The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. Leading the news this Friday, Pres. Bush and the other leaders of the industrialized nations opened their economic summit in Paris, former Housing Sec. Pierce was implicated in the HUD scandal, and a drop in wholesale prices brought good inflation news. We'll have the details in our News Summary in a moment. Robin.

MR. MacNeil: After the News Summary, we have the latest in the HUD scandal with excerpts from today's Congressional hearings, next a documentary report on one of the issues before the Paris summit, the greenhouse effect, followed by a summit preview with two former insiders, Donald Regan and Fred Bergsten, then David Gergen and Mark Shields analyze the week's political issues, we see the French celebrate their 200th Bastille Day and Roger Mudd has an essay on the ties between the French and American Revolutions.NEWS SUMMARY

MR. MacNeil: Leaders of the world's richest nations opened their fifteenth economic summit in Paris today, a meeting overshadowed by celebrations of the 200th birthday of the French Revolution. The day began with a military parade down Pari's grandest avenue, the Chance Elises, to commemorate the storming of the Bastille Prison which marked the beginning of the revolution. The summit leaders watched from a viewing stand protected by bullet proof glass, along with some of their third world counterparts. Then Pres. Bush and his summit partners from France, West Germany, Britain, Japan, Italy, and Canada, went to get their picture taken at the Louvre's new glass pyramid, which is now the museum's main entrance. One of the main topics on the summit agenda is third world debt. Pres. Bush met on that subject today with Mexico's President. They discussed the possibility of a 1 to 2 billion dollar U.S. loan to help Mexico pay its debts. We'll have more on the summit and Bastille Day later in the program. The Soviets said today they would be willing to give up sea launched Cruise missiles depending on U.S. actions. In Paris, National Security Adviser Brent Scowcroft said the suggestion was one of several back and forth in the strategic arms reduction talks and added, "We'll have to look at this one and see what it means." Jim.

MR. LEHRER: Former Housing Secretary Samuel Pierce was directly contradicted today by two of his ex-employees. Both told a House Subcommittee hearing Pierce personally approved HUD grants to a former law partner of his. Pierce had sworn to the same committee that he had not been involved in such approvals. The two witnesses, Shirley MacVerry Wiseman and Janet Hale, each served as deputy assistant secretary for housing under Pierce. Ms. Wiseman described how Pierce ordered her to approve the deal involving his former partner.

SHIRLEY WISEMAN, Former HUD Official: But he said, I want the project funded and I said, I can't fund it, Mr. Secretary, and he said, well I want it funded. And I said, well, I'm sorry, I can't fund it, but I will send it upstairs to you.

REP. LANTOS: And you did?

SHIRLEY WISEMAN: Yes, sir. And that was the end of the conversation.

REP. LANTOS: And you did?

SHIRLEY WISEMAN: Yes, sir.

MR. LEHRER: We'll have an extended excerpt from today's hearings after the News Summary. The Senate today voted overwhelmingly to slap more sanctions on China. The vote was 81 to 10 for suspending for six months the activities of the Overseas Private Investment Corporation in China, and barring the export to China of crime control and detection equipment among other things. The legislation is similar to some already passed by the House. Both versions are opposed by the Bush administration.

MR. MacNeil: The story of the pilot who survived a crash after blacking out at the controls of his plane turned more bizarre today. Thirty-six year old Thomas Root was rescued moments after his single engine Cessna ran out of fuel and plunged into the ocean near the Bahamas. Authorities had earlier speculated that Root might have suffered a heart attack or inhaled carbon monoxide, but today police officials said he was shot through the abdomen at close range. Officials said Root's wound might have been self- inflicted, but a family member today denied that and said it might have occurred when a gun Root was carrying fired on impact. Police have been unable to interview Root, who remains heavily sedated in a Florida hospital.

MR. LEHRER: Three economic numbers from June were out today. Wholesale prices fell .1 percent. The Labor Department said it was the first drop in that figure since December 1987, and was caused by decreases in food and energy costs. The Commerce Department reported retail prices down .4 percent, a terrible slump in new car sales was given as the reason, and the Federal Reserve Board said industrial production was off .2 percent. In a business development today, a state court judge in Delaware ruled Time Incorporated can go on with its $14 billion offer to buy Warner Communications. Paramount Communications, which is seeking to buy Time, had filed suit to stop the deal. Paramount immediately appealed today's decision. If the appeal fails, it means the Time- Warner deal most likely will proceed to completion.

MR. MacNeil: Alabama electrocuted a 28 year old retarded murderer today, but had to do it twice because the wires were crossed the first time. After the first attempt to execute Horace Franklin Dunkins, Jr. at the Atmore State Prison, doctors said Dunkins was unconscious, but with a strong heartbeat. Guards found the electrodes cross, reconnected them, and the switch was thrown again. Dunkins was pronounced dead 19 minutes after the first attempt. Dunkins was retarded, withan I.Q. of 69. He was convicted of killing a mother of four, who was stabbed 66 times. A second defendant who pleaded guilty is serving a life sentence.

MR. LEHRER: Finally in the news, the Senate Armed Services Committee today approved production of the most expensive war plane in history, the B-2 Stealth bomber. It has not yet been approved by a House committee. And that's it for the News Summary. Now it's on to the HUD scandal, the greenhouse effect, a summit preview, Gergen & Shields, and the French Revolution. UPDATE - BUILDING SCANDAL

MR. LEHRER: We go first tonight to the HUD story, the Congressional investigation into allegations of influence peddling, lax oversight and theft at the Department of Housing and Urban Development. Today two former HUD officials directly contradicted the sworn testimony of Samuel Pierce, the Secretary of Housing during the Reagan years. They challenged his version of his rule in determining which projects received funding. Kwame Holman has our report.

MR. HOLMAN: Janet Hale and Shirley Wiseman were assistant secretaries at HUD in the mid 1980s. Both say they were asked by then HUD Sec. Samuel Pierce and his executive assistant Deborah Gore Dean to approve funding for North Carolina housing projects for the elderly, a project objected to for years by career bureaucrats.

SHIRLEY WISEMAN, Former HUD Official: I received a call asking me --

REP. LANTOS: From Sec. Pierce?

MS. WISEMAN: Yes, sir, asking me if I had received the Durham packet and had Deborah spoken with me, and I said, yes, I had received it and yes, Deborah had spoken with me, and he said, the Secretary said, I want the project funded.

REP. LANTOS: Those were his exact words, as you recall, I want that project funded, or words to that effect?

MS. WISEMAN: I believe that's the exact words.

REP. LANTOS: That's close enough, close enough.

MS. WISEMAN: But he said, I want the project funded, and I said, well, I'm sorry, I can't fund it, but I will send it upstairs to you.

REP. LANTOS: Ms. Hale.

JANET HALE, Former HUD Official: Yes, I wanted to be sure that Deborah or the Secretary understood having to be now -- my signature that would be on those documents, that there was tremendous opposition. In the spring when I was asked to sign the waivers, after I had been there probably several weeks, having learned more of the project, having heard the allegations that it was on a toxic waste site, as the chairman referred to, I refused to sign the documents, because one of those documents I had to sign was a site and neighborhood standards waiver. I was not willing and told Deborah I was not willing to sign those waivers with the allegations that it was on a hazardous waste site.

MR. HOLMAN: But ultimately, Janet Hale, who succeeded Shirley Wiseman as HUD's deputy assistant secretary for housing, acceded to the demands of Pierce. She signed documents allowing $16 million of subsidies and tax breaks to flow to the housing project that was developed by a former Pierce law partner.

MS. HALE: I was asked to sign the waivers again. I asked staff to check to be sure that the land had been inspected and given staff conversation with the field office, I was told that it had been inspected and that there was no evidence of toxic waste.

REP. CHRISTOPHER SHAYS, [R] Connecticut: So you signed it and by then you had just decided you were going to sign it?

MS. HALE: I was told to sign them and I did, sir.

REP. SHAYS: This whole testimony is unique in that we have the Secretary saying he never tried to influence a project and we have two of you making it very clear to us that he tried to influence this project and have it move forward in the department. We have both of you concurring with that, and that is extraordinarily significant testimony, as I'm sure you're aware.

MR. HOLMAN: Both women said the pressure to sign the funding documents came from Pierce's assistant, Deborah Gore Dean. Dean, 31 years old at the time and with no previous housing experience, refused to testify before the committee last month. Witness after witness have testified that she played a pivotal role in funding dozens of projects now under investigation for impropriety. Committee Chairman Tom Lantos asked each of today's witnesses for an assessment of Dean's performance.

MS. WISEMAN: Mr. Chairman, that's a difficult question. I must preface my remarks with the fact that I believe young people in this country deserve an opportunity to participate at all levels and to have access to responsibility and decision making. However, coming from 25 years experience,I would say that a position as powerful as the executive assistant to the Secretary of Housing needs a person with lots of experience, lots of time and grade, if you will. And I guess the Secretary misjudged Ms. Dean's experience in that manner.

REP. LANTOS: Ms. Hale.

MS. HALE: Mr. Chairman, that's a very difficult question for me. As Shirley alluded to, I was the young person that was given the opportunity to progress. I think the responsibilities of the Office of the executive assistant to the secretary, that office having the ability to influence, if not control, actions that are undertaken at the department. You've alluded to the $1/4 trillion worth of long-term housing assistance that is there, the FHA insurance programs. You would hope that the person that is put into that job would have the wisdom, the experience or the maturity to handle that. I think your question, sir, was how did we judge Sec. Pierce's judgment. And I honestly think that's one for him to answer.

MR. LEHRER: On Monday, the committee will hear from the United States Trade Rep. Carla Hills, who was Secretary of HUD during the Ford administration. She will be questioned about her lobbying and legal work on behalf of a mortgage firm and a real estate developer in 1985. FOCUS - HEAT & LIGHT

MR. MacNeil: As we reported, the Paris economic summit got underway today. While the leaders of the world's seven richest nations are expected to take up a wide range of topics, from East- West relations to third world debt, there is a new issue fighting its way to the center of the world stage, the global environment. A key aspect of the environmental issue is global warming. Correspondent Tom Bearden reports.

TOM BEARDEN: June 1988, the weather was brutally hot. Global temperatures for the first five months of the year were the warmest ever recorded. Severe drought conditions caused half of the nation's agricultural counties to be declared disaster areas.

FARMER: Well, it's the worst I've seen it. It's the worst my father has seen it. He's 76 years old.

MR. BEARDEN: Forest fires raged out of control, and the Mississippi River fell to a record low level, halting river traffic and leaving barges stranded.

SPOKESMAN: The river is closed as of about two days ago for us.

REPORTER: So you're able to ship nothing via the river?

SPOKESMAN: Nothing on the river.

MR. BEARDEN: Washington was having unusually hot weather too. All of that tended to focus attention on a hearing here on Capitol Hill, where a NASA scientist was warning all of the scorching weather might be just a taste of things to come. The scientist was Dr. James Hansen, Director of the Goddard Institute for Space Studies in New York City. He told a Senate Committee the warming trend for the 1980s, which included the five hottest years on record, was not normal, not a natural climate variation.

DR. JAMES HANSEN: [June 23, 1988] The global warming is now large enough that we can ascribe with a high degree of confidence a cause and effect relationship to the greenhouse effect.

MR. BEARDEN: Up to that moment, global warming due to the so- called "greenhouse effect" had seemed a remote possibility, something for future generations to worry about. But the theory of how the effect works is undisputed. Sunlight strikes the earth, the earth radiates heat back to the atmosphere, and part of that heat is then trapped in the atmosphere by carbon dioxide and other gases.

DR. HANSEN: The greenhouse effect has been detected and it is changing our climate now.

MR. BEARDEN: Hansen's testimony based on this computer climate model touched off a storm of controversy. Most climatologists felt he had jumped the gun. They argued that climate naturally varies so much it would take several decades before anyone could determine whether the greenhouse effect really had set in. Hansen disagrees.

JAMES HANSEN, NASA: And I tried to illustrate the impact of the greenhouse effect in the 1990s by making up these colored dice. This dice is for the period of 1950 to 1980, and a hot summer is represented by a red side of the dice, a cool summer by the white sides, and a white side represents an average summer. So in that time period, there was a probability of about 33 percent of having a hot summer. But by the 1990s, the amount of the greenhouse warming, even though it's less than natural climate variability is enough to make the probability of a hot summer 60 to 70 percent. That means four out of the six sides are red. I think that this is a sufficient loading of the climate dice that the man in the street will notice that the climate has changed. [CLIMATE MODEL BEING SHOWN]

MR. BEARDEN: But this model at the Geophysical Fluid Dynamics Laboratory in Princeton predicts the greenhouse effect won't become noticeable for about 20 years. GFDL Director Dr. Jerry Mahlman says in 30 years, however, the effect will be so obvious scientists won't be debating it.

DR. JERRY MAHLMAN: As we start out, we see that mostly it's greens and blues because the boundary between green and blue is no temperature change at all. The start of this was in the year 1958, and each flash is now one year, so we're now ten years out and no real evidence of any systematic climate warming. After 60 years, 30 years from now, they'll begin to see the reds and the browns showing up more carefully, the red again a warming of more than 4 1/2 degrees celsius. The greens and the blues have begun to disappear and we're seeing large amounts of yellow showing up, meaning warming between 1 1/2 and 3 degrees.

MR. BEARDEN: By the year 2048, the model shows that warming in most of the U.S. will be 4 1/2 degrees centigrade and more. That's 8 degrees Fahrenheit.

MR. BEARDEN: This is predicated on an increase in carbon dioxide?

DR. MAHLMAN: An increase of carbon dioxide at 1 percent per year.

MR. BEARDEN: That's the core of the greenhouse problem. Carbon dioxide and other gases have begun increasing at a rapid rate. Power plants and automobiles are burning more and more CO2 emitting fossil fuels. Tropical forests, which absorb CO2, are being burned down, adding even more CO2 to the air. Chlorofluorocarbons, or CFCs, from aerosol sprays and refrigerants have increased. So too have the less important greenhouse gases like methane, which comes from rice paddies and other sources. Climatologists generally agree that as the gases increase, so too will the heat trapped in the atmosphere.

JERRY MAHLMAN, Climatologist: The entire mainstream scientific community agrees that the greenhouse effect is real, it produces a warming effect on the planet, the planet is likely to warm and the details of the warming are frightfully complicated.

MR. BEARDEN: Dr. Jessica Mathews is a research scientists and Vice President of the World Resources Institute in Washington, D.C.

JESSICA MATHEWS, World Resources Institute: We have a pretty good sense of what the global impacts will be, sea level rise, generally more precipitation, a wetter planet, a cloudier planet, a warmer planet, but when you say what will be the climate in the Midwest, then becomes much more difficult to say.

MR. BEARDEN: It's also difficult to say whether we will see some of the disaster scenarios people associate with global warming, an increase in major floods like this one in Bangladesh last year, more killer hurricanes like last year's Gilbert, widespread drought like the ones that plague Ethiopia.

SPOKESMAN: One always has to be open to those possibilities. The droughts are basically results of our own models, and we see that they are likely to be more intense and more frequent a hundred years from now, but that's not a disaster scenario in the sense that Kansas becomes like the Sahara Desert or something, we don't see that happening at all. There have been speculations about the collapse of the West Antarctic ice sheet, for example, and that producing a colossal increase in the sea level and so forth. Right now the best scientific opinion seems to be that that's quite unlikely to happen on the scale of many lifetimes.

MR. BEARDEN: "The best scientific opinion." It should be pointed out that all the forecasts of global warming are based on scientific opinion. Nothing is an ironclad certainty, but evidence that the greenhouse effect will warm the earth comes from several sources.

JESSICA MATHEWS: The strongest evidence that it will be happening comes from the theory which is really scientifically robust. We have confidence that the theory is correct. And the evidence that the theory is correct comes from many different sources. For example, if you look at Venus is Mars, Venus is much hotter than its distance from the sun would suggest because it has a runaway greenhouse atmosphere, lots of greenhouse gases. Mars, on the other hand, is frozen, much colder than its distance than its sun would suggest, because it has no greenhouse gases in the atmosphere.

MR. BEARDEN: On our own planet, ice cores like this from a Greenland glacier confirm that greenhouse gases are increasing. Bubbles in the ice allow scientists to suffer hundreds even thousands of years old. The data shows that CO2 concentrations have increased 25 percent in the last hundred years since the industrial revolution. Support for the greenhouse theory also comes from the fact that sea levels have risen about 1/2 foot in the past century. That's consistent with global warming because water expands when it's heated. But it doesn't prove the effect is really there. Much of the evidence is ambiguous. Take this global temperature chart, for example. At first glance, the chart which shows about a one degree Fahrenheit increase over the past century seems to support the theory.

PATRICK MICHAELS: In fact, when you break the earth into its Northern and Southern hemispheres, the complexity begins to appear.

MR. BEARDEN: Patrick Michaels is a professor of environmental science at the University of Virginia. He says one would expect temperatures in the Northern Hemisphere, which has more land mass, would have warmed more quickly than those in the Southern, which has more ocean. But that's not the case.

PATRICK MICHAELS, University of Virginia: The Southern Hemisphere is the one that shows a more greenhouse like signal. The Northern Hemisphere's mean temperature, believe it or not, has not changed significantly over the last 55 years. A lot of that warming that you see over the last hundred years was, in fact, before the major emissions of the trace gases went in, and therein lies the problem.

MR. BEARDEN: Michaels looks at the inconsistencies and says it's too early to take drastic action.

PATRICK MICHAELS: When you deal with such uncertainty, it behooves you to carry a very wide range of options. One of those options is, in fact, that to research the problem, to iron out these glaring inconsistencies like the problem between the North and in the Southern Hemisphere, you have to iron these things out before you go to a policy which is going to cost so much money that nobody has even calculated it yet.

MR. BEARDEN: But the balance of opinion among scientists seems to be tipping in the other direction, toward taking action soon. In 1987, a joint workshop of the United Nations Environment Program and the World Meteorological Organization concluded "It would be inappropriate to postpone action until the consequences of warming are clearly visible.".

MR. BEARDEN: Why not wait until all the data is in before making recommendations for action?

JESSICA MATHEWS: You really can't do that on this problem for two reasons. One is, the first is this is an experiment you can only do once, right? We've only got one planet and there's only one planet in the universe so far as we know where there's life on it. So if the problem is as serious as many people believe, then we're running a tremendously high risk to wait. That's one reason. The second reason is that unlike some more familiar forms of pollution where you can go back and clean up the mess, here the change is irreversible. You cannot change the atmospheric balance back again, at least in human times, as opposed to geologic times. So you don't have the luxury of being able to wait for the normal level of consensus.

MR. BEARDEN: Since the summer of '88, the consensus in favor of taking action has been building slowly and haltingly. The Congress is considering legislation to coordinate and strengthen U.S. policy with regard to the problem. But reaction at the White House is mixed. In one week last May, the Bush administration refused to support a treaty on global warming, then reversed itself, agreeing to begin negotiations. That same week the administration censored testimony by Dr. Hansen to make his conclusions seem less serious and less certain. A month after the censorship flap, Pres. Bush did take some action. He announced a new clean air bill to reduce acid rain and smog. The measures proposed would help fight global warming by reducing greenhouse emissions.

PRES. BUSH: [June 13] There's one thing everyone agrees on; we need action and we need it now. Every American deserves to breathe clean air.

MR. BEARDEN: Internationally, the Montreal protocol, an agreement calling for the phasing out of chlorofluorocarbons, was ratified. More than 40 countries agreed to cut production of CFC's at least in half by the end of the century. The agreement was passed with unusual speed because of a related environmental crisis. Three years earlier, a NASA satellite had detected a hole in the ozone over Antarctica. The ozone, which protects the earth from the sun's harmful ultraviolet rays, was being eaten away by CFC's. The hole is the dark shape inside the pink.

MICHAEL OPPENHEIMER: The discovery of the ozone hole completely changed attitudes on both the part of the scientists and the general public about the atmosphere.

MR. BEARDEN: Michael Oppenheimer is senior scientist with the Environmental Defense Fund in New York.

MICHAEL OPPENHEIMER, Environmental Defense Fund: It sent out a warning. Basically the warning was you can't fool with Mother Nature without something happening in return. And I think everyone took a long look at the ozone hole that was sort of looking down into the abyss and said, wait a minute, whoa, we don't want to go down that path.

MR. BEARDEN: In Europe, a consensus in favor of taking action was building more rapidly than in the U.S. for a number of reasons. Acid rain and the dying off of forests had become a major issue in Germany. The green parties, Europe's environmentally active political parties, were gaining power. Also a NASA satellite had discovered a thinning of the ozone over Northern Europe. After the discovery, Prime Minister Margaret Thatcher convened a conference of ministers from 118 countries to study the problem.

MICHAEL OPPENHEIMER: And at that meeting, she led the way toward a commitment to eliminate chlorofluorocarbons totally, that is to go way, well beyond the Montreal protocol. At that meeting, she really grabbed the international leadership on this issue.

MR. BEARDEN: The cost of reducing greenhouse emissions worldwide would be unprecedented, although experts say many of the measures would make good sense for other reasons. The political obstacles and international cooperation required would also be unprecedented. One major issue to be resolved, would the developed countries, which are the source of most of today's greenhouse gases, be willing to subsidize efforts in developing countries to reduce their greenhouse emissions?

JESSICA MATHEWS: I'm optimistic that we may see over the coming years a very different relationship between the developed world and the developing world than we're used to having, which is basically a conflict between the have's and have not's, and out of it coming a different sense of a shared destiny, of being passengers on the same boat, and of the need to jointly address the issue.

MR. BEARDEN: Environmental issues, including global warming, will be high on the agenda at the economic summit which began today in Paris. The summit participants are all expected to compete for positions of leadership on the issue. Prime Minister Uno of Japan, a country often accused of being insensitive to environmental concerns, has already made his leadership bid. Earlier this week, he announced a $2.2 billion program which would aid poor countries in fighting deforestation. The issue of global warming has come a long way since the summer of 1988.

MR. LEHRER: Now we preview the possibilities of the Paris economic summit with two veterans of economic summitry, Donald Regan, who served as Treasury Secretary and White House Chief of Staff during the Reagan administration, and Fred Bergsten, the Assistant Secretary of the Treasury for International Affairs in the Carter administration; he's now Director of the Institute for International Economics, the Washington think tank. Mr. Regan, first on this issue of the environment and the warming, the global warming problem, would you expect this summit to really deal with that in a substantial way?

DONALD REGAN, Former Chief of Staff: Oh, yes. I think they will make for a real effort to try to get cooperation among the industrialized countries, because you see this is a political thing as well as an economic and environmental problem.

MR. LEHRER: Explain the politics.

MR. REGAN: Well, Chancellor Kohl has a problem with the Greens in Europe. George Bush ran as the environmental President in '88, he's got to make good on those promises. Prime Minister Uno knows that Japan has been picked on, he's got problems back home, so it's a very good issue for all of them.

MR. LEHRER: Mr. Bergsten, your view.

C. FRED BERGSTEN, Institute for International Economics: I think the main effect of the Paris summit will be to sharply raise global consciousness over the severity of the environmental problem and particularly the greenhouse effect. I think that's a major function that summits play. The glare of publicity enables the leaders to focus attention on a problem that's coming. I don't think they'll do anything very concrete. I think they will demonstrate the link between environmental problems and economic issues, which are very close, raise consciousness and begin to pave the way for the significant action that is required in the future.

MR. LEHRER: All right then what will be its main business, in your opinion?

MR. BERGSTEN: I think in addition to the environment --

MR. LEHRER: You're not suggesting that the environment will be the major business?

MR. BERGSTEN: I think the environment will be the major topic of discussion. There won't be concrete action. There will be a lot of attention paid to the nature of the problem, its severity, and I think some procedural steps probably will be put in place to begin to try to deal with it. In addition to that, there'll be a lot of emphasis on East-West political and economic issues. Pres. Bush has just visited Hungary and Poland. There's enormous interest among the European participants at the summit of finding new bridges, new ways to help promote political and economic reform in the Eastern Europe countries and in the Soviet Union, itself. I think that'll be another very high priority at the Paris summit.

MR. LEHRER: Do you see it the same way?

MR. REGAN: More or less, of course there will be other subjects that they have to discuss. Third World debt is a big and pressing issue at this point as is the policy as coordinated intervention or coordinated policies on monetary affairs in order to keep their currencies in line with other.

MR. LEHRER: Newsweek had a story this week, I believe that it was this week which said that the most important problem that facing all these countries will not be discussed and that is our trade deficit and the trade deficits back and forth all among these countries. You are shaking your head.

MR. REGAN: I disagree entirely. I don't think that our trade deficit is that big a problem. I think what's more of a problem is our economy. If our economy is slowing down and we got some figures today that give an indication of that then Germany and Japan for the most part and Great Britain to a certain extent have got to pick up the slack in order to keep the world trade going from the point of view from our trade deficit that is easily explained at this point.

MR. BERGSTEN: I totally disagree with Mr. Regan on that one. I agree with Newsweek. I think the trade imbalances should be the leading issue. It looks like on everybodY's forecast the U.S. deficit which is already over a 100 billion dollars will start rising again next year. The United States is already the World's largest debtor Country. We've had to borrow 700 billion dollars over the last five years to finance these huge trade deficits. Our foreign debt is headed toward a trillion dollars by the early 1990s and that is one reason that President Bush despite his good intentions can not come up with any money to help Poland or Hungry, can't come up with much money to help Mexico or the third World Debtors. I think that that what is needed is a renewed effort among the major Countries to get the trade imbalances coming down. That means action by the United States on its budget. It means action by Japan on its trade barriers. It means actions by the Germans to increase their economic growth. It means action on the exchange rates but I think that if they ignore that issue they are running some peril with the World economy as a whole.

MR. LEHRER: They are going to ignore aren't they, I mean, it is not on the agenda?

MR. BERGSTEN: It looks like they are going to ignore it and that I think underlines the risk that Mr. Regan pointed to. The outlook for the U.S. trade deficit is now actually so bad, so much deterioration could occur over the next two or three years that that could drag our economy into recession, cause a lot of financial instability and bring on a lot of trade protection as well.

MR. REGAN: Well here we get the difference. Actually a part of our trade deficit we should be praising ourselves for it because much of it is money coming in here voluntarily to be invested in the United States. Just look at what happened in Hong Kong when there was trouble in China. The money all poured in here. Money is coming in for everywhere in to the United States for investment. That is helping us. We are building foreign plants here. The product of that is going to help us. Part of our job creation, the 17 million jobs that have been created over the last few years is coming from foreign sources so I don't see the trade deficit as real number one problem. Sure it is a problem I am not denying that but it is not the number one problem facing us nor the World.

MR. LEHRER: Let's talk about Summits generally and how it may relate to this one based on your individual experience. As a practical matter is there anything that is not scripted?

MR. REGAN: In a Summit?

MR. LEHRER: In a Summit.

MR. REGAN: Yes, when the heads of state or Government get together the seven of them, based on my experience at six Summits they will talk about anything and they will not follow a script. These are individual leaders and when they start discussing things among themselves they can hope from subject to subject pretty rapidly and what ever they want to do they can do.

MR. LEHRER: They can talk about things but isn't it unlikely that would take a, have they ever taken a spontaneous action, made a decision, issued a communique that they didn't plan?

MR. REGAN: Yes I will tell you one happened as a matter of fact in Paris at the last time there was a Summit in Paris in 1982. Israel invaded Lebanon and they got out a communique very quickly from the Versailles Summit in 1982. That was spontaneous.

MR. BERGSTEN: I think that the Summits have really fallen into disrepair in the 1980s when President Ford was involved in starting the Summits back in the mid 1970s there was a lot of serious substantive work done by the Leadersand coming to grips with some of the key economic problems they faced. Likewise when President Carter several Summits in the late 1970s also dealt substantively with major economic problems but I am afraid they have fallen into disrepair in the 1980s. I think President Reagan and his Administration was nearly so inclined toward International Economic cooperations. I think President Reagan as, in fact, Mr. Regan said in his book as not to inclined to get into deep substantive discussion on economic issues and the result was media opportunities, photo focus, Not much on substance. I think there is a big opportunity being missed. I hope President Bush takes this opportunity to get back on track and deal with some substance.

MR. REGAN: Well again I have to disagree with my colleague in this respect. These Summits serve several purposes other than just a pure discussion of economics. You can have all kinds of Ph.D.'s go discuss economics if that is what you want. These are Heads of Government, Heads of State. They have important responsibilities in the political arena, social arenas and many other things that they want to discuss among themselves. The fact that they are on a first name basis makes it easier the other 364 days of the year for them to call each other or to correspond with each other on other topics be it some type of International Political event or what have you. So I think these Summits serve as a get together which is very helpful. Like the annual check up that a person takes.

MR. LEHRER: So they may have began as Economic Summits but what you are suggesting they have moved on to something else. It is just a way to get together and get to know each other and talk about what ever they want to talk about.

MR. REGAN: What concerns their members concerns the free World and I think that is very healthy.

MR. LEHRER: What is wrong with that?

MR. BERGSTEN: I agree that it is good to get together and get to know each other and have friendly chats and to talk about political as well as economic issues but I think that they are missing big opportunities. It is the only time in the year when the Heads of State get together, the people who can cross cut across different economic issues, monetary. trade, economic, financial, debt issues. Those issues can only be resolved by heads of State relating the issues to each other and making the tough political decisions that they can then take back home and get implemented. That has been done in several Summits in the past and I think that it is not being done now.

MR. LEHRER: Give me an example of when it was done. Something truly substantial that changed the course of history or something else at a Summit.

MR. BERGSTEN: There is a very clear example in the 1978 Summit in Bonn when President Carter, Chancellor Schmidt of Germany, the Japanese and French worked out a deal. The U.S. at that time also had some trade deficits and needed some help. The Germans, Japanese and French agreed to speed up their growth rate, the kind of thing Mr. Regan was talking about before. In return, they said to Pres. Carter, you Americans are using too much energy. That was a period of the oil shocks and the energy crisis. We want you to get your energy policy in shape. Pres. Carter pledged to decontrol U.S. oil prices, take a series of other steps to reduce U.S. use of energy. He brought the deal home to the Congress and large part because it was part of an international bargain was able to sell it here politically which had not been done before, very concrete, very substantive achievement.

MR. LEHRER: A deal worked out in advance long before they got to Bonn?

MR. BERGSTEN: Worked out partially in advance, but only clinched among the heads of state and Bonn, itself.

MR. LEHRER: Is that a legitimate function of a summit?

MR. REGAN: Oh, yes. The sherpers, that is the people that guide the leaders to the summit --

MR. LEHRER: The what?

MR. REGAN: Sherpers.

MR. LEHRER: Sherpers.

MR. REGAN: As in Indian, leading people up the mountains and so forth, well, these are sherpers. These people -- our head sherper happens to be the Under Secretary of State for Economic Affairs and these people discuss -- as matter of fact, there's gotten to be quite a bureaucracy built up about this in most of the countries -- they discuss practically 12 months out of the year what is going to happen at the summit. Once they get targeted what the main issues will be then they go back to their principals and say this is what you want to discuss. From that will come other things that a principal might want to discuss. Once they hit upon the agenda though they start working on the communique and believe it or not, there are very little chances to maneuver once that communique has been set.

MR. LEHRER: Based on your experience, would you expect anything startling or unplanned to come out of this one?

MR. REGAN: No. I think that pretty much at this point since the draft communique have been leaked, people have an understanding before --

MR. LEHRER: Before they even met?

MR. REGAN: Before the discussions would take place. I think they're pretty well geared now over the next couple of days to discuss those topics that are in the draft communique.

MR. LEHRER: Do you agree?

MR. BERGSTEN: I'm afraid the summits have fallen into disrepair. This is one evidence and we probably won't get any big surprises.

MR. LEHRER: And it's all Regan and Regan's fault?

MR. BERGSTEN: No, not all, but they contributed to it.

MR. REGAN: Well, you've got to remember that after all Mrs. Thatcher, Chancellor Kohl, then Prime Minister Nakasone, various other people like that, they're all independent people. They could have objected if they didn't like the way these summits were going, and I know Mrs. Thatcher for one would certainly speak out. She apparently approves of what they are, so if the seven heads of government or state are comfortable with this, I say so be it.

MR. LEHRER: All right and we will say so be it as well. Gentlemen, thank you both very much.

MR. MacNeil: Still ahead on the Newshour, Gergen & Shields, scenes from the 200th Bastille Day and Roger Mudd on the American- French connection. FOCUS - GERGEN & SHIELDS

MR. MacNeil: It's Friday and for Gergen & Shields fans that means they're back again. Our weekly political analysis with David Gergen, Editor at Large of U.S. News & World Report, he joins us tonight from the studios of public station WNED in Buffalo, New York, and in Washington, Mark Shields, Syndicated Columnist with the Washington Post. Mark Shields, how's the European trip been going for the President, both in rhetoric and tangibles?

MARK SHIELDS, Washington Post: Well, I think the reviews so far would have to be so so in Warsaw, Bofo and Budapest, and Paris still awaits him. I think the ghost of Ronald Reagan has stalked George Bush on this trip in two respects, one, Reagan did have that marvelous flare for the dramatic and that poet's instinct for the memorable line, both of which have alluded Mr. Bush thus far on the trip and the other thing of course is that the Reagan budget deficits have left George Bush with a deleted purse, and very limited options as far as aid.

MR. MacNeil: David Gergen, the ghost of Reagan haunting Bush on the stump in Europe?

DAVID GERGEN, U.S. News & World Report: I wouldn't quite put it that way. I think it's been a modest plus for him back here in the United States, Robin. What we saw in Poland was a George Bush who had to walk a very careful line, and just as he had on questions relating to China, he was trying to balance things off, and I think that prevented him from issuing memorable declarations about human rights and pushing too far. He wants to encourage change in Poland, pluralism in Poland, but he wants to do it in a way which doesn't antagonize Mr. Gorbachev and the Soviets, so I think that produced some restraint in the way he went about his business there. I think Mark is right about the purse question. Of course, Mr, Bush was able to come forward with, in Poland, with about $100 million, which is far less than the Poles wanted and of course, this was a week when the Japanese proposed some 40 billion additional dollars for third world aid and debt reduction and for the environmental improvement internationally, and say here the American President comes along with a $115 million from Poland and 25 million dollars for Hungary, it's quite a bit less than with the Japanese. We can see now who has the money.

MR. MacNeil: Mark Shields, David mentioned political impact at home. What is the political impact back here of Mr. Bush going around Eastern Europe and sounding as though he and Gorbachev are partners in a way in this?

MR. SHIELDS: Well, I think that the first political fallout is felt in the House Armed Services Committee, where this week the President's defense budget was getting chewed up pretty badly, and there has almost been a sea change in attitude. I mean, the fact is now that there is not the perceived threat of the Soviets here at home and of course, this trip contributes to that and that had been a coheving agent in maintaining a strong commitment to high spending on national defense. And that has dissolved. So I think that's one implication and one direct product of the chumminess.

MR. MacNeil: What do you see, David? You mentioned it first, the political impact back home.

MR. GERGEN: Well, I think it's less, this trip has less impact than when he proposed these large troop reductions, American troop reductions in Europe. I think that was played heavily here. It was warmly welcomed by people on both sides of the aisle. It played well in Congress. This trip, of course, is different in character and he does not have the kind of money he can go forward with. But I think coming to the point about Mr. Gorbachev, what I've been told by sources in the administration is that the President and his top advisers sense that Gorbachev has the support of his generals and he may be willing to cut a deal on conventional forces a lot more rapidly than they first expected, and they were worried that a couple of years from now he may not have that support, so they want to move forward and I think that Bush is intentionally trying to warm up that relationship rhetorically with Gorbachev in order to move forward on that conventional deal.

MR. MacNeil: A commentator in the New Republic this week or last week said that Mr. Bush is still on a lot of these issues afraid of the conservatives on his right wing and that he is making a lot of symbolic gestures to keep them happy, which explains the flag amendment issue, the abortion stance, gun control and so on, do you think that's right?

MR. GERGEN:I'm not quite certain to whom that's directed.

MR. MacNeil: I gave it to you.

MR. GERGEN: Okay. If I may, I think the administration is very concerned still about the conservatives. He wants to keep one foot clearly in the conservative camp. There have been rumblings on the right for sometime now. They seem to be getting along with Mr. Bush, but periodically the conservatives speak up and say they're not happy. I thought the most interesting thing really frankly were these two people in high positions in the administration that people were on the verge of being appointed who withdrew under conservative pressure over the last 10 days. One of them, of course, Mr. Bush had spoken about, Mr. Fisk, for the No. 2 position at the Justice Department. I think those were blows for Mr. Bush. They suggested that he's vulnerable from the right.

MR. MacNeil: Do you have an opinion on that, Mark?

MR. SHIELDS: Certainly.

MR. GERGEN: You have an opinion on everything.

MR. SHIELDS: Two examples of it come quickly to mind, one on this trip. All of a sudden, some of those on the right to whom Lech Walesa had been just an anti-Communist hero discovered that, in fact, his politics were not those of a supplysiding free marketer, that he was a trade unionist, a militant trade unionist, and a socialist, and this has caused some consternation on the Republican right and some distancing by Sen. Helms from support of Walesa, or all out endorsement of him. Secondly, I would say in the President's proposed campaign finance reform, he does limit severely and almost eliminate business PACs, corporate PACs, labor political action committee contributions, but not ideological political action contributions, and those of course are both left and right but most emphatically right and hard right, those were the groups that put on the Willie Horton commercial last fall against Michael Dukakis and for George Bush.

MR. MacNeil: Mark Shields, turning the corner a little bit here, the HUD scandal, we just had excerpts from the latest testimony on earlier in this program, what is your hunch? Is this going to grow and turn into a very big political scandal?

MR. LEHRER: I think it is going to continue to grow. I talked to Tom Lantos, the chairman, the House Subcommittee chairman today whose own accent will soon be known I think to a majority of Americans Hungarian born, and he has, in fact, described it as a Whitman box, a sampler, he has just taken the first bite, the committee has, and they've discovered that this one didn't taste good, and there's 50 more there. I mean, he didn't say that with any great delight, but he said they literally have scratched the surface. The first report I guess politically is the deafening silence of Newt Gingrich, the Republican House Whip, who had announced several times and rather proudly and prominently, that the corruption, the Republican crusade against corruption, of Democratic corruption, that is, was going to restore the Republicans to their rightful majority place. That phrase has not trickled from Mr. Gingrich's lips since these hearings became so widely covered.

MR. MacNeil: David, how do you see it hurting, if you do, the Republican Party in practical political ways? Will the distance from the White House of the HUD scandal, the fact that there's no inclination that Pres. Reagan was involved, keep this smaller and more controlled than things like Watergate or Iran-Contra?

MR. GERGEN: Robin, I've begun to change my view on the HUD scandal. I thought that three or four weeks ago this was going to be fairly modest insize and it was not going to make that much difference. As it's gone on, as it's deepened, it seems to me more and more Republican blood is beginning to flow on this. In particular, I think it's beginning to raise more serious questions about the Reagan legacy, about Reagan's place in history. I think it's reviving a lot of the questions that were there earlier during the Iran-Contra period, and I think that Ronald Reagan may well pay a price, certainly his place in history might, if this continues, and it appears that it just was out of control at HUD and it looks like a real mess. It has not just lapped up on George Bush, and I have to tell you, I think that it's costing the Republicans one of the issues they wanted to use in this coming election, one we've talked about here frequently, and that is, they wanted to go after the Democrats and the sleaze in the House and the questions of resignations and that sort of thing. When you have one Republican scandal coming after a Democratic schedule, it begins to neutralize each other and everybody looks bad. I've been up here at Chitaqua for the last couple of days and I have to tell you the people here are, they're just disappointed in politicians in general. They can't say enough bad things about politicians.

MR. MacNeil: Mark, what does this do for Jack Kemp?

MR. SHIELDS: Well, sadly, I am a Jack Kemp fan, and I confess to that quite enthusiastically. I always thought the two stars of the Bush cabinet would be Bill Bennett, the drug czar, and Jack Kemp at HUD, because they're both men of imagination, of enthusiasm, energy and commitment, and I think Jack Kemp while committed to housing, committed to helping poor people, especially the homeless, is going to be playing defensive ball, and I don't think anybody ever scores politically really on the defensive.

MR. MacNeil: We'll have to --

MR. GERGEN: Robin, I disagree with that. I think Jack Kemp is doing very well on this.

MR. MacNeil: You'll have to disagree next week, David. Okay, thank you both. FOCUS - BASTILLE DAY

MR. LEHRER: Finally tonight some sounds from and words about France. It was 200 years ago today that angry Frenchmen stormed the bastille in Paris, freeing prisoners and triggering a revolution. The anniversary was marked with a major parade down the Chance E'Lise in Paris today. [MUSICAL SEGMENT] ESSAY - VIVE L'ENFANT

MR. LEHRER: Now to some words about the special contribution of one Frenchman to our capital city. They are the words of Roger Mudd.

ROGER MUDD: Thirty-five years ago as the greenest reporter on the evening paper in Richmond, Virginia, it was I who drew the assignment to write the annual Bastille Day story. The city editor's instructions were brief. He said go out and find some French families and find out whether they still eat frogs legs or whether they set off fire crackers like Americans do. It never occurred to me that he'd been giving those same instructions to his newest reporter every July 14th for years. Writing the Bastille Day story was no big assignment, not then, and not in that Southern city. So here it is 35 years later, and I'm in the big time, but I'm still being assigned to write the Bastille Day story. This time, however, the company is considerably better. The National Geographic, for instance, has set a team of 24 reporters and photographers to prance for nine months and it has devoted its entire issue in July to France and the bicentennial. The magazine France published by the French government has already put out its special commemorative issue. American Heritage is celebrating the French Revolution with a historical piece by Gary Wills, an article on the 1912 American tour by the great French actress Sarah Bernhardt, and an essay on everybody's favorite Frenchman, Marie Joseph Paul E. Roche Jebere Motier Marquis De Lafayette. Lafayette, he helped Washington crush the British at Yorktown, lionized, canonized, memorialized, and his death in 1834 nearly paralyzed American fears with grief. Thirty-six American towns and eighteen counties bear his name, not to mention the college in Pennsylvania. No other Frenchman, not Pasteur, nor Piaf, not DeGaulle nor Napoleon is so known and so loved in America as Lafayette. But there is a Frenchman to whom those who live and work in Washington, D.C., owe a daily word of France for making the city a place of livable beauty and space. His name was Pierre Charles L'Enfant of Paris, a man so obscure he has no known portraits, only this caricature. He was one of thirty other French officers who volunteered to help the continental army fight the British. He was an engineer, mostly self-taught, and after the war, George Washington picked him to lay out the plans for the new nation's capital. He moved quickly and secretly to shield his design from the local land speculators. On the only hill in town, Jenkins Hill, just 80 feet above sea level, he placed the Capitol Building, the Congress House he called it. A mile and a half to the West on a slight rise with a view of the Potomac River, he spotted the President's house. Then he connected the two with a wide diagonal, Pennsylvania Avenue. He laid in a broad open mall to intersect at right angles with the President's fields, and then north of the mall, he set down his grid of streets, letters for the East-West, numbers for the North-South, with avenues for the 13 states slanting across the grid and forming circles where they crossed. Within a year, the prickly but talented L'Enfant had made so many local political enemies that George Washington had to fire him. L'Enfant never collected from the Congress what he thought it owed him, despite 20 years of badgering, and in 1825, at age 71, he died a pauper. Not for 50 years after his death did the government come to realize the legacy of L'Enfant's vision. By then, the Capitol Building was finished, the malodorous Tiber Creek Canal sealed off. The Washington Monument started in 1848 was finally completed in 1888, and the mall was cleared of its train station and railroad tracks. The Lincoln Memorial in East-West alignment with the capital was dedicated in 1922. Twenty-one years later on the North-South axis with the White House, the Jefferson Memorial was added. The plan for this city from the mind of a Frenchman who loved it more than any American produced a capital unlike any other in the Western world. Its buildings and their dignity, its avenues and their sweep, its parks and their welcome all proclaim the ideals of the New Republic. In 1909, 85 years after he died in obscurity, L'Enfant's bones were exhumed, brought to the Rotunda of the Capitol to lie in state, and then finally buried here in Arlington, on the edge of this hill, overlooking his city, carved on the top of his tomb is his 1791 street plan for the Capital of the United States of America. Vive L'Amerique. Vive La France. Vive L'Enfant. RECAP

MR. MacNeil: Again, the major stories of the day, Pres. Bush and the other industrialized leaders of the nations opened their economic summit in Paris, new testimony in the HUD scandal implicated former Housing Secretary Samuel Pierce. Good night, Jim.

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