The NewsHour with Jim Lehrer

JIM LEHRER: Good evening, I'm Jim Lehrer. On the NewsHour tonight, Margaret Warner looks at why the NASDAQ stock market is doing so well, Kwame Holman reports on the effort to raise the minimum wage, Betty Ann Bowser tells the charter school story, and Mark Shields and Paul Gigot look at this important week of Presidential politics. It all follows our summary of the news this Friday.

NEWS SUMMARY

JIM LEHRER: President Clinton today promised to veto an increase in the $1 minimum wage the House passed last night. It would take effect over two years, as Democrats and Mr. Clinton wanted. Republicans included tax cuts worth $122 billion to help small business. The Senate has passed similar legislation. Me. Clintonsaid the tax cuts would help mostly the well off. We'll have more on this story later in the program tonight. There were new questions today about the investigation of Clinton-Gore fund-raising in 1996. The "Los Angeles Times" reported on an internal Justice Department memo that Attorney General Reno kept sealed for two years. It claimed her top aides used gamesmanship and legal contortions to avoid independent investigations of the Clintons and Vice President Gore. Presidential Spokesman Joe Lockhart had this to say.

JOE LOCKHART: I'm not going to respond to recycled information here. We responded very openly several years ago when these things first came up. And I don't have anything new. The only thing I'll say is that the Attorney General made her decision based on the facts, the evidence and the law.

JIM LEHRER: The memo's author was Charles Labella, then the Justice Department's chief campaign finance investigator. Overseas today, an explosion killed a suicide bomber and 18 others in the capital of Sri Lanka. Five police were among the dead. At least 46 people were hospitalized. Military officials said the bomber apparently missed his target, a motorcade of cabinet ministers. No one claimed responsibility, but the military blamed Tamil guerrillas who have been fighting for independence for 17 years. New storm clouds rolled over Mozambique today, and that meant more trouble for the effort to help flood victims. We have a report from Tim Ewart of Independent Television News.

TIM EWART, ITN: Just as the people of Mozambique were starting to piece together their lives, the weather dealt them another cruel blow today. At the airport in the capital, Maputo, helicopters that should have been delivering aid were grounded by the weather. The big transport aircraft could still operate, but crews who make the final run to the refugee camps were left kicking their heels.

SPOKESPERSON: Well, today was a disastrous day. When we woke up this morning and saw the rain pouring down, we knew that we were going to have another problem. Yesterday we were barely able to get out any food, and today's looking equally grim.

TIM EWART: And as we flew to the worst affected areas, we encountered the sort of weather that is playing such havoc with the relief program. On the ground, at the Chocalani refugee camp, the rain had stopped, but the demand for help was nonetheless urgent. There are 57,000 people here, the biggest single community of the internally displaced. The international aid agencies have been criticized for reacting too slowly to the crisis in Mozambique. They are now desperately trying to catch up. But in a country crippled by the weather, demand far outstrips supply. The U.N. estimates that 650,000 people need food from outside. At the moment, they're feeding fewer than half. It's not just food that's needed. In what was once a convent in the ruined town of Choque, the sick receive what little medicine is available. It isn't much. Despite the latest weather, the floods are receding, but the misery here is not.

JIM LEHRER: The U.N. World Food Program warned 74 camps for flood victims would run out of food in a day or two if they're not resupplied. Back in this country today, President Clinton announced a plan to ease gridlock at the nation's airports. It involves high-tech weather forecasts and giving more control to a central command center. Airliner delays jumped by more than a third last year. That's it for the News Summary tonight. Now it's on to the NASDAQ, raising the minimum wage, the charter schools trend, and Shieldsand Gigot.

UPDATE - NASDAQ - FLYING HIGH

JIM LEHRER: Margaret Warner does the NASDAQ.

MARGARET WARNER: The NASDAQ Composite Index was created less than 30 years ago for fledgling companies that were too small or too weak to be listed on the bigger, more prestigious exchanges. But today this index of about 5,000 companies, many of them in the computer, communications, biotech and Internet sectors, is the growth powerhouse of Wall Street. The NASDAQ has jumped from 3,000 to more than 5,000 in just four months, accelerating a trend of dramatic growth through the 19 90s and far outperforming the Dow Jones Industrial Average, which has actually declined in recent months. Is this growth justified? We turn to Ash Rajan, Senior Vice President at Prudential Securities, and David Levy, Vice Chairman of the Jerome Levy Economics Institute at Bard College. Welcome gentlemen.

David levy, 3,000 to 5,000 in four months. Is this run up justified?

DAVID LEVY: In terms of any long-term valuation, no. I think it's a clear case of a speculative market that has gained enormous momentum and has put on a crescendo, has had a crescendo much like other speculative markets before it that have ended badly.

MARGARET WARNER: Now, when you say "speculative market," what do you mean?

DAVID LEVY: Well, I think, you know, there's always a healthy kind of speculation in the market and in the economy, when people are taking risks and hoping that they'll invest in something that will have productive returns. But when it gets to the point where people are investing simply because they think something will go up and they've stopped paying attention to the underlying value-- in this case, the earnings of companies, or in the case of real estate in the 1980's, the rents that could be earned-- it takes on an emotional, irrational character which can be very... go on for quite a while, but ultimately it's found out that the emperor has no clothes.

MARGARET WARNER: So, Ash Rajan, do you think that's what's happening here, emotional and irrational growth?

ASH RAJAN: Margaret, I would have to gracefully disagree with David. His point of view was very relevant when the Dow... when the NASDAQ was at 3000. It certainly was even more relevant when the NASDAQ was at 4000, and now with a new milestone. I do grant that there is a speculative froth underneath of all these movements, but there are some very tangible reasons why stocks in the NASDAQ react the way they do. If you look at the wireless, if you look at the semi-conductors, e-commerce, software, and biotechnology, these are very real technologies that are driving the way we do business and driving the way we live.

MARGARET WARNER: Well, David Levy, we keep reading that a lot of investors are actually moving their money out of the Dow Jones Industrial Average companies and into these NASDAQ companies, as Mr. Rajan just cited some of them. Some of the others are Microsoft, Cisco System, Intel. They seem to be betting that these are the new core stocks of the new millennium or the new century. I mean, are they wrong about that?

DAVID LEVY: Well, I think investors are very good at identifying trends and jumping on bandwagons, and that's what we see. They're getting off a sinking ship and onto one that they think is going to go sailing off. If I can address the issue of these new technologies, sure, they're new technologies, they have a lot of promise, they're going to grow a great deal. I don't disagree with that. But there's not a great revelation that's taken place in the last four months that should have pushed them up another two- thirds in value. The important thing is, you know, you could say many of the same things about technologies in 1929, about broadcasting, the spread of telephone, automobiles. It doesn't mean that there is no limit to what should be paid for a stock just because it has a lot of long-term potential, nor does it mean that there cannot be some rather serious financial consequences along the way that can derail that train before it reaches its ultimate destination of, in this case, technological development.

MARGARET WARNER: What about that point, Mr. Rajan?

ASH RAJAN: Well, I think the dynamics this time around are certainly different, and I'm not alluding to the "new paradigm" school, if you will, but this is reality. Let's take this very show, for instance. You're sitting, Margaret, in Washington, D.C., David's in New York and I'm in Boston, and we're making this happen thanks to fiber optic technology, thanks to routers and an ATM synthesizer, thanks to magnifiers and just about everything that makes this network equipment possible. That's just a microcosm of the society that we live in. You could have made cell phone calls this morning or sent emails and you would have evoked the same infrastructure and that's the infrastructure we're paying for via the stock prices of the companies that make them.

DAVID LEVY: Okay, wait a minute. We... A lot of this technology that we just referred to has been around with us for a few years, now, and in fact, if we want to talk about what we're paying for, we have to talk about what kind of contribution it's making to the economy, and when you see companies that, even if they have fantastic growth, will still have only a fraction of the sales five or ten years from now that some of our great blue chip companies have -- you know, you have to wonder, "well, wait a minute, if we look at the mechanics of the actual earnings and do the math, how on earth do we justify some of these prices?" I'm not saying there aren't some stocks that will be great successes and are worth it, but I think overall, when the NASDAQ has grown ten times faster than GDP, the overall stock market in the last ten years, if we look back to 1982, the beginning of the boom, the overall stock market has grown about 15 times when the economy has only less than tripled. This cannot keep going.

MARGARET WARNER: Mr. Rajan, are you saying earnings are irrelevant here? I mean, that used to be the old valuation of the stock?

ASH RAJAN: Not even close. I think earnings are very relevant. The old school of equity analysis is still very relevant. It's what you're willing to pay for these technologies is what's becoming sort of the contemporary and controversial thing. However, if you ask an old world company, if you will, like a GM or Ford, they will tell you, and they will tell you with passion, that they want to become a part of the new economy and the investing of the business-to-business E-commerce infrastructure to get to exactly doing that, to be more productive. It's not about increasing the sales or market share, it's just about savings-- huge cost savings-- that's coming with technology investment. And those enablers that make it happen do get rewarded with higher stock prices. That's all I'm alluding to.

MARGARET WARNER: Mr. Rajan, staying with you for a minute, who are the investors who... let's look at who they are, who are going into this. I read a piece in the "Wall Street Journal," the lead story today, and they told an anecdote about a broker, a conservative broker who always looked at earnings and so on, and clients coming in and saying "I want you to beat the S&P 500 or I'll find someone who can." Is that happening a lot?

ASH RAJAN: Margaret, yes, in fact it is. We see that happening in the retail individual front. We have empowered virtually just about every investor out there, especially the individual investor, about the potential part of the stock market. We have certainly spoiled them. But they will learn from their mistakes. The best education is not listening to experts like us, but making their own mistakes and learning, and that's what David has alluded to, this "froth and speculative action." That will have a way of settling. But there is no denying the power of the new technology and the cost and the price that we have to pay to have it.

MARGARET WARNER: Go ahead, David Levy.

DAVID LEVY: We've had... I mean, look, we had tremendous new technology which has, I think, had a bigger impact on the way business is done, so far. That may change. Just looking at personal computers coming in, and some of the changes in networking that that brought. We've had, I think, the revolution of the telephone, which made instantaneous communication possible for the first time earlier in this century, was far more profound in saving costs than the Internet is, or some of the other communications technologies.

MARGARET WARNER: David Levy, let me interrupt you on sec, just to comment, too, though on this "who are these investors?" What would you say is the difference? Is there a new mindset? Do we have, now, people investing in the old economy versus different kinds of people in the new economy?

DAVID LEVY: I think that what we have is, we've entered an era where people are not afraid of losing money, they're terrified of missing gains. We've had 18 years of the greatest bull market in U.S. history, with very few and relatively short interruptions. This has led to a perception that risk is very, very low. Yet, I refer to the Former Treasury Secretary, Robert Rubin, who's been speaking and writing recently about the extreme risk that's being ignored both globally and internationally by the financial community. We're living in a bit of a fantasy land here, ignoring the fact that, you know, we have to think about playing defense when market values become record. And even adjusted for interest rates, we've broken the 1987 record. We're more overvalued than ever before.

MARGARET WARNER: Ash Rajan, do you tell your clients this, that the bubble could burst?

ASH RAJAN: Margaret, no, I don't. I tell them to be disciplined, one -- to understand the risks that they are taking on. But I also tell them if they cannot handle the volatility, then they will have to really get out of the kitchen, because if they can't handle the heat, they're really better off in what their instinct leads them to invest. However, I also simultaneously tell them that there is at real meaning for all of these new technologies and the way they're taking place. And when I see the so-called "old economy" names use technology as the ticket to get to the new economy, that gives me much more credibility and it endorses this whole momentum that we're seeing. I happen to agree with David to the point that there is some sense of gravity to all of this at some point. Nothing goes up forever. However, we have to acknowledge that investments in very, very specific leadership areas of technology, telecommunications, semi-conductors, software, and even biotechnology, for that matter, are justified and are tangible.

MARGARET WARNER: All right. Ash Rajan, David Levy, we have to leave it there, but thank you both very much.

UPDATE - MINIMUM WAGE

JIM LEHRER: Now, Kwame Holman reports on the effort to raise the minimum wage.

KWAME HOLMAN: On Capitol Hill few issues illustrate the ideological differences between the two political parties as clearly as the Minimum Wage.

Democrats, more closely associated with the working class, yesterday pushed a plan in the House to increase the minimum wage by one dollar over two years to 6 dollars and fifteen cents an hour.

REP. DAVID BONIOR: Today more than 10 million hourly workers earn less than $6.15 an hour. Almost 70 percent of them are adults. Three out of every five are women. And a lot of them are single moms who have to work two, sometimes three jobs to make ends meet, and are never home to be with their kids or seldom home. They are struggling to give their kids, though, a better life. And today we say that it is high time we do our part to help them.

KWAME HOLMAN: Republicans, on the other hand, traditionally have stood to promote and protect those small businesses forced to pay the wage increase.

REP. THOMAS TRANCEDO: The idea that the government knows best how much money anybody should make for any particular job is idiotic. I will fully admit that I do not know what anyone should make in this economy. I do not know what the smallest minimum wage should be, or the highest. I admit that, because there is something that is in fact important and that does make that decision. It is called the marketplace. I will trust the marketplace.

KWAME HOLMAN: However, increasing the minimum wage historically becomes more attractive to members of Congress in an election year. House Republican leaders faced up to that reality yesterday.

REP. DAVID DREIER: I realize that a majority of this House supports an increase in the minimum wage. I'm in the minority here in believing that we should simply encourage economic growth through tax and other investment incentives. But I'm in the minority. I'm in the minority and so I feel the responsibility to do everything that we possibly that we can to allow a free flow of ideas.

KWAME HOLMAN: And so Republican leaders yesterday proposed increasing the minimum wage on "their" terms: a one dollar increase over three years -- and to ease the impact on small businesses tied the wage increase to122 billion dollars in tax cuts over ten years.

REP. MARK FOLEY: Yes I agree increasing the minimum wage will help. But I certainly don't find it a problem to at least assist the small businesses in making that increase in payroll costs softened at least by some important tax provisions.

KWAME HOLMAN: Some Democrats however found big problems with the tax cuts.

REP. CHARLES RANGEL: How dare you say the tax provisions in this bill is to protect small businesses. That's outrageous! It's an insult to the American people. It's clear that two-thirds of the tax benefits, they don't go to small businesses. They go to the richest Republicans that we have!

KWAME HOLMAN: Out from the center of the partisan debate stepped Jim Traficant...a colorful Democrat from Youngstown, Ohio...not known as a conciliator. But yesterday it was Traficant who convinced a stubborn group of Republican conservatives it would be political suicide for them to follow through on their threat to block a vote on the minimum wage increase. And later, it was Traficant who urged fellow Democrats to support the Republican proposal for small business tax cuts.

REP. JAMES TRAFICANT: How many times do we come to the floor we bash, pit old against the young; rich against the poor; black against the white; man against the woman; worker against the company? Ladies and gentlemen, without a company there is no worker. Without an entrepreneur there is no company. I think the Democrat Party has got to look at this issue.

KWAME HOLMAN: Democrats did look at the issue of providing tax cuts to small businesses, and when it came time to vote on that portion of the bill, 21 Democrats joined House Republicans in approving the ten-year, $122 billion package. A few hours later, 42 Republicans returned the favor as they joined with House Democrats who approve the $1 increase in the minimum wage over two years instead of three. The two votes provided a rare glimpse of bipartisanship.

REP. ROBERT ADERHOLT: I commend my colleagues on both sides of the aisle for working together to bring forth a compromise. Despite the harsh words about this issue from some and both parties, this legislation is a good example of Congress at its best -- Democrats and Republicans working together and working to do what is best for America's working families. This is what the American people expect and, quite frankly, it's what they deserve.

KWAME HOLMAN: However, the minimum wage bill still has a steep road to travel before it can become law -- over to the Senate to be reconciled with similar legislation approved by that body, and then down to the White House for the President's signature. But this morning the President repeated his resolve to reject the bill if it comes packaged with the large tax cuts attached by the House.

PRESIDENT CLINTON: Now, I think the American people questioned why Congress can't do something as simple as raising the minimum wage without loading it up with special favors. And I think it's a good question. The right answer is to send me a clean bill, a bill simple and clear that could fit on one side of one piece of paper. In fact, if you look at it, that's exactly what our minimum wage bill does - not very big, not very complicated, and I hope that we can pass it. I'm looking forward to working with the Congress. I have not given up on this, and I have been given some encouraging signals that we might yet be able to reach an agreement, so we'll keep working on it.

KWAME HOLMAN: And on Capitol Hill leaders from both parties agree some compromise is inevitable sometime before November 7th, election day.

JIM LEHRER: Still to come on the NewsHour tonight, charter schools and Shields and Gigot.

FOCUS - CHARTER SCHOOLS

JIM LEHRER: The charter school story. Betty Ann Bowser reports.

BETTY ANN BOWSER: Every morning at 7:15, Lolita Wood takes seven-year-old daughter, Jana, to Edison Friendship Elementary, not by car, not on a bus, but in her wheelchair. She goes to all of this trouble because she believes in the program at Edison Friendship.

LOLITA WOOD: I like their curriculum. I like the things that they do, the things that they teach, and the behavior that the kids have to follow. I like that. (Reciting Spanish lesson)

BETTY ANN BOWSER: Like the other parents who bring their children here from all over the District of Columbia, wood likes the Spanish language immersion program... (Singing in Spanish) ...The music and art classes.

JOHN PENNEL: Your shoes tied?

STUDENTS: Yes.

JOHN PENNELL: Everybody?

BETTY ANN BOWSER: ...The emphasis on discipline. And she likes the fact that Jana will get to bring a brand new computer home next year when she becomes a third grader. Because the school runs its own financial affairs, principal John Pennell can hire and fire teachers without going through the bureaucracy downtown. And his staff can decide how and what to teach.

JOHN PENNELL: Will we ever see dinosaurs again?

STUDENTS: No.

JOHN PENNELL: That's why they're extinct.

BETTY ANN BOWSER: Edison friendship has all the autonomy of a private school, but it isn't. It is a public charter school paid for with taxpayers' money. Nelson Smith is executive director of the D.C. Charter school board.

NELSON SMITH: A charter school is a public school that operates independently of the traditional public school system. It is publicly funded. It is accountable to a public body, but it is operated without the red tape and bureaucracy of the traditional public school systems.

BETTY ANN BOWSER: The number of charter schools has grown from just one in 1992, to over 17 hundred in 25 states today. But the District of Columbia has seen some of the most dramatic growth in the country.

TEACHER: Check your answers, okay?

BETTY ANN BOWSER: This is a school system where 75% of the fourth graders can barely read, where 95% of the eighth graders can't do grade- level work in math and science.

TEACHER: What is it? Do you know what it is?

BETTY ANN BOWSER: So the prospect of charter schools that could use public money but operate independently of the broken system has been warmly received in some quarters. Under the district's charter school law passed by Congress, 20 schools can be created each year. So in just a short period of time, 32 charter schools have opened. Today almost one out of every ten kids in the public school system attends a charter school. The schools offer a dizzying array of programs. Sometimes an entire school is devoted to an education niche. This elementary school teaches children with learning difficulties.

TEACHER: How did you arrive at this decision.

BETTY ANN BOWSER: And this school has a curriculum designed for kids who've been in the criminal justice system. Charter schools are in fact beginning to attract students back from private schools to a system that was once written off as one of the worst in the country. A few months ago, Yvette Clinton took seven-year-old daughter Jasmine out of a private school that cost $6,000 a year and placed her at Edison Friendship.

YVETTE CLINTON: I grew up and I always went to a private school. And I didn't believe that you could receive an appropriate education without having to paying for it. But I found out here at Edison that that is not the case.

BETTY ANN BOWSER: But not all the D.C. charter schools have been successful. Several were closed because of fiscal mismanagement. And D.C. Board of Education President Robert Childs says there have been other problems.

ROBERT CHILDS: We've seen times where a person will open a school that is not ready to be open, and really is not health-wise, safety-wise is it not safe for children to enter the building. But they've rushed it open so they wouldn't lose dollars for the school year.

TEACHER: Four times blank equals four. What is the answer?

BETTY ANN BOWSER: Critics of charter schools also say because teachers don't have to be certified, there isn't enough control over the quality of teaching. And, they say, charter schools hurt the traditional system, because each child who leaves takes more than $7,000 in per- pupil allotments with them to the charter school. So D.C. School Superintendent Arlene Ackerman is fighting to hang on to every student.

ARLENE ACKERMAN: I want this school system to be the absolutely best school district in this country. So I mean competition is real. One of the things that I tried to do is to free schools of the bureaucratic structures that were in place a few years ago. In fact, now, when I came 20% of our budget was spent on the central office bureaucracy. Now 6% of the budget is spent. And those dollars have gone directly into the schools.

TEACHER: Say it. Spell it.

STUDENTS: T-a-l-l.

BETTY ANN BOWSER: Some of that money went into an intensive 90 minute a day reading program.

CHILD: Mr. Lash sets up the fish tank.

BETTY ANN BOWSER: Today more children are reading at or above grade level.

TEACHER: He stretched out under the sunny skies.

BETTY ANN BOWSER: Ackerman also hired 1,100 new teachers at a time of national shortages, and she's added new computer technology programs.

TEACHER: Who has perseverance in this story?

BETTY ANN BOWSER: Now the tug of war between charter schools and traditional public schools has moved to Northwest Washington where opposing forces are fighting over the future of Paul Junior High School. Educators from all over the country are following what happens here closely to see if charter schools can undermine traditional public schools at a time when aggressive attempts are being made to improve them.

TEACHER: If we perform this in the auditorium what would you find exciting? Yes.

BETTY ANN BOWSER: Last spring, after two-thirds of the students, teachers and parents at Paul Junior High, signed required petitions to become a charter Cecile Middleton is the principal of Paul Junior High.

CECILE MIDDLETON: Well, I think a charter school forces accountability, and that's something that we need very much in the D.C. public schools. If we have accountability we won't have teachers getting their checks late. When things don't work, like, we have one line now on our telephone and parents are constantly complaining they can't get in contact with us. In a charter school we would be able to have that fixed instead of waiting for the school system to come out and do it.

BETTY ANN BOWSER: But the new the Paul Charter School hit a roadblock when it asked to do what no other charter school has done. Instead of finding new space, the Paul Charter advocates want to lease the building. The answer from Ackerman was a resounding no. Ackerman reasons, if the Paul Charter School gets the building, what's to stop other schools from converting and doing the same thing?

ARLENE ACKERMAN: We've spent more than $3 million on in the last five or six years with new roofs, new gym floors, and windows. What happens when we've spent this kind of money bringing this building up to, you know, some kind of modernization code you, and then we're going to lose that building, not only lose it to the school system, but lose it to the families who also... and the community, the larger community.

BETTY ANN BOWSER: Ackerman retaliated. She wants to pour thousands of dollars into a new Paul Magnet School with computers and technology, and share the building with the New Paul Charter School. Charter School Board Director Smith says it's a recipe for disaster.

NELSON SMITH: Here's the dilemma: How do you put a brand new charter school, which is authorized to fully occupy its building, in the same building with a school with 500 kids, which is what the school system says they want, and that school would appeal directly to people who don't like the charter schools? That is a prescription for failure, for tension and for not a very good learning environment.

BETTY ANN BOWSER: Now the debate has turned ugly. A group of teachers representing about half the teaching staff at Paul, has charged they were threatened with their jobs if they didn't go along with the charter school plan.

AZALIE HIGHTOWER: Some teachers left the school in June and did not return because they felt as though they had been intimidated to point where they could no longer stay there. I think there some are teachers who feel as though their ratings are lower than what they should be, and it's that way because they did not sign.

BETTY ANN BOWSER: Middleton adamantly denies all of this. Did you pressure any of the teachers?

CECILE MIDDLETON: No, not at all, not at all.

BETTY ANN BOWSER: The Washington Teacher's Union has called for an investigation into the teacher's charges. The D.C. Charter school board says it is looking into the matter. Jeanne Allen, Director of the Center for Education Reform, says the debate over Paul is important because similar disputes have gone on in other parts of the country. Her organization tracks charter schools.

JEANNE ALLEN: What the Paul School shows us is very typical across the country. It's almost as if you've got a school that's basically asking its administration for a divorce. "Sorry, we don't want you. We're taking the furniture. We're leaving." There's a real resentment building between charter schools and their administrations, particularly when they want to convert. There's not one case in this country where, despite protestations to the contrary that charter schools are taking our money, where schools have had to close down because suddenly a charter school opened up.

BETTY ANN BOWSER: But Superintendent Ackerman says it's too early to make such judgments.

ARLENE ACKERMAN: And so we need to be careful. I mean, charter schools are relatively new. They're untested. We don't have a lot of data about results. And I think this is one of those initiatives that, while it certainly has a lot of benefits, we need to move slowly with them. And we need to make sure that we're holding charter schools accountable for the same kinds of results and high standards that we're holding public schools accountable for as it relates to students results.

BETTY ANN BOWSER: They may not be new, but the charter schools are rapidly becoming a popular alternative to the status quo. Surveys continue to show parents like Lolita Wood are frustrated with traditional public schools and impatient with efforts to reform them.

FOCUS - POLITICAL WRAP

JIM LEHRER: Finally tonight, Shields and Gigot, syndicated columnist Mark Shields Wall Street Journal columnist Paul Gigot.

Paul, and now suddenly there are only two remaining. George W. Bush and Al Gore. What kind of campaign are they likely to run?

PAUL GIGOT: I think a close one, Jim. I think it has all the earmarks of a very competitive election. You've got two parties that are at rough parity right now with one another. You have two candidates who are both -- one center left, one center right. Both have consolidated more or less, not completely in the case of Governor Bush, but more or less their bases. Now they have to reach to the middle. And I think that with no great overwhelming pressing issue, there's no war, there's no recession, there's no driving issue here -- I think -- in this election, I think you are going to see an awful tough race, often a mean race as both men go after one another and their records and their associations - President Clinton in Texas. It's going to be... It may not be edifying all the time but it might be entertaining.

JIM LEHRER: Do you agree entertaining, not edifying, Mark?

MARK SHIELDS: I think Paul may have been ease necessity his review, Jim.The one thing we can be sure of not that this race will be close, but that it will be long. I mean, this is going to be the longest campaign in American political history. And it will be... I agree with Paul, it will be relentlessly negative because each candidate quite frankly, having won his party's nomination by first attacking and criticizing and running against his principal opponent, will dance with the girl who brung him in the fall. I mean, that's the strategy that got each Bush and Gore to where he is today. Secondly I think the key point is when the economy is bad, the economy is the only issue in an American political campaign. And Paul's right. The economy is very good. So we're going to look for other issues. And I think one of them was raised today in a piece by Dan Balz and Tom Edsel of the "Washington Post," who are frequent contributors to the NewsHour, when they quoted Congressman Tom Davis, the chairman of the House Republican Congressional Campaign Committee and he said the old Reagan coalition just doesn't get us a majority anymore. And I think that may be spreading the ugly truth. I mean, just as Democrats for the longest time were reluctant to accept the fact that the New Deal coalition was no longer operable and could no longer deliver a majority, I think that's the quandary and dilemma that confronts George W. Bush tonight and will in the months ahead.

JIM LEHRER: All right. Let's go through each one of these candidates one at a time, strengths and weaknesses, beginning with Vice President Gore. After this primary run, what emerges, Paul, as his main strengths?

PAUL GIGOT: Peace and prosperity. Unless there's a stock market crash or some kind of global crisis, people are pretty happy. The electorate is fairly happy.

JIM LEHRER: And he gets credit for that because he's with the Clinton administration.

PAUL GIGOT: Well, he is going to say he deserves credit and he is going to try to take as much credit for it and Governor Bush is going to say no, it's a Republican Congress. And I happen to think, you know, that there is a lot of truth to that. But the voters usually give some credit to the person who is in office. So I think he is going to get credit for that. I think Gore probably is better in candidate skills than Governor Bush. He's more experienced. He has been through this before. He's got a more experienced team -- a very tough team. I mean the way they cut up Bill Bradley ought to give George Bush pause because they're going to come after him with the same kind ever arguments and the same kind of fervor. I mean, Gore is in a way incredibly disciplined, relentless, almost like a machine. You can come at him, stop him but he is relentless. And I think that that is going to serve him well as he gets into a campaign.

JIM LEHRER: Mark, what would you add or subtract in that list? We're talking about Al Gore's strengths?

MARK SHIELDS: Al Gore's strength, Jim, 4.1% unemployment versus 7.2 unemployment the last time there was a man named Bush in the White House -- a 3500 Dow Jones versus 10,000 -- biggest deficit in the nation's history then biggest surplus today. You can be sure if the unemployment was at nine today, Republicans would not be saying the Republican Congress deserves credit or blame for it. They would be saying it was Bill Clinton's fault. So the prosperity, the sense of three out of four Americans believing this is the best time in their life is a big thing going for him. He has been through the process before. Jim, everybody is a rookie at running for President. But Al Gore has been through two national campaigns, albeit not as the point man but he did run on his own before in 1988. And I think he is a more experienced and savvy candidate and he has a more unified party. Just watching the withdrawal statements of Bill Bradley and John McCain yesterday, you could see the difference. The Democrats are a more united party today than are the Republicans.

JIM LEHRER: All right, staying with you, Mark, on weaknesses, what are his weaknesses coming out of this?

MARK SHIELDS: Well, his weaknesses are that basically people don't like Al Gore very much. And he's got to convince them that over the next four years you want to have him in your living room. He's also going to make a case that afflicts all Vice Presidents running to succeed the President under whom they've served, he has got to resolve that dilemma, which is things have never been better and I'm the only guy that can get out... us out of the mess we're in. In other words, he's got to have some message that goes forward. What is the difference - because people do want the Clinton era over. They don't want to the Clinton prosperity over; they don't want the Clinton policies dramatically overhauled but they want the Clinton era over. How does he do that?

JIM LEHRER: Yeah. Okay. What would you add or subtract to that?

PAUL GIGOT: The Clinton albatross - the Clinton baggage - I mean, 61% of voters in California on Tuesday had a negative view of Bill Clinton as a person. Al Gore only got 17% of those voters. 80 percent of those voters went for John McCain or George W. Bush. Mark is right, voters do want the Clinton-Gore era - the Clinton years over with sort of the rancor, the partisanship and some of the ethical problems. So no controlling legal authority -- that's going to be a problem for him.

JIM LEHRER: That's what he said on the...

PAUL GIGOT: In defense of himself on campaign finance. Bill Clinton is one of our greatest -- will go down in history as one of our greatest Presidents during the day of impeachment. That's going to appear in multiple ads.

JIM LEHRER: Because that's what Al Gore said on the day he was impeached.

PAUL GIGOT: The day that Bill Clinton was impeached. And there are a lot of Americans who they like the prosperity, but they really do not want to be asked to ratify a third Clinton term. And that's in many ways what Bill Clinton wants this election to be about, is ratifying a third term for him through the vehicles his wife the Senate candidate and his Vice President.

JIM LEHRER: Okay. Let's go to George W. Bush. His strengths.

PAUL GIGOT: He's likable. He's sort of a blithe spirit. Bob Dole was a more dour soul. And I think that particularly for a conservative, you got to have an optimistic outlook. That's was what made Reagan so appealing. And that's temperamentally what Bush is. He's an outsider. He is not part of this mess. He wasn't one of the impeachers. He wasn't part of the Congress. He can lay claim to an outside record to the Republicans who are the most popular Republicans in the country right now - who are not in Congress - have been governors. He can say I have a record of reform as a governor. And there are a lot of us out here. This is the kind of record in experience and governing philosophy will bring to Washington.

JIM LEHRER: Mark?

MARK SHIELDS: Jim, he has got to recreate himself. And it's a real problem. He entered this campaign, Governor Bush, as I'm the change candidate. I am the person that's going to be different. I'm the fellow who is inclusive, I'm the person who's going to bring people together. I'm the compassionate conservative. He is no longer seen that way as we saw in the exit polls last Tuesday. He has changed constituencies in the middle of the race. He became the favorite of social conservatives. As Scott Reade, Bob Dole's campaign manager pointed out, it was bad for Governor Bush to have at 8:05 P.M., Reverend Pat Robertson virtually on every channel announcing his victory instead of the Republican National Chairman. That's not at message you want to have out front. But I think that the biggest problem he has beyond unifying his own party and -

JIM LEHRER: What about his strengths? We'll get to his problems -

MARK SHIELDS: His strengths are considerable. His strengths are that he comes from a solid state, a big state, he has a record he can talk about. He has the leadership of his party solidly behind him. He is a on a retail basis, that is a candidate dealing with individual voters in crowds and social and public situations, he's as good as anybody. He is as good as Bill Clinton which is high praise, believe me. And he does have, Paul is right, he has a resiliency, and upbeatness about him. There is not a scowl, that sort of "my jockey shorts are too tight" wince that conservatives so often effect, or grumpiness. And I think that in that sense he brings to it real strengths that his father didn't have.

JIM LEHRER: Yeah. Now do you want to finish your problems list?

MARK SHIELDS: Yeah. The problems are, and I think the one and Paul and others and the conservative side have acknowledged it, alluded to, touched upon it, it is a little difficult, and that is when anybody runs for President, the first question that professional politicians ask about him or her is he heavy enough, is she heavy enough. That means are they a person of such heft - it isn't just intellectual but sort of a substance, the gravitasse of the person, and that is -- those are the doubts about George W. Bush that are left lingering from this campaign, especially as seen in the exit polls on Tuesday from the McCain voters. And I think that's something he has to resolve soon. I think he can.

JIM LEHRER: Do you agree that's his number one problem, Paul?

PAUL GIGOT: Yeah. I do believe it's his biggest vulnerability. In the new ABC - excuse me -- NBC-"Wall Street Journal" poll, Gore beats Bush on experience 47-30. And that's really Al Gore's only big advantage. On everything else, they're very competitive and very equal. And governors often have to meet this threshold. I think he can do it by substance, talking about issues that people care about in a way that sounds credible, entitlement reforms, Social Security, education. That's one strength Bush has. He can talk about those issues -- traditionally Democratic strongholds, Democratic strengths in a way that most Republican candidates haven't been able do. But he has to do that... and there's a lot of talk right now that he should probably take Al Gore up on that offer of maybe doing some more debates.

JIM LEHRER: He has to do a lot of them -

PAUL GIGOT: To show head to head he can compete.

JIM LEHRER: Okay. Before we go and briefly here the two men who dropped out this week, Mark, John McCain and Bill Bradley. First McCain. What did John McCain leave as a legacy behind him?

MARK SHIELDS: There were two things I think. He has changed the language of our politics. I mean people today talk about Bush voters or Gore voters. They talk about the McCain vote. It's this new constituency that nobody really... everybody wants -- nobody is exactly sure. And, Jim, before John McCain's campaign,reform, particularly campaign finance reform was a goodie-two-shoes idealistic, naive issue. And he put it on the map as they won the campaign, Al Gore and John McCain were trying mightily to identify as reform candidates and George Bush is trying to decide right now how far can he go on reform. Can he go where his father is who wants to abolish soft money -- publicly has stated so -- to win John McCain's support and that of his backers?

JIM LEHRER: Paul?

PAUL GIGOT: He opened up the reform message, it's true. I'm not so sure, as Mark is, that it is campaign finance reform because most of the people I talked to, you know, had a more general description of that word. But I think a lot of it is personal. A lot of his legacy is personal because those five million votes he got, which are extraordinary, so many of the people were voting for him, I think, his unique character, his unique biography. I think he opened up for us this year, he showed us how much the voters really want a President again that they can admire, somebody they can really look up to. I think that's a big part of it.

JIM LEHRER: All right. We didn't get to Bradley but we will before this world ends. Thank you both very much.

RECAP

JIM LEHRER: And again the major stories of this Friday: President Clinton threatened to veto a minimum wage bill that passed the House last night. He opposed Republican tax cuts attached to it. And an explosion killed a suicide bomber and 18 others in the capital of Sri Lanka. We'll see you on-line and again here Monday evening. Have a nice weekend. I'm Jim Lehrer. Thank you and good night.