News Digest July 18-24

By Tom Curry, Michael Duffy, Christopher John Farley, Richard Lacayo, Alexandra Lange, Michael D. Lemonick, Erik Meers and Michael Quinn

NATION

Indictment for Rostenkowski?

Just as he assumed center stage in the delicate negotiations to craft a House and Senate compromise on the President's budget plan, Illinois Representative Dan Rostenkowski, chairman of the House Ways and Means Committee, found himself under the threat of a criminal indictment. His troubles resulted from last week's guilty plea by former House postmaster Robert Rota, who admitted that he had helped several unnamed Congressmen embezzle tens of thousands of dollars from the House Post Office. A comparison of court papers with public records indicated that Rostenkowski may have been one of these Congressmen. He denies the allegations. Federal prosecutors have not said whether they will seek indictments.

The Flood: Week Six

A few days of dry weather allowed water levels to recede slowly along parts of the Mississippi River. Des Moines, Iowa, turned its tap water back on for the first time in almost two weeks. But later in the week heavy rain returned to much of the area, causing still more flooding. "We are going to have another crest coming down," said Larry Crump, Army Corps of Engineers spokesman at Kansas City, Missouri. So far, the flood has killed at least 40 people, submerged 16,000 sq. mi. of farmland and caused $10 billion in damage.

Clinton Aide's Suicide

The White House was shocked by news that Vincent Foster Jr., 48, a childhood friend of the President's, a former law partner of Hillary Rodham Clinton's and the No. 2 lawyer in the office of the White House counsel, was found dead in a Virginia park. Foster apparently shot himself in the head with a composite 1913 Colt revolver. A father of three, Foster left no note or other . explanation. "No one can ever know why this happened," said the visibly grieving President, who asked the Justice Department to investigate Foster's death.

A New FBI Director -- Finally

After months of resisting pressure to resign, fbi Director William Sessions said he would leave only if President Clinton fired him; Clinton obliged and promptly nominated U.S. District Judge Louis Freeh for the position. A former fbi agent, Freeh, 43, first made a name for himself as a federal prosecutor in New York City, where he helped obtain the 1987 convictions of a Mafia drug- dealing ring in the Pizza Connection cases.

Ginsburg Aces Hearings

Ruth Bader Ginsburg, Clinton's nominee to the Supreme Court, emerged virtually untouched from four days of hearings before the Senate Judiciary Committee. While reassuring conservatives with her view that judges should avoid making policy from the bench, Ginsburg declined to state her position on the death penalty and other issues that might come before the court -- but she did take the unprecedented step of strongly endorsing abortion rights.

Elders Gets Heard

In a one-day Senate confirmation hearing, Dr. Joycelyn Elders, Clinton's nominee for Surgeon General, reaffirmed her strong support for sex education and condom distribution. Elders, a former Arkansas health director, also acknowledged that she had been cited by the Office of the Comptroller of the Currency for mismanagement as a board member of the National Bank of Arkansas.

Don't Ask, Don't Tell, Don't Get Caught

The Administration unveiled a somewhat confusing compromise on the vexing issue of service by gays in the military. The scheme won the blessing of the Joint Chiefs of Staff by making large concessions to their concerns. Gays may remain in the service if they remain celibate and do not identify themselves as gay. But frequenting gay bars or marching in gay-rights parades will not automatically constitute the "credible information" required for an investigation. Senator Sam Nunn's Armed Services Committee voted to write the policy into law.

Antigay Measure Thwarted

The Colorado Supreme Court let stand a lower court ruling that temporarily bars enforcement of Amendment 2, the measure passed by voters last November to forbid any state or local laws that would prohibit discrimination against gays. Using language that gave gay-rights groups the hope that the lower court - will eventually strike down the amendment altogether, the judges said it appeared to violate constitutional guarantees of equal protection.

WORLD

U.S. Gives Up on Bosnia

With Bosnian Serb troops shelling Sarajevo and close to capturing key roads leading to the city, Secretary of State Warren Christopher acknowledged that the Clinton Administration would take no action to aid the besieged Muslims in Bosnia. "The United States is doing all it can, consistent with our national interest," Christopher insisted, while admitting that the U.S.-backed strategy to put Sarajevo and five other cities under U.N. protection as safe havens for Muslims "certainly seems not to have been effective." President Clinton looked more interested in assigning some retroactive blame, saying that the bloody Sarajevo end game had been brought about partly by the European nations that last May opposed his plan to arm Bosnian Muslims. "That's when things began to deteriorate," Clinton said.

CIA Wants Stingers

The U.S. secretly shipped Afghanistan's mujahedin rebels hundreds of Stinger antiaircraft missiles for use against the occupying Soviet troops in the 1980s. It worked -- but now the CIA is scrambling to buy more than 300 leftover Stingers back. Gratitude is one thing, but the Afghans need cash. Worried that Islamic militants or unfriendly governments like North Korea will come up with a better offer, the agency has earmarked $55 million for the missiles.

Iraq Bends, U.N. Doesn't

Rolf Ekeus, the chief of the United Nations commission monitoring Iraq's weapons industries, got assurances from Saddam Hussein's government that it would submit to long-term surveillance of its arms-production facilities. This sign of Iraqi pliability didn't move the Security Council, which voted to keep in force the three-year-old trade embargo on Baghdad.

Humiliated but Still PM

British Prime Minister John Major prevailed in a no-confidence vote in Parliament, although the only thing that Major's fellow Conservatives really seemed to be confident of was that the public would have swept them from office if Major had lost the vote and been forced to call a general election. Previously, Major had lost an important vote on the Maastricht treaty of economic union with Europe. Major's victory seemed to clear the way for British ratification of the treaty, but the Prime Minister appears to be weaker than ever.

BUSINESS

Greenspan Talking Tough

Will the Fed raise interest rates? Though inflation is low and holding steady, Alan Greenspan, the Federal Reserve Board chairman, told a House subcommittee he was disappointed that it "has at best stabilized, rather than easing" in the face of a 7% unemployment rate. Greenspan was hopeful on the economy, however, predicting growth of 2.5% for the year and a drop of 0.25% in the jobless rate by year's end. Greenspan also disclosed last week that the Fed is moving away from more than 15 years of reliance upon monetarism -- the attempt to guide economic growth by adjusting the money supply -- in favor of its former reliance on adjustments in interest rates. He said that M-2, the Fed's measure of the money supply, was no longer useful because it does not include mutual funds.

GM Settles Truck Suits

To settle 36 class-action lawsuits by owners of GM trucks that have gas tanks mounted outside the frame, and which critics have said are therefore liable to explode in an accident, the company will distribute between 4.7 million and 6 million $1,000 certificates good for the purchase of its trucks. The National Highway Traffic Safety Administration is still seeking recall of the trucks, and personal-injury suits were not covered by the deal.

Cheaper Cigarettes

Ensuring a further price war in the tobacco industry, Philip Morris decided to make permanent the temporary price reductions on Marlboro cigarettes that it put into effect in April and to extend price cuts to its other brands.

MEDIA & THE ARTS

MGM and UA: The Sequel

Hollywood mogul Michael Ovitz is revitalizing beleaguered MGM/UA. He's persuaded Credit Lyonnais to pump $400 million into the studio and a new TV division. Overseeing the new MGM/UA: ex-Paramount chief Frank Mancuso.

Woody Allen's New Deal

It's splitsville again for Woody Allen -- he's leaving Sony's TriStar Pictures for Sweetland Films, a tiny independent production company. Sweetland is headed by Allen's friend Jean Doumanian, and Allen's sister, Letty Aronson, is a vice president; Doumanian's longtime companion is Jaqui Safra, nephew of the principal shareholder in the Republic New York banking corporation.

SCIENCE

Soot, the Unlikely Killer

The Environmental Protection Agency and the Harvard School of Public Health estimate that up to 60,000 American deaths a year are caused by particles of soot -- an old-fashioned form of air pollution generated by factories and diesel trucks -- even though soot levels seldom exceed legal limits. Most victims are children and elderly people with respiratory problems, and asthmatics of all ages.

Harder Than Diamond

Harvard chemists have come up with a substance that in theory should be harder than diamond, considered the hardest substance on earth. The new synthetic material is a blend of carbon and nitrogen (diamond is all carbon), and if the researchers can make a chunk big enough and pure enough to test, they'll be able to see whether the theory is correct.