Across the Nation

Latest polls show Bush with slight lead

WASHINGTON - As George W. Bush and John McCain hurtle toward their primary showdown in South Carolina tomorrow, the latest polls are giving the Texas governor a narrow lead.

But the public might want to be wary of those numbers, because even some pollsters aren't putting much faith in the polls right now. Not after what happened in New Hampshire.

On primary night in the Granite State, while John McCain was celebrating his blowout victory, the pollsters were scraping egg off their faces.

At least a dozen organizations published polls in the days leading up to the election, including the major broadcast networks, newspapers and news weeklies. None managed to gauge the size of the McCain wave with any degree of accuracy, while several had forecast a lead for Al Gore over Bill Bradley that was larger than his slim winning margin.

One New Hampshire pollster, Dick Bennett, got it spectacularly wrong. He showed Bush with a lead over McCain right through election eve.

"I've had to eat a lot of crow in the past," Bennett said. "I know how to make it taste pretty good."

A final pre-election poll by CBS News showed McCain ahead by a scant 4 percentage points; he won by 19. On the Democratic side, CBS showed Gore 16 points up on Bradley; he won by just 4 points.

CBS wasn't alone in misjudging the electorate. Five polling groups tracked daily voter sentiment leading up to the election. None of their final polls gave McCain a lead greater than 12 percentage points. The average McCain edge was 7 points, less than half his actual margin of victory.

As the election returns were rolling in that night, a friend asked Dotty Lynch, CBS News' political editor, why all the polls had been so far off base.

She came back with a stock answer that pollsters often use in such situations.

"A lot of people made up their minds on Election Day," she said with a hearty laugh.

There was at least a grain of truth in that reply. Much of Bradley's support came from voters who had made up their minds as they headed for the ballot booth.

Still, the pollsters' bad election night points up some of the difficulties of polling in presidential primaries. In a post-New Hampshire statement, the National Council on Public Polls, which seeks to raise the standards of the profession, describes those problems as "almost unsurmountable."

Among the difficulties: Turnout in primaries is often low, making it difficult to identify those who will actually vote. Also, the campaigns are shorter than general election races, and many voters can be swayed to almost any candidate.

"Most pollsters understand these pitfalls, and they do polls anyway," the NCPP statement concludes. "Our advice: caveat emptor (let the buyer beware)!"

Other factors may have also contributed to the skewed poll results. They include:

Polls are only a snapshot of sentiment at the time they are taken, not a predictor of results.

The poll that came closest to matching the actual victory margin in the Republican race was conducted two weeks before Election Day. But that may have been largely a matter of luck, since there were wide swings in voter attitudes in the days that followed.

"I didn't believe my own numbers," says Whit Ayers, a Republican pollster whose survey showed McCain with a 17-point edge.

In general, the closer a poll is taken to Election Day, the more accurate it is likely to be. Still, things change in campaigns.

And people change their minds, often when they step into the voting booth. This is especially true in a state such as New Hampshire, which is known for its volatile and unpredictable electorate.

There is an element of educated guesswork to the "science" of polling, though some pollsters don't like to acknowledge it. That shortcoming was on display in New Hampshire, and it could be again this weekend when the votes are counted in South Carolina.

The problem boils down to turnout, the factor that ultimately determines who wins. Pollsters use devices to try to figure out who will actually vote, including asking a series of questions designed to screen out nonvoters.

But pollsters can never be certain which respondents will vote. Some of those who say they will probably vote never do.

The "X" factor in New Hampshire, opinion analysts realized from the start, would be how many independent voters - who outnumber either Republicans or Democrats in that state - would actually cast ballots.

Complicating that equation, independents could vote in either the Republican or Democratic primary. And they didn't have to decide that until Election Day.

"In a state where independents can participate in party primaries, it's anybody's guess as to how many of them are going to vote," says Warren Mitofsky, a polling consultant for CBS and CNN.

Bennett, the New Hampshire pollster who missed the McCain wave, guessed wrong on independent turnout. Based on his 23 years of experience in the state, he factored in a figure that turned out to be barely half of the huge independent vote, which went heavily for McCain.

Further complicating matters in New Hampshire, many independents were torn between two candidates who campaigned as reformers: Republican McCain and Democrat Bradley. Which leads to the final element that makes polling treacherous right now:

The McCain factor. From time to time, a phenomenon shatters the old rules. McCain's campaign did just that in New Hampshire, and there are signs it could happen again in South Carolina.

"McCain makes it tougher for pollsters, because he's attracting people who haven't participated in the process and who don't vote normally," Bennett says.

(Optional add end)

In South Carolina, there is no voter registration by party - and no Democratic primary on Saturday to compete for the attention of the voters.

Unlike in New Hampshire, where only Republicans and Independents could vote in the Republican primary, anyone may vote in the GOP primary this weekend. Most pollsters, and politicians, predict that about 10 percent of the votes will be cast by McCain Democrats - or Democrats who just want to create a little mischief by voting against Bush.

Ayers, who has long experience in South Carolina, wants no part of the action this time. "It's too darn fluid," he says. "Which is why in South Carolina I'm out of the predicting business."

If New Hampshire was hard to predict, "it's going to be worse" in South Carolina, adds Mitofsky. "I'm not going to be surprised if a lot of these polls are off."

Greenspan indicates rate hikes to come

WASHINGTON - Federal Reserve Chairman Alan Greenspan signalled yesterday that the central bank is likely to raise short-term interest rates again in coming months, possibly several times more, to cool off the red hot U.S. economy and keep inflation under control.

Even though the Fed has already lifted its target for overnight rates by a full percentage point since last June, Greenspan told the House Banking Committee, "There is little evidence that the American economy, which grew more than 4 percent in 1999 and surged forward at an even faster pace in the second half of the year, is slowing appreciably."

There is always a lag before the full effect of interest rate increases, which raise borrowing costs, work their way through the economy. In the meantime, the Fed chairman said, spending by consumers and businesses on goods and services keeps increasing faster than the economy's ability to produce them.

That has driven the nation's unemployment rate down to 4 percent and caused the U.S. trade deficit to reach a record level, as imports have satisfied part of the nation's demand. Neither trend can continue indefinitely, he said.

Greenspan cautioned that the impact of some special factors that have helped keep inflation low, such as weak economies abroad and falling prices for non-oil imports, is waning. As a result, he said, the urgency in slowing growth "seems more pressing today than it did earlier."

That slowing should occur "before the effects of imbalances began to cumulate," generating more inflation and threatening continuation of the now record-long economic expansion, Greenspan said.

As he has in the past, the Fed chairman emphasized that a key reason U.S. economic growth has been so strong is the major rise in the value of assets, such as corporate stocks and owner-occupied homes. As those values have gone up, American households have become wealthier and chosen to spend about three or four cents of every dollar of added wealth - a phenomenon called the "wealth effect," he said.

At some point, an increase in longer-term interest rates usually puts a lid on rising asset values, but so far that hasn't happened this time. Rates have gone up, he said, but business has been so good that increases in earnings expectations "have more than offset" the restraining effect of higher rates on stock prices.

However, that could be changing. While prices of some high-tech company stocks have continued to shoot upward, the Dow Jones industrial average and the Standard & Poor's 500 stock index, are currently no higher than they were last spring.

For the wealth effect to diminish and demand for goods and services to ease, asset values only need to stop rising faster than the nation's incomes, Greenspan said.

Many financial analysts and investors had already assumed that the Fed would raise its 5.75 percent target for overnight rates more than once in coming months. With those expectations already incorporated in investors' thinking, Greenspan's remarks had only a small immediate impact on financial markets.

"We can comfortably assume that the chairman probably envisions not one tightening, probably not two, but several quarter-percentage point rate increases," said Ray Stone of Stone & McCarthy, a financial markets research firm.

A number of other analysts, including Bruce Steinberg, chief economist for Merrill Lynch & Co. in New York, agreed.

"Greenspan's testimony was hawkish and pointed to more tightening," Steinberg said. "We still look for two more moves, but the risk is three or four."

Forecasts from the members of the Federal Reserve Board and the 12 regional Federal Reserve Bank presidents who participate in policymaking meetings show than most expect the economy to grow at a 3.5 percent to 3.75 percent pace this year, with the jobless rate remaining in the 4 percent to 4.25 percent range, Greenspan told the committee.

Most of the policymakers believe the economy can grow about that fast without driving unemployment lower and putting more upward pressure on wages. Since the economy grew 4.2 percent last year, that suggests growth "doesn't have to slow that much to satisfy the Fed," Steinberg said.

Stone said Greenspan's testimony could be taken by "some commentators as an indication that the next adjustment at the March 21 Fed policymaking meeting will be a half-percentage point increase rather than the standard quarter point. But our sense is that the chairman's urgency is not specific to the March meeting, but more generally to a pattern of several quarter-point adjustments over a relatively short period of time."

Greenspan himself underscored that interpretation when he told a committee member late in the hearing, "Less volatile monetary policy helps stability and growth. Stable, incremental policy for monetary authorities is always best, if it's feasible. The less volatile policy changes are, the less volatile fluctuations in the financial system are, the greater is the long-term sustainable economic growth."

-(Optional add end)-

That is exactly the sort of approach to changes in interest rates Greenspan has pursued since he became chairman in 1997. And for the moment at least, that approach still looks feasible because Greenspan made it clear that his concerns about inflation relate not to the present but the future.

"Inflation has remained largely contained," he said. "An increase in the overall rate of inflation in 1999 was mainly a result of higher energy prices."

And productivity - the amount of goods and services produced for each hour worked - grew so rapidly in the second half of last year that the cost of labor per unit of output actually declined.

Several committee members asked Greenspan what could be done to bring down world oil prices, which were hurting the pocketbooks and businesses of their constituents. Essentially, he said there is little that can be done, except possibly through diplomatic efforts to encourage oil producing nations to increase production.

The continuing low rate of inflation was confirmed yesterday by a Labor Department report that producer prices for finished goods were unchanged last month and up only 2.5 percent in the last 12 months _ in the face of a 17.5 percent jump in energy prices. Moreover, so-called core producer prices, which exclude volatile food and energy prices, fell 0.2 percent last month and were only 0.8 percent higher than they were in January 1999.

The decline in the core index was partly the result of an unexpected 4.2 percent drop in tobacco prices.

Immigration official charged with spying

MIAMI - A U.S. immigration official with ''secret'' security clearance was arrested Thursday and charged with spying for the Cuban government, the FBI said.

Mariano Faget was being held at the Federal Detention Center in Miami and was to appear in court Friday, the FBI said in a statement.

Faget, a native of Havana, is employed at the Immigration and Naturalization Service as a supervisory district adjudication officer. He held a ''secret'' security clearance and was responsible for supervising decisions that affected immigrants and people seeking political asylum, the FBI said.

''Faget has access to classified and sensitive INS files relating to confidential law enforcement sources and Cuban defectors,'' the FBI said.

The agency said he had made unauthorized contacts with Cuban intelligence officers in Miami and in other U.S. cities.

A spokesman for the Cuban Interests Section, which represents the nation in Washington, declined comment. The White House also had no comment, spokesman Mike Hammer said.

The FBI said it wouldn't release any further details on the case until a news conference set for Friday morning.

Russ Bergeron, director of media relations at INS headquarters in Washington, said he could not comment on Faget's arrest. He said it is INS policy to cooperate with such investigations.