--

	 ``At least 50 percent of all non-hard-sciences research on
American campuses is a lot of foolishness!'' declared the speaker,
thumping his lectern. The audience of 200 responded with laughter
and applause.
	 This wasn't a revival meeting somewhere in the Bible Belt. It
was a smartly dressed gathering of the Greater Boston Chamber of
Commerce at Le Meridien Hotel in the heart of Boston's financial
district.
	 The speaker was James F. Carlin, a successful insurance
executive who serves as chairman of the Massachusetts Board of
Higher Education. This hitherto inconspicuous body, which
supervises the state's 29 public colleges, served as a platform for
Carlin to attack some of the very foundations of academia: faculty
rule, research, publications, tenure and sabbaticals.
	 Carlin's remark was unusual only for the scathing tone in which
it was delivered. Across the country this winter, governors,
legislators, congressmen, business leaders, university trustees and
even some faculty and students seem to have declared open season on
professors.
	 ``Faculty bashing is on the rise,'' said Arthur Levine, the
well-traveled president of Columbia University's Teachers College.
``It used to be a whisper, but now people speak it loudly.''
	 James E. Perley, a professor of biology at the College of
Wooster in Wooster, Ohio, and president of the 45,000-member
American Association of University Professors, confessed with no
little bewilderment that he is denounced almost everywhere he goes.
``It's 360-degree bashing,'' he said. ``All around us, people are
throwing things. I've been a teacher for 33 years, andcan tell
you it's never been this bad.''
	 The main complaints are that faculties have usurped control of
educational institutions and run them chiefly for their own
benefit, not the student's; that they are accountable to no one,
and that colleges have failed to increase productivity and that
they cost too much.
	 The critics also contend that all too often, students are unable
to graduate in four years because faculty members are off pursuing
hobbies masquerading as scholarship or research, and not teaching
enough sections of required courses. And, they say, as a final slap
to the taxpayers who finance public institutions, professors have
created an inflexible tenure system that guarantees them lifelong
employment at a time when almost no one but federal judges and
Supreme Court justices enjoys that privilege.
	 These attacks, often heard in statehouses scrutinizing state
education budgets, have gained momentum as Congress approaches the
reauthorization of the Higher Education Act, a $40-billion package
of loans, tuition tax deductions, financial aid and institutional
grants that is the single most significant piece of federal
assistance to students, colleges and universities. Behind the
complaints is the undeniable fact that most faculty members lean to
the left politically, whereas their critics are largely
conservative. There is also a natural tension between thinkers and
doers, between scholars and businessmen. And then, there is the
difficulty of measuring and evaluating what professors accomplish.
What, after all, is the love of knowledge? And how is it
communicated?
	 In his speech last November, Carlin took delight in describing
the cushy life of the tenured professor, which, in his view,
includes long summer vacations, paid sabbaticals, the service of
teaching assistants, free time for outside consulting, and ``every
fringe benefit God ever invented.'' Claude Hendon, an expert who
advises the Florida state Legislature on education policy, says he
has heard similar words before from state legislators. He
illustrates the point with an image he has frequently heard in
their remarks.
	 ``It is Friday morning,'' he said. ``The rest of us are headed
for a day's toil at the shop or the office. But the professor is
out there mowing his lawn. His weekend starts early.''
	 Frank Newman, president of the Education Commission of the
States, a nonpartisan research organization in Denver, has not
hesitated to criticize faculty members for resisting change, but he
acknowledged that the current climate is ``at least a little bit of
scapegoating.''
	 He said: ``Faculty get unfairly blamed when the public asks for
more than the schools can deliver. The perception used to be that
it was nice to have Princeton and the others out there. They were
helpful, but they weren't essential. Today, a college education is
seen as essential and the institutions are seen as not doing a very
good job.''
	 ``The reward system for faculty is not aligned with the
priorities of the states,'' he said. ``And that leads to great
misunderstanding.''
	 Still, faculties have left themselves vulnerable by resisting
demands for accountability, in the view of Charles S. Lenth, the
director of higher education policy studies of the Education
Commission of the States.
	 ``The universities have not gone through the stress of
downsizing or increasing productivity,'' Lenth said, ``so people
are asking why are professors protected from all this when the rest
of the world is not?''
	 Forewarned that Carlin would attack the professoriate, members
of the Massachusetts Teachers Association, the faculty union,
filled three tables at the Chamber of Commerce lunch. Among them
was Jenny Spencer, who teaches English at the University of
Massachusetts at Amherst. ``I don't think Mr. Carlin understands
the essential connection between teaching and research,'' she said.
``I'm an editor of a journal called Theater Topics. That requires a
lot of very hard, interdisciplinary work, but how canexplain
that to him?''
	 The professors had good reason to fear Carlin since his board
has the power to approve presidential appointments, set admissions
policies, approve academic programs, and make budget requests for
the state's 15 community colleges and 9 four-year state colleges.
The five campuses of the University of Massachusetts are more
independent.
	 When Carlin called for questions, up jumped another professor,
Conor Johnston, 54, a tall man in rumpled corduroy with a shaggy
beard. An English teacher at Massasoit Community College in
Brockton, Mass., he has devoted much of his career to the study of
the Irish novels of Anthony Trollope and to organizing poetry
readings in Brockton. He challenged Carlin's assertion that faculty
members are overpaid: ``After 24 years of teaching, my annual
salary is a miserable $40,500.'' Carlin, 57, a millionaire several
times over, replied in the blunt, sometimes abrasive, language of
the board room. He said that many professors work only 12 hours a
week.
	 Johnston said: ``That's like saying a professional football
player works only three hours a week because you exclude that he
was practicing for five days earlier in the week.''
	 Carlin complained that faculty committees have seized authority
from college and university presidents. ``That's like telling
General Motors that the president can't get involved in making
cars,'' he said. Johnston responded by recalling the revered
university tradition of faculty governance.
	 Finally, Carlin landed his heaviest punch. ``Since the end of
World War II, there has been enormous change,'' he said. ``People
moved from cities to suburbs, the interstate highways
revolutionized transportation, telecommunications has gone through
the roof, and there's been a major revolution in health care. Now
there's going to be a revolution in higher education. Whether you
like it or not, it's going to be broken apart and put back together
differently. It won't be the same. Why should it be? Why should
everything change except for higher education?''
	 Whomever one blames for rising college costs, the problem is
real. Fifteen years ago, a home mortgage was the largest financial
obligation a middle-class family would undertake. Today, the cost
of post-secondary education for children, especially for families
who choose private institutions, can be an equal or greater
financial burden.
	 According to estimates by the National Commission on the Cost of
Higher Education, an independent group established last spring by
Congress, the total annual cost at four-year public institutions
rose over the last decade from an average $7,107 to $10,759, up 51
percent. The total cost at private colleges has gone from an
average $15,049 annually to $20,003, up 33 percent.
	 Needless to say, the statistics can be manipulated to advantage
by both those who contend that tuition continues to rise unchecked
and those who say it is rapidly coming under control.
	 Some have argued that the costs have grown even more rapidly
than the National Commission's figures indicate. Testifying before
the commission at a hearing last October, Rep. Michael N. Castle, a
Delaware Republican, said that between 1984 and 1994, the cost of
transportation was up 34.3 percent, the price of sirloin steak was
up 37.5 percent, medical care leaped by 111 percent, and college
tuition soared by roughly 150 percent.
	 Those figures, he said, suggest an urgent need for colleges and
universities to create more efficient structures, narrow the focus
of their teaching or otherwise downsize.
	 The numbers seem to indicate, Anderson said, that ``colleges
have been quietly responding over the last four or five years to
the bad publicity they have been bombarded with on the cost of
college.''
	 Whatever set of numbers one chooses, the faculty tends to catch
the blame.
	 And some faculty members believe that they themselves should
bear some responsibility for the increased costs. Jacques Barzun,
the Columbia University philosopher and historian, said: ``College
faculties and administrators have exacerbated the present cost
problem by losing sight of their priorities. We have to strip
higher education down to the basics _ students, teachers, and
blackboards. Cut out all these counseling programs, opportunities
for acting, student periodicals, and guest lecturers. These things
are in themselves valuable, but if we can't afford them, they are
the things that should go, together with the personnel that operate
them.''
	 In some communities, grass-roots frustration with higher
education has led elected officials to go well beyond the reforms
proposed by Carlin. Two years ago, John A. Lawless, a Republican
representative in the Pennsylvania state Legislature, held a set of
hearings around his state that struck fear into the hearts of the
faculty at state-supported colleges and universities. He concluded
that many college professors work less than full time and should
have their pay reduced accordingly. ``When are faculty going to
learn that they have to live like the rest of us?'' he demanded.
	 Lawless also believes that sabbaticals are mostly junkets, and
drew laughs at one hearing when he remarked: ``Nowknow why
there's a professor on Gilligan's Island. Professors travel all the
time!''
	 He argues that royalties from work done on sabbatical should be
paid to the state, not the professor, and that faculty and staff
should not be handed tuition and fee discounts for their children
at state-supported schools.
	 While his proposals died in committee, Lawless savored small
victories, like the state legislation he supported last year that
requires professors requesting sabbaticals to spell out the
academic purposes of any travel they propose. He said greater
success is inevitable, given increasing public support for his
ideas.
	 ``Now I'm on the Internet, getting questions from people all
across the country,'' he said. ``My constituents love what I'm
doing. They don't want me to stop.''
	 Last May, the National Commission on Higher Education was
established when two Republican congressmen known for fiscal
conservatism, Rep. Bill Goodling of Pennsylvania and Howard P.
McKeon of California, sensing public anxiety over the cost of
college, authorized $650,000 to create the commission. It was
designed as a national forum to investigate the cost of higher
education and suggest remedies from legislation to recommendations
for the United States Education Department. The commission is an
11-member bipartisan group of college and university presidents and
others knowledgeable about higher education.
	 Some members were bent on exploring the suspicion that low
faculty workloads and undeservedly high faculty salaries had been
responsible for driving up college costs. Last fall, the commission
traveled throughout the country, asking provocative, if not openly
hostile, questions like, ``Are faculties paid too much?'' and ``Do
professors work hard enough?''
	 The questions raised the ire of Perley and fellow members of the
AAUP, who soon found support in an unexpected quarter. In November,
Anderson of the Hoover Institution, well known as a sharp faculty
critic, and the author of ``Impostors in the Temple:Blueprint
for Improving Higher Education'' (Simon ; Schuster), said: ``There
is a lot wrong with higher education _even wrote a book about it
_ but the one thing that colleges can't be accused of is gouging
the public.''
	 And many members of the commission appear to be siding with
Anderson, so troubling Reps. Goodling and McKeon that in December
they issued a news release angrily declaring that ``any suggestion
that we don't have a crisis flies in the face of common sense.''
	 The commission was so sharply divided last month that its
chairman, William Troutt, president of Belmont University in
Nashville, Tenn., twice postponed the final report. He said the
committee had reached agreement on some measures, like a
recommendation that colleges disclose more financial information to
help prospective students and their parents better understand
college costs and financial aid.
	 Optimistic faculty members may think that they won a round with
the commission, but Congress is not through with them.
	 House and Senate Republicans are taking a skeptical look at
reauthorization of the Higher Education Act, which provides federal
grants and loans for college students, tax deductions for
tuition-related expenses and aid to colleges.
	 One proposal under discussion is a carrot-and-stick approach, in
which colleges that reduce tuition or increase faculty workloads
would get federal grants for their students, and those that did not
would see their aid cut.
	 David Longanecker, the Department of Education's assistant
secretary for post-secondary education, said the administration
strongly opposes any such action. ``Price is a federal concern but
not a federal responsibility,'' he said.
	 But a Republican staff member said that Congress may act anyway.
``People down here are sufficiently concerned about runaway college
costs that they are actually speaking of price controls,'' he said.
``That's not what we prefer, but if people in this industry _ if
you can call it an industry _ can't police themselves, we may have
to do the job for them.''
	 And the faculty's role? ``Let's just say faculty are not part of
the solution,'' he added.
	 College and university faculties also came under siege last year
when Congress considered phasing out Section 117 of the tax code,
which allows these institutions to offer tuition reduction benefits
for faculty, faculty dependents, graduate students and other
college and university employees as tax-free income. Section 117
also granted tax-exempt status to the TIAA-CREF retirement fund,
the major pension fund in which faculty members participate.
	 Last spring, Rep. William Archer, a Texas Republican who leads
the House Ways and Means Committee, proposed taxing the tuition and
retirement benefits. Taking aim at the tuition benefit, he and
others in Congress asked why middle-class and working-class
families must struggle largely without federal assistance to meet
increasing college costs, while many tenured professors enjoy this
significant tax break.
	 Faculty members said they deserved the benefit, because they had
chosen a relatively low-paying profession and performed a public
service.
	 Reacting to Archer's proposal, the higher-education community
blasted Congress with thousands of letters and telegrams. In the
end, the retirement benefit lost out, while the tuition tax break
survived, at least for now.
	 Open season on faculty is also generating pressure to modify or
eliminate tenure. Only a few years ago, the subject was taboo, but
today there is sharp criticism in state legislatures and in
publications like the Johns Hopkins Magazine, which recently ran a
cover story on ``the once sacred institution of tenure.''
	 The effort gained momentum from a federal law that took effect
in January 1994 and prohibits mandatory retirement on the basis of
age for tenured professors. As a result, many are continuing to
teach after the age of 70, leading to warnings of a graying faculty
lecturing from yellowing notes. Levine, of Teachers College, said
that the new federal law eliminating mandatory retirement has
caused tenure to be perceived as ``a real threat to modernity.''
	 As he explained it: ``Tenure is no longer a 30-year arrangement
but a 50-year arrangement, and that has people worried.``
	 One result, Levine continued, has been to inspire talk about
tenure buyouts, post-tenure review (which would subject tenured
faculty to peer review after a set period of time) and similar
plans.
	 One of the most explosive of the post-tenure review proposals
was promoted two years ago by William Ratliff, a Republican in the
Texas Senate who then chaired its Education Committee. Playing to
his largely rural constituency, Ratliff proposed a post-tenure
review, including the possibility of dismissal for cause, for all
faculty at publicly supported colleges and universities in the
state. ``My idea was to assess them in terms of productivity,
effectiveness and so forth, to see if we were getting our fair
share for the taxpayers' money.
	 ``My proposal, which some people thought too prescriptive,'' he
continued, ``was that if you flunked the post-tenure review two
years in a row, you would lose the protection of tenure.''
	 To the great relief of many Texas academicians, Ratliff moved
from the Education to the Finance Committee last year. One result
was that in May 1997, the Texas Legislature adopted a relatively
mild plan that calls for post-tenure review, but leaves it to each
institution to decide how to carry it out.
	 Meanwhile, the AAUP, among other faculty organizations, has been
fighting the spread of these reviews. Perley, for example, argues
that post-tenure review programs are useless and wasteful because
wherever they have been adopted, only 1 percent of the faculty
reviewed gets poor marks. ``So why create a whole new program to do
something that really doesn't need to be done?'' he concludes.
	 Other critics argue that while most professors are liberals
intent on changing society, they dig in their heels when it comes
to their own profession and oppose anything new.case in point,
according to Newman, is what happened at the University of Maine
three years ago.
	 J. Michael Orenduff, then chancellor of the University of Maine,
decided to expand the university's reach by creating an eighth
branch consisting only of two-way television classes. The plan was
enthusiastically approved by the university's 16-member board of
trustees, but faculty members on all seven campuses rebelled and
forced Orenduff to resign.
	 ``What's the message?'' Newman asked. ``It's that the faculty is
in charge, and if you try to make changes and force the issue, you
talk yourself out of a job.''
	university official who spoke on the condition of anonymity,
said: ``Give them anything new _ anything _ and they immediately
say no. I'm not just talking about the young, untenured people who
understand that promotions and tenure come through departmental
chairs rather than from interdisciplinary committees, but the most
bitter opponents of change are the older faculty who have things
the way they like them, and the world be damned.''
	 Perley, president of the AAUP, testified before the National
Commission and gives speeches in defense of faculty wherever he
can, but he conceded that it's uphill work.
	 ``The bottom line,'' he concluded, ``is that we have to refocus
the debate on the positive things we do. That's difficult. We've
lost touch with the public.''



NYT-01-04-98 1337EST



 NYT19980104.0062 
STORY 
 01/04/1998 13:41:00 

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COMMENTARY:POLITICSEDUCATIONBLACKSA STARRING

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	 With welfare reform and the budget deficit defused as issues,
public education is shaping up as the next point of contention
between Democrats and Republicans. The debate will require fancy
footwork, given that educational financing and policy are local
matters in which the federal government plays only a minuscule
role. The shift will be especially awkward for Republicans, who
have generally viewed ``local control'' as the be-all and end-all
and have denounced even enlightened federal initiatives as preludes
to a government takeover.
	 Hints of change were evident in the last Congress, when the
Republican leadership generated several school choice proposals,
all of which failed, though not before exposing the most retrograde
features of the Democratic party line on education. The most
controversial proposal set aside $7 million to pay 2,000 private
and parochial school scholarships for children trapped in the
abysmal schools of Washington.
	 As a dysfunctional city run by Democrats, Washington is a
frequent target for Republicans who wish to embarrass the
opposition and grandstand for the folks back home. But the
horrendous failure of Washington's schools made the city a
legitimate target for the voucher plan. The severity of the problem
came through in a recent report from the financial control board
overseeing city affairs. The report, titled ``Children in Crisis,''
said that the city had failed ``in virtually every area and for
every grade level ... to provide our children with a quality
education and a safe environment in which to learn.''
	 The study described a system that was mired in graft and
violence and had failed to determine basic information, like how
many people it employed or how many children it served. Nearly 80
percent of students could not read at even the basic level _ almost
twice the national figure. The longer these children remained in
the system, the worse they performed. The school system's chief
academic officer, Arlene Ackerman, recently described the process
as ``educational genocide.''
	 The same Republicans who had sworn by ``local control'' sounded
like activist liberals, saying that vouchers would allow at least
some of Washington's children to go on to college rather than jail.
Democrats who had made careers as champions of the poor opposed the
plan, arguing that a solution that did not save every child was
unacceptable. The Democrats got the worst of the exchange. They
seemed more interested in preserving the public school monopoly
than in saving at least some children's lives.
	 During the debate, an African-American father in the District
spoke for millions of others, saying he didn't care if relief came
from ``Democrats, Republicans or chickens,'' just as long as it
helped his child. The comment conveys the potency of the voucher
issue among African-Americans, who are overwhelmingly confined to
the country's worst schools and favor vouchers in far greater
numbers than do whites.
	 Thehopes to exploit African-American discontent by
portraying itself as an advocate of choice for the poor and by
casting the Clinton administration and the teachers' unions as part
of the horrendous status quo. Given these politics, the expansion
of programs that offer private education at public expense is
inevitable, if only in inner cities, where letting the poorest
students flee to private schools is the only moral thing to do.
	 But despite its popularity as a political tool, the voucher
strategy amounts to no more than tinkering at the margins of an
enormous problem. Among the millions of children trapped in
inner-city schools, not even 10 percent could find private school
placements if they were given vouchers tomorrow. One survey in
Washington found that the city's private and parochial schools
would have trouble absorbing even 2,000 voucher students, in part
because the proposed scholarships fell far short of tuition costs.
	 If Congress wants to improve American schools, it will need to
wade into issues like school construction, teacher training and,
most crucially, national standards establishing what children need
to know and when. If Congress bypasses these issues _ and history
suggests that it will _ the coming debate will consist mainly of
noise and empty irrelevancies.
	 The voucher idea originated 40 years ago with the free-market
economist Milton Friedman. Friedman argued that students should be
permitted to transfer from failing public schools to successful
private schools, taking public dollars with them. This strategy, he
predicted, would force the worst schools to close and mediocre ones
to shape up. His critics countered that a voucher system would skim
off the brightest students, promote white flight and leave
inner-city schools black, poor and bereft of a viable tax base.
This happened, anyway _ not through vouchers, but through
middle-class flight brought on by worsening schools.
	 Friedman's proposal died shortly after birth, but was recently
resurrected in the form of scholarships aimed at the poorest of the
poor. Three-fifths of the states have choice programs that allow
movement among public schools; several others are considering plans
that would allow low-income families to escape the worst inner-city
schools for private schools and _ if the courts allow _ parochial
schools as well. The congressional plan was modeled on publicly
funded voucher programs in Milwaukee and Cleveland. The two
programs, which have fewer than 5,000 students between them, have
come under heavy attack from the educational establishment. The
record shows in grim detail how difficult it is to break a
public-school monopoly.
	 That the Milwaukee program has survived is something of a
miracle. The scholarships are limited to $3,000 _ less than half
what the public schools spend per pupil _ insuring that many
students would enroll in schools that lacked financial stability.
The schools were forced to accept children at random, to insure
that there would be no skimming for the best and brightest.
Enrollment was limited to 1.5 percent of the student body, making
certain that thousands of children would remain in failing schools
that graduate almost no one. Yet, despite the obstacles, recent
studies have shown measurable improvements in test scores for
students who were lucky enough to get the vouchers.
	 The Cleveland program was just as penuriously financed, but
somewhat better organized. Unlike the Milwaukee program, it allowed
families to choose not only private but also parochial schools,
thus greatly expanding the options. The program now includes 3,000
children, who receive up to $2,500 each and attend 55 private and
parochial schools.recent study by the Harvard Program on
Educational Policy and Governance examined test scores for about
one-fifth of the voucher students and found that since leaving
public schools, most had made measurable gains in English and
dramatic gains in math.
	 Critics argued that private schools would reject the poorest and
most difficult students. But of the children who use the voucher
program in Cleveland, 75 percent are poor and two-thirds are black.
Critics also suggested that poor parents would be incapable of
choosing private schools and would do so on irrational grounds.
	 The Cleveland parents, however, were as rational as they come.
About 85 percent said they took part in the voucher program for
academic reasons, with close to 80 percent citing safety as an
additional concern. The Harvard study found that two-thirds of the
voucher parents were ``very satisfied'' with the academic quality
of the school, compared to fewer than 30 percent of the parents of
students who remained in public schools.
	 Teachers' unions and other groups challenged Cleveland's program
on constitutional grounds, arguing that it violated the separation
of church and state. But this is a thin reed, growing thinner all
the time. An Ohio state judge rejected this argument, allowing the
program to continue, pending rulings in a higher court.
	 In an intriguing decision, the Ohio judge, Lisa L. Sadler, found
that the voucher scholarships were not subsidizing religion. On the
contrary, the judge seemed to argue that the voucher students were
no different from college students who are allowed by law to use
federal grants and scholarships at religious colleges.
	 Enemies of the Cleveland program can expect little solace from
the U.S. Supreme Court, which has signaled in several cases its
readiness to weaken church-state barriers in education. The most
recent signal was Agostini vs. Felton, in which New York City was
permitted to deliver federally mandated remedial services to
children on parochial school grounds instead of in trailers just
off parochial school property.
	 The teachers' unions are understandably worried.
	 But in carrying the fight, some union activists are advancing
disturbing and even sinister arguments about inner-city children.
The most common is that vouchers should be disallowed because they
benefit the few while leaving out the many.
	 The unions also argue that data showing improvement among the
voucher students has been cooked and can't possibly be real. In
essence, these critics are making a claim that no parent would
accept: that orderly, well run private schools can't possibly be
better than horrendously run public schools. Taken to their logical
conclusions, these arguments assert that inner-city schools are
doing the best they can with what they are given.
	 What this means is that the teachers' unions have lower
expectations for African-American children than for whites.
Inner-city parents are caught between cynical Republicans, who use
them to bludgeon Democrats, and cynical Democrats, who patronize
them and sacrifice their children to the vagaries of politics.
	 But surveys and focus groups show quite clearly that
African-Americans want out of the decrepit and unsafe city schools.
Recent survey data from David Bositis of the Joint Center for
Political and Economic Studies, a Washington research organization
that specializes in racial issues, show that African-Americans have
a dimmer view by far of public education than whites.
	solid majority of whites view their schools as either good or
excellent, but only about a third of African-Americans and 40
percent of Latinos are satisfied with their schools. Nearly 80
percent of blacks and more than 85 percent of Latinos say the
government spends too little on education, as opposed to about 60
percent of whites.
	 Whites are evenly split on the issue of whether to issue
vouchers for use in public, private and parochial schools. But
African-Americans and Latinos are heavily in favor of such a
system. Among African-Americans ages 26 to 35, 86.5 percent favor
vouchers.
	 In addition, Bositis' studies show that black support for
vouchers jumped by about 19 percent in a single year, from 1996 to
1997. These numbers spell trouble for the Democrats, who have been
trying to persuade African-Americans to keep the faith with schools
that destroy their children's futures. The same congressmen who
stood tall for a voucher program that would have reached only 2,000
children in Washington cowered when it came to reform that would
have benefited every school child in the country.
	 The issue in the last Congress was the Clinton plan for a
voluntary national test that would allow parents to know exactly
where their children stood with respect to state, national and even
world standards.
	 The current patchwork of tests includes vague scoring statements
that allow school districts to obscure how badly they are doing.
The only way to clarify things is through clear, standards-based
tests that permit local, national and international comparisons.
Congress lacked the courage even for this.
	 Republicans argued that a national test would erode local
authority and lead to a government takeover of the schools. Black
and Hispanic Democrats complained that such a test would further
stigmatize minority students, who would inevitably perform worse
than whites.
	 What really scared Congress was the prospect that parents would
find out exactly where their schools stood _ and hold lawmakers and
school officials accountable as never before. On the whole,
American schools are far better than most critics wish to admit,
particularly at the high end, where they easily rival the best that
Japan and Western Europe have to offer.
	 The problems lie at the low end, with inner-city schools at the
bottom of the heap. The obvious thing to do is to apply standards
used at the very best schools to all the rest, while providing the
resources and roadmaps to make the new standards achievable.
	 But having balked at a national test, Congress seems to have no
appetite for going where no American has gone before. American
education was hobbled from the start by the twin presumptions that
mediocrity is acceptable and that excellence is available only to
the privileged few.
	 The story of how this happened can be found in the philosopher
Richard Hofstadter's book ``Anti-Intellectualism in American Life''
(Alfred A. Knopf), which won the Pulitzer Prize in 1964. In the
mid-1890s, a prestigious national task force called The Committee
of Ten called for a strong academic curriculum for all high school
students _ whether or not they planned to attend college.
	 The Ten decried the ``feeble and scrappy'' courses offered in
American schools and advocated a rigorous regime that included four
years each of foreign language, English and literature, three to
four years of science and math, and two to four years of history.
The committee said that a strong academic curriculum was especially
important for students not bound for college, to prepare them to
participate knowledgeably in democracy.
	 If all this sounds familiar, it's because it is. In 1983, the
National Commission on Excellence in Education sounded the same
themes in its report, ``A Nation at Risk,'' which warned against a
``rising tide of mediocrity'' and pointed out that American
children were losing ground compared with their peers in Europe and
Japan. Echoing The Ten, ``A Nation at Risk'' insisted on extensive
education in English, math, science, social studies and computer
science _ for every high schooler, regardless of background or
vocational interest.
	 The national standards movement that grew out of that report
started in the right direction, but was burned up during the
culture wars, when the subject of standards became highly
politicized. Things are pretty much where The Ten left them in
1894. Back then, bureaucrats subverted the committee's plan,
arguing that it was too demanding and that rigor would be lost on
the poor and especially women, who were destined to be housewives,
anyway.
	 Science and math became ``industrial arts'' and ``household
science.'' The result was a tracking system that sorted students in
terms of ``ability groups'' that were often proxies for race,
gender or class. Hofstadter called this the most antidemocratic
moment in the history of American education. The Boston University
educator Paul Gagnon describes the process as triage for the
masses, noting that 80 percent of the population is consigned to
the nonacademic scrap heap by junior high school.
	 As a consequence, a disadvantaged child has a better chance at a
rigorous education in Paris, Copenhagen or Tokyo than in New York,
Chicago or Cleveland. West Germany and Scandinavia have much to
teach us, as do Singapore, South Korea and especially Japan, whose
schools are ranked in international studies as the best in the
world. But even if Americans copied Japanese techniques, the view
of human potential that makes them work would be far more difficult
to acquire.
	 Japanese push their children to achieve because they see
excellence as the product of hard work. Americans tacitly accept
failure because they view it as the product of diminished ``native
intelligence.'' Voucher programs and charter schools are logical
parts of a broad educational mix. But in terms of what ails us
nationally, they are no more than pop guns deployed against a
battle ship. At the barest minimum, Americans need to reach a
national consensus about standards _ and about what children need
to learn and when they need to learn it.
	Congress that fears even voluntary national testing is
unlikely to embark on so politically charged a mission in the
absence of strong, bipartisan leadership. Unless that leadership
arises very soon, the debate on school reform will be sound and
fury, signifying nothing.



NYT-01-04-98 1341EST



 NYT19980104.0065 
STORY 
 01/04/1998 13:47:00 

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 BC-EDLIFE-ACOHOL-ART-4TAKES-NYT 

BINGE NIGHTS:EMERGENCYCAMPUS

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	 CHARLOTTESVILLE, Va. _ Getting in to see John Casteenis no
easy matter. As president of the University of Virginia, one of the
nation's premier colleges, he is often on the road, raising money
for a $750 million capital fund drive that does not end until the
year 2000. When he is on campus, he is tightly scheduled. Early in
the morning, appointments begin to back up in the elegant waiting
room outside his Madison Hall office. Alumni, faculty,
undergraduates, doctoral candidates, state legislators, bankers,
the student reporter from The Cavalier Daily_ they all want a
few minutes.
	 But one afternoon in early December, the busy president abruptly
canceled his appointments and drove two hours from the
Charlottesville campus to Reston in northern Virginia, to visit the
parents of Leslie Baltz, an honors student in the Class of '98.
	 Casteen makes these visits once or twice a year, though he is
never sure if the parents will want to see him, given the
circumstances. That previous weekend, Ms. Baltz, a 21-year-old
senior who was on the dean's list every semester, was drinking
heavily. There are some who believe she was doing her ``fourth-year
fifth,'' the longstanding practice of University of Virginia
seniors to consume a fifth of liquor for the last home football
game.
	 Seeing how drunk she was that Saturday afternoon, her
girlfriends left her on a couch upstairs at one of their
apartments, then went to the game against Virginia Tech. When the
friends returned at 9:30 that evening, they opened the apartment
door and there was Ms. Baltz at the foot of the stairs,
unconscious, face up, her legs slanting up the stairway. The
friends called 911, and she was rushed to the university medical
center.
	 This is not a rare occurrence. Every weekend, between 3 and 10
University of Virginia students arrive in the emergency room with
alcohol poisoning or an alcohol-related injury. That same day,
another student had such severe poisoning from bingeing on bourbon
at a tailgating party that he stopped breathing and was placed on a
respirator in the same intensive care unit as Leslie Baltz.
	blood sample showed Ms. Baltz's alcohol level was .27 _ more
than three times the state limit for intoxication. From the
internal injuries to her brain, authorities surmised that the
honors student had risen from the upstairs couch at some point,
then fallen down the apartment stairs, head first.
	 ``Generally speaking, the families don't want to see me, but
some do,'' Casteen said. ``One comes into the family's life as an
invader. You go in the family's home, and what you're dealing with
is their awareness it will never be the same again.child who was
a treasure, who was precious, and you see the physical leavings are
all over the family's lives. All the remnants of their achievements
in grade school, their clothing, their awards, their photographs _
sometimes an automobile _ they're all there.family is dealing
with that lost child and you know that it will never be the same.
	 ``In my family,'' continued Casteen, the father of two
teen-agers, ``the way we deal with grief or joy is through
religious practices, but that's not part of what we can do; this is
a public institution. The culture is very secular. Whatcan say
is,feel sorrow.offer whatever help. Mostly whatdo is
listen, often for a couple of hours.''
	 On Nov. 30, Leslie Baltz became the fifth Virginia college
student to die in a month's time in alcohol-related accidents.
	 Three _ from Virginia Tech, Virginia Commonwealth and Radford
University _ were killed in drunk driving crashes. Another, an
18-year-old Virginia Tech freshman who was sleeping off a night of
heavy partying, rolled off her bed, out her dorm window and fell
eight stories.
	 This string of death followed the much publicized drinking
deaths earlier in 1997 atand Louisiana State University, and
numerous less publicized ones at Fordham University; Hartwick
College in Oneonta, N.Y.; Clarkson University in Potsdam, N.Y.; St.
Mary's University in Winona, Minn.; the University of Massachusetts
at Amherst; Pennsylvania State University; the State University
College at Cortland, N.Y.
	 Virginia officials were spurred to take action: they convened a
daunting number of task force committees and subcommittees on ways
to curb binge drinking by students. State Attorney General Richard
Cullen led the way, assembling a 38-member task force that includes
14 of Virginia's college presidents.
	 But while there is no shortage of alcohol task forces across
America _ like tombstones, they tend to appear wherever a student
dies _ there is a noticeable shortage of solutions. It is not even
clear whether more college students are dying from alcohol these
days, or if it's a matter of the media paying more attention to the
issue lately because of a few sensational cases. Several public
health experts say they know of no long-term national statistics on
college alcohol fatalities.
	 Indeed, in some respects it appears that a substantial number of
today's students have a more conservative attitude toward alcohol
than the previous generation.
	 In 1980, 9.5 percent of college students nationwide said they
abstained from alcohol; by 1996, 17 percent did, according to an
annual survey by Professor Lloyd Johnston of the Institute for
Social Research at the University of Michigan at Ann Arbor.
	 In 1980, 6.5 percent reported drinking daily; today, 3.2 percent
do. Even the number of binge drinkers may be declining: in 1980, 44
percent reported binge drinking; today, 38 percent do.
	 At the University of Virginia, which has a reputation as a
hard-working, hard-partying school (one of the unofficial mascots
is the wahoo, a tropical fish that can drink twice its weight), the
administration appears to have made some headway. During the 1980s,
it got rid of Easters, the massive, weekend-long drunken fraternity
block party that was held on Rugby Road each spring and attracted
wahoos from all over the East Coast.
	 As Chris Jeffries, the head of the Inter-Fraternity Council, put
it: ``I really do believe it's calmed down some. You don't see kegs
flying through the windows any more.''
	 The university has a substance abuse center, a program to train
bartenders how to keep drinking under control, classes in alcohol
abuse, an alcohol awareness week, a free taxi program so drunken
students don't have to drive, nonalcoholic social events and
student alcohol patrols.
	 Each year, Virginia runs national conferences to teach other
universities how to handle substance abuse in their athletic
programs. Indeed, a 1996 report, ``Promising Practices: Campus
Alcohol Strategies,'' by David Anderson, an associate research
professor at George Mason University in Fairfax, Va., singles out
the University of Virginia as having one of the dozen best campus
programs in the country.
	 Still, Ms. Baltz died in November, and Lumsford McGowan died in
a drinking accident the year before, and Brian Cook the year before
that.
	 What university officials here and across the country fear they
are seeing is a substantial number of students who drink
excessively and dangerously, and don't seem reachable. The most
recent survey at the University of Virginia reports that of
students who drink, 25 percent were binge drinking three or more
times in the previous two weeks.
	 ``It's one thing to drink a little to get buzzed,'' said Cheryl
Battles, a senior, ``but I'm amazed at how many people here drink
to get wasted _ `Oh man, you were bombed last night, you were
hysterical, you were throwing up all over the place.' ''
	 Dr. James Turner, head of the university's student health
services, said that while the number of drinkers may be down,
``we're seeing more serious problems in our emergency room.'' He
said a generation ago, a significant number of students wanting to
get high used marijuana, while today it is mainly alcohol.
	 ``Now, please don't make it sound like I'm endorsing
marijuana,'' he said. ``I'm not. But the problems of marijuana are
different. They're not as severe. You don't have the violent
behavior; you don't have the sexual aggression; you don't have the
poisoning.''
	 As part of their training, upper-class students who are chosen
to supervise dorms as resident assistants are taught how to keep
very drunk students alive. ``We have andoctor teach them how to
lie the drunk students on their side and hold their heads up, so
they don't choke on their own vomit,'' Turner said.
	 When adults hear that 3 to 10 drunken students at one of the
finest universities in America wind up in the emergency room each
weekend, they are shocked, but it does not make much of an
impression on the young.
	 ``We have 18,000 students on campus,'' Turner said. ``If 40
percent are bingeing, that's thousands and thousands, so to them,
the risk is low. Fear-based education _ getting up in their faces
and saying, `You're going to die'' _ isn't going to work. They
don't believe it.''
	 When it comes to alcohol, educators have found that every
solution is accompanied by a fresh set of problems. To control
drinking on campus, Louisiana State University banned liquor at
fraternities and campus events. Then, in August, 20-year-old
Benjamin Wynne drank himself to death at an off-campus fraternity
party at a local bar. Suddenly,officials found themselves
wondering if it might be better to allow drinking on campus again,
so they would at least have some say in regulating it.
	 The 21-year-old drinking age is a major headache for college
administrators. In the mid-1980s, the federal government threatened
to cut off highway funds to any state that did not raise the
drinking age from 18 to 21; by 1988, all 50 states had complied.
That policy has measurable benefits: the National Highway Traffic
Safety Administration estimates that the older drinking age saves
the lives of 800 18- to 20-year-olds each year.
	 On the other hand, a drinking age of 21 makes it very hard for
administrators to teach students to drink moderately, when
three-quarters of the campus is not supposed to be drinking at all.
At colleges across America, the legal drinking age may be a joke,
but it is not a joke that university administrations can
participate in.
	 At the University of Virginia, the most recent health survey
indicated that over 75 percent of under-age students drank, and
over half of the under-age students had been intoxicated in the
previous two weeks. Turner said 70 percent of the drunken students
they see in the emergency room are under age.
	 As a parent, University of Iowa president Mary Sue Coleman let
her son, Jonathan, now 26, drink at home when he was under age.
	 ``We didn't want him to think alcohol was a totally forbidden
substance,'' she said. ``We'd have a glass of wine or beer with
dinner. Always in moderation.''
	 Would President Coleman say this to her 18,000 undergraduates at
Iowa? ``Oh no,'' she said. ``I'm not going to tell students I
expect you to drink if you're under 21.don't want them to get
the message that we're winking at state law.''
	 Students mock the hypocrisy of their elders, as administrators
try to figure out where to draw the line on alcohol. At Iowa and
Virginia, the campus police do not enforce drinking rules at
tailgate parties before football games, but are aggressive about
limiting alcohol in the stadiums.
	 ``The students see all our efforts to control the flow of liquor
into the stadium,'' Casteen said, ``which seems comical in light of
all the tailgate drinking in the parking lots. They see a place
where we control things and where we don't.''
	 The students also see pervasive, often dangerous under-age
drinking at the private, off-campus fraternities being ignored by
the administration, but what they rarely see these days is a
responsible professor or administrator taking a casual drink at a
social event.
	 ``We don't have sherries,'' Casteen says. ``It's orange juice
and bottled water.''
	 One of the last vestiges of a social drink together, the
architecture department's Friday afternoon beer gathering with
students, was ended in 1995.
	 Robert Canevari, the dean of students at the University of
Virginia, said when the drinking age was 18, his staff would keep
beer in the office refrigerator and on Fridays, and at the end of
the work day, sit with students and have a drink. Now, he said: ``I
try to avoid all occasions where undergrads have alcohol.don't
want to see it.''
	 Casteen added: ``I'm not the funniest character in town. But I
don't even joke about drinking any more.''
	 In forming the statewide task force, Attorney General Cullen, a
Republican, had suggested exploring whether it would make sense to
lower the drinking age.
	 ``It's worth at least asking if more problems aren't being
created by the forbidden-fruit mentality,'' he said.
	 But before he could even fax assignments to all his
subcommittees, newspapers across the state were carrying articles
quoting outraged legislators who were dead set against any change
in the drinking age.headline in The Cavalier Daily summed up the
prospects succinctly: ``Not gonna happen.''
	 The university formed its own task force after the Baltz death,
and one of its focuses is the fraternities, which even fraternity
brothers acknowledge are the biggest source of under-age binge
drinking. For years, the college has generally taken a hands-off
approach, reasoning that fraternities are private, off-campus
residences.
	 But lately, there have been signs that attitude is changing.
Faculty senate president Jahan Ramazani has proposed moving the
fraternity rush from the first semester of freshman year to
sophomore year, so incoming 18-year-olds have a chance to know more
about college life before committing to a social system so steeped
in alcohol. He also believes that raiding the fraternities once in
a while might be useful.
	 ``No one thinks of venturing into a frat house,'' he said.
``There's this mystical quality of not crossing that line. If cops
went in a couple of times and made arrests, it could change the
pattern of behavior.''
	 Indeed, less than a week after Ms. Baltz's death, state agents
raided a Virginia Commonwealth fraternity, arresting 52 students in
a crackdown on under-age drinking.
	 But ax-wielding policemen did not stop liquor from flowing
during Prohibition in the 1920s, and hauling all the frat brothers
off to jail isn't likely to, either. The two most recent alcohol
fatalities at the University of Virginia have involved seniors who
were over 21, drinking at off-campus apartments.
	 Changing the binge drinking culture, public health officials
say, is a long, slow process that requires a good deal of resources
for education and advertising at a time when the federal commitment
is near zero.
	 In 1987, the Reagan administration provided $8 million in seed
money to start substance abuse institutes on 100 campuses. By the
end of the Bush administration, funding had climbed to $14 million,
but this year, under President Clinton, just $1.7 million in grants
was awarded to seven colleges.
	 Today, schools like Virginia, which have kept their programs
going with private funding, are the exception, says Anderson of
George Mason. In a few cases, foundations have provided grants,
although they have not nearly made up for the loss of government
funds.
	 This year, the Robert Wood Johnson Foundation gave about
$700,000 apiece over a five-year period to Lehigh University and
the universities of Iowa, Vermont, Colorado, Wisconsin and
Delaware, to develop coalitions with their local communities, aimed
at curbing high-risk drinking.
	 Finances are tight at the University of Virginia: the state has
cut its fiscal appropriation to the university by 30 percent in the
last decade. So there is little money available for campus
officials trying to put together a new publicity campaign aimed at
teaching students to drink moderately.
	 ``You need a budget for shiny posters, advertising, a video
campaign,'' said Susan Tate, who will oversee the Virginia effort.
``Ifhad 1 percent of the millions Budweiser has to advertise, I
might be able to make a dent. But with what we have _ we'll just
have to see what we can do.''
	 Researchers consider a person who has had five drinks on one
occasion during the previous two weeks to be a binge drinker. By
that definition, Ryan Dabbieri, a 22-year-old University of
Virginia senior, was a binger, although he did not think of himself
that way. ``I didn't drink a lot,'' said Ryan, an electrical
engineering major. ``Maybe once a week, I'd do five, maybe six or
seven drinks in two hours. Whatdrank was pretty typical.''
	 He was looking forward to the Nov. 29 Virginia Tech game, the
season finale. At a tailgating party that Saturday afternoon, Ryan
drank bourbon with several friends. ``I was pouring andwas very
excited about the game and, apparently,was pouring two or three
times as big shots for myself as everyone else,'' he recalled. ``I
didn't realize it.remember maybe three shots,can't remember
after that, but my friends saidactually drank 5 or 6 big shots
in 10, 15 minutes.''
	 Police did not bother tailgaters, but as fans poured into the
stadium, there was security everywhere, looking for alcohol. `` was
pretty out of it,'' Ryan said. ``One of my friends said, `You'll
have to sober up to get in.'tightened up to get through, then
oncewas in,sort of fell apart.''
	 He doesn't remember the rest, but has since pieced it together
from friends and doctors.
	 When he began throwing up in the stands, the two women he was
with decided they had better get him out of there. It was a lot of
work lugging him back to the car _ 6 feet, 1 inch and 165 pounds of
dead weight. As they passed, people made sly comments about ``doing
your fourth-year fifth.'' His friends planned to drive him home and
put him to bed, but one of them was a lifeguard trained in first
aid, and when Ryan didn't come to, they took him to the hospital as
a precaution. At the emergency room, they got a wheelchair and
rolled him in, and about then, he stopped breathing. When doctors
realized it, they raced to put him on a respirator. They estimated
his breathing had stopped for four minutes and did a brain scan to
check for damage.
	 His blood alcohol level was .25.
	 He came to the next morning in the intensive care unit, but was
still so drunk that he didn't realize why he was in the hospital.
When he tried to talk, the tube in his throat prevented him, and on
a piece of paper he wrote, ``What happened?'' That evening, he
said: ``I woke up and my Dad was standing there. He'd come in from
Atlanta. My parents are divorced, anddon't see him often, so it
was a big shock to me _ that's whenrealized I'd almost died.''
	 He says the experience was hardest for his friends, who saved
his life. ``They were by my side the whole time, scared to death I
would die,'' he said. ``Being unconscious,missed all the emotion
of it.
	 ``I don't see myself drinking again,'' he added. ``I'm lucky not
to be dead.''
	 On Monday, Dec. 1, at 3 in the afternoon, less than 48 hours
after he had stopped breathing, Ryan Dabbieri walked out of the
hospital, returning to finish the semester and prepare for exams.
	 Leslie Baltz lived through that same Saturday night in the same
intensive care unit, but the next morning, when a brain scan showed
no activity, her parents made the decision to have life support
withdrawn. She was pronounced dead at 10:15 Sunday morning. The
Baltzes donated her organs, and later that week she was cremated.
	 Neither the Baltzes nor their daughter's friends have talked to
the press, and the Charlottesville police have released only basic
information, saying the family has suffered enough.
	 On campus, the biggest unanswered question is why friends left
her alone in that condition. The health service has since run a
full-page ad in the The Cavalier Daily with a list of things to do
when students pass out drunk, including making sure someone stays
with the unconscious person.
	 Det. Richard Hudson handled the Baltz investigation,
interviewing the friends, including one of the girlfriends who
found her. ``As you talk to them,'' he said, ``you can see them
begin to recognize their mortality. They tell you, `It's not
possible,just saw her.' ''
	 During his 11 years as a detective, he has handled ``six or
eight'' college drinking deaths. ``All these kids are nice, and
their families are nice people,'' he said. ``You get the sobbing
people, they want to know what happened; it's awful, all these nice
people sobbing.
	 ``Tomorrow morning,'' Hudson said, ``at the memorial service,
there'll be all these sobbing people. And by evening, a lot will be
drinking again. Some of them won't, but ifwere to hazard a
guess, I'd say more will be drinking than not.''
	 Friday, Dec. 5, was a brilliant sunny morning with a crisp blue
sky and a late fall chill in the air. By 10:30, the main gallery at
the university's Bayley Art Museum was filled to overflowing with
about 200 people, mostly students: young women in tasteful, dark
wool outfits and young men in conservative suits, there for Leslie
Baltz's memorial service.
	 In an hour's time, two dozen people spoke, ranging from the head
of the art department to a friend who had spent nine summers with
Leslie at overnight camp. Leslie was a double major in studio art
and art history, and one of her paintings was placed on an easel,
by the podium.
	 Her professors recalled an excellent student, with a 3.92
average out of 4.0 in art and a 3.67 overall. They mentioned the
semester she spent abroad, in Florence, and the senior essay she
was preparing on Polish-born sculptor Elie Nadelman. ``I can say it
really was promising work,'' said Prof. Matthew Affron.
	 Christy Ullrich, a friend, described visiting Leslie in Rome,
and recalled how, late at night, when they needed to get home and
did not have a transit pass, Leslie decided they would just jump on
a bus. ``She said, `Oh forget it, let's just hop on. If any men in
red suits get on, just jump out the back door.''
	 Friends mentioned her piercing green eyes, and how beautiful she
could look at a party, dancing in a dress with no shoes.
	 Michelle Mandolia, a roommate, said that when she and Leslie
couldn't get all their studying done at night, they would set their
alarms for early morning, put on coffee and work in the predawn
darkness. She said when she thinks of Leslie, she sees her studying
in a heavy sweater, curled up on the couch with wool socks. She
recalled how Leslie liked eating chocolate chips by the handful
straight out of the bag and picking marshmallows out of her Lucky
Charms. She described how Leslie would come home at night from her
part-time job at the university's music library, announce she would
be up for several more hours, studying, then immediately fall
asleep in her clothes. And she remembered the time Leslie baked a
tuna casserole in the oven with the Saran Wrap still on the top.
	 Hudson was right: the memorial service was full of all these
nice people sobbing. And he was right again: that night, the
fraternities along Rugby Road and the bars on The Corner were
crammed to capacity with glassy-eyed students drinking all kinds of
concoctions from paper cups.
	 Turner, of student health services, called it ``a pretty typical
weekend _ three or four alcohol cases in the emergency room.''



NYT-01-04-98 1347EST



 NYT19980104.0070 
STORY 
 01/04/1998 14:01:00 

A5569 x1f; taf-z
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	_ The nation's automakers and car dealers will probably
find themselves working harder this year just to sell the same
number of cars and trucks that they sold last year. For shoppers,
that could mean lower prices.
	 Why? Partly because trends in the global economy have filtered
back to car dealers on Main Street. The weak Japanese yen has made
it painless for Toyota and Honda to lower prices, and the Big Three
American automakers have been forced to try to follow suit.
	 Because automakers around the world continue to build factories,
there are more than enough cars to meet demand. And with economists
predicting that the U.S. economy will slow slightly from last year,
automakers expect demand to ease a bit.
	 ``The competition is clearly going to heat up,'' said Thomas T.
Stallkamp, president of the Chrysler Corp.
	 For the car makers, that could mean pressure to cut costs
further if they are to maintain the profit growth of the last few
years. Shoppers, however, may wind up with a rare bit of good
fortune: Some vehicles carry lower sticker prices than last year's
models, and most come with offers of generous rebates or discounted
financing or lease rates.
	 Sung Won Sohn, chief economist of the Norwest Corp. in
Minneapolis, predicts sales of 15 million cars, sport utility
vehicles, pickup trucks, minivans and heavier trucks this year,
about 300,000 fewer than last year.
	 Economists for the Big Three automakers are somewhat more
optimistic, because they do not expect the economy to deviate from
its path of modest but steady growth. These economists predict that
customers will buy 15 million to 15.5 million cars and trucks in
the United States this year, as they have for the last four years.
Last year, shoppers were expected to have bought 15.4 million new
vehicles _ final tallies will be released by Wednesday.
	 ``There is no reason why the U.S. economy can't continue to grow
at a steady pace'' of 2.5 to 3 percent this year, said G. Mustafa
Mohatarem, chief economist for General Motors Corp. ``There is no
reason why consumers can't keep spending.''
	 His counterpart at Chrysler Corp., W. Van Bussmann, said that
the difference between his sales prediction last year and his
prediction for this year is that last year he expected sales closer
to 15.5 million than to 15 million.
	 Ford Motor Co.'s projection is also for healthy, if not
spectacular, sales to continue. ``It certainly can go on,'' said
Martin B. Zimmerman, executive director of government relations and
corporate economics at Ford.
	 Those sales will be driven in part by flat or lower prices. As
recently as mid-1995, vehicle prices were rising faster than
inflation. Since then, prices for new cars and trucks have
increased more slowly than overall inflation. In the last two
months, prices even began to decrease.
	 Of course, bargains can't be found on every new car or truck on
dealers' lots. While many cars, particularly small ones, are
expected to be relative bargains this year, the outlook for truck
prices is mixed. Minivans and medium-sized sport utility vehicles
like the Ford Explorer and Jeep Grand Cherokee are likely to carry
rebates and other discounts, but some of the largest and newest
sport utility vehicles _ like the Lincoln Navigator and the
Mercedes ML320 _ are selling at full sticker prices.

	 (STORYEND HERE.MATERIAL FOLLOWS)

	 In part, the pressure on prices is caused by the strength of the
dollar, which may help Japanese and European automakers win market
share from the Big Three this year.
	 Another factor in the expectation of flat or lower prices is
simple supply and demand, which has been thrown off-kilter lately
because the world's automakers have been racing to build new
factories, particularly in Asia and South America, where
projections of further rapid growth now look highly questionable.
``There is a lot of excess capacity in the industry, and there is a
lot of capacity going in,'' Zimmerman said. ``Our task is to make
sure that the excess capacity is not ours.''
	 To that end, automakers have been cutting costs at the same time
that they hold the line on prices, which has enabled them to
continue earning strong profits. And while 1998 should be a good
year for consumers, the expected decline in sales is not expected
to be as large as some of the cyclical swings of the past.
	 Wall Street expects that earnings forand Chrysler will
increase slightly this year compared with last year. While analysts
generally expect profits at Ford to edge down slightly from healthy
levels last year, Ford's top executive has a slightly more
optimistic view.
	 ``If the industry can deliver another 15.5 million new cars and
trucks,think we can aspire to do as well in 1998 as in 1997,''
said Alex Trotman, Ford's chairman, president and chief executive.



NYT-01-04-98 1401EST



 NYT19980104.0071 
STORY 
 01/04/1998 14:02:00 

A5570 x1f; taf-z
u f x13;x11;BC-YEAREND-OIL-ART-NYT ;01-04 0567


 BC-YEAREND-OIL-ART-NYT 

OILEXPECTEDBE FIRM

(ART ADV: Graphic showing oil production is being sent to NYT
graphic clients. Non-subscribers can make individual purchase by
calling 212-556-4204 or -1927.) ; 
(gh) ; 
 ; BySALPUKAS ;; ; 
 ; c.1998 N.Y. Times News Service ;; ; 


	 An underpinning of the economic boom of the 1990s has been the
relative steadiness of oil prices. While big oil-producing
countries have been frustrated by an inability to raise prices,
American drivers, and hence the whole economy, have benefited from
steady costs at the pump.
	 But the surge in economic growth in recent years has led to
increasing demand for oil, a trend that is expected to gain
strength this year. In the face of tight supplies, that might be
expected to push up prices _ or at least to keep them firm _
possibly setting off alarms about higher inflation.
	 The wild card remains the big oil producers, particularly the
Persian Gulf nations that dominate the Organization of Petroleum
Exporting Countries, which are expected to play an even greater
role than usual in determining supply and prices.
	 In November,members agreed to raise their overall
production ceiling to 27.5 million barrels a day, from 25 million
barrels. The increase will not really add supply, however, because
some countries have already been cheating on their production
quotas.
	 The amount of oil that will actually be available will depend
much on Middle East politics, and particularly on Saudi Arabia,
whose production quota has increased the most. Saudi Arabia will
now be allowed to pump up to 800,000 more barrels of oil a day to
help meet the 75 million to 76 million barrels a day that are
expected to be needed this year _ up about 2 million barrels a day
from 1997.
	 Saudi Arabia, which has the capacity to pump even more oil than
it is allowed to, will be in a position to watch whether demand
will be as strong and whether production from other sources like
the North Sea will be greater than expected. If the last few years
are a guide, the Saudis will seek to add production only if demand
can absorb it _ seeking to keep up prices.
	 Other factors, too, point to the possibility of higher prices.
These include the industry's inability to make substantial
additions to its reserves and growing shortages of increasingly
costly drilling equipment.
	 Meantime, demand for gasoline has increased _ particularly in
the United States, where gas-guzzling sport utility vehicles are
highly popular _ and has generally been underestimated by experts.
	 All bets about the course of oil prices are off, however, if
another big producer _ Iraq _ is allowed to return fully to the
world market by the United Nations. And despite the relative
steadiness of prices recently, day-to-day volatility has not been
eliminated entirely. On the Monday afterdecided to increase
its production quotas, for instance, the active crude oil futures
contract on the New York Mercantile Exchange fell sharply. The
price, above $25 a barrel in early 1997, ended the year at $17.64.
	 Constantinos Fliakos, an oil analyst for Merrill Lynch, while
saying that he expected oil prices to be held down by
quota-cheatingmembers and the possibility of lower demand in
Asia, acknowledged that predicting oil prices was often simply a
game of hunches like these. ``Poker is easier,'' he said.



NYT-01-04-98 1402EST



 NYT19980104.0072 
STORY 
 01/04/1998 14:02:00 

A5571 x1f; taf-z
u f x13;x11;BC-YEAREND-TRAVELCOSTS-N 01-04 0699


 BC-YEAREND-TRAVELCOSTS-NYT 

TRAVELERSEXPECTTOAGAIN

(gh) ; 
 ; ByMcDOWELL ;; ; 
 ; c.1998 N.Y. Times News Service ;; ; 


	 Because of the strength of the U.S. economy, travelers have been
filling airplanes and hotel rooms to levels not seen in years. With
no immediate end to the boom in sight, experts generally expect
travel costs to rise by as much as 7 percent in 1998, several
percentage points more than the current general inflation rate.
	 American Express forecasts that overall business travel prices
in 1998 will rise 6 to 7 percent in the United States. That would
match what American Express predicted for 1997, an increase it now
projects at 12 percent, largely because of a rise in air fares. It
says American companies spent an estimated $156 billion on travel
last year _ 42 percent of it on air fares, 21 percent on lodging,
14 percent on meals, 8 percent each on car rentals and
entertainment, 5 percent on communication and 2 percent on taxis,
tips, tolls and other expenses.
	 Other forecasters _ Runzheimer International, Rosenbluth
International and Travel One _ generally agree with American
Express on the overall increase in costs. Still, the companies
differ on the areas in which they think the increases will come and
on the reasons.
	 American Express and Runzheimer, the management consulting firm
based in Rochester, Wis., generally agree that air fares _ which in
1997 cost the typical business traveler an estimated $850 for a
full-fare economy class roundtrip ticket _ will rise about 5
percent in 1998.
	 But while Runzheimer says that increased fuel costs could force
fares up and predicts that some discounts for seven-day and 14-day
advance purchase will disappear, American Express cites wage
demands by airline unions as putting upward pressure on air fares.
	 Rosenbluth International, the travel management giant in
Philadelphia, says that air fare increases could vary considerably
around the country. Even though they could be held to as little as
2 percent in most of the United States, it says, they could reach 9
percent for flights into or out of some key markets, including New
York.
	 Travel One, another big management company, forecasts 1998 fare
increases of 6 percent on domestic flights and 7.5 percent on
international fares. It says the increases are enough that
corporations will investigate such air travel alternatives as
charter flights and full or partial ownership of corporate
aircraft.
	 Travel One, which is based in Mount Laurel, N.J., also expects
hotel rates to soar 10 percent in 1998 because of continuing high
demand. Consequently, it says, companies will consider making
corporate housing available in cities frequently visited by their
employees, or they may buy blocks of hotel rooms at discounted
rates.
	 American Express sees sharp increases in corporate hotel rates,
which it estimates averaged $127 a night in 1997. It expects
increases of 13 to 15 percent, largely because it predicts that the
occupancy rate will dip slightly from 1997 and that more rooms will
be added. Runzheimer forecasts a 6 percent increase in room rates.
	 Increases in car rental costs are expected to range from 4 to 8
percent in 1998. Runzheimer said that car rental companies, having
trimmed costs by not buying and maintaining fleets big enough to
accommodate 100 percent of demand at peak periods, can now raise
prices enough to produce modest profits. Rosenbluth, said that
higher car rental rates will result largely from higher taxes and
insurance costs, as well as from less competition because of the
consolidation of the industry.
	 The big bargain in 1998 travel, if the forecasters prove
correct, will be meals and entertainment, whose prices they expect
to rise by only 2 to 3 percent.
	 All of the predictions assume, of course, that the economy keeps
rolling and that Americans' wanderlust continues. As Rolfe
Shellenberger, Runzheimer's senior travel consultant, noted,
``Travel demand expectations could be thrown off by such events as
war and terrorism, economic catastrophe such as stock market
crashes, or political retrogression to planned economies''
overseas.



NYT-01-04-98 1402EST



 NYT19980104.0073 
STORY 
 01/04/1998 14:03:00 

A5572 x1f; taf-z
u f x13;x11;BC-YEAREND-GOODGADGETS-5 01-04 0848


 BC-YEAREND-GOODGADGETS-550;ADD-NYT 

THEISAPLACECONSUMERS

(lh) ; 
 ; ByL.;; ; 
 ; c.1998 N.Y. Times News Service ;; ; 


	 The 1997 movie ``The Ice Storm'' gave Americans a bleak view
backward to the early '70s and, as a vivid aside, reminded them how
far many consumer products have come since then.
	 Feuding patterns in shirts and ties were the least of it. Irons
back then were known to lose control of their heating mechanisms,
leading to melted messes in at least one safety test. People mowing
the lawn had to deal with the worry that the mower blades would
keep whirring even if they let go of the machine, cutting up
whatever azalea, pet or small child got in the way. Childproof
containers for over-the-counter drugs were a thing of the future.
	 Stereo equipment ranged all over the map in terms of sound
quality. Automatic-changer compact-disk players didn't exist; there
was, however, that short-lived medium called the eight-track tape.
Disposable diapers were expensive and soon to be labeled socially
irresponsible. Cars had so many flaws that consumers actually
expected problems.
	 But then came consumer advocates and the government, calling for
better standards that, in many cases, have arrived. In addition, as
shoppers flocked to products made abroad, U.S. captains of industry
were forced to pay attention and compete. Terms like ``planned
obsolescence'' became politically incorrect. Now, if you are going
to make a household appliance (hold the harvest-gold color scheme),
the quality has to be better.
	 Take the refrigerator. ``Refrigerators have gotten a little
smaller on the outside but still give you the same dimensions
inside,'' said R. David Pittle, technical director for Consumers
Union, the publisher of Consumer Reports, in Yonkers, N.Y. ``Their
compressors are quieter and cost less to run, thanks in large part
to the government's requirements on energy-efficiency labeling.''
	 Color television is also on a higher plane, even before the
arrival of digital TV, thanks mostly to competition among
manufacturers, many of them from overseas. And hair dryers, once
known to cause many electric-shock deaths, have become far safer.
Those made in the last few years must have mechanisms that shut the
dryers off if they fall into, say, a bathtub. ``Now, when they are
dropped in water, they shut off and nobody is killed,'' Pittle
said. And lawn mowers are required to have devices that
automatically shut them off if the operator lets go.
	 Of course, concerns remain about other products, on quality or
safety issues. ``In summer 1995, we tested a group of child-safety
seats and three out of 25 were unacceptably dangerous because they
came apart on impact,'' Pittle said. Two of the three companies
recalled their child seats; the third did not, because the
government did not force it to, he added. ``Part of their argument
was that they didn't have any complaints,'' he said.
	 Overall car quality has gone up sharply over the last decade,
mainly in response to competition from Japanese imports. ``There
were days when, after you bought a new car, you'd keep a pad of
paper on the front seat to jot down every problem you had,'' said
Robert Schnorbus, director of automotive analysis for J.D. Power ;
Associates. ``You almost expected to have to take the vehicle
back.'' Now, he estimates, there are half the complaints there were
10 years ago.

	 (STORYEND HERE.MATERIAL FOLLOWS)

	 The same trend is apparent in cars more than 5 years old,
Schnorbus said, heightening the demand for used cars. People are
still replacing their old cars, but not always with new models
fresh from the factory. ``This is part of the reason we have seen
new-vehicle sales flatten out,'' he said. ``Because fewer new cars
are needed to replace scrapped vehicles, used vehicles are getting
a greater share of total sales.''
	 Not that all is rosy on the automotive front. Safety experts are
particularly troubled by the popularity of sport utility vehicles,
which, because they are heavier and have higher bumpers, can do a
lot of damage when they collide with standard cars. Pittle is also
concerned about the higher center of gravity on such vehicles,
which makes it easier for them to roll.
	 ``The SUVs have replaced the station wagon as the family car,''
he said, ``and they should perform as safely as any other product
used as a family car.''
	 Most evolutions in car design _ like air bags, anti-lock brakes
and daytime running lights _ are intended to keep people safer.
While air bags have come under attack for causing deaths of small
children in the front passenger seat, the lives they save far
outnumber those deaths. But innovations in brakes and lights have
yet to become standard equipment on all vehicles.
	 Some things, of course, are every bit as vulnerable as they ever
were. Paper bags still break. Eggshells crack. Light bulbs have to
be replaced. And, as was true in the era ``The Ice Storm''
depicted, marital bliss still doesn't come in a can.



NYT-01-04-98 1403EST



 NYT19980104.0075 
STORY 
 01/04/1998 14:05:00 

A5574 x1f; taf-z
u f x13;x11;BC-YEAREND-BANKS-550;ADD 01-04 0850


 BC-YEAREND-BANKS-550;ADD-NYT 

BANKSSEIGE1997

(lh) ; 
 ; ByL. O'BRIEN ;; ; 
 ; c.1998 N.Y. Times News Service ;; ; 


	 Bankers used to inhabit a staid, predictable world, one marked
by a golf-course-like serenity that was occasionally interrupted by
their proclivity for making extraordinarily bad loans. While bad
lending habits persist, banking is no longer a chummy stroll around
the links.
	 Banks are now under siege from a host of new competitors as the
borders that once separated traditional banking from more exotic
financial services continue to dissolve. The banking world was
roiled in 1997 by huge domestic mergers and economic turmoil
abroad, and the landscape promises to be equally challenging in
1998, with more mergers, rising credit problems and slowing revenue
growth.
	 All of this should make it harder to ring up the fat profits
that made many banks stock market darlings over the last few years.
	 ``In 1998, there will be many more banks that fall short of
their earnings targets than in 1997,'' said Thomas Brown, an
analyst with Donaldson, Lufkin ; Jenrette.
	 To be sure, many banks, particularly Citicorp and Chase
Manhattan, have rebounded smartly from the type of lending problems
of a decade ago that are now bedeviling foreign-owned banks in such
regions as Southeast Asia. Many other banks have responded to
competitive pressures by becoming more efficient operators and
savvier marketers, lessons that large foreign banks are trying to
emulate. These changes will continue to benefit all banks in 1998
and beyond _ it's just that the game is growing more complicated.
	 Though banks are not threatened with insolvency by huge losses
from bad real estate and emerging market loans like those of the
1980s, they have still been buffeted by sloppy trading practices
abroad and indiscriminate credit card lending at home.
	 On the merger front, more big bank takeovers are expected, but
perhaps at more reasonable prices. In 1997, First Union agreed to
acquire Corestates Financial for $17.1 billion and Nationsbank
agreed to acquire Barnett Banks for $15.5 billion. The deals were
the two richest mergers in banking history, carrying eye-popping
valuations. While the lofty prices may come back to haunt the
acquirers, they are also the reason many banks are willing to sell.
	 ``We're in the midst of putting together national franchises,''
said David Berry, an analyst with Keefe, Bruyette ; Woods, ``and a
lot of banks are looking at the prices being paid and are saying,
`If not now, when?'''
	 Bank advisers say that 1998 may witness big acquisitions by such
giants as Chase Manhattan and BankAmerica, but that many smaller
banks waiting to be picked off will be ignored because they do not
offer attractive franchises and require too much expensive
retooling.
	 Foremost among the issues that need to be tackled at smaller
banks is the technological problem that threatens to cripple
computer systems when the new millennium arrives. Analysts say many
small, regional banks have yet to overhaul their computer systems
to make sure that customers' accounts are not thrown into confusion
when 2000 dawns. These banks are assuming it is not worth their
while to spend millions of dollars fixing outdated technology if
buyers will come along and foot the bill _ an approach that could
prove foolhardy if no suitors come calling.

	 (STORYEND HERE.MATERIAL FOLLOWS)

	 As the Year 2000 problem ticks loudly in the ears of small
banks, larger banks with overseas operations have been buffeted by
the rapid and brutal downturn in Southeast Asia and financial
troubles in such large Latin American countries as Brazil.
	 Regulators and bankers are still working to stem the fallout,
but banks of all sizes are sure to feel more pain as the wrenching
events from overseas contribute to what many analysts expect to be
a slowdown in the U.S. economy in 1998.softer economy translates
into weaker loan demand and a greater likelihood that consumers and
corporate borrowers will have more difficulty paying off their
debts.
	 ``I think there are risks from credit exposures abroad and a
slowdown in corporate profits domestically,'' said Judah Kraushaar,
an analyst with Merrill Lynch ; Co. ``Then the question becomes,
how careful have the banks been in structuring corporate loans?''
	 Ascertaining exactly where big banks stand internationally is a
tricky matter. The country's largest banks _ including Chase
Manhattan, Citicorp, BankAmerica, J.P. Morgan and Bankers Trust _
have large operations abroad but tend to disclose very little about
the nature of their exposure to volatile emerging markets.
	 Also on the radar screen for every banker in 1998 is Alan
Greenspan, the Federal Reserve chairman, who controls the Fed's
interest-rate switch. Though interest rate increases might still
have been in order as recently as last summer, few analysts think
the Fed chairman is planning to raise rates to cool off the economy
in 1998. Southeast Asia's travails have taken care of that for
him.



NYT-01-04-98 1405EST



 NYT19980104.0077 
STORY 
 01/04/1998 14:06:00 

A5576 x1f; taf-z
u f x13;x11;BC-YEAREND-2000-NYT ;01-04 0838


 BC-YEAREND-2000-NYT 

WAITINGMILLENNIUM `PANIC LEVEL'RISE

(gh) ; 
 ; ByHANSELL ;; ; 
 ; c.1998 N.Y. Times News Service ;; ; 


	 For several years, technological doomsayers have bleated a dark
prophecy of computerized chaos to be brought on by the inability of
many computers to interpret dates after 1999. Repair your programs
now, they intoned, or be prepared for your systems to freeze in
millennial ice.
	 Though it has been hard to know how seriously to take these
predictions, with less than two years to go, clues are emerging.
Much of the evidence supports the view that the year 2000 problem
is, indeed, a big deal, and computer users are slowly coming to
this realization. By all accounts, the activity devoted to the
problem will substantially pick up this year.
	recent survey of 108 technology managers and big companies by
Cap Gemini, the huge French consulting firm, found that four out of
five had initially underestimated the cost of fixing the problem.
And 7 percent have already had computer failures related to the
problem.
	 ``A lot of companies, when they found out how big the problem
was, just went into a catatonic state,'' said Jim Woodward, the
head of Cap Gemini's year 2000 practice.
	 Cap Gemini and many other companies that had hoped to profit
from selling year 2000 repair services have found business to be
slower than they had predicted. ``1997 was a missed opportunity for
many companies to have their work done at a lower cost,'' Woodward
said.
	 Such warnings have been issued before. Another attending plague
that was warned of _ a scarcity of programmers skilled in adjusting
software to fix the problem _ has yet to materialize.
	 ``You can read this two ways,'' said Edward Yardeni, the chief
economist of Deutsche Morgan Grenfell, who has warned of a global
economic slowdown from compounded computer errors. ``Either there
hasn't been enough recognition of the problem, or it's not really
such a big deal.pick door No. 1.''
	 That is not to say that even some big companies aren't worried.
BankAmerica, the huge San Francisco bank, has established two bonus
pools: $30 million to be shared by those among its 600 computer
experts who stay with the company and see the millennium through,
and $50 million that is open to all other employees who help spot
impending bugs.
	 The typical multinational company has estimated the total cost
of dealing with the problem at several hundred million dollars.
	 While many companies devoted last year to planning how to deal
with the problem, they generally expect to do most of the actual
reprogramming this year, leaving themselves 1999 to test their
systems.
	 Meanwhile, there is nothing like the dawning of an absolute and
unalterable deadline to focus the attention of procrastinators,
including smaller businesses, those in developing countries and
many government agencies everywhere.
	 ``In 1998, the panic level will go up, and that's good,''
Yardeni said. Signs of it are appearing in many parts of the world.
	 _ In Washington, a recent assessment by the Office of Management
and Budget found that only eight of 24 Cabinet agencies had the
year 2000 problem under control. Seven other agencies have made
insufficient progress, the report said.
	 _ Several airlines, including American and KLM, are monitoring
whether air traffic control systems have been properly upgraded,
and have said that in 2000 they may not fly to certain destinations
until it becomes clear that safety can be maintained.
	 _study by the British government found that hospitals had
made so little progress in reprogramming their systems that in
January 2000 they could be forced to close to all but emergency
cases, risking as many as 1,500 unnecessary deaths.
	 _ American Express has a team of 40 people traveling the world
with test cards that expire in 2000. The cards are choking so many
merchants' credit validation systems, including those of some
airlines, that American Express has yet to issue customers cards
that expire after 1999.
	 If programmers have been a little less busy than expected, one
group has already found profitable work, well before the dawn of
the millennium: lawyers.
	 Some have negotiated contracts between computer companies and
corporate customers that detail who will be responsible for
mistakes caused by the year 2000 problem. Other lawyers who have
made money in securities class-action lawsuits have leapt on the
year 2000 issue as a potential gold mine. One group of customers
filed suit last month accusing a software company of trying to fix
the year 2000 problem by requiring users to buy a costly program
upgrade.
	 ``I didn't expect the extent to which lwyers who previously did
not specialize in information technology have looked on the year
2000 as an opportunity,'' said Barry Weiss, a partner at Gordon ;
Glickson, a technology law firm in Chicago.
	 That, cynics might say, is the best indicator yet of the size of
the problem that looms.



NYT-01-04-98 1406EST



 NYT19980104.0078 
STORY 
 01/04/1998 14:09:00 

A5577 x1f; taf-z
u f x13;x11;BC-YEAREND-TELECOM-NYT ;01-04 1286


 BC-YEAREND-TELECOM-NYT 

PHONERACEFINDSUITORS

(kd) ; 
 ; BySCHIESEL ;; ; 
 ; c.1998 N.Y. Times News Service ;; ; 


	 There was a time when following the telecommunications industry
meant following the actual business of telecommunications. Those
days, like rotary telephones, are long gone. In 1997, takeovers
became almost as important to this industry as dial tones.
	 Clearly beating out the year's No. 2 telecommunications story _
the failure of any regional Bell company to offer long-distance
service _ mergers, proposed and actual, became the biggest story in
one of the nation's most dynamic industries (notwithstanding a
federal judge's bombshell ruling six hours before the year's end
that invalidated broad swaths of the Telecommunications Act of
1996).
	 And 1998 promises more of the same, at least on the merger
front.
	 The deals this year might not be as wild as Worldcom's breaking
up the merger agreement between British Telecommunications and MCI
Communications and then sweepingaway with a $36.5 billion
offer _ all while warding off a third suitor, GTE. And the failures
might not claim victims as visible as John R. Walter, the erstwhile
printing executive who lost his chance to run AT;T after making the
wrong moves during AT;T's botched merger talks with SBC
Communications.
	 But of the three forces pushing combinations _ deregulation, the
desire to offer more services and surging financial markets _ the
first two are sure to hold up, setting the stage for a 1998 that
could make the deals of 1997 seem positively normal.
	 ``There will be an unprecedented number of large telecom deals
in 1998,'' said Robert A. Kindler, a partner at Cravath, Swaine ;
Moore, which advised Worldcom in its bid for MCI. ``By the end of
next year, we likely will see significant transactions by AT;T,
GTE,and several of the regional Bell operating companies.''
	 As prosaic as it may seem, the biggest dampers on the pace of
acquisitions could be a weaker economy and, far more important,
weaker financial markets.
	 The remarkably robust markets of 1997 put currency in the form
of more valuable stock into the hands of acquisitive executives. As
a company's shares become more valuable, it becomes easier to issue
new shares to acquire a rival.
	 Of course, a bull market also lifts the prices of targets. But
in a strong market, the shares of companies with successful
acquisition records are sometimes valued far higher than those of
potential targets.
	 ``The market's a huge factor,'' said Eric Strumingher, an
analyst for Paine Webber. ``Worldcom would never have been able to
pull off a deal likeif it weren't for the bull markets we've
had.''
	 The shares of Worldcom, which was built on dozens of stock-based
acquisitions, trade at more than 75 times estimated 1998 earnings,
compared with multiples of about 20 for most big telecommunications
carriers _ MCI's was about 25 before the Worldcom bid. So if the
stock market had taken a beating last year, Worldcom shares would
most likely have fallen far more than MCI's, simply because they
had further to fall. That might have made Bernard J. Ebbers,
Worldcom's chairman, less likely to pursue such a large stock-based
acquisition, because he would have had to issue more shares.
	 Companies often choose to use stock rather than cash when it
allows them to use accounting rules to avoid big expenses. The
mergers last year betweenand the Pacific Telesis Group and
between Bell Atlantic and Nynex, involving a total of more than $40
billion, cost less because they were all-stock deals. But Worldcom,
despite using stock, will not be able to avoid large
merger-associated expenses, in part because it also had to pay
about $7 billion in cash to British Telecommunications.
	 Debt markets also play a role. Many of the investors who bought
billions of dollars in zero coupon bonds from fledgling wireless
communications carriers in 1995 and 1996 are still around and
willing to lend.planned to finance its bid forwith $28
billion in borrowed cash.is hardly a start-up, but Wall
Street's confidence thatcould easily raise the money is a sign
of how loose credit is.
	 So if the party continues on Wall Street, telecommunications
companies will have the financial backing to make deals. Then, the
factors that actually have to do with the workings of the industry
can take over.
	 Foremost among them is fear _ fear that companies that do not
offer nearly every service imaginable will not thrive, and fear of
passing up the chance to gain a financial edge by combining with a
rival and cutting costs.
	 The first fear gets more attention.
	 ``You compare the U.S. market to anywhere else in the world and
it is a very highly fragmented market, where the industry structure
does not reflect how customers would like to buy services,'' said
Frank Governali, head telecommunications analyst for Credit Suisse
First Boston. ``In other places, people can buy the service they
want from single entities. But here you can't do that.''
	 While corporate executives would most like to pull off vertical
acquisitions, those involving companies in complementary but not
identical businesses, federal regulators so far have allowed only
the biggest horizontal mergers.
	 Thus, companies that offer similar service _ like Bell Atlantic
and Nynex, or Worldcom and_ have been allowed to merge, while
proposed deals between local and long-distance operators have
received sharp denunciations from regulators.
	 There is a huge pent-up desire among both the Bells and the
long-distance carriers to link with one another. But the Federal
Communications Commission and the antitrust division of the Justice
Department have made it clear they will not allow that until the
Bell companies sufficiently open their local markets to
competitors.
	 So for now, the Telecommunications Act of 1996, which
deregulated much of the industry, continues to foster horizontal
deals, and vertical deals on the margins.
	 Last Wednesday, a federal judge in Texas ruled that the
regulatory hoops that the Bells must jump through before they may
offer long-distance service are unconstitutional. If the ruling
withstands the government's appeals, the decision would completely
change the telecommunications landscape by allowing the Bells to
offer long-distance service almost immediately.
	 That could add even more fuel to the deal-making fire because
the long-distance carriers, especially AT;T, would come under
intense pressure as the Bells attacked the very core of their
business _ residential long-distance customers. Rather than see
their shares of the market slashed, companies like AT;T could
decide to merge with their potential competitors.
	 But alternative local carriers, which generally compete against
the Bells only for business customers, are perhaps the hottest
commodity; since the passage of the act, Worldcom, the No. 4
long-distance carrier, has acquired two of the biggest, MFS
Communications and Brooks Fiber Properties.
	 The conventional wisdom on Wall Street is that the best way for
AT;T, the largest long-distance carrier, to get a start in local
markets would be to buy one of the few remaining big competitive
local carriers, most likely Teleport Communications.
	 But as the Bells move into the long-distance market _ even if
last week's ruling is overturned, they will probably convince the
FCC at some point that their local networks are open to competitors
_ look for at least one to seek a blockbuster merger with a large
long-distance carrier. If such a deal materializes, MCI-Worldcom
may not look so wild after all.



NYT-01-04-98 1409EST



 NYT19980104.0079 
STORY 
 01/04/1998 14:09:00 

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MANDOG:OPTIMISTICPROSPECTS

(lh) ; 
 ; ByPETERSON ;; ; 
 ; c.1998 N.Y. Times News Service ;; ; 


	 Surveys of newspaper readers often show that they think papers
are run by sourpusses who live only to print bad news. Those
readers might be surprised to see how downright cheerful and sunny
most editors and publishers have been lately about their industry's
money-making performance.
	 For the first three quarters of 1997, certainly, the industry's
performance was the strongest it has been in this decade. The cost
of newsprint remained moderate and predictable, advertising sales
figures seemed drawn from the days before competition from
television, and even a long downward trend in circulation at some
of the biggest papers showed signs of turning around, if only a
little.
	 Industry analysts estimate that newspaper earnings per share
will finish the year about 19 percent ahead of last year's
earnings. And the total amount of advertising space sold increased
in the first three quarters by 5.3 percent over the corresponding
period last year, despite the industry's aggressive increases in ad
rates.
	 Finally, advertising spending in newspapers rose 8.9 percent
over the first nine months of 1997 compared with the year before,
the Newspaper Association of America announced. The study suggested
that newspapers might have actually regained some of the
advertising share they lost to television in recent years.
	 ``The economics of the newspaper business are as good as they
have been in a long time,'' said David M. Cole, publisher of two
industry newsletters.
	 Newspaper executives who took part in a Paine Webber media
conference in mid-December spoke of a 1998 that could be as good as
1997, if the economy remains strong and inflation stays down.
	 The executives said they expected newsprint prices, which can
account for a quarter of the costs at a big paper, to increase by
10 to 15 percent, circulation to remain flat or go up slightly, and
the amount of advertising space sold to increase by as much as 4
percent.
	 But this outlook is clouded by uncertainty about the direction
of the economy and by fourth-quarter results for the industry. One
omen was that the rate of increase in earnings slowed during each
quarter of last year, compared with a year earlier.
	 To John Morton of Morton Research Inc., who made the
year-to-year comparisons, the challenge to keep profits increasing
solidly could be hard to meet.
	 ``It's fairly likely that newsprint costs are going to go up on
the order of 10 to 12 percent,'' Morton said. Moreover, the
industry will have a tough job trying to match the 1997 growth in
advertising, he said. ``So, if volume is flat and newsprint costs
are up, it could put a squeeze on earnings.''
	 Helped by the companies' strong financial performance, many
newspaper stocks performed well last year. The economic instability
in Asia may have also helped these stocks, at least in the short
run, as investors moved their money to stocks of companies, like
those in the newspaper industry, whose fortunes are largely tied to
local, rather than global, events.

	 (STORYEND HERE.MATERIAL FOLLOWS)

	 Although some newspapers saw declines in circulations slow or
turn around slightly last year, it is unclear whether a
decades-long erosion has been stopped. But given the strong
financial performance recently of many newspaper companies, the
long-term significance of the loss of readers is a matter of
debate.
	 ``The revenue picture is masking some serious problems,'' Cole
said, ``and until publishers come to grips with the notion that
they have to measure their business in ways that also take
readership and circulation into account, they are cruisin' for a
bruisin,' as my mother used to say.''
	 But Malcolm A. Borg, chief executive of Macromedia Inc., a
cluster of New Jersey dailies, including The Record in Bergen
County, whose sales slipped slightly in the most recent reporting
period, maintained that circulation figures should be judged paper
by paper, not industry-wide.
	 ``Sure, the readership is off, but so is television
viewership,'' said Borg, who also owns three CBS-affiliated
television stations. ``It's the same thing. Maybe a lot of
newspapers have lost some of the sense of relevancy to their
readers, butthink many others are doing a damned good job.''



NYT-01-04-98 1409EST



 NYT19980104.0081 
STORY 
 01/04/1998 14:11:00 

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u f x13;x11;BC-YEAREND-EURO-NYT ;01-04 0931


 BC-YEAREND-EURO-NYT 

EUROWILLEVERYAND PURSE

(ART ADV: Graphic is being sent tographic clients.
Non-subscribers can make individual purchase by calling
212-556-4204 or -1927.) ; 
(kd) ; 
 ; ByL.;; ; 
 ; c.1998 N.Y. Times News Service ;; ; 


	 FRANKFURT, Germany _ Absent a huge political or economic
calamity, the European single currency, the euro, will make its
debut on Jan. 1, 1999. Banks have begun overhauling their computer
systems, and many big companies are already making plans for the
switch. But the magnitude of the transformation is only beginning
to sink in.
	 To be sure, European leaders still face a few big decisions in
1998, and consumers will not start to use euro bills and coins,
which have already been designed, until 2002. But as of 1999, at
least 10 and probably 11 countries are expected officially to
surrender their own monetary policies and hand power to a new
European Central Bank here in Frankfurt.
	 From Day One, transactions between banks will be processed in a
new double-entry format, for both euros and a national currency.
Corporations like Daimler-Benz and Siemens say they will carry out
all their paper transactions in euros before the end of 1999.
	 In any case, they will have to make the switch by July 1, 2002,
the deadline by which national currencies are to be abolished.
Between now and then, almost anything that has to do with money is
likely to be affected:
	 _ Manufacturers of everything from cars to clothing will have to
smooth out what are often substantial differences in the prices
they charge in different countries. Germans now pay more for a
Mercedes in their homeland than they would in Italy, an opportunity
that has already stimulated a lively arbitrage business among
``gray market'' auto dealers that buy German cars in Italy and
resell them in Germany at lower prices.
	 _ Governments must reckon with tax differences. Germany's sales
tax will be 16 percent next year, but consumers next door in France
pay 22 percent. And income tax rates vary even more widely. Because
the single currency makes all costs easier to compare, countries
with higher taxes are likely to lose business.
	 _ Banks, corporations and government agencies will have to
overhaul computer systems. Invoices, tax calculations and bank
statements will have to be changed from marks or francs to euros.
By some estimates, the conversion could cost private industry as
much as $80 billion.
	 ``Everything that is related in one way or another to the
Deutsche mark will change,'' said Dieter Bock, financial director
at Puma A.G., the athletic shoe manufacturer in Herzogenaurach,
Germany. Consider the problem of a shoe that costs 149 marks. Like
companies everywhere, Puma sets prices that end with a 9 because
149 sounds lower than 150. But 149 marks would convert to something
like 75 euro, which creates a pricing problem that could be
ticklish to resolve. ``The question is, where is the new price for
this article?'' Bock asked. ``Will it tend more toward 79 or 69
euro?''
	 But where medium-sized companies like Puma face difficult
questions, multinational giants like Siemens and Daimler-Benz see
opportunity. The elimination of currency fluctuations should make
planning, pricing and billing simpler for companies like these,
which send many of their exports to other European Union countries.
	 Indeed, the advent of the euro has already unleashed a flurry of
mergers as companies that until now were seen as largely French,
Italian or German, for example, seek to grow into pan-European
groups. Analysts expect these combinations to continue, redrawing
the business map of the Continent.
	 Frankfurt will feel some of the most direct effects of the
conversion. Though this city is the heart of Germany's huge banking
system, and will be home to the European Central Bank, the
financial sector here could end up a loser.
	 The euro is hastening the ascent of London, not Frankfurt, as
the financial capital of Europe, even though Britain does not plan
to adopt the single currency immediately. As financial institutions
increasingly organize themselves into pan-European enterprises,
even big German banks like Deutsche Bank and Dresdner Bank are
moving key operations to London, which has a much deeper reserve of
traders, brokers and sheer technical infrastructure.
	 Once the euro becomes fully established, it will wipe out a
large component of financial activity _ the exchange trading
between European currencies. Europe's huge bond market will also be
transformed. Until now, bonds sold by different countries have
always offered different interest rates, reflecting the varying
strength of currencies.
	 But all that will disappear with the euro. Once the European
Central Bank takes over, there will be only a single set of
European interest rates because there will be only one currency.
Indeed, interest rates have already been converging across Europe,
partly because countries had to bring their rates in line with core
countries like Germany and partly because traders have been betting
that Italian bonds, for example, will soon simply be euro bonds.
	 On down the line, almost nothing will escape the transformation.
The vast majority of parking lots in European cities will have to
adjust the automated machines they use to take money and dispense
tickets. Most telephones accept calling cards that must be
recalibrated. And then there are the untold millions of computer
keyboards now in use that do not have the E-shaped euro symbol.



NYT-01-04-98 1411EST