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MR. LEHRER: Good evening. I'm Jim Lehrer in Washington.
MR. MAC NEIL: And I'm Robert MacNeil in New York. After tonight's News Summary, we examine the concerns of the elderly about health care reform. Business Correspondent Paul Solman explains what's driving the stock and bond markets, and Elizabeth Brackett updates a story on a truce between teenage gangs in Chicago. NEWS SUMMARY
MR. LEHRER: A bomb exploded on a bus in Israel today. Six people were killed, thirty others wounded. The attack was claimed by the Islamic fundamentalist group Hamas. It took place in the town of Hadera. We have a report narrated by Vera Frankl of Worldwide Television News.
MS. FRANKL: The coach bound from Afula to Tel Aviv had made a scheduled stop at the Central Bus Station in Hadera when the bomb went off. There were about 40 people on the bus when the bomb exploded. Among the casualties were several children. Angry Israelis immediately took to the streets shouting, "Death to the Arabs!" The Islamic resistance movement, Hamas, claimed responsibility. A spokesman in Jordan said the attack was in retaliation for the Hebron mosque massacre and that there was more to come.
HAMAS SPOKESMAN: There will be more free operations as a retaliation of Hebron massacre.
MS. FRANKL: The attack, which occurred on the day Israel remembers its dead soldiers, could not have come at a worse time for the fragile Israel-PLO peace deal. It's certain to fuel tensions between Israelis and Palestinians and strengthen right wing Israeli opposition to the deal. Israeli Prime Minister Rabin, who was attending a memorial service for Israeli soldiers, called the attack despicable murder, but he said he was determined not to let Hamas wreck the peace deal. PLO Leader Yasser Arafat, who's in Strausbourg addressing the parliamentary assembly of the Council of Europe, also denounced the bombing. He said the attack struck at the heart of the peace process.
MR. LEHRER: Arafat also rejected attacks on Israeli civilians in a letter sent to President Clinton last night. State Department Spokesman Michael Curry said today's bombing showed why it was urgent for Israel and the PLO to implement their peace accord. Robin.
MR. MAC NEIL: Russia's envoy to Bosnia said today he had won an apparent commitment from the Serbs to end their offensive against the Muslim town of Gorazde. NATO jets twice bombed Serb positions near the city earlier this week. International mediators Lord Owen and Thorvald Stoltenberg arrived in Sarajevo to try to get the warring parties back into talks. The Serbs broke off contact with UN negotiators after the NATO attacks, and this evening, the prospects for peace were undermined when four rockets landed in Sarajevo, breaking a two-month-old cease-fire. Sniper and machine gun fire were also reported in the city.
MR. LEHRER: Fighting continued in the African nation of Rwanda today. A large rebel force was battling government troops for control of the capital, Kigali. The rebels said they had reached the city's center and already controlled its outskirts. More than 100,000 refugees have fled Kigali and nearly all foreigners have left the country. Aid officials said some 20,000 people may have been killed in a week of violence tied to long-running ethnic conflict. In Johannesburg today, Henry Kissinger and other international mediators met with African National Congress Leader Nelson Mandela. They made no progress in resolving a deadlock between the ANC and other political parties which so far cannot even agree on the agenda for their talks. The Zulu-led Inkatha Freedom Party wants an autonomous state and is demanding this month's all-race elections be postponed to discuss it. Mandela's party and the government have rejected a delay.
MR. MAC NEIL: In this country, the major tobacco companies today released a list of 599 chemicals that are added to their cigarettes. Until today, the list had been a trade secret. They also released a report from six independent scientists who said the ingredients were safe in the quantities used. The ingredients included such things as flavorings and tobacco extract, as well as ammonia and an insecticide which the industry said had been approved as food additives by the Food & Drug Administration. Congressman Henry Waxman, Democrat of California, said he did not trust the industry's assertion that the ingredients were safe.
REP. HENRY WAXMAN, [D] California: The list is one that we will have to have really independent toxicologists review. I wouldn't trust the so-called independent experts that the tobacco industry has paraded out for the public and Congress over the years to tell us things like tobacco smoking really is pretty good for you because it relaxes you, or there is no connection between cigarette smoking and addiction, and, of course, their latest one, that they don't manipulate the nicotine levels.
MR. MAC NEIL: Waxman has scheduled congressional hearings on cigarette additives for tomorrow. The Chief Executive Officers of the leading U.S. tobacco companies are scheduled to testify. A study conducted by scientists to prove that beta carotene and other so-called anti-oxidants lower the risk of cancer has backfired. The results suggest they may actually cause cancer. The ten-year-old study was conducted by the U.S. Cancer Institute and the Public Health Institute of Finland and involved over 29,000 male smokers. It showed that those taking beta carotene were 18 percent more likely to develop lung cancer than those who did not. It had been thought that beta carotene and anti-oxidants could decrease cancer risk.
MR. LEHRER: In economic news today, the Labor Department's Consumer Price Index rose .3 percent in March. Inflation so far this year is running at a 2.5 percent annual rate. A separate report showed retail sales rose .4 percent in March. Commerce Sec. Ron Brown said consumer spending growth was consistent with a balanced economic recovery.
MR. MAC NEIL: President Clinton again today defended the way he's handled the Whitewater affair. The subject was raised during a question and answer session at a meeting of the American Society of Newspaper Editors in Washington.
JOHN SIMPSON, USA Today International: Not long ago I was watching television with my daughter, and you were explaining some of the events that had gone on 15 years ago or so in Arkansas, and you said something about, oh, you remembered that there were -- you'd lent $20,000 to your mother and so on, and essentially new things were coming out and changing, and my daughter turned to me and said, "Dad, you know the problem? He sounds just like me when I'm trying to explain why I don't have my homework." And I'm wondering, sir, other than perhaps suggesting to my daughter that she has a future in politics, what -- what should I tell her?
PRESIDENT CLINTON: All I can tell you, sir, is I have done my best to answer the questions asked of me. Maybe you have total and complete recollection of every question that might be -- not is - - might be asked of you at any moment of things that happened to you twelve, thirteen, fourteen years ago. Maybe you could give your tax records up for 17 years and at the moment answer any question. Or maybe instead you want to go back to the homework question, you think I should have shut the whole federal government down and done nothing but study these things for the last two months. I would remind you that I was asked early on by the press and the Republicans to have a special counsel look into this. On the grounds that then everyone could forget about it and let the special counsel do his job and I could go on and be President, I could give all the records up and then when he had a question in his document search, he could ask me, we could work it out, and the issue could be resolved, so I said, sure, even though the criteria for appointing a special counsel weren't met, no one had accused me of any wrongdoing, certainly nothing connected with my presidency or my campaign for the presidency; I said, let's do it, so I can go back to work. And that is what I have tried to do.
MR. MAC NEIL: Another questioner offered Mr. Clinton the opportunity to grade the press on its coverage of his administration and Whitewater. The President declined to do so, saying, "If I could grade the press, I wouldn't, especially not now."
MR. LEHRER: Finally, a follow-up on a story we reported last week. California State Sen. David Roberti yesterday defeated an effort to recall him from office. Los Angeles voters backed him by a 60 to 40 percent margin. Roberti co-authored a 1989 California law limiting sales and possession of assault weapons. The recall drive was supported by the National Rifle Association and other gun rights activists.
MR. MAC NEIL: That's our summary of the day's top stories. Now it's on to health care and the elderly, bonds and stocks, and Chicago gangs. FOCUS - SPECIAL INTEREST
MR. LEHRER: All Americans will be affected by what Congress and the President finally decide, if anything, about health care reform. Our lead story tonight is about the specific effect it may have on those who use the health care system more than any others, the older Americans. We begin with this backgrounder by our medical correspondent Fred De Sam Lazaro.
HEALTH CARE PROVIDER: Okay. Can you take some really deep breaths?
MR. LAZARO: Elderly Americans are by far the biggest users of the nation's health care system. Almost all of them are covered by the $150 billion a year federal Medicare program, a program as sacred to many as Social Security. Medicare is largely funded by payroll taxes on all Americans, and its annual costs have been rising at double digit rates in recent years. That's just one reason seniors fear it may become a target in health care reform.
ELDERLY WOMAN: But they'd better not take away any of our Medicare that we have.
WOMAN: Said they won't.
ELDERLY WOMAN: Well, it's in the paper they might.
WOMAN: All right. I'll talk to you later.
MR. LAZARO: The Clinton administration's health care proposal does not trim any of Medicare's current benefits, but it does scale back future growth in Medicare spending. The fears of seniors, even if unfounded, are real, as is their political clout.
REP. DAN ROSTENKOWSKI: [1989] I don't think they understand what's going on, and it's just too bad.
MR. LAZARO: Few lawmakers can forget this ambush of Congressman Dan Rostenkowski in 1989 after he voted for a measure that raised Medicare premiums to pay for catastrophic health insurance. The persistent opposition by groups like the American Association of Retired Persons led to the measure's repeal a year later. From the outset of his campaign for health care reform, President Clinton has courted senior organizations.
PRESIDENT CLINTON: I'm glad I'm here in Florida for spring training, because while the baseball players are working on their swings, I came to tell you that I'm still in Washington going to bat for you, and I will every day I am the President of the United States.
MR. LAZARO: At rallies from Florida to New Jersey to the Midwest, the President has tried to reassure seniors they'll be well cared for under his reform proposal.
PRESIDENT CLINTON: There are a few major plans before the Congress now. Only one of them proposes to keep Medicare strong and makes it stronger. That's our proposal.
MR. LAZARO: The present Medicare consists of two parts. Part A covers hospitalization. Medicare patients pay a $700 deductible each time they're admitted for a new complication. The rest -- and it's frequently thousands of dollars -- is paid by the program. Under Medicare's Part B, seniors pay a deductible of $100 a year plus 20 percent of their doctor or outpatient bills. Medicare pays the other 80 percent. The total package costs each senior about $41 per month, far lower than the premium for any similar commercial insurance. Still, co-payments and deductibles often add up, so many elderly Americans purchase private insurance cover them -- so- called "MEDIGAP" policies. Those below the poverty line may be eligible for this type of insurance through state Medicaid programs. Medicare and most other policies it's combined with still leave two major expenses uncovered, long-term care and prescription drugs.
JUNE LINSK: Prescription drugs are too expensive; they're terrible. I can -- well, our expenses are $400 a month for medicine. So --
MR. LAZARO: Medicare doesn't cover those?
MR. LAZARO: The Clinton health plan would add significant prescription drug coverage under Medicare.
PRESIDENT CLINTON: We save money in our health care system if people who need medicine get it and can, therefore, stay out of hospitals. You can spend a year's worth of medicine in three days in a hospital.
MR. LAZARO: The President's plan does provide for some long-term care. It would not cover the expensive nursing home care but would pay for in-home care, assisting people with daily living tasks like eating, bathing, and dressing.
MR. LAZARO: How valuable would you say that is?
JUNE LINSK: Very good, very good.
SHIRLY GOLDFARB: I know several people who have to go into the home because they have no one at home to take care of them. If they had someone to come in a couple of hours a day and help 'em, they wouldn't have to be in a nursing home. And a nursing home is very costly today, probably $3,000 a month or more.
MR. LAZARO: The President proposes to pay for these added benefits by slowing Medicare's near double digit inflation rate for savings of $120 billion by the year 2000. It likely would mean smaller reimbursements for doctors and hospitals. This financing mechanism has many critics. Some question its feasibility and others, even those who would benefit, its consequences.
HUELLA WOLF: If you do that enough, a lot of these doctors don't want to bother with Medicare patients then, if they can get a larger reimbursement. And I don't see -- at least from my doctor - - that they're being reimbursed that much. It's twenty -- twenty- two dollars for an office visit is what Medicare allows them to charge. So I hope that that part won't get changed that much, because if they cut that too much, it's going to make a difference.
MR. LAZARO: Do you think your doctor -- do you think in your situation your doctor would, would say to you, I'm sorry I can't see you any longer, because it's not just worth my while?
HUELLA WOLF: No. I don't think he would say it that way, but it might be that if he were at one time, well, say, come back in three months, they might make it six months now.
MR. LAZARO: Worry about the proposed cuts in Medicare's growth is one reason the American Association of Retired Persons has yet to fully embrace the Clinton health plan even though it addresses most of their major concerns. Most seniors we talked with are not just worried about health care reform but also the process by which it's enacted.
SIDNEY GOLDFARB: I don't think all of us understand the complete plan, but it seems that no matter what they try to do, there's too much opposition coming from all sides. They're always trying to knock down everything before it even gets started.
MR. LAZARO: What has started is the legislative jockeying between the various reform proposals in Washington. Senior organizations say for now they'll await the outcome before throwing their support to any plan.
MR. LEHRER: Now to four views on how health reform might affect seniors. Judith Feder, an adviser to President Clinton on health reform, is a deputy secretary at the Department of Health & Human Services. Martin Corry is the director of federal affairs for the American Association of Retired Persons. Carol Cox Wait is the president of the Committee for a Responsible Federal Budget. And Dr. Nancy Dickey is a family physician who practices in Richmond, Texas. She's on the board of trustees of the American Medical Association. Before we get into it, Mr. Corry, during the -- at the very beginning of that tape, you said, not true. What was it that Fred De Sam Lazaro said that was not true?
MR. CORRY: Notwithstanding our reservations about the financing of the catastrophic bill, AARP supported the legislation right to the end. We stood with it, in part because of things like prescription drugs, which were such a huge burden on seniors.
MR. LEHRER: So that was the catastrophic thing --
MR. CORRY: Right.
MR. LEHRER: -- involving when Fred De Sam was talking about Congressman Rostenkowski.
MR. CORRY: Right.
MR. LEHRER: Okay. That said, Ms. Feder, in a general way, how would you characterize what changes the Clinton plan would make in health care now received by seniors?
MS. FEDER: As you heard from the President, it is his and the administration's commitment to preserve and strengthen the Medicare program by, particularly by addressing two benefits that are now missing from that program, prescription drugs and long-term care, with a new program not only for seniors but for all persons of all ages with severe disabilities. We could hear from the person whom we all saw what a burden these prescription drugs that are not now covered by Medicare are, and we know now that families are struggling to keep loved ones at home because virtually nobody is paying or helping them deal with long-term care. We would address those problems, and we would do so by slowing the rate of cost growth in Medicare, and very importantly, we would differ from other proposals and from behavior of the past by not simply slowing Medicare cost growth but slowing growth of Medicare alongside a slowdown in growth for the whole health care system, so that Medicare beneficiaries' access to doctors would be preserved, not endangered.
MR. LEHRER: But as the woman on the tape said, that is her major concern. She believes that down the road you can't take money out of her -- in a nutshell, she's saying you can't take money out of the system without people who are having benefits now somehow being lessened.
MS. FEDER: Well, the issue of her concern is what she's facing under the current system. As we see money coming out of the Medicare program, which has happened over the last decade, and private health care costs rising, you get a growing gap between what Medicare pays doctors and hospitals and what private payers are paying. What we do essentially by slowing cost growth and benefitting everybody is essentially preserve the access for beneficiaries. Also, the overall reform means new revenues for doctors and hospitals and other providers as we pay for people who now get health care and don't pay for it. Under the President's Health Security Act, everybody will get served because everybody will be covered and will pay appropriately.
MR. LEHRER: Mr. Corry, if that's the case, if Ms. Feder's analysis is correct, that for the average person, the average older American, they're going to get more, not less, why is your organization not 100 percent behind this?
MR. CORRY: Well, we have commended the President really time and again, as well as the First Lady, for their leadership in not only including long-term care and prescription drugs in the package but for moving this whole debate forward. If it weren't for the President, we probably wouldn't be sitting here right now. Our members are, however, nervous. Medicare has been cut by a couple of hundred billion dollars over the last decade. We just saw another 56 billion dollars in last year's budget bill. And they look at the program now with a view of some threat to it. They are hearing from physicians that they weren't from before that, well, I'm not going to take any more Medicare beneficiaries. And so while the benefits that the President has included are very important ones, they are understandably nervous about losing something of what they have.
MR. LEHRER: Like choice in their doctor?
MR. CORRY: I think the issue of choice has been largely overplayed. The President, I think, has been pretty clear about saying you will have the choice of plan and for many people that will still mean they'll have the actual choice of physician. There may be some limitations there. I think it's more of a concern on the part of seniors that the Medicare program has taken a lot of hits, if you will, in the budget process over the last decade, as I said, over $200 billion. And they're seeing that now show up. Physicians aren't dropping their Medicare patients, but what they are doing is reducing the number of Medicare patients by attrition. We now get reports from some of our members that they have to call ten, twelve doctors when they're trying to find a new doctor because, well, they don't want more Medicare patients right now, or, gee, you should talk to somebody else, we've got our quota of Medicare patients right now.
MR. MAC NEIL: Dr. Dickey in Chicago, looking at this, would you agree then that the seniors have a legitimate concern when looking ahead, because you and your fellow and sister physicians may very well look not to have as many Medicare patients working, period?
DR. DICKEY: Well, I think, Jim, that we do have some of those same concerns on behalf of our older patients. We have over the last five years seen a broadening gap, actually 10 cents less per dollar in reimbursement, for the Medicare services that are provided, and an ever-increasing list of things that doctors continue to do but that are taken off the list of things that will be paid for by Medicare. So while we want to be --
MR. LEHRER: Like what? Give me an example of something that's kind of routine. Is there anything that's routine?
DR. DICKEY: Sure. There's lots of older people out there on a drug called Cumadin that thins your blood down that has to have a blood test done on a monthly basis to be sure that you've got the right amount, not too much, not too little. While the lab test is paid for, the physician's office is paid nothing to pull the chart, compare the result, phone the patient, adjust the medication, and if you have twenty or thirty patients on the medication, as some cardiologists do, that can be a tremendous expense to your office that you simply have to write off. And so physicians are finding that they have to decide how many Medicare patients they can see when their cost of service isn't being met. In fact, I provide care in a low income clinic that normally saw people that didn't have access to care. Our fastest growing group of population are Medicare patients. They called other places, can't get in, or at least not in a timely fashion, and are coming to us to say, can we use your facility?
MR. LEHRER: So what -- from your perspective, where is this thing headed? Do you think it's going to get worse under this plan, rather than better?
DR. DICKEY: Well, I think that what we have to do is work with Congress and the administration. We want the same things they do in terms of addressing the needs of pharmaceuticals and long-term care. But we can't say to the American public we're going to take money out of the system, actually not let it grow is what it's going to be, and give more service. Those of us who were around in 1955 remember the prediction was that Medicare was going to cost $9 billion instead of $98 billion. If we have an estimate this time that's that far off, we're going to find ourselves totally out of the business of providing the care we promised the elderly.
MR. LEHRER: She's absolutely right, is she not, Ms. Feder?
MS. FEDER: Well, I don't think so. She's right about the Medicare --
MR. LEHRER: No. I just think her final line there -- if the mistake is that big, we're -- everybody's out of business.
MS. FEDER: There's a real difference in terms of what -- our experience with Medicare and what we're doing today. In the early days of Medicare, essentially, the government took on paying responsibility for senior citizens and essentially paid whatever charges were, whatever hospital costs were. There was no sensitivity to the issue of simply putting more and more money in without any regard to value for the dollar or appropriate payment, and essentially, we've learned a lot. And what we've done, we've paid a price not just because of Medicare. The private sector actually grows faster than Medicare.
MR. LEHRER: And that's the reality of any kind of health reform, whether it's the President's plan or anybody else's plan, you believe, has to deal with that problem.
MS. FEDER: Has got to, and it's a critical element of the President's plan, and what the Congressional Budget Office has, in fact, validated is that we can cover everyone in this nation and spend less as a nation than we are today and if we proceed and approach along the lines of the President's. That's what they confirm.
MR. LEHRER: Dr. Dickey.
DR. DICKEY: In fact, I think the Congressional Budget Office told us that your estimates were probably on the low side and that for the amount of money you've told the American public about is just the first installment, that if we're actually going to continue to move technology forward, find the kinds of medications that keep people out of the hospital and, in fact, keep the elderly productive and active until they're seventy, eighty, ninety years old, that probably those estimates will continue to go up. You can't keep paying a smaller and smaller fraction of the cost and expect the service to continue to be rendered.
MR. LEHRER: Let me bring Ms. Wait in on this. You believe, do you not, that just putting this all in Medicare is not the way to go at all, is that right?
MS. WAIT: I think that, that this is a microcosm of the entire budget debate, health care debate, and it all comes out the same way. First off, let's be very quick. Doing something that's just deficit neutral isn't good enough. We can't afford the base line. The projections of current spending and health care are unsustainable. It is growing too fast. Nobody is going to be able to afford it, public or private. Secondly, there are tremendous risks. With due respect to Ms. Feder, we did have a lot of experience. We have 15 years of experience of trying to control cost in Medicare, and we routinely underestimate the cost of our federal health care entitlement programs, even given those kinds of controls. Finally, we need a whole lot of real, old- fashioned honesty in this debate, so that everybody knows what we're talking about.
MR. LEHRER: Like what?
MS. WAIT: To begin with, we are assuming that we're going to save money because health inflation is going to grow more slowly. It's kind of like saying if "ifs" and "buts" were candy and nuts, every day would be Christmas, for crying out loud. That's not a solution to the problem. It's a restatement of the problem. But having made that assumption, we're going to spend that money on very real benefits for very real people who are going to be very upset if we ever have to take them away. Now if past is prologue, and this thing does cost us more money than we anticipate that it will, we could be putting both our economy and our health care system at risk. One final statement on what CBO said in terms of truth in budgeting. They said that we could slow the rate of growth in health care spending if the administration's assumptions about their efforts to slow the rate of growth in health care spending were accurate, but there are a lot of problems with that, and Congress may not have the political will to sustain all of that. Even given all of that, CBO said if you do what the administration proposes to do, ten years from now, your federal government will be spending $1/2 trillion a year more than it would be under current law and 44 percent of that total budget will go for health care. That's what the CBO reports says.
MR. LEHRER: Let me see if I can, in the interest of truth and honesty on this issue, is what you're saying is that the discussion over here that we've had till now is missing the point, in other words, there is no way that the elderly Americans, along with any other Americans, are going to be able to have a health care system that gives them all they have now, they're going to have to take less, not more?
MS. WAIT: I'm very skeptical about anybody who tells us that we can have more services for more people and without any hard choices, without giving up anything for anybody, we're somehow going to save money. I don't know any economic theory that says by interjecting more demand into the system that you get some kind of --
MR. LEHRER: Like the 40 million -- in other words the -- first of all, the 40 million who are not insured --
MS. WAIT: You're going to have 40 million new people.
MR. LEHRER: -- plus the new benefits --
MS. WAIT: Plus the new benefits and services.
MR. LEHRER: -- for the elderly we've been talking about.
MS. WAIT: I mean, there really is --
MS. FEDER: Let me clarify, if I may.
MR. LEHRER: All right. Excuse me, Mr. Corry wants to get in there first. Yes, sorry.
MS. FEDER: All right.
MR. CORRY: Just a couple of points. When Medicare began, there was no cost containment. And, indeed, part of the reason why Medicare costs went out of control was for a very key concession to the physician community back in 1965. There was no cost containment in the physician's side of Medicare Part B or the hospital side, Part A. It took almost 20 years to put some kind of a reform in place, and we're just beginning to see the effects of that. I know of no one -- and I think we would all agree on this - - that would suppose that health care reform would proceed at this year and at this time without cost containment. Secondly, one of the things that the President does that makes very good sense and that the Congress is looking at closely is not just looking at Medicare. Carol knows that's all we've been looking at for the last dozen years. It's pretty clear by itself that doesn't work. You have to look at the whole system. Otherwise you have cost shifting from Medicare to the private sector. The private sector passes those costs onto consumers and to workers and works its way right back into the health care cost spiral. We can't continue to do it that way.
MR. LEHRER: Ms. Feder.
MS. FEDER: Okay, first let me clarify when Carol was talking about the federal budget and what the Congressional Budget Office said. They recognized that essentially if we slow costs in the private sector and in Medicare, we can over time reduce the deficit. What I believe she's addressing are issues about private premiums and whether those should be reported in the federal budget. And we need accountability, but we're paying those private premiums today. Those are not new costs, and so her expenditure estimates for federal expenditures I believe are greatly exaggerated. But equally important, I think that it is critical to recognize that we're not talking in reform about essentially throwing money down a sink hole that many would describe a lot of our current insurance system. We see enormous waste in that system. We see essentially insurers spending money on avoiding risk. We see hospitals and doctors spending enormous amounts of time on paper work when they would rather serve their patients. And what we are talking about in reform, which is a private insurance system for the younger population while we strengthen Medicare for our seniors, is essentially a reform that changes the way the insurance market operates, essentially goes to a private sector system in which we are promoting value for the dollar in our high quality system, and there's a lot of agreement that there's money to be saved.
MR. LEHRER: Do you agree?
MR. LEHRER: Okay, Ms. Wait. Then to you, Dr. Dickey. Excuse me. Yes.
MS. WAIT: Two things. There's a difference between spending money and having the government decide you're going to spend it and move it on the budget. But putting that aside --
MR. LEHRER: Yeah. Let's don't argue that.
MS. WAIT: -- as a budgeteer, I have for years heard people say if we only got rid of waste, fraud, and abuse in the budget, we could solve the budget deficit problem. Now I'm being told if we only get rid of waste, fraud, and abuse in the health care system, we can have everything we want, and we aren't going to have to pay any more. And you and I know the world doesn't work that way.
MR. LEHRER: Let's see if Dr. Dickey thinks it does. Does the world work that way from your perspective of the world of medicine?
DR. DICKEY: We certainly wish it did, Jim, but no. Even if we find all of the ways to end all of the fraud and abuse that's out there that amount of money is not going to cover all of the kinds of things that we're promising for the uninsured, for the underinsured, and the elderly, not only to keep what they're getting but to expand those benefits to other things. And let's don't forget that we're talking about what we have today, and there are increasing demands coming down the post. We're going to have a population that gets older for the next 40 years. And as you said in your introduction, one of the costs of us aging and living longer is that to stay healthy at seventy-five or eighty-five requires more services, more pharmaceuticals, and frequently more assistance at home. To continue to find the new technology means that we not only have to fund the research, but then once we prove it's useful, we have to pay for it. And so we have to be careful that we don't promise easily and then we're not able to fund it as has happened so often. I'll remind Judy that we've been working with the government in terms of reforming payment for the physician's system now for over five years, and virtually since the day they put it in place with our assistance and our assistance on the research, they have been having to cut back and re-tailor what it is they promised. Our elderly population has good reason to be concerned about promises based on assumptions and unproven research tactics.
MS. FEDER: Now, Nancy, essentially, I know you've had those problems, and, essentially, we know how difficult it is for Medicare to control its costs on its own. Essentially, if we have a system that has no incentive to choose plans based on value for the dollar, we have essentially unconstrained cost growth in the private sector. Medicare either cuts what it pays and then it inhibits access, or keeps spending more and more. We've got to change the system. Doesn't mean we don't make hard choices. The hard choices are that we need to reorganize the system so that we hold practitioners accountable for delivering high quality care efficiently.
MR. LEHRER: Are your constituents prepared to take some hard choices, make some hard choices?
MR. CORRY: Older Americans have always been willing to take on some tough choices. I think they will in this debate as well. What they need and, frankly, what most Americans need is more information about what's in the President's plan as well as all the other plans. There's a great deal of confusion and a lot of misinformation not unlike what we saw in catastrophic, a lot of fear mongering. And frankly, we believe that as people know more about what the trade-offs are they will be willing to accept some trade-offs, but they want to be sure that this limitation on cost is not just limited to the Medicare program, because that's what we've been doing for the last decade and it hasn't worked.
MR. LEHRER: Okay. We have to leave it there. Thank you all four very much.
MR. MAC NEIL: Still ahead on the NewsHour, what's driving the stock and bond markets and a Chicago gang truce. FOCUS - WALL ST. - MAKING SENSE
MR. MAC NEIL: Next on yet another volatile day for stocks and bonds what's moving the markets. For weeks now it's been a whole lot of down, a bit of up, and endless wondering where it's all leading. Business Correspondent Paul Solman spent yesterday on Wall Street.
SPOKESMAN: [meeting] Good morning. I want to first make some comments about the PPI and CPI statistics that are going to be coming out.
MR. SOLMAN: 7:45 AM at Donaldson Lufkin Jenrette, one of Wall Street's foremost firms. The bond traders are gathered for their daily meeting. It's Tuesday, and they want to know if the Producer and Consumer Price Indexes, the PPI and CPI, are likely to batter the bond market.
UNIDENTIFIED PERSON: [in meeting] Again, as Elliott mentioned, this week's PPI and CPI numbers have pretty much set the tone for what we should expect for the rest of the week.
MR. SOLMAN: Now, experts have figured a number of exotic suspects to explain the market's recent tumble from hedge funds to derivatives. But Tuesday's big news on the bond market was more mundane and more central, inflation, as measured by the Producer Price Index.
OTHER PERSON: [in meeting] But down the road Vinny, take a look at crude goods.
MR. SOLMAN: And in Washington, they had just released the PPI to reporters who can't say a word about it until 8:30 when the news embargo is lifted.
UNIDENTIFIED WOMAN: You can make your connections. Please speak in English.
MR. SOLMAN: The number can now be made public, and back at DLJ, the bond desk's economist interprets the numbers.
ECONOMIST: I just want to recount what the data showed this morning. As you can see from the screens, the PPI was up .2 percent.
MR. SOLMAN: They buy and sell US bonds here, and the prices go up and down with changes in the interest rate. There's little reaction this morning because the PPI is exactly what the market expected, implying modest inflation, less than 3 percent a year. But first question: How does inflation or the fear of it affect interest rates?
JON TIKTIVSKY, Bond Trader: The connection normally is that if the perception is that inflation is going to increase, interest rates are going to go up, because people will believe that their money is going to be worth less in the future. And if they're going to invest in bonds, they're going to need more of a return.
MR. SOLMAN: Now for those who don't already know, a government bond is simply an IOU that gets bought and sold, traded by people like those behind me. Say I have $100 to invest. I lend it to the government long-term. It promises to pay me back in 30 years at 5 percent interest -- that's $5 a year. The bond is the government's promise, or IOU. But if I need cash now, how much can I get from my bond? Well, if long-term interest rates stay at 5 percent, this bond is still worth $100. Now suppose interest rates double to 10 percent and you suddenly want to buy a 30-year bond. The government will sell you one for $100, now paying 10 bucks a year at 10 percent. Or you can buy my bond paying only $5 a year. My guess is you're going to offer a lot less for my old bond than the government's new one. As a result, my 5 percent bond would drop in price if I sold it on the bond market, and that's why bond prices have been dropping recently as interest rates have gone up.
UNIDENTIFIED MAN: Any feedback from customers?
SECOND UNIDENTIFIED MAN: I think they're generally more constructive than they've been. I mean, I think the blood bath is over, but I don't think anyone is really --
MR. SOLMAN: In fact, for the past two months, government bond prices have been plummeting as fears of inflation drove up interest rates, fears that even a low PPI might not completely quell. The floor of the New York Stock Exchange, where shares of the company's biggest companies change hands. Here too, as we'll see, interest rates have tumbled prices. But right now, the market is up, and DLJ floor traders are taking orders for the firm's newest stock offering, Centex Building Materials.
UNIDENTIFIED SPOKESMAN: In three minutes, I want to know what it stands on the floor.
MR. SOLMAN: At DLJ headquarters, they're waiting for the New York Stock Exchange to let them begin selling the new Centex stock.
UNIDENTIFIED SPOKESMAN: Okay, that's good. Thank you.
COMMERCIAL ANNOUNCER: Established more than 40 years ago in Dallas, Texas, today Centex Corporation is the nations premier company in construction-related business.
MR. SOLMAN: The new company is actually a subsidiary of the giant Centex Corporation. Now home construction companies are very sensitive to interest rates. Even a whiff of inflation could hurt the price DLJ has promised to get, $14 a share.
UNIDENTIFIED PERSON: Anybody who has not filled on their allocations, I need your after markets; we're going to open this stock in about two to three minutes. It's looking fourteen to a quarter.
MR. SOLMAN: But all stocks are affected by interest rates, says Bob Antolini, who trades over-the-counter stocks.
MR. SOLMAN: What affect does the Producer Price Index have on the stock?
BOB ANTOLINI, OTC Trader: What it does is it doesn't so much drive specific stocks; it drives the whole market, the supply and demand. It'll drive people into bonds, to some other commodity, out of the market or into the market.
MR. SOLMAN: But why? What's the logic?
BOB ANTOLINI: Return on money. Everybody wants the most money he can get. Everybody's under pressure from the competition to get as much return as they can, so wherever the best return is, that's where you want to be, whether it's stocks, bonds, commodities, England, France, whatever.
MR. SOLMAN: In other words, investors compare stock returns to what they can get from bonds. Stock prices might be in line with bond returns at the moment, but if interest rates rise and bonds begin paying more, then not only are existing bonds worth less but existing stocks as well.
SPOKESMAN: Spectravision. Everybody hear this -- 50,000 going on at 5 1/4, you can buy Spectravision.
MR. SOLMAN: Spectravision. In the middle of all of this, he's doing a deal for Spectravision. Finally, moments after 10 AM, the first listing of Centex Construction Products, symbol CXP, comes over the ticker. President Greg Dagnan is up from Dallas for the great event.
MR. SOLMAN: I see. So you really are excited?
GREG DAGNAN, President, Centex Construction Products: Yes. Bring on the champagne.
SPOKESMAN: [on phone] Buy 50,000 more CXP with a 14 3/8 limit, cans nothing, does not can my 1/4 bid.
MR. SOLMAN: DLJ's Brad Weeks and the top brass from Centex were actually reluctant to take the company public Tuesday, afraid that the PPI could rise dramatically.
GREG DAGNAN: And that it would be generally bad news for the market, where a new offering coming out, and it would have had negative connotations for our initial trading.
MR. SOLMAN: So if inflation looked like it was going up today, that would have been bad for you?
MR. SOLMAN: Meanwhile, time marches on. The market, however, is at a standstill, down a mere 7 points at noon and for several hours there's little action. The next news of the day takes us back to the bond market. A Federal Reserve Board governor has just given a speech warning about inflation, and the bond market, which had been going up slightly, is now back down to where it opened in the morning.
MIKE MORAN, Bond Trader: This market tends to just key on certain little pieces of inflation and react and in layman's terms in a very indiscernible movement in rates. But in our world, a movement of, you know, two, three basis points is significant enough to make or lose a good of money.
MR. SOLMAN: Two or three basis points, two or three hundredths of a percent?
MIKE MORAN: Correct, correct.
MR. SOLMAN: Meanwhile, it's nearly closing time for the stock market. The Dow is still down 7. Centex is up 1/8, and then there's Spectravision.
UNIDENTIFIED TRADER: Want to buy some Spectravision?
MR. SOLMAN: Spectravision. No, I don't --
UNIDENTIFIED TRADER: It's a $5 stock; you should own this one.
MR. SOLMAN: And why should I own it?
UNIDENTIFIED TRADER: Because I don't want it.
MR. SOLMAN: That would be good for you, but might it be bad for me?
UNIDENTIFIED TRADER: It certainly could be.
BOB ANTOLINI: [shouting in room] Did you guys see that crusher? It was just an argosy flash on the tape. I didn't see what it said.
MR. SOLMAN: Over-the-counter stocks have done even worse. In fact, there's been a mini crash in the computer sector for no obvious reason.
BOB ANTOLINI: Microsoft down 2 1/4 on 240,000 -- 2,400,000 -- that's a way to raise money easy. Apple down a buck and a half on 10 million shares. These are highly liquid stocks, so if you have to raise capital, worried about the market, you sell these because these are easy to do.
MR. SOLMAN: Bob Antolini claims the market is skittish as almost never before. Dudley Eppel, DLJ's senior trader, thinks he knows why.
DUDLEY EPPEL, Equities Trader: There are really too many people in the market. All, all my four kids own the mutual funds. They don't have a clue. I try to help them but we've got a lot of young investors in this market, and a lot of kids are just finding out now they can lose money doing this too.
MR. SOLMAN: But they're putting their money in the hands of these seasoned mutual fund managers.
DUDLEY EPPEL: It doesn't matter. When these markets cave, they cave, seasoned mutual managers or not.
UNIDENTIFIED PERSON: [on phone] All right. You have a current balance based on last night's close of $42,134.56.
MR. SOLMAN: It's well known by now that as interest rates dropped, lots of small investors took their money out of bank accounts and put them into stocks, mainly mutual funds, fueling a run-up in prices. Now that interest rates are going up, those small investors and, therefore, their mutual funds are threatening to take the money back out.
MR. SOLMAN: How much of what you do ultimately is determined by interest rates?
BRAD WEEKS, Equities Trader: About 100 percent.
MR. SOLMAN: Not quite 100.
BRAD WEEKS: A lot, not quite 100, but a lot. Stocks follow bonds and the interest rates.
MR. SOLMAN: And bonds are going to be determined by interest rates.
BRAD WEEKS: Exactly.
MR. SOLMAN: So at the end of the day interest rates had held steady and so had the markets, leaving time and energy for a different game of chance. Today, however, there was all the action you could ask for onthe markets, themselves. The Consumer Price Index, or CPI announced this morning was pretty much what folks were expecting. But the long-term government bond market dropped .7 percent or so of its total value, a loss on paper of several billion dollars. The stock market lost 26 points. And while there are lots of possible explanations, the most plausible is probably that even though today's price numbers were nothing special, the markets are worried long-term about inflation and rising interest rates, which is what's been driving down the markets for months. Oh, and by the way, Centex closed down 1/8 today, back to exactly $14 a share. UPDATE - BROKEN TRUCE?
MR. LEHRER: Finally tonight, an update on the truce signed more than a year ago by Chicago's street gangs. Elizabeth Brackett of public station WTTW reports.
MS. BRACKETT: It has been a bloody three weeks on the streets of Chicago, 56 people killed. Like this victim, some lost their lives as a result of a wave of gang-related violence, much of it centered in the public housing developments that stretch for nearly four miles along State Street on the city's south side. Three teenagers have died here, and in one four-day period police logged three hundred reports of shots fired. Many children have stopped going to school, and most are scared.
SHAQUITA MCINTOSH: [little girl] Yesterday I was crying.
SHAQUITA MCINTOSH: 'Cause I don't like them, people to be shooting, and they almost shot my uncle.
MS. BRACKETT: Was your uncle in a gang?
MS. BRACKETT: The recent rash of shootings terrified Sheila Easley. She lost her son to gang violence in the projects three years ago.
SHEILA EASLEY: It's undescribable. You know, it's undescribable. Every time a gun shot goes off, you're scared, it brings back memories. They shot through my bedroom window the other day, and my daughter just luckily was not sleeping in the bed, you know. And it's just a fear. It's a fear every morning when you wake up. It's a fear that if you unarm your children and everyone is not going to unarm their children, but if you unarm your children, you can't send them outside, they can't go to school.
MS. BRACKETT: Newspaper headlines labeled the violence a gang war that signaled an end to a gang truce signed over a year ago. Last year, with the truce in effect, police say out of 851 homicides, 125, or about one in seven, were gang related. Since the violence flared on March 25th, police reports suggest that of the 56 homicides nearly 1/3 were gang related. Youth worker Harold Baskin had put in countless hours working with gang leaders to forge the gang truce. Now, as he makes his daily drive checking for trouble spots in his south side neighborhood, he insists that despite the terror and the bloodshed of the last weeks, the gang truce still held.
HAROLD BASKIN, Youth Worker: If there were a gang war going or if there was a truce broken, you wouldn't see these young people out here playing in the street on a day like this. And this is not really a cold day, as such per se. The sun is out. It's bright, and they feel they can come out and maybe exercise themselves and play a little basketball, walking to the store, or just out walking and talking with their friends.
MS. BRACKETT: But moments later, Baskin did spot trouble.
HAROLD BASKIN: [talking to group of kids] Hey, hey, hey! You can't be socking him like that, okay? Everything okay? Everything okay? No problems.
HAROLD BASKIN: A small incident like that oftentimes could escalate into a big incident, because the smaller kids may have bigger brothers, and he'd go home and tell his bigger uncle that a bigger boy pushed him. If the cousin is associated with an organization, he generally comes out and maybe jumps on the bigger boy, and the bigger boy goes home and gets his brother or uncle, and then it's a big to do about nothing when you could have stopped it at its source.
MS. BRACKETT: Gang members on the north side of the city claim the truce has held up better in their neighborhoods than in the Robert Taylor homes on the south side.
YOUNG MAN: We still have our piece, but Taylors, they're outrageous.
MS. BRACKETT: At the Cabrini Green Housing Development, there have been no gang related killings since the truce. The leader of the gangster disciples on the north side says the truce continues to make a difference.
GOATHEAD, Gang Member: It made a lot of difference, for the families, the elders, and the kids.
MS. BRACKETT: And that held?
GOATHEAD: Everybody needed to get together. That's what they need to do, everybody to get together, get along. That's what I think.
MS. BRACKETT: Truce organizer and longtime activist Marion Stamps admits that the truce has broken down in other parts of the city. But she says the gang leaders in the north side can better control their members.
MARION STAMPS, Community Activist: You know, the leadership is more concerned about how much money they can make off of drugs as opposed to how much money they can bring into their communities to make sure that brothers and sisters get jobs, then they're going to have wars like the kind they have at Robert Taylor, you know, the question of turf, the question of drugs. You know, and that's not what happened here. I think the reason the peace is here is primarily what that brother says, the leadership; the leadership is in control.
MS. BRACKETT: But neither the mayor, Richard Daley, or the head of the Chicago Housing Authority, Vince Lane, or the Chicago Police Department, ever bought the idea of a gang truce. Privately they say the only reason gangs might agree to stop shooting is to make it safer to sell drugs. Following the recent outburst of shootings, the mayor called for more police to search the housing developments for gangs, guns, and drugs.
MAYOR RICHARD DALEY, Chicago: And I believe there has to be more sweeps in regards -- the more guns you pull out, the more lives you're going to save.
MS. BRACKETT: Beefed up tactical response teams from the Chicago Police Department and the Chicago Housing Authority police began all night foot patrols in developments with the highest reports of shooting.
OFFICER: [talking to patrol] Do not cut down Vincennes. It's too close. Swing down King Drive and pick up 43rd Street from there.
MS. BRACKETT: Chicago Housing Authority patrol officers got the call last Friday night to search the Washington Park Development on the south side of the city. Officers say the first few minutes of a sweep are critical.
OFFICER: [talking to patrol] One in the white.
WOMAN: [shouting] That's my son!
MS. BRACKETT: Do you think there's been a gang truce over the last year or so?
OFFICER RANDALL BOGATHY, Chicago Housing Authority: Not at all.
MS. BRACKETT: Was there a lull in the shooting?
OFFICER RANDALL BOGATHY: Yes. During the winter months when it's colder and nobody's out on the streets.
MS. BRACKETT: So you wouldn't attribute that to any kind of a truce?
MS. BRACKETT: Do you think there's any chance of one getting started now?
MS. BRACKETT: Why not? The gangs don't talk to each other, or what?
OFFICER RANDALL BOGATHY: They just don't get along. As long as the money from drug profits are in one area, the other -- as long as the other gang has a smaller area, they're always going to want the other area.
MS. BRACKETT: CAJ police found no guns Friday night. And on Saturday, a 14-year-old girl was shot in the thigh, and on Sunday night, a 32-year-old man was shot and killed here. Police had not determined if the shootings were gang related. Back on the north side, these three Chicago police officers see their relationship to the community differently. Unlike many of their fellow officers, they supported the truce. As the truce broke in other parts of the city, they kept in touch with gang leaders in the Cabrini Green area. The three officers also try to reach kids before they get involved in gangs. Calling themselves "The Slick Boys," they bring their anti-gang, anti-violence message to the schools coded in a language the kids understand, rap. Once they have the kids' attention, the message is tough.
POLICE OFFICER: Last weekend, 17 people got shot in Chicago, 16 was black, 11 was under the age of 18. We kill each other over nothing. If you are a Vice Lord, if you are a Stone, if you are a Cobra, if you're a GD, if you're a BD, you're a whore, because what you're doing, if you like it or not, what you're doing, hold on, what you're doing is let the system use you.
MS. BRACKETT: Back on the street, they say their act and their police work go hand in hand.
ERIC DAVIS, Chicago Police Department: We're going to see you in the daytime, and we're going to give you the answers to this test. Leave these drugs alone. This is what you need to do to get away from it. Leave the gangs alone. Leave the violence alone. And once we come out here at 6 o'clock, if you haven't listened well in class, we're going to police you, and we're going to police you for your own good, because I would rather see you incarcerated than cremated.
MS. BRACKETT: So in some areas of the city, children are playing ball. In other areas, they are ducking bullets. Is the truce a success, or a failure? It may depend on the neighborhood. RECAP
MR. MAC NEIL: Again, the main stories of this Wednesday, six people were killed in the bombing of a bus in Israel. The fundamentalist group Hamas claimed responsibility and said it was retribution for the Hebron mosque massacre. Tobacco companies released a previously secret list of nearly 600 chemicals they add to cigarettes but said none were unsafe in the quantities used. And the government reported inflation at the consumer level remained moderate in March. Good night, Jim.
MR. LEHRER: Good night, Robin. We'll see you tomorrow night. I'm Jim Lehrer. Thank you, and good night.
The MacNeil/Lehrer NewsHour
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Episode Description
This episode's headline: Special Interest; Wall St. - Making Sense; Broken Truce?. The guests include MARTIN CORRY, American Association of Retired Persons; JUDITH FEDER, Clinton Health Adviser; DR. NANCY DICKEY, American Medical Association; CAROL COX WAIT, Budget Cutting Advocate; CORRESPONDENTS: FRED DE SAM LAZARO; PAUL SOLMAN; ELIZABETH BRACKETT. Byline: In New York: ROBERT MAC NEIL; In Washington: JAMES LEHRER
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Chicago: “The MacNeil/Lehrer NewsHour,” 1994-04-13, NewsHour Productions, American Archive of Public Broadcasting (GBH and the Library of Congress), Boston, MA and Washington, DC, accessed June 23, 2024,
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