The MacNeil/Lehrer NewsHour

MS. FARNSWORTH: Good evening. I'm Elizabeth Farnsworth in New York.

MR. LEHRER: And I'm Jim Lehrer in Washington. After our summary of the news this holiday Monday, we have excerpts of President Clinton's Martin Luther King Day speech in Denver, a debate about the new push to eliminate affirmative action, a Paul Solman report on the way inflation is measured, and a Richard Rodriguez essay about the closing of a store. NEWS SUMMARY

MR. LEHRER: This was Martin Luther King Day in America, the national holiday established to celebrate the birthday of the late civil rights leader. His family participated in an observance at Ebenezer Baptist Church in Atlanta, where Dr. King and his father had both preached. King's widow, Coretta Scott King, was one of today's speakers.

CORETTA SCOTT KING: Today we affirm the values of tolerance, justice, and peace, with a vibrant spirit of unity. We hold up love and truth and reconciliation and the non-violence, as we re-commit ourselves to the dream of Martin Luther King, Jr. Although we celebrate these values which empowered Martin's leadership, we realize that believing alone is not enough, because all of these values will have meaning only when they are tested in the crucible of action.

MR. LEHRER: President Clinton observed the day with two speeches. We'll have an excerpt from one of them after this News Summary. Elizabeth.

MS. FARNSWORTH: Prosecutors in South Carolina announced today they will seek the death penalty against Susan Smith. The 23-year- old former secretary has confessed to drowning her two young sons last October. Smith had earlier claimed the two boys were abducted by a man with a gun. At today's hearing, Smith's attorney said she was not ready to enter a plea. The judge automatically entered an innocent plea on her behalf. A trial date was set for April 24th.

MR. LEHRER: Californians are facing more rain and flooding. The weather service predicted today a Pacific storm will hit the Northern part of the state Wednesday and move into Central California later in the week. President Clinton will survey the flood damage tomorrow. Flooding in North Carolina killed at least four people over the weekend, including three fourteen-year-old boys on a Boy Scout outing. The floods also struck Tennessee, forcing dozens of people from their homes, closing roads and toppling trees.

MS. FARNSWORTH: The struggle for control of the capital of Chechnya continued today. Russian helicopter gunships launched a barrage of rockets in the Western part of Grozny. And Chechen rebels claimed to have re-taken key areas in the North. We have more in this report from Paul Davies of Independent Television News. A word of caution: It contains graphic pictures.

PAUL DAVIES, ITN: Artillery shells here raining on the Minuka area in front of the presidential palace, too many to count, their explosions merging into one sound. In the center of Grozny, the dead are now left where they fall. We were told the corpses of these two men, killed by an air bomb, had been lying here for two days at the mercy of dogs and rats, though in Grozny life is uncertain even for scavengers. This old man had been fetching water when he was killed by a shell that landed by the water queue just a few minutes before we arrived. This woman has just been told that her ten-year-old son was killed in the same attack on the well. Incredibly, even in a devastated city center, people continue to struggle to survive. At the height of the battle, these women are crossing one of the most dangerous streets in Grozny. Despite a close call, this time they make it. They risk their lives just to collect bread for their families. "Grozny used to be a nice place. We had a good life here before all this," the woman says. But her cries are lost beneath the sound of another Russian air attack. Chechen fighters open up on the jets, but at this range it's little more than a defiant gesture. Despite the incessant bombardment and Russian claims that the end is in sight, the Chechens are still putting up fierce resistance. No one here is talking defeat. This afternoon, two Chechen tanks appeared on the streets, ignoring the artillery barrage, the fighters shouting that they were winning.

MS. FARNSWORTH: The war in Chechnya will be the subject of talks between Secretary of State Christopher and Russia's foreign minister tomorrow in Geneva.

MR. LEHRER: Pope John Paul II arrived in New Guinea today. It followed news that authorities in the Philippines had foiled a plot to assassinate the Pope. At least two people were arrested in Manila, and police are searching for several others. The 74-year- old pontiff will leave for Australia and Srilanka Wednesday.

MS. FARNSWORTH: A strong earthquake hit Western Japan today. It was centered near the port city of Kobe, but could be felt across the country. There were early reports that said 40 houses and some apartment buildings may have collapsed. That concludes our News Summary this Monday. Now it's on to President Clinton's King Day speech, the new debate over affirmative action, how to measure inflation, and a Richard Rodriguez essay. FOCUS - ENDURING LEGACY

MS. FARNSWORTH: We focus first on the commemoration of Martin Luther King's birthday, which was celebrated in cities and towns across the country today. Denver, Colorado, staged the second largest King Day parade, according to its organizers. Only Atlanta had a bigger one. Colorado Governor Roy Romer and the mayor of Denver, Wellington Webb, led off the march. A crowd of more than 20,000 was on hand, as was President Clinton. In his speech, the President defended his national service program. The program encourages young people to perform community service in exchange for tuition grants and stipends. House Speaker Newt Gingrich has called it "enforced volunteerism," but Mr. Clinton said it represented everything he wanted to do as President. In the speech, the President recounted Dr. King's contribution to America.

PRESIDENT CLINTON: His life should have special impact for every American, for he freed the rest of us too, of our hatred, our bigotry, of the illusion, of the illusion which still crops up from time to time that we can somehow lift ourselves up by putting others down, that somehow if we can just find someone to look down on, we can feel like we're being looked up to. Martin Luther King knew better than that. I ask you to remember today that more than anything else, Martin Luther King's life was a life of service. Even as he marched all across this land and took that vast throng to Washington, D.C., and asked the government to act, he knew that in the end what was in the heart and the spirit and the mind of the average American citizen was even more important. And that is why he always said that all of us had a responsibility to do our part and to serve. Martin Luther King said everybody can be great because everybody can serve. He said if all you do is sweep the streets, then sweep them just as well as Michelangelo painted the Cystine Chapel, be the best street sweeper that ever lived. Serve and serve. I was asked the other day of all the things that had happened in the last two years, was there one achievement I could say I was most proud of, and I said, I think it was the creation of a national service program. And some of them are here today. Why? Because these young people are committed to service, and if we all are committed to the idea that we are bound up with one another, then we can all be great, and our country will be great. This country cannot go on with children shooting children. This country -- this country cannot go on with so many kids just giving up on their lives. This country cannot go on with more and more little babies being born into unstable situations, where the mothers are children too, and the future looks bleak. We can turn this around, but we have got to turn it around, and we have got to do it together by lifting each other up. I have traveled this whole world on your behalf. I have seen many different places. I have dealt with many different opportunities and problems. I am more convinced today than I was on the day I took the oath of office that the greatest days of America lie in front of us if we have the courage to live the dream of Martin Luther King! [applause] But, remember, what he lived and died for was for every one of you to have the right to do good and to be good and to make the most of your own life. It was no living and dying for the freedom to shoot people, no living and dying for the freedom to shoot up, no living and dying for the freedom to hate people, no living and dying for the freedom to ignore the responsibilities of parenthood and the obligations of our children. That is not what this was about, and there was no living and dying to advance the proposition that we are all just isolated individuals out here, we don't need anybody helping anybody else, and everything we do as a government is intrinsically bad. Twenty-seven years ago, April 4th, Martin Luther King was killed. Only such a young man, but he gave his life willingly so that we might become all God meant for us to be. We can still do it. We will have more opportunities than ever before, but you look at this sea of people and you think about what the founding fathers said over 200 years ago: Life, liberty, the pursuit of happiness, together.

MS. FARNSWORTH: The President then flew on to Los Angeles to tour the flood-damaged areas and to take part in King Day events in South Central LA. Still to come on the NewsHour, the new affirmative action debate, Paul Solman on the Consumer Price Index, and a Richard Rodriguez essay. FOCUS - A LEG UP?

MR. LEHRER: Now, that new argument over affirmative action. Tomorrow, the issue of how the federal government operates affirmative action programs goes before the U.S. Supreme Court. Tom Bearden has this backgrounder.

MR. BEARDEN: Here in the foothills of the Rocky Mountains just west of Denver Adarand Constructors is installing guard rail. County jobs such as this one are only a small part of Adarand's work. Adarand depends on federally-funded projects. The company's owner, Randy Pech, says he's been getting a lot fewer of those contracts because of a program Congress passed in the 1980's to help socially and economically disadvantaged businesses.

RANDY PECH, Adarand Constructors: When we started our business, there were several other white contractors in our business. I know for a fact that at least two of 'em left because of this program.

MR. BEARDEN: Because of the program, because they lost business because of it?

RANDY PECH: 'Cause they lost business because of it and were unable to maintain what they needed to, to keep their businesses open.

MR. BEARDEN: That federal program is regulated by the Surface Transportation Acts, which try to help those disadvantaged companies become competitive by giving them preference in the awarding of federal contracts. Pech claims that the laws put him at such a disadvantage that it may ultimately drive him out of business.

MR. BEARDEN: How does this affect your business?

RANDY PECH: We lose jobs on a regular basis and probably on a monthly basis to contractors that are minority-owned, even though we're the low contractor on the job.

MR. BEARDEN: How much money are we talking about in the course of a year?

RANDY PECH: On a yearly basis probably $1/2 million worth of contracts.

MR. BEARDEN: How does that relate to your overall business?

RANDY PECH: Oh, that's about a quarter of our business.

MR. BEARDEN: Because of the program, Pech's company didn't get to install this nearly five-mile-long section of guard rail along the Forest Highway in southwestern Colorado, even though it had submitted the lowest bid. So in August of 1990, Pech sued the federal government, charging that its racial discrimination violated his equal protection rights under the Constitution. The U.S. District Court and the Court of Appeals rejected that argument, but in September of last year, the United States Supreme Court agreed to hear the case. In his argument, Pech maintained that the prime contractor had awarded the subcontract to a different company, Gonzales Construction, because it was minority- owned, and by hiring Gonzales instead of Adarand, the prime contractor was eligible for a $10,000 bonus.

WILLIAM PERRY PENDLEY, Lawyer: I think that's a fraud, and I think it's wrong.

MR. BEARDEN: William Perry Pendley is Randy Pech's attorney.

WILLIAM PERRY PENDLEY: And here's the federal government coming into a situation and saying, prime contractor, if you give this contract not to the lowest bidder but to someone who's of a certain racial background, we'll give you money.

MR. BEARDEN: Mary Cheh is a constitutional law professor at George Washington University. She believes the court accepted the case because it wants to make a statement about preference programs.

MARY CHEH, George Washington Law School: It's an important case because it'll settle, perhaps, the issue about whether Congress does have greater power to adopt race preferences in their programs and if Congress is given that power, then it has an enormous influence in terms of the various agencies of the federal government. There's an enormous amount of government contracting work that's let every day, every year, and if this program is struck down, then it will curtail the preferences that are now operative.

MR. BEARDEN: Pendley maintains this case is about race and reverse discrimination.

WILLIAM PERRY PENDLEY: I'll tell you what I think is the real problem with this statute, is we've been trying to get people to do the right thing. It has been unconstitutional, it has been illegal, it has been immoral to discriminate on the basis of race for a long time in this country, and here we have a federal law reaching down into a highway construction project in Colorado and rewarding someone for making decisions on the basis of race. If he had done that on the basis of race of his own volition, because he didn't like minorities, and given that contract to a white person, he'd be in court today and properly so.

ELAINE JONES, NAACP Legal Defense Fund: Most of the things I have read give the general impression to the public this is a preference program for minority contractors, specifically maybe Africans and Hispanics. And that is not the case.

MR. BEARDEN: Elaine Jones of the NAACP Legal Defense & Educational Fund says this case isn't about race but about encouraging diversity and competition in the marketplace. She supports the government's position and makes a distinction between compulsory and voluntary programs.

ELAINE JONES: It's voluntary. It doesn't tell prime contractors you must do this. You know, it says, look, if, if a subcontractor has bid and you think that subcontractor meets the qualifications to do the job, you know, and you want to get the economic incentive to help this subcontractor, you know, and this subcontractor is economically disadvantaged, well, then as a matter of public policy, we say, if you want to do it, prime contractor, go ahead and do it.

MR. BEARDEN: Jones says the court has maintained that distinction before.

ELAINE JONES: Voluntary affirmative action is different. The Supreme Court has said that Congress may in its wisdom decide as a matter of public policy that there are areas in which inclusiveness, the promotion of inclusiveness and diversity is a positive goal and ought to be encouraged.

MR. BEARDEN: Since 1980, the court has made that finding in two major cases involving Congress and racial preferences.

MARY CHEH: And in those two cases, the court has given Congress greater latitude to have programs that prefer on the basis of race. The real question here may be whether Congress should have that special deference.

MR. BEARDEN: And as Prof. Cheh knows, the make up of the court has changed dramatically since those cases were heard, making the outcome of this case much less predictable.

MARY CHEH: It may be that that court will say that, yes, Congress has greater latitude because it's the national legislature, and it has a special role to play in remedying societal discrimination. But it may also be that the reason why the court wants to look at this case is it wants to bring in line federal programs, just like state and local programs, and say, yes, you can have them, but it has to be to make up for past discrimination, and it has to be very narrowly tailored to do just that.

MR. BEARDEN: Adarand owner Randy Pech hopes the court will return the process of awarding federal contracts to something more like it was when he got into the business in 1976, when, in his view, the process was much less discriminatory than it is today.

MR. LEHRER: Now to our own debate. Eleanor Holmes Norton is Washington, D.C.'s delegate to the House of Representatives. She's a Democrat who was chairman of the Equal Employment Opportunity Commission during the Carter administration. Milton Bins, a Virginia businessman, is chairman of the Council of 100, a national organization of black Republicans, Anne Sulton is a civil rights lawyer and legal counsel for the Denver chapter of the NAACP, Errol Smith, a businessman, is on the board of the California Civil Rights Initiative, which would dismantle affirmative action for state jobs, education, and contracts. Mr. Smith, generally, are affirmative action programs still needed?

MR. SMITH: I believe that some kind of affirmative action is still needed, but affirmative action, as it's currently being practiced, I don't believe is needed or appropriate or for that matter even constitutional, in my opinion.

MR. LEHRER: Why is it -- why do you say that?

MR. SMITH: Well, if we just look at the 14th Amendment, which guarantees equal protection under the law, it seems to me when people are being granted privileges and punishments on the basis of race that that does not constitute equal protection.

MR. LEHRER: All right. Ms. Sulton, you disagree.

MS. SULTON: Oh, yes. I disagree very strongly. I think it's important to understand that affirmative action was designed to diversify all work places; that is good for America, it's good as we move toward the 21st century. I think it's important for us to define affirmative action. Affirmative action is not about hiring those that are unqualified or less qualified but, rather, to give those that are fully qualified an equal opportunity to compete.

MR. LEHRER: But you believe that if two people are equally qualified, that there should be, it's all right to give a racial preference to one of those persons if that happens to be, if that person happens to be a minority, and you think that's still legitimate and needed, is that correct?

MS. SULTON: Oh, yes, absolutely, that if one looks at the work force and they find that they're all white males in that work force and they think that women or minorities would be good to help diversify that work force, then I think that in both the public and private sector they should be given an opportunity to hire that person. For example, if we look at policing, some 30 years ago, we had no women who were working in the field, and the reason that women were excluded was because of their size, their height, weight, and so forth. Once we eliminated that qualification that was not job specific and gave women an equal opportunity to compete, we found that we had a new pool of very qualified applicants for those positions.

MR. LEHRER: Mr. Smith, how do you respond to that, that in order to diversify the work force, in order to diversify society, you have to give some preferences to racial, on racial grounds?

MR. SMITH: I completely disagree with that. I don't think that there is any argument against making sure that whoever is qualified should be able to have access to the various positions that are out there. Certainly inclusion is an ideal to be sought after, but I think that when you begin to grant preferences on the basis of race, that what you're trying to do is to, to fix a past injustice by a current injustice. And what we're seeing is that it's creating a tremendous amount of animosity and enmity in our -- across the nation, and I just don't think it's healthy. I don't think it's good. I don't believe that it is ultimately taking us in the direction that we want to go as a nation. And this is why I'm firmly against it.

MR. LEHRER: You think there are more negatives involved in this than positives?

MR. SMITH: There is no question about that, and one of the things that disturbs me the most about it is that it seems to argue the primacy of group rights over individual rights. What I hear -- sorry, I didn't catch your name -- but what I heard the earlier speaker saying is that essentially a group that happens to be white, if they dominate a certain industry, that by virtue of that, others who happen to be white as individuals should not have access to that group. We're not dealing with people on the basis of their individuality. Instead, we're dealing with them on the basis of their group membership. And I think this is fundamentally un- American.

MR. LEHRER: All right. Fundamentally, un-American, Eleanor Holmes Norton?

DEL. NORTON: What is un-American could happen if we go back to where we were 30 years ago and where, I'm afraid, some of those who argue this case do not realize you would take us. What the courts have done over a period of almost 30 years now is carefully tailored not preferences but remedies. This is not preferential treatment. This is remedial treatment. Almost all of these programs have to do with overcoming past discrimination. There are very few exceptions to that. The most prominent one is in education, where the Supreme Court said in the Bache case that a value of education is bringing together people of various backgrounds and in order to promote that diversity you can use race as factor. But virtually everywhere else we're either trying to keep from subsidizing discrimination with state or federal dollars, or we are specifically making up for past discrimination.

MR. LEHRER: What about Mr. Smith's argument that he just made, individual rights versus group rights?

DEL. NORTON: You know, it's very interesting. When it comes to talking that talk about non-discrimination and individual rights, we all, of course, believe it, and who could take exception to that? But very few of us have been willing to walk that walk, and walking that walk means taking actions to undo 300 years of discrimination. The courts tried saying rather vague and amorphous things, and so did the legislatures. Finally, Congress got into the act, and the courts, even a conservative Supreme Court, has allowed remedies narrowly tailored for limited periods of time. And, and even those remedies, some of these individuals would now try to eliminate, if they do, if they do, they will take this society back fifty years in just five years.

MR. LEHRER: So you think they're still needed?

DEL. NORTON: I think anyone who looks at America will see that they're still needed. I think even our friend, who you've just heard, has said that some affirmative action is still needed.

MR. LEHRER: Mr. Bins, when you look at it, what do you think, still needed?

MR. BINS: I think it's absolutely still needed, Jim. For one thing, this notion about group, group rights versus individual rights and liberties and freedoms, we must remember that the experience of African Americans going back in terms of what Ms. Holmes, Eleanor Holmes just mentioned, the 300 years, that was not based on just individual discrimination. That was based on discrimination against an entire group of people, simply based on skin color and race. That history is real. Now I do agree that the time has come after 30 years of trying to figure out how to bring some justice and some order and some remedies that will undo what has been done, perhaps it can never be, really be undone, but we have tried, I think, and this country has made a great deal of progress over the last 30 years. But I also think that the body politics is saying something that we have to listen to. The, the reactions and some of the anger cannot be discounted. It has made itself felt at the ballot box, particularly in November, so I think it's incumbent --

MR. LEHRER: But what do they say? How do you read those results, and what does this anger add up to, in your opinion?

MR. BINS: I think this anger, Jim, has been as -- is really being misdirected. I think it's primarily being directed against African- Americans and other groups who are clearly racially or gender- identifiable, or in terms of the welfare, you know, situation, that we're trying to cope with, but what I know is that the data, the information, is completely out of line with the anger. The data shows us if you look at the present EEOC data, it shows us that it's not African-Americans who are the principal beneficiaries of these programs.

MR. LEHRER: You think, though, that there's a message that must be read, and you think the affirmative action must be examined in light of reality?

MR. BINS: Absolutely. I think affirmative action, Jim, for several reasons, because of the racial tension it has created, that it will continue to create, and that reflected itself in my opinion in some of the voters that came out on November the 8th, we have to address that. I think that's looking backwards. I think, Jim, more importantly, is looking forward. We have to address African- Americans, some of the internal problems facing our communities and our people. And I think to a great extent relying on something called affirmative action to be the, you know, the saving grace of what we have to really deal with in terms of our economic issues and our, you know, educational issues and so forth, it keeps us distracted, I believe.

MR. LEHRER: What about that? It's time to move on to something else?

DEL. NORTON: Well, you got to be able to walk and chew gum at the same time. You've got to be able to take up the issues that are presented, and they are entirely new in many ways, but you can't leave unfinished this great scar on the body politic on America, itself. You can't say, well, we're half finished, we're through with it, a lot of folks don't like these remedies. Of course, they don't like these remedies. If you had put to the American people to vote on whether schools should be desegregated in 1954, there would have been an overwhelming vote against it, but the courts have got to plow ahead, the Congress in the 1991 Civil Rights Act, despite a lot of polarization in the society over these remedies, we enacted the 1964 Civil Rights Act. I think that is recent evidence. A bill signed by a Republican President that these remedies are still necessary, are still condoned widely across the country.

MR. LEHRER: Mr. Smith in California, you're involved in a initiative out there that the governor is supporting, as I understand it, would reverse some of these affirmative action programs at the state level. What caused that to happen? Is this the kind of anger or reaction that Mr. Bins was, was talking about?

MR. SMITH: First of all, I think it's inappropriate to say that it would reverse.

MR. LEHRER: Okay.

MR. SMITH: What it's actually looking to do is to reinstate the initial intention and spirit of the 1964 Civil Rights Act. It's reaffirming the notion that all Americans should be treated equally, and that includes white males. This -- I think it's important to make a distinction between preferences and affirmative action. I know of no one involved with CCRI who is arguing that we should bring back segregation or bring back a time when discrimination and prejudice and segregation were the laws of the land, but what they are saying is that we must be true to the initial intent. When the Civil Rights Act of 1964 was being debated, there were lawmakers who were concerned that at some point in time that the laws would be used to grant preferences. Hubert Humphrey was a great champion of this, assured the lawmakers that this would never occur. In fact, he said that if this bill or this legislation is ever used to create preferences that he would eat the paper that the bill was written on. Well, I suspect that if he were here today, he would probably have indigestion, because it is clear that we have sort of embraced the notion of trying to use injustice to remedy a past injustice. And you just can't do that.

MR. LEHRER: What about that, Ms. Sulton, that whatever you may think about it, that there is a way to look at affirmative action or preferences, whatever term you want to use, as an injustice against somebody in order to correct another injustice? Do you agree?

MS. SULTON: It's absolutely absurd to suggest that remedial actions are somehow preferential. As Ms. Norton mentioned, the court has looked at this issue. If we look at the case of Crowson versus Richmond, the court has said it's okay to have remedial programs in place. And to say somehow that these remedial programs that we refer to as affirmative action programs are inconsistent with the Constitution, there's simply no basis in law or fact for that assertion.

MR. LEHRER: Mr. Bins, how do you feel about this question of using an -- Mr. Smith's point -- using an injustice, as he would see it, to correct prior injustice?

MR. BINS: I think there's some funny kind of language that's going on there, Jim. I don't buy it, first of all. I think the, the wisdom that was imbedded in the efforts put forth by the Congress of the United States, by the Supreme Court, in its wisdom in trying to respond to court decisions that have been brought around the issue of affirmative action, and the goodwill, I think, of the American people have essentially been behind doing something. Now, we may get a little --

MR. LEHRER: What I meant was the point that you were making earlier that this reaction to it is based on this idea that injustice is being done against --

MR. BINS: Jim, I'll be very frank with you. I think that is a legitimate feeling on the part of the gentleman from Colorado who spoke regarding the contract. He felt it was an injustice. What I'm saying though, what I'm saying, though, Eleanor, here is the fact that that has now bubbled up in the body politics in this country. Now, we cannot run away from those attitudes and those feelings that have developed. What I'm trying to propose is that after 30 years, we now have an opportunity to look at this and try and figure out is there some other way that we can level, are there some other ways that we can level the playing field, and I think we do have some, Jim.

MR. LEHRER: Do you -- your -- you disagree. You don't think affirmative action needs any kind of re-examination, is that correct?

DEL. NORTON: In particular instances -- and let me tell you how that re-examination occurs -- there's another case that's equally notorious that's working its way to the Supreme Court, Happgood, a case from Texas, where of all institutions a Texas law school had two sets of entrance procedures, one for whites and the other for blacks and Chicanos. Well, the Bache case said you can't do that. It said that was aquota, and here's a law school doing something dumb. So what happened? It got overturned as unconstitutional. But what the court also said was that race could be a factor under Bache in getting diversity in a law school, so what that shows, I say to my friend in California, is that the system has built within it ways to correct the injustice that he speaks of.

MR. LEHRER: Mr. Smith.

MR. SMITH: Well, you know, I frankly have never really understood the kind of what I consider voodoo logic that explains or tries to explain away preferences by claiming that they're not discrimination. What is clear is this: Well over 80 percent of white Americans believe that preferences are not appropriate, not fair, not just. Well over 70 percent of African-Americans also believe that merit, not race, should be the primary consideration in hiring, so I have to say that many of the people who I'm listening to today are completely out of step with the American people, and this is why we're taking it through the initiative process to the electorate so that they can decide, and hopefully, we can get these laws changed.

MR. BINS: See, Jim, that's the very problem. You take this and put into the politics of California, in 1996 in a presidential election, and we are now trying to get on with solving some of the great issues and great problems facing this nation, I mean, issues around the global economy, around who is going to be prepared to take advantage of the information society that is now upon us, and here we are, we are going to get bogged down in an issue that's been out there for 30 years that these issues are being wrestled with by the Supreme Court, I mean, are being wrestled with in the Congress of the United States and in the consciousness of the American people, but in California, here we have again an example of where you seize upon something that is going to be divisive, is going to be absolutely distracting, is going to take the presidential candidates off the main agenda that they ought to be dealing with, and as how to keep this nation moving forward into the next era.

MR. LEHRER: Ms. Sulton.

MR. SMITH: Jim, if I may interject.

MR. LEHRER: Yes.

MR. SMITH: I think that, that all three of the, of the other people on the program today are underestimating just how divisive this issue already is perhaps because --

DEL. NORTON: You will make it more so.

MR. SMITH: -- perhaps because currently the cards are stacked in the favor of people like myself, it's easy to sit back and say we shouldn't be spending a lot of time on it, but there are a lot of people out there who don't feel quite that way. And this is reason why. Unfortunately, we've had to seek the initiative process to try to deal with this because legislators have not had the political back bone to really take up this issue and deal with it.

MR. LEHRER: Ms. Sulton, what is the, what is the -- forget from the legal standpoint, the courts and all of that -- just what is your reading of the situation in Denver, and in your area, as far as the divisiveness of this issue as outlined by Mr. Smith and others?

MS. SULTON: Well, we were taught a very good lesson here about a year ago, when the electorate passed a law that would have reduced the rights available to those who are gay, and the court came back and told us that what we had done was wrong, it was unconstitutional, and I was pleased to see that. I think it is crucially important that all of our legislators and our jurists lead with a sense of a moral imperative. We have to move beyond looking for ways in which we candivide the nation and look to how we can make it a great nation.

MR. LEHRER: What about Mr. Smith's point that, that it's already a divisive issue and it has to be dealt with?

MS. SULTON: No, no, no, that -- I think it's absolutely important for us to have an open and honest and candid debate about the issue of race in this nation, we haven't had that for a while, but I don't think we get to an open, honest, and candid debate by alleging that affirmative action somehow is preferential treatment and, therefore, we should discard it, when we certainly have nothing to replace it with.

MR. SMITH: Again, let's keep in mind that there is a distinction between preferences and affirmative action. White advertising, taking -- making sure that the kinds of legal recourse are in place -- legal systems are in place so that those who are genuinely discriminated against can have recourse, that is fine and well within the, the terms of the California civil rights initiative. What we are saying is that we need to curtail the excesses of the policies that we've put into place over the last 30 years -- just the excesses -- that's all we're really talking about.

DEL. NORTON: Mr. Smith is saying he's for the benign approaches that didn't work and that moved the courts and the Congress on to approaches that have begun to work. About the most cynical, demagogic, polarizing thing you could do is to put an issue that resonates in race on a ballot anywhere in the United States of America today, and to do so, to do so, even though affirmative action, indeed, does help white women more than anybody else, because they've been educationally prepared, you are going to work up a racial storm for no reason, especially since the state of California cannot overturn federal legislation that requires these remedies.

MR. LEHRER: We have to leave it there. Thank you all four very much. FOCUS - NUMBERS CRUNCHING

MS. FARNSWORTH: Next, how good are the government's numbers? Last week, Federal Reserve Chairman Alan Greenspan suggested a surprising way to help cut the budget deficit. According to Greenspan, the government consistently overestimates the amount of inflation in the economy as measured by the Consumer Price Index, or CPI. That number affects many government expenditures, for example, the cost of living increases that seniors receive for Social Security benefits. Business Correspondent Paul Solman picks up the story.

MR. SOLMAN: Alan Greenspan's mini bomb shell appeared to come out of the blue. In brief, Greenspan said that if the government did a better job of calculating the inflation number, it could save money, a lot of money.

ALAN GREENSPAN, Chairman, Federal Reserve: [last week] Removing the bias in the CPI would have a very large impact on the deficit. For example, if the annual inflation adjustments to index programs and taxes were reduced by 1 percentage point and making the admittedly strong assumption that there are no other changes in the economy, the cumulative five-year savings would approximate $150 billion.

MR. SOLMAN: Of course, many seniors and others who depend on a cost of living increase might not like the implication of Greenspan's testimony, lower payments. But for those who study government statistics, he was making a familiar point. Back in 1991, we told the story of the CPI and its critics.

MR. SOLMAN: [1991] Meet Harriet Shaw, professional shopper.

HARRIET SHAW: This price increased. It was $5.89 last month and now it's $6.69 per item.

MR. SOLMAN: Harriet Shaw is gathering data for the government, price data from which the nation's most prominent index of inflation is computed, the Consumer Price Index or CPI.

MS. SHAW: This is $1.29. Last month, it was $1.67. It's not a sale price. It's a new regular price.

MR. SOLMAN: Does our super shopper stop digging when she finds Preparation H going up and hair spray down?

MS. SHAW: No, no. And if it's more than a 10 percent change in price, I have to justify it, so I can question and ask them why it's gone down or why it's gone up.

MR. SOLMAN: On any given day there are 330 Harriet Shaws in all parts of the country checking prices for the Bureau of Labor Statistics. The monthly CPI figure reflects the annual rate at which those prices seem to be rising.

MS. SHAW: And it's $37, and that it was last month, so there's been no change in the price.

MR. SOLMAN: To see how the government determines inflation and how well it does the job, we spent a day in suburban Chicago with Shaw, doing a job that can be tougher than it looks, as when a somewhat paranoid merchant hears that she's from the government.

MS. SHAW: I'll come in and I'll say somebody reported they purchased something in your store. What do you mean they reported, did they say I was too expensive, or they got a bad item or what, and we try to explain to them, no, they reported that they made a purchase here, and they were pleased with their purchase, I mean, we're not coming to you because somebody complained about you, this is not a complaint type of thing, but a lot of people are not aware of what the Consumer Price Index is.

MR. SOLMAN: Well, here's what the Consumer Price Index is: A market basket of goods and services representing the budget of the average American, broken down into seven broad categories. There's housing, the biggest ticket, 41 percent of what we spend; food and beverages, 18 percent of the typical budget of which a third is spent eating out; transportation is also 18 percent; then there's medical, the fastest growing category now up to 6 percent; apparel, 6 percent; entertainment, 4 percent; and finally other, the catch-all category that includes both tobacco and education. According to the Bureau of Labor Statistics, that's how we consumers spend our money. Harriet Shaw doesn't actually spend any money on her rounds. She just prices.

MR. SOLMAN: $1.85, a whopper.

MS. SHAW: A whopper, with cheese $2.09.

MR. SOLMAN: $2.09, that's the same.

MS. SHAW: A double whopper is $2.69, and with cheese, it's $2.93.

MR. SOLMAN: If there's a change in what they're serving here, Shaw is sure to catch it. She checks weight, portion, even the condiments.

MS. SHAW: And a whopper is how large?

MANAGER: That's 1/4 pound.

MS. SHAW: 1/4 pound, and it comes with a bun.

MANAGER: Yes.

MS. SHAW: And the garnishments are the same?

MANAGER: The same. The only difference is we put onions on them.

MR. SOLMAN: How Harriet Shaw gets paid to care about the Consumer Price Index, but why in the world should we? For two reasons: It turns out, and the first concerns macroeconomic policy, we'll leave it to another time; the second reason, however, hits us right where we live. For many Americans, their Social Security checks, union wages, even alimony payments, feature cost of living adjustments or COLAs to keep pace with inflation. These adjustments are tied to the CPI. So for every 1 percent rise in the CPI say, it costs the government an extra $3 billion or so to COLA recipients. Now, suppose, just suppose, that the CPI actually overstates the rise in the cost of living. Well, then all those people with COLAs will actually be getting more money than they arguably should. And sure enough, here at an Omni Super Store, the CPI may be making one of those costly overstatements. For years, consumers have been flocking to discount stores like Omni, but the government has just begun to price here.

MS. SHAW: Well, you select whatever you would purchase if you were the consumer.

MR. SOLMAN: And what would you purchase if you were the consumer?

MS. SHAW: I would purchase something like this, this looks like a good lettuce, as opposed to maybe something that's smaller.

MR. SOLMAN: The CPI changes the stores it surveys to keep up with consumers. But it switches a lot less quickly than the consumers do. Economist Robert Gordon.

ROBERT GORDON, Northwestern University: Then they bring Omni in, but they just missed that month when suddenly the consumer makes the switch. Of course, the consumers have been making the switch to Omni for years before the CPI ever discovered Omni existed. But finally they get the news, they go to Omni, but they start pricing your lemons at the new lower price and they miss this whole decline that has been bringing the customer to Omni in the first place.

MR. SOLMAN: A case in point, these bananas at Omni.

MS. SHAW: Bananas.

MR. SOLMAN: Bananas.

MS. SHAW: 48 cents a pound, first quality.

MR. SOLMAN: Last month, Shaw bought identical looking bananas at a regular supermarket for a much higher price, 69 cents a pound, but the price drop isn't noted by the CPI. They consider that this is a different store with different expenses, different features, maybe even different bananas. But if consumers consider these to be the same items which they're simply buying for less, they are actually beating inflation, even though the CPI says their costs are rising.

MS. SHAW: I have to take two of them to weigh. We weigh a pair, yes. [going to weigh honeydew melons]

MR. SOLMAN: Do we just pick these at random?

MS. SHAW: Yes, any two, any two that the average consumer would purchase, we just pick them at random, it makes no difference.

MR. SOLMAN: Consumers save in other ways that the CPI simply isn't designed to catch, coupons, for example, or stocking up when an item is on sale, as when this Omni ran a special on peanuts, a 24 ounce jar for a mere 99 cents.

OLDER MALE CONSUMER: You can't beat that. That's cheaper than the glass is worth. Every time I bought one, the girl said one limit, so I bought one and my wife bought one, so we got two, went to this cashier, and then we got the sales check, went back to the sales check, they had another peanut for the same price, I went back with the cart, come back and got another one. I did that nine times, times two is eighteen. That's what I call a bargain.

MR. SOLMAN: In other words, bargain hunters, especially in a recession, may choose to buy far more of a sale item, and, therefore, change what's in their market basket each time they shop. But the CPI assumes we continue to buy the same market basket of goods month after month. Over the long haul, of course, the CPI market basket does change somewhat. Deputy Commissioner Lois Orr.

LOIS ORR, Bureau of Labor Statistics: We would not want to have a market basket never change, because, for example, we would never have gotten around to pricing electricity, we'd still be doing candles.

MR. SOLMAN: But critics argue that the CPI doesn't change fast enough. Consider advances in technology that keep delivering consumers more for their money. Here again, the CPI may be missing a drop in the cost of living and thus, overstating inflation.

MS. SHAW: Let me just verify all the information with you. It's a VHS HQ, okay, and the price is $399.95 and your sales tax percentage is 7 percent.

SPOKESMAN: 7 percent.

MR. SOLMAN: The price for the VCR is the same as last month, but the product's been improved. You're spending the same, but you're getting more for your money.

MS. SHAW: When I come in and he tells me that the item that I've been pricing is no longer available, we substitute to the most comparable sub available.

MR. SOLMAN: Now when you come to the most comparable in your sort of personal opinion, are you pricing a better machine?

SPOKESMAN: A better unit, always. We upgrade the unit. We don't say that the unit is equal. We'll say it must be a little better.

ROBERT GORDON, Northwestern University: In 1978, the first VCR that we bought had electrical rather than electronic controls, it jammed all the time, it could only program one channel. It cost more than $1,000. Now, for $200, you can buy something with 20 times as many features in a remote control, and that's a price decline of more than 80 percent. If you look at the government's statistics for television products, including the VCRs and look what's happened in the last 10 years, they tell you the price has gone down maybe 10 or 20 percent. They've vastly missed this tremendous improvement.

MS. SHAW: The CPI folks are working on the problem, but solutions are not as easy as they might seem.

MS. ORR: In the case, for example, of a candy bar, let's say, where you have a decrease in the weight of the candy bar, that's a quality change, if you will, that we can take into account. Some of these other kinds of changes aren't as easy to make quality adjustments and these are some of the areas where we're undergoing a lot of research in an effort to try to figure out what are some of the things that we can do to reflect some of these differences.

MR. SOLMAN: [at gas station] But changes in the CPI remain to be made. Meanwhile, the number continues to miss advances in technology like this one. After 10 fill-ups here at the pump, you get a free cellular phone, something of an improvement over the free glass of olden days. But, again, the CPI doesn't take such advances in technology into account. So add it all up, technology improvements, discount stores, bargain sales, and there are a lot of problems with the current CPI. That's what Alan Greenspan finally pointed out last week and suggested that only Congress can make the necessary adjustments.

ALAN GREENSPAN: The Congress should basically endeavor to adjust the CPI, itself, in the sense that it would be the escalating procedure would be CPI minus 1 percent or minus 1/2 percent, or whatever it is you chose because we know the biases there can't get it out fully but we know it overestimates the true underlying cost of living.

MS. FARNSWORTH: By this weekend, Republican Congressional leaders were already picking up on Chairman Greenspan's critique of the way inflation is calculated. House Speaker Newt Gingrich even threatened to withhold funding from the Bureau of Labor Statistics if it did not change its approach. ESSAY - CLOSE OUT

MR. LEHRER: We close tonight with an essay. A few days before the San Francisco-based apartment store chain, I. Magnin, closed, Pacific News Service editor Richard Rodriguez paid a final visit.

RICHARD RODRIGUEZ, Pacific News Service: I. Magnin's was a chain that belonged to the West, from Seattle to Scottsdale, a chain famous for elegance in a part of the country more famous for informality. This white marble store designed by Timothy Phleuger on Union Square in San Francisco was the flagship of the chain. San Francisco is one of the few American cities that still has a thriving shopping district in the center of town. Chicago is another, and New York. In most other American cities, the great downtown stores closed long ago in favor of branch stores in the suburban shopping malls. The downtown stores closed at about the same time that the great movie palaces were torn down for parking lots. Evening gowns, fifth floor; children's clothing, sixth; household goods, eighth floor, there are still middle class department stores in San Francisco as grand as banks with rotundas and skylights and great stone facades. But here on Union Square, as on Michigan Avenue, or Fifth Avenue, something new is coming to town: entertainment merchandising. Across Union Square from I. Magnin's, Dunhill's is due to be replaced by NIKE Town, a sportswear, multimedia shopping experience, and over there, on the other corner, Disney is opening up a store. Everyone says in the history books that Henry Ford invented the automobile. I've always thought that Americans invented Henry Ford. The Model T merely gave shape to an American desire for solitude, or convenience, or escape. Suburban malls are surrounded by acres of parking spaces. Downtown stores stand on congested streets. That, at once, is their inconvenience and their excitement. Downtown stores are located next to where people work. Shopping and working are linked activities. In those days when American mothers didn't work, going downtown to shop was a way for them to connect with the working world. The shopping malls that began to be built in the late 1950's separated shopping from work. Shopping in the suburbs became its own point, an antidote to boredom, something to do at night or on Sundays, and you didn't have to dress up to go to the mall. I can still remember when women in San Francisco used to dress up to come downtown. I remember women in their suits and their white gloves. The old downtown stores used to be closed on Sundays. After all, people had better ways of spending their leisure than by going to Macy's. People went to church on Sunday, so they stayed home. "I'm going downtown," my mother would say, straightening her hat in the mirror. The very phrase, "I'm going downtown," was as redolent of glamor as a scent of perfume. My mother never shopped at I. Magnin's. It was too expensive to interest her much. But you didn't have to go inside to sense its metropolitan glamour. I remember the door man, a tall, black man standing sentry at the entrance. I remember black limousines idling at the curb in those years before limousines stretched white for rock stars and for high school proms. We Americans are not given by instinct to ceremony. The informality of the mall suits us. But once upon a time, there used to be great department stores, stores that reminded us that we lived in cities, stores that belonged to their singular cities, as I. Magnin's belonged to Union Square. Once upon a time, people dressed up to shop on Mondays, and they had better things to do on Sundays than to seek entertainment from NIKE Town on Michigan Avenue, or at the Warner Brothers Store on Fifth Avenue. I'm Richard Rodriguez. RECAP

MS. FARNSWORTH: Again, the major stories of this Monday, prosecutors in South Carolina said they will seek the death penalty against Susan Smith for the murder of her two sons. And a strong earthquake hit Western Japan, injuring dozens of people. Early reports said scores of homes and some apartment buildings may have collapsed. Good night, Jim.

MR. LEHRER: Good night, Elizabeth. We'll see you tomorrow night. I'm Jim Lehrer. Thank you, and good night.