The Battalion
WORLD & NATION 9
Tuesday, October 17,1989
Bush slashes budget by $16 billion
WASHINGTON (AP) — President Bush
signed an order Monday night cutting federal
programs by $16.1 billion after giving up hopes
fora last-minute compromise with Congress.
“It’s the law,” said White House press secretary
Marlin Fitzwatcr. “We’re ready to implement it.”
He said that, while the administration had sought
to avoid the almost across-the-board cuts trig
gered by the nation’s Gramm-Rudman budget
cutting law, “it might even be good” if the budget
ax does fall.
The order Bush signed shortly before 7 p.m.,
to take effect at midnight, was largely procedural
as the spending cuts were automatic under the
law.
“We’ll continue to work with the Congress” in
seeking to develop a compromise to reduce the
deficit to roll back the spending cuts, Fitzwater
said. “But there is some feeling here that (the au
tomatic cuts) are the way to go. It will reduce
spending in a very effective fashion.
“Everyone’s going to have to take in their
belts,” he added.“It will have a hit, there’s no
doubt about it.”
Earlier, budget director Richard Darman said
“we are doing what the law requires.”
The cutbacks are required under the Gramm-
Rudman law because of the failure of Congress
and the White House to agree on a deficit-reduc
tion package.
House leaders met during the day to see if
there was any way to accomplish a lightning-fast
completion of a budget-cutting bill, acceptable to
the White House, by midnight. But this came to
nought and the House recessed for the evening.
Imposition of the cuts — as occurred in 1986
and 1987, remaining in place the first year, being
rolled back the second — is nonetheless a politi
cal embarrassment to members of both political
parties, adding to a public perception of a Con
gress congenitally unable to do its budget work
properly.
The practical effects for the first several weeks
are expected to be nil, however, because agencies
can juggle their funds to make up for spot short
falls.
Darman, in a move apparently aimed at in
creasing pressure on Congress to finish the defi
cit-reduction bill quickly, said Monday that the
cuts would be imposed at a more detailed level
than in 1987. He said the effect would be to give
bureaucrats less flexibility and accelerate the
time in which the cutbacks would be felt.
“It has a little more discipline to it,” Darman
said of the new method of applying the cuts.
Darman said administration officials want
Congress to send Bush the streamlined $14 bil
lion deficit-cutting measure the Senate approved
late Friday. Then, he said, the administration
and GOP lawmakers would work for congressio
nal approval of a capital gains tax cut on a sepa
rate bill.
If the House and Senate try instead to reach
middle ground on their deficit-reduction bills, he
said, “we’re going to insist on preserving capital
gains” in the final measure.
Darman reiterated his preference for keeping
the Gramm-Rudman cuts permanent.
House leaders said their bill would reduce the
deficit by $11 billion, but Darman said it contains
just $2.8 billion in true savings. It also includes a
broadening of child care programs and other
provisions the administration opposes.
House, Senate negotiators agree
on smoking ban for U.S. flights
WASHINGTON (AP) — House-Senate negotiators
agreed Monday to ban smoking on all continental U.S.
airline routes and on all flights to or from Alaska and
Hawaii that last six hours or less.
The restrictions would prohibit smoking on more
than 99 percent of all flights within American territory,
supporters of the ban said. Current rules prohibit
smoking on flights of two hours or less, covering 80
“With few exceptions, every airline
passenger in America now can look
forward to smoke-free travel.”
— Richard Durbin,
Illinois congressman
percent of U.S. routes.
“With few exceptions, every airline passenger in
America now can look forward to smoke-free travel,”
said Rep. Richard Durbin, D-Ill., an architect of the
provision.
The provision was a compromise between the Senate,
which sought a permanent ban on all U.S. flights, and
- - ■ • ■ ■
the House, which preferred making permanent the
current two-hour restrictions.
The full House and Senate will have to approve the
legislation before it can be sent to President Bush for
his signature.
The restrictions are part of an $11.9 billion spending
measure for transportation programs for the fiscal year
which began Oct. 1. There are other disagreements on
provisions in that bill that must be worked out, and ne
gotiators will take several more days before sending a
compromise bill back to their chambers for votes.
The House voted 259-169 on Aug. 2 to make perma
nent the current ban on smoking on airline flights of
two hours or less. That prohibition has been in effect
since April 1988 and would have otherwise expired
next April.
On Sept. 14, the Senate voted 77-21 to end delaying
tactics by tobacco-state lawmakers who were trying to
block a permanent extension of the ban to all flights.
The chamber then adopted the stricter rules on a voice
vote.
The Senate-approved ban would take effect 95 days
after the legislation is signed.
Health advocates and airline unions have sought the
tougher rules, arguing that the recirculated air in air
line cabins is unhealthy even to non-smokers. The to
bacco industry has insisted that more evidence is
needed to make that claim.
Trump withdraws AMR bid;
considers making lower offer
NEW YORK (AP) — Donald
Trump scrapped his proposed $7
billion offer for AMR Corp. Monday
but said he was still considering mak
ing a lower bid for the parent of
American Airlines.
It was the second unraveling of a
giant airline deal since Friday and
came against a background of grow
ing alarm over debt-financed take
overs for large American companies.
“I am currently reviewing all my
options with respect to AMR includ
ing making another offer at a lower
price,” the New York-based devel
oper said in a letter to AMR Chair
man Robert L. Crandall.
Trump said he was also consid
ering increasing his holdings in
AMR or selling his stock. He said he
would take “any other actions that I
may deem appropriate.”
AMR, based in Fort Worth, said it
had no comment on Trump’s deci
sion.
The airline, which has said it
wanted to remain independent, had
said it would study Trump’s propo
sal but the company made no other
response to his overtures.
Trump sent his letter after AMR’s
stock dropped $13.75 a share to
$84.87'/a on the New York Stock Ex
change Monday as volatile trading
on Wall Street continued following
Friday’s 190-point decline in the
Dow Jones industrial average.
Trump had offered to buy AMR for
$120 a share.
Friday’s stock plunge was caused
in part by word that the manage
ment-led employee group seeking to
buy UAL Corp., the parent of
United Airlines, had been unable to
secure financing for its proposed
$6.75 billion buyout of that airline.
Blue chip issues made a comeback
Monday, but the broader stock mar
ket remained lower and trading was
extremely heavy.
AMR’s stock was depressed amid
the uncertain outlook for airline
takeovers.
Trading in the airline’s shares was
temporarily halted pending the an
nouncement of Trump’s withdra
wal.
Trump’s proposed bid, an
nounced Oct. 5 but never formally
presented to stockholders, had been
shrouded in skepticism, partly be
cause of growing criticism over a
rash of airline takeovers that rely on
borrowed money.
The developer gave no details of
his financing strategy besides a plan
to include $1 billion of equity in his
proposed offer.
Friday’s stock drop had cast fur
ther doubt on the proposed deal.
High court
to hear case
on mergers
Power of states
could be strengthened
WASHINGTON (AP) — The
Supreme Court said Monday it
will consider bolstering the power
of states and private citizens to
break up corporate mergers.
The justices agreed to hear an
appeal by California officials
seeking to use federal antitrust
law to kill the $2.5 billion merger
of the Lucky and Alpha Beta su
permarket chains.
The high court acted at a time
when much of the nation’s anx
ious attention was focused on
Wall Street developments follow
ing Friday’s market tailspin. Last
week’s steep drop was attributed
in part to investor worries over
the future of debt-financed cor
porate takeovers.
The supermarket case focuses
on the merger of Lucky, Califor
nia’s largest supermarket chain,
and Alpha Beta, the fourth larg
est. They operate 550 stores be
tween them.
The high court action Monday
will keep in effect an order Jus
tice Sandra Day O’Connor issued
in August.
In other action, the justices:
• Agreed to take a new look at
the rights of motorists suspected
of drunken driving. The court
will hear an appeal by Pennsylva
nia officials seeking to reinstate
the drunken-driving conviction
of a man videotaped answering
police questions before he was
warned of his right to a lawyer or
to remain silent.
• Rejected an appeal by a po
litical action committee linked to
fringe presidential candidate
Lyndon LaRouche. The group
now may have to pay $2.7 million
in contempt-of-court fines.
• Refused to free Pan Ameri
can World Airways from having
to pay $951,500 plus interest to
two families of victims of a 1974
crash in Indonesia that claimed
107 lives.
• Agreed to use a Washington,
D.C., case to set guidelines for pe
nalizing lawyers who file frivolous
lawsuits.
Look out
below
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