The MacNeil/Lehrer NewsHour

MR. MacNeil: 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, we have a major debate about jobs and NAFTA, the North American Free Trade Agreement, Mark Shields returns from vacation to lead a follow-up discussion on the politics of NAFTA. Then come a Spencer Michels report on farming without pesticides, and the story of a Cape Cod music man. NEWS SUMMARY

MR. LEHRER: Unemployment was down .1 percent in August to 6.7 percent, the lowest rate in more than two years. The Labor Department report said today there was an overall gain of more than 400,000 jobs. In a separate report, the government's main economic forecasting gauge, the Index of Leading Indicators, edged down .1 percent in July. That reversed a .1 percent gain in June. The Index is designed to predict economic activity six to nine months in the future. President Clinton made another pitch for the NorthAmerican Free Trade Agreement today, saying it would do good things for the U.S. economy. He spoke in the Oval Office.

PRESIDENT CLINTON: This agreement, especially coupled with the side agreements, means more jobs, not fewer jobs, for the American people. And this is a job issue. Since the late 1980s, over half of our net new jobs have come from expanding exports. And one of the biggest deterrents of our expanding the job base in America today is declines in exports because of the flat economy in Europe and the flat economy in Japan, Latin America as a whole is the second fastest growing area of the world. Mexico is leading that growth. I believe this will be a very good thing for the United States, it means more jobs.

MR. LEHRER: The President announced Bill Frenzl, a former Republican Congressman from Minnesota, has joined the administration's effort to win congressional approval for NAFTA. He will work with Chicago Democrat Bill Daley, the leader of the team. We will look at the numbers and the politics of NAFTA right after this News Summary. Robin.

MR. MacNeil: Israeli soldiers clashed with Palestinian protesters today in the Israeli-occupied Gaza Strip. The Palestinians were demonstrating against the prospective peace agreement between Israel and the PLO. We have a report narrated by Vera Frankl of Worldwide Television News.

VERA FRANKL: With opposition to the self-rule deal growing, violence is once again simmering in the occupied territories. Palestinian factions have vowed to sink the proposed accord by aggression. In the Gaza Strip, members of the Islamic Jihad clashed with security forces, claiming the PLO has joined America and Israel in a marriage of convenience. Hamas, Hezbollah, and other factions accused PLO Leader Yasser Arafat of doing deals without them, without the backing of the Palestinian people. In south Lebanon, members of Hezbollah called for his death. It was Hezbollah which felt the sting of Israel's bombs and missiles less than one month ago. Yasser Arafat meantime was touring Arab states, seeking approval for the deal. The PLO leader met Morocco's King Hassan, who like others in the Arab world have shown qualified support for the deal. Arafat may have international support for the initiative, but first came full support from within his own organization. The largest and the wealthiest group, Fata, will be his biggest obstacle.

MR. MacNeil: Muslims and Croats clashed in central Bosnia today, but most of the country was quiet. Fighting around the central Bosnian town of Gorny-Baku blocked the shipment of fuel to Sarajevo. There have been no shipments of fuel to the capital in a month. There was no word on when or whether the warring parties would resume their suspended peace talks.

MR. LEHRER: Ukraine and Russia resolved their differences today with the former Soviet Black Sea fleet and Ukraine's nuclear warheads. Ukraine agreed to ship Russia the warheads for destruction and to give its part of the fleet to Russia in return for financial compensation. The Russian parliament overruled Boris Yeltsin's suspension of his vice president today. Yeltsin temporarily removed Alexander Rutskoi over corruption allegations Wednesday. Rustkoi is a leading critic of Yeltsin's reforms. Parliament's action will keep him in office until a court rules on the removal.

MR. MacNeil: And that's our summary of the news. Just ahead, the NAFTA numbers game, the politics of NAFTA, reducing farm pesticides, and making music on Cape Cod. FOCUS - TRADE BENEFITS?

MR. LEHRER: Now, the numbers and the politics of NAFTA, the North American Free Trade Agreement. The debate about the numbers is where we begin, because that is where it is also likely to end. Does NAFTA mean thousands of jobs gained or millions lost? Seldom have the answers to anything so important been so far apart.

PRESIDENT CLINTON: It's a remarkable advance, and I think it will clearly give the American people more jobs than it will cost. It will be a big job gainer for us.

THOMAS R. DONAHUE, AFL-CIO: We will lose somewhere between five hundred and six hundred thousand U.S. jobs in the remaining years of this decade. We will continue to see the outflow of U.S. production to Mexico.

CARLA HILLS, Former U.S. Trade Representative: We have 600,000 Americans who rely upon Mexico for their jobs in the United States. And by 1995, that will be over a million.

ROSS PEROT: [NBC: "Meet the Press"] It will destroy millions of working jobs. You talk about concern for the working American. Read the details of NAFTA, and you'll cry.

REP. ROBERT MATSUI, [D] California: [NBC: "Meet the Press"] This will create American jobs. Right now, we've created 400,000 American jobs over the last five years. And almost every study shows that it'll create a minimum of 200,000 jobs over the next 24 months if NAFTA passes.

REP. DAVID BONIOR, [D] Michigan: [NBC: "Meet the Press"] A Commerce Department report that came out last year indicated that we could lose up to 40 percent of the jobs in auto, steel, apparel, textiles, and that means whole communities being devastated.

MR. LEHRER: Now, four other people with strong opinions about the NAFTA numbers. Rufus Yerxa, Deputy United States Trade Representative and chief negotiator on NAFTA; Pat Choate, who is co-author of Ross Perot's new anti-NAFTA book; plus two economists, Thea Lee of the Economic Policy Institute, and Gary Hufbauer of the Institute for International Economics. Two hundred thousand new jobs, is that the administration's position that, that NAFTA will create, Mr. Yerxa?

MR. YERXA: The administration has estimated that at a minimum we will see 200,000 new jobs, i.e., net new jobs, over the next two years as the NAFTA's implemented. But I want to be very clear here that this is not an exact science, and neither the critics of NAFTA nor its supporters can tell you precisely what the effects will be. I think --

MR. LEHRER: Where does the 200,000 figure come from?

MR. YERXA: The 200,000 figure comes from a review of all of the studies that have been done by such independent bodies as the Congressional Budget Office, the International Trade Commission, and by a number of private sector studies. I do like to point out that while there are varying estimates of the exact impact, the overwhelming body of economic evidence is that it will be positive. The President today received a letter from 294 economists, including all 12 of the living Nobel Laureate economists in the United States. Now, it's hard to get 294 economists to agree to anything. And here's what they said about NAFTA.

MR. LEHRER: I'm resisting all the urges to tell, you know, all the economist jokes.

MR. YERXA: Well, we actually got them to agree on something. Here's what it is. While we may not agree on the precise employment impact of NAFTA, we do concur that the agreement will be a net positive for the United States both in terms of employment creation and overall economic growth, specifically the assertions that NAFTA will spur an exodus of U.S. jobs to Mexico are without basis. Now, that's from all 12 of the Nobel economists.

MR. LEHRER: All right. Mr. Choate, you take the opposite position. On what basis -- first of all, what is your -- what numbers would you and Mr. Perot use, and what do you base those on?

MR. CHOATE: We estimate that 5.9 million production jobs in the United States are at risk in NAFTA. These are jobs --

MR. LEHRER: Now, what's at risk? What's at risk?

MR. CHOATE: Risk means the job will either go to Mexico, or the job will disappear because of competition from Mexico. These are jobs that pay $7 an hour or more that work -- where people work in industry where the cost of labor is high, 20 percent or higher of the cost of final production. We base those estimates on taking the Census Department data, taking the criteria that was developed for investment in Mexico by Mexican and Wall Street investors who are buying plants and moving them to Mexico and applying the real world of investment criteria to the Census Department data. Our position is, is that most of the models have come out with the conclusion that it will, that NAFTA will create limited jobs are very primitive. Most of these models are unable to make, for example, realistic predictions of what the economy will be next year, or what interest rates will be next month, let alone make predictions 10 years into the future. These models are so fundamentally flawed that they must be rejected as the basis for making policy decisions.

MR. LEHRER: What do you think of Mr. Choate's mythology here?

MR. YERXA: Well, we looked at his study, 5.9 million jobs at risk, and what he's done is he's taken all the jobs in America, manufacturing jobs where the -- in industries where the cost of production is more than 20 percent labor, and arbitrarily moved all of those jobs to Mexico. And the ironic thing is that he's even done so in sectors which are probably likely to be prime beneficiaries of NAFTA because of increased exports to Mexico.

MR. LEHRER: Is that what you did?

MR. CHOATE: No, that's not quite correct. What we've done is we've taken and identified 75 sectors that are labor cost sensitive. We've then taken in those sectors and matched out what has already moved to Mexico, taken 2200 plants that have moved to Mexico, and what we find is a rather amazing correlation. We find that in each of those 75 industries we've already seen U.S. factories go to Mexico.

MR. LEHRER: And you're assuming that that will continue under NAFTA?

MR. CHOATE: It's very profitable for a company to move their factory to Mexico. You've got to assume that it would be done. But, moreover, what we're seeing in the movement to Mexico and what's happening in Mexico is that very high-tech industries can go to Mexico. The Mexican workers are very good. Once they're trained, they can produce top quality goods that are equal to products produced anywhere else in the world. And today we find the circumstance where 1.7 million Mexicans are in college, or in vocational, technical schools. We must consider that Mexico is able to produce very good workers.

MR. LEHRER: Mr. Yerxa, why do you look at the situation and see it so differently?

MR. YERXA: What Mr. Choate is talking about is the status quo. He's right. Jobs have gone to Mexico, because the Mexican market hasn't been completely open to us. The fact of the matter is the American market is open today to goods from Mexico. And that's why a lot of jobs are going. NAFTA is the solution to that problem. And what Mr. Choate and critics fail to explain to the American people is that this agreement levels the playing field. It eliminates the Maquiladora program, because the incentive for companies to move to Mexico and ship to the United States. Under this agreement, what we're going to be able to do is export directly to Mexico for consumption in Mexico.

MR. LEHRER: And you don't think then that these, all these plants for economic reasons, for cheaper labor reasons, will move to Mexico, as Mr. Choate does, is that right?

MR. YERXA: I think the point here is that in a global economy with mobile capital there will always be plants moving both to the United States and abroad, but --

MR. LEHRER: Yeah.

MR. YERXA: -- the very critical point here is that this agreement levels the playing field and opens up the Mexican market.

MR. LEHRER: Let's bring our two economists into this. Ms. Lee, do you think it levels the playing field for the United States?

MS. LEE: No. I think it doesn't level the playing field exactly. What it does is create new incentives for U.S. companies to move to Mexico, because it does have a lot of investment chapters, four investment chapters in the NAFTA, that changed the rules governing investment and trade, and so it is significantly easier for a U.S. company to move a factory to Mexico after the agreement goes through than it is today.

MR. LEHRER: Like what? Give me one example of where it will encourage American companies to move to Mexico rather than discourage.

MS. LEE: Well, Mr. Yerxa's absolutely right, that there are already U.S. companies that can move to Mexico, the wage differential is there, the productivity benefits are there, but U.S. investors might be nervous about moving to Mexico, because they might be afraid their company would be nationalized. They might be afraid they couldn't get their profits out fast enough. NAFTA in Chapter 11 does address all those issues, and, therefore, it sets to rest some of the worries that investors might have had. And the truth is that you don't have to ask economists, you can ask business people whether they're thinking about moving to Mexico or not, and the Wall Street Journal asked corporate executives what their plans were, and 40 percent of the corporate executives said they were likely or somewhat likely to move production to Mexico if NAFTA is implemented. So they are waiting for NAFTA. It is pivotal in that sense, and even President Salinas has made it very clear that one of the big benefits he sees to Mexico is that he will be able, more able to attract foreign investment from the United States.

MR. LEHRER: Let me ask Mr. Hufbauer, you look at the -- from your economic perspective, you look at the set of circumstances, and you see it differently than Ms. Lee, correct?

MR. HUFBAUER: I'd like to use my minute or two to tell you why Pat Choate is preposterous. Ambassador, you, as an ambassador, were very polite, and I want to be impolite. Pat Choate has told you and he's told the American people that 5.9 million jobs are at risk. He has used the following criteria, 20 percent or more of wages - - of sales being wages. First of all, he hasn't even followed the criteria in the prospectus he talked about, because it had two criteria: 20 percent or more and 7 to 10 dollars an hour wages. If you look through his detailed statistics, you'll see it includes lots of industries which pay more than 10 dollars an hour. In my own state of New Mexico, out of the 9,300 jobs lost -- and I realize it's a small state -- more than half, or half of those are industries, instruments in chemical and allied industries which pay more than $10 an hour. Let me come to the macro picture. A million jobs lost in the United States would requirea trade deficit with Mexico of -- get this -- 50, 50 billion dollars, that's worked out at 20,000 jobs per billion dollars of net trade balance. I know the arithmetic is fast, and I apologize for that.

MR. LEHRER: I'm not sure I follow you there.

MR. HUFBAUER: Yes. Every billion dollars of trade deficit with Mexico will lose us 20,000 jobs. To get a million jobs lost, you have to have a 50 billion job --

MR. LEHRER: And that's not going to happen.

MR. HUFBAUER: 50 billion dollars. Now, let me tell you why, Jim.

MR. LEHRER: Okay.

MR. HUFBAUER: We have trade with Mexico now. We're selling to Mexico about $42 billion this year, and we're buying from Mexico about $38 billion. To get a $50 billion trade deficit, our imports would have to soar to the moon its equivalent to that, and our exports would have to stay flat. And there's nothing in U.S. trade history with Mexico, Canada, other countries in this hemisphere which would support that story. That's just 1 million jobs. to get his number of 5 million jobs, let's round it up to 6 million jobs, you'd have to have $300 billion of trade deficit with little old Mexico. Do you know how much Mexico's GNP is? Three hundred billion. I mean, these numbers are the most preposterous numbers that have been published by an economist of some reputation in my career in this area.

MR. LEHRER: Mr. Choate.

MR. CHOATE: Well, I think his critique is amusing. The reality is, is Mexico has a large and a growing work force. Mexico will have as many new workers coming into the work force in the decade of the 1990s as will the United States. Secondly, when we take a look at our own history, what we find, we can travel through the northeast Midwest and through New England and find thousands of shuttered factories that -- where companies have moved their facilities from the union states to the southern states because of a 30 percent wage differential. We're talking about a 7 percent wage differential. Economics is not grand celestial mechanics balancing out the numbers as Gary Hufbauer suggests. If companies can save 10 to 15 dollars per worker by moving to Mexico, that equates to fifteen to twenty thousand dollars a year, they're going to do it. We have 2200 factories in Mexico, U.S.-owned factories in Mexico, that have already taken that route. And this is done under the restrictions that exist. When these restrictions -- when these restrictions are ended, as the ambassador suggests, it will be much easier to move to Mexico, as Ms. Lee suggests, American investors will be protected. I see nothing to suggest that American businessmen are not going to run to profit.

MR. LEHRER: Why will they not go to Mexico, Mr. Hufbauer, just for the simple, basic economic reason it's cheaper to do business?

MR. HUFBAUER: Yes. Let's keep it very simple. We're selling more to Mexico now than we ever did in the past. Our trade deficit in 1989 has swung into a trade surplus. The reason they won't go to Mexico is the same reason they haven't gone in droves to Korea, to Hong Kong, to Taiwan, all which have lower wage than here, and the reason is very simple. Productivity is lower, much lower in Mexico than in the United States. If low wages were the magnet for American industry, there would be no American industry here, and let's go further, in Germany, there would be no industry in Germany, because Germany pays 25, 26 dollars an hour. We pay only $16. Why haven't all those German industries closed and come to the United States?

MR. LEHRER: Ms. Lee.

MS. LEE: Nobody is saying that low wages are the only thing that drives investment. Obviously, wages and productivity and geographic proximity and infrastructure and all sorts of thing influence where companies decide to locate. In the case of Mexico --

MR. HUFBAUER: Why weren't those listed by Ross Perot? All those - - all those are lost.

MR. CHOATE: They are. They are not lost. Really look carefully here.

MR. HUFBAUER: Now --

MS. LEE: In terms of productivity, you do look at Mexico, Mexico is an extremely good value for U.S. businesses, because in the export-related industries, as you know, productivity levels have been 80 or 100 percent of U.S. levels, while Mexican workers earn only 1/10. There have been engineering studies that have done, Howie Shaken's study at the University of California at Berkeley. If you take the average productivity of the entire Mexican economy and you factor in agriculture and you factor in the informal sector, then sure productivity per worker will look slow, but that's not the relevant factor for a U.S. company.

MR. HUFBAUER: Let me talk about the relevant factor.

MS. LEE: But the point is -- no, the point is really that you can talk about academic studies and statistics and theories about what wages and productivity are in Mexico, but the fact is that hundreds and thousands of U.S. companies have already moved.

MR. LEHRER: Mr. Yerxa, why do you and the President believe that is not going to happen?

MR. YERXA: Well, let me try and turn this debate to what it ought to be, i.e., a discussion of the merits of the agreement, itself, and why it's a good agreement, because we all agree that the real issue here is: How are we going to create good, high wage jobs in a global economy? The proposal that's being given to us by critics of this agreement is that we have to protect ourselves and not fail to recognize the future that is upon us, the future that is coming, i.e., a open world economy. The question is: Can we open up other markets to American products? What they fail to tell you is that the American market is already open to goods from export. All of the horror stories that they told us about plants going to Mexico have happened under the status quo.

MR. LEHRER: So if they were going to happen, they could have already happened, is that what you're saying?

MR. YERXA: They could already have happened, and the reason this agreement changes it is that it fundamentally opens a market to our goods. Now, I want to return to something that Ms. Lee said, because I think it is at the very heart of the criticism of this agreement. She implied that because we make Mexico a more secure market for investment we are creating inducements to move to Mexico as if the better policy is for us to make Mexico a unstable economy which is not a favorable climate for investment. This is a very curious argument. The fact of the matter is that the more securities to investors and the more securities to economic activity, the more prosperous it will be, and the better market it will be more American products. Pat Choate, himself -- let me just make one other point -- Pat Choate, himself, in his 1985 book The High Flex Society pointed to this very fact about the need to make Mexico a prosperous and stable economy. He said, while expensive, frustrating, and time consuming, U.S. efforts to help Mexico become a prosperous, advanced economy, providing an indispensable means of reducing illegal immigration, creating a strong trading partner, lowering the risks of political instability south of the border, and reducing demands on the American economy.

MR. LEHRER: You've changed your mind?

MR. CHOATE: No, that was absolutely true then. It's even more true today. In Chapter 7 of this book, we described --

MR. LEHRER: Which one, the new one or the old book?

MR. CHOATE: The new book with Ross Perot, Save Our Job -- Save Your Job -- we describe what is needed to create a trade agreement that is in our mutual interest, and a trade agreement that will help bring up the wages of Mexican workers and at the same time defend the jobs of American workers. We should have an agreement with Mexico. We do have much in common with Mexico. This is not the way to do it. This particular deal would preserve the status quo of an oligarchy controlling Mexico, holding down wages, sucking jobs out of the United States. This deal should be rejected.

MR. HUFBAUER: Jim, I would like one minute on their trade agreement.

MR. LEHRER: How about 30 seconds?

MR. HUFBAUER: Thirty seconds is fine. Their trade agreement calls for a social tariff which would require a tariff of at least 100 percent on Mexican products. Our tariff on Mexican products is now under 2 percent. They want to declare war on Mexico.

MR. LEHRER: They meaning Perot and --

MR. HUFBAUER: They want to declare war on Mexico. They do not want a small modification to this agreement.

MS. LEE: But the point is that we have protections for investment and for profits in the agreement. We don't have the same kind of protections for workers, for the environment in the agreement, and that, that is the real fundamental asymmetry of the agreement and why it's a bad deal to take the tariff barriers down to zero while we're not protecting labor rights and environmental standards. We have two very different economies that we're trying to integrate, and we're trying to do it too quickly. We hadn't taken into account the kinds of disparity in income, in regulation, in labor market institutions between the two countries.

MR. LEHRER: I have to take into account the fact that we're out of time. Thank you all four very much.

MS. LEE: Thank you. FOCUS - POLITICAL WRAP

MR. MacNeil: Now, for some analysis of the political battle ahead and how NAFTA is perceived in Washington and around the country we turn to our regular syndicated columnist, Mark Shields, joined tonight by Stuart Rothenberg, editor and publisher of the Rothenberg Political Report, and Frank Newport, editor in chief of the Gallup Poll. Mark, is the political battle going to be lost by who believes the numbers we've just heard on either side? Is that the crunch?

MR. SHIELDS: The crunch is going to be, in my judgment, Robin, jobs, and the sense that the anxiety, the pessimism in the United States right now about the future, the flat economic news is not good news for NAFTA. It's not good news for national health, but it's immediately not good news for NAFTA.

MR. MacNeil: Frank Newport, is that where the nitty gritty's going to be, whether you believe it's 200,000 jobs gained, or millions lost?

MR. NEWPORT: I think so. Jobs, as Mark points out, is a very pivotal word right now. Americans reacted very strongly to it. We and other pollsters have put the two jobs arguments to the people. Some people say you'll gain. Some people say you've lost, and overwhelmingly when you do that to the public, they agree strongly with the argument that jobs would be lost.

MR. MacNeil: And Stuart Rothenberg, is that what it's going to come down to on Capitol Hill, the argument that we've just heard over jobs?

MR. ROTHENBERG: Yeah. I think it's a fight over definitions. Right now opponents make the argument that this is a fight over jobs to Mexico, that it's a win/lose proposition, if Mexico wins we must be losing, and that the little people are opposed to this, and it's the Wall Street financial interests, and the Fortune 500 that are supporting NAFTA. I think if the issue is turned around, if it's a question of jobs in the United States, U.S. being more competitive, then I think the NAFTA supporters have a chance.

MR. MacNeil: Mr. Newport, where does your polling tell you public opinion stands right now on NAFTA?

MR. NEWPORT: Good question. I think, Robin, the fundamental point is to realize that most Americans don't care right now. There's a big sea of ignorance out there. When we ask Americans, a lot of them say they don't even know what it is. They haven't been following it. We asked Americans earlier in August at Gallup to prioritize things for Clinton. 2 percent said that NAFTA was a high priority. It's all health, or even Gore is re-engineering, that's where they want the emphasis, so I think public opinion is very malleable and that probably the most important thing we need to realize today that it could shift. When you do look at polls, our polls at Gallup, other polls, you find that you can probably say it crystallizes it about a break-even situation, or maybe moving more towards the negative or oppositions.

MR. MacNeil: Is that where you would put it politically, Mark, at the moment?

MR. SHIELDS: No. I'd put it politically that NAFTA's in a very uphill fight. What you've got, Robin, is I think Stuart's point about the elites, is working very strongly against them. And there was a time in this country when trade and treaties and foreign policy were left to a foreign policy establishment. Call it skepticism. Call it what wants, alienation, but there's a greater distrust, a skepticism. I think the skepticism that NAFTA's dealing with was seen perfectly on the budget bill. On the budget bill I think even critics would acknowledge Bill Clinton's proposals, 4 out of 5 dollars that are going to be raised on the very wealthiest, yet, as Frank Newport, as Stuart confirmed, when people were asked, by a better than two to one margin, they thought that the middle class was going to get the hardest. That is a mistrust, a distrust, a skepticism, a lack of confidence in the, in the elites.

MR. MacNeil: How does -- Mr. Newport -- how does opinion break down on NAFTA, depending on demographics and education and income? Who is for it, and who's against it at the moment?

MR. NEWPORT: It's not huge, but to some degree it follows conventional wisdom. Those with the lowest levels of education and the lowest incomes are most likely to be opposed. Those with say $75,000 plus incomes, college degrees and so forth, are somewhat more likely to be break hidden or be positive in favor of it. The same for Republicans, they're a little more likely to be in favor of it, Democrats and independents more neutral. People who voted for Perot, Robin, we even looked at are following the party line, and they're against this agreement as well.

MR. MacNeil: Mark Rothenberg -- Stuart Rothenberg, where do you think it is on the Hill at the moment?

MR. ROTHENBERG: Well, Mark has suggested that it's in an uphill climb for supporters of NAFTA, and I think he's certainly correct. Right now, the opponents have defined this issue. There is a range of opposition that includes Perot. The public is divided. Organized labor is strongly opposed. The environmental movement is split. I think that even within the administration there is some opposition, and certainly Democrats and Congressmen, you know, about David Bonior and widespread opposition on the Hill. I don't think this fight is over. A lot of people think that it's the ninth inning and two outs and Clinton is down by ten runs. I don't think that's the case primarily because, as Frank has noted, there is no informed public. And I think he has the opportunity to engage the debate. I don't think they've done that yet. So I think he has a chance to turn it around, but it is uphill.

MR. MacNeil: Mark, what are the political consequences of the demographic breakdown that Frank Newport has just outlined, that basically blue collar people, high school education, seem to be against it, people of higher incomes, college education, for?

MR. SHIELDS: Well, it becomes a problem for Bill Clinton institutionally and electorally. Institutionally, first of all, the AFL-CIO, which has a diminishing membership but still has considerable clout within the Democratic Party and within Washington as an institution, and with grassroots support, has put it pretty bluntly. Lane Kirkland, its president, has said to Bill Clinton, I have a couple of million dollars to spend for education, communication, lobbying, advertising. I can spend it for health care or against NAFTA. You make the choice. The environmental groups which are very key to Clinton's support in 1992, including the Sierra Club and Greenpeace, are out against it. Jesse Jackson, African-Americans, there was a constant theme recurring at the Martin Luther King 30th anniversary of the march last Saturday here in town. NAFTA was sort of a rallying crime, the shibboleth that you heard over and over again, opposition to NAFTA. So Bill Clinton's facing a three-way race in 1996, and he's looking for 40 percent. All of a sudden, these, these institutions which are on the other side and these organizations and these individuals take on a greater importance.

MR. NEWPORT: Robin.

MR. MacNeil: Yes.

MR. NEWPORT: I think that there's a flip side to Mark's list. Mark's absolutely right about the opposition, about the importance of these Democratic constituencies. But the flip side is this gives Bill Clinton a great opportunity to redefine himself, to portray himself as the new Democrat, the Democrat who while he may be with organized labor on striker replacement, or an air traffic controllers being rehired, he is not their tool. And he can display some independence if he combines Republicans with some Democrats, and he comes off as a much stronger precedent. It's a great risk but a great opportunity.

MR. MacNeil: And he must do that because by and large there's a lot of Republican support for it, and the Democrats are very divided right now in the House, isn't that true?

MR. NEWPORT: Sure. This is a Bush negotiated agreement, remember. It's the awkward situation of the President after having gone through a number of very partisan battles, now flipping over and depending -- he really has to depend on the Republicans both in the House and the Senate to pass this.

MR. SHIELDS: Robin.

MR. MacNeil: Yes, Mark.

MR. SHIELDS: There's a key player in this. And, and Stuart started on the brief roster of those who are against it. Five former Presidents are in favor of it. But on the other side are disparate bunk mates, so disparate as Pat Buchanan, conservative candidate for President, Jesse Jackson, former liberal candidate for President, Jerry Brown, former governor of California, Democratic Presidential candidate, Ralph Nader, consumer activist and former write-in presidential candidate. But the most important person is Ross Perot, and Ross Perot very simply, Ross Perot brings to this debate something nobody else does. He brings to it credentials that are quite comparable to those that Yitzhak Rabin brings in the Middle East right now. Yitzhak Rabin can bring peace, because he is seen as a hawkish man with military credentials, an authentic Israeli hero. Ross Perot is a businessman who's made several billion dollars. He's seen as an authentic patriot. That's why his role in this debate is so crucial and so formidable for the White House to deal with.

MR. MacNeil: What does Mr. Clinton have to do -- in your view, as a pollster -- to pull this out, given the state of public opinion the way it is, very amorphous, not very well informed?

MR. NEWPORT: Well, I think we heard it. I've been hearing this week more administration spokesmen using the word "jobs." It seems to me if this were an INR initiative and referendum campaign for the public that's going to vote, that's where he would go. I think Stuart mentioned it earlier. You've got to go out and convince Americans that it creates jobs, j-o-b-s, rather than loses them. But right now, when we put that argument to people, we say some people say it'll create, some lose. The point is that people overwhelmingly three to one say well, I'll agree with the fact that it will cause a loss of jobs in the U.S., so I think it's tough. But I think he's doing the right thing. He's got his own pollster. He's out there, he knows, so his people will be using that word. I think jobs is --

MR. MacNeil: Do you agree with Stuart Rothenberg that so far the opponents have defined the issue?

MR. NEWPORT: Well, Stu's such a bright person I couldn't disagree with my colleague, Stu Rothenberg. Yes, to some degree certainly. Jobs, they've come out. I think Perot -- we've heard it tonight from his economist -- they're using that term. They were first to jump on that kind of issue, so to some degree, yes, but when we asked the basic ballot question keep in mind we still find that the public roughly breaks even in our most recent asking just a few weeks ago, so I would say that it's still, you have to say, open to some movement on the part of the public if Clinton can move quickly and try to change things.

MR. MacNeil: Stuart Rothenberg, describe what President Clinton has to do if he can to win this.

MR. ROTHENBERG: You know, I think this is a perfect case study or potentially case study of presidential leadership. I think the President is going to win in the Senate. The question is really the House. Most counts give him anywhere from a hundred to a hundred ten Republicans in the House. I think he -- been talking to some people recently, and I think he may actually get up to a hundred and twenty or exceed that among Republicans, so what he's got to do, he's got to bring Democrats along. He's got to -- he's got to talk about jobs, jobs for the United States, and show that this is a win-win situation for --

MR. MacNeil: Excuse me interrupting you but as things stand at the moment how many more Democrats do you think he needs than he's got already and how hard would they be for him to get?

MR. ROTHENBERG: Well, a lot of Democrats and a lot of Republicans as well are trying not to commit at this point in part because they're concerned about how strongly the President is going to follow through on this issue. I think he certainly needs another forty or fifty votes to tie this up. And there is concern, particularly on the part of the Republicans, that they're going to be marching off the end of a cliff and like theBTU tax, when the President suddenly made a 180 degree turn and switched on that, that the President is going to retreat while they're charging. And that's a problem. That's why I think the President needs to be more aggressive sooner rather than later right after reinventing government and indicate his support, or else he may lose some of the Republicans and Democrats who are inclined to go with NAFTA.

MR. MacNeil: White House officials are saying the President is going to make a major speech in the next couple of weeks on this, on the free trade area. Mark, do you have any sense that the President might back off on this one, figure it's just too damaging, too politically costly a fight to wage when he has everything else on his agenda this month?

MR. SHIELDS: Well, that, that case has been made. I think that it was seen during the campaign, Robin, on the part of the Clinton people, the President's position on NAFTA, which did undergo a couple of different existences during the campaign, that it became a character issue, that for Bill Clinton to back off on NAFTA during the campaign would have been seen as further evidence of doubts about his character, raise further doubts about his character, so they decided not to. I think it will be hard for him to do it at this point. I think that the count, quite frankly, is a little more pessimistic than Stu has it. I think that there are very few industrial state Republicans at this point who are really leaning that way, they see it as a problem, but the biggest problem that Bill Clinton has to deal with is not political. It's the environment. We've had since the first of the year America's principal companies, IBM, General Electric, Procter & Gamble, lay off 400,000 people, abolish jobs. We're at a time of jobless prosperity. People are anxious. There isn't any American family that doesn't either personally know or have a relationship with a college graduate who's moved back home. So there isn't, there isn't a sense of optimism about it. There's a sense of, boy, you'd better prove to me there's going to be jobs here, pal; there'd better not be doubts about it.

MR. MacNeil: But wouldn't that increase the, the anxiety to hear or the hunger or the appetite to hear that something will create more jobs?

MR. SHIELDS: I think that's what it's going to be, and I think that is the argument, and who's ever going to be persuasive, but it's always in the long run, it seems, that proponents and advocates of the treaty that come back, well, in the long run it's going to be good. Yes, there's going to be dislocation, and I think this elite business of the people who are most for it are the ones not threatened by foreign imports. There are no $75 a week Taiwanese bureau chiefs coming to Washington to take over major publications.

MR. MacNeil: Having heard the discussion we heard before, and familiar with the way public opinion works, who's got the -- what kind of a sell is this going to be if that's the nature of the argument, the argument that we heard before?

MR. NEWPORT: He's got the upper hand.

MR. MacNeil: He's got the upper hand, and just rhetorically.

MR. NEWPORT: Rhetorically it looks to me as if, as I mentioned, Perot, labor unions, the people who are against it so far, have the argument which looks like it's more salient, but as I started out saying, Robin, I think most Americans when you say NAFTA aren't sure if that's a strange disease or don't know what you're talking about, and that's what our data show and others as well. So to some degree, I would say with the big hunk of the public nobody has the upper hand. It's there to be dealt, so to speak, if we can -- commercials, which I understand will be starting, and all these speeches begin, maybe then we'll see some arguments taking place. But 50 percent or more of Americans hadn't heard of it, or tell us they haven't followed it at all.

MR. MacNeil: Do you agree with that, Stuart Rothenberg?

MR. ROTHENBERG: I think it's easier to make the anti-NAFTA argument, and I think rhetorically it's easy to talk about jobs going to Mexico and wave that red flag. But I do think the President has an opportunity, and we're ignoring the ability of the President to twist some arms, to offer some bait here, and I think that we shouldn't underestimate that if Bill Clinton is really committed for NAFTA.

MR. MacNeil: Yeah. Mark, how would you predict it going at the moment?

MR. SHIELDS: I, I think it's very much uphill. I think that you can see right now the lie of the land this way. The blame is already being apportioned. Gee, it's Bill Clinton's fault. I'm not suggesting to my colleagues here, but that's, that's very much in the Washington atmosphere, although the White House isn't committed, the White House isn't on board, and he's being set up for a fall right now. So I, I'd say it's uphill.

MR. MacNeil: Okay. Well, gentlemen, thank you all.

MR. LEHRER: Still to come on the NewsHour tonight, farming and pesticides and music on Cape Cod. FOCUS - BALANCING ACT

MR. LEHRER: Now, a report on the government's plans to reduce the use of pesticides in farming. It is a coordinated effort among the Environmental Protection Agency, the U.S. Department of Agriculture, and the Food & Drug Administration. Correspondent Spencer Michels of public station KQED-San Francisco reports from California's central valley.

MR. MICHELS: At 6:30 on a summer morning, a bi-plane sprays a California tomato field with pesticides. A majority of American farmers use pesticides to control insects and weeds and to fertilize crops. Pesticides are part of doing business for Steve Borchard, who farms on 1800 acres near Sacramento. Tomatoes are the key cash crop of him and his father, Jim, who started this operation 30 years ago.

JIM BORCHARD: We're very thankful that we have pesticides, because otherwise I know the ordinary housewife wouldn't like to have a worm in her tomato sauce, or anything like this.

STEVE BORCHARD: It's so easy to have the chemicals, and if they're safe, why not use them?

MR. MICHELS: Growers like the Borchards, known as conventional farmers, have been under pressure from environmentalists for years to cut back on pesticide use. The pressure intensified this summer when three federal agencies and the Clinton administration decided that to protect the health of children and the environment, they would move to reduce the use of pesticides. Many farmers, processors, and even researchers are not convinced that pesticides pose much of a health problem for consumers. Nevertheless, they do know that pesticides can harm farm workers and harm the environment, and they are well aware of the public relations problem that pesticides cause.

CARL WINTER: I like to think that we're doing a lot of the right things for the wrong reasons.

MR. MICHELS: Chemist Carl Winter heads the food safe program at the University of California at Davis. Like many scientists, he doesn't think pesticide residues make fresh fruits and vegetables harmful to eat, yet, he strongly wants to lessen pesticide use.

CARL WINTER, Chemist: We're looking into much better ways to produce our crops with less environmental damage, less worker damage, and in the long-term probably a much more economical way of doing things as well.

MR. MICHELS: But what are the alternatives to chemicals for farmers like the Borchards? The most publicized is organic farming, without any pesticides at all. In fact, Steve Borchard's mother raises a small vegetable garden organically, but her son says that's not a viable option for the rest of the farm.

STEVE BORCHARD: We're not like my mom's garden over, i.e., my mom hasn't sprayed anything. Our machinery is all structured for the kind of production we have, large scale. We really can't buy $80,000 worth of beneficial insects to spray on 120 acres when a chemical may cost for the acreage a total of $20,000.

MR. MICHELS: In fact, organic produce makes up only about 1 percent of California's total, and less elsewhere, a highly specialized market. But Jill Auburn of the University of California believes that conventional and organic are not the only choices, that there are other options to reduce chemical use while maintaining economic viability.

JILL AUBURN, Project Manager: You can't have an agriculture that meets the environmental goals but is unprofitable so a farmer can't stay in business. But there are many farmers in this state and across the nation. We have found systems that work for them, and some of those systems use chemicals. Some of those systems do not.

MR. MICHELS: These systems fall under the umbrella known as sustainable agriculture, and they are the focus of research at the university's campus at Davis. One method researchers are promoting begun two decades ago is integrated pest management, or IPM. Frank Zalom directs the IPM project.

FRANK ZALOM, Director, IPM Project: What we're doing is looking at the crop production and the biologies of individual pests and their natural enemies. And we're trying to produce the crop by creating an ontological balance within the, the orchard.

MR. MICHELS: Using insects as part of a program is something the Borchards can support. In fact, they use rented bees to pollinate their sunflowers. Zalom says farmers can also be trained to use biological control to destroy pests. In this peach orchard, a mating confusion technique is being used to get rid of the oriental fruit month. Plastic straws contain synthetic female insect scent.

FRANK ZALOM: You have four of these per tree. There's enough of a chemical then that the male cannot find the female that's calling with the same chemical in the tree, and so they don't get together, mate, and produce a subsequent generation that's going to result in the flagging of the kids of feeding on the fruit. In the case of oriental fruit moth, it's working very well here in California, and a lot of farmers are using it.

MR. MICHELS: Farmers can also introduce insects into their fields which eat other pests like this green lace wing larvae attacking an aphid. Spider mites are a big problem with many crops. Zalom encourages the use of predatory mites shown on the late in this Davis footage.

FRANK ZALOM: The predatory mites have little sucking type of mouth parts, and they'll bite into the spider mites, and they'll suck the contents of the spider mites out and kill the spider mites.

MR. MICHELS: Biological control.

FRANK ZALOM: Yes.

MR. MICHELS: Is that an effective method for, for many, many insects, or is it only very specific?

FRANK ZALOM: Biological control, when it works, is very, very efficient. Most of us believe that for every pest, there's a natural enemy somewhere in the world, and wehave not found it yet.

RALPH HOLSCLAW, Growers Air: I've been in this business for 30 years, and I haven't seen integrated pest management work yet.

MR. MICHELS: Ralph Holsclaw owns Growers Air and six bi-planes used for spraying near Davis. He says spraying has declined recently but will always be needed, despite the government's push to reduce chemicals.

RALPH HOLSCLAW: The administration are like college professors. You know it's one thing to talk about it in the university, and it's another thing to make it work in the field. I think that the use of pesticides has already been reduced to the level where if they're reduced any further, it'll start affecting production agriculture and crop yields.

MR. MICHELS: But that's not the attitude on the Davis campus. They have a lot of other methods up their sleeves, including an old standby, crop rotation. Steve Temple is a farmer and a researcher on the Sustainable Agriculture Project.

STEVE TEMPLE, Researcher: The rotation of tomatoes with safflower, corn, beans, and wheat gives, has advantages in terms of managing pests such as soil pathogens, insects, weed populations, et cetera.

MR. MICHELS: Farmers flock to Davis on field days to learn new growing techniques. University researchers like Temple know that they must compete with hard economics.

STEVE TEMPLE: There are some disincentives for crop rotations that are very important. In this case, processing tomato is such a high value field crop that there is a lot of pressure from lenders and bankers to put it into the system as many years consecutively as possible.

STEVE BORCHARD: Introducing these new ideas are more costly, and right now, the way the price is now, it's not cost effective. It's not economically feasible.

MR. MICHELS: Although Borchard has cut down a little on pesticide use, he doesn't feel that he's yet found an alternative he can live with. But other nearby farmers say new methods can work. Tony Turkovich, one of the most innovative, large growers in California, successfully uses portions of sustainable agriculture and integrated pest management.

TONY TURKOVICH: Those techniques can be used, many of them can be used on a large scale. Some have limitations at this point. In the future, I think they can, many of them, more can be used.

MR. MICHELS: He tests varieties of tomatoes for resistance to pests. He plants special ground covering orchards to encourage predator pests. And he uses a program developed by U.C. Davis to sample his crop and find out if there are enough worms to justify spraying.

TONY TURKOVICH: For three years prior to 1984 we sprayed 32 percent of our tomato fields for worms over a three-year period. The last three years we've sprayed 7 percent, a reduction of almost 80 percent in chemical use. A third of that was using a biological not a synthetic pesticide.

MR. MICHELS: Many farmers today use small parts of IPM or sustainable agriculture, but complete techniques to protect most crops have yet to be developed. Those working in the field hope that new incentives and regulations from the federal government will lead to the development of more alternatives for more crops, effective substitutes for chemicals that farmers like the Borchards will feel comfortable using. FINALLY - MUSIC MAN

MR. MacNeil: Finally tonight, since this is summer's concluding weekend, we thought we would reprise a piece from the summer of 1984, which celebrated one of Cape Cod's summer traditions. If ever a place was invented for summertime, it is this place, Cape Cod, Massachusetts. Each visitor has a different reason for coming here. Some come for the beaches, for the chance to eat French fries and the warmth of a Cape Cod afternoon, others to fish, or sail, some just to enjoy the Cape's natural, rugged beauty. But if there is one common denominator, one characteristic that appeals to all who summer here, it is the rich sense of tradition that pervades the Cape. That tradition, that unchanging quality, is perhaps best exemplified by what occurs here, in this park in Chatham. Every summer Friday night, as the sun starts to set, the people of the Cape gather to listen to the Chatham Band. They bring their children, and balloons, their lawn chairs, and their hopes of seeing America as it once was. The Chatham Band has changed little over the years. Their red uniforms date back to the 1930s. The music they play is even older, and they've had the same conductor since 1946. His name is Whit Tileston. A tradition in himself, the 78-year-old Tileston is better known as the Music Man of Cape Cod.

WHIT TILESTON: The minute I get up on the band stand, I'm still jittery, have been for every one of the 38 years and every one of the Friday nights in 38 years. But the minute I give that down beat to the opening march, suddenly it's like another world. Everything is so beautiful, wonderful, and I just feel good. I feel like you're doing something good, or people wouldn't turn out the way they do.

WHIT TILESTON: [speaking to audience] But you know, we can't start any program till we start it the right way. Hydi Ay Oh!

[AUDIENCE SHOUTING BACK]

WHIT TILESTON: Well, that wasn't bad. Let's try one more time. Hydi Ho!

AUDIENCE: Hydi Ho!

WHIT TILESTON: Oh, I love it. And with that, we go into our theme story, "It's Band Time in Chatham." One, two. [band playing]

WHIT TILESTON: I think one of the features of bands that would be most noticeable is the spirit that the band fellows have. They know that we're not a real professional band, but the fellows are giving everything they have, and the whole overall result is wonderful between the band fellows and the audience. [band playing] Every program for these 38 years I've put together with the idea that it'll appeal to various ages, like the first period where I sort of cater to the little kiddies.

WHIT TILESTON: [speaking to audience] Oh, I love it! All right, put your head now -- [singing] I put my head right in, and I put my head right out, I give my head a shake, shake, shake, and turn myself about. Oh, here we go loopty --

CHILDREN IN AUDIENCE: [singing] Here we go loopty lou --

WHIT TILESTON: That a way to go!

CHILDREN IN AUDIENCE: [singing] -- here we go loopty lie, here we go loopty lou, all on a Saturday night.

WHIT TILESTON: [singing] -- all on a Saturday night.

WHIT TILESTON: And then later on some band music, and we specialize in waltzes for the older folks. [music]

MR. MacNeil: As the moon appears on the horizon, the crowd keys up for the concluding dance, the Bunny Hop. [Bunny Hop]

WHIT TILESTON: That is probably the most spectacular scene. There will be four or five hundred people dancing the Bunny Hop. I told 'em exactly what to do and then they're on their own. [Bunny Hop] I feel that in many ways people deserve a new face, somebody with new ideas up there. Of course, the minute I mention new ideas, no, we love it the way it is. So I suppose I'll continue. The band fellows, if I get so I can't walk up there, they'll just carry me up. [music in background]

WHIT TILESTON: [talking to audience] Hey! I'm proud of you. Beautiful!

MR. MacNeil: The concert ends, as always, right on the dot at 10 PM, and the contented crowd melts away into the summer night, dispersing to the various villages and towns along the Cape. But they'll all be back next Friday night, and so will Whit, and the Chatham Band.

MR. MacNeil: Tileston, now 87, is still going strong and is conducting the summer's last concert this evening. RECAP

MR. LEHRER: Again, the major story of this Friday was the economy. The nation's unemployment rate dipped to a two-year low of 6.7 percent last month. More than 400,000 jobs were created. Good night, Robin.

MR. MacNeil: Good night, Jim. Have a good Labor Day Weekend, and we'll see you Monday night. I'm Robert MacNeil. Good night.