are pursuing degrees in increasingly narrow fields, avoiding the liberal arts and sciences and avoiding subjects we believe that challenge their verbal skills. And they're moving more and more into professional and vocational programs on the undergraduate level.

WOODRUFF: Among the major recommendations made by Bell and the report is one that all college graduates should have at least two full years of liberal arts education, even if it means those getting professional degrees such as engineers and teachers have to go to college for more than four years.

That wraps up our look at today's top news stories. Jim? The Debate: Thru Elderly Eyes

LEHRER: And that brings us to focus segment number one tonight, the debate about the debate. Who won last night in Kansas City and why, and is it likely to change things between now and two weeks from tomorrow, Election Day? We offer a variety of answers, beginning with those of a group of elderly voters in Bensonville, Illinois. Correspondent Elizabeth Brackett spent the evening with them during the first debate, and she returned last night.

ELIZABETH BRACKETT [voice-over]: It is a group that leans toward President Reagan, but a group that was surprised and disturbed by the President's performance in the last debate. As residents in a retirement community, it is also a group that understands the problems that come with age. But most here felt, with this well-planned quip, the President responded to the age question well.

Pres. REAGAN [2nd debate]: I am not going to exploit for political purposes my opponent's youth and inexperience.

RUTH PEARCE: I thought he handled that very nicely tonight, and I still do believe that that age difference, like he said, was experience that he has had. And I don't see where his age has anything to do with it.

EDNA DIEKRIDGE: I this day and age, look at the people that are active that are 80, 85 and 90 years old, and I don't agree with that they should retire at 70 or 75.

LILLIAN MEYER: It does worry me a little. Four years from now -- I'm lots older than he'll be then and you wonder, with the terrible stress of the country --

BRACKETT: Did you worry more or less about the issue of the President's age after this debate?

Ms. MEYER: No, I'm not any more worried. I thought Reagan handled himself very well.

BRACKETT: Do you worry less about it after this debate?

Ms. MEYER: Yes.

MARGARET KEHOE: Both appearance-wise and his arguments he was much improved. If you noticed his face was very relaxed and his appearance was quite good this time whereas Mondale's had slipped.

BRACKETT: Edna, what did you think about Mondale's appearance this time?

Ms. DIEKRIDGE: He looked very tired. He had bags under his eyes. And I've watched him on TV previous times before and he never seemed as tired as he was tonight.

PAULA CAIN: And maybe that shows us something too, that he is vulnerable just as much as an older person would be.

BRACKETT [voice-over]: The group felt both men made points on this exchange.

Pres. REAGAN: He has a record of weakness with regard to our national defense that is second to none.

Mr. MONDALE: I accept your commitment to peace, but I want you to accept my commitment to a strong national defense.

Ms. MEYER: Mondale came out very strong to verify everything. He emphasized that over and over. Reagan emphasized the same thing. He was just as strong as he was before.

BRACKETT: Do you think the President was able to portray Mondale as weak on defense?

CAROLYN HENDRICKS: No. Not as far as I'm concerned, he didn't. I don't think the President's any smarter tonight than he was the last time I saw him.

WILLARD VINCENT: He failed to answer the questions that Mondale put to him about his responsibility in Lebanon.

KARL MEYER: Lebanon has been -- that's an obnoxious country through the years, and you could just expect things like that to happen.

Ms. HENDRICKS: The Lebanon thing, I think he skirted around that very well. So he didn't really answer the question. There's a lot of things I'd like to know about that. he didn't come out with any of it.

BRACKETT: Mr. mondale has been trying to portray Ronald Reagan as someone who is not in command of the facts, particularly on the intricate issues of defense and arms control.Do you think he succeeded in doing that?

RICHARD KEHOE: I don't think he succeeded in doing that. He kept trying it more than once. Every time he got a question he came in with -- tried to always come back to the lack of his information, as it were.

ALICE GARRATT: The thing that I didn't like was that Mondale was constantly talking about the President's not knowing his job, which annoyed me tremendously.

BRACKETT: What did you think about the President's idea of sharing information on a defense system with the Russians?

DAVID McINTYRE: No, positively. Because you never could trust them.

Mr. VINCENT: I certainly wouldn't give any technical information to Russia. Why would we have to? If we can protect ourselves that way? The Russians will catch up with -- they'll get their own.

BRACKETT: What do you think the President was trying to say in his closing statement?

Ms. KEHOE: Whatever it was, he missed saying it.

Ms. CAIN: I think he was trying to prove a point there --

BRACKETT: What was it?

Ms. CAIN: Well, I really don't know what the point was that he was trying to prove.

BRACKETT: Who do you think won the debate tonight?

Ms. MEYER: I think it was quite equal. Reagan skipped answering a few questions and so did Mondale, and they just counteracted each other.

Mr. VINCENT: Mondale had a little edge, but it was more even than last time.

Mr. KEHOE: If you are asking in comparison to last week, I think Reagan would have won the debate tonight, mainly because he was more easy-going, more free. And last week he stumbled around and wob-wob-wob all the time.

Ms. KEHOE: The President came off much stronger this time, and my first thought was now they've evened the debates, where's the third one? The Debate: Thru Partisan Eyes

LEHRER: That report by Elizabeth Brackett. Elizabeth said, by the way, that all of that said, none of the people in the group said any of their votes changed as a result of last night's debate. Next, the official campaign views of what happened last night and what happens next and in two weeks and a day from now. Edward Rollins is the former White House political director, now the director of the Reagan-Bush campaign. Richard Leone is a senior adviser to the Mondale-Ferraro campaign.

First to you, Mr. Rollins. Vice President Bush, among others on your side today, said for all practical purposes the election is over; Ronald Reagan has been re-elected for another four years. Do you agree, sir?

EDWARD Mr. ROLLINS: Well, unfortunately we have to wait until November 6th to have, I think, the support the President has ratified, but I certainly thought the President performed extremely well last night, and we think on November 6th the potential is there for a great victory.

LEHRER: Performed very well last night in what way, from your perspective?

Mr. ROLLINS: I think that he very definitely defended his own programs, he laid out the weaknesses of Mondale's record and history as a United States senator, which he had the worst record in 1969 through 1974 on defense issues. He clearly pointed out that the words really aren't what's relevant; it's what action and the actions that Mondale has taken historically have been anti-defense, not pro-defense. And I think that he really punched some holes in the Mondale rhetoric.

LEHRER: I read today somewhere -- please don't pin me as to where I read it -- but that the quip of the President's that we just saw about the age question had been worked out in advance, well-rehearsed, etc. Is that true?

Mr. ROLLINS: Absolutely not. That's typical of many White House agents trying to take credit for something the President did himself spontaneously.

LEHRER: I see. Do you think that, whatever, do you believe that the has put the age question behind you now?

Mr. ROLLINS: I don't think the age question was a very serious question at all. The President had one off night in the last 44 months. Walter Mondale had one good night in the last two years of campaigning. I think Ronald Reagan has been a very vigorous, very active President and I think the American public has already made that judgment that he can do the job and he will do the job effectively in another four years.

LEHRER: Were you concerned at all about what the folksin Bensonville, Illinois, said, at least a couple of them did, about the President's closing statement? They never quite figured out what it is he was saying?

Mr. ROLLINS: No, I don't think closing statements really matter a whole lot. I don't think debates matter a whole lot in the big picture. I think that the job the President has done really is what the American public's going to vote on, and I think that he'll have an overwhelming vote on November 6th.

LEHRER: What do you think really mattered the most last night in that debate, though?

Mr. ROLLINS: I think the President was forceful. The President was certainly had facts and figures at his fingertips. I think that he showed once again the confidence that he has in his own ability to lead this country and lead this country effectively.

LEHRER: Mr. Rollins, thank you. Turning to you, Mr. Leone, is the election over? Has Walter Mondale had it for all practical purposes?

RICHARD LEONE: You know, I think that that comment by Vice President Bush and a recent comment by his press secretary and, frankly, what Ed just said about debates not mattering much show a kind of cyncism about the American people. They've become engaged in this election in the last few weeks since the debate.They're going to make a decision on the most important issues before the country and the world, and I think they're going to make that decision between now and Election Day. They're going to make it themselves and no amount of wishing away that choice or hoping that they don't pay attention is going to make that process go away.

LEHRER: Mr. Leone, the polls show that the majority of Americans have already made a decision in favor of President Reagan. That's not campaign rhetoric.

Mr. LEONE: I think we've learned about volatility in the polls, and if you look at Lou Harris who had the race at nine points last week, and ABC, which had it closing to 10; our own polling has it under 10. All of the major states, all of the states we need to win are under 10 points. Anything can happen in two weeks. We've learned that several times this year. And I suggest that what has happened in the last two weeks demonstrates that when people start becoming interested and look at the two candidates and what they're saying, we're going to see a lot of movement.

LEHRER: The experts -- and I put "experts" in quotation marks, but anyhow -- the experts said going in last night that for Walter Mondale to close this gap that still exists, and that you concede still exists, he had to score a real knockout last night or Ronald Reagan had to score a real dropdown last night. Did either happen?

Mr. LEONE: I don't believe that was necessary. We came into the first debate way underestimated with a real expectations problem, and Mondale overcame that. He crossed the threshold to leadership in a dramatic way. People began to look at this race in a serious way. Last night we had an opportunity to continue the trend which has been moving in our direction by raising issues like Star Wars and Central America and Lebanon. The President in all those areas showed he wasn't in command of the facts and didn't have a sensible foreign policy, was primitive in thinking about our nuclear weapons systems. And I think that will count heavily against him in the next two weeks, and it will accelerate this trend.

LEHRER: It is your view then that Walter Mondale got the best of last night's debate?

Mr. LEONE: Yes. I think we won the debate. In addition, more importantly, this particular occasion will have consequences for the actual vote in two weeks.

LEHRER: Do you believe he did as well comparatively speaking as he did in the first debate two weeks ago?

Mr. LEONE: I some respects he did better. The first debate was important in crystallizing the fact that there was a real race going on. Last night we had a clean message about arms control, nuclear war, Central America and Lebanon. In all those cases the President basically made mistakes or indicated he didn't know what the heck was going on. Now, that's going to be very important in the next two weeks. We wanted a fight on that ground, we now have the fight we want.

LEHRER: All right, gentlemen, don't go away because we have a specific exchange from last night. Both sides, interestingly enough, said today that they believe their man did particularly well in the one-two over the so-called Star Wars anti-missile defense system in space. They felt most particularly good with the question of sharing the advanced technology required with the Soviet Union. Here is some of what each said about it last night.

Pres. REAGAN: What if we come up with a weapon that renders those missiles obsolete? There has never been a weapon invented in the history of man that has not led to a defensive counterweapon. But suppose we came up with that. Now, some people have said, "Ah, that would make war imminent because they would think that we could now launch a first strike because we could defend against the enemy." But why not do what I have offered to do and asked the Soviet Union to do -- say, "Look, here's what we can do. We'll even give it to you. Now, will you sit down with us and once and for all get rid, all of us, of these nuclear weapons and free mankind from that threat?" I think that would be the greatest use of a defensive weapon.

Mr. MONDALE: First of all, let me sharply disagree with the President on sharing the most advanced, the most dangerous, the most important technology in America with the Soviet Union. I would not let the Soviet Union get their hands on it at all. The most dangerous aspect of this proposal is for the first time we would delegate to computers the decision as to whether to start a war. That's dead wrong. There wouldn't be time for a president to decide; it would be decided by these remote computers. Might be an oil fire, it might be a jet exhaust; a computer might decide it's a missile and off we go. Why don't we stop this madness now and draw a line and keep the heavens free from war?

LEHRER: Mr. Leone, let's go from war to you first this time. How did Walter Mondale get the best of that exchange?

Mr. LEONE: Well, I think the President was wrong in two important respects.He was naive about the sharing of technology. The technology involved in not only recognizing a missile launched but in striking it can be used in a variety of ways in a warfare situation. If we're ahead in that technology it'd be very dangerous to give it to the Soviet Union. It's naive to think of us working for 10 years without them working and then turning the results over to them. Secondly, Star Wars itself is a foolish system. It would cut the response time to 50 seconds; the decision would have to be made by a computer. We could launch World War III without any human being playing a role in the process. There is no responsible scientist outside the administration who thinks it's a good idea to proceed, and we'd be very happy to fight the rest of the election as a referendum on whether or not we should spend a trillion dollars building Star Wars.

LEHRER: Do you believe that Walter Mondale made that point effectively last night to the American people?

Mr. LEONE: I think he made it in a variety of ways. He continued that process today. He started some time ago, a week or 10 days ago, and we're very happy that the debate has focused to some extent on that exchange.

LEHRER: You used the word "naive" a couple of times.Is that Mr. Mondale's position, that Ronald Reagan is naive after almost four years as President of the United States?

Mr. LEONE: The President's performance was astonishing last night in a couple of respects. At one point he said, "I'm not a scientist, I don't know where they're going to put those things." Obviously this is a system which would be based in space. In addition, if you marry it to the anti-satellite systems which we're already testing, which could blind us or our adversaries, you create a more dangerous world. A president has to know about that. That's not technical knowledge that ought to be beyond the mastery of the commander-in-chief

LEHRER: But what's wrong, as Mr. Reagan said at one time, well, what's wrong with just trying it? Let's try it. Nobody's ever tried this kind of approach before.

Mr. LEONE: Well, what's wrong with trying it is it's destabilizing. Multiple warheads were "let's try 'em. Let's try submarine-based missiles." What leads to an arms race is "just trying" to build more hardware. The other side responds. It accelerates the race. People begin looking for ways to break through. We've already looked at, in the United States, boosters on our MX missiles which would enable the missiles to get off quicker, so that an enemy Star Wars system wouldn't have time to respond. Now, the Soviet Union is undoubtedly doing that. Quicker missiles mean less response time, a hair trigger. People will feel the need to respond more quickly to any possible attack. They make the world more dangerous. And I think that that kind of thought, that somehow we can bridge this technology and break through, is naive.

LEHRER: All right, turning to you, Mr. Rollins. Why do you and others in the Reagan camp feel that this was a good score for Mr. Reagan?

Mr. ROLLINS: Well, I think first of all Mr. Mondale showed his naivete. This is a defensive system, and when he talked in terms of computers starting a war, I've never found a defensive system yet that could ever start a war. Unlike Dr. Leone, I'm not an arms control expert, but I certainly know that, you know, fires in oil drums on something that's still very much a research project is kind of a far-fetched extreme example. I think far more important is that Walter Mondale has made nuclear freeze his major foreign policy initiative, and last night he could not even talk about which weapons he wanted to verify. Geraldine Ferraro, the other evening on another television show, made the same kind of statement, and she didn't know how you could verify warheads. Walter Mondale last night talked about 2,000 new warheads being aimed at this country in the last three years, which basically came under the provisions of SALT II, which he basically approved and wanted the Senate to ratify. So I think he certainly shows a naivete for someone who's been vice president of the United States and a candidate for more than four years.

LEHRER: Well, what do you see as the major difference, then, between these two candidates on arms control and this whole area, whether it's in space or whether it's nuclear freeze or what?

Mr. ROLLINS: The key difference, I think is that the President basically wants to negotiate out of strength; Walter Mondale wants to negotiate out of a position of weakness.

LEHRER: What do you think about the folks, here again, that Elizabeth Brackett talked to in Illinois who came away thinking that it wasn't a good idea to share this information with the Soviet Union, as Mr. Reagan wants to?

Mr. ROLLINS: Well, I think the President basically said that if somewhere down the road -- it's purely a research proposal at this stage, if somewhere down the road the Russians were willing to basically disarm, as we would basically end up doing, and sit down and have some serious negotiations on it, that we would share the technology. I think any effort towards peace, whether it's the freeze that a Mondale wants or the efforts that we want, is certainly worth at least discussing, and that's all the President was doing last night.

LEHRER: Did you feel at all -- uncomfortable is probably not the word -- odd when, here you have a conservative President suggesting sharing information with the Soviets and a candidate who is generally considered more moderate or liberal being against it?

Mr. ROLLINS: Well, I think that the President himself has basically stated over and over again that the great gole that he has in a second term is to guarantee peace for generations in the future. I think one of the most telling remarks that he ever made to me one time in 1982 when I was arguing with him that the defense buildup politically was not the best route to go from a purely political perspective, the President turned to me and he said. "Ed, if you're alive in the year 2000, which I won't be, it'll be because of my defense proposals, and the Russians know that I meant business." And I think that's a very telling remark of this President's commitment to peace.

LEHRER: All right, gentlemen, thanks to you both. Judy? The Debate: Thru expert Eyes

WOODRUFF: For a less partisan persnective on the debate aftermath, but only slightly less partisan, we now bring in our two regular political analysts, Democrat Alan Baron, editor of the biweekly newsletter The Baron Report, and Republican David Gergen, former communications director in the Reagan White House, now with the American Enterprise Institute.

Well, gentlemen, we've heard that each side is saying that his guy won. What do you think, David?

DAVID GERGEN: Well, I think it was a close debate in which both candidates performed very well. But I'd like to go back to sort of fundamentals on this if we might. As you know, most elections, when incumbents run for re election, are referendums on that incumbent. Ronald Reagan started this race as a popular incumbent with what was perceived to be a good record on the economy. Walter Mondale started with a very large hill to climb. He managed to climb part of that hill in the first debate, and there were questions created about Reagan's age in that first debate. Last night Mondale performed well, but he did not enlarge that question.In fact, Reagan blew it away. He has disposed of the one question mark that remained between here and November 6th, and I would say right now that unless something catastrophic happens, Reagan essentially sealed his victory for November 6th last night.

WOODRUFF: So you agree with Vice President Bush that it's over?

Mr. GERGEN: I think that it's not over 'til it's over, but I just can't imagine anything large enough now that would close the kind of gap that still exists. You have to give credit to Walter Mondale. He has performed extremely well in both of these debates. He did not get theknockout last night that he needed in order to close the gap in order to win.

WOODRUFF: Alan, what about that? Do you think there's anything Mondale could have done to score a knockout? I mean, as you were sitting there watching the debate, was there a point when --

ALAN BARON: No, I think Mondale did as well as he could do, and I think the fact of that he's very much evidenced in the polls that have come out since the debate. Now, I know that these polls have shown President Reagan 43-40, 39-36, most of them very close. But the point of that is, of course, that going into those polls anywhere from 54, 55 percent of the people said they were for Reagan, and about 40 for Mondale. So you had a 14% gap for Reagan, and yet, when these same people are asked who won, you had a 3% gap. So I think Mondale did as well as he could.Now, I agree with david. It's a referendum on the incumbency. In the last 50 years half of the incumbent presidents running for reelection have won 58% or more of the vote. And it's very hard to defeat an incumbent, an elected incumbent running for reelection.

WOODRUFF: What you're saying is, looking at the debate as an isolated proposition, Mr. Mondale did well, but the question is whether that's enough --

Mr. BARON: Well, I think he probably did well enough in these two debates to, at a minimum, mean that Ronald Reagan will be reelected by a lower percentage of the vote, I would bet, than the average elected incumbent seeking reelection. And I don't think that was true at the beginning when Reagan was up at 58, 59 percent, which is where the average of these people get reelected. The odds are still against him of course, against Mondale.

WOODRUFF: We just heard Ed Rollins say that the debates don't matter.

Mr. GERGEN: I think they matter. Can we say the headline out of this is "Alan Baron Agrees with George Bush"?

Mr. BARON: No, because I don't think the election's over. I'm sure that -- and I certainly don't think Vice President Mondale does because a week before New Hampshire he was ahead 49 to 10 or something. So I think you wait until the election to count the votes.

Mr. GERGEN: The most important thing that happened last night was that Reagan bounced back. He reassured people. He gave them the kind of assurance they needed to believe that he was vigorously in command in his office. That was the one question mark that remained in this campaign. I do think --

WOODRUFF: But the Mondale people are going to say from now until the -- at least if what Mr. Mondale is saying today is any indication, they're going to go around pointing out every mistake that the President made last night, and they're going to say --

Mr. GERGEN. I'm surprised by that, to tell you the truth, because I don't think that that's a kind of rallying cry that's going to bring voters over to him.It seems to me that he had the possibility of developing much more effectively than he did the kind of argument that we haven't done enough on arms control, that "I'm going to go to the table every year," that Ronald Reagan is bringing us to the brink, to try to scare people. I think Reagan had a lot of counterarguments, but instead of going down that track he went down, "Reagan is a man who doesn't know all the facts." The American people are quite comfortable with a president who doesn't know every single fact out of an encyclopedia. They want a leader, and that's where Reagan is scoring over Mondale. It is not a race to become secretary of state. This is a race for the presidency, and that's where I think he'smaking his mistake.

WOODRUFF: Alan, you're shaking your head?

Mr. BARON: Well, I'll tell you something. If that's what the American people are looking for, then they'd better be prepared for a series of presidents who've got all of this information from the military -- and this is a very bipartisan statement, as I think anyone knows -- for 15 or 20 years that we were winning the war in Vietnam. And each month they sent thousands of more people into that war to die because the president said -- Richard Nixon, Lyndon Johnson, John Kennedy -- starting, but not as much. Certainly Johnson and Nixon said, "Based on the information that's coming up from below" -- which is obviously sending up because it'll get good marks, "We're winning this war." The President has to be in charge. You know, Franklin Roosevelt's strength was that he'd been an assistant secretary of the Navy --

WOODRUFF: Well, wasn't that one of the points that Mr. Mondale was trying to make?

Mr. BARON: I think so, and I think it's a valid point. I mean, David is talking like a -- David said last night that Mondale won in the race for secretary of state. Well, I'll tell you, the President has a lot of decision-making. I don't know what that means. Does that mean --

WOODRUFF: Do you think there's anything Mondale can do to catch up in the next two weeks?

Mr. BARON: Do I think there's anything Mondale can do? I don't know whether there's tactical anything he could do. I think that since whatever happened before that last debate, when he started to address these issues really to people rather than groups, I think he's done a very first-class job. I think things could have been done earlier.

WOODRUFF: A last word, David?

Mr. GERGEN: The headline could be "George Bush Agrees with Alan Baron."

WOODRUFF: Okay. David Gergen, Alan Baron. Thanks once again. Jim?

LEHRER: Still to come on the NewsHour tonight, a look at the economic revolution coming in China, an American farmer's unique view of what's going on in the Soviet Union, and a look at the prospects for an all-out oil price war and OPEC's fight to prevent it.

[Video postcard -- Richmond, Virginia]

LEHRER: A new wind of revolution is blowing across the vast land that is China and it has to do with things like merit pay. Charlayne Hunter-Gault has more on it in our next focus segment. Charlayne? Going Competitive

CHARLAYNE HUNTER-GAULT: Jim, in the most radical change in 35 years, China's Communist Party announced over the weekend that it would move away from its rigid system of government control in favor of a more competitive, capitalistic approach. The dramatic blueprint calls for greater individual competition and reward and economic independence for the nation's one million state-owned enterprises. The series of reforms are being called the boldest yet undertaken by China's premier leader Deng Xiaoping, who himself called them a kind of revolution. They include reduced central planning for most industries except those that directly affect the national economy or people's livelihood, like steel or cement production; a phase-out of various subsidies for consumers; setting prices by supply and demand rather than by the government; and linking wages in urban areas to productivity. These changes follow China's 1978 revision of its rural economic system in which individual farms began to supplant China's communes. For more on the long-range implications of China's new economic direction, we have with us Nicholas Lardy, an associate professor at the University of Washington's Jackson School of International Relations, where he specializes in China's economy. He's just returned from a lecture tour in China. Tonight he joins us from he studios of public station KCTS in Seattle.

Professor Lardy, why is China making these radical changes now?

NICHOLAS LARDY: The major reason is the relatively slow growth of the industrial sector and the perception that agriculture has responded so well to the reforms that were instituted a number of years ago, that it's time to try to push forward, to introduce similar far-reaching changes in the urban sector, primarily industry and also international trade.

HUNTER-GAULT: The Party used some fairly strong language in describing what was wrong with the system that they had all these years, like stifling initiative, spawning waste, ignoring market demand.I mean, is this tantamount to a repudiation of the Soviet style of communism they've had in place all these years?

Prof. LARDY: Well, some of the criticism has been voiced previously. Indeed, over the past four to five years, many of the criticisms that are contained in the document have already been made.What the document really represents and what the decision of the central committee of the Party represents is a deepened commitment to go ahead with reform rather than to turn back. In other words, some people have suggested that since marginal reforms really haven't been very effective that they ought to return to their old Stalinist-style, Soviet economic planning.

HUNTER-GAULT: Are these people within the Party who have suggested this?

Prof. LARDY: Yeah, some of them certainly are within the party. they are at all levels, including very high levels of the party, and also within the economic bureaucracies. So the analysis of what's wrong has been debated and gone on for years, and this really represents an acceptance by the Party of the necessity of much more dramatic reforms than they'd previously been willing to consider.

HUNTER-GAULT: How do you think these reforms are likely to affect China's economic life?

Prof. LARDY: Well, they could be quite far-reaching if they're ultimately all carried out. For example, China doesn't really have a system of labor markets. People are assigned to their jobs, by and large stay working for the same enterprise for decades. A system that's going to reward labor productivity with higher wages is going to have to implicitly introduce labor markets, give the opportunities for mobility. People might be able to change their employment, change their job. The changes will be really quite far-reaching if they're all followed through.

HUNTER-GAULT: How prepared are China's people for these kinds of dramatic changes? I mean, suddenly there's individual initiative and all of this sort of thing, competition. How are people and how are businesses likely to react?

Prof. LARDY: Well, I think the reactions will be quite varied. Many people will welcome the opportunity for a system that provides them with greater opportunities for increasing their living standards. Some bureaucrats, on the other hand, are going to be quite strongly opposed to the reform. they're going to be confronted with more pressures for improved performance, some coming from the foreign sector, that is, imports. Other people are worried that prices are going to increase and perhaps reduce their living standards. I think ultimately the effectiveness will be determined by how well the reforms succeed in improving living standards. In the agricultural sector, for example, the reforms have been enormously successful, and initial opposition to them has been virtually completely overcome.

HUNTER-GAULT: Has there been much preparation for this? I mean, did people sort of see this coming once the -- I mean, Deng Xiaoping was the one who brought in these agricultural reforms. I mean, have people sort of been preparing for this change?

Prof. LARDY: Yes, many of the reforms that were announced have been tried out on an experimental basis or in modified form. There's been some discussion in the press of the need to reduce these very heavy subsidies of consumer goods, particularly in urban areas. So people have been understanding that a major change would be coming.

HUNTER-GAULT: What do you think is going to be the hardest of these reforms to implement?

Prof. LARDY: I think the most difficult thing politically will be eliminating the very heavy subsidies of consumer goods. Let me give you an example. To break even on the sale of rice and flour, the state would have to roughly double the price. Housing, the price would have to be roughly quadrupled; that is, rents. So if they're really going to eliminate subsidies, they have to institute some very substantial price changes, and they'll have a difficult time engineering a wage system that will offset some of the substantial price increases.

HUNTER-GAULT: Isn't it likely, too, I read today there'll be a lot of business bankruptcies and a lot of unemployment as a result? I mean, have the people been prepared for these kinds of perhaps short term upheavals, but upheavals in the system, nevertheless?

Prof. LARDY: It's not really clear to what extent there'll be widespread layoffs and closings. The Chinese have talked about having a concept of socialist bankruptcies in the past, but they've never been really willing to bite the bullet and close down very many inefficient enterprises. Until last year, for example, about a fourth of all the enterprises in China were losing money. In 1983 they managed to reduce it somewhat, but there's still a very substantial number of enterprises that are losing money.

HUNTER-GAULT: All right, well, how long do you think it's going to be before these reforms can be totally implemented?

Prof. LARDY: Well, I think it's going to be a period of months and, indeed, years. Indeed, I would not use the word blueprint to describe the document that's been released, but rather a vision. It represents a vision of where they want to be in terms of improvement and the efficiency of allocation of resources. It's rather unspecific on the question of details and policies to achieve the vision.

HUNTER-GAULT: All right --

Prof. LARDY: And I think it's likely to take a number of years for this to unfold.

HUNTER-GAULT: All right, Professor Lardy, thank you for being with us, and we'll be watching as it does unfold. Judy? People to People

WOODRUFF: We're going to turn our attention now to China's biggest neighbor, the Soviet Union, and one piece of its economy, a very human piece. Twenty-five years ago last month, Soviet Premier Nikita Khrushchev became the first Soviet leader to come to the United States. While here he visited a farm in Iowa, and one of the people he met on that farm was the owner's nephew. the nephew's name was John Crystal. And, as producer Lee Luse of public station KTCA in Minneapolis-St. Paul found out, Mr. Crystal has kept his memory of that visit very much alive.

JOHN CRYSTAL, Iowan: When Khrushchev came to Coon Rapids it was a town of 1,300 people. And there were thousands of people from he news media, all looking for their own particular stories, so that they were, I'd have to say, rude and fighting to get the best shot.

They really didn't know very much about agriculture, and they hardly knew cattle from hogs. I think what they really found most interesting was each other and the whole episode.

LEE LUSE [voice-over]: It's been 25 years since Nikita Khrushchev visited the Roswell Garst farm near Coon Rapids. But for Garst's nephew, John Crystal, that visit was only the beginning. Four years later, Khrushchev invited Crystal to visit his home on the banks of the Moscow River, an occasion that John Crystal today recalls with some amusement.

Mr. CRYSTAL: Khrushchev was personable, blunt, really quite likeable. I know that we had dinner at his house and we had roast duck, which Mrs. Khrushchev had cooked. And he asked us where we thought we got the duck, and of course we din't know, and he said Castro was here and shot it, and then just laughed like mad that capitalists would be eating duck shot by Castro at Khrushchev's home.

LUSE [voice-over]: In the years since that visit John Crystal has prospered. Today he's president of the local bank, a successful farmer and part owner of Garst Seed, one of the largest seed-corn companies in Iowa. He's also continued his visits to the Soviet Union, becoming a sort of unofficial expert on Soviet agriculture. At the request of top Kremlin officials, Crystal has made over a dozen trips to the Soviet Union, where he is in great demand as both an agricultural consultant and lecturer. This unusual working relationship has allowed Crystal to develop close personal friendships with both Soviet officials and citizens, a privilege he does not take lightly. Because of these experiences, John Crystal has made it a personal priority to share his insights on Soviet behavior with the folks back home.

Mr. CRYSTAL: I think Americans would like for the Soviets to be like Americans, and they aren't. They didn't have the Reformation. They didn't have the Renaissance. They've not had a mixture between themselves and other people. They are what they are. That's something that oftentimes we justly don't admire, and it's oftentimes something that is to our discomfiture. But that's how it is, and we have to find some way to live with them in the world or to be incinerated.

LUSE [voice-over]: In addition to reducing the possibility of nuclear war, Crystal feels that improved relations with he Soviet Union could mean more business for Iowa.

Mr. CRYSTAL: I really personally am more interested in how I could help Coon Rapids and the state of Iowa and the United States, in ascending order, but my ability becomes less as you go up the ladder. And I think that maintaining a friendship and contacts in the Soviet Union helps Coon Rapids. I think, in fact, he town is very supportive of having the whole town have a relationship with the Soviet Union because it's an agricultural town, and we need to export agricultural goods, and the Cold War is very bad and they'd like to see it be better. So that I think the town is very supportive.

LUSE [voice-over]: John Crystal's openminded approach to world politics plus his practical farm experience have given him a unique perspective on the problems of both American and Soviet farmers.

Mr. CRYSTAL: When I visit with a Soviet farmer, I really have a feeling of empathy for him. They have one drought out of every three crops. That's a terrible thing for a farmer. Even if the price isn't very good, to raise a bountiful crop and see it come in out of those wagons is really a glorious feeling, and they don't do that as often as we do. And farming is a series of either failures or avoiding failures. It's a business built with disaster. And to see them with machines that work well and a good-looking crop and good-looking livestock and success is just wonderful. Sure, I feel a real empathy with Soviet farmers and understand the pride they take when they have good luck combined with good industry.

I think we ought to view the Soviets in reality. We ought to have them be thought of as what they are and not what we wish they were. And, in fact, their economy has not been a failure, since in the 25 years I've been going there they have better housing, better education, better health delivery, better recreation. They have a better life. When I first went there they had 65% of the population in agriculture. Now they have 35. It's a terrific off-farm movement. What they're doing in agriculture is feeding a larger population and a population of which more lives in the city a better diet with fewer farmers. And that's successful.

It's just not as successful as it is in the United States for several reasons. We've had a longer history of education. We've not had a war on our land. And we have a longer growing season and we have more rain. And we've been at it longer than they have. We have an infrastructure that is marvelous in the United States -- a road system, an elevator system, a farm-implement dealer system. And all those things have cost billions and billions of dollars, and they don't have as much of it as we do now. But they are successful when compared to themselves.

LUSE [voice-over]: In a world of political tensions, John Crystall's personal goal is to sow a few seeds of international understanding.

Mr. CRYSTAL: I think if you wanted to look at the Russians for positive things, that could be beneficial to he United States. It is that they are industrious, bright people who come from a difficult background, who have made a lot of progress and want to have a better world for their children. I think you see a kind of a sleeping giant and I hope a sleeping peaceful giant. Fuel Prices: Going Down?

LEHRER: Our final focus piece tonight is on oil prices. Today the Saudi oil minister said in Geneva he and his OPEC collaborators had decided to hold the line. Their prices will not come down to meet the cuts made by Great Britain, Norway and Nigeria. What is going on, we ask? And we ask it of David Cook, who has been covering this oil price story for The Christian Science Monitor.

Is OPEC dreaming, or can they really hold the price where it is?

DAVID COOK: That depends on how successful they are in doing what they say they want to do. At the moment the plan, according to Libya's former oil minister, who is also the former president of OPEC, is to cut production about 20%. If they succeed in doing that, many analysts say they have a shot, anyway, at stemming the price decline.

LEHRER: Now, in simple language, how would that stem that?

Mr. COOK: Well, if you took a 20% cut, that's about 3.5 million barrels a day that you'd be taking out of the world oil market. And that would tend to -- that would tighten the supplies fairly significantly. OPEC is now producing about 17.5 million barrels. Tighten the supplies and put upward pressure on price. A number of the analysts mentioned that there is very little oil outside of OPEC that could come onstream right now to sort of make up for the reduction in OPEC's production, so they're in pretty good shape there.

LEHRER: All right, now. Let's go back a step, David, to the action by Great britain and Norway and then Nigeria --

Mr. COOK: Right.

LEHRER: -- which, of course, is one of the 13 OPEC countries. What caused them to lower the price in the first place?

Mr. COOK: There are a couple of factors at work here, and there's sort of a psychological impact as well. It's a commodity market so there's a lot of psychology involved. Several factors.One, first of all, refiners have moved away somewhat from the light oil that is sold by those three countries, Norway, Britain and Nigeria. Light oil is a higher-quality oil, sells for a higher price and is used in gasoline and aviation fuel. Anyway, refiners in the United States and elsewhere have moved away from heavy oil. They've got new equipment that lets them refine heavy oil and make the same kind of product. So they save money. So, weak demand for light oil. Secondly, the dollar, as you know, has weakened a bit lately.A number of oil traders thought, well -- it's especially ascribed to German oil traders -- "We'll hang out of the market, wait for the dollar to go down a bit, and then we can buy the oil cheaper." And that created a slight glut in the North Sea market where Norway and Britain both have wells. The final factor is a maintenance kind of situation in the British fields. They were off-line in the summer. Norway got to pick up some of that demand. Britain came back on, and the theory is, anyway, that there was then an excess and that prompted Norway to cut price to hold its market share.

LEHRER: I see. All right, let's go back to the OPEC decision now. They're going to meet actually a week from today -- Mr. COOK: Right.

LEHRER: -- also in Geneva and to try to bring about this 20% cut. There are two scenarios, obviously. Number one, they're successful: number two, they're not successful. If they are successful, what is the likely scenario?

Mr. COOK: If they're successful in holding the price? Well, for us, anyway --

LEHRER: That's what I mean, for us, for American consumers.

Mr. COOK: For the United States.For the American consumer it means you don't get a gift you thought you might have gotten. All right, we don't get the sort of lower inflation that we would have gotten from an oil price cut. You don't get the slight kick to economic growth. On the other hand -- and, of course, if you're an investor and you've taken a plunge in airline stocks or auto stocks thinking that oil prices are going down, you might be a little bit sorry. But the situation isn't as it might look. For one thing, OPEC last moved up prices in February or March -- moved them down, rather, I'm sorry, in February or March of '83. Since then the prices have been constant. Inflation has been ticking along at a low rate, but nevertheless in real terms, after-inflation terms, oil prices have come down already so consumers have done fairly well on oil. And also, if OPEC succeeds in holding the price, it will take a little pressure off of U.S. banks which have made loans to some developing nations that sell oil. Those loans might go sour if the oil price goes down and they can't pay off.

LEHRER: Okay, reverse it. Let's say OPEC doesn't hold the price and we have some kind of oil price war. What happens to us and for us?

Mr. COOK: I should say that anlysts are giving, in typically cautious fashion, sort of a 50/50 hedge on that. If it happens, you've got to ask yourself first, how much are the oil companies going to pass on to us?They have the option f fattening their profit margins a bit and not passing it all along. Well, let's assume that they're feeling particularly generous and and not passing it all along. Well, let's assume that they're feeling particularly generous and that there's a cut of roughly $2 a barrel in oil prices. If that happens, you could see a drop in gasoline prices of about 3" a gallon. Home heating oil is another sort of interesting subject. You might see a cut of 7" a gallon there. the Energy Department now says that this winter heating oil prices should be about $1.10 a gallon. So you can take 7" off of that. Because oil competes with natural gas in some applications, espcially in industry, there'd be some downward pressure on natural gas. As you know -- covered in the program a lot -- the natural gas prices are going to be decontrolled in January. the expectation is that prices will then go up a percent or two. If this oil price cut were to take place, natural gas prices might be flat.Want me to ramble on a bit about how it'll affect the economy?

LEHRER: No, no, that's all right, that's okay. Just to summarize this because we need to get on, that whichever scenario, there is for the long run at least, it looks like the United States and the rest of the world is going to have fairly stable or lower energy prices over the next year or two, correct?

Mr. COOK: There are two scenarios. I'll be very brief. One scenario is lower oil prices stimulate faster economic growth; therefore, faster use of oil, therefore higher prices.The flip side, and the one cited by Clifton Garvin, the chairman of Exxon, in a Washington Post interview on Sunday is, oil prices roughly where they are now, and eroded by inflation. Take your pick.

LEHRER: All right, David, thank you very much.

Mr. COOK: Thank you.

LEHRER: Judy?

WOODRUFF: Taking a last look now at today's top stories. It was the day for the debate over the debate. Both Mondale and Reagan said they had won last night's foreign policy faceoff. Most opinion polls indicated it was a draw.

And some OPEC nations said today that they will cut production before they'll let prices fall further. OPEC holds a formal meeting next week.

Good night, Jim.

LEHRER: Good night, Judy. And we'll see you tomorrow night. I'm Jim Lehrer. Thank you and good night.