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News Briefs

Greenspan Urges Congress To Adopt Discipline


Federal Reserve Chairman Alan Greenspan on Thursday urged Congress to take steps to restore discipline in dealing with the federal budget as it drops deeply into the red, but he said he opposes postponing or eliminating the parts of last year’s $1.35 trillion tax cut that haven’t yet become effective.

“Returning to a fiscal climate of continuous large deficits would risk returning to an era of high interest rates, low levels of investment and slower growth of productivity,” Greenspan told the House Budget Committee.

After several years of large surpluses, the budget deficit for the fiscal year ending this month is projected to be about $157 billion, according to the Congressional Budget Office. The office said the swing to deficit is the result of several factors, including last year’s tax cut, the plunge in stock prices that reduced tax payments tied to capital gains and stock option profits, last year’s recession, and spending increases linked to the war on terrorism.

The major drop in stock prices, the terrorist attacks of last September and “a sharp retrenchment in investment spending” have all hurt the U.S. economy over the past year, the Fed chairman said.

“To date, the economy appears to have withstood this set of blows well, although the depressing effects still linger and continue to influence, in particular, the federal budget outlook,” Greenspan said.

Captured al-Qaida Operative Details Bomb Plots


A key al-Qaida operative in Southeast Asia arrested here three months ago has provided detailed information about bomb plots against U.S. embassies in Asia, prompting heightened security this week around the world, officials reported.

Omar Faruq, who was quietly handed over by Indonesia to U.S. authorities in June, provided information about planned al-Qaida bombings that helped persuade authorities to have at least six embassies and consulates closed since Tuesday, the officials said.

Faruq, who is believed to be from Iraq or Kuwait, also provided information about other terrorist activities, including surveillance of three U.S. Navy warships and a Coast Guard vessel that visited the Indonesian city of Surabaya in late May and early June. No attack on the ships was carried out.

West Nile Virus Detected In Donated Blood


Government scientists said Thursday they have found West Nile virus in blood collected from three different donors and transfused into a Mississippi woman who subsequently came down with the infection.

The discovery provides strong new evidence that the West Nile virus can be spread through blood transfusions, and raises the possibility that prevalence of the microbe in the blood supply of certain parts of the country may be much higher than previously suspected.

An official of the Food and Drug Administration called finding the virus in so many donors “fairly surprising and ... unexpected.” The agency is embarking on studies to try to find out what fraction of blood donors this summer were carrying the virus, the official said.

There are no plans at the moment to routinely test for West Nile virus or to change the rules for blood donation, although various changes in procedure could be made.