The Real Anthrax Scare
More than three years after the nation was traumatized by
anthrax, the government still cannot properly respond to a
mail-borne threat.

http://www.nytimes.com/2005/03/17/opinion/17thu1.html?th

US Congress as baseball's cleanup hitter
The current hearings on steroids are merely the latest example of the
historic Capitol Hill connection to America's most storied sport. By
Mark Sappenfieldand Gail Russell Chaddock
http://www.csmonitor.com/2005/0317/p01s02-uspo.html?s=hns

To paddle or not to paddle? It's still not clear in US schools.
As use of paddle declines, some parents and educators dig in to defend
corporal punishment. By Stacy A. Teicher
http://www.csmonitor.com/2005/0317/p01s04-legn.html?s=hns

Senate OKs Alaska wildlife refuge drilling
Controversial measure now goes to the House, where passage is far from
certain. By Brad Knickerbocker
http://www.csmonitor.com/2005/0317/p02s01-uspo.html?s=hns

Arms-smuggling sting sheds light on US security efforts
Federal authorities have indicted 18 men in the latest effort to keep
deadly weapons away from would-be terrorists in the US. By Ron Scherer
http://www.csmonitor.com/2005/0317/p02s02-usgn.html?s=hns

Could cuts in emissions come faster?
Why does a new law not impose stringent mercury emission limits until
2018? By Mark Clayton
http://www.csmonitor.com/2005/0317/p11s01-sten.html?s=hns

When girls train against the guys, is there a loser?
The NCAA examines the safety and fairness of top women's basketball
teams practicing against men. By Clayton Collins
http://www.csmonitor.com/2005/0317/p11s02-alsp.html?s=hns

A mix of mice and men
Injecting animals with human genes raises huge ethical questions. By
Gregory M. Lamb
http://www.csmonitor.com/2005/0317/p13s01-stct.html?s=hns

So durable, it's hard to get rid of
Debate over the environmental impact of polyvinyl chloride (PVC) is
intensifying. By Mark Clayton
http://www.csmonitor.com/2005/0317/p13s02-sten.html?s=hns

Small vibrations lend new insights on Earth's crust
Scientists are building detailed images using vibrations previously
discarded as noise. By Peter N. Spotts
http://www.csmonitor.com/2005/0317/p14s02-stss.html?s=hns

On the horizon
News from the frontiers of science. Compiled from wire services
http://www.csmonitor.com/2005/0317/p16s01-stgn.html?s=hns

A step toward honest governments
Some roadblocks have risen between corrupt leaders and the government
till. By David R. Francis
http://www.csmonitor.com/2005/0317/p17s01-cogn.html?s=hns

___________________________________
THE MORNING BRIEF

March 17, 2005 -- 6:37 a.m. EST

___________________________________

Viacom is the latest multimedia megalith to admit that size doesn't equal success.

Big Media Seem
To Be Shrinking

By JOSEPH SCHUMAN
THE WALL STREET JOURNAL ONLINE


Viacom's 1999 purchase of CBS opened a new era of super-jumbo media conglomerates, but in now considering a split, the House of Redstone becomes just the latest multimedia megalith to admit that size doesn't equal success.

Chairman, Chief Executive and principal shareholder Sumner Redstone, issuing what Variety called "a shocker of a press release," said yesterday that he authorized the board to explore the division of Viacom into two separate publicly traded companies. One, run by current co-President Leslie Moonves, would include CBS, other broadcast-TV stations, and radio and outdoor advertising operations. The other, to be headed by fellow co-President Tom Freston, would take MTV, Nickelodian, Showtime and other cable networks; Paramount Pictures and Paramount Television; and publisher Simon and Schuster. Mr. Redstone would chair and essentially control both companies, meaning, Variety notes, that any takeover of the smaller pieces would be near impossible without his approval. The news comes just weeks after Viacom reported the fifth-largest quarterly loss in American business history after taking an $18 billion charge to write down the value of its ailing radio and outdoor-advertising businesses.

And while the proposal is largely aimed at jump-starting the company's moribund stock price, The Wall Street Journal notes it may also solve one of the most vexing succession conundrums in the industry. By naming Messrs. Moonves and Freston to replace the abruptly departing Mel Karmazin last year, Mr. Redstone set up a competition between two men unaccustomed to sharing the spotlight. "Under his new plan to divide Viacom, Mr. Redstone would give each superstar executive his own publicly traded sandbox, removing competitive pressures and allowing the men to fully focus on building their respective empires," the Journal says.

The Viacom-CBS deal was quickly followed by the ill-fated Vivendi acquisition of Universal and AOL's purchase of Time Warner, which both turned out differently than originally anticipated. And a Viacom split would even more poignantly illustrate how the media consolidation of the last decade hasn't worked out, the Los Angeles Times says. "The proposed breakup underscores the challenges facing the entertainment industry as it realizes that acquisitions have in many cases done as much harm as good," the paper says. "Media stocks as a whole have been a drag," Frank Biondi, a former chief executive of Viacom and Universal Studios who now runs a private investment firm, tells the Times. "When companies have such large scale, it's virtually impossible to get all the pieces moving in one direction," he says. And the Journal notes that the proposed split shows how the media and entertainment businesses are still under assault from new technologies, which include the Internet, satellite radio and digital recorders like TiVo, which chip away at advertising-based profits.

GM, Predicting a Loss, Fuels Wider Anxiety
General Motors' stock price fell to its lowest level in more than eight years yesterday after it announced expectations for a first-quarter loss, what the Detroit Free Press sees as evidence of how GM's latest efforts to fix its crucial North American car and truck business are still being pummeled by competitors with hotter brands. While GM sells the most high-profit pickups and SUVs in the U.S., "its models are aging; they face more competition, and more Americans are shifting to cars, wagons and crossover vehicles, now that they face higher gas prices and have more good vehicles to choose from," the paper says. In the first two months of this year, GM's U.S. sales fell 9.9% and its market share hit a record low of 24.4%, even as foreign rivals Toyota, Nissan, BMW and Hyundai saw their U.S. sales increase, the Los Angeles Times notes.

The Wall Street Journal describes yesterday's abrupt warning from GM as a big setback for the strategy pursued by Chairman and Chief Executive Rick Wagoner to use heavy rebates and cut-rate financing to keep North American sales flowing, while at the same time waiting for attrition to gradually reduce the size of GM's costly unionized work force. Like more and more companies, GM increasingly relies on its financing arm for profits, BusinessWeek points out. But that business can no longer compensate for the losses at its auto unit. The magazine suggests that Mr. Wagoner may have to go back to GM's unions to get concessions to trim the work force and lower health-care costs, and "squarely face a dilemma that has haunted GM for years: Can it really continue to support eight competing divisions?"

In addition to its plummeting share price, GM saw its official creditworthiness questioned anew by the three big ratings firms, increasing the likelihood its bonds could be downgraded to junk status. And the Journal says the broader impact is that "GM's troubles fueled concerns that U.S. companies' finances might not be healthy enough to justify the low interest rates they have been paying on their debt."

J.P. Morgan Latest to Settle for WorldCom
A day after former WorldCom chief Bernard Ebbers was convicted on fraud charges, J.P. Morgan Chase said it had reached a $2 billion settlement with the company's shareholders, who argued the underwriter should have been aware of WorldCom's shaky financial situation. The move avoids the negative publicity and financial risk of a trial that had been set to start next week, American Banker notes, and it makes J.P. Morgan the last big banking company to settle. Citibank settled last spring, and such deals had been escalating, with BNP Paribas and Deutsche Bank among 12 banks that settled for a total of $1.4 billion over the past two weeks. Mr. Ebbers, meanwhile, is trying to get out of a different civil lawsuit, asking a Manhattan bankruptcy court judge to toss out demands from MCI -- the former WorldCom -- that he repay $408 million in loans he got from the company, the New York Post reports. Mr. Ebbers isn't denying he owes the money but doesn't think bankruptcy court is the right place to fight it out.

If the legal process that convicted Mr. Ebbers continues to work against him, he could be in jail within months, The Wall Street Journal says. His attorney, Reid Weingarten, said he would probably base an appeal on Judge Barbara Jones's instructions to jurors that they could find Mr. Ebbers guilty if they thought he strongly suspected fraud and intentionally turned a blind eye. But the Journal says some legal experts doubt an appeal on that basis would be effective. And the paper cites several jurors saying that they didn't entirely believe Mr. Ebbers or star prosecution witness Scott Sullivan, the former WorldCom finance chief. Instead, the jurors said, they "resorted to picking through the dense financial documents entered into exhibits by the defense and prosecution" to figure out the truth.

Oil Prices Burn Ever Higher
The price of crude oil rose to a record this morning, surpassing $57 a barrel in electronic Nymex trading on concern that OPEC can't pump enough oil to meet demand this year, Bloomberg reports. The Organization of Petroleum Exporting Countries raised its output target by 500,000 barrels a day yesterday to 27.5 million barrels a day, a record for the 10 members restrained by quotas. The move comes in response to significant pressure from the U.S. and others to try to ease petroleum prices to avoid stunting global economic growth. The move marks a change in OPEC strategy, because the cartel will let inventories accumulate in the second quarter in preparation for surging use in the second half.

The Los Angeles Time observes that the OPEC increase offers no relief at the gas pump for American drivers. And in addition to its broader effects on the stock market, the escalation in oil prices sent shares in Boeing tumbling because of the ever larger toll that high fuel costs are taking on the ailing U.S. airline industry, the Seattle Post-Intelligencer notes. The paper also reports that Boeing's interim chief executive signaled the search for a new leader could take months.


Variety: FCC Commissioner Kevin J. Martin, a former Bush campaign official and economic adviser who once suggested that broadcasters be fined not per incident but for every "indecent word" uttered, has been tapped by the White House to head the agency.

Wall Street Journal: After years of resistance by environmentalists, the Senate endorsed a White House-backed plan to authorize oil exploration in a portion of Alaska's Arctic National Wildlife Refuge, a vote that illustrated the business-friendly tilt in Congress following November's elections and a victory for Exxon Mobil and other oil giants.

Washington Post: Google co-founders Sergey Brin and Larry Page and other senior company executives have sold more than $500 million of stock in the Internet-search firm over the past several months, according to regulatory filings.

Bloomberg: New York Attorney General Eliot Spitzer has no plans to investigate billionaire Warren Buffett for his role in a reinsurance transaction that triggered the resignation of AIG's Maurice "Hank" Greenberg, according to a person familiar with the matter.

Nature: Two Indian government departments that have fought for years over who should control stem-cell research are finally negotiating a single set of guidelines for clinical practice, a move driven by the mushrooming of clinics that claim to use stem cells to treat a wide range of diseases.

Los Angeles Times: Freed from prison two weeks ago, Martha Stewart is planning multiple TV projects to help her battered image, but her comeback may be complicated by CBS's plans to quickly produce an unauthorized movie on the recent events of her life, possibly with Cybill Shepherd in a repeat performance.

Quote of the Day
"The U.S. is putting the biggest skeptics of multilateralism in charge," Devesh Kapur, a Harvard political scientist and co-author of the official history of the World Bank, tells the Financial Times, in reference to President Bush's decision to nominate Deputy Defense Secretary Paul Wolfowitz, a principal architect of the war in Iraq, as president of the World Bank. The news, rumored for weeks, provoked consternation among European governments, including Britain's, the FT says.

__________________________________
TODAY'S MARKETS
The Dow industrials dropped 112.03 points, or 1.04%, to 10633.07 after oil surged 2.1% to a record $56.46 a barrel and GM's slump siphoned about 35 points off the blue-chip average. The Nasdaq composite fell nearly 1%. - Chart: Oil vs. the Dow

- GM News Roils Bond Market

http://online.wsj.com/article/0,,SB1110974...tml?mod=djemTMB

Concern is growing among some members of Congress and state officials about the fairness of the arbitration system, the principal way in which investors can seek redress for their grievances.

http://online.wsj.com/article/0,,SB1111015...tml?mod=djemTMB

A growing number of parents are not paying the nanny tax -- largely because of the rising cost of child care. But avoiding such taxes is a short-sighted mistake, says Sue Shellenbarger.

http://online.wsj.com/article/0,,SB1111016...tml?mod=djemTMB

Napster To Go could be the stiffest competitor yet for Apple's iTunes. The online music service lets users rent an unlimited number of songs for a monthly fee, but Walt says there are some downsides to the subscription model.

http://online.wsj.com/article/0,,SB1111015...tml?mod=djemTMB

A proposed measure in Congress to crack down on "phishing" scams would be tough to enforce, security experts say, because it is nearly impossible to catch many of the perpetrators.

http://online.wsj.com/article/0,,SB1110811...tml?mod=djemTMB

Granola v. Gravy: Are health-conscious people the real problem with Social Security, as one columnist writes? Plus, why private accounts could mean trouble for Wall Street, in our roundup of the best writing on the Web about Social Security and Medicare.

http://online.wsj.com/article/0,,SB1110836...tml?mod=djemTMB

--------------------
House Passes $82-Billion Request for War Funding
--------------------

The bill allocating money mainly for Iraq and Afghanistan draws bipartisan support.

By Mary Curtius
Times Staff Writer

March 17 2005

WASHINGTON; President Bush's request for nearly $82 billion in emergency funds primarily for military spending in Iraq and Afghanistan and assistance to global hot spots easily passed the House on Wednesday, winning virtually unanimous support from Republicans and broad backing from Democrats.

The complete article can be viewed at:
http://www.latimes.com/news/nationworld/wo...headlines-world

--------------------
President Sees the Middle East as a Bright Spot
--------------------

Bush, who remains upbeat about Iraq, envisions Lebanon as a 'thriving democracy.' He jokes about terrorists' election chances.

By Tyler Marshall
Times Staff Writer

March 17 2005

WASHINGTON; Confident that events in the Middle East are moving in his administration's direction, President Bush on Wednesday sketched his vision of Lebanon as a "thriving democracy" and light-heartedly expressed doubt that terrorist groups could win free elections on a platform of "blowing up America."

The complete article can be viewed at:
http://www.latimes.com/news/nationworld/wo...headlines-world

THE AGE OF MISSING INFORMATION

One of the most striking features of the government information
landscape today is the continuing withdrawal of unclassified
information from the public domain. More of a reflex than a policy,
it has left gaping holes in the public record of government
activity.

The scope of the problem is surveyed in an article in Slate
today. See "The Age of Missing Information":

http://slate.msn.com/id/2114963/


SENSITIVE BUT UNCLASSIFIED: A POLICY ANALYSIS

The problem posed by unclassified information that is deemed a
potential threat to security is the subject of an extended new
policy analysis from the University of Maryland.

Government controls on so-called sensitive but unclassified
information have multiplied since September 11, 2001, in often
arbitrary and conflicting ways.

"Sometimes the potential danger is pretty clear and other times it's
a difficult call," said Jacques Gansler, a former Under Secretary of
Defense and co-author with William Lucyshyn of the new Maryland
study. "Advanced biotechnology research is an area of particular
concern where we probably need to increase oversight. In other
cases, precautions can seem excessive or capricious."

The study provides a useful analysis of the problem, which has
numerous complicating features, such as the fact that much of the
information in question is generated outside of government control
or even internationally.

Written with evident good will, the study will nevertheless leave
many readers uneasy with its recommendation that the President
establish a new class of restricted materials to be termed CUSI --
Controlled Unclassified Security Information.

Some of the problems with the authors' proposal, in Secrecy News'
view, include the following:

** The current Administration does not share the "bias in favor of
openness" that the authors insist is needed to ensure the
credibility and feasibility of any new system of control of
unclassified information. (See "The Age of Missing Information"
above.) Asking this Administration to impose new controls on
unclassified information is inviting an addict to indulge his habit.

** The authors assign a lead role to the Department of Homeland
Security in fleshing out and implementing their proposal. But when
it comes to security policy, DHS has over-reached (e.g. by requiring
non-disclosure agreements for unclassified information) and
under-performed (e.g. by failing to produce procedures for
protecting sensitive homeland security information more than two
years after they were mandated to do so). It is doubtful that it is
up to the task.

** Most fundamentally, the authors assume that the consequences of
withholding or releasing particular types of unclassified
information are knowable in advance, or can be established by
consensus. In many cases, that is unlikely to be true.

** The authors commendably prescribe an appeals process in order
to correct any misapplication of the new controls, but such
processes do not function reliably today. Thus, for example, when
the CIA says that the 1997 intelligence budget can be declassified
but the 1957 or 1967 budget cannot be, all of the available appeal
mechanisms -- the ISCAP, a federal judge, congressional intelligence
committees (by their acquiescence) -- say that the CIA is correct.
But it isn't.

** The authors occasionally lapse into prejudice, as when they
glibly state that "seemingly benign information can be used easily
to endanger the national security" (p.42). But the national
security is not easily endangered. Anyway, this presumes what needs
to be demonstrated. It is the characteristic defect of much
security policy analysis that in the absence of validated threat
data, analysts assume a ubiquitous and hyper-competent adversary.
That is a poor foundation for public policy.

The authors do deserve credit for tackling a difficult subject, and
illuminating it, and perhaps initiating a conversation that has been
long overdue.

See "The Unintended Audience: Balancing Openness and Secrecy" by
Jacques S. Gansler and William Lucyshyn, Center for Public Policy
and Private Enterprise, University of Maryland, dated September 2004
but released last week and posted here:

http://www.cpppe.umd.edu/Bookstore/Documen...dience_3.05.pdf


WAXMAN ON SENSITIVE BUT UNCLASSIFIED

Burgeoning controls on "sensitive" information "are being invoked
improperly to block the release of information that is not
classified," wrote Rep. Henry Waxman (D-CA) in a March 1 letter
reporting the findings of a staff study.

"Some of the examples we reviewed involve absurd overreactions to
vague security concerns. In other examples, the Administration
appears to have invoked the [sensitive but unclassified]
designations to cover up potentially embarrassing facts, rather than
to protect legitimate security interests."

Rep. Waxman identifies several of those examples in his 12 page
letter, a copy of which is posted here (500 KB PDF file):

http://www.fas.org/sgp/congress/2005/waxman030105.pdf

RECALLING THE THOMAS BUTLER AFFAIR

Thomas C. Butler is the distinguished expert on infectious diseases
who was aggressively prosecuted by the government and convicted for
improperly shipping plague samples and for contract violations.
Credited with helping to save literally millions of lives through
his medical research, Butler is now serving a two year jail term.

The Butler case should be studied in government sponsored public
workshops in order to "illustrate how rules and norms have been
changed," Gansler and Lucyshyn suggest in their new University of
Maryland study (p. 42).

But many scientists and other observers reject the idea that the
Butler case constitutes a new norm. Rather, they say, it is a
miscarriage of justice that should be repudiated.

In an open letter, Butler's supporters argue that "Incarcerating
Dr. Butler has and will continue to adversely impact the national
security."

"Knowing that even a technical violation or disputing a university's
claim to funds can result in criminal charges, [scientists] will
decline to work on research critical to national security, such as
plague or anthrax."

"One author of this letter has already destroyed all plague samples
held in his lab for exactly this reason."

The letter calls for new efforts to free Butler on appeal. See a
copy here:

http://www.fas.org/butler/letter0305.pdf

MILITARY INTELLIGENCE PROFESSIONAL BULLETIN

When the U.S. Army started moving its online content behind a
password-protected portal called Army Knowledge Online in 2001,
untold thousands of Army records ceased to be publicly available
online.

One of those was a quarterly journal called Military Intelligence
Professional Bulletin.

A July 2004 Freedom of Information Act request to the Army for
electronic copies of the unclassified journal was denied (although
the Army noted that hardcopy subscriptions may be purchased through
the Government Printing Office).

But in response to an appeal, the Army this month conceded that it is
legally obliged to provide the requested publication in softcopy
format, and it did so.

Back issues of Military Intelligence Professional Bulletin, a small
token of the countless unclassified Army publications that have been
withdrawn from online public access, are now once again available here:

http://www.fas.org/irp/agency/army/mipb/index.html

http://www.nbc30.com/news/4294259/detail.html

Conn, New Jersey to Simulate Large-Scale Terrorist Attacks

http://www.public-i.org/report.aspx?aid=669

Tiny School Gets No-Bid Work from Homeland Security
Agency deems Mercyhurst College the sole source to provide training for intelligence analysts

___________________________________
THE EVENING WRAP

March 17, 2005 -- 5:08 p.m. EST

Crude-oil prices jumped to yet another new record, raising the risk that the U.S. economy is heading for another soft patch.

Oil Slick

By MARK GONGLOFF
THE WALL STREET JOURNAL ONLINE


Crude-oil prices are setting new records again, raising the risk that the U.S. economy is again due for what Alan Greenspan last year called a "soft patch."

A barrel of crude momentarily fetched more than $57 on the New York Mercantile Exchange, an all-time high, before sliding and settling at $56.40. When oil crossed $50 last year, some thought it was in a bubble and due to fall sharply. The mood has changed: the futures contract for the year 2009 puts oil at about $49 a barrel. "That's scary," said Oppenheimer & Co. analyst Fadel Gheit. And there's talk that crude could soon hit $60 or more. "We now enter what we academically refer to as 'the stupid phase,' with calls for $100 crude and unsustainable gains in the energy sector," Barry Ritholtz, chief market strategist at the Maxim Group, said in a note -- though he's still an oil bull.

In 2003, when oil cost half what it does today, talk of a $57 price tag might have panicked Wall Street. But the U.S. economy needs less oil than it once did, and much of today's price gain is due to high demand, rather than the kind of abrupt supply disruptions that once caused excruciating recessions. Last year, oil prices nearly doubled, gas prices set new records and everybody complained loud and long as they filled the tanks of their SUVs, yet the economy grew at the fastest pace in five years.

Which is not to say that oil can be ignored. "Every extra dollar has an impact," said senior Citigroup economist Steven Wieting. General Motors has a lot of other problems, but one reason its bottom line is hurting is the fact that pricey petrol has cut demand for its gas-guzzling SUVs. Today, FedEx reported better-than-expected sales and profits in its latest quarter. But FedEx, which burns tons of fuel driving and flying packages all over the world, warned high fuel costs would pinch future earnings. "We are in another oil-induced soft patch," said Richard Yamarone, chief economist at Argus Research. "Like last year's soft patch, I suspect that businesses will tighten the reins on hiring and investment, and that's going to slow the investment and consumption components of economic growth."

Senate Defeats Medicaid Cuts
The Senate voted 52-48 to reject the $14 billion in cuts to Medicaid proposed by Senate Republicans. The vote was one of the first defeats in the long budget process for President Bush and Republican congressional leaders, who had based much of their deficit-cutting hopes on the proposal to cut Medicaid and other benefits. In recent days, they had won Senate votes for extending tax cuts and drilling for oil in the Arctic National Wildlife Refuge. Losing the Medicaid vote, though, is a serious blow to their plans to shrink the deficit by cutting entitlement benefits. "Without the Medicaid savings, it's almost pointless to have a provision in the budget cutting entitlements at all," Tom Gallagher, head of policy research at ISI in Washington, said in a note. There's still a chance a Medicaid cut could be passed, though; the House is more likely to pass one, and it could be included in an eventual compromise between the two houses.

Stocks Flat
For much of the day, U.S. stocks struggled to overcome the jump in oil prices, but eventually ran out of steam. Michael Panzner, head of sales trading at Rabo Securities USA, said much of the early buying was due to short-term technical factors, including tomorrow's "triple witching," a coming rebalancing of the S&P 500 index and more. "All that has overshadowed the oil news in the short run," Mr. Panzner said, "but I think once the short-run issues are out of the way, the high price of oil will rear its ugly head again." The Dow fell about 7 points, with about 1.58 billion shares trading on the Big Board. Shares of GM, a Dow component, fell more than 2% after dropping yesterday to their lowest level since 1994. Shares of insurance giant AIG fell another 3%, roiled by fresh accounting worries and the recent loss of its iconic CEO. The S&P 500 rose about 2 points, while the Nasdaq rose less than 1 point. Shares of Toys "R" Us rose about 5% on news it was being bought by a group of private-equity firms. In their first day of trading, shares of satellite company PanAmSat opened below a target price of $18 and fell to $17.35. Shares of Qwest and MCI each fell by more than 2% after Qwest boosted its bid to buy MCI. U.S. Treasury bond prices rose for the second straight day, sending interest rates lower. Major European markets were mixed, while major Asian markets fell.

Goldman, Morgan Stanley Post Strong Earnings
Goldman Sachs and Morgan Stanley capped a week of good news for investment banks. Goldman said it earned $1.51 billion, or $2.94 a share, in its fiscal first quarter, which ended in February, up 17% from a year ago. Revenue rose 8% to $6.4 billion. Morgan Stanley said it earned $1.46 billion, or $1.35 a share, up 20% from a year ago. Its revenue rose 10% to $6.85 billion. Results from both firms stomped all over Wall Street expectations, continuing a trend set earlier in the week by Lehman Brothers and Bear Stearns. Once upon a time, many observers thought rising interest rates would hurt bank profits by cutting demand for bonds and other interest-rate securities. Instead, long-term rates stayed fairly low, and volatility in some markets boosted trading volume. Goldman's revenue from trading interest-rate securities, currency and commodities jumped 18%. Morgan Stanley's fixed-income sales and trading revenue jumped 21%. Goldman also raked in 17% more in investment-banking cash, thanks in part to a boom of mergers and other banking activity -- though stock underwriting revenue fell 15%. Goldman shares fell slightly, while Morgan Stanley shares dropped more than 1%. Some investors are still worried about the impact on the banks of higher interest rates, but many analysts are still positive on the group.

SAP Boosts Retek Bid
Escalating its bidding war with Oracle, German software maker SAP offered $11 a share, or $640 million, to buy Retek, a Minneapolis company that makes software used by retailers, including the Gap and Best Buy. That is a 29% premium over SAP's previous offer of $8.50 a share, or $496 million, and a 22% premium over Oracle's recent offer of $9 a share, or $524 million. Oracle may need Retek to keep up with SAP, the world's biggest business software company, and to tap what could be a $10 billion market for retail software. Many analysts thus expected Oracle to come back with a higher bid. Oracle shares rose more than 1%, while SAP's U.S. shares fell slightly. Retek shares jumped more than 10%.

Good News, Bad News on Economy
New claims for U.S. unemployment benefits fell last week to 318,000, the Labor Department said. But the four-week moving average, which irons out the ups and downs of the volatile weekly data, rose slightly. The report roughly matched Wall Street economists' estimates. Jobless claims have trended lower lately -- a sign, many economists believe, of a healthier labor market. Though less firing hasn't always translated into brisk hiring in recent years, with many businesses still intent on keeping labor costs low, February was one of the best months for job growth in recent years. Economists hope the trend will continue, supporting the rest of the economy -- although with oil prices rising, that hope may be tested.

The Conference Board, a private research firm, said its weekly basket of leading economic indicators edged up 0.1% last month, recovering from a dip in January. The index has fallen in six out of the past nine months. The Philadelphia Federal Reserve said its index of factory activity in the mid-Atlantic region fell to the lowest level in 20 months. Wall Street pays some attention to the report, though it's not always a close predictor of the Institute for Supply Management's closely watched index of national factory activity -- which has fallen in seven out of the past nine months. "The indicators are flashing yellow," said Mr. Yamarone of Argus Research. "That doesn't necessarily mean the economy's headed for the red; it just means there are plenty of legitimate reasons for caution."

Bush Taps New Trade Rep
President Bush nominated Ohio Rep. Rob Portman to be the next U.S. trade representative, replacing Robert Zoellick. Mr. Portman must be confirmed by the Senate. Though he comes from a state that has suffered deeply from a loss of manufacturing jobs, he is an outspoken advocate of free trade. And he'll be asked to push for even freer trade, including approval of the Central American Free Trade Agreement, which would drop trade barriers between the U.S. and Central American nations.

Lawmakers on the Senate Committee on Health, Education, Labor and Pensions grilled Lester Crawford, Mr. Bush's nominee to head the Food and Drug Administration. Mr. Crawford has been acting head of the FDA for a year, at a time when the agency has been under a hot spotlight for its drug-approval process amid a series of drug-safety worries, including the withdrawal from the market last year of arthritis-pain drug Vioxx. Mr. Crawford, whose nomination is contested vigorously by consumer groups, defended his agency's record and said he'd support an independent drug-review board.

McGwire Won't Name Names
Retired baseball player Mark McGwire, who broke a long-standing single-season home-run record, testified in a hearing before the House Government Reform Committee about steroid use in baseball. Mr. McGwire didn't admit or deny to using steroids, and he said he wouldn't "participate in naming names" of people who did. Also testifying at the hearing, which some critics have called a waste of lawmakers' time, were Major League Baseball Commissioner Bud Selig, who defended the league's testing policy, and Boston Red Sox pitcher Curt Schilling, who questioned the credibility of former slugger Jose Canseco, who claimed that steroid use is widespread in the national pastime. Two current players, Sammy Sosa and Rafael Palmeiro, also testified, denying that they'd ever used steroids, as Mr. Canseco has claimed. Mr. Sosa's season-long home-run derby with Mr. McGwire helped repair the game's image in 1998. "I have never taken illegal performance-enhancing drugs," Mr. Sosa said. "I have never injected myself or had anyone inject me with anything. "

GM Recalls Thousands of Minivans, Cars
A day after slashing its profit forecast for the year, General Motors recalled more than 77,000 minivans and nearly 36,000 Pontiac sedans. GM said the rear brake lights on Chevrolet Astro and GMC Safari minivans from the 2001 and 2002 model years can stop working, possibly causing accidents. It also recalled 35,777 of its 2005-model Pontiac G6 sedans because their manuals don't let owners know there's an anchor for child car seats in the sedan's back seat.

Budget Woes Wipe Out T.P.
A $100 million deficit in the budget of Erie County, New York, recently left employees in one county office building without soap, paper towels and toilet paper. The county of one million residents, which includes the city of Buffalo, has had to lay off some 2,000 workers and cut back on parks, snowplowing, school nurses and other services to close the gap in its $1.1 billion budget. At one point, its zoo nearly had to ship its animals to other cities, until funding was found to keep them put. Workers at the county's Rath Building in Buffalo probably wish they could have been shipped somewhere else. The county finally managed to get some workers to the building yesterday to clean and stock many of the bathrooms, but not soon enough to prevent trauma to some of the employees. "When people got to bring their own toilet paper and soap to wash their hands, it's like working in another country," one employee reportedly said, "a bad country."

TODAY'S MARKETS
The Dow industrials declined 6.72 points to 10626.35, losing steam in the last hour of trading. Exxon Mobil saw another strong day, while AIG took it on the chin. Financial stocks yawned at strong earnings from Goldman and Morgan Stanley.

http://online.wsj.com/article/0,,SB1111061...tml?mod=djemTEW

GM slashed its earnings estimates and said its CEO's profit strategy needs an overhaul. The auto maker's bonds were battered as S&P and Moody's moved closer to cutting their rating to junk status.

http://online.wsj.com/article/0,,SB1110976...tml?mod=djemTEW

Viacom is considering splitting its radio and broadcast-TV business from its MTV cable networks and Paramount studio to form two public companies.

http://online.wsj.com/article/0,,SB1111004...tml?mod=djemTEW

J.P. Morgan settled a suit by WorldCom investors for $2 billion, bringing the total amount recovered in the case against Wall Street firms to just over $6 billion.

http://online.wsj.com/article/0,,SB1111001...tml?mod=djemTEW

Concern is growing among some members of Congress and state officials about the fairness of the arbitration system, the principal way in which investors can seek redress for their grievances.

http://online.wsj.com/article/0,,SB1111015...tml?mod=djemTEW

Charge Him or Release Him:

by Jacob G. Hornberger

Make no mistake about it: The governmental power exercised in the Padilla and al-Marri cases will be a back door to military control of our nation. While the American people might not realize that, Pentagon officials most certainly do.
http://tinyurl.com/5cqtj

Rice arrives to a tense north Asia
This week, Seoul sent F-16 jets over some disputed islands and China
passed a Taiwan antisecession law. By Robert Marquand
http://www.csmonitor.com/2005/0318/p06s01-woap.html?s=hns

Common threads running through recent shootings
Anger at institutions and alienation may be factors. But murder
statistics show a drop. By Alexandra Marks
http://www.csmonitor.com/2005/0318/p02s01-ussc.html?s=hns

How to prepare a planet for global warming
Convinced the phenomenon is inevitable, some scientists now focus on
coping with it. By Peter N. Spotts
http://www.csmonitor.com/2005/0318/p02s02-usgn.html?s=hns

Can anyone stop the rise in oil prices?
Oil tops $57 a barrel, and a gallon of gas is at $2.05. Prepare for
$2.50. By Ron Scherer
http://www.csmonitor.com/2005/0318/p03s01-usec.html?s=hns

Raids mark a gain in war on gangs
Arrests may signify new cooperation of federal and local forces. By
Daniel B. Wood
http://www.csmonitor.com/2005/0318/p03s02-usju.html?s=hns

Roy Godson and Richard Schultz
Excerpts from a Monitor Breakfast with the president of the National
Strategy Information Center and the research director of the Consortium
for the Study of Intelligence. By David T. Cook
http://www.csmonitor.com/2005/0318/p20s01-usmb.html?s=hns

Outsourcing detainee mistreatment?
A federal judge deals another blow to the administration's views on
rights - or lack thereof - of enemy combatants. By Daniel Schorr
http://www.csmonitor.com/2005/0318/p09s03-cods.html?s=hns

In Blow to Bush, Senators Reject Cuts to Medicaid
By SHERYL GAY STOLBERG
The vote, a rebuke to both the White House and the Senate
leadership, put the House and Senate on a collision course.

http://www.nytimes.com/2005/03/18/politics/18budget.html?th

McGwire Offers No Denials at Steroid Hearings
By DUFF WILSON
Mark McGwire was among 10 players and baseball executives
who testified before a House committee investigating
steroid use.

http://www.nytimes.com/2005/03/18/sports/b...teroids.html?th

Feeding-Tube Case Roils Washington and Florida
By ABBY GOODNOUGH and CARL HULSE
Congress and the Florida Legislature failed to pass
measures to halt the removal of a feeding tube from Terri
Schiavo, a critically brain-damaged woman.

http://www.nytimes.com/2005/03/18/national/18schiavo.html?th

On Texas' Coast, a Laboratory for Private Accounts
By SIMON ROMERO
In 1981, officials in Galveston, Tex., opted out of Social
Security and chose to plunge its local government into the
unknown territory of private retirement accounts.

http://www.nytimes.com/2005/03/18/politics/18texas.html?th

Split Panel Sends Renominated Candidate to Full Senate
By NEIL A. LEWIS
The Senate Judiciary Committee approved the first of
President Bush's appeals court nominees, hastening the
Senate's march to a large-scale partisan breakdown.

http://www.nytimes.com/2005/03/18/politics/18judge.html?th

Un-Volunteering: Troops Improvise to Find Way Out
By MONICA DAVEY
One by one, a trickle of soldiers and marines - some just
back from duty in Iraq, others facing a trip there soon -
are seeking ways to get out.

http://www.nytimes.com/2005/03/18/national...oldiers.html?th

Viacom Fights Against Its Own Size
By GERALDINE FABRIKANT
Viacom chief Sumner Redstone spent a decade building one of
the biggest media companies in the world, but is now
considering a breakup of that empire.

http://www.nytimes.com/2005/03/18/business...8viacom.html?th

Congressman From Ohio Is Chosen for Trade Post
By ELIZABETH BECKER
President Bush selected Representative Rob Portman, an Ohio
Republican who is one of his closest friends in Congress,
to be the next U.S. trade representative.

http://www.nytimes.com/2005/03/18/business/18trade.html?th

At A.I.G., It Seems Chief's Departure Was Exaggerated
By GRETCHEN MORGENSON and LYNNLEY BROWNING
Just days after Maurice Greenberg stepped down as chief
executive of the American International Group, he continues
to hold a powerful sway over the insurance giant.

http://www.nytimes.com/2005/03/18/business/18insure.html?th

Exploitation at the Big Dance
Despite legislation designed to keep athletes on track for
graduation, sports departments still exploit college
basketball players.

http://www.nytimes.com/2005/03/18/opinion/18fri2.html?th

Care for an Aging Subway
New York's 100-plus-year-old underground transportation
network needs tender, loving care and a lot of money to go
with it.

http://www.nytimes.com/2005/03/18/opinion/18fri3.html?th

___________________________________
THE MORNING BRIEF

March 18, 2005 -- 6:24 a.m. EST

___________________________________

If the myth of a cohesively dominant Republican majority in Congress needed any more debunking, last night's dueling budget votes in the House and Senate did so.

Senate Republicans Buck
White House on Medicaid

By JOSEPH SCHUMAN
THE WALL STREET JOURNAL ONLINE


If the myth of a cohesively dominant Republican majority in Congress needed any more debunking, last night's dueling budget votes in the House and Senate did so.

The Senate dealt a "slap to President Bush and the Republican leadership," in the words of the Washington Post, passing a guideline budget resolution that would "gut much of the GOP's deficit-reduction efforts by restoring requested cuts to Medicaid, education, community development and other programs." In doing so, the Senate set up a major fight over budget priorities, the Post says, as it, the House and the White House "try to iron out an agreement that would allow for the first entitlement cuts since 1997, as well as oil drilling in Alaska's Arctic National Wildlife Refuge." In the biggest difference with the Senate, the House narrowly passed a budget that includes $69 billion in entitlement cost cutting, with as much as $20 billion in savings from Medicaid, the government's primary health program for the poor.

What the two budget resolutions have in common are tens of billions of dollars to extend Mr. Bush's tax cuts over the next five years, the New York Times notes. Though in a surprise move, the Senate also voted to approve $34 billion more in tax cuts than the president wanted -- essentially repealing a tax enacted in 1993 on Social Security benefits for the wealthy. But the Medicaid issue moved the House and Senate further apart, infuriating House Republicans and provoking a scathing rebuke from Senate Budget Committee Chairman Judd Gregg, The Wall Street Journal reports. While some of the savings can be salvaged in coming budget talks, the divergence "underscores just how difficult it is politically -- even in Mr. Bush's own party -- to rein in the escalating cost of many government benefit programs," the Journal says. Still, the Senate did go along with the House's cutting of $2.81 billion in agricultural and nutrition programs.

If the two chambers cannot reach agreement, they would be forced to go without a plan, as they did last year, the Los Angeles Times notes. And such a breakdown would be what the Times calls "an embarrassment for the GOP leadership, which had expected that the larger Republican majorities in both chambers -- and particularly in the Senate -- would allow easy passage of the president's proposals."

Fed to Citigroup: Get Your House in Order
The empires of ages past are infamous for exhausting themselves in outward expansion even as they rotted within, an historical lesson brought to mind by the Federal Reserve Board's order to Citigroup yesterday. The Fed is essentially curbing Citigroup's growth by acquisition, requiring its executives to instead turn their full attention to the company's recent high-profile string of embarrassments. The American Banker notes that the Fed, which usually has little taste for irony, put a hold on potential Citigroup expansion within the context of approving its acquisition of First American Bank of Bryan, Texas. But it added that Citigroup executives should not consider "significant expansion" and must instead concentrate on developing the culture and the controls to keep the company out of trouble.

"Given the size, scope, and complexity of Citigroup's global operations, successfully addressing the deficiencies in compliance risk management that have given rise to a series of adverse compliance events in recent years will require significant attention over a period of time by Citigroup's senior management and board of directors," the Fed said. "The board believes it important that management's attention not be diverted from these efforts by the demands that mergers and acquisitions place on management resources."

A Strained Commercial Air Infrastructure
More than one billion people a year will be boarding planes in the U.S. within a decade, a new study forecasts - 45% more than the number now using an aviation system that is already showing signs of being overburdened. While the Federal Aviation Administration study suggests the daunting challenges ahead, the Seattle Post-Intelligencer notes that it was confirmation of fairly optimistic forecasts recently by Boeing and Airbus. It is less encouraging for the FAA, which faces spending cuts for runways, air-traffic-control equipment and buildings. The agency's administrator, Marion Blakey, expressed confidence that there would be enough money to accommodate the dramatic growth in air traffic, but lawmakers and aviation advocates aren't so sure, the PI says. Ruth Marlin, executive vice president of the air traffic controllers union, said many passengers will do a lot of waiting in 2015 if things do not change. "The FAA is trying to do more and more with less and less and that is putting an incredible strain on the system," she says.

A Fait Accompli for OPEC
OPEC members' decision this week to increase their production ceiling by 500,000 barrels a day to 27.5 million barrels a day was just a fait accompli, Cambridge Energy Research Associates argues. "Whether or not OPEC had agreed to such an increase, a Saudi production rise was already under way," CERA says, estimating that Saudi production in March was 9.45 million barrels a day, up 250,000 from the February level. "The Saudis made clear that their move is driven by a very high estimate for demand growth later this year: a 2.7 million-barrels-per-day increase from the third to fourth quarter."

New York Times: Goldman Sachs and Morgan Stanley followed their Wall Street peers Lehman Brothers and Bear Stearns in reporting strong first-quarter earnings, fueled by continued strength in trading, most specifically bond trading and its subsidiary businesses.

Financial Times: Microsoft is heading for a fresh clash with the European Commission after the Brussels-based antitrust regulator dismissed the U.S. software group's plans for implementing last year's landmark antitrust ruling.

Los Angeles Times: Southern Californian officials won a record $81 million settlement with energy giant BP, which regulators accused of illegally spewing toxic gases from its Carson refinery for nearly a decade. Under the deal, BP will pay for doctors to try to diagnose possible asthma and other health problems in thousands of the refinery's neighbors.

Economist: President Bush nominated a new trade representative to replace Robert Zoellick - Rob Portman, a respected Republican congressman who will be a good salesman for the White House trade agenda in Congress. But it is less clear how good he will be at negotiating international trade deals.

Wall Street Journal: FedEx reported a 53% jump in quarterly profit, helped by double-digit percentage growth in U.S. ground shipments and international air deliveries. But its profit target for the current quarter could fall short of analysts' estimates in part because of sky-high fuel costs.

Sports Illustrated: Five current and former baseball players, some future Hall of Famers, bemoaned steroids as a problem for their sport but denied they are widespread during a day of extraordinary theater at the House Government Reform Committee.

Quote of the Day
"Oh, I hope I have not broken a story," U.S. Secretary of State Condoleezza Rice said, after, apparently inadvertently, she revealed that Afghanistan was postponing its parliamentary elections once again, from May to September. President Hamid Karzai confirmed the date moments later, during a trip in which Ms. Rice stressed Afghanistan's transition to democracy at almost every stop with little if any acknowledgment of the many problems troubling the country, the New York Times reports.

Iran says its nuclear program is solely for electrical power, and argues secrecy is necessary for a country living under U.S. sanctions. The ambiguity poses a problem for Washington.

http://online.wsj.com/article/0,,SB1111110...tml?mod=djemTMB

--------------------
Senate Rejects Bush's Cuts
--------------------

It narrowly approves a $2.6-trillion budget as four Republicans break ranks. A confrontation with the House over its fiscal plan is expected.

By Joel Havemann
Times Staff Writer

March 18 2005

WASHINGTON; The Senate on Thursday voted to restore cuts sought by President Bush in Medicaid, education and other domestic programs, and then approved a $2.6-trillion budget for fiscal year 2006.

The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...,0,536153.story

--------------------
20 Million Copies Later, Vatican Says Don't Read 'Da Vinci Code'
--------------------

The bestseller is a pack of lies that maligns Jesus and harms Catholicism, a cardinal announces.

By Tracy Wilkinson
Times Staff Writer

March 18 2005

ROME; OK, so maybe author Dan Brown takes a few liberties.

The complete article can be viewed at:
http://www.latimes.com/news/nationworld/wo...0,2502233.story

--------------------
Lawmakers Can't Agree on a Way to Save Schiavo
--------------------

The Florida woman, in a vegetative state for years, may have her feeding tube removed today.

By Mary Curtius and John-Thor Dahlburg
Times Staff Writers

March 18 2005

WASHINGTON; Lawmakers in Washington and Florida failed Thursday to agree on legislation to block the court-ordered removal today of the feeding tube that has kept a severely brain-damaged woman alive for 15 years.

The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...,0,122185.story

--------------------
Diplomat Was Architect of U.S. Cold War Policy
--------------------

His 1946 cable led to the 'containment' approach to the Soviets. He later backed arms control.

By Jon Thurber
Times Staff Writer

March 18 2005

George F. Kennan, a leading authority on the Soviet Union who in the midst of the Cold War became a passionate crusader for the control and abolition of nuclear arms, has died. He was 101.

The complete article can be viewed at:
http://www.latimes.com/news/nationworld/wo...0,7081687.story

--------------------
Anatomy of Give and Take
--------------------

Economic theory goes only so far in explaining why people buy, sell, save or trust. Scientists are looking inside the mind for answers.

By Robert Lee Hotz
Times Staff Writer

March 18 2005

HOUSTON; The two women had money in mind.

The complete article can be viewed at:
http://www.latimes.com/news/custom/showcas...0,2028461.story

--------------------
Players Balk on Steroid Use
--------------------

House members grill some of baseball's big names. McGwire lets his emotions do the talking.

By Richard Simon and Tim Brown
Times Staff Writers

March 18 2005

WASHINGTON; Putting the integrity of the national pastime under a harsh spotlight, a House committee questioned a panel of superstars Thursday about steroids in baseball, eliciting sharp denials from several — and in the case of retired home run legend Mark McGwire, an emotion-choked acknowledgment of baseball's doping problems followed by repeated refusal to answer questions about his own possible involvement.

The complete article can be viewed at:
http://www.latimes.com/news/printedition/f...lines-frontpage

--------------------
Bush Meets With Sisters, Fiancee of Slain N. Ireland Man
--------------------

At a St. Patrick's Day reception, the president offers support for their bid to bring the killers, suspected of being IRA members, to justice.

From Associated Press

March 18 2005

WASHINGTON; President Bush met on St. Patrick's Day with five sisters who want the outlawed Irish Republican Army held responsible for their brother's death.

The complete article can be viewed at:
http://www.latimes.com/news/nationworld/wo...headlines-world

--------------------
Tennessee to Vote on Ban on Gay Union
--------------------

The state Legislature approves placing a proposed constitutional amendment to bar same-sex marriage on the ballot next year.

From Associated Press

March 18 2005

NASHVILLE, Tenn. — Tennessee voters will decide next year whether to amend the state constitution to ban same-sex marriage after the state's House of Representatives on Thursday approved putting the question on the ballot.

The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...eadlines-nation

--------------------
South Dakota Governor OKs Abortion Limits
--------------------

The latest restrictions include a requirement that doctors tell patients a human life will be ended. Opponents of the new measures may sue.

From Associated Press

March 18 2005

PIERRE, S.D. — Gov. Michael Rounds signed a series of antiabortion bills, including one that requires doctors to tell women that the procedure ends the lives of humans, his office announced Thursday.

The complete article can be viewed at:
http://www.latimes.com/news/nationworld/na...eadlines-nation