The MacNeil/Lehrer NewsHour

MR. MAC NEIL: Good evening. I'm Robert MacNeil in New York.

MR. LEHRER: And I'm Jim Lehrer in Washington. After our summary of the news this Friday, special envoy Charles Redman explains the NATO air strike in Bosnia, Kwame Holman reports on the day's Whitewater hearings, White House Chief of Staff Leon Panetta is here for a Newsmaker interview, and Mark Shields and Paul Gigot offer their political analysis of Whitewater, health care reform, and other matters. NEWS SUMMARY

MR. LEHRER: NATO planes attacked Serb positions around Sarajevo today. Sixteen U.S., French, British, and Dutch jets took part in the mission. One target was hit according to a Pentagon spokesman. it came after the Serbs violated a NATO ultimatum by seizing heavy weapons under U.N. control. A U.N. official said the Serbs agreed to return the weapons following the NATO attack. We have more in this report narrated by Louise Bates of Worldwide Television News.

LOUISE BATES, WTN: Sarajevo was bracing for trouble. Anticipating some kind of retaliation from the Bosnian Serbs for what was to come, British troops reinforced defenses of their U.N. outposts. An AWACS reconnaissance plane at the head, a routine sight, this time on serious business. Activity at other U.N. outposts hinted impending action. By seizing a tank and other heavy weapons from a U.N. depot, Bosnia's Serbs took a step too far.

LT. GEN. SIR MICHAEL ROSE, UN Commander: I regret the use of force. Our job as peacemakers is to keep the road to peace open, but there's a limit to how much encroachment on that we can accept.

LOUISE BATES: Soon after NATO's air strike, snipers fired on a crowded tram in Sarajevo. Survival instincts went into high gear. Trams have become a favorite moving target for the snipers who still terrorize Sarajevo. This time two people were wounded. Peacekeepers arrived quickly but the snipers had disappeared. Bosnia's U.N. ambassador welcomed the air raids.

MUHAMED SACIRBEY, UN Ambassador, Bosnia: Clearly to use this type of force, especially with these circumstances, also invites further attacks and retaliation by the Serbian forces, and it seems to us that history has proven out that it's more dangerous not to react than to react.

LOUISE BATES: Meanwhile, Serbia's border with Bosnia at the Srem Raca crossing point was firmly sealed. Fed up with the Bosnian Serbs' rejection of a peace plan for Bosnia, the Serbian backers have severed political and economic links.

MR. LEHRER: The United Nations threatened more strikes against the Serbs if they do not return the heavy weapons by tomorrow. Here in Washington, White House Press Sec. Dee Dee Myers said a lifting of the U.N. arms embargo when the Muslims could become unavoidable. Sen. Minority Leader Robert Dole introduced a non-binding Senate resolution this afternoon urging the U.S. to unilaterally lift it.

SEN. ROBERT DOLE, Minority Leader: The reality is that only by lifting this illegal and unjust arms embargo on the Bosnians can we hope to eventually have a just resolution of this conflict and avoid sending U.S. forces to implement a partition of Bosnia.

MR. LEHRER: We'll have more on this story right after the News Summary. Robin.

MR. MAC NEIL: The government reported today the nation's unemployment rate edged up in July to 6.1 percent. Despite the .1 percent rise, more than 1/4 million new jobs were created last month. That's because the government tracks unemployment by surveying households and job growth through employer payrolls. President Clinton talked about jobs this morning to a group of business leaders at the White House.

PRESIDENT CLINTON: Today we celebrate because this morning, as the chart to my left shows, the Labor Department reported that since our administration came into office our economy has produced more than 4 million new jobs, almost all of them in the private sector. Now, as we know, when I ran for office, I said I thought we could produce eight million new jobs in four years and that we would do four by the end of 1994. So we are six months ahead of schedule.

MR. MAC NEIL: President Clinton's stewardship of the economy got a different review by one of his leading critics, Senate Republican Leader Dole who said today Mr. Clinton had inherited a good economy and added all he had to do was make sure he didn't mess it up.

MR. LEHRER: Former Bush administration solicitor general Kenneth Starr will replace Robert Fiske as Whitewater independent counsel. A special three-judge federal panel made that announcement this afternoon in Washington. Fiske had been by appointed by Attorney General Janet Reno. When Congress re-enacted the independent counsel law earlier this year, Reno recommended that Fiske remain on the case. Several Republican members of Congress have questioned Fiske's independence. Both Fiske and Starr are Republicans. Starr is also a former federal appeals court judge. His appointment came within hours after the first phase of congressional hearings on Whitewater ended on Capitol Hill. White House Counsel Lloyd Cutler was the closing witness before the Senate Banking Committee today. Officials from the Resolution Trust Corporation were the last before the House Banking Committee. We'll have more on all of this later in the program.

MR. MAC NEIL: President Clinton blasted the National Rifle Association over the crime bill today. The President said the NRA and its allies in Congress were blocking the vote on the bill. Among other things, the $33 billion package contains a ban on assault weapons, something strongly opposed by the NRA. The President spoke at this morning's economic meeting at the White House.

PRESIDENT CLINTON: If anybody wants to vote against a crime bill, let 'em vote against it. There are people who are going to vote against it because they are honestly opposed to capital punishment or because they're honestly opposed to the assault weapons ban, or because they're honestly opposed to the prevention funds. Let them vote against it. That's fine. But do not let us pull another Washington, D.C., game here and let this clientele go down on some procedural hide and seek. If we're going to have a shoot out, let's do it at high noon, broad daylight, where everybody knows what the deal is. Thank you very much.

MR. MAC NEIL: The bill would also provide funds for 100,000 new police, more prisons, and crime prevention programs. Some members of the Congressional Black Caucus have also threatened to block the bill. They object that it does not contain a provision allowing the use of statistics to help prove racial bias in death penalty cases.

MR. LEHRER: The United States and North Korea resumed their nuclear negotiations in Geneva. The U.S. wants North Korea to allow United Nations inspections of its suspected nuclear weapons program. The talks were suspended last month after the death of North Korea's leader, Kim Il Sung. The Senate today voted down a proposal that would require congressional approval of a U.S. invasion of Haiti. The vote was 63 to 31. Opponents said it would hamper the President's ability to enforce foreign policy.

MR. MAC NEIL: U.N. officials today began broadcasting messages to Rwandan refugees in Zaire. The broadcast will advise refugees on how to avoid diseases that have killed thousands in the past few weeks. There were reports today that returning refugees were being killed by the Tutsi-dominated military. Mark Austin of Independent Television News reports.

MARK AUSTIN, ITN: They may be curbing the cholera in the refugee camps at Goma, but an epidemic of fear is spreading fast. Aid workers believe allegations of reprisal killings inside Rwanda by the rebel Tutsi army will bring the flow home of Hutu refugees to a halt. There's a growing air of permanence to these camps. They're building shelters for the rains which come in September, and even though people continue to die here, they'd rather risk disease and the possibility of violent death in their country. These two Hutus returned home to Rwanda but claimed they saw friends bayonetted to death. They've since fled back to Goma. Whether the reports of atrocities are true or simply Hutu propaganda, it all adds up to one big problem for the aid agencies. Hundreds of thousands of people intent it seems on staying put, consuming massive amounts of aid for months, even years.

PANOS MOUUMTZIC, Aid Worker: Right now there's a lot of fear among refugees about going back, and if the information on atrocities are confirmed, it's becoming very clear that not a single person would go back, and we'd have 2 million refugees staying in the outside borders in Zaire, in the neighboring countries, for quite some time.

MARK AUSTIN: The Tutsi army in Rwanda deny any knowledge of revenge attacks and accuse Hutu extremists of scare mongering. Ultimately, of course, the aid will dry up and in the middle the innocent victims of this crisis. The future for them looks bleaker than ever.

MR. LEHRER: And that's it for the News Summary tonight. Now it's on to the NATO air strikes in Bosnia, today's Whitewater hearings, the White House chief of staff, and Shields and Gigot. FOCUS - STRIKE FORCE

MR. MAC NEIL: First tonight, we focus on NATO's air strikes near Sarajevo. Today's sortie is the fourth time NATO warplanes have struck at the Bosnian Serb army. The air strikes have been in response to violations by the Bosnian Serbs of a United Nations order issued last February to pull back weapons from a 12-mile radius around Sarajevo. Today's attacks came after Serb soldiers seized a tank and other heavy weapons from a U.N. depot and shot at a U.N. helicopter. Margaret Warner has more.

MS. WARNER: Joining us now for an update on today's air strikes is Amb. Charles Redman, the U.S. special envoy for the former Yugoslavia. Good evening, Amb. Redman. Thanks for being with us.

AMB. REDMAN: Good evening.

MS. WARNER: The Bosnian Serbs have broken various agreements and understandings before. Why did NATO respond to quickly to last night's provocation?

AMB. REDMAN: Well, first of all, I think we have to look to Gen. Rose's explanation, which is that the actions taken last night by the Bosnian Serbs were so clearly in violation of the established regime around Sarajevo that they really had to be responded to. And, of course, when the U.N. asked for action, NATO responded positively, immediately against the targets that have been specified. There was absolutely no question in this case that the Bosnian Serbs had planned this action, that they knew they were violating the rules, the regulations of the exclusion zone regime, and as a consequence, they saw what happened when the United Nations asked for NATO action.

MS. WARNER: There are reports now that the Bosnian Serbs have offered to return these weapons that they took. Do you believe that's a serious offer? Do you have any evidence it is?

AMB. REDMAN: I don't have any evidence to that effect, but I hope that what will come out of this particular incident is even a larger lesson, because I think we are in the midst now of a very important period in terms of trying to bring the Bosnian crisis to a negotiated resolution, and part of that process involves the Bosnian Serbs seeing that they have no other choice really than to say yes to the proposal that's on the table from the contact group to say yes to an internationally negotiated peace, and that war is no longer an option for them. And I think there are other aspects to that issue that would be worth discussing, but I think that is really what I hope the Bosnian Serbs are seeing even from what happened in Sarajevo today.

MS. WARNER: Well, of course, their provocation came right on the heels of the government in Belgrade, the Serbian-Yugoslav government in Belgrade, threatening or say it would cut off all support to the Bosnian Serbs, because they have rejected this peace plan. Do you see a connection between what the Bosnian Serbs did last night and Belgrade's action?

AMB. REDMAN: It's hard to know if there is a direct connection, but I think there is no question that the Bosnian Serbs must be feeling the pressure. They are more isolated now than they ever have been in the course of this war. Their closest friends in Belgrade have told them that they need now to accept the proposal of the contact group. The Russians have worked very hard as members to the contact group to convince the Bosnian Serbs to say yes. So whatever they may be thinking out there in Pale, in Bosnian Serb territory, they must be feeling that the world, the whole world is telling them this is the moment to say yes, because it really is.

MS. WARNER: Of course, it's always very hard to understand motives and connections in the Balkans, but tell me this. Do you think that the Bosnian Serb leader Radovan Karadzic orderedthis provocation last night? I mean, do you have any sense of what political gain is being played here for him to do something, or for the Bosnian Serbs to do something that was so likely to provoke a NATO response?

AMB. REDMAN: It's always hard to divine the intentions of the Bosnian Serb leadership. We've had similar cases in the past where even after the fact we never really got a good explanation for what they did. You're right. It doesn't seem very logical. They should have expected this response. Perhaps they thought that they could push the international community and the United Nations further than actually proved to be the case.

MS. WARNER: Now, how serious do you think this threat is from Belgrade to really cut off the Bosnian Serbs?

AMB. REDMAN: It's still early going, but the initial signs are that this is, indeed, a different kind of a threat than what we have seen in the past. We obviously will be watching it carefully but the signs so far in terms of the rhetoric that's been used by Milosevic as well as the steps that he seems to be taking indicate that these are, in fact, potentially serious measures.

MS. WARNER: And do you think he has the power, if he is serious about it, to actually enforce it, given all the friends that the Bosnian Serbs had, themselves, in the Yugoslav army? I mean, the Yugoslav army has to actually enforce this. Do you think Milosevic has that kind of political authority still?

AMB. REDMAN: Only time will tell to what extent he will enforce this. The Yugoslav army did come out backing this move the night it was announced by the government and then backed up by President Milosevic, so we really do look to Belgrade and to President Milosevic to follow through on what they've said they would do. This is the best chance that we have had for peace, and, of course, to the extent that the Bosnian Serbs recognize that they are going to become further isolated, particularly if Milosevic and the Serbs in Belgrade are willing to be a part of that process, then I think the message should get through to them loud and clear.

MS. WARNER: And have the Serbs in Belgrade responded to this NATO attack, to either last night's provocation or the attack?

AMB. REDMAN: I don't know of any reaction at this time. Again, I would hope that they look to the circumstances that you have described, that it will be really evident that there was just, that there was just no question that this kind of provocation had to be responded to.

MS. WARNER: And, Amb. Redman, if Belgrade succeeds in really isolating, physically isolating the Bosnian Serbs, not letting any material get through, how much will that restrict, or how quickly will that restrict the Bosnian Serbs' ability to hold on to territory they've seized which, of course, the Muslim-led government in Bosnia is trying to retake? How much will it affect them militarily and how quickly?

AMB. REDMAN: Obviously, it would depend on how stringent the controls would be, but secondly, the Bosnian Serbs no doubt have quite a supply of weapons and material that would allow them to go on fighting, waging the war for certainly some months to come. But I think, in fact, what may be shaping up here is a real man-to-man struggle between Milosevic and Karadzic, because given the gauntlet that Milosevic has thrown down, it seems to me unlikely that this struggle can go forward very long without a clear winner, and frankly, I would not expect that President Milosevic went into this expecting to lose. If there is a change in the Bosnian Serb leader in the scenario that I've just described, then I would expect that Milosevic would like to see that earlier, rather than later, and hopefully, that change in leadership will produce a leadership that sees reason and says yes to the proposal of the contact group.

MS. WARNER: And is that really where the West's or the contact group's hopes lie now, with the pressure from Belgrade? In other words, is there anything else in the sort of bag of pressure tricks that the West has left to, to use against the Bosnian Serbs, other than this?

AMB. REDMAN: This is only one aspect. We have a process underway within the contact group which has been on schedule, on target from the beginning. Last Saturday in Geneva, we took the first step in the program of disincentives that we had said we would do, which is to move now toward heightening, strengthening economic sanctions. In response to those decisions on Saturday, we have now seen what President Milosevic is attempting to do. But in the meantime, we're moving on to our second phase, which has to do with preparing for enforcing or extending the exclusion zones in Bosnia. And finally, of course, if all that fails, then the contact group again has stated in Geneva that lifting the arms embargo could become unavoidable. So we have a step-by-step process. We intend to see it through to the end. We simply hope that the Bosnian Serbs see the light earlier rather than later and say yes, but otherwise, we're going to have to follow through with this process.

MS. WARNER: And on this threat to lift the arms embargo, of course, the President has been wanting to do this for some time. The Hill is urging him to do it unilaterally. The President's position has been he wouldn't do it without the UN. Has there been any change in that position?

AMB. REDMAN: No, there hasn't. The President feels very strongly that the way to do this is multilaterally. And I think one of the things that we have tried to do in structuring the approach of the contact group is, No. 1, achieve a negotiated settlement, but, No. 2, if it's not possible to do that, to set the stage then so that we have the maximum chance of attracting international support for a multilateral lifting of the arms embargo. That is clearly our preferred course of action.

MS. WARNER: Well, Amb. Redman, that's all the time we have. Thank you very much for being with us.

AMB. REDMAN: You're welcome.

MR. LEHRER: Still to come on the NewsHour tonight, Whitewater hearings, Leon Panetta, and Shields and Gigot. FOCUS - Q&A

MR. LEHRER: Now more Whitewater hearings. Both the House and Senate Banking Committees wrapped up their inquiries today. For the Senate, the end followed another long night. Kwame Holman reports.

MR. HOLMAN: A few hours before dawn today, weary members of the Senate Banking Committee engaged former White House Counsel Bernard Nussbaum on the critical issue of these hearings, the circumstances leading Deputy Treasury Sec. Roger Altman to recuse himself from the Resolution Trust Corporation's investigation of the failed Madison Savings & Loan, an Arkansas thrift owned by a friend of the Clintons'. Chairman Donald Riegle led fellow Democrats and Republicans in strongly criticizing Nussbaum for telling Altman it might be his duty not to recuse himself.

SEN. DONALD RIEGLE, Chairman, Senate Banking Committee: [Last Night] I think that is a central part of the problem that we have here is the fact that there was an interference with that recusal decision. Mr. Altman had reached the decision -- he testified before us sitting right where you are now -- that he'd reached the decision to recuse himself. It was in his briefing notes. And after you ventilated your opinion, obviously strongly, I think he felt pressure, and I think he behaved in a manner that demonstrates that, because within 24 hours he not only changed his mind and decided not to recuse himself, but he felt the need to come back to the White House and report that decision at a meeting and to ask for a meeting to do it. He should not have done that either. Now, I know you don't see it, and that's part of what bothers me, is that you don't see it even yet. That was one time when you should have bit your tongue if you had to bite it in half and not stick your nose into that decision. I think you had no right to do it.

SEN. JOHN KERRY, [D] Massachusetts: I respectfully say to you that not to have been sensitive ethically to both the friendship - - and no one has mentioned this -- but also to the fact that everybody in this town talked about Mr. Altman as a potential future secretary of the treasury, and for him to walk into the White House after everyone he'd talked to had helped him make up his mind to recuse himself and it was their opinion and his that he should recuse himself, you should have said, Roger, fine, it's your decision. But no, you're sitting here saying, I kept telling him the bottom line was it was his decision but a whole bunch of stuff came in-between from his boss, from his White House.

SEN. CAROL MOSELEY-BRAUN, [D] Illinois: I don't want to sound like I'm piling on, although I must say I -- along with my colleagues -- concur in their judgment about the recusal decision. Now that you've had a chance to see and hear the other views, the other perceptions, would you change that view now?

BERNARD NUSSBAUM, Former White House Counsel: You're not going to like this answer perhaps, Senator.

SEN. CAROL MOSELEY-BRAUN: Okay.

BERNARD NUSSBAUM: But I've thought about it a lot. I've had occasion, you know, having left the government, taken a mini- sabbatical, to think about this. I respect the other views. I respect your view and Sen. Bauchus's view, Sen. Kerry's view, the chairman's view, Lloyd Cutler's view, Lloyd Bentsen's view. I don't agree. I don't agree. I -- I really still maintain my view, that if you're not legally or ethically required to recuse yourself and that includes appearances, then you do your job, you do your duty. Now, that's my position. I -- as a result of that position -- I am now back in New York, rather than in Washington, but that's my position.

MR. HOLMAN: When the committee returned after sun up, Senators were in the mood to find ways to prevent the problems that grew out of controversial discussions between White House and Treasury officials about the RTC probe. The witness was current White House counsel Lloyd Cutler.

SEN. PAUL SARBANES, [D] Maryland: We had an extended exchange here last night with your predecessor in the counsel's office about the recusal issue and a proper policy for federal officials to follow when deciding to recuse themselves. And I wondered if you have any thoughts on what that standard is to guide people.

LLOYD CUTLER, White House Counsel: We're all speaking now with hindsight, and we all have marvelous 20/20 hindsight. We -- none of us had to make the call that Mr. Nussbaum and Mr. Altman and the others had to make in February. But it seems to me pretty clear that if a question of recusal comes up, and I'm speaking now of the Executive Branch and people who could be fairly thought of as fairly close to the White House, I'm not speaking of judges, when - - if the question comes up should you recuse yourself in Washington, D.C., you're probably better off recusing. We can talk about this duty to serve, but what was the importance in the end of Mr. Altman's duty to serve? It didn't matter, as we know from the testimony. He wasn't going to step into what was happening anyway. It was totally a matter of appearances. And I must say it is hindsight. But just reflect on how this entire storm blew up, because when the oversight hearing occurred and Mr. Altman reported the meeting and the material he did report on on February 24th, there was a great firestorm. If he were gone by that -- if he had stepped out by that time, we wouldn't be sitting here.

MR. HOLMAN: As the committee prepared to close this first phase of Whitewater hearings, members' views of the eight-day experience tended to split along party lines.

SEN. CHRISTOPHER BOND, [R] Missouri: There were some people who really are the best examples of government servants who came before us, but in other instances, we saw a second phenomenon work on a few people, the blurring of the lines between public responsibility of their positions and their private commitment to protect the President sometimes at all costs. I'm afraid this is a tone that was set at the top. In some cases, ends do justify the means. Somehow the public is best served if the President's interests are served, whether those interests be his private interests, his political interests, or the interest of the office of the presidency. It is this ethical blurring, coupled with a set of standards that seem to imply, if you're not indicted, you're fit to serve that has put some officials, both current and departed, on the hot seat this week.

LLOYD CUTLER: You talk about attracting fine, upstanding people to government. Who is going to serve in government if you describe serving in government the way you do, and you come from a party which while it held the White House was responsible for Watergate and for Iran-Contra, where incidentally, Mr. Meese as soon as he found out during his investigation that Col. North was saying that he had the authority of the President went immediately to the President who was clearly involved and the President's chief of staff to tell him that. All I can say, Sen. Bond, is I am very surprised and disappointed by your statement.

SEN. JOHN KERRY: I don't think that we have here evidence of a dark conspiracy or of some creeping malevolence. I think we have evidence of overzealous, sometimes insensitive, perhaps even unthinking, overreaction to perceived political situations, and that those led some people to make some plain old dumb, insensitive judgments.

MR. HOLMAN: With the Senate and House Committees ending their hearings, it's now up to the newly appointed Whitewater independent counsel to help determine the rules and timing for the next set of Whitewater hearings. NEWSMAKER

MR. MAC NEIL: Now a Newsmaker interview with White House Chief of Staff Leon Panetta, who joins us from the Old Executive Office Building. Mr. Panetta, thank you for joining us.

MR. PANETTA: Robin, nice to be with you.

MR. MAC NEIL: What's the White House reaction to the appointment of Kenneth Starr to replace Robert Fiske as the Whitewater independent counsel?

MR. PANETTA: As we have with the Congress, as we have with Special Counsel Fiske, as we did with Lloyd Cutler, and with the Office of Government Ethics, we will fully cooperate with the new appointee. We have nothing to hide here. As the President's made clear, there is no wrongdoing, he did nothing wrong, and the investigations of Fiske, of the Office of Government Ethics, of Lloyd Cutler, and very frankly, the conclusion of the hearings, themselves, this week is that nothing happened that violated any criminal law, that violated any ethical law, and, therefore, nothing happened.

MR. MAC NEIL: What lessons do you think the White House should draw from the hearings of the past week?

MR. PANETTA: Well, it's pretty clear that obviously as pointed out there were, in fact, too many people talking to each other, and there were mistakes of judgment. Lloyd Cutler and I have both made very clear that when there is an investigation that is going on, that no one is to talk to any department involved in that investigation. And this is a matter for the Justice Department ad for counsel to handle, period.

MR. MAC NEIL: Are you a bit disappointed that the attorney general's recommendation that Robert Fiske be continued and named independent counsel didn't happen and that, instead, the court appointed Mr. Starr?

MR. PANETTA: Well, again, I think this was done pursuant to an act that was signed by the President. He supported the adoption of this special counsel authority, and he signed that into law, and this was done pursuant to that authority. And, again, we will fully cooperate with that counsel, as we have in the past. I guess at some point I hope enough is enough but obviously we're going to continue to cooperate.

MR. MAC NEIL: Just let me ask you a question about the hearings. You're a congressional veteran, and you know how important Congress takes it that members of the Executive Branch tell the truth when they come before the Congress. Are you comfortable with the standard of truthfulness exhibited by witnesses from the administration over the last week?

MR. PANETTA: Oh, without question. I think the fact is that everyone, including some of our heaviest critics on the committee, indicated that we had fully cooperated in every way with the committees, had presented our testimony directly and honestly. And I think anyone who watched those hearings over the past week and viewed the testimony from all of the witnesses knows that these witnesses answered every question that was directed to them, sometimes very late into the evening. But it was very clear that they fully cooperated, and we intend to continue to do that.

MR. MAC NEIL: Don't you find it as a former member of Congress extraordinary that a Democratic committee chairman, Sen. Riegle, would give a stern admonition to the counsel of a Democratic president and say, as Sen. Riegle did late last night, we can't have situations arise in the future where witnesses come before Congress and are anything less than candid? Isn't that a very unusual admonition from --

MR. PANETTA: I think the President has made very clear that when members of this administration testify to the Congress, they are to be straight and honest in answering those questions and nothing less. I think those who testified indicated that honesty and that directness, and obviously, chairmen, Democrats, Republicans can all have their different views as they approach this. But I really do hope that the American people understand the bottom line here. The bottom line is that for all of the hearings, for all of the testimony, for all of the questions, for all of the speeches, nothing happened here to violate the law. Nothing happened here in terms of any ethical violation. These were perhaps mistakes of judgment. There were, indeed, people who talked that shouldn't have talked to each other. But when you get to the bottom line, there were no violations of the law.

MR. MAC NEIL: There's another bottom line politically, and Lloyd Cutler just referred to it. And that is: Is Roger Altman going to stay as deputy secretary, press -- secretary of the treasury? Any number of members of those committees, most of them Republicans, have expressed some loss of, of belief in his credibility as a witness. Is he going to stay?

MR. PANETTA: Again, I refer to a statement by the President at the press conference this week. The secretary of the treasury has expressed complete confidence in Mr. Altman. The President shares that confidence in Mr. Altman. He has done his job well. He has performed in terms of not only job but also working on an economic plan, working on trade issues. He's done a very good job for us. And we continue to have confidence in his ability.

MR. MAC NEIL: Let's turn to the task you were hired to do, and that was take charge of the White House. I read today that you've decided to wait until after the health care issue is through the Congress before making any staff changes at the White House, is that correct?

MR. PANETTA: I enjoy reading those things too. I don't know who they talk to, but, you know, I have -- I continue to review the operations here. I will make my recommendations to the President. My view is that we need an efficient and effective operation at the White House to serve this President. That was the direction that the President gave me as chief of staff, and that's what I intend to do.

MR. MAC NEIL: I read some speculation today that one of the reasons it's taking long for you to make any changes you're going to make -- and this report quoted White House officials as fearing the delay means the President is now regretting giving you a free hand and that there's some back sliding there and he doesn't want to give you a free hand.

MR. PANETTA: No, not at all. The President and I have been talking on a regular basis about the different operations in the White House, and I'm continuing to talk to members of the staff in the White House and getting a sense of the strengths and weaknesses in each of those operations. The fact is we have a lot of very talented, capable people that are part of the White House. And it's shown in terms of our record of accomplishments over the past year as far as the economic plan, as far as NAFTA, crime, a welfare reform proposal that went to the Congress, health care. I don't think there's any question we have a very capable staff. The question is how to best direct that staff and to ensure that there is discipline, that there are clear lines of authority, and that there's some focus in terms of the issues that we're dealing with. That's really what I'm trying to direct myself.

MR. MAC NEIL: The same story I was quoting was in the Los Angeles Times today. It says some staff members believe that the White House's current troubles are severe enough to require major changes. Do you agree? Do you face major changes?

MR. PANETTA: Oh, as I said when the President appointed me, changes will be made, but I want to be able to look at the operations within the White House and determine what changes should be made to improve its efficiency and its operation on behalf of the President. And as I said, and I'll say it to you and I've said it to others, my recommendations are going to go to the President of the United States first, not to the public.

MR. MAC NEIL: The White House structure is described -- this White House's structure is described in a widely quoted comment that it's like 10-year-olds playing soccer; everybody wants to run after the ball and kick it at the same time. Do you agree that's part of the problem?

MR. PANETTA: Well, as I said, there are three goals that I'm after in this job. One is obviously discipline. I think everybody has to do the job that they're responsible for. They've got to respond to the direction of the President, directions of the chief of staff. That's important. Secondly, lines of authority, clearer lines of authority in terms of what their responsibilities are and who they respond to in terms of direction, and I think thirdly, we just need to have better focus each day and for the next six months of the year looking ahead to what the direction is for, for the Office of the Presidency over that period of time. So those are the goals I'm after, and the changes that I make will reflect those goals.

MR. MAC NEIL: The recent polls all seem to show a continued decline in the President's approval ratings. Now, the economy is improving, and usually Presidents get credit for that. What is it - - you had a good deal to do with the President's economic policies. What do you -- how do you explain the fact that he isn't getting credit for it, and the polls continue to in approval ratings decline?

MR. PANETTA: Robin, I've been around this town for a long time, and obviously, whether it's Presidents or whether it's members of Congress, you ride a roller coaster up and down oftentimes in terms of popularity and where the polls are, but I think ultimately, the one thing the public keeps its eye on is the target and whether or not an administration, in fact, is accomplishing those kinds of goals on behalf of the American people. That's really the bottom line here. And I think that's what the President is focusing on. We passed the economic plan. It was attacked by many of our critics as a plan that would produce a recession, a plan that would cause unemployment. And instead, we today have a plan that has produced over 4 million jobs in a very short period of time as far as this administration is concerned, produced about 3.7 percent - - percentage points in terms of growth. We've cut the deficit virtually in half in terms of a percent of GDP, and the economy is moving forward. We did the same thing on NAFTA when we were promoting a trade agreement that most people had condemned as gone. And yet the President fought that. It was another tough vote. We're fighting the same battle on health care. We're fighting the same battle on crime. I think ultimately the American people are going to look at the accomplishments of the administration and the accomplishments of this President. That's going to be the bottom line test of whether or not the President is popular or not. The day-to-day rolls here, you really can't waste your time on that. I think the bottom line is: Do you, in fact, do things that improve the lives of Americans in this country?

MR. MAC NEIL: So do you think it's a matter of communications, you're just not -- the President is not communicating the fact that he's done all the things that you've just said?

MR. PANETTA: Well, the President, himself, has said that it relates to a number of things. One is the fact that we do have a heavy agenda in terms of legislation. The President feels he was given a mandate by the American people not to simply come back here and sit back and make excuses why he can't do things. He was elected to do things, to try to deal with crime, to try to deal with the problems of our economy, try to deal with health care issues, welfare reform issues, education issues, to improve the lives of our citizens. That's what he's trying to do. Every one of the proposals we have submitted to the Congress is aimed at trying to solve a problem in our society. We're clearly at a period of time at the end of the Cold War where people are now trying to find their way. They are trying. They have fears. They have anxieties. They sense the changes that are going on. But they also, I think, deep down understand that there's hope here, that we can try to build a better nation into the next century. That's really what it's all about. And, again, we have got to keep our eye on the target. If we are diverted by the day-to-day polls, if we're diverted by the day-to-day popularity predictions of, of various polls, then we will be diverted ultimately from our target. The President is keeping his eye where the American people need to keep their eye, which is on the accomplishments that we're pursuing for the people of this country.

MR. MAC NEIL: Let's talk about health care for a moment, which is obviously one of the main targets. As it stands now, is it as close as the budget battle last year which you won by one vote?

MR. PANETTA: It's pretty close, Robin. We seem to have these battles almost all the time on these tough issues. The economic plan, as you know, came down to one vote in the Senate, the Vice President's vote. We had a tough vote on NAFTA, although we won it by a larger margin. We're now fighting the crime bill which we have a conference on the crime bill. We finally have a tough balanced crime bill for the first time in six years, and we're fighting the NRA and the gun lobby, which is fighting us even bringing the issue to the floor.

MR. MAC NEIL: But you're a good congressional head counter. Is this -- is this worse as a battle for you than the budget was, or is it gloomy, or are you more pessimistic about it?

MR. PANETTA: It's another tough battle. There's no question about it. I think, again, we have to seize what is a historic opportunity here. For the first time in sixty years we have, this President has brought health care reform to the floor of the House and the Senate. We've got a strong bill by Dick Gephardt introduced on the House side. We have a strong bill introduced by George Mitchell on the Senate side. We think we have a very good chance of getting both of these bills passed and into conference. If we can do that, we will produce a strong health reform bill for the American people this year. And so that's the battle. There's no question these are going to be tough votes, but at the same time, I think members have to be able to say to the American people that they didn't walk away from this challenge.

MR. MAC NEIL: What do you --

MR. PANETTA: I think that's what gives us the best hope that we can win.

MR. MAC NEIL: What do you make of Sen. Kerry of Nebraska, who was one of the presidential candidates who first pushed health care reform in '92, saying today he couldn't vote for either Democratic bill?

MR. PANETTA: Well, Bob Kerry's someone who always looks at these things from different angles from time to time, and I respect his views. I think ultimately he'll continue to consider this legislation. He has the opportunity to amend it on the floor of the Senate. He has the opportunity to try to make the changes that he feels are necessary and the members of the Senate will vote on those changes. So I hope that he doesn't walk away from this challenge or that any member of the Congress, Republican or Democrat, walks away from the challenge here. They may criticize different parts of the health reform bill. There are parts of it that I don't like. I'm sure there are parts of it that even the President doesn't like. But the fact is that we now have the best opportunity we've had in 60 years to produce health care reform for this country. We ought not to walk away from that opportunity.

MR. MAC NEIL: Well, Mr. Panetta, thank you very much for joining us.

MR. PANETTA: Thank you, Robin. FOCUS - POLITICAL WRAP

MR. LEHRER: Finally tonight, our regular Friday night analysis from Shields & Gigot, syndicated columnist Mark Shields, Wall Street Journal columnist Paul Gigot. Gentlemen, let's start where Robin ended, with Leon Panetta and work back. And that's health care reform. Can you work out a scenario in the Senate for me, Mark?

MR. SHIELDS: It results in the passage of --

MR. LEHRER: Results in either its passage or its non-passage.

MR. SHIELDS: Yes, I can, Jim. I'm glad you asked. I think that the Mitchell bill which is about as far from what the President introduced at the outset -- the President has endorsed it and embraced it because it's less bureaucratic, as he described it, and has all sorts of other virtues that the President's own legislation --

MR. LEHRER: So he kind of knocked his own.

MR. SHIELDS: Yeah. It was great humility of authorship as far as the President was concerned. I think it's got a shot in the Senate. It's a very, very long road to get to employer even mandates, the kind of strong encouragement that we --

MR. LEHRER: In the year 2000.

MR. SHIELDS: In the year 2000, that's right.

MR. LEHRER: But do you think that will survive, even that small mandate part of that, do you think that can survive and get a majority vote in the Senate?

MR. GIGOT: Well, knowing how strongly that George Mitchell believes in the employer mandate this is probably the minimum that he thought he could get. So if this is what he proposes, it's probably all that he can get, and it's going to be very hard. Now, the people I've talked to say he's about 46, maybe 47 votes right now. He needs 50 with the Vice President, and he doesn't have them. And, of course, Sen. Kerry coming out today against certainly didn't help, so I mean, there's a pattern with these bills, Jim, and that's that, you know, people like the bill until they read it. And then the President's bill first and then last week Mr. Gephardt's bill has really suffered this week, and now we've got a boomlet here for the Mitchell bill. I don't know how long that'll last.

MR. SHIELDS: And don't forget the Dole bill has 40 co-sponsors and hasn't been printed yet.

MR. LEHRER: Hasn't been printed.

MR. GIGOT: I'm telling you it's a virtue in this debate.

MR. LEHRER: I know. But is the mandate thing a symbolic thing, or is that still real, Mark, both in the House and the Senate?

MR. SHIELDS: It's real. It's real, Jim, in this sense, that nobody knows how else they're going to pay for it. And they -- what they have to do is get some sort of a mandate out of the Senate even if it's just the outline, sort of an artist's recreation of a mandate so it can get into conference, so that then when the House --

MR. LEHRER: Is this going to have -- it's going to have a mandate.

MR. SHIELDS: The House bill -- the House bill does have a mandate. The Gephardt bill which, which was a strong piece of legislation and is going to be a tough sell as well, but that does have a mandate. That's 80/20. That's the tradition in the country of employers picking up the cost of insurance. So in order for it to survive to the point where it comes back to both Houses to be voted upon, it has to have going into that conference from the Senate something that at least can pass for a mandate.

MR. LEHRER: Going back to the President's news conference earlier this week and also the advertising campaign that the people who support health care reform have now started and are going to continue it through this time in the House and the Senate. The President's strategy seems to be to say look, I have -- I'm the one who has moved, I have moved from the original Clinton bill, and I've gone and I've listened and I've listened to certain people and I've listened to the moderates and I've listened to the Republicans, and then does there come a time when politically he can say, no further, and I -- this is as far as I'm going to go, and it's Bob Dole and the Republicans and the moderate Democrats who've denied the country health care reform?

MR. GIGOT: Well, I think that position is probably -- that line, if you will, is probably the Mitchell bill, because already what George Mitchell has proposed, you're seeing an awful lot of grousing among the House liberals. They're saying, look, this doesn't do it, this isn't what the President took out that famous pen and said, I'll veto --

MR. LEHRER: This meaning the Mitchell bill?

MR. GIGOT: The Mitchell bill.

MR. LEHRER: Not the Gephardt.

MR. GIGOT: No. They like the Gephardt bill, but they're saying, you know, the Mitchell bill doesn't do it, and if we're going to have to settle for this, is this what we're in this for? So I think the President, you know, it'll be a lot tougher for him to get anything through the House if he goes any further.

MR. LEHRER: But the politics of going to the American people with that and say, okay, we didn't get it, now here's why we didn't get it, I went all the -- I kept walking the extra mile, nobody would walk with me, in the final analysis this thing was killed by the Republicans, can he make that case, and is that good politics?

MR. SHIELDS: He can --

MR. LEHRER: Right before an election.

MR. SHIELDS: He can make that case and it is not good politics. He can make that case, Jim, because I think right now that the Clinton presidency is at the point where it needs success, it needs achievement, it needs a sense of movement, as it needs a sense that it's working communicated to the American electorate on the eve of the elections of 1994. And I think that includes a crime bill, the passage of it, there's a sense of movement there, and as well a health bill. I don't think there's any way that the Democrats can prosper politically in 1994 by a health bill failing in the Congress.

MR. LEHRER: But what if somebody said back to you, to play devil's advocate with you, sir, what if somebody said, hey, wait a minute, Clinton's real problem isn't that, his problem is a perception that he doesn't stand for anything, so maybe he takes a stand, and he gains more by losing than he would if he --

MR. SHIELDS: He gains by losing perhaps. The Democrats don't. His, as one Republican described it to me this week, he sees the elections of 1994 approaching for the Republicans enormity of the Democrats' victory in 1974. He sees Democrats staying home, okay, just as Republicans did in -- if that were to happen, and if the Republicans were to take over control of the Senate and maybe even the House, or at least to be at an operational point of being able to put together a majority in the House, at that point, Bill Clinton has two more years. The lines are drawn. This Republican says to me, the Republicans are ill prepared to deal with him in offering proposals. And at that point, he could look good going into 1996, while the Democrats, his party, looks awful and they're missing.

MR. LEHRER: What do you think of that?

MR. GIGOT: There's a real problem for the Democrats. I would call it Democratic gridlock. You know, we had the thing that we were supposed to have broken in 1992, but the gridlock is on the Democratic side now, and that's the danger they have in not passing anything at all. I mean, the crime bill has been stymied because of Democratic disagreements, campaign finance reform the same way, and the health care bill. You can make the argument that the Republicans blocked it, but when they only have 44 votes in the Senate and 178 votes in the House, it's just really hard to make that case, especially if Democrats are the people who didn't pass it for you. So it's going to -- I agree with Mark's analysis completely -- it's going to be very troublesome for Democrats this autumn if they can't pass a health care bill.

MR. SHIELDS: I accept your agreement up to a point. I don't really think --

MR. LEHRER: You don't think he really --

MR. SHIELDS: The President's consistently getting 85 percent of his own party supporting his programs. I don't think you can call that gridlock.

MR. GIGOT: Well, on some of these key issues coming up.

MR. SHIELDS: But basically on the tax increase last year, on economic package --

MR. GIGOT: Two hundred and eighteen votes.

MR. SHIELDS: Two hundred and eighteen votes, but he got 85 percent of his own party, which is really, you know, that's about as good as most presidents are going to do on tough ones. You're not asking guys to vote for flag resolutions or apple pie and motherhood. These are tough votes they're going to have to defend.

MR. LEHRER: All right. Let's go to the Whitewater thing. First, Paul, what do you make of the decision to replace Robert Fiske as special counsel with Kenneth Starr?

MR. GIGOT: That certainly roils the waters. I mean, Fiske was well on his way, and I think it's very interesting, and if you read the statement that the judges issued, the three-judge panel, what they said was we saw the attorney general's recommendation of Robert Fiske, but we --

MR. LEHRER: To continue -

MR. GIGOT: To continue in the job.

MR. LEHRER: Right.

MR. GIGOT: But we want this independent counsel to be -- to have the appearance of independence.

MR. LEHRER: Absolute independence.

MR. GIGOT: As well as to be actually independent. And so there had been some creeping concern. You saw some criticism at the hearings this week by Republicans that maybe Mr. Fiske wasn't as thorough as he ought to be and in particular that he was objecting to further hearings. They wanted to make sure -- you know, he said, look, you're going to interfere with my investigation. The Republicans said wait a minute, there's a criminal standard that you're investigating, but there's a political standard of accountability here that the Congress can take care of. And that's where they were beginning to object.

MR. LEHRER: Mark.

MR. SHIELDS: The White House must feel tonight like they're snake bit, Jim. You remember that great character in Little Abner, Al Capps' Little Abner, Joe Bafucks, the guy that walked --

MR. LEHRER: Always.

MR. SHIELDS: All right. Just think what happened on Whitewater this week. They went from this being an allegation of presidential misconduct to five -- to five days of hearings, two committees, to basically being an argument about who in the Treasury Department told whom what when about what meeting and was there a memo sent. I mean, there was no question about presidential misconduct. Really, after two committees ventilated this, three investigations --

MR. LEHRER: There was not even an allegation that he was --

MR. SHIELDS: There really wasn't. And so what happens at the end of the week? At the end of the week, having gotten through this, dodged a bullet and all the rest and moving on, they announced that Ken Starr, a respected fellow and a Justice Department official in the Reagan administration --

MR. LEHRER: A frequent guest on this program.

MR. SHIELDS: A frequent guest on this program, solicitor general of the United States, a man who was urged and seriously considered running for the Senate in 1994 in Virginia as a Republican against Ollie North.

MR. LEHRER: Oh, my goodness.

MR. SHIELDS: So, I mean, you know, a fellow whose Republican credentials are obvious but what it opens up is he can go back over all of this stuff again. I mean, instead of having it behind you if you're sitting in the White House tonight, you've got to say, my goodness, it's just beginning all over again.

MR. LEHRER: And does he have to almost do that to prove his, is manhood, end quote?

MR. GIGOT: He can do just about anything he wants, frankly. I mean, he could take what Fiske has already done and accept that, I believe.

MR. LEHRER: Just kind of review it?

MR. GIGOT: Sure, absolutely, and he could sign off. He could keep the people that Fiske has hired, if he wanted to.

MR. LEHRER: Sure.

MR. GIGOT: I mean, he could hire his own staff, but I think given the mandate from the court which said actual independence, he's probably going to want to put his own stamp on it.

MR. LEHRER: You heard what Mark said about the hearings. What did you think about the hearings now that they're over, at least this first phase?

MR. GIGOT: Well, I thought the Senate hearings were terrific. I mean, the House hearings were, I thought, awful and partisan, but they made, you know, did the impossible and made the Senate Banking Committee look like statesmen. I mean, I think Donald Riegle, who had been under a cloud because of the Keating 5 and is retiring this autumn, did a terrific job of really trying to coax out information and holding people to the fire, and I thought we learned something. We learned a lot about the mind set of this administration. We learned a lot of information about how they reacted when Whitewater broke. And I thought there was a strong degree of political accountability here, and it was very useful to see.

MR. SHIELDS: I thought the -- the Senate proved that Senators work more than three hours a day. They went till 2:30 in the morning, and they really did. They worked long, long days. I thought there was -- posturing was not limited to the House by any means. I mean, when I heard some Republicans talking about the lack of candor on the part of Mr. Altman, having just come from a fund raiser for the same Oliver North, as far as being candid with testifying before Congress, I find a little bit disingenuous, but, no, I think the administration looked bad.

MR. LEHRER: John Kerry.

MR. SHIELDS: John Kerry of Massachusetts pointed out to Sen. Phil Gramm, the chairman of the Republican Senate Campaign Committee, that his, his sensibilities about people not being absolutely candid in dealing with the Congress did not extend --

MR. GIGOT: You know, if Oliver North wins, they're going to run against him for 20 years on that point.

MR. SHIELDS: That could very well be. But I do think they looked bad. I mean --

MR. LEHRER: Who looked bad? The administration looked bad.

MR. SHIELDS: The administration looked bad, especially the Treasury Department. I mean, you've got the chief of staff denying that what he wrote in his diary was true. You've got the secretary of the treasury, an enormously respected man, saying he didn't know what was going on in his own department basically, Lloyd Bentsen. You've got the general counsel saying that what she told the deputy secretary and the deputy secretary saying she didn't tell him that, so I mean, you know, really it did not look good. It did not look good.

MR. LEHRER: Serious harm?

MR. GIGOT: I think -- I think quite damaging. It gets right at that issue that is so troubling for this President, which is can you believe what he tells you, and this was -- sort of broadened the issue to say can you believe what others in his administration tell you. I think it's quite damaging.

MR. LEHRER: We have to go. Thank you all very much. RECAP

MR. MAC NEIL: Again, the major stories of this Friday, NATO warplanes struck a Serb position in Bosnia after the Serbs seized heavy weapons under U.N. control. Sixteen U.S., French, British, and Dutch jets took part in the search and destroy mission. After the raid, a U.N. spokesman said the Serbs agreed to return the stolen weapons. And in Washington, a federal appeals court appointed former solicitor general Kenneth Starr as the new Whitewater independent counsel. He will replace Robert Fiske. Both men are Republicans. Good night, Jim.

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