The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight: The news of this Monday; then three takes from today's immigration protests in Los Angeles, Chicago and Washington, plus analysis of the boycott's impact; a Darfur update as talks reach an impasse and as thousands of Americans rally for peace; and a Paul Solman remembrance of John Kenneth Galbraith, a public man of economics.

NEWS SUMMARY

JIM LEHRER: This was a day of immigration protest around the country. Legal and illegal immigrants stayed away from workplaces, schools and shopping centers to show their economic weight. And thousands gathered at rallies and marches from Miami to Detroit to Denver. In New York City, protesters linked arms in a human chain. Several large companies, including Gallo Wines and Tyson Foods, shut down some or all of their operations. We'll have much more on this story right after this News Summary. Workers in European and Asian nations also took to the streets today in traditional May Day marches. Most were peaceful. In the Philippines, anti- government protesters marched in Manila, under the eyes of a heavy police presence. And in Indonesia, about 100,000 workers condemned a labor law cutting severance packages.

A U.S. inspector general reported substantial progress today in rebuilding Iraq. But he also said violence and corruption have greatly impeded the effort. The report found hundreds of police stations, schools and firehouses have been rebuilt. On the other hand, oil and gas output and power generation still lag behind pre-war levels.

There was little progress today in talks between Sudan and rebels from its Darfur region. On Sunday, the African Union extended the deadline for a peace deal through tomorrow. Today in Washington, a State Department spokesman announced Deputy Secretary of State Robert Zoellick was heading to the talks in Nigeria.

SEAN McCORMACK: Right now, it is down to a few difficult issues, things concerning disarmament of militias, how to integrate former militias into an armed force and associated issues. So although we are down to a few issues in this regard, nothing is done until everything is done. And Deputy Secretary Zoellick is going there in hopes to move the process forward, to on the ground bring the parties together and help them resolve any remaining differences.

JIM LEHRER: The talks have lasted two years. Sudan's government has said it would sign the draft peace agreement. The rebels have refused. We'll have more on this story later in the program. Later in the day Secretary of State Rice held out hope for a deal but she would not predict the outcome. We will have more on this story later in the program.

The government of Puerto Rico largely shut down today in a fiscal crisis. The legislature and governor of the U.S. Commonwealth failed to agree on a budget. Public schools closed for the academic year, two weeks earlier than usual. Government offices also closed, putting 100,000 employees temporarily out of work. Police and other vital workers remained on the job.

The finances of Social Security and Medicare grew steadily worse again last year. Trustees for the program reported that today. They said the Social Security trust funds will be depleted by 2040. That's a year earlier than last year's estimate. Medicare will exhaust its hospital insurance fund by 2018, two years earlier.

Treasury Secretary Snow chairs the trustees. He called again today for action.

JOHN SNOW: Solutions that generate a permanently sustainable Social Security system will require bipartisan efforts. The president's put forward a number of proposals. He's invited others to come forward with their proposals. The time is now for a serious and thoughtful engagement from all sides.

JIM LEHRER: The trustees also projected spending on the Medicare drug plan will be 20 percent less than expected between now and 2015. They cited lower enrollment than first projected and lower premiums due to competition.

The U.S. Supreme Court agreed today to let a former playboy playmate continue fighting for her late husband's estate. Anna Nicole Smith married Texas billionaire J. Howard Marshall in 1994, the year before he died. Today's decision lets her pursue a claim for part of Marshall's fortune in federal court.

Economist John Kenneth Galbraith died Saturday in Cambridge, Massachusetts. He advised Democratic presidents from Franklin Roosevelt to Bill Clinton. In 1958, his book, The Affluent Society,' argued the U.S. economy should do more for public needs such as schools. John Kenneth Galbraith was 97 years old. And we'll have more on his life and work at the end of the program tonight.

Oil prices shot back up today over tensions with Iran and violence in Nigeria. In New York, futures gained 2.5 percent to close at $73.70 cents a barrel. In other economic news today, the Commerce Department reported consumer spending rose 0.6 percent in March, the most in six months. Separately, the private Institute for Supply Management said manufacturing showed healthy gains in April.

But on Wall Street, stocks moved lower on new concerns about interest rates. The Dow Jones Industrial Average lost more than 23 points to close at 11,343. The NASDAQ fell more than 17 points to close below 2305. And that's it for the News Summary tonight. Now, today's immigration protests, making peace in Darfur, and remembering John Kenneth Galbraith.

FOCUS - BOYCOTT

Today's immigration protests. We begin with reports from NewsHour correspondents Jeffrey Kaye of KCET-Los Angeles, Rich Samuels of WTTW-Chicago and Kwame Holman in Washington, D.C. California is first.

JEFFREY KAYE: Walking away from their jobs and classrooms, thousands of people, many waving American flags, gathered on the streets of Los Angeles today. Among them, hotel worker Victoria Vergara.

VICTORIA VERGARA, Hotel Worker (Translated): We are not criminal we are workers. We contribute to this country, and it is only fair that they legalize those who don't have documents.

JEFFREY KAYE: Vergara and other demonstrators were galvanized by proposed federal legislation that would make illegal immigration a crime. By withholding their labor and their buying power, protestors hoped to showcase the economic clout of illegal immigrants, who comprise an estimated 15 percent of the LA labor force.

The first economic effects of the May Day boycott were seen early this morning in downtown Los Angeles. A wholesale produce market, normally bustling with activity, was all but deserted. Stalls were closed and trucks were at a standstill.

JEFFREY KAYE: Have you ever seen it like this?

RUBEN CALDERON, Produce Merchant: No, never. Not even on Sundays.

JEFFREY KAYE: Merchant Ruben Calderon, himself an immigrant from Mexico, gave his five workers the day off. He's says he'll lose as much as $4,000 in sales, but he says it's for a good cause.

RUBEN CALDERON: It's a lot of hard time for the immigrants right now, and it's the right time to let them talk to say they're here and they're here for good. Because they're hard-working people, so I think they need, you know, some kind of a legal status to be here.

JEFFREY KAYE: Early morning commuters into downtown Los Angeles found light traffic today. Normally crowed buses were nearly empty. Businesses weren't the only places affected by the boycott. Outside Belmont High School, which is 91 percent Latino, junior Cynthia Contreras urged students to demonstrate. She said many kids here illegally won't be able to get a higher education.

CYNTHIA CONTRERARS: Most students immigrated when they were very small with their families; they didn't choose to come here. But unfortunately, they can't continue their education just because they don't have the legal status.

JEFFREY KAYE: A key architect of today's protest was immigrant rights activist Nativo Lopez. He says a boycott is the most potent way to show America's reliance on undocumented immigrants.

NATIVO LOPEZ, Mexican American Political Association: If people just stop and reflect. Change your own children's diapers, mow your own lawn, fix your own car, program your own computer, change the diapers of your elders that are in convalescent homes, do all the other grimy, dirty, stoop, difficult labor that immigrants do, and then truly you will appreciate their tremendous value to society and reward them with legalizing their status.

JEFFREY KAYE: It was a message that resonated even with those who constantly struggle to find work. Last week, these day laborers in Hollywood said they would honor today's work stoppage.

THOMAS LOPEZ, Day Laborer (Translated): If we've crossed the border, crossed the deserts risking our lives to get here, why not give up a day of work for something that can help us all?

JEFFREY KAYE: Many merchants in Latino immigrant communities also joined the boycott by shuttering their businesses. But not all merchants embraced the boycott idea enthusiastically. Fred Adibi, who's an immigrant from Iran, said last week he was afraid that if he kept his appliance store open, it would anger his Latino customers and neighbors.

FRED ADIBI, Store Owner: I am making money out of them. They are spending money, so I am supporting them.

JEFFREY KAYE: Even within the immigrant rights' community, the boycott has had its skeptics and critics. Some activists feared immigrants might be fired if they participated in a boycott.

ANGELICA SALAS, Coalition for Humane Immigrant Rights of Los Angeles: If they feel that their job is in danger, we feel that they don't need to risk their job on this day.

JEFFREY KAYE: Angelica Salas supports the cause, but not the boycott. So the organization she directs, the Coalition for Humane Immigrant Rights of Los Angeles, helped plan an alternative to this boycott march-- a separate, late-afternoon demonstration for after school and after work.

ANGELICA SALAS: When you are actually threatening somebody's daily bread, when you are threatening somebody's wages, you had better be very serious about why you are calling that action, that boycott.

JEFFREY KAYE: To accommodate protestors, officials closed streets in downtown Los Angeles. And the federal courts shut down for the afternoon in anticipation of expected traffic snarls. Demonstrations that began midday in Los Angeles rolled into the evening, as they did throughout southern California.

RICH SAMUELS: It was demonstrators as far as the eye could see at the staging area for Chicago's march. Chicago was where the idea for a nationwide demonstration originated.

DEMONSTRATORS: Legalicion. Legalicion.

RICH SAMUELS: It was the brain child of Jose Artemio Arreola, a service workers union official.

JOSE ARTEMIO ARREOLA, Service Workers International: We need it. We need it, immigration reform.

RICH SAMUELS: He proposed a rally that was held here in March.

SPOKESMAN: Vamos con olga.

RICH SAMUELS: Latino radio personalities like Javier Salas provided publicity that led to a turnout of at least 100,000 then. Today he had to overcome what he claimed was a negative image projected by some sectors of the Anglo media.

JAVIER SALAS, Univision Radio: We're not burning flags. We're not singing anthems in bilingual. We're not offending this country. What we all want is to share the American dream, as clich(c) as it sounds. We just want to have the opportunity to provide for our families.

RICH SAMUELS: Between three hundred thousand and five hundred thousand marchers turned out here today.

Organized labor had a considerable presence. Tony Avalos, a Teamster organizer, believes managers agree with workers on the immigration issue.

TONY AVALOS, Teamsters Hispanic Caucus: They're very supportive because they're not afraid of the walkouts or not being here. They want us to come back to work. They want us to be legal. They want to give us the things that everybody else has.

RICH SAMUELS: Joining the Chicago marchers today, with some misgivings, was Carmen Velasquez. She's a health care professional. Many of her clients are immigrants without documentation.

CARMEN VELASQUEZ: You have to have courage to call attention to your issue. Whether it's the best way to do it, I'm not sure. But I do know this, that unless we do something that demonstrates to the entire country that this is still America, that we have the right to voice our concerns and our issues and bring it out in the open, and we are not afraid to talk about this issue. And this country has to stop being afraid to talk about it, only because we have come out and said, "Deal with us. You cannot erase us from the blackboard."

RICH SAMUELS: Among the elected officials addressing the marchers was U.S. Senator Barack Obama.

SEN. BARACK OBAMA, (D) Illinois: You know, I am proud of the fact that a national movement began in Chicago, because Chicago has always been ahead of the curve. And what started out as march born of fear, fear of a House bill that would criminalize and create felons out of hard- working families who are simply trying to raise their children as best they can, has now become a movement of hope.

RICH SAMUELS: But not all Chicago's African-Americans agreed with Senator Obama today. Talk show host Cliff Kelly fielded a call this morning that he says is not unique.

CALLER: They're here illegally. And if they broke the law, then they should be sent back, as many as can.

RICH SAMUELS: Talk show host Kelly says jobs are the issue for this and other like-minded callers.

CLIFF KELLY, WVON Radio: He mentioned the fact of how many African-Americans are out of work; that's what's behind it: Sheer economics. People need jobs, you know, not withstanding all this we hear about. Oh, the economy, this that and the other. That's a bunch of crap. As I say, drive through my community and you see all these people on the street at noon. They are looking for work.

RICH SAMUELS: While the Chicago protest was by far the largest pro-immigrant rally in Illinois, a handful of similar rallies were held today throughout the state.

KWAME HOLMAN: It looked like business as usual in the nation's capital today. There were taxi cabs a-plenty. The racket from construction sites echoed through the streets. And daily life for most went undisturbed, as many immigrant workers showed up for their jobs or gave advance warning they'd be gone.

In some of Washington's Latino neighborhoods, such as Mount Pleasant, several businesses were closed in observance of the boycott. But feelings remained mixed, especially in Carlos West's apparel store, which he kept open.

CARLOS WEST, Store Owner: I'm a supporter. I support. But then again, everyone's got to pay rent.

WOMAN: You pay rent, but only one day we have to be together, to work together. They know what we are the strong of this country, and we pay taxes like them, like everybody else.

KWAME HOLMAN: A few blocks away, a popular Mexican restaurant did its usual Monday lunchtime business. Many of Lauriol Plaza's 300 seats were filled. Co-owners Luis Reyes and Raul Sanchez talked to their employees last week, and decided shutting down today wasn't the best way to support immigrants' rights.

LUIS REYES, Restaurant Owner: I don't think we help the -- get attention with the boycott. I think we'll look bad for us.

KWAME HOLMAN: The owners, as well as most of the staff, were born outside the U.S.

RAUL SANCHEZ, Restaurant Owner: Everybody knows immigrants are useful, and is needed here. We've been needed. And tell everybody don't go to work, it's not going to help. You are going to disrupt the economy to show what -- what are you going to show?

KWAME HOLMAN: Another usually bustling lunchtime spot, Chef Geoff's, also kept its doors open for most of the day.

SPOKESMAN: This country is founded on immigration.

KWAME HOLMAN: That was a collective decision, according to owner Geoff Tracy, who convinced his team that closing would hurt everyone.

GEOFF TRACY, Restaurant Owner: We're a profit-sharing company. At the end of the year I give back a large percentage of the profits to all my employees. They all know that. And so we talked about that $30,000 worth of revenues that just disappears; that's just gone; profits that's just gone, you know, they balanced that out. And they said, "Maybe that's not a good thing for the restaurant."

KWAME HOLMAN: Tracy acknowledged that his restaurant business depends heavily on an immigrant workforce, and he's not alone. About 45 percent of Washington, D.C.- area food service workers are immigrants; not all illegal, according to the Pew Hispanic Center.

GEOFF TRACY: There's a lot of labor involved, and a lot of that comes from the Latino community. And if they all get together and say, "you know, we're not going to work today," well, if the produce doesn't arrive, there won't be many Caesar salads that day.

KWAME HOLMAN: Around the corner the management of Finemondo closed the restaurant in solidarity with its employees, most of whom are immigrants. Manager David Burkhardt said that meant a hit to the bottom line.

REPORTER: How much money are you going to lose?

DAVID BURKHARDT: Anywhere between $5,000 to $12,000.

KWAME HOLMAN: But next door, the High Noon Deli struggled to deal with the lunch time crowd when half its workers chose to boycott. Manager Stella Dumka expected that, and planned ahead.

STELLA DUMKA: We're going to be very frazzled all day and we're going to just keep going, do the best we can, and that's all you can do.

KWAME HOLMAN: Many immigrants and their supporters who chose not to work came together this afternoon for a rally in the city's most prominent Latino neighborhood. That wasn't a concern for Roxana Rivas. Owners of the nearby store where she works chose to close for the day.

ROXANA RIVAS (Translated): Where I work it's a Hispanic business and all my bosses support us. They know we are dignified people and they understand we need to one day legalize and get papers.

KWAME HOLMAN: Though much smaller than last month's pro- immigration rally on the National Mall, today's turnout in Washington pleased organizers. They said the so-called "sleeping giant" has been awakened, and promised to continue to push for legal status for America's millions of undocumented people.

JIM LEHRER: Ray Suarez takes it from there.

RAY SUAREZ: What was the impact of today's immigration protests, and where does the movement go from here? We get two perspectives. Juan Jose Gutierrez is director of Latino Movement USA, a Los Angeles-based group that helped organize today's boycott. And Leslie Sanchez is chief executive officer of the Impacto Group, a market research firm focused on the Hispanic community. She served as director of the White House initiative on Hispanic education under the first President Bush.

Juan Jose Gutierrez, you were one of the organizers. Did what you envisioned come about, and what was the message it sent to the rest of the country?

JUAN JOSE GUTIERREZ, Latino Movement USA: What I envisioned that going to happen as a result of this very remarkable and historic day is that the American people going to begin paying attention to the very just quest by immigrants for legalization.

I think that if every poll is beginning to indicate the tide is turning. And today's boycott, that's incredible day is going to make Americans move past in the direction of doing the right thing, of urging Congress and the president of the United States who have been politicking on this issue for way too long. I think the time for doing that so ever. The American people are impatient. They're sick and tired of the polarizing over this issue.

They want to do the right thing. They know that these people are the ones that are doing the tough jobs that nobody else wants to do. They are taking care of their kids. They're their neighbors. They're the people that serve them food, wash the dishes and do all the dirty work that needs to be done, that other people don't want to do.

And you know, ultimately I think that the American people are going to see right through all the politicizing of this issue, and the wrong way and say you know what, we need to do the right thing, let's legislate a comprehensive immigration reform that allows people to become legalized, that lays out a clear path to citizenship for those that choose to become Americans citizens. I do believe the majority of these immigrants are going to embrace citizenship given the chance. And I think that this country will be so of the better for it.

RAY SUAREZ: Well, he put two issues out Leslie Sanchez, let's take them one at a time. First, as Juan Jose suggested, did this get America's attention?

LESLIE SANCHEZ, Impacto Group: I really think overall it is a fizzle. And I know it's probably too early to tell, especially on the West Coast, but the reason I say that is we have to look at what the intent of this was. The intent according to many of the organizers was to wreck economic chaos. It is not a coincidence that they picked May Day, the international socialist day of the worker, to celebrate this.

This not like the protests you saw in March and April that were organic in the sense that they were Hispanic-sponsored immigrant groups, faith-based oriented Spanish language radio, and they came together collectively to talk about the things my colleague here just mentioned.

But, you know, I think that is what drew America's attention and said, you know, we really need to look at the provisions outlined by President Bush with a guest worker program.

This animal today is completely different. I think it is much more politicized. It's organized by umbrella groups that have an intent other than immigration reform. And I don't think they got, you know, what they said they wanted all weekend, which was havoc on American cities.

RAY SUAREZ: Mr. Gutierrez's second point was that this will catch the attention of the national legislature and push along the effort for immigration reform, do you agree?

LESLIE SANCHEZ: I think that the effort is moving. You know, you have already seen a House bill that has passed with some provisions that I personally don't agree with and I think a lot of people feel are very harsh. The Senate has pressure placed upon it. And the president has been working very hard since 1999, when he first started this effort on comprehensive reform. I think the battle cry for comprehensive reform is legitimate.

But these type of politicized protests where you are basically allowing several on the fringe elements of the radical left, including some organizations that are bringing in Iraq and the war and other discussions to disrupt U.S. economies, is not going to bode well with, I think the American public or mainstream Hispanics.

Mainstream Hispanics do not want to vote against economic, you know, capitalization. They want to be part of it. They don't want amnesty; they want a legitimate process for citizenship. And that's why this is distinctly different and I think that's why we have to be care of a backlash.

RAY SUAREZ: Juan Jose Gutierrez. is it so different, did the immigrants from many places but certainly from Latin America out on the streets of the country today put forward those ideas that Leslie Sanchez says they hold by standing away from work, by not spending money?

JUAN JOSE GUTIERREZ: No. What the people did today is that they took an American position for their constitutional and civil rights in this great nation. Nothing could be further from the truth that just because some people from the left happen to join us in solidarity, that that in itself describes the remarkable historic event of today.

The truth of the matter is, is that by the millions, men and women, hardworking men and women that do the tough jobs in America, who pay taxes, abide by the rules, have children, they have to work hard to put food on the table, you know, they decided to stand up, to do the American thing, you know, to take a page from history, of what this great country has had to go through to right the wrongs of this nation. And they've said enough.

And I think that, you know, they did it the right way. They did it the American way. They took to the streets. They exercised the right, you know, to do so; they are petitioning the representatives. The representatives are supposed to be doing the business of the people. What have we gotten from marching so much by the millions for weeks on end, more than a million at a time in LA on March 25?

You know, no one is paying attention the way we would expect that they would at this point. We have a broken immigration system that needs urgent attention. That has not happened. The time to act is now. And I think that that is what the people are saying.

And that's precisely why the call has already gone out. And we will be in force on May 19 of this year right in front of the White House, clamoring once again for America to rise up to the occasion and to do the right thing once again, as they have done throughout its history, and incorporate this newest wave of immigrants into the mainstream.

That's what's made America great -- its capacity to incorporate wave after wave of immigrants into this nation so that they can better contribute, you know, to the greatness of America. That hasn't happened yet, but I have no doubt that after today that will happen.

RAY SUAREZ: You are shaking your head, you wanted to respond.

LESLIE SANCHEZ: I really do, the biggest problem I think Americans and mainstream Hispanics and other immigrants who came here legitimately are going to have is this sense of entitlement. I mean, where does that actually come from?

This is not harking back to the civil rights efforts of the 1960s where there was something, where they were really working to codify and have legitimacy with the 14th Amendment.

This is something where people do not have rights to come into this country illegally and then have a right to have certain, you know, expectations for entitlement. That is the part that is really hard for many in our country to stomach. And I think the more that they do this in your face, we are entitled to something, versus saying you know what; we want to come out of the shadows. We want to be a legitimate part of the American society, there needs to be a way to trade labor the way we serve goods and services with Mexico, Latin America and the rest of the world. That is a different conversation from this right that you owe us.

I mean we're a very generous country. I think the United States gives $30 billion to Mexico and Latin America every year in terms of remittances. And now you say you are entitled to those things. That is really not go to fly.

RAY SUAREZ: But I think Mr. Gutierrez suggested earlier that the sense of entitlement comes from the significant role that the workers who are his constituents play in the economy. They didn't just arrive to demonstrate.

LESLIE SANCHEZ: Right.

RAY SUAREZ: They've been keeping the businesses that we saw in those earlier reports running, the ones that stayed open and the ones that closed today.

LESLIE SANCHEZ: Sure. I mean it's not -- it is not against free speech. I think the idea is: Do undocumented immigrants have a right to social services? Do they have a right to protest? Do they have a right to make demands on U.S. American consumers and voters? That is the question.

There is a difference between how, I think, the U.S. Congress is even going to compromise in having a comprehensive immigration bill. But they are not going to tolerate in your face, you know, kind of measures.

RAY SUAREZ: Mr. Gutierrez, go ahead.

JUAN JOSE GUTIERREZ: Two points, Mr. Suarez: I think that something remarkable happened today. You know, when this lady is talking about the American people, you know, she makes a whole lot of mischaracterizations that have no base in reality.

The fact of the matter is that today when many companies decided to stand up for their employees, their undocumented employees, and they advised the public that they were not going to operate today because they want to extend solidarity to their employees, I think that that says a lot about the character and the nobility of the American people, because I think that if the business community had decided to stand up with their workforce, I think that the rest of the American family, which are the vast majority of the people in this country, are not going to take extremist positions and this propaganda that gets thrown around all the time, that the majority of American people are against immigrants.

How can a country of immigrants be against immigrants? The fact of the matter is that there are now poll after poll that are coming out, one by the Wall Street Journal, that indicates that over 61 percent of the American public wants constructive resolution of this issue, and in fact favor legalization and a clear path to citizenship for the undocumented population.

I think the tide is turning. And I think that the message to the American people and to the government of this country from immigrants and their allies today has been loud and clear. We will not take it anymore. We want legalization. We are contributing greatly to this economy. It's false that America gives $30 billion to Latin America in remittances. Let us not forget that that is the result of the labor and sweat all of these hardworking future Americans that have to take care of their families. That is what's really going on right here.

And the fallacy of the arguments that are being made right now as we speak, you know, I think that are having less and less effect. And I think that the people will ultimately stand up with us.

RAY SUAREZ: Your response.

LESLIE SANCHEZ: I think America is a country of immigrants. We support legal immigration. And we do not want to see -- any community -- want to see anybody taken advantage of. That is the problem you have with the legal immigrants in an underground economy. They are victimized. They are taken advantage of. He's exactly right.

And I think people see that and have compassion for that. What they don't want to see are these immigrants who do not have rights in this country come here and demand things from a very generous nation.

And looking back, the $30 billion, I mean 17 billion goes to Mexico alone, and that's the Inner American Development Bank. The last part, I would add, is my company does focus groups. We've been across the country talking about immigration, border security and especially I would say among Hispanic women.

A lot of folks that live along the southern U.S.-Mexico border do not want to have an open amnesty. They want to see people earn it. They want to know who are these individuals, do they have a criminal background check; what is their intent? Are they paying taxes?

There is a legitimate way to have a good conversation about this. Congress and the president are moving in that direction but to blindly say we will give amnesty to everyone just because you got here illegally will never fly in America.

RAY SUAREZ: Leslie Sanchez, Juan Jose Gutierrez, thank you both.

LESLIE SANCHEZ: Thank you.

JUAN JOSE GUTIERREZ: Thank you.

FOCUS IN MEMORIAM

JIM LEHRER: Now, the passing of John Kenneth Galbraith. Our economics correspondent Paul Solman sat down a year ago with the author of a definitive biography about Galbraith. Here is an updated excerpt from that interview.

PAUL SOLMAN: John Kenneth Galbraith, 20th century America's most famous economist. Advisor to Presidents Franklin Delano Roosevelt, Lyndon Johnson, Harry Truman-- the most famous figures in the Democratic Party for more than seven decades-- always advising them that markets need an active government to help make them work. Author of a new Galbraith biography, Richard Parker:

RICHARD PARKER: He broke with American conservatism over this idea in the 1930s that free markets could solve their own problems. The American economy in the 1930s was in a mess. We were in the middle of a great Depression. A quarter of the population was out of work. 90 percent of the stock market had disappeared. But conservatives were saying, "Leave it alone. The economy will come back." Galbraith was quite worried. He saw Stalin in Moscow. He saw Hitler in Germany. And he wanted to save capitalism from its failure.

PAUL SOLMAN: So what did he do?

RICHARD PARKER: So what he does is he... is, influenced by an English economist named Keynes, and devises an idea of how to use government to smooth out the cycles that business normally goes through, the ups and downs of the so-called business cycle. By using government spending at the bottom of these cycles, you can stimulate the economy from the drop, and you can also use government tax policy to clip off the high excesses that would lead to irrational exuberance.

PAUL SOLMAN: In other words, you'd tax people, take money out of their pocket, and therefore they wouldn't be able to spend. That would dampen the....

RICHARD PARKER: Exactly at the height. And then what you do is you pump money in at the bottom using deficit spending by government.

PAUL SOLMAN: That's what... that was the prescription for the '30s.

RICHARD PARKER: He's writing about it, he's teaching at Harvard University, but he's also serving as an advisor to the New Deal. And by the start of the Second World War, Roosevelt trusts him enough that, as a 32-year-old, Galbraith is put in charge of the American domestic economy. He's the price czar in World War II, the man who is in charge of making sure that the economy can grow quickly to accommodate all the military needs of the Second World War, but that inflation doesn't break out and disrupt the economy and disrupt America's war-making capacities.

PAUL SOLMAN: Because the idea is that if you suddenly have lots of orders at certain factories and you have to have lots of people work at those factories, that's going to drive up the prices and the wages.

RICHARD PARKER: Right. It creates scarcity. It creates extraordinary demand and just... prices will soar if you don't manage the economy.

PAUL SOLMAN: So during the war, Galbraith set prices, instituted rationing. Post-war, however, he agrees with the consensus: Time to unleash the market. But he still wants a strong government role.

RICHARD PARKER: He does want to continue this process after the war, of cutting off the top of business cycles and cutting off the bottom by using government. And, in fact, America adopts those policies, and for the next 30 years, goes through an extraordinary boom that creates this enormous American middle class.

PAUL SOLMAN: So that's when he's really riding high.

RICHARD PARKER: He's riding at the top of his game at that point. He is the most famous economist in the country. He's listened to by politicians, by journalists, by the general public. His words are hung on by just amazing number of people from across the spectrum.

PAUL SOLMAN: In the late '50s, Galbraith wrote "The Affluent Society," still in print, arguing that the private sector was too much in control.

RICHARD PARKER: We were producing big Cadillacs with the tail fins. We were constructing gigantic suburbs. But we weren't paying for the things that America really needed: The great quality education systems, the hospitals, the roads, the parks, the sort of things that make for a really first-class quality of life.

PAUL SOLMAN: So before he was trying to save capitalism from itself. Now he's trying to save capitalism from its excesses.

RICHARD PARKER: Well, in the '30 he was worried about its failures. Now he's worried about its excesses, and it's quite appropriate because he's an economist who adapts his prescriptions to the times.

PAUL SOLMAN: In 1960, with John F. Kennedy's election as president, Galbraith got another shot at government. A campaign speechwriter, he becomes ambassador to India, and secretly a key so-called back channel advisor.

And what's he telling President Kennedy in these back-channel communications?

RICHARD PARKER: Well, he's telling President Kennedy economically that we have an opportunity now in the 1960s to right this balance between public sector starvation and private sector excess. And in fact, he convinces Kennedy to become this activist Keynesian, this activist manager of the economy.

PAUL SOLMAN: Along with government activism in the '60s came great prosperity. And the notions of John Maynard Keynes to moderate the swings in the economy became the conventional wisdom, a phrase that Galbraith actually coined. But the big government projects of that era-- the wars against poverty and Vietnam-- helped fuel inflation, at the same time that the oil crises in the '70s helped lead to both inflation and recession.

RICHARD PARKER: We get high unemployment. We get high inflation at the same time. And it ends up delegitimizing the Democrats, it delegitimizes liberalism, and it delegitimizes the kind of economics that Galbraith has been pressing for, for the last 30 years.

PAUL SOLMAN: This era of so-called stagflation' also set the stage for Ronald Reagan and his promises of smaller government and greater reliance on free markets.

RICHARD PARKER: Galbraith by now is in his 70s, but remains a ferocious critic of Reagan and this new conservatism. He says, first of all, you don't end up making government smaller. Government didn't get smaller under Ronald Reagan. It didn't get smaller under either George Bush I or the present government.

Second, he said the Republicans didn't, in fact, bring the fiscal responsibility they promised. They've run deficits continuously for the last 30 years. So they haven't met their own promise, but what they have done is gotten the imbalance between the public and private even worse. And he says this is absolutely the wrong way to lead an economy for a democratic people, small "d."

PAUL SOLMAN: After spending years on the biography, Richard Parker got to know his subject pretty well.

Galbraith, when still alive, expected today's economic paradigm to change.

RICHARD PARKER: He thinks that we're in a period of Republican overreach. And he thinks that, yeah, America is ready to look in different directions in the years ahead.

PAUL SOLMAN: I'd asked Richard Parker one last question. Did he think Galbraith himself might be up for a short visit? An hour later at the Cambridge house the Galbraiths have occupied for the past half-century, Parker and I climbed to the bedroom. Wife Kitty, herself 92, and a nurse were watching over him. Galbraith was, well, matter-of- fact.

JOHN KENNETH GALBRAITH: Sit down.

PAUL SOLMAN: We'd been invited but wanted to be brief, if blunt: Hadn't Galbraith's economic vision been eclipsed, from Reagan to the present?

JOHN KENNETH GALBRAITH: No question it's been eclipsed by the people who have the money. There's no question that this is a time when corporations have taken over the basic process of governing.

PAUL SOLMAN: Will the pendulum swing back, do you suppose?

JOHN KENNETH GALBRAITH: Whether in my lifetime or not, could require an exceedingly optimistic answer. But there is a certain alert concern on these matters running through the whole structure of the United States and the other democracies, is something that has operated up until now, and I strongly expect it to operate in the future.

PAUL SOLMAN: John Kenneth Galbraith died in Cambridge on Saturday at age 97 of complications from pneumonia.

According to Parker, Galbraith's last words to his doctor before slipping into a coma were: I've had enough now.'

FOCUS EMINENT DOMAIN

JIM LEHRER: We regret we were unable to bring you the Darfur story tonight. One of our guests has been delayed in traffic.

Instead, here's a report from NewsHour correspondent Spencer Michels about defining California over eminent domain law.

SPENCER MICHELS: In the heart of Los Angeles at the famous corner of Hollywood and Vine, Bob Blue is fighting to preserve his 60-year-old family luggage store from the clutches of redevelopment. The city has given him 90 days to move out.

BOB BLUE, Luggage Store Owner: It's wrong to steal land, if you will. It's wrong to steal business. It's wrong to the community.

SPENCER MICHELS: Bernard's Luggage is in an historic neighborhood that declined in the '90s and according to the Hollywood Chamber of Commerce needed a major facelift.

LERON GUBLER, President, Hollywood Chamber of Commerce: When we hit rock bottom, there were numerous boarded-up buildings along Hollywood Boulevard, panhandlers, homeless everywhere. There were prostitutes, as well.

SPENCER MICHELS: With the chamber's support, the city's Redevelopment Agency invoked eminent domain on Blue's store so it can replace it and 30 other small businesses with a luxury hotel, housing units, upscale shops and restaurants.

LERON GUBLER: The Redevelopment Agency had the ability to make things happen, including the eminent domain tool. You need that because, once an area starts spiraling downward, there's no way to bring it back unless people start investing in the community.

SPENCER MICHELS: But Blue doesn't want to sell or move. He has posted a huge movie-style billboard over his store to gain public support.

BOB BLUE: I think this fight is about big business versus small business and existing business. We have people, out-of-town developers coming in, wanting to put in a luxury hotel. And they want to kick out the people that have struggled through the years and survived.

SPENCER MICHELS: What bothers Blue the most is that his private property is being condemned and sold, not for a road or a school, but to private developers and at a price authorities set, not what the owner thinks its worth.

BOB BLUE: I didn't even know that they could use eminent domain for private use, so it got thrust upon me.

SPENCER MICHELS: Eminent domain is an old practice of taking private property, sometimes blighted, for a public use. The Constitution recognizes it as long as there is just compensation, and the Supreme Court has upheld it many times, most recently last June in its ruling in the Kelo case in Connecticut, where the justices ruled this private home could be seized by the city and sold to a private developer, if the transaction would benefit the public.

Justice John Paul Stevens wrote in the 5-4 decision, "Promoting economic development is a traditional and long-accepted function of government." But the court also said, "Nothing precludes any state from placing further restrictions on eminent domain."

The decision set off a storm of political activity across the nation, across political lines, mostly among those who believe eminent domain is being abused.

PETITIONER: This petition is a petition to limit the government's authority to eminent domain people's property.

SPENCER MICHELS: These paid workers are trying to gather nearly a million signatures so that voters in California will get a chance to severely restrict the use of eminent domain and make it illegal to transfer private property to a private developer.

This petition drive and similar campaigns in six other states, plus a slew of bills before state legislatures, are gathering steam. In fact, bills with varying provisions have already passed in 13 states.

Political consultant Kevin Spillaine is organizing the California Protect Our Homes Campaign, whose initial financing -- up to $2 million -- comes from a libertarian group which seeks to limit government.

KEVIN SPILLAINE, Political Consultant: This Kelo decision has basically energized the population. They're upset. It's really an issue about government needing to be restrained.

SPENCER MICHELS: Tim Sandefur, a staff attorney with the property-rights group Pacific Legal Foundation is helping shape some of the new proposals.

TIM SANDEFUR, Pacific Legal Foundation: People don't have the right to take away your property just because they think it would be better for society. Private property is a right, not a privilege, and they don't have the right to take it away from you just because they think it would be in the public's interest, whatever that might be. It's not in Mr. Blue's interest.

SPENCER MICHELS: The reaction to Kelo has alarmed John Shirey, who directs the California Redevelopment Association.

JOHN SHIREY, California Redevelopment Association: There's been a backlash to that decision, and I think it's going to result in legislation that won't be good. It's a reaction to a lot of emotion.

SPENCER MICHELS: Shirey contends that the backlash is being used by lawyers and politicians for their own purposes.

JOHN SHIREY: What's in jeopardy is that what we do through redevelopment will be greatly hampered, but we also need to keep in mind that a lot of the legislation here in California, the voter initiatives that are out there, go far beyond the issues that were in the Kelo case.

SPENCER MICHELS: Shirey says new laws could drive up the cost of acquiring property for roads and schools, restrict legitimate attempts to regulate land use, to say nothing of stopping needed redevelopment. In San Jose, officials are afraid the Kelo backlash could derail its attempt to turn its aging and blighted neighborhoods around.

Harry Mavrogenes directs the Redevelopment Agency.

HARRY MAVROGENES, Director, San Jose Redevelopment Agency: We're very concerned that, in losing the eminent domain authority, that we may be precluded from doing certain very critical projects, affordable housing, for example.

SPENCER MICHELS: Redevelopment and eminent domain, he says, have brought parks, and museums, and jobs to a decaying downtown area. Adobe Systems, for example, now employs 2,500 people.

HARRY MAVROGENES: It was a major company that would not have come to downtown had we not assembled a site for them.

SPENCER MICHELS: But that's a private company, a profit-making company, and you had to get rid of some existing buildings that were there to build this, right?

HARRY MAVROGENES: Yes. We did, and we worked with some of the owners. We did use eminent domain on one of them.

SPENCER MICHELS: He points to this new shopping center as an example of successful redevelopment with limited use of eminent domain. It replaced a high-crime, seedy neighborhood.

HARRY MAVROGENES: The liquor store was one of the things the neighborhood really didn't want in here.

SPENCER MICHELS: But San Jose also exemplifies how just the specter of redevelopment often brings fear, especially in residential areas. Even though no homes have been taken by eminent domain in the prosperous Nagley Park area, concern over what could happen has prompted a rebellion.

These residents are furious their aging neighborhood was designated a redevelopment zone. Beth Shafran-Mukai, who calls herself a political progressive, says it's absurd to call this area of million-dollar homes blighted.

BETH SHAFRAN-MUKAI, Chair, Neighborhood Association: We know we're a beautiful, historic neighborhood of generally single-family homes on the edge of a downtown frame. And our city is focused on development and increasing tax revenue. And our concern is, over the years, we will see the edges of our neighborhood gobbled away and that people will, indeed, lose homes.

SPENCER MICHELS: Association members have become more alarmed since the Kelo decision and are helping gather initiative signatures.

SUE BERNHAM, Bookshop Owner: For me, more than even the neighborhood, it is the loss of our rights as citizens and human beings. With each thing that is taken away, it brings us closer to a Soviet state, almost. And, to me, that is frightening.

HARRY MAVROGENES: We really have not used the eminent domain tool, and we don't intend to.

SPENCER MICHELS: In San Francisco's largely African-American community, long before Kelo there was suspicion and hostility toward redevelopment and eminent domain. Kelo has only added to it.

Bayview Hunters Point has a high crime rate. Proposals to redevelop the decaying area which, during World War II was home to a major naval shipyard, have met serious resistance. And much of that stems from an infamous urban renewal project in the '60s, when another largely black San Francisco district, the Fillmore, was bulldozed and the population evicted in the name of progress.

Patricia Wright, now a chef for the San Francisco Giants, grew up in the Fillmore.

PATRICIA WRIGHT, Resident, Hunters Point: I was one of the people that was swept away. I remember losing my friends, family, my mother and father in this Victorian building that we grew up in.

SPENCER MICHELS: After the Kelo decision, Wright, today a resident of Bayview, began working with neighborhood newspaper publisher Willie Ratcliff to circulate anti-eminent domain petitions.

WILLIE RATCLIFF, Newspaper Publisher: The point is, if you take away the state laws that allows private eminent domain, one private party taking property from another.

SPENCER MICHELS: But Bayview Hunters Point needs government help to upgrade buildings, remove blight, and reduce crime, says Angelo King, who chairs the Citizen's Advisory Committee for Redevelopment.

ANGELO KING, Chair, Citizens Committee: No eminent domain shall not be used on any legal-occupied dwelling unit, period, that's irregardless to zoning or anything else. And so our intention from the very start was that nobody's home would ever be taken by eminent domain.

PATRICIA WRIGHT: I don't believe it.

SPENCER MICHELS: Why not?

PATRICIA WRIGHT: Because I've seen it happen. My greatest fear is that the community will be gone.

SPENCER MICHELS: The Pacific Legal Foundation's Tim Sandefur doesn't trust the politicians either.

TIM SANDEFUR: Under the rationale of cases like Kelo, anything that the politicians believe is good for the public is sufficient grounds for the use of eminent domain.

JOHN SHIREY: Local officials are loathe to use eminent domain. They avoid it whenever possible.

SPENCER MICHELS: Afraid of the political backlash to Kelo, the redevelopment lobby intends to sponsor its own mildly restrictive legislation hoping to head off more drastic measures that could halt redevelopment in its tracks.

RECAP

JIM LEHRER: Again, the major news stories of the day: Legal and illegal immigrants stayed away from work and school to show their economic weight. The State Department announced it's sending deputy secretary Robert Zoellick to peace talks between Sudan and Darfur rebels in Nigeria. And oil prices shot back up over tensions with Iran and violence in Nigeria. In New York, futures gained 2.5 percent to close at $73.70 cents a barrel.

JIM LEHRER: And, once again tonight, to our honor roll of American service personnel killed in Iraq and Afghanistan. We add them as their deaths are made official and photographs become available. Here, in silence, are ten more.

JIM LEHRER: We'll see you online and again here tomorrow evening. I'm Jim Lehrer, thank you and good night.