The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. I'm Robert MacNeil in New York.

MR. LEHRER: And I'm Jim Lehrer in Washington. After our summary of the news this Tuesday, Ontario Premier Bob Rae and White House official Gail Wilensky debate the Canadian health care system, Tom Bearden reports on making the state government's ends meet in Florida, and we update the war over the dividing nation of Yugoslavia. NEWS SUMMARY

MR. MacNeil: Convicted murderer Robert Alton Harris was put to death this morning in a California gas chamber. The execution took place after the U.S. Supreme Court overturned four stays and ordered the Appeals Court not to hand down anymore. The last stay had been issued with Harris already strapped in the chair. Outside the San Quentin Prison, hundreds of death penalty supporters and opponents peacefully demonstrators. Harris was the first person to be executed in California in 25 years. Jim.

MR. LEHRER: Hundreds of anti-abortion protesters demonstrated in Buffalo, New York, today. They were met by about an equal number of abortion rights demonstrators. Police demonstrators said there were some skirmishes between the two sides. Two people were arrested. The group, Operation Rescue, has vowed to blockade and close down the city's four abortion clinics.

MR. MacNeil: Medicaid, prison costs and increased demands for welfare are among the leading budgetary problems facing state governors this year. The National Governors Association released its annual survey of state fiscal conditions today. It showed a general pattern of budget cutting and tax increases, but the report said fiscal conditions were the worst they'd been in 15 years. New England states were hardest hit, followed by the Mid Atlantic, the West, and the South. The Association's executive director spoke about one major problem area.

RAY SHEPPACH, National Governors' Association: Health care cost is the major problem. Not only has it grown 20 percent a year over the last couple of years, and Medicaid represents about 14 to 15 percent of state budgets, but as you look out over the next five years, even the Congressional Budget Office continues to have Medicaid growing at 17 percent per year over the next five years. We need to work with the Congress and the administration on comprehensive health care reform. That's probably the only way that we're, in fact, going to be able to handle health care costs.

MR. MacNeil: As an example of one state's new struggle with budget and taxes, we have a report on Florida later in the program. The Federal Bureau of Investigation reached an out of court settlement today with some 300 of its black agents in a discrimination case. The two sides reached an agreement in principle to reform the FBI's employment policies and practices. In addition, black agents who filed complaints will receive promotions, back pay, and other monetary compensation. Under the agreement, the FBI did not admit it engaged in any form of racial discrimination. The agency's legal counsel, Joe Davis, explained that at a Washington news conference.

JOE DAVIS, FBI Legal Counsel: Under the law there are certain situations in which you can have something that would be referred to as discrimination and would be prohibited by Title 7 without any intent to discriminate, if you have facially neutral policies or practices that adversely impact on a particular minority group. And so there were a few areas where we saw indications from the statistics that we might have that situation.

MR. MacNeil: One of the agents involved in the complaint was Liz Cassell. She had this reaction at a separate news conference in Washington. At her request, we have obscured her face so as not to compromise her position as an undercover agent.

LIZ CASSELL, FBI Special Agent: I feel confident that things will be better. As Joe mentioned earlier, most of us went into the idea that we could change the system and that's what we wanted to do is to change the system. Because Director Sessions is interested in changing the system and providing a colorblind system, then we were able to do this.

MR. MacNeil: Specific details of the changes are still being negotiated.

MR. LEHRER: In Afghanistan today, a government leader said he was ready to surrender power to a rebel-led council. But so far the rebels have not agreed on who should lead such a council. The country has been led by the remnants of its once Soviet-backed government since President Najibullah was forced to resign last week. We have a report from Kabul by Paul Davies of Independent Television News.

MR. DAVIES: The U.N. envoy to Afghanistan appealed to all rebels to join the peace talks.

BENON SEVAN, United Nations Envoy: We are almost there. Don't risk destroy the chance for peace. At the same time, I'd like to say to everyone, and I'm sure you will agree and they will agree, that this is the time to promote tolerance and forgiveness. This is the time to refrain from revenge.

MR. DAVIES: Today the guns defending Kabul have been largely silent, waiting for the threatened assault and the outcome of new U.N.-sponsored talks. In the new no man's land, villagers took advantage of the lull to go about their normal business, moving their herds out of what could soon be the next battlefield. The main routes into the city are now patrolled by a mixture of government troops and Mujahadeen who've come together to form a defensive barrier to block the advance of the Islamic fundamentalist army. This army officer told us he's happy to stand alongside his former enemies. He said, "We're forming a line here as brothers to stop those who want to destroy Kabul." The UN envoy has been meeting several Mujahadeen leaders today. He believes he'snow critically close to reaching agreement on a new Mujahadeen- dominated council to replace the government of former President Najibullah.

MR. LEHRER: Najibullah remains in Kabul at a United Nations office. His family has gone too India.

MR. MacNeil: There was more ethnic fighting today in the Bosnian capital, Sarajevo. Serbian forces are continuing to resist Bosnia- Herzegovina's declaration of independence from Yugoslavia. We have a report narrated by Richard Vaughan of Worldwide Television News.

MR. VAUGHAN: It seems that nothing can stop Bosnia from slipping into all out war. Serbs launched their heaviest assault on Sarajevo, seemingly intent on cleaving it apart. Observers believe they want to occupy parts of the city. Whatever the objective might be, the cost is high. Serbs aimed their mortars at Sarajevo's television station, claiming it was responsible for broadcasting propaganda. Four shells hit the station, causing extensive structural damage and shattering glass throughout the building. Despite the attack, engineers say transmission equipment wasn't affected and they will stay on air. At UN headquarters, peacekeepers watched, but for now, commanders seemed determined to stay out of the fray.

FRED ECKHARD, United Nations: We're just taking some extra security precautions here on our own facility and waiting to see what develops.

MR. VAUGHAN: They may have no choice but to act before the rival ethnic factions destroy everything there is of this recently born republic.

MR. LEHRER: Sec. of State Baker said today the United States must stay actively involved in helping the former Soviet republics. He called for public support of a $24 billion international aid package for Russia. He spoke to the Chicago Council on Foreign Relations.

JAMES BAKER, Secretary of State: I'm sure you will ask me, as some in Congress have already asked me, whether this is just more foreign aid. And I will answer you that it is not just more foreign aid. You will ask me whether this is just more charity and I will answer you that it is not just more charity. It is, instead, a hard-headed investment in our security, a hard-headed investment in our future. Simply put, the Freedom Support Act is in America's national interest. Indeed, I would argue it is in our national security interest.

MR. LEHRER: Arab and Israeli negotiators have agreed to meet in Rome for another round of peace talks. They will follow those scheduled for next week in Washington. No date has been set for the Rome session, but a State Department official said they will not be before Israel's June 23rd national elections.

MR. MacNeil: And that's our summary of the news. Now, it's on to a debate on Canadian health care, budget problems in Florida, and an update on fighting in Yugoslavia. FOCUS - PRESCRIPTION FOR CHANGE

MR. LEHRER: Our lead story tonight is the new American debate about some Canadian, guaranteed cradle to grave, nationalized health care for all. The political push toward reforming the U.S. system has led some to advocate adoption of the Canadian approach. President Bush is among those opposed. Here is the way he laid out the choices in his State of the Union Address.

PRES. BUSH: Really, there are only two options, and we can move toward a nationalized system, which will restrict patient choice, a system which will restrict patient choice in picking a doctor and force the government to ration services arbitrarily, and what we'll get is patients in long lines, indifferent service, and a huge new tax burden. Or, we can reform our own private health care system which still gives us for all its flaws the best quality health care in the world.

MR. LEHRER: The debate about the Canadian system has continued since that speech and we continue it now at a government to government level. Gail Wilensky is deputy assistant to President Bush for policy development. She advises Mr. Bush on health policy. She served earlier as administrator of the Health Care Financing Administration, the federal agency which runs the Medicare and Medicaid programs. Bob Rae is the Premier of Ontario, Canada. Mr. Rae, like the premiers of Canada's other provinces, is responsible for overseeing the local administration of Canada's national health care system, of which he is a strong advocate. He is with us tonight from Toronto. Mr. Rae, you answered President Bush and other Americans in a recent Washington Post op-ed page. "I'm glad we have our system and not yours," you said. Why are you so glad, sir?

MR. RAE: Well, because the things that President Bush said in his speech about how our system runs -- I can't speak for other countries, I don't know what other systems he had in mind -- but in Canada, patients have the right to choose their own doctors and do. That right is fully established and clearly established and has not been changed at all by the way in which we've changed our insurance plan, because we're able to provide insurance literally for everyone that it is paid for out of tax dollars at the provincial level and on the whole, it's a system that is more affordable for our society, more affordable for our economy, and provides a better quality of care than any of the alternatives that we've seen. And the picture that President Bush describes or Sen. Tsongas, who's commented on our system, when they talk about our system, I simply don't recognize what we experience here. It's not a perfect system, but we think it's a good one and we think that if you want to study it, that's fine. If you want to choose another system, that's fine too, but don't knock the system here because we think it's a good one and we think many of the criticisms that we've seen in the American political debate are just really quite off base.

MR. LEHRER: I want to go through those, but in your op-ed page piece you made -- the major point that you made was that comparing your system with the American system was that your system, the Canadian system was fairer. What did you mean?

MR. RAE: Quite simply, we don't have -- I think in your country there's something 40 million people estimated for '91 who don't have any insurance at all, another 50 million people who are substantially underinsured. In our system, everyone is insured. Everyone is covered. People get to choose their doctor and the care is provided. It's paid for out of tax dollars. The system ensures that what determines whether or not you get care and when you get care is how sick you are, not how well off you are, or how well connected you are, or what kind of insurance you have. Everybody has the basic insurance. Now, you can supplement that insurance, but the basic insurance is there for everyone. And I think that's the fairest system. What we've said as a society -- we said it a long time ago -- and there's nobody on the right or the left or in the middle or wherever in the political spectrum I think who'd want to move away from it -- what we've said is that health care is simply not a commodity. It's a basic right. It's a sign of what we owe each other as human beings. Anybody can get sick, whether they're rich or poor, and everybody should have access to decent health care. And we've managed to do that and we've managed to do it in a way that's we think reasonably cost effective, reasonably fair. And of course, there are going to be problems in any system, but we're very proud of our system.

MR. LEHRER: Mr. Wilensky, has Mr. Rae not actually framed the differences between the United States and Canada when he says that in Canada health care is a right, wherein the United States it is not seen as a right?

MS. WILENSKY: I don't think that's the most useful way to look at it. Let me explain why. I think that Americans believe that people need to get access to adequate health care. The question is: Who, who, who pays, how is it provided? That's really a very complicated question. I think that it's important for Americans to recognize that if Canada is satisfied with the Canadian system, that's their business. I look at what Canada does and I feel very strongly this is not going to work for us. We are not them. We have a different cultural background. We have different views toward government. We have different expectations, and I don't think that what they have done through their entirely tax- financed system, which has much greater constraints on technology and availability of specialists, is something that we in this country would find comfortable with. If it works for them, I'm not going to tell them they ought to change. I do think that they are beginning and will continue to see some fraying at the edges. It's 20 years out. Some of their capital structure is going to start to show signs of wear and tear and, of course, their baby boomer generation is just beginning to hit their own country. But, again, it's for them; that's their business.

MR. LEHRER: But let's go to some of the basic underpinnings of that system as how it applies to the debate that's going on in the United States, the political debate. And it's not only a political debate, I think you would agree, it's a debate that's going on not only among the politicians, but among everybody in the country. Now the question that I raised and that he raised is the issue of the right. In other words, in Canada, the decision has been made by society that everybody has a right to health care, across-the- board. Now, that decision has not been made in the United States, is that correct?

MS. WILENSKY: Well, in the sense of does the government guarantee that you will have insurance or that you will have coverage, no, we certainly have not made that kind of decision. What we have said, and what President Bush has announced, is that the government ought to make sure that poor people have access to insurance and that the barriers that exist that keep the rest of us from sometimes getting insurance or knowing we'll have it, have to be broken down. But our whole concept of a public/private partnership is a very fundamental way we look at social services. Canada has no private universities. The whole notion of wiping out private higher education, doing away with that public/private partnership, would, I think, strike people as being very strange, indeed. It really is a very different view: What's the role of government, how do we best respond to the needs of our citizen? I think there are very few people who would want government controlling 12 percent of our Gross National Product and everything that means in terms of responsiveness.

MR. LEHRER: Well, Mr. Rae, isn't she right that before you get to health care, specifically, you have to take one step backward to the political philosophy that guides your country vis-a-vis what guidesthis country?

MR. RAE: Well, I think the issue is -- I think the issue is one of values in part, but it's also one, frankly, of information. I mean, there's a number of things which Ms. Wilensky has said about our system which, you know, I appreciate the comments that she's made. I can make equally strong comments with respect to the American system. She says our system may be fraying after 20 years. I don't think your system is fraying. I think your system is falling apart. I think when you've got 90 million people who either don't have any insurance or are dramatically underinsured, the only industrialized country in the Western world that's in such a situation, it may be that the country that's out of step with what's going on in the rest of the world is the United States, and not everyone else.

MR. LEHRER: Let's let Ms. Wilensky respond --

MR. RAE: We accept -- let me just say one thing -- we accept a public/private partnership; that's essential. The argument, for example, that President Bush makes that in what he calls a nationalized system, the only thing that's been made public in our system effectively is the system of insurance. We have one insurer in every province. We've dramatically reduced the administrative costs of the system. Our administrative costs, our bureaucratic costs, the costs the bureaucracy, which I would have thought would be of interest to Americans, is about 25 percent per capita what your costs are. That's where the savings come in. But all the other stuff about how Canadians can't choose their own doctor or how we don't have access to technology or how, you know, people die waiting for operations, this is the -- this is cliche-ridden stuff. It does not describe the system that I think most Canadians understand and see instinctively and see happening all around us.

MR. LEHRER: Ms. Wilensky, have you got his system wrong?

MS. WILENSKY: There are a lot of points he just raised. Let me say first the 90 million is a number I think most of us would not accept. There are some 30 plus million people without health insurance coverage. What counts for underinsured is very much in the eye of the beholder. We recognize in this country that having large numbers of people without health insurance coverage is a problem. The President has stepped forward with a plan to resolve it, others have as well. And we recognize that our costs are increasing too fast. The good news for us is that we couldn't have designed a system to spend more money than the one we've got that gives us lots of place to look to try to get a handle on health care cost increases without going to a system which for us would be very uncomfortable, that is, government, single payer. Now, the issue about whether we're the ones out of step, they're the ones out of step, Canada is frequently cited as being very much in line with other European countries. In fact, it is one of the few countries that does not have a place for private insurance. I'm not going to say that's wrong for them, but it actually --

MR. RAE: That's not true.

MS. WILENSKY: -- is not very moderate with that.

MR. RAE: Excuse me, excuse me, Ms. Wilensky, that just isn't the case. You've just said something which isn't true. You've just said that there's no room for private insurance in the Canadian system. There are hundreds of thousands, indeed, I would suspect millions of Canadians, who have supplemental insurance of various kinds, so that, again, let's get the facts straight. Now, the room for private insurance may not be as big as you or others would like it, but to go around telling Americans that Canadians can't choose their own doctor, that there's no room for people having additional insurance, the other stuff that's being said, is really quite unfair. And it's almost as if we're being forced into the debate in the United States because -- I mean -- Sen. Tsongas said, for example, he said, if he'd been ill in Canada, he wouldn't have been able to get the same treatment. False. The treatment has been in place in Canada for as long as it's been in place in the United States. I was a bone marrow donor, myself, I mean, for my own brother. So it -- the stuff that's being said about our system I think is becoming -- is putting at issue really why it is that so much about the Canadian health care system is being misunderstood and misinterpreted in the middle of this political debate in the United States.

MR. LEHRER: Well, then let's give Ms. Wilensky an opportunity to describe what she believes the Canadian health system is and why it wouldn't work here.

MS. WILENSKY: Fundamental decisions are made at a governmental level. It is government-financed health care. In this country that carries with a very large connotation. Decisions about technologies are made at the provincial level. They are done through --

MR. LEHRER: You mean --

MS. WILENSKY: -- budgets --

MR. LEHRER: -- so many, whatever, CAT scan machines --

MS. WILENSKY: Exactly.

MR. LEHRER: And that sort of thing.

MS. WILENSKY: Lithotrifters, the kidney stone smashers, magnetic resonance, imagers, the MRIs, the latest in imaging, these devices are rationed, allocated in a very careful way as a way to try to control health care costs. They're much less available. People are expected to travel to university sites to have them in very controlled ways. The number of specialists are much more controlled than they are in the United States and they're controlled in much more of a government-oriented fashion. For us to look to this kind of a system where government makes the decisions about how much and how to allocate it and raise the money to finance health care through taxes would be a very foreign concept. There's a wonderful quote that was on the PBS show about two weeks ago on critical condition where a man from Flint said, I'm for national health insurance, I just want to keep the government out of it. Now, that's not the kind of comment that you hear in Canada. And, again, I am not telling Canada that this is not a good system for them. I do believe very strongly our way of doing things, our view of government, our views about the role of government, and our inclinations toward availability of modern technologies in an easy way is a very important distinction.

MR. LEHRER: Let me ask you this. There are many ways to measure quality of health care. One of those that Mr. Rae cited in his op- ed piece and that I read today, those who advocate a system for here point out that two of the measurements are infant mortality and longevity of life, and in both of those categories, Canada out ranks the United States.

MS. WILENSKY: I think frankly you know better. I think that you know that both infant mortality and life expectancy are heavily influenced by lifestyle factors. Our problems are much more to do with drugs and alcohol abuse, not taking proper care. You need medical care. There are instances where medical care makes a difference of life and death. But we know that these factors are much more heavily influencing.

MR. LEHRER: All right. Then what measurements would you use? In other words, how would you judge, and what basis would you use to judge the differences between the quality of the health care that the average Canadian gets vis-a-vis the quality that the average American gets?

MS. WILENSKY: Well, I think that what we are trying to do in this country -- and it's something this country has been a leader on - - is look to outcome measurements, look to what really makes a difference, as well as, of course, how people function, how well they're functioning, the whole sense of well-being. Very little of medical care at any point in time really is distinguishing between life and death. It has a lot to do with quality of life, how well we function, the sense of well-being that we have in our system. Those factors, of course, are driving in part our interest in reform. We know that we've got to make changes. I don't want to sound like our health care system now is everything it should be; we know that's not true. But on areas like quality and easy accessibility and comfort, we do have very strong measures and leaders in research and development and training, pharmaceutical research, areas in which not only we gain a lot but, of course, the rest of the world gets to gain with us.

MR. LEHRER: Mr. Rae, what measurements would you use to judge the differences in the health care quality that the average Canadian, average American gets?

MR. RAE: Well, I do happen to think that basic criteria like how long you live and how many children survive and so on, I think those are basic factors. Those are basic measurements that are used by the World Health Organization and everyone else. I'm not -- I don't disagree with Ms. Wilensky when she says that there are a lot of other factors. Of course, there are, but let's not redefine the problem or redefine the issue. And I think those are critical criteria that you've got to use. I also just want to take issue, because Ms. Wilensky keeps coming back to this specter which I know is such a feature of American politics, of the government running everything. The reality in our system is, is that what drives the health care system is the relationship between patients and doctors. That's as true of our system as it's true of the system in the United States.

MR. LEHRER: Let's stop right there. Let's stop right there. Are you suggesting something different than what he has said about the Canadian system? Do you think it works differently than what he just said?

MS. WILENSKY: I think that the issue of whether the most important relationship is patient and physician is, of course, true. The question of whether or not government makes fundamental allocation decisions about where technologies, facilities,and specialists are available, is something that characterizes Canada, doesn't characterize us.

MR. RAE: I guess my disagreement with Ms. Wilensky is, is that I think she's forgetting the fact that every system makes a decision about priorities. This argument somehow that Canada is a system in which the government runs everything -- which is false - - that just isn't true -- and then to say that there is no rationing in the United States, that there's no allocation going on in the United States, of course, there is. It's just that it's being done in a different way and it's being done in a way that isn't as clear to everyone. Yes, some priorities are established, but to argue from that, to say that somehow people don't have access to care, or that there's a denial of access to care is, again, it's just simply not true. And I think that this is what makes the debate for us such a real one. When the President of the United States goes on the State of the Union Address and says that if you have a system which is different from the American system - - and he uses the cliche of a nationalized system -- and then says, patients can choose their doctors, I mean, you've got -- you've got millions of Canadians watching that and just saying, is he talking about us, because if he is, hey, that's not the system we understand.

MR. LEHRER: He was talking about Canada, wasn't he?

MS. WILENSKY: He was talking about I think at that point generically nationalized systems, including Western Europe, as well as in Canada.

MR. RAE: I just don't think it's fair --

MR. LEHRER: I hear you. But in response to Mr. Rae, what you're saying is -- you're not denying that there is rationing of health care in the United States, right?

MS. WILENSKY: Well, I think the issue --

MR. LEHRER: You're just upset about who makes the decision?

MS. WILENSKY: What I -- the point I think that's important --

MR. LEHRER: You don't want the government to?

MS. WILENSKY: -- is who makes these decisions.

MR. LEHRER: Yeah.

MS. WILENSKY: In Canada, with regard to facilities, institutions, technology, specialists, it is government. Now, that is a form of doing it.

MR. RAE: Now, wait a minute.

MS. WILENSKY: I know more about government making decisions or issues of that nature, having just come from being the administrator for Medicare and Medicaid, than many people in the United States. I think for us that is not where we want those decisions being made. It is an option. Many countries do it. When we talk about rationing, what we usually mean is not providing services that we believe can have medical benefits associated with them. Of course, we have to make resource allocation decisions.

MR. LEHRER: And that's rationing.

MS. WILENSKY: Rationing is when you don't --

MR. LEHRER: Same thing, right?

MS. WILENSKY: Well, when I think -- we think of the United States as rationing is not providing medical services that can have medical benefits because they're too low a priority. Right now, we have a medicare system in the United States where everything drives us and the providers of health care to want more, consume more, and provide more. We have so many places that we can move to try to change those dynamics before we are to do something like explicitly not have services that provide medical benefits, what other people can call rationing. Do we make choices? Do we make resource allocations? Of course, we make resource allocation decisions.

MR. RAE: In that case, so do we. I mean, I just say if you're going to play those word games, Ms. Wilensky, then I will just say to you that's exactly what happens in our system as well. And to argue that somehow it's the government alone acting in some sort of a vacuum which simply determines these things when, in fact, the evidence is overwhelming in our own system, that it's the choices of patients and of doctors, working within the context of what is affordable, obviously, no one -- no society exists without limits. The insurance companies, the private insurance companies in the states make those decisions all the time.

MR. LEHRER: And no television show exists without limits either, so we have to go. Premier Rae, thank you for joining this debate - -

MR. RAE: Thank you very much.

MR. LEHRER: -- here tonight in Toronto.

MR. RAE: Thank you.

MR. LEHRER: Ms. Wilensky, thank you here in Washington.

MS. WILENSKY: You're very welcome.

MR. MacNeil: Later this week, we'll be looking at new plans to contain health care costs that have been adopted in Oregon and Minnesota. Still ahead on the NewsHour tonight, Florida's budget problems and fighting in Yugoslavia. FOCUS - THE BIG SQUEEZE

MR. MacNeil: Next tonight, the fiscal state of the states. Meeting in Washington, the state governors reported today that they are facing their worst budget pinch in 15 years, despite massive spending cuts and increased taxes. With more and more of the burden falling to the states for all sorts of programs previously funded by the federal government, and on top of a bad recession, the budget squeeze will only get worse. Correspondent Tom Bearden went to Florida to report on how that state was making ends meet.

MR. BEARDEN: One of the great political dramas of this decade is unfolding all over America. It's a new and bitter version of the old fight between those who want to spend more money on state government and those who say enough is enough. This particular state is Florida. The leading role in this melodrama belongs to walk-in Lawton Chiles, who literally walked the state in his campaign for governor after an 18-year career in the U.S. Senate. He promised to cut back state government and in his first year in office cut over a billion dollars from the budget. Now, he's fighting hard for the biggest increase in the state's history, close to a billion and a half dollars. He says it's part of his plan to bring state government, especially the schools, into the 21st century.

GOV. LAWTON CHILES, Florida: We want to give our schools back to our teachers. We want to give our kids back to our schools. We want to give this state the kind of history and courses it should have. And you're out here helping us do it. God bless.

MR. BEARDEN: Someone else is walking the hallways of the state capitol, no staff, no cheering section, just a sheaf of papers bearing a very different message. George Schulte, longtime advocate for lower taxes. What he lacks in constituency and clout, he makes up for with a gadfly's dogged persistence.

GEORGE SCHULTE, Floridians for Tax Relief: You have set accurate, deadly, ballistic Scud tax missiles throughout over this state and I don't think we are going to survive. The government in this state now represents one employee in the government sector to every five in the private sector. We cannot survive.

MR. BEARDEN: There's nothing new about fights over taxes, but this one is a good example of how those sorts of fights have changed lately. In the past few years they've gotten a lot more intense because cities and states are living much closer to the edge than ever before. Federal money that used to subsidize a lot of programs is mostly gone. And then there's the stage for this drama, a state whose loss of affluence looks more and more scuffed these days. The national recession hit harder here than in most places. Housing construction slumped, employment fell, personal income fell. South Florida lost 6,000 jobs when Eastern Airlines shut down. Eleven months later so did Pan Am. All of that shows up in the money missing from the thousands of tax payments that pour into the State Department of Revenue each month. Florida is one of only seven states without an income tax. Most of the receipts come from the sales tax. When the economy slipped, so did retail sales and the state's income. Since the state is required to balance the budget, something had to go. Many of the early victims were social service programs. The state's only treatment center for people with serious alcohol and drug problems closed its doors. Over 600 people a year were treated here,people with problems that couldn't be treated anywhere else. But that first round of cuts wasn't enough. In January, Gov. Chiles raised the curtain on Act 2 in his state of the state message.

GOV. CHILES: Last year, we refused to initiate any fact reform or to seek new revenue until we had overhauled the spending system.

MR. BEARDEN: Then the governor unveiled what he called his investment budget, increasing spending $1 1/3 billion. The money was to come largely from extending the sales tax to previously exempt services like dry cleaning and cable TV.

GOV. CHILES: This is our plan, investing in Florida's future.

MR. BEARDEN: Everybody in the room knew what had happened in New Jersey two years earlier when Gov. Jim Florio's tax hikes touched off a voter rebellion. Florio became a political pariah. But Chiles seems unfazed, even though his ratings are the lowest they've ever been. He's pressed ahead, turning his part in the drama into a road show. He flies from city to city, an endless selection of photo ops and sound bites, to sell his program. But for every bouquet, there's a brick. This town meeting in Tampa was packed with people who make their living in or benefit from state programs. Dissenters were few but were very angry.

DISSENTER: What you failed to mention is 1/2 million small businesses that are being destroyed by your taxes. And if you pass this mom and pop service tax that's been advertised in the paper, you're going to put the rest of us out of business, there won't be a source for the taxes, sir. You have a bucket that has a lot of holes in it. You don't fix it by expanding the size of the bucket, sir. You fix the bucket and patch the holes.

GOV. CHILES: I've been working on holes for a year and I've cut $2 billion out of the budget. Now, you show me anybody that's made those kind of cuts in the first billion where the leaks were the fat and the waste, I'm confident of that. When we started cutting the second billion, we started cutting in the muscle and nerve, and the last 600 million that I cut all were programs that were not going to save these very people that you're talking about more money. And let me ask you something else. What did you think of the President's speech last night?

DISSENTER: Well, frankly, I don't have any opinion on his speech last night.

GOV. CHILES: Let me tell you, he's going to borrow and add to the deficit $450 billion. Now, you want to know what's hurting that lady? You know what's hurting your small business? It's a federal government that will not pay as they go. My tax plan is because I've got the courage to follow the Constitution that says we're going to pay for what we spend in Florida. And I've got the courage to not say, read my lips. And I want to say we can go cut. I can't find any more cuts. You help me find 'em and I'll cut it.

MR. BEARDEN: The governor's main selling point is the public schools. They get 60 percent of their operating funds from the state. Chiles says earlier cuts have hurt them badly, that without a tax increase they'll be little more than baby sitters.

TEACHER: Get your textbooks out. Let's look at the first problem, first problem.

MR. BEARDEN: This is Killean High School in Miami, 3300 students, 58 different nationalities, 150 of them take English as a second language. The huge county school system has already cut $85 million. They did it by offering fewer class periods in the day taught by fewer teachers. In Richard Townville's chemistry class, that means five or six kids working at lab benches designed for four. Somebody is always odd man out. There's more chance of an accident. Most teachers have more students to teach, more papers to grade, more discipline problems, and crowded classrooms.

TEACHER: I said quietly. I hear too many people talking. And I don't hear chemistry -- so I know you're not talking about chemistry.

TONY PARISO, Principal: The stress level for students and teachers has gone up considerably to the point where we very frequently had situations where teachers simply emotionally, physically, whatever the situation may be, cannot take any more kids in their classes. So you sometimes have a situation where a kid needs a class, the teacher already had forty-five or fifty students in a class, and there's no place for him to go.

MR. BEARDEN: But Chiles faces a tough audience. How tough? Well, even Killean's parent-teacher organization isn't leaping to its feet to applaud the call for help.

MR. BEARDEN: Why don't the taxpayers say, we got a great system, let's keep it going the way it is?

MARILYN OCTAVIANO, PTA Member: I think it's the mistrust. I really think it's the mistrust.

MR. BEARDEN: Of the schools or of government in general?

MARILYN OCTAVIANO: Of government in general.

MR. BEARDEN: Do you think they've broken their promises before?

RITA CASAGRANDE, PTA Member: Yes.

MR. BEARDEN: Do you trust them?

RITA CASAGRANDE: I don't know.

LORRAINE JATCZAK, PTA Member: I think they're trying to squeeze us to the point that we're going to say, give us taxes, okay, we'll do anything, anything just to give us taxes. I don't think all the measures have been taken to provide the funding that they could take.

MR. BEARDEN: How are those taxes being spent? Officials hammer relentlessly at a few simple themes: If we don't spend more, classes will get bigger.

SPOKESPERSON: In the fourth grade, there are 38 students.

MR. BEARDEN: If we don't spend more, we'll fall behind and won't be able to compete.

GOV. CHILES: How in the world will we keep up with the Japanese or the French or the Germans, or how will we keep up with the Georgians, because they're going to do better than that --

MR. BEARDEN: The complete picture is extraordinarily complex. Used selectively, it provides ammunition for both camps. For example, Chiles talks about shortfalls, but the absolute number of dollars spent on schools has risen every year for the past ten years -- ammunition for the anti-taxers.

GEORGE SCHULTE: The Florida legislature, if they convened this week, went home, didn't change anything in the tax structure of this state, they would still have $600 million in new tax revenue.

MR. BEARDEN: But pro-taxers say dollars had to rise because the number of students is rising too, from 1.6 million to just over 2 million in 10 years.

SPOKESPERSON: School districts today are receiving about the same amount of dollars on a per student basis that they received two years ago.

MR. BEARDEN: The anti-taxers have their rebuttal. The amount of money spent per student also went up over the past decade. It went up faster than the inflation rate and faster than the personal income from which it's drawn. With all that extra money per student, they ask, why do we need new taxes? A local think tank called Florida Tax Watch was the first to start calling attention to the increase. When they unveiled their findings last fall, Education Commissioner Betty Castor was so upset she attended their news conference and called their report, in her words, "a crock."

BETTY CASTOR, Florida Education Commission: What a disservice it is to ignore the fact that bills have to be paid and somebody's got to pay them.

MR. BEARDEN: But many Floridians disagree.

DAVID HURLEY: They're saying we need more taxes, but what they're saying is that we don't want to be affected by any economic downturn that occurs in the overall economy.

MR. BEARDEN: The government, you mean?

DAVID HURLEY: The government wants to be insulated from reality.

MR. BEARDEN: Dave Hurley is a good example of how many taxpayers feel these days. He runs a surveying business in Tampa. When he heard about the taxes, he got so angry, he wrote a letter to the governor and every member of the state legislature. His feelings are shared by other small business people -- Suzanna Pilat, struggling to build up a small investigative agency, in Clearwater with her husband, George. People like Hurley and the Pilats are deeply suspicious that officials are exaggerating the need for layoffs to build support for a tax increase.

MR. BEARDEN: You think they're playing games with you?

SUZANNA PILAT: Well, sure.

GEORGE PILAT: Absolutely.

SUZANNA PILAT: I mean, we only hear what we read in the newspaper or watch on TV. We don't know what they're really doing.

GEORGE PILAT: The governor may feel that he needs this money, but I'll tell you what. If I get up to Tallahassee and I start looking around, I'll find out where the money's going. I just don't have the time or the money and I know there's wastage and they don't want me looking up around in Tallahassee.

MR. BEARDEN: Tallahassee is where Act 3 will be played out at the state capitol complex, a group of sleek white buildings constructed in 1977 behind the graceful old state capitol. From a distance, the buildings seem to have no windows, which heightens the self- contained feeling of what goes on inside.

SPOKESMAN: The bottom line is this, the flexibility that's being discussed here --

MR. BEARDEN: Every day when the legislature is in session, flocks of well dressed lobbyists for many different interests stand outside the chambers while the session plays on projection TV nearby. They talk. They wait for something to happen. They make phone calls. Those without cellular phones crowd a bank of pay phones on the fifth floor. The information counter puts out dishes of gum drops, peanuts, popcorn, M&Ms and fish crackers for stomachs that start to rumble during the long afternoon. This winter, some lobbyists spent a lot of time trying to avoid higher taxes for their industry.

SPOKESMAN: And it is already one of the most taxed of industries. We hope you find --

MR. BEARDEN: Other lobbyists tried to raise taxes, like the two powerful teachers unions whose members are paid with tax money.

LOBBYIST: And tell them we need more taxes to educate --

MR. BEARDEN: The teachers unions have the organizing strength to pull off a major rally on the capitol steps and the money to pay for TV commercials. But they were stunned to discover that this year. The legislature was listening to other voices.

TEACHER: When I started teaching in 1980, I got $500 a year for supplies for my classroom. Now, I get $75 a year, 12 years later. Last year, I was told -- $75 for classroom supplies -- that's for crayons, pencils, paper, all consumables -- last year, I was told that I had to choose between getting spelling books or reading books or math books, which ones do you want, one out of three -- math, spelling or reading?

JOHN McKAY, Florida State Senator: And that's wrong. That's wrong. What I'm telling you is it's the system that's messed up. In the last five years, the legislature has increased its funding to education 70 percent. The student population has only gone up 30 percent.

WOMAN: We want a tax. I don't understand your rationale for not supporting a tax for our children.

JOHN McKAY: Money is -- just to put more money into the education system, without trying to fix a way for what's there is not going to fix it.

WOMAN: It's going to cost more to support the --

JOHN McKAY: Wait -- please --

WOMAN: -- than it is --

JOHN McKAY: I understand all the buzzwords and all the phrases, but I'm trying to deal with facts. I'm working hard at this.

MR. BEARDEN: Mobs of school lobbyists crowded the hallways of the capitol, but this year, all that strength has had less effect than the lone wanderings of anti-tax gadfly Schulte and the grassroots anger of voters drifting back to the capitol. Still, Chiles has a few tricks up his sleeve, like the time he ordered a couple of pizzas to be delivered during a news conference. His point was that new taxes would cost the average family only about as much as one pizza a month.

GOV. CHILES: $24 [paying pizza delivery man].

MR. BEARDEN: Chiles took one pizza, and then sent the other down to the Senate Republican leader, who promptly sent it back, saying, Florida can't swallow $1.5 billion worth of pizzas. So Chiles is getting attention. And some even admire his leadership. What he hasn't done so far is overcome the suspicion that he's overplaying the problem.

RICHARD LANGLEY, Florida State Senator: This has been a plot from the top from Gov. Chiles to -- from Day One, he told everybody in his administration go out and make the cuts where it hurts.

MR. BEARDEN: Some of the recent polls seem to indicate that a lot of voters simply don't believe that the world is going to end if the state doesn't get another billion and a half dollars and some believe that the state's credibility has been severely damaged. Has it been?

GOV. CHILES: Oh, I think it has been, and I think that's not just true in Florida. We're seeing that all across the country, the anger, the voter disillusionment. We're trying to change things and do things completely different in Florida and we know it'll take a while before we get credibility.

MR. BEARDEN: The arguing, maneuvering and noshing continued for seven weeks. In March, the legislature finally passed a bare bones budget, one that didn't require a tax increase, and then adjourned. True to his word, Chiles vetoed it. It was a frank challenge. Come back into special session and give me the budget I want, or there won't be any budget at all.

MR. BEARDEN: Do you think you're going to be sitting in that chair come next election time?

GOV. CHILES: You know, all I've said is that I ran for a four- year term. I'm going to serve every day of that as well as I can, but I'm not going to make any decision based on whether it helps me or not. I used to do that. I have lived in that kind of life at one time, where I had to be popular with everybody. I got so tired of it I left the Senate. This is exciting to me because, you know, I feel good about what I'm doing.

MR. BEARDEN: The legislature is supposed to come back in May for a special session on taxes. So this cast could find itself playing a very long last act before the curtain rings down on their drama. It's a show that could settle in for a long run all over America, same characters, different local casts, as the old battles over taxes and spending ratchet up to new levels. Watch for it. It's coming soon to a state house near you. UPDATE - CIVIL WAR

MR. MacNeil: Next tonight, an update on the civil war in Yugoslavia, which has cost more than 10,000 dead in the past year. The object of the fighting now is the republic of Bosnia- Herzegovina, which recently declared its independence from the Yugoslav Confederation. Today, there were battles in the Bosnian capital, the historic city of Sarajevo, and in the town of Mostar. Our report is from Liz Donnelly of Independent Television News.

MS. DONNELLY: The television station in the heart of Sarajevo came under mortar attack fired from Serb positions in the hills in the early hours of this morning. For days now, it's been targeted by Serb politicians who accuse journalists working here of bias and manipulation in their coverage of the conflict. This attack served as the signal for the battle to spread. Other key buildings like the central electricity headquarters were also the focus of attack, positions defended by members of the newly formed territorial guard of Bosnia-Herzegovina, an anti-Serb alliance made up mostly of Muslims and Croats. The vicious street fighting spread to the rooftops, where snipers crouched, seeking out targets in the streets below. The territorial defense guard has been preparing for a major attack, but though today's fightings, the heaviest here today, it's far from clear whether it represents the start of the full scale assault which many fear. And despite their spirited defense, it's difficult to make out just who the snipers are aiming out as they, themselves, admit the Serbs are out of range.

MAN: [Speaking through Interpreter] They're shooting at us from secure positions. They started with heavy artillery and machine gunfire to create panic. Then they launched grenades. They were firing indiscriminately. They shot at the central electricity headquarters, restaurants and residential areas.

MS. DONNELLY: Only 200 meters away from the fighting, United Nations troops were anxiously observing developments. Their job in the region is restricted to Croatia and Serbia and though this is the headquarters of the operation, they have no mandate to intervene and are only too well aware that events in Sarajevo could threaten their base and jeopardize their entire operation.

FRED ECKHARD, Spokesman for UN in Bosnia: Our security people are on alert. You can see them. They've got weapons that are ready in case they need to defend this facility, but we have at this moment to think that there will be any hostilities directed at us. We just happen to be in the middle of it, it seems.

MS. DONNELLY: The Serb political leader in Bosnia-Herzegovina is Radovan Karadzic. It's unclear what his relationship is with Serb irregular forces. His office issues an order forbidding him to fire on Sarajevo, which they ignored. So the possibility is that this is a political game. But he denies his intentions are aggressive.

RADOVAN KARADZIC, President, Serbian Democratic Party: We don't want to gain territory which does not belong to us. We just want to defend our territory which are historically and ethnically Serbian territories in order to prevent occupation by Croats or Muslims and if they occupy it, they would not negotiate anymore. They'll take it for themselves.

MS. DONNELLY: In the ancient and picturesque city of Mostar to the South of Sarajevo, the colors of the new republic of Bosnia- Herzegovina hang defiantly from the mosque. There's been fighting here for more than two weeks since the European Community granted recognition. Like many of the towns involved in this conflict, the population here is more or less evenly split between Muslims, Croats and Serbs, but it's the Croatian district which has suffered most of the attacks.

MS. DONNELLY: Are people here frightened or worry?

WOMAN ON STREET: Yeah, frightened and worried most of the time, even in the night, because all of the attacks they're planned in the night because they thought we didn't accept that, they wanted to surprise us.

MS. DONNELLY: But as we were filming here, the local militia told us they'd been warned that another, very serious attack was imminent. Unlike in Sarajevo, where the role of the Serb-controlled federal army is difficult to ascertain, this attack on Mostar was clearly carried out by them. Looking up at army positions on the ridge of the hill above the city, it was possible to make out mortars being fired. Earlier in the day, the army had issued the town with an ultimatum, demanding the release of two of its pilots it claimed had been kidnapped and despite appeals to call off the attacks from EC monitors to an army colonel, it continued for four hours. The local Croat and Muslim leadership claim that Mostar's been specifically chosen as a target by the Serb-controlled federal army because of its strategic value. They say whoever controls Mostar controls the main road and rail links between Sarajevo and the sea. People here say the pattern is to terrorize the population, where residential areas have taken direct hits, and to provoke retaliatory fire from local militia, armed with their own rocket propelled grenades. Events both in Mostar and in the Bosnian capital, Sarajevo, are seen as a major setback to international peace efforts which Bosnians believe represent their only chance of improving the situation. Lord Carrington, the chairman of the Conference on Yugoslavia, is expected in Sarajevo on Thursday to see if he can halt the momentum which is rapidly turning Bosnia-Herzegovina into a battleground. RECAP

MR. LEHRER: Again, the other major story of this Tuesday, convicted murderer Robert Alton Harris was executed in the gas chamber at San Quentin Prison. It was the first execution in California in 25 years. Good night, Robin.

MR. MacNeil: Good night, Jim. That's the NewsHour for tonight. We'll be back tomorrow night with analysis of the Pennsylvania abortion case that is being argued at the Supreme Court. I'm Robert MacNeil. Good) h night.