USA

Helped by record revenues, the federal budget deficit in fiscal 2006 fell 22 percent to $248 billion from $319 billion in 2005, the Treasury Department said Wednesday. The gap was slightly smaller than projected and the smallest it's been since 2002.

AT&T's $78.5 billion buyout of BellSouth Corp. moved a step closer to receiving full approval Wednesday when the Justice Department OK'd the deal to create the nation's biggest provider of phone, wireless, and broadband Internet services. Final review is now left to the Federal Communications Commission, which may vote on the matter Thursday.

The Roman Catholic Diocese of Davenport, Iowa, on Tuesday became the fourth in the nation to seek financial bankruptcy protection to deal with priest sex-abuse cases. The courts have also assumed financial supervision of dioceses in Portland, Ore.; Spokane, Wash.; and Tucson, Ariz.

The Justice Department said Tuesday that the PeopleSoft subsidiary of softwaremaker Oracle Corp. agreed Tuesday to pay $98.5 million to settle complaints that it charged numerous government agencies "vastly inflated prices" between 1997 and 2005.

Moderate-income families that move to the outer suburbs often wind up spending more on transit than they do on their homes, according to a study released Wednesday by the Center for Housing Policy. Families earning between $20,000 and $50,000 a year spend 29 percent of their incomes on transportation and 28 percent on housing.

San Diego firefighters had to rescue a man Tuesday who got stuck in a pipeline as a dozen illegal immigrants sneaked through a connection between a Mexican gas supplier and a US holding tank. It's believed to be the first time the city has caught migrants using an existing subterranean passageway.

If prisoners refuse to leave their cells in Connecticut, Delaware, Iowa, South Dakota, and Utah, guards may use dogs to terrify them into compliance, according to a new report by Human Rights Watch, which compares the "well-kept secret" to abuses at Iraq's Abu Ghraib prison.

New York Yankees owner George Steinbrenner ended speculation that he'd replace manager Joe Torre by saying Tuesday that he'd retain the popular bench boss for another year. Although Torre led baseball's highest-paid team to four World Series titles in his first five years, the club hasn't reached the World Series since 2003 and has lost in the first round of the playoffs the last two seasons.

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