The MacNeil/Lehrer NewsHour

INTRO

ROBERT MacNEIL: Good evening. Here are today's main news stories. Moscow sounded negative about President Reagan's call for better relations. Walter Mondale accused the President of changing many policies just to woo voters. A group of prominent economists said today that economic growth alone cannot wipe out the deficit. President Reagan was more optimistic. Israel's government sounded hopeful about a plan to pull its troops out of Lebanon. Jim Lehrer is off this week, and Judy Woodruff's in Washington. Judy?

JUDY WOODRUFF: The stories we look at on the NewsHour tonight begin with Walter Mondale's tough anti-Reagan speech. Two political analysts join us to assess the impact it'll have, if any, on the Mondale campaign. We look at the question of whether the Federal Trade Commissioner Michael Perschuk sparks our debate. We follow that with a report on one state's tough new law to protect people who buy used cars. And we end with an explanation of the landmark Agent Orange legal settlement, and what it'll mean for thousands of Vietnam veterans and their families.

MacNEIL: Moscow today poured cold water on President Reagan's new approach to U.S. Soviet relations, but the President refused to see it as a rejection. First the Soviet news agency Tass, then President Konstantin Chernenko appeared to dismiss Mr. Reagan's United Nations appeal for constructive negotiations. Tass said Mr. Reagan's assurances that he wanted arms reduction were absolutely groundless. Chernenko made his comment when he appeared in the Kremlin to speak to a meeting of the Soviet Writers' Union. It was his first public appearance before a large gathering since last June, and when Chernenko walked into the hall he was greeted with a long and vigorous round of applause. Referring to Reagan's speech, Chernenko said the U.S. government does not understand: there is no sensible alternaytive to the normalization of Soviet-American relations.

Commenting to reports, President Reagan said Chernenko's speech was not necessarily a rejection of his appeal yesterday for better understanding. Mr. Reagan said, "I'm just going to wait for my meeting with Mr. Gromyko." The President has a date with Soviet foreign minister Andrei Gromyko on Friday. White House spokesman Larry Speakes said, "We believe that the substantive Soviet response to the President's speech and policy objectives will come in a discourse over days, weeks and months." President Reagan confirmed today that he had consulted former president Richard Nixon for advice in advance of the Gromyko meeting. He also sought advice today from former secretary of state Henry Kissinger, who had this to say about President Reagan's latest approach to the Soviets.

HENRY KISSINGER, former secretary of state: I think he is moving towards a negotiated coexistence with the Soviet Union.

REPORTER: Is that detente -- easing of tensions?

Mr. KISSINGER: I used to call it detente, but I don't want to --

REPORTER: Why do you think he has changed his tone so drastically?

Mr. KISSINGER: Because I don't think you can be President without wanting to contribute to moving the world towards a more peaceful condition. I'm convinced that the President will continue the course on which he is after the election, because after all, after the election he's running for history and not for any other office.

MacNEIL: For students of Soviet internal policy, the main content of Chernenko's speech today sounded like a throwback to the days of Stalin. Chernenko said that Soviet writers and artists must focus on positive Communist heroes and gear their works to explaining and supporting policies of the Kremlin. Indicating that no criticism of the Soviet system would be tolerated. Chernenko said the best definition of what he meant was the phrase "Soviet realism." That was the term under Stalin for a cultural policy which viewed the arts as little more than an extension of Party propaganda. Judy? Mondale Speech: Will It Matter?

WOODRUFF: Former vice president Walter Mondale today used some of the toughest language of the campaign so far in criticizing the President and his speech on U.S.-Soviet relations. Speaking before a group of students at George Washington University here in the nation's capital, the Democratic challengers contrasted with he called the "old Reagan" with the "new Reagan" who wants to be conciliatory towards the Russians, and asked which one would shape American policy in a second term. Mr. Mondale then widened his criticism to include the administration's record of dealing with poor people, of racking up high deficits, of handling the environment and other issues. It was a broad-sided attack and a defense of his own candidacy that set out the themes of the campaign that Mondale's aides say he will pursue between now and election day. Here is an extended excerpt.

Vice Pres. WALTER MONDALE, Democratic presidential candidate: Yesterday Mr. Reagan addressed the General Assembly of the United Nations in New York on the subject of foreign policy; and how we all welcome those new soothing words! Gone is the talk of nuclear warning shots, gone is the talk about winning nuclear war, gone is the evil empire. After four years of sounding like Ronald Reagan, yesterday morning he tried to sound like Walter Mondale. The new Reagan talks about peace in Central America; the old Reagan started the illegal war in Nicaragua and undermined the chances for negotiations for peace in that region. The new Reagan now talks about the Camp David process; the old Reagan torpedoed it with the Reagan Plan. The new Reagan worries about arms sales abroad; but the old Reagan sold almost anything to anyone, anywhere on earth. The new Reagan now warns about nuclear proliferation; but the old Reagan said it was none of our business, and opened the sluice gates of materials to make bombs. The new Reagan now proposes regular consultations with the Soviets; the old Reagan is the first President since Herbert Hoover not to meet with his Soviet counterpart.

Nineteen months ago, I announced my candidacy for President. Six weeks from today, you will make your decision about where you want this country to go. I come to you as today an underdog, there is no question about that. And when you're an underdog, boy, do you get a lot of advice. I have been told to attack Mr. Reagan personally: and my answer is no. I'm not in this race to tear down anyone, I entered it to fight for our future. I have been advised to ignore the issues, to choose slogans over substance; and my answer is no. I believe there's a big distance between Pennsylvania Avenue and Madison Avenue, and there ought to be a big difference between a campaign for president of the United States and a pep rally. I have been counseled to cut loose from my history, to desert the forgotten Americans I've fought for all my life; and my answer is no. I would rather lose a race about decency than to win one about self-interest. I would rather fight for the heart and soul of America than to fight for the bonuses of the Fortune 500.

For a generation, my opponent has fought all Democrats. He campaigned for Richard Nixon in 1960, he fought Kennedy on arms control, he fought Johnson on civil rights, and he fought Humphrey on Medicare. But now, six weeks before the election, he sprinkles his speeches with Roosevelt quotes, gives a medal to Humphrey, invokes Truman's name in Missouri, Kennedy's in Connecticut, asks Democrats to become Republicans as if it didn't matter. We know the difference. But of course it matters a great deal. Take a second look at the Republican home you're being sold, and the platform it's built on, before you buy it. Do you really want to join a part that intends to put government between you and most private choices of your life? Do you really want women to be paid less than men for the same work? Do you really want politicians to write the prayers for your children? Do you really want us to get deeper into the war in Central America? Do you really believe there are winners in a nuclear war?

Now, some people have declared -- by the way, you passed the test -- some people have declared this election over. They have announced a Republican landslide. They are telling you your vote won't count and your voice does not matter. This crowd -- I believe it does, yes, I do, yes, I do, -- this crowd doesn't want you to think about the stakes in this contest. They want to trivialize it, and that is arrogant. We are in an American presidental election; this is the season for both principle and passion. This election is not about jelly beans and pen pals; this election is about toxic dumps that are poisoning our children. This election is not about country music and birthday cakes; it's about old people who can't pay for medicine. This election is not about the Olympic torch; it's about the civil rights laws that opened athletics to women and minorities and permitted us to win the Olympics. This election is not about sending a teacher into space; it's about improving education and learning and science and training here on Earth. This election is not about the size of my opponent's crowd; it's about the size of the deficits. This election is not about Republicans sending hecklers to my rallies; it is about Jerry Falwell picking justices for the Supreme Court.

These Republicans, they say they are for family values; but families that are worth the word don't disown their weaker children. What would we think of parents who taught their kids to think only of themselves and not their brothers and sisters? What would we say of parents who lived high and saddled their kids with debts? We're talking about what kind of people we are, we're talking about our values, we're talking about what we believe in -- and this is more important to you than anyone, because we're talking about the kind of America in which you will live for all year lives. I won't permit this crowd to steal the future from our children. I won't let them put ice on our soul without a fight. They may ask for our vote, but I'll be damned if they'll steal our conscience.

WOODRUFF: Because the Mondale speech was one of his bluntest yet, with his aides describing it as an important address, laying out the basis for his campaign, we have invited two political analysts to help us assess it, and the bearing it has on Mr. Mondale's chances. They are Democrat Greg Schneiders, formerly a top advisor to Senator John Glenn, now a private consultant; and Republican Douglas Bailey of the consulting firm of Bailey, Deardourff and Associates, which advises Republican candidates, including former president Gerald Ford.

First of all, gentleman, was this a new Fritz Mondale, or are we just hearing a well-crafted speech?

DOUGLAS L. BAILEY: It certainly was a well-crafted speech; probably rhetorically, that's the best Fritz Mondale I may -- I think I've ever heard. The speech was very good. It certainly is part, however, of an effort by the campaign -- or at least that I sense -- sort of groping to find some message that will sell. Whether this message will sell or not, I have some serious doubts about. I would think he would be overjoyed, by the way, that at least on this network he has gotten away from having to live with the 45-second clip and has gotten a little more message. And I frankly would hope all the networks would give both candidates more than 45 seconds. But I believe he's got -- he's still got a problem; he hasn't yet passed, in my judgment, now, the Labor Day test that the public puts through -- puts all presidental candidates through, particularly the challengers. Is he honest enough for the job? Obviously he's passed that. Is he strong enough, is he competent enough? I'm not quite sure, and in most voters' minds, I think the question is not about Ronald Reagan -- They know him -- the question is about Walter Mondale, they don't know him.

WOODRUFF: The leadership question.

Mr. BAILEY: The leadership question. I'm not sure he's passed that, and I don't know that he can do it by concentrating in such a strong and fairly strident way on attacking the President.

WOODRUFF: Greg Schneiders, do you think he passes that test with this speech?

GREG SCHNEIDERS: Well, I don't think any one speech makes a candidate, particularly a challenger, pass those basic tests that Doug is talking about. This struck me as being more the old Fritz Mondale in the best sense of the word, than any new Fritz Mondale. He was talking about values that have characterized his career throughout his public life, and I think that's good. He's talked about those values throughout the campaign: he may have been doing it more effectively, more articulately, today. And frankly, I like the Fritz Mondale with the coat on and the tie pulled up and speaking a little more quietly to people in their living rooms, rather than seeming to --

WOODRUFF: The sleeves rolled up that we have seen.

Mr. SCHNEIDERS: Yeah, the fightin' Fritz, yelling at the huge outdoor rally, I think, frankly, is not an effective way to communicate with people who are seeing him in those 45-second bites on the evening news.

WOODRUFF: Do you think this kind of tack helps him, that he's coming on so strong against the President? It was a very negative speech.

Mr. SCHNEIDERS: He's anywhere from 15 to 30 points behind the President by all polls, he's probably behind the President in all 50 states at this point. I think that he has no choice but to run a very tough campaign; not, as he said, a personal attack on the President, but pointing out all the differences that they have on the issues in the toughest language possible, because he doesn't have much time, he's got to make it clear what this race is about.

Mr. BAILEY: I think he has -- the Vice President has a doubly difficult job. He has to educate, and this speech, frankly, is an attempt to educate the public away from the view they have about Ronald Reagan, and he's doing without in a sense giving the devil his due. Most people in this country, certainly most of those who are persuadable one way or another in this race, happen to like President Reagan, they think he's a good guy.

WOODRUFF: Even the people who disagree.

Mr. BAILEY: Even the people who disagree with him on many of the policies that Mr. Mondale was talking about -- they like the President, think he's a nice man, think that he's a stable man, think that he's a strong man and passes the leadership test. And Mr. Mondale has the problem of either changing people's mind about that, or admitting that that's true.And, frankly, I know a lot of people who think he would get further if he would simply admit that the President is a nice man, because he obviously is a nice man.

WOODRUFF: Well, do you think -- I mean, he said in the speech, "I've been advised to attack the President personally," and he says he's not doing it. He was pretty tough, he talked about poisioning our children and he talked about opening the sluice gates for everybody to use the bomb. How personal should he get?

Mr. SCHNEIDERS: I was glad to see the scorned advisor back in the presidential campaign. He's the fellow who's always there giving terrible advice to candidates that they then reject out of hand. As I said before, I think to some people he needs to be tough, and I'd agree with Doug, he's running against a popular incumbent at a time of peace and at least the perception of prosperity, a conservative tide running in the country, and I think all of the negative things that are said about Mondale to expalin this huge gap are overstated. I'm not sure than any Democrat would be having a much easier time under these circumstances against this President, and that job is an overwhelming one for him. I think he's doing the right things, whether or not they will be enough to close that gap remains to be seen. It's very tough.

Mr. BAILEY: My impression is that the attack is a little strong. It comes too strong; to a people who like the President, the attack is too strong. The other thing that seemed to me really intriguing, this may be the start of a totally new campaign. I don't find in the entire speech, certainly in the segment that was shown, any reference whatsoever to the tax plan, which was the centerpiece of the campaign. and suddenly it's not there any more, which may mean that he's running away from it. I'll tell you this; I haven't found a single Democratic candidate running for anything, other than Mr. Mondale and Ms. Ferraro, who support the Mondale tax plan -- everybody else is running away from it, maybe he's running away from it now, too. That will be a problem for him, if he tries to do that.

WOODRUFF: So you're saying there's some inconsistency in that approach.

Mr. BAILEY: A lot, a lot, and that reflects back again on competence and readiness for the job.

WOODRUFF: Greg Schneiders, you as an advisor to John Glenn ran against Walter Mondale or some time earlier this year and last year. What advice would you give him at this point? I mean what does he have to do?

Mr. SCHNEIDERS: I think he really has to in one sense play for the break. I think he has to hit the President, and I think that has to be hard -- not personal but tough -- on all of his vulnerabilities, and he does have them, on the war and peace issue, polls show that, on the environment, on women, on blacks, on social programs and so on. The President has vulnerabilities that I think has and should continue to point out.

WOODRUFF: But that's what he's been saying, but he doesn't seem to be getting through.

Mr. SCHNEIDERS: It's what he's been saying. Well, that's why I say play for break, because whether it be in the debates -- and that's where it's most likely to happen -- or in some error on the part of the President, Mondale really has to wait for the opportunity to surge, and that is not going -- he can't make that happen entirely on his own, coming from the position that he's in. I think that's going to come if the President makes a misstep, or in the debates should perform poorly and Mondale were able to win in those debates, then he has opportunity, building on what he's been doing up to now really capitalize on those vulnerabilities.

WOODRUFF: Doug Bailey, how likely do you think it is that that'll happen?

Mr. BAILEY: Not very, although I think it would be a serious mistake for the President or his campaign people to underestimate Mr. Mondale in the debates. That is the Mondale opportunity; he's really been a very good debater, not of course that the President hasn't been a superb debater, but I think it would be a very serious mistake to underestimate him in the debates.

WOODRUFF: Thank you, Doug Bailey, Greg Schneiders, for joining us.Robin?

MacNEIL: After being stalled for months, a defense spending bill looks like emerging from Congress, lower than President Reagan wanted and putting a big question mark over the future of the MX missile. After secret round-the-clock bargaining, conferees from the House and Senate Armed Service committees hammered out a compromise. The new authorization bill will call for overall defense spending of $297 billion in 1985, but that will be lowered by another $4 billion by another bill yet to come. President Reagan originally asked for $313 billion, but gradually backed off. The biggest White House concession was on MX; any further production of the missile is barred unless it passes special go-ahead votes in each chamber of Congress next spring.

President Reagan talked defense and peace today when he saw the new Canadian prime minister Brian Mulroney at the White House. Afterwards both men spoke to reporters.

Pres. REAGAN: The Prime Minister and I exchanged views on a broad range of global issues, reviewed our common search to advance our aganda for peace, particularly the search for real and equitable reductions in the levels of nuclear arms. I told him that in our efforts to build a lasting structure of peace and security, we shall continue to value the experience, the counsel and the participation of our Canadian allies.

BRIAN MULRONEY, Canadian prime minister: Yesterday in the United Nations you reached out to the Soviet Union with a message of peace, and you invited the leaders of the world to join in what we can accomplish together. We commend you, Mr. President, for this appeal, and for your leadership in this vital area. For our part, we intend to continue to seek opportunities for constructive dialogue with the Soviet Union and with Eastern European countries. We will continue to contribute, as we have in the past, ideas which may help yield results in our common search for peace and security.

MacNEIL: Turning to the Middle East today, the death toll in last week's terrorist bombing of the new American Embassy in Beirut rose to 14, when another Lebanese employee of the embassy died of his wounds. An American official told the Associated Press that the car bomb contained more than 3,000 pounds of explosives, making it larger than the bomb that destroyed the original embassy building, killing 63 people. Last night the State Department sent out a warning to all Middle East diplomatic posts after new threats of terrorist attacks. At the same time, the administration asked Congress for $372 million in emergency funds to construct more secure embassies in high-threat areas.

Meanwhile, assistant secretary of state Richard Murphy continued his mission to explore new possibilities for removing Israeli troops from southern Lebanon. Yesterday he was in Syria, today in Israel and on to Egypt. The Labor Party newspaper Davar today quote prime minister Shimon Peres as saying his government is likely to ask Parliament within a few weeks to adopt a plan for withdrawing troops from Lebanon. Judy?

WOODRUFF: Ahead on the NewsHour we look at the question of whether the Federal Trade Commission is doing its job protecting consumers. Former FTC commissioner Michael Pertschuk begins our debate. We follow that with a report on one state's tough new law to protect people who buy used cars. And we end with an explanation of the landmark Agent Orange legal settlement, and what it'll mean for thousands of Vietnam veterans and their families.

[Video postcard -- Dallas, Texas]

WOODRUFF: Two conflicting economists views were offered today. A group of economists headed by Wall Street guru Henry Kaufman of Salomon Brothers said the U.S. economy will not improve enough to wipe out the federal deficit. Kaufman, Felix Rohatyn, head of the New York City's Municipal Assistance Corportion, and Congressional Budget Office chief Ralph Penner told a Congressional committee it was unlikely the U.S. economy would grow out of its red ink problems without raising taxes. President Reagan viewed the U.S. economic situation more optimistically. He told the International Monetary Fund improvements in the U.S. economy will benefit other nations.

Pres. REAGAN: We are heartened that the strength of the U.S. economy is helping lead the world from recession toward a new period of lasting economic expansion, with lower rates of inflation in many countries. And we're convinced we can continue to offer this leadership in the future. This broadening economic growth has had a significant impact on stimulating world trade. We sometimes hear complaints about U.S. interest rates, particularly by debtor nations which are legitimately concerned about the additional debt service costs that they must bear. But not enough mention is made of trade, and the far greater benefits developing countries receive from renewed economic growth and open market policies of the the United States.

WOODRUFF: Mr. Reagan told the IMF that U.S. interest rates, which increase the payments owed by borrowing nations, would fall. Robin? Who's Protecting the Consumer?

MacNEIL: We have a different kind of economic story for our next segment.You don't normally expect a member of the family to kick up a row in public on a big family anniversery, but that's what's happening over at the Federal Trade Commission. Tomorrow is the 70th anniversary of the founding of the FTC to protect consumers against fraud in business. Today the termofone commissioner, Michael Pertshuk - I'm sorry, next month - expires, and he's using the anniversary to raise hell. This afternon Pertschuk made a speech to the National Press Club, blasting the Commission's record under the Reagan administration. Yesterday in a letter to Congress, the current head of the FTC, James Miller, called Pertschuk "a chronic complainer" and a "saboteur." Tonight, to explore this government family quarrel further we have Mr. Pertschuk and Christopher DeMuth, until recently a Reagan appointee in the Office of Management and Budget, now general manager of a private consulting firm in Washington.

Mr. Pertschuk, starting with you, in general terms what is your complaint about the way the FTC's conducted its business in the Reagan years?

MICHAEL PERTSCHUK: Well, let me make it very general. The Federal Trade Commission is the nation's cop on the consumer law enforcement beat, and this administration, it's as if we had a new mayor take over a town and fire the police force and hire a group of economists. And when the burgular alarm sounded, instead of going out and arresting the burglar, the economists sat around and debated whether the government should interfere with the burglary. There is this belief that anything that happens out there in the marketplace is essentially good, and that government is the only evil we have to worry about. And that includes enforcing the law against such basic consumer abuses as deceptive practices and defective products.

MacNEIL: Now, how have consumers suffered, in your view, because of this different approach? Give us a couple of examples.

Mr. PERTSCHUK: Well, the Commission has had occasion to investigate several product hazards. There have been complaints that the various products were defective, and indeed that they created a hazard. Instead of going through a routine investigation and going after the company's records to find out how many complaints there were and how significant the hazard was, the Commission staff under the new administration have said, "Wait a minute, It isn't necessarily our job to intervene in the marketplace here. Perhaps the threat of lawsuits if people are injured or hurt from these products will get the companies to cure the matter themselves." There's this belief that instead of going ahead and enforcing the law and tough investigations, we've just got to sit back and wait. And of course what that means is, we wait until people get hurt before we really move.

MacNEIL: Mr. DeMuth, is that how you see the approach and philosphy of the FTC under Reagan?

CHRISTOPHER DEMUTH: No, I think that Mike has it wrong on almost every important particular, Robin. He's right on one thing, and that is that there has been a very dramatic change in the approach that the Commission was taking. When Mike was chairman in the late 1960's, the commission spend millions, tens of millions of dollars -- and in my view, squandered them -- investigating cases where there was no plausible case of collusion or problems in mergers. Virtually all of the merger actions that were commenced by the Commision when Mike was chairman were dropped. In fact, only one of 18 survived review by the Commission's career judges, commission review or the federal courts. In the consumer protection area, the Commission pursued a wide variety of what I believe were marignal cases that were not closely related to the interests of consumers, and were motivated primarily by interest in just bashing businesses that seemed to create problems with advertising that the Commission didn't like. The Commission ordered Kroger to cease saying that it had the lowest prices in town because the Commission, even though it agreed that Kroger had the lowest prices in town, didn't like the statistics that it used. So effective competitive advertising was snuffed out. By 1980 the Commission was in deep trouble in Congress; both houses of Congress, both Democratic at that time, passed bills to tie the Commission in knots -- they even let the Commission close down for several days by cutting off their appropriations. The new Commission, I believe, has been inspired by the economic learning of the past decade on subjects of mergers and consumer protection, and the result has been a much more discriminate approach. There have been many cases against mergers, there have been many very effective cases against misrepresentation.

MacNEIL: Let's go back and get Mr. Pertschuk's reaction to what you've just said, the charges, really, against his administration.

Mr. PERTSCHUK: One thing the FTC economists today are very good at is manipulating numbers. I'm proud of the record that I had when I was chairman. Most of the cases they have cited as being overturned were brought before I ever got to the Commission. But the real issue is, what is this Commission doing, and it isn't doing very much. The fact of the matter is that this Commission has stopped almost no mergers, and we've had, and indeed invited some of the largest mergers in history.

MacNEIL: Can I interrupt for a moment? Let's make clear that you are complaining about two different actions or failures to act in the administration. One is in the area of consumer protection and investigating complaints about certain products --

Mr. PERTSCHUK: Well, it's basically the enforcement of the antitrust laws. One area which has really cost consumers a great deal of money and in which we have a serious difference of opinion as to what the law should be, is the Commission's role in making certain that manufacturers don't force retailers to bring their prices up -- the so-called law against resale price maintenance or resale price fixing. Now, we have the complaints from the manufacturers, including for example the president of K-Mart, who said that if the Commission is not enforcing the law which frees discounters to charge low discount prices, American consumers are going to pay $23 billion more in losing the benefit of discounts.

MacNEIL: What's your answer to that, Mr. DeMuth?

Mr. DEMUTH: Let me respond both on the merger side and on the consumer protection side, if I may. We take a very different attitude in the current FTC towards mergers. We don't believe that if a firm is simply big in absolute size, that is what should determine the outcome. What matters is whether the result of the merger is a firm with a very large share of the market. There are many kinds of businesses -- petroleum firms, automobile manufacturing firms -- which have to be large due to complexity of what they engage in. And I think a good example of the difference between the current commission and the previous one, is the G.M.-Toyota joint venture, which with some conditions, and over Mike's objections, the FTC let go ahead.The reason to let them go ahead was that a staff economic study showed that it was going to permit G.M. to produce more smaller cars at lower cost, it was going to save 12,000 jobs in the United States, and those were sound economic reasons for going ahead.

The reason to let them go ahead was that a staff economic study showed that it was going to permit G.M. to produce more smaller cars at lower cost, it was going to save 12,000 in jobs in the United States, and those were sound economic reasons for going ahead.

MacNEIL: Let me stop you there and get Mr. Pertschuk's answer on that, and then we'll come back on the K-Mart example in a minute. On the merger, on the G.M.-Toyota merger --

Mr. PERTSCHUK: Yes. I'd be glad to answer that. G.M. could have achieved all of those efficiencies and built those cars by teaming up with a smaller Japanese company, Isuzu. By teaming up with Toyota, which was its most aggressive competitor, G.M., which has 49% of the market for small cars, and Toyota, which was the largest importer, are able to towork together to keep those prices up. And the fact of the matter is, that the prices for cars, because of the import restrictions on the Japanese cars, which make this a rather tight oligopoly, the prices on used cars have gone up 40% since 1981, twice the average rate.

MacNEIL: So you say that, in terms of consumer interests, that was a bad decision, you said, to permit that?

Mr. PERTSCHUK: It was a bad decision. You could have achieved those efficiencies, you could open that plant with a smaller Japanese company, you didn't have to let Toyota and G.M. marry each other.

MacNEIL: Mr. DeMuth?

Mr. DEMUTH: But before moving on to resale price maintenance. I must insist that the staff economic study of the results of the merger came to precisely the opposite conclusion.

Mr. PERTSCHUK: Chris, that's wrong.

Mr. DEMUTH: That it was going to result in more smaller cars and lower costs and lower prices, and more competition in the American market.

MacNEIL: Do you agree with Mr. Pertschuk on what the result has been in the marketplace?

Mr. DEMUTH: We have a plant that is being constructed in California that's going to have 3,000 jobs that would not have been there otherwise.

MacNEIL: Now, what's your answer to Mr. Pertschuk's point that the head of K-Mart says it's going to cost consumers -- $23 billion, did you say?

Mr. PERTSCHUK: That's what he said to Congress.

Mr. DEMUTH: Well, here we have a case where Mr. Pertschuk is willing to give a lot of deference to one competitor in the marketplace that wants the government to come in and say what pricing policies ought to be as between competitors. The fact is that where it comes to a manufacturer setting the price at which goods are going to be sold at retail, there are cases where that is anticompetitive and ought to be attacked; there are cases where it is procompetitive, where it gives retailers an incentive to invest in services at the final stage of retailing that they would not have otherwise.

MacNEIL: You don't agree with that, Mr. Pertschuk?

Mr. DEMUTH: It's a very close case whether it should be permitted or should not, and one has to look at it on a case-by-case basis.

MacNEIL: You don't agree with that, Mr. Pertschuk?

Mr. PERTSCHUK: Let me make two points. First of all, whether it's good economics or bad, it's against the law, and the Commission won't enforce it. But it's bad. The fact is that the freedom of retailers to sell at a discount has really provided real benefits. We sued Levi-Strauss because they fixed the prices for retailer -- for jeans, and now you can buy Levis at a discount all over this country.

Mr. DEMUTH: I must insist on this point of whether it is lawful or not. In a celebrated case recently, the Russell Stover case, where Commissioner Pertschuk insisted on pursuing this kind of a case, he lost in court.

Mr. PERTSCHUK: Not because of the [crosstalk]

Mr. DEMUTH: On the subject of what is called the Colgate doctrine among lawyers, whether a manufacturer can say that he will only deal with people that sell at a certain price, that doctrine which was the reason that Mr. Pertschuk's view is not upheld in court in the Russell Stover case, was explicitly affirmed once again -- it's been around for decades -- by the Supreme Court just this last term. [crosstalk]

Mr. PERTSCHUK: The Commission wouldn't let it go to the Supreme Court. It went to the Court of Appeals in the Russell Stover -- [crosstalk]

Mr. DEMUTH: No, no, in a related case, Mike, as you know very well, in the Monsanto case, they explicitly affirmed the Colgate doctrine that you were challenging in the Russell Stover case and lost.

Mr. PERTSCHUK: Yes, yes, but they did not overturn the per se rule, which says that retail price maintenance is per se illegal.

Mr. DEMUTH: But it was the Colgate doctrine that was at issue in Russell Stover, you know that [crosstalk]

MacNEIL: Gentlemen, gentlemen, please. It's getting a little difficult to follow, and also we have just a couple of minutes left. And I'd like to come back to where you started today, Mr. Pertschuk. Chairman Miller said that what you were doing was really engaging in an election polemic.Are you trying to get this into the political arena in this campaign, and say if you reelect Mr. Reagan, you're going to have an FTC with this philosophy which you complain of, if you elect Mr. Mondale, you'll have an FTC with your kind of philosophy. Is that the point?

Mr. PERTSCHUK: Robin, it is political, but it is by no means partisan politics. I'm defending the Commission, not of the late '70s, but the Commission of Caspar Weinberger and Elizabeth Hanford Dole. Those were the commissioners in the '70s when Nixon and Ford was President that developed the very kinds of programs, on advertising substantiation and defect recall, that this Commission is now dismantling. It's political, all right, but it isn't Democratic-Republican political.

MacNEIL: What is your view of that, Mr. DeMuth?

Mr. DEMUTH: Let me make two points. First, I have been in the administration and worked with both Secretary Dole and Secretary Weinberger, and I can say without any qualification that they would disassociate themselves entirely with the attack that Mr. Pertschuk has just made. But I do not disagree with his making a political issue out of this. He says that there have been a lot of anticompetitive mergers approved; if that is the case, one would have expected a lot of price increases in the economy. That's a testable proposition. In fact, inflation has come virtually to a halt compared to the years when Mr. Pertschuk was head of the Commission.

MacNEIL: Okay, gentlemen, thank you both very much for coming this evening and airing two very different points of view. Judy? Seller Beware

WOODRUFF: One of the most heated debates over consumer rights focuses on the purchase of a used car. Last July the FTC voted down a resulation which would have required used car dealers to put a sticker on their cars informing buyers of any known defects. The decision angered consumer groups. The FTC decision on the federal level hasn't prevented some states from passing their own legislation to protect local car buyers. One of the states with this type of used car law is Wisconsin. Steven Jandacek of public station WHA in Madison, Wisconsin, reports.

CAR SALESMEN: Are you looking for a car in that price range? $2,000-3,000? Automatic or manual, does it make any difference?

What can I say? You know, we feel we have the car priced right at $2995. You said you wanted to make me an offer. Make it.

AM-FM stereo with a cassette player.

I know it's a good strong car. I know it'll serve your purposes. You like it, why not just pay the 20; $2750? Please? Please, just help me that much.

STEVEN JANDACEK [voice-over]: Settling on a price is only the first headache when buying a used car. What you really have to worry about is the headache you inherit. Who owned this car first? How well was it maintained? And what secret problems are lurking under the hood?

WOMAN: Thank you very much.

SALESMAN: You like it?

WOMAN: Yes.

JANDACEK [voice-over]: In Wisconsin, used car buyers have an ally: a state law passed 10 years ago and considered the toughest in the nation. The law requires used car dealers to inspect each car, fix any safety problems and post for the prospective buyer a lengthy checklist which indicates the car's overall mechanical condition.

GARY WILLIAMS, president, Wisconsin Automobile & Truck Dealers' Assoc: The Wisconsin concept is one simply the dealer saying, "This is what I think I know about the car, the truck, and I'm simply going to tell you what I think I know."

JANDACEK [voice-over]: Gary Williams is president of the Wisconsin Automobile and Truck Dealers' Association. Like most car dealers, he supports the law and believes it works because of tough enforcement provisions.

Mr. WILLIAMS: There are the people assigned in the state to do the educating, do the mediating, do the enforcing.

EMPLOYEE: Okay, I'm going to send you a complaint form. I'd like you to fill it out, send it back to us. The dealer should not have sold it to you with a faulty exhaust system.

JANDACEK [voice-over]: When used car transactions seem to violate the Wisconsin law, the state's Division of Motor Vehicles becomes the enforcement arm. Chuck Supple is a consumer specialist with the dealer inspection unit.

CHUCK SUPPLE, Wisconsin Division of Motor Vehicles: Dealers don't like to have complaints, and most of them are willing to work to resolve them. But I think overall once we get involved, dealers are willing to take care of the customer right away.

JANDACEK [voice-over]: Last year the Wisconsin Division of Motor Vehicles processed about 1,500 used car complaints, many of which turned out to not be actual violations of the Wisconsin law. But if violations are uncovered, state penalties range from warning letters to fines to dealer license revocation.

JUDY LAUFENBERG, consumer: When I had talked to the dealer, he agreed to fix the car up and fix what was wrong with it.

JANDACEK [voice-over]: Judy Laufenberg has become well versed in used car problems and state enforcement procedures. Last year she bought a 1982 Oldsmobile Delta 88 from this dealer outside Dodgeville, Wisconsin. She paid $7,500 for the car, but neglected to get a purchase contract or a vehicle disclosure statement.

Ms. LAUFENBERG: There was a big electrical problem with the car -- like the heater, the air conditioning, the windshield wipers.The lights worked. But he didn't -- he took it back a couple times but never fixed it. And then he asked me to take it into another dealer that does work on Oldsmobiles, and he would take care of it for me. In the meantime I had to rent a car.

JANDACEK [voice-over]: The dealer finally paid for the repairs. Five months and $800 in repairs later, Laufenberg got the car again.

Ms. LAUFENBERG: I went up to pick up the car and as I was driving it back across the Beltline, it wouldn't go over 20 miles an hour. Nothing worked on it. That's when I got in touch with the Motor Vehicle department.

JANDACEK [voice-over]: After Laufenberg filed her complaint, the Motor Vehicles department discovered that the car was once leased to a toxic waste disposal firm, Waste Management Inc., of Chicago. The car had been stolen, stripped and left sitting in a canal. The previous damage was never disclosed by the dealer.

Ms. LAUFENBERG: I felt I was stuck with something, and I had put out a lot of money for it, I had no use of it, and I couldn't get rid of it. Nobody wanted it.And I felt I was stuck, I had been taken.

JANDACEK [voice-over]: Eventually a state inspector helped convince the dealer to buy the car back.

Ms. LAUFENBERG: If it hadn't have been for that, I don't know, I'd probably still have the car.

JANDACEK [voice-over]: The Oldsmobile Delta 88 may no longer belong to Judy Laufenberg, but it may not have left the state, either. Once the dealer repurchased the car, he took it here, to a used car auction house in Milwaukee. Once a week as many as 350 cars are auctioned off here in an assembly-line type process that makes it easier for defective cars to find new homes. Wisconsin title registration records showed the Delta 88 was auctioned off here twice more, once to a Milwaukee used car dealer where it was later purchased for $7,200, again with no disclosure of flood damage. Again, the dealer eventually repurchased the automobile. Who the next lucky owner will be remains unknown.

Clearly, Wisconsin's used car law can't prevent a poor purchase from being made, and made again. But dealers and consumer advocates here seem to agree that the program works most of the time, and that the cost of the state regulation isn't being saddled on the consumer. Used car dealer David Larson.

DAVID LARSON, used car dealer: What we're doing now is hopefully spending a little money before they buy it, so they don't have to, the week or the month or the year after they buy it. And so it's in the long run, no, I wouldn't say it's more expensive, and they start out with a safer car.

JANDACEK [voice-over]: It should be pointed out that for now, Wisconsin's law applies only to dealer sales, not purchases made by one individual from another. And for dealers, the state law remains one regulation they support.Better, they say, than simply saying "Buyer beware." Agent Orange Settlement Approved

WOODRUFF: That was by reporter Steven Jandacek of public station WHA in Madison, Wisconsin. The long-standing battle over Agent Orange moved closer to a resolution today. Federal Judge Jack Weinstein gave tentative approval to a $180-million settlement reached between Vietnam veterans who claim they suffer because of their contact with the herbicide, and the chemical companies that sold Agent Orange to the U.S. government for use in Vietnam. Under the terms of the settlement, seven chemical companies will set up and finance a fund for veterans and their families. Weinstein said the deal means hardship will be reduced to some small degree. He also said he is withholding final approval until the parties work out a fair system for distributing the money in the fund and paying the legal fees associated with the case. For more on the significance of today's ruling, we turn to the man assigned to work out the payment system. He is attorney Kenneth Feinberg, who the judge appointed to be the so-called special master to help oversee the complex case.

I have to ask you first of all, Mr. Feinberg, what is special master? It sounds like something out of the 18th century.

KENNETH FEINBERG: Well, it's a term that reflects the judge's decision that I should have two functions. First is to try and settle the case, work out an agreement between the chemical companies and the plaintiff veterans; that's been done. And now we turn our attention to the second issue, a very complex one, of trying to work out a distribution scheme as to how this money that's now been made available by the companies will be distributed to the Vietnam veterans.

WOODRUFF: And how exactly will you decide that?

Mr.FEINBERG: Well, the veterans themselves under the opinion today will, along with other interested parties, try and propose something that I will work with them on; that is, a so-called plan for the distribution of the money. But ultimately, Chief Judge Weinstein will review that proposal in December, hold public hearings early next year, and decide ultimately how the money should be distributed.

WOODRUFF: Will there be some formula for deciding who has the most worthy case to make, or --

Mr. FEINBERG: Well, that's the real gut issue. In the opinion today, the judge made very clear that he is extremely dubious about any scientific or medical relationship between Agent Orange exposure and the illnesses claimed by the class. That being so, it would appear at least that some other mechanism must be used as a formula, such as, hardship or need or degree of disability, or some sort of life insurance program. All of these options will be considered by the court.

WOODRUFF: Well, now, what you said about what the judge -- the judge's point is what it's interesting about this, is that he really said in effect in his ruling that the veterans were wise to settle out of court, because they would have had a hard time making their case. Why?

Mr. FEINBERG: That comes through loud and clear in the opinion.

WOODRUFF: Why is that? What does he base that on?

Mr. FEINBERG: Well, there are a couple of things that were of great concern to the court. First, based on the evidence presented to Judge Weinstein to the present, the judge was very dubious that any specific disease claimed by the veterans was in fact caused by Agent Orange. He doesn't say that's not the case; he says based on the evidence before him at the present time, he's dubious about that claim. Secondly, in a major portion of the opinion, Judge Weinstein pointed out that even if indeed such causation could be shown, that there was a very strong possibility that the chemical companies would be able to demonstrate that the fault really lay not with them but with the United States government which used the herbicide in Vietnam. For both of those reasons, as well as others in the opinion, the judge concluded that the plaintiffs were extremely wise to accept the settlement.

WOODRUFF: Well, if their case was so weak, why was the settlement reached in the first place?

Mr. FEINBERG: Because the defendant chemical companies, as the judge also points out in a portion of the opinion, were also wise to accept the settlement. This litigation, especially a case like this, this mass tort litigation involving 2 1/2 million people in the class, raised the serious possibility that a Brooklyn jury would return a verdict in the billions against the defendant chemical companies, and, it should be pointed out, in any event the trial of this case would have taken well over a year and raised tremendous expenses that the chemical companies would have to foot. So the judge concluded specifically in the opinion that it was in the interests of everybody including the public to accept the settlement.

WOODRUFF: So he's saying they got a good deal, the $180 million was a good deal, and now it's your responsibility to work out -- and the judge's, obviously -- to work out how it's allocated.

Mr. FEINBERG: That's right, I mean, everybody benefits from this.

WOODRUFF: What about the role of the government? Obviously the government wasn't a part of this settlement -- what does the judge say -- can you expand a little further on what the judge said about that?

Mr. FEINBERG: Yes. The judge approaches the government in two respects. First, he says that if this case had gone to trial, and if the chemical companies were able to demonstrate that the government knew about this herbicide Agent Orange and what it might cause -- illnesses or disease -- and yet nevertheless the government decided to use the herbicide with full knowledge of its harmful effects on humans, then perhaps the government -- in fact the judge is fairly strong on this in the opinion -- it is likely that the chemical companies would have been able to shift the burden to the government. That's the first point.

WOODRUFF: But isn't there a law that says veterans or government employees are not permitted to sue the government over service-related injuries or --

Mr. FEINBERG: If, as the court stated, if it could have been shown that the government had full knowledge of the harmful effects of the herbicide, then that law would not apply, according to the judge's opinion. Beyond that, it's important to point out that running throughout this entire opinion is the view of Chief Judge Weinstein that regardless of this litigation, ultimately the government must help these Vietnam veterans. He points out time and time again that no matter what he does ultimately with this $180 million settlement, the problems confronting the Vietnam veteran are so enormous and so pervasive that the judge in effect implores the United States -- the Congress and the executive branch -- to do what is right and what is necessary, more than they're doing now, although he acknowledges they are doing some things, to help this class of people.

WOODRUFF: So there's some criticism implied of the government.

Mr. FEINBERG: I think there is a criticism.

WOODRUFF: When can the veterans expect to see some of the first money that will come out of this settlement?

Mr. FEINBERG: Anybody who has a current health effect, adverse health effect, that they think is caused by Agent Orange must file a claim with Judge Weinstein by January 1. That is the cutoff date. If you don't file by January 1, and you're currently ill, you will be barred from compensation under the fund. The judge will hold a hearing in February, and hopefully money will begin to be distributed on some basis yet to be determined sometime in the middle of next year.

WOODRUFF: All right. Kenneth Feinberg, thank you for explaining that very complicated decision to us. Robin?

MacNEIL: Once again the main stories of the day. Moscow reacted coolly to President Reagan's proposals to improve Soviet-American relations.

Former Vice President Mondale said Reagan is changing his policies to win votes.

Congress agreed on a defense spending bill that casts doubt on the future of the MX missile.

A group of prominent economists said economic growth alone cannot wipe out the deficit.

Israel's government sounded hopeful about a plan to pull its troops out of Lebanon.

And the death toll in the American Embassy bombing rose to 14.

Good night, Judy.

WOODRUFF: Good night, Robin. That's our NewsHour for tonight. I'm Judy Woodruff. Thank you and good night.