In a diplomatic roller-coaster ride, Palestinian leader Yasser Arafat and Israeli Prime Minister Ehud Barak agreed to return to the bargaining table at Camp David, Md., reviving peace talks that had been declared a failure only hours earlier. President Clinton said "the gaps remain substantial, but there has been progress." With the future of Jerusalem the main hang-up, Secretary of State Madeleine Albright took over as mediator of the talks as Clinton flew to Okinawa for a summit of leading industrialized nations.
In his midyear report to Congress, Federal Reserve Chairman Alan Greenspan said it was too early to conclude the US economy has slowed enough to ward off inflation risks, signaling he's not yet ready to declare victory after raising interest rates six times in the past 13 months. Greenspan said softening US consumer spending may help bring demand back in line with the economy's potential to produce. But he warned tight labor markets and rising energy prices might stoke inflation.
Housing construction last month fell to its lowest level in more than two years, signaling that the Fed's interest-rate hikes are having some impact on slowing the economy. Builders began work on new homes at a seasonally adjusted annual rate of 1.55 million units in June, a 3 percent drop from May's level, the Commerce Department reported.
The Clinton administration said it will not recommend breaching Snake River dams in Washington State for at least five years to give a new recovery plan for salmon time to work. Removing portions of the four dams would be insufficient and would divert funds from other recovery efforts, the White House said. Officials proposed recovery measures such as habitat improvements and changes at hatcheries that could require sacrifices from land owners and local governments.
The House approved 367 to 58 a $20 billion increase in Pentagon spending for next year, including a 3.7 percent pay raise designed to keep men and women from leaving the military. The compromise $289 billion bill will also cover a 9 percent increase for military health care and improvements in US readiness. Clinton has said he will sign it.
The House also approved a bill that would increase the contribution limit to individual retirement accounts from $2,000 a year to $5,000 by 2003. The measure would boost the amount workers may contribute to 401(k) plans from $10,500 a year to $15,000 by 2005. Clinton opposes the bill.
An Oregon wood-products company will pay an $11.2 million fine, the largest of its kind, to the government under a Clean Air Act settlement. The agreement with Willamette Industries requires the company to install $74 million worth of pollution control equipment at 13 plants across the US.
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