News Digest August 29-September 4

By Christopher John Farley, Christine Gorman, Michael D.Lemonick, Eric A. Meers, Sophfronia Scott Gregory, David E. Thigpen, Sidney Urquhart

NATION

He's Back

President Clinton finished his Martha's Vineyard vacation and immediately returned to the task of solving all the country's problems. In September he is scheduled to present Vice President Gore's proposals for reinventing government, then press for the passage of NAFTA and then announce a complete overhaul of the U.S. health-care system.

Health-Care Strategy

The Administration revealed more details about that last initiative. The President's health-care plan would guarantee coverage for all Americans by the end of 1997, but offer only limited coverage for mental-health care and almost none for adult dental care. Increased taxes on cigarettes and perhaps alcohol are expected to bring in $16 billion to help cover the increased government medical bill.

Catching Deadbeat Docs

The Department of Health and Human Services published the names of 4,973 physicians and other health professionals to shame them into repaying $228 million in government medical-education loans that are in default.

U.S. Military Action in Bosnia?

In an open letter released last week, former Secretary of State George Shultz, former British Prime Minister Margaret Thatcher and nearly 100 other signers urged President Clinton to insist that nato make immediate air strikes against Serb planes and artillery and that the U.N. lift its arms embargo against the Bosnian Muslims. Responding to yet another breakdown of the Geneva peace talks, Clinton warned the Serbs and Croats once again that the military strike option was "still very much alive." Earlier in the week, Clinton said that under the right conditions, he would send almost 30,000 troops to Bosnia to help enforce a peace treaty.

Military Cuts in Washington

Defense Secretary Les Aspin unveiled a five-year plan to cut back on military spending and personnel. Troop numbers would shrink from 1.7 million to 1.4 million, and "Star Wars" spending would be cut from $39 billion to $18 billion. The U.S. would continue its strategy of remaining prepared to fight two regional wars nearly simultaneously, Aspin said. The Pentagon also acknowledged that it intended to purchase unnecessary weapons in order to keep production lines running.

Pratfall in Mogadishu

Are they U.S. Rangers or Keystone Kops? An elite squad of 50 U.S. Army troops, hunting Somali warlord General Mohammed Farrah Aidid, stormed a building in Mogadishu last week and trussed up nine men and women. The detainees turned out to be U.N. aid workers. A Pentagon official admitted the predawn raid was "not particularly auspicious for the Rangers."

Demjanjuk Can Come Back

Attorney General Janet Reno said the Justice Department will not fight the return of John Demjanjuk to the U.S. She added, however, that prosecutors will seek to deport the retired Cleveland autoworker again, for while new information suggests that he is not "Ivan the Terrible," as formerly accused, there is evidence that Demjanjuk did serve in a Nazi concentration camp.

King Officers Denied Bail

Stacey Koon and Laurence Powell lost their bid to stay free pending appeal of their convictions for violating Rodney King's civil rights. They will start serving their prison sentences later this month. Theodore Briseno, acquitted in the case, wants to remain a cop and went into hearings with Los Angeles police department officials who will decide if he will be allowed to return to duty.

New FBI Leadership

Louis Freeh was sworn in as the director of the FBI.

WORLD

Israel and the P.L.O.

After nearly 50 years of seemingly irremediable hatred, the Israelis and the Palestinians have drafted a preliminary peace agreement. The pact, expected to be signed within days, comes at the end of nine months of secret negotiations between Israeli officials and members of the p.l.o. Jerusalem has agreed to recognize officially the P.L.O. if the organization repeals parts of its covenant calling for Israel's destruction. The plan provides for limited self- government for the Palestinians in the occupied territories, and will be implemented first in the Gaza Strip and the West Bank city of Jericho.

Moscow Purge

As charges and countercharges of corruption swept through the Russian government, President Boris Yeltsin suspended his Vice President and archrival, Alexander Rutskoi. He also temporarily dismissed First Deputy Prime Minister Vladimir Shumeiko, a powerful supporter of Yeltsin's economic reforms, at his own request so Shumeiko could defend himself against corruption charges.

Ukraine Hand-Off

Ukraine President Leonid Kravchuk, in dire need of cash, has agreed to turn over his country's nuclear warheads and half-share of the Black Sea fleet to Russia. But the Ukraine parliament may try to block the deal. Ukraine owes Russia about $6 billion.

Puppet Theater in Nigeria

Less than a week after Nigerian strongman General Ibrahim Babangida stepped down, the country's powerful labor unions called a five-day general strike to protest the new civilian government of Ernest Shonekan, whom many see simply as Babangida's surrogate and pawn. Deepening the crisis, five of the country's 30 state governors have vowed not to recognize Shonekan.

Farewell to Lithuania

The last Russian soldier has left Lithuania. Talks on the final departure were suspended two weeks ago amid rumors that Lithuanian negotiators were demanding up to $146 billion in reparations for their country's annexation by the Soviet Union 53 years ago. Lithuanian President Algirdas Brazauskas has agreed to postpone the compensation discussions.

Argentine Sex Cult

Authorities have taken 170 children into custody in Buenos Aires after allegations that many of them were being sexually abused by members of "the Family," an American-led cult that calls itself a worldwide Christian- missionary church. Nearly 60 of the children were American.

Chamorro and the Military

Nicaraguan President Violeta Chamorro will oust Humberto Ortega, the Sandinista army chief. The announcement drew a denunciation from Daniel Ortega, Humberto's brother, who was President of the Sandinista government that ran Nicaragua for more than a decade. "You are not the owner of Nicaragua," he told his successor. But Chamorro's action could help unfreeze $94 million in U.S. aid.

BUSINESS

Cable Cuts Raise Prices

An FCC regulation meant to cut cable-TV rates failed to have the desired effect for many no-frills subscribers: instead of going down, their bills went up. Cable companies that had charged below the benchmark price for basic cable raised those rates to compensate for the lower prices the new law forced them to charge for equipment such as channel converters and remote controls.

Car-Safety Requirements

Federal regulations will make air bags mandatory in all new cars four years from now, and in all light trucks the year after that.

Long Bond Makes History

For the first time in a quarter-century, interest on 30-year Treasury bonds fell below 6%. Other economic news was mixed: payroll jobs, a key measure of economic health, fell in August, even as unemployment dipped from 6.8% to 6.7%, and the index of leading economic indicators fell. At the same time, new data on the country's output suggest that the recession during the Bush Administration was not as severe as previously reckoned.

Litton's Big Verdict

A federal jury in Los Angeles found that Honeywell infringed on a Litton Industries patent covering airplane navigation systems. The jury awarded Litton $1.2 billion, which is pending approval by a judge this week.

Lee Leaves Early

Lee Iacocca suddenly resigned a year earlier than had been planned from Chrysler's board of directors last week, saying it was "time to let the younger people do the driving." Iacocca had been chairman of the board's executive committee.

SCIENCE

Saving Billions and Billions

NASA has appointed a kind of outer-space swat team to figure out how to make up for the scientific gap left by the loss of Mars Observer. The team, which includes all-around space guy Carl Sagan, will look into whether cheaper, less complex space probes can map Mars and whether foreign nations should be invited to take part. A report is due in two months.

Hands Across the Universe

Even before Sagan & Co. make their report, the U.S. and Russia, spurred on by President Clinton, have finally done what the experts have urged for years: agreed to massive cooperation in space. The Russians will be permitted to launch U.S. satellites; the U.S. will pay hundreds of millions of dollars to put experiments aboard the Russian space station Mir, where they will be tended by American astronauts; and the U.S. will bring Russia on as a full partner in its own space-station effort.

MEDIA & THe ARTS

He Is Worth All That Money

The much hyped premiere of Late Show with David Letterman included Tom Brokaw grabbing cue cards, Bill Murray spray-painting furniture and Paul Newman looking for singing cats. It was all very gratifying to CBS executives, , especially after they saw the resulting numbers. Letterman's show delivered a huge 32% audience share the first night and 25% the next night. On Tuesday night, Jay Leno's Tonight Show tumbled to an all-time nonrepeat low rating of 3.5 with a 10% share. Advertisers are snapping up Late Show time, and on Wednesday CBS's stock leaped $19, or 8%, to $266, the highest of the year.