ANNOUNCER: From the nation's capital, the McLaughlin Group, an unrehearsed program presenting inside opinions and forecasts on major issues of the day. "GE is proud to support the McLaughlin Group. From plastics to power generation, GE: We bring good things to life."

MR. MCLAUGHLIN: Issue one: Some call it treason.

SEN. JOSEPH BIDEN (D-DE): (From videotape.) This is a serious investigation. This should be pursued. This is serious stuff. And if in fact there is any evidence that any political official within the State Department or any in the administration or anywhere knew that there was a correlation of quid pro quo, it should be ferreted out, the person should be indicted and put in jail, no matter who it is.

MR. MCLAUGHLIN: The "quid pro quo" Senator Biden is referring to is campaign money from China to the Democratic National Committee and the Clinton-Gore campaign in exchange for sensitive dual-use missile-guidance technology to the army aerospace program of the People's Republic of China. Campaign contributions from foreign sources are illegal, but trading national secrets for them is treasonous. Other prominent Democrats agree that this prima facie quid pro quo has raised the Clinton scandals to a new and disturbing level of gravity.

SEN. BOB KERREY (D-NE): (From videotape.) They need to be investigated.

SEN. TOM DASCHLE (D-SD): (From videotape.) Well, I think the Justice Department is doing exactly the right thing. The president has said he would like an investigation. I believe that that's the right approach.

SEN. DANIEL PATRICK MOYNIHAN (D-NY): (From videotape.) There has been an Asian attack on our political system, and the Chinese specifically, and we better find out about it. And the way to do -- is an independent counsel.

MR. MCLAUGHLIN: Senate majority leader Trent Lott has directed Senate Intelligence Committee Chairman Richard Shelby to begin an investigation. Lott has also convened a Senate leadership task force to ensure a coordinated effort of all the relevant Senate committees.

On Wednesday, the House of Representatives rebuked President Clinton in four different votes, saying that Mr. Clinton "failed to act," quote-unquote, "in the national interest" last February, when he authorized a Chinese satellite launch through a U.S. aerospace firm with close democratic connections. All four House votes were nearly unanimous, Democrats alongside Republicans. House Speaker Newt Gingrich called for the creation of a special committee modeled on the Watergate committee, headed by Representative Chris Cox to investigate links between campaign funds and national security breaches.

Until this week, hearings on the Clinton scandals had been divided on partisan lines -- Republicans the investigators, Democrats the obstructionists. No Democrat had asked what Republican Senator Howard Baker had asked about Republican President Richard Nixon during Watergate, namely, what did President Clinton know and when did he know it? That has now changed radically.

Question: Will Chinagate be Clinton's Watergate, Pat Buchanan?

MR. BUCHANAN: Well, John, it's not there yet but these are gravely serious charges and there's three questions that have got to be answered: did the president of the United States know that Johnny Chung was mainlining money right out of the Chinese communist politburo into his campaign? The second is, did the president issue a waiver for that satellite technology transfer to China because his biggest contributor gave him $600,000 and ran the company? And the third thing is, did the president undermine a Justice Department criminal investigation of the transfer of missile and satellite technology to China against the wishes of the Department of Justice?

Each of these is gravely serious, John, but the bigger overall question is, what in heaven's name is the United States doing using rockets of the Chinese army to launch our satellites?

MR. MCLAUGHLIN: Eleanor Clift?

MS. CLIFT: Well, if this is Chinagate, it's everybody's Chinagate, because the decision was made in 1988 that the Chinese were very good at launching these rockets and we could just pop our satellites on top. The communications industry in this country lobbied hard to get that decision. Reagan and Bush granted nine waivers in three years, President Clinton, eleven waivers in five years.

You're not going to find that this president traded away national security in exchange for campaign contributions. To suggest that he's guilty of treason is where the real scandal is. This is a policy question, it's Republicans and Democrats promoting big business in this country, and I think it's the right decision. It's the kind of decision we pay presidents to make; we want to get in there with our technology first and have the kind of leverage that that brings.

MR. MCLAUGHLIN: Chris Matthews. Welcome back to TV, Chris.

MR. MATTHEWS: Thank you. (Laughs.) (Laughter.) I'll let that stand.

MR. MCLAUGHLIN: Actually, I was at the start on the CNBC.

MR. MATTHEWS: Thank you.

MR. MCLAUGHLIN: And you do a great job, there.

MR. MATTHEWS: Thank you. Let's talk about this.

It seems to me that the problem with the Tom Daschle argument, and the problem with Eleanor's argument, is that the Justice Department has already been looking into questions about why we're giving this technology to the Chinese government.

And the fact is that while that investigation was going on, and while Loral Corporation was being probed, at that very time, this February, just a few months ago, the president said: "I don't care about that Justice Department probe. I am going to approve yet another waiver, yet another satellite shipment over to the Chinese government." I don't know why this president listens to Commerce secretaries about national security. You listen to the secretary of State and the Defense secretary if you want to get a national security reading.

MS. CLIFT: He did. He did.

MR. MATTHEWS: If you want to learn how to promote --

MS. CLIFT: They agreed with him.

MR. MATTHEWS: -- (now ?), he shifted jurisdiction --

MS. CLIFT: They agreed with him.

MR. MATTHEWS: He shifted jurisdiction from the State Department, in 1996, over to the Commerce Department so that his pals could have a better (read-out ?), a better hearing, over there.

MS. CLIFT: The State Department and his national security people --


MS. CLIFT: -- agreed with that decision.

MR. MCLAUGHLIN: Fred. Fred Bergsten, welcome.

MR. BERGSTEN: Thank you.

MR. MCLAUGHLIN: Now you were eminent person to APEC. What's APEC?

MR. BERGSTEN: APEC's the Asia Pacific Economic Cooperation Forum. It's agreed to move to free trade and investment in the Asian Pacific by the year 2010.

MR. MCLAUGHLIN: Fred, you were eminent person to that group --

MR. BERGSTEN: Absolutely.

MR. MCLAUGHLIN: -- an official designation. Do I call you Your Eminence, or is that too ecclesiastical?

MR. BERGSTEN: Please call me Your Eminence. And I was chairman of the Eminent Persons Group, so I was particularly eminent. (Chuckles.)

MR. MCLAUGHLIN: Okay. As long as people don't confuse you for the Dalai Lama.

MR. BERGSTEN: I hope not!

MR. MCLAUGHLIN: All right. Please continue.

MR. BERGSTEN: (Laughs.) I think there are two sets of facts here that have to be kept in mind. The first is what Eleanor said. There is nothing new about the U.S. letting commercial satellites be launched on Chinese rockets. It's been done for 10 years. It's been done from Reagan through Bush through Clinton.

MR. MCLAUGHLIN: Have any of those presidents contradicted the instruction, the direction and the feeling of the interagency group pulled together by Warren Christopher -- this is in 1996 -- and then against the express wish of the Justice Department that was in the middle of an investigation?


MR. MCLAUGHLIN: There is no parallel on that front; namely, that Bush contradicted the State Department and the Arms Control and Disarmament Agency and the Pentagon and the interagency group.

MR. BERGSTEN: But the second key point to keep in mind is there is no technology transfer involved here.

MR. BUCHANAN: Wrong. Wrong.


MR. BERGSTEN: You have to distinguish --

MS. CLIFT: Let him finish.

MR. BERGSTEN: -- between the satellite and the rockets. What we're talking about is putting U.S. satellites on Chinese rockets. There are very tight safeguards. The Defense Department watches the transfers.


MR. MCLAUGHLIN: Let's talk about that precisely. (Cross talk.) Your talking about the black box.

MR. BUCHANAN: (Inaudible) -- safeguards were violated.

MR. BERGSTEN: Americans put the satellites on the rockets.

MR. MCLAUGHLIN: You're talking about the black box?

MR. BERGSTEN: And the Chinese can't even look into the satellite.

MR. BUCHANAN: But, look --

MR. BERGSTEN: The technology transfer is not involved.

MR. BUCHANAN: -- the (existing ?) technology is missing from the satellite that went down. The rocket blew up. The Chinese checked it out, and the Americans went and confirmed the Chinese report on the rockets. These are the same rockets, 13 of which are targeted on this country with nuclear warheads right now.

(Cross talk.)

MR. MCLAUGHLIN: Well -- no, wait. Let him finish.

MR. MATTHEWS: When the rocket crashed in 1996, our guys from Loral went over there and taught them how to shoot their rockets better. And we're teaching them -- how to launch intercontinental ballistic missiles is what we're teaching them to do.

MR. MCLAUGHLIN: What did the DOD say in its report about that -- at that particular --

MR. BUCHANAN: National security has been harmed.

MR. MCLAUGHLIN: What did it say?

MR. BUCHANAN: National security has been harmed.

MR. MCLAUGHLIN: Eleanor, what do you say to that?

MS. CLIFT: "Our guys" went over there from Loral; that isn't President Clinton handing over stuff. And I doubt that Loral wants to hand over their technology; that would be the end of their contract. And --

MR. MATTHEWS: Why did the president approve a waiver after they'd already broken the rules?

MR. BUCHANAN: He torpedoed the investigation. He torpedoed the investigation.

MS. CLIFT: He didn't torpedo the investigation. These aerospace companies are always under review. They're always being looked at. And the precedent was that, short of an indictment, we keep doing business, because there are tens of millions of dollars at stake here.

MR. BUCHANAN: But this was a criminal investigation.

MR. BERGSTEN: And the Pentagon approved the waiver in 1998 --

MS. CLIFT: Precisely.

MR. BERGSTEN: -- even though the investigation was under way. They found no national security risks.

(Cross talk.)

MR. BUCHANAN: But the Justice Department -- they had a criminal investigation under way at that point --


MR. BUCHANAN: -- investigating Clinton's biggest contributor, and suddenly a waiver goes and undermines the investigation --


MR. BUCHANAN: -- against the wishes of Justice.

MS. CLIFT: It shouldn't undermine it; it's ongoing. (Chuckles.)

MR. MCLAUGHLIN: Let me point out that it was two waivers. One was in 1996, and the Justice Department was investigating the 1996 waiver --

MR. : Right.

MR. MCLAUGHLIN: -- because one -- the first of the four rockets that were authorized in this regard failed, and then U.S. technicians went over. And in the process of correcting the failure, they also communicated to the Chinese valuable encryption -- possibly -- secrets --


MR. MCLAUGHLIN: -- and other secrets.

Now bear in mind, Fred, that there are 13 Chinese intercontinental ballistic missiles, with nuclear warheads, pointed at the United States. The accuracy of those missiles could conceivably be improved by this transaction that we're talking about.

MS. CLIFT: They've been there since the '80s.

MR. BERGSTEN: Could conceivably, could possibly. That's the topic of the investigation.


MR. BERGSTEN: But right now we don't know, and I'd say hold back the troops until we know.

MR. MCLAUGHLIN: Before we go to the exit question, I think it's just appropriate and necessary to hear what the president of the United States said when he denied that there was any wrongdoing in these waivers and that he was only operating in the -- on the public good.

PRESIDENT BILL CLINTON: (From videotape.) But I can tell you that the decisions we made, we made because we thought they were in the interest of the American people.

BERNARD SCHWARTZ (chairman and CEO, Loral Space & Communications): (From videotape.) I don't think there's anything here for me to be concerned about.

MR. MCLAUGHLIN: I think we all feel very reassured by those statements. (Laughter.) Now let's go to the exit. On a political damage scale of zero to 10, zero meaning zero damage, 10 meaning metaphysical damage, how politically damaging will Chinagate be to Bill Clinton? Pat Buchanan?

MR. BUCHANAN: It's only three or four now, but has a high upside potential, John.

MS. CLIFT: It's two and it's heading down, because the facts are going to come out despite everything you're going to do to prevent that.


MR. MATTHEWS: This is going to cause problems for the president on the left with people like Nancy Pelosi who don't like this proliferation of weaponry throughout the Asian continent --

MR. MCLAUGHLIN: How much damage?

MR. MATTHEWS: In terms -- well, I'll tell you one thing -- his trip to Tiananmen Square is Bitburg.

MR. MCLAUGHLIN: You mean if he goes -- if he goes --

MR. MATTHEWS: Big, big problems with the American left --

MR. MCLAUGHLIN: -- if he goes to China in June --

MR. MATTHEWS: Liberal Democrats are going to be furious -- they're going to rip at this guy for going there --

MR. MCLAUGHLIN: Give me a number, one to 10. What do you think of this? How bad?

MR. MATTHEWS: Ten -- 10 -- within the next month it may dissipate, but this may be the one that takes him out.

MR. MCLAUGHLIN: Do you think it's a seven? Eight?

MS. CLIFT: Oh -- I can't --

(Cross talk.)

MR. BUCHANAN: -- a 10!

MR. MATTHEWS: Well, this is the big one.

MR. MCLAUGHLIN: Did you say 10? He said 10! What do you think?

MR. BERGSTEN: I think it's very low, but we have to wait until the investigation comes through to see what the facts are and therefore know --

MR. MCLAUGHLIN: You're an international economist, you deal in numbers. Can you give me a number between one -- between zero and 10?

MR. BERGSTEN: Two or three.

MR. MCLAUGHLIN: Two or three! The answer is six.

When we come back, is the feds rap against Microsoft fair, or is it a political shakedown because Gates didn't pay his protection money?


MR. MCLAUGHLIN: Issue two: Indonesia. Is the worst over, or is it yet to come?

PRESIDENT SUHARTO: (Translation from videotape.) I have decided to hereby declare that I withdraw from my position as the President of this Republic of Indonesia. (Cheers from Indonesian citizens watching resignation on television.)

MR. MCLAUGHLIN: With his economy in shambles and protests escalating in the streets, Indonesian President Suharto resigned Thursday, turning power over to Vice President B.J. Habibie. In his 32 years in office, Suharto was both praised for beating back communism and building a strong, diverse high-tech economy, and scorned for running a government wracked with graft and corruption. While Indonesia's economy boomed, Suharto lined his own pockets, amassing a family fortune of 15 to 30 billion dollars.

In Suharto's wake, one big question is, what's going to happen to the $43 billion International Monetary Fund -- IMF -- Indonesian bailout? And another $18 billion in IMF funding unrelated to Indonesia, currently stumbling through the U.S. Congress?

Question: If IMF reforms helped depose Suharto, then will Congress now see fit to approve IMF funding? Fred Bergsten?

MR. BERGSTEN: Congress should support IMF funding anyway. The Asian crisis is about to get worse; there are other countries around the world that could have similar crises. If the IMF's out of money to help, then Congress better get the money fast.

It's fiddling while the world burns.

MR. MCLAUGHLIN: Pat Buchanan?

MR. BUCHANAN: For heaven's sakes. The IMF is responsible for the debacle in Indonesia. They told them to shut down some banks, there was a run on the currency, they refused a currency board, they're responsible to tell them to raise food prices, and this caused the disaster. Congress has got to show that it has the courage to follow George Shultz's advice, which is to shut that IMF down before it kills again.

MS. CLIFT: Well, the reforms may have been the final spark, but what brought that government down was corruption and the fact that he made all this money and everybody else was having a hard time. But that money's got to be frozen unless Habibie makes immediate moves towards elections.

MR. MCLAUGHLIN: Did Clinton get any money from Indonesia? Do you remember James Riady of the Riady-Lippo group, $12 billion in assets, and 100 subsidiaries, including real estate and high finance?

MR. MATTHEWS: Well, of course.

MR. MCLAUGHLIN: What about that Lippo Group?

MR. MATTHEWS: Mochtar Riady and James Riady, these are household names --

MR. MCLAUGHLIN: Well, they were very friendly with Suharto.


MR. MCLAUGHLIN: Did they prevail upon the president of the United States, say, to spend this much time with Suharto?

MR. MATTHEWS: Everything I've understood from the Riady crowd is they're primarily interested in PRC matters with the big energy development in the People's Republic. That's their economic concern. They may be offshore Indonesians, but the big issue they've been pushing for is China power.

MR. MCLAUGHLIN: Fred, let me ask you. You knew Suharto quite well. Do you know Habibie?


MR. MCLAUGHLIN: Is Habibie given to reform?

MR. BERGSTEN: No. Habibie does not believe in liberalization. He's not going to be a reformer. He's a short-termer in this job.

MR. MCLAUGHLIN: Do you think that the cabinet appointees, which are supposed to be reform minded, that he has already installed, three of them, augurs well, or it doesn't prove anything?

MR. BERGSTEN: Doesn't prove anything yet, but Habibie's not the right guy for the job at this point.

MR. MCLAUGHLIN: Do you want to say something, Patrick?

MR. BUCHANAN: Riady's malls was one that was burned down. There's a tremendous backlash against the IMF, but against the Americans, as well, because we're seen as the ones imposing these sanctions.

MS. CLIFT: Yeah, but that --


MS. CLIFT: That economy is on life support. It's 200 million people. It's the largest Muslim country in the world. It is in our interest to try to provide some stability there. The IMF is a crude instrument, but it's the only instrument we have, Pat.

MR. BUCHANAN: You are bailing out banks! You're bailing out Japanese and European banks! That's where the money is going!

MS. CLIFT: That's an unfortunate by-product, but you're also helping the people.



MR. BERGSTEN: Pat's just wrong. The IMF reform helped bring Suharto down. He wasn't willing --

MR. BUCHANAN: And created a disaster!

MR. BERGSTEN: -- he wasn't willing or able to do them.

MR. MCLAUGHLIN: But he was a liberalizer.

MR. BERGSTEN: Suharto was a liberalizer in the past. He had a good record of development, but he built a system that was corrupt and inefficient. The banks have to be reformed. The corporate structure has to be reformed. Suharto couldn't do it. His time had passed. The IMF insisted on changes that have to be made. They helped bring Suharto down. The IMF should get credit from those who don't like Suharto.

MR. MCLAUGHLIN: We have a $4.5 billion trade deficit with Indonesia. Now, we also have a monumental trade deficit if you average it out for the entire year.

MR. BUCHANAN: Merchandise trade deficits running at $240 billion a year in March.

MR. MCLAUGHLIN: The question is: What is the impact of this going to be, as far as the Asian flu coming to the United States is concerned?

MR. BERGSTEN: The Asian flu increases our trade deficit substantially. We, therefore, have a crucial interest in overcoming the Asian crisis. One way to do that is to get money to the IMF so they could help the countries get back on their feet.

MR. MCLAUGHLIN: Exit question: Have things gone from bad to worse in Indonesia or from worse to bad? Pat Buchanan.

MR. BUCHANAN: They're gone from bad to worse, and they're going to get "worst." (Chuckles.)

MS. CLIFT: The opposite direction. I mean, there are more chapters in this play.

MR. MATTHEWS: I am with Eleanor. I think -- Indonesia's been through these changes from Sukarno to Suharto. They're always better off than they look when they start.

MR. MCLAUGHLIN: Worse to bad or bad to worse?

MR. BERGSTEN: No. It's going to get better. Habibie is a temporary fix. There will be reform; there will be elections. It'll take time, but Indonesia will get back on track.

MR. MCLAUGHLIN: They have now a revolution of rising expectations -- the people have there. And what they also have is the reality of falling incomes. This is from bad to worse -- that's where it's falling -- for the time being, Fred.

MR. BERGSTEN: For the time being; but if you look out six to 12 months, what's happened enables Indonesia to get back on track.

MR. MCLAUGHLIN: Issue three, U.S. versus Bill Gates: Fair rap or bum rap?

BILL GATES (CEO, Microsoft Corporation): (From videotape.) Interfering with the freedom to innovate, through lawsuits like these, will limit, not expand, choice.

ATTY GEN. JANET RENO: (From videotape.) In short, Microsoft used its monopoly power to develop a choke-hold on the browser software needed to access the Internet.

MR. MCLAUGHLIN: Bill Gates's worst enemy is no longer his competitors in the software market. It's the Clinton Justice Department and attorneys general from 20 states, who are jointly suing Microsoft, alleging that the world's biggest software company is an illegal monopoly. At issue is Microsoft's Internet Explorer web browser, which is bundled with its new Windows 98 operating system. Further, the Justice Department claims that Microsoft's business practices are both predatory and anti-competitive.

The legal case against Microsoft, however, in the minds of keen analysts, is fundamentally flawed. Item; consumers contented. The rationale behind the governing anti-trust law, the 108-year-old Sherman Act, is this: Protect consumers. In the instance of Microsoft, consumers are satisfied, if not happy; few complaints from them, calling for protection.

Item; no relevant law. Cyberspace technologies are in continuous and apparently permanent flux. The century-old Sherman Act cannot keep pace and indeed never was supposed to be relevant in the cyberspace changing world. Janet Reno, Joel Klein and the Department of Justice, the DOJ, are attempting to intimidate Microsoft by fashioning a new law and retrofitting it to punish Microsoft, say critics. But the DOJ is not a lawmaker; Congress is the lawmaker. If the DOJ wants a new law, they should ask Congress to pass one.

The legal case, in other words, is a cover story.

DOJ critics claim that the real reasons why 20 AGs and the Clinton administration are beating up on Microsoft are these: politics, fame and fortune.

Take California, the preeminent electoral state. California's Republican Attorney General, Dan Lungren, is one of the 20 state attorneys party to the feds' Microsoft suit. Count the number of voters working California technology companies that are directly or indirectly competitors of Microsoft. Here's a small sampling: 3COM, Adobe, Cisco, Network Associates, Oracle, Qualcomm, Silicon Graphics, Sun Microsystems, Sybase, Symantec, plus hundreds of others in California, including Netscape, Microsoft's arch rival.

Why is Dan Lungren, a pro-competition, pro-business conservative, who believes government intrusion in the private sector should be held scrupulously in check, why should Lungren join the feds' suit when the legal merits are, at best, thin, and at worst, tainted, ask the critics. Answer: Because he's running for governor and the prospect of 1.3 million technology-employed voters who with their families, friends, suppliers and associates could add up to as many as 5 million votes in November and substantial campaign funds, that prospect makes Lungren swoon, so say Microsoft defenders.

Question: Is the DOJ and the 20 AGs' rap against Microsoft fair or is it a political shakedown since Gates didn't pay his "protection" money? Do Gates's competitors see here a suit as a political bonanza for themselves?

I ask you, Christopher Matthews.

MR. MATTHEWS: The country loves guys like Bill Gates because they're cowboys. The trouble with this is you've got a situation where you're going to have a monopoly where there won't be any more cowboys. We should have a country in which any young person, male or female, has a shot at becoming a Bill Gates. If Gates gets in the way of that dream, he's the bad guy.

MS. CLIFT: Bill Gates has a wonderful product in Windows, but it is a monopoly and what he did to Netscape is wrong. All he needs to do is unbundle the browser, and they ought to arrive at that out of court.

MR. BUCHANAN: I think it's outrageous that they're telling Gates he cannot put out a product that's a terrific product that everybody wants to buy.

MR. MCLAUGHLIN: What do you say?

MR. MATTHEWS: Just like Standard Oil, right?

MR. MCLAUGHLIN: Exit question --

MR. BERGSTEN: The Justice Department is firing a warning shot across the bow of Microsoft. It is a monopoly, it has pursued predatory practices, it could get worse in the future. This is an effort to head that off at an early stage.

MR. MCLAUGHLIN: Very quick exit question. How is this going to end? Is DOJ going to win? Is Gates going to win? Will it be settled? Or will the Justice Department drop it?

I ask you.

MR. BUCHANAN: September trial, Gates wins.

MR. MCLAUGHLIN: Gates wins.

MS. CLIFT: They'll settle before September.

MR. MCLAUGHLIN: They'll settle before September.

MR. MATTHEWS: I'm a loner -- settlement.

MR. BERGSTEN: None of the above. The case will go on for years. It will be overcome by the technology before it's over. It will be like the IBM case that took 13 years with no results.

MR. MCLAUGHLIN: You're absolutely right. But time is on Gates's side.

We'll be right back with predictions.


MR. MCLAUGHLIN: Predictions. Pat?

MR. BUCHANAN: Al Checchi, the Democrat, spent $30 million in his race for governor of California -- he will run third in the primary; Jane Harman, second; Gray Davis wins it.


MS. CLIFT: Republicans will get scorched if they pursue the China money, because Republicans lobbied for technological transfers along with the Clinton administration.


MR. MATTHEWS: The Massachusetts congressional seat once held by James Michael Curley, John F. Kennedy, and Tip O'Neill, my old boss, will go to a woman this time, Marjorie Claprood (sp).


MR. BERGSTEN: More global financial crises are coming. Russia and Argentina are the most likely candidates. New countries in Asia may come up again. That's why the Congress better pass the IMF money fast.

MR. MCLAUGHLIN: We should bail them out with the IMF, right?

MR. BERGSTEN: We should help them adjust to their problems.

MR. MCLAUGHLIN: Hear that, Pat? You've got more --


MR. BUCHANAN: You got to get some money over there.

MR. MCLAUGHLIN: Hey, you got more to say at your bookstores, Pat. (Laughter.) I notice you've been visiting. Are there a lot of them up in Iowa and New Hampshire? (Laughter continues.)


MR. MCLAUGHLIN: India will sign the Comprehensive Nuclear Test Ban Treaty within three months.

Next week: A hard look at India. Is the outcry for punishment deserved? Bye-bye!





MR. MCLAUGHLIN: Issue four: Marion Barry, bye-bye!

MAYOR MARION BARRY (DC-D): (From videotape.) I'm really upset that this mean-spirited Republican-led Congress has broken too many of our spirits. We walk around with our head down. But I've come to the conclusion that there are areas I can better serve in outside of the government.

MR. MCLAUGHLIN: Question: Why did this "mean-spirited" Republican Congress crush the city's spirit and drive Mayor Marion Barry to resign? I ask you, Chris Matthews.

MR. MATTHEWS: Well, the big reason was him. (Laughter.) I have to say, he is a classic ethnic politician. He's like -- I mentioned James Michael Curley before in this show. He's like --

MR. MCLAUGHLIN: Who was he?

MR. MATTHEWS: He was a former crooked mayor of Boston. Tip O'Neill, who I worked for, used to say he was crooked by the standards of those days, which is really crooked!

MR. MCLAUGHLIN: He was even reelected while he was -- he was reelected while he was in jail.

MR. MATTHEWS: He was -- just like him -- reelected while in jail. That takes -- I think ethnicity is the last refuge of a scoundrel.

MR. BERGSTEN: I think Andy Brimmer and the Control Board have done a superb job.

MR. MCLAUGHLIN: What do you think, Pat? You were born in the District, were you not?

MR. BUCHANAN: I was born and raised in the District, about 800,000 people here, a wonderful town. I'll tell you what killed DC, and it wasn't just Marion Barry; it was Washington Post liberalism all across the board.


MR. MCLAUGHLIN: Let's organize our complaints against Barry. Let's organize our complaints against Barry.

MR. BUCHANAN: (Off mike.)

MR. MCLAUGHLIN: Here we go. Okay, the record, Barry's Washington:

Education: DC spends $9,500 per public school student and fails to open the schools on time.

Personnel management: DC has 32,000 employees. Twelve thousand of them receive disability pay.

Financial management: DC fails to deliver basic city services, but consumes more tax money per person than any other jurisdiction in the United States.

Sanitation: DC garbage men collect 75 percent less trash per man than their counterparts in New York City. (Laughter.)


MS. CLIFT: I've lived in the District for 22 years, and there's a lot to like about it. Marion Barry was once a good mayor.

MR. : Agreed.

MS. CLIFT: He's a little bit like Suharto; he stayed on a little too long. He built too big a patronage machine. It finally sank under its own weight.

MR. BUCHANAN: He may have been guilty --

MS. CLIFT: He had the wisdom to leave because I knows the Republican Congress won't restore home rule during for this year. (Chuckles.)


MR. BUCHANAN: I think we're going to need an IMF bailout in your town one of these days, Eleanor -- (laughs) -- just like in Indonesia.

MR. MCLAUGHLIN: Pat, do you think it's possible that the next mayor, in the next election, could not be of color?

MR. BUCHANAN: It's possible, but it's remote. Remote.

MR. MCLAUGHLIN: Really remote?

MR. BUCHANAN: I think if you split the Democratic party about six or seven ways, it's going to be a Democrat, whoever wins the Democratic primary.

MR. MCLAUGHLIN: Is there any lesson here for other urban centers in the United States? I ask you, Fred.

MR. BERGSTEN: Avoid ethnic politics, try to get a two-party system, try to get some real competition, and try to get some serious management practices all the way through.

MR. MCLAUGHLIN: Can you conceive of any other mayoral jurisdiction that is as troubled as is Washington, DC?

MR. MATTHEWS: Actually, mayors are having a comeback across the country. You've got Rendell in Philadelphia; he's immensely popular.


MR. MATTHEWS: You've Richie Daley, you've got Giuliani -- I don't like him much, but he's doing great. (Laughter.)

MS. CLIFT: Right. Detroit and Cleveland are doing well as well.

MR. MCLAUGHLIN: There is, unfortunately, one location that has been doing ill. What is that?

MR. BUCHANAN: Detroit.

MR. MCLAUGHLIN: Also, what?

MS. CLIFT: No, Detroit's been making a comeback --

MR. MCLAUGHLIN: Well, once again, I'm afraid I have to help the panel --

MR. BUCHANAN: Miami. Miami.



MR. MCLAUGHLIN: Miami has had serious trouble.