Federal Reserve Leaves
Interest Rates Unchanged
Federal Reserve Board officials left their target for overnight interest rates unchanged but signaled that they are ready to cut rates if war with Iraq destabilizes world financial markets.
The Federal Open Market Committee, the central bank's top policymaking group, reiterated its belief that the economy's recent lackluster performance is primarily because of uncertainties created by the prospect of war, including the sharp increase in world oil prices. As those uncertainties are resolved, low interest rates and continuing productivity growth "will provide support to economic activity sufficient to engender an improving economic climate over time," a committee statement said.
In other words, Federal Reserve Chairman Alan Greenspan and his colleagues do not think the economy will need another push from interest rate cuts unless there is a serious adverse reaction to the war in financial markets. The target is already at 1.25 percent, the lowest in more than 40 years. If needed, the Fed could act before its next policymaking session May 6.
The committee said after the meeting that the current economic situation is so fraught with uncertainty that it decided not to issue a statement about the balance of risks between economic weakness and inflation. Normally the Fed officials conclude that one risk outweighs the other, or that they are balanced.
-- John M. Berry
Report Says Medicare Finances
Have Significantly Worsened
Medicare's financial condition has deteriorated significantly, according to a government forecast that says the health insurance program for the elderly will be depleted of money four years sooner than expected.
The annual report, issued by the trustees who monitor the fiscal health of the Medicare and Social Security systems, concluded that the trust fund that pays Medicare's hospital bills will last until 2026. A year ago, it was predicted to have enough money until 2030, but its solvency has been harmed as medical costs have risen and revenue from payroll taxes has dwindled.
The report said Social Security's solvency is largely unchanged. The retirement system is predicted to have enough cash to pay the benefits it owes retirees, disabled workers and workers' survivors until 2042, one year later than predicted.
The assessment of the durability of the two programs carries substantial budgetary and political implications. Both programs will confront crippling financial strains in coming decades, because longevity is increasing and the 77 million-strong baby boom generation will begin to retire in eight years. Combined with falling birth rates, those trends mean there will be too few workers paying taxes toward retirees' benefits.
Not since 1996 have the trustees -- four members of the president's Cabinet and two members of the public -- moved up their prediction of when Medicare would run out of money.
-- Amy Goldstein
Critic of Violence Is Named
Palestinians' Prime Minister
Mahmoud Abbas, a critic of Palestinian violence and an advocate of peace with Israel, agreed to serve as the Palestinians' first prime minister, a senior adviser to Palestinian leader Yasser Arafat said.
The new position is designed to dilute Arafat's powers and give new impetus to stalled Middle East peace talks.
Abbas, a longtime Arafat associate, accepted the job after weeks of efforts by international negotiators and Palestinian Authority insiders to win Arafat's consent to a potential major shift in the operations of his government.
Senior Palestinian leaders have sought to prune Arafat's powers for years. But the autocratic symbol of the fight for Palestinian statehood only agreed last month to the change. Intense international pressure for Arafat to accept the new post came from the United Nations, European Union, Russia and the United States as they attempt to restart peace negotiations between Israel and the Palestinians. The United States and Israel have refused to deal directly with Arafat, saying he supports terrorism, and have said that new Palestinian leadership was a prerequisite to resuming a cease-fire and peace talks.
Palestinians, Israelis and Western diplomats said it was too early to determine whether Abbas would be granted the power and independence necessary to rein in Palestinian support for terrorism and curb official corruption.
His appointment occurred in a violent week in the current Israeli-Palestinian conflict that began 2 1/2 years ago.
On Sunday, Rachel Corrie, a 23-year-old American protesting the demolition of Palestinians' houses in the Gaza Strip, was killed by an Israeli military bulldozer that crushed her body as she crouched in its path. On Monday, 10 Palestinians, including a 4-year-old girl and two teenage boys, were killed in gun battles between Israeli troops and Palestinian fighters in the Gaza Strip.
-- Molly Moore
Study Finds No Quality-of-Life Benefits in Hormone Treatment
Pills containing estrogen and progesterone do not improve the quality of life for most women who have gone through menopause, erasing the last reason many women had for taking the once-popular drugs, a major government study reported.
The federally funded Women's Health Initiative issued the landmark conclusion last summer that the risks of hormone therapy outweighed any protection from osteoporosis and other diseases. In this new study, the initiative produced convincing evidence that for most women the hormones also don't improve their sense of vitality, memory, mental health, sleep, sexual satisfaction or other measures of well-being.
The only evidence of possible benefit was for younger women who had trouble sleeping because of severe hot flashes and night sweats. Those women -- 10 percent to 20 percent of those using hormones -- seemed to get some relief, but it appeared to be minimal and temporary, lasting only for the first year after menopause, said Jennifer Hays of the Baylor College of Medicine, who coordinated the new research.
The findings contradict long-held popular conceptions that led women to take hormones for years to alleviate the short- and long-term effects of menopause. For millions of women, the new findings should make their decision to stop easier, experts said.
-- Rob Stein
Kidnapping, Sex Assault Charges Filed in Smart Case
Prosecutors in Salt Lake City filed charges of aggravated kidnapping and aggravated sexual assault against the self-styled religious prophets charged with abducting Elizabeth Smart last summer, as the girl's family pleaded with authorities to protect the 15-year-old's privacy.
The charges could lead to life imprisonment for Brian David Mitchell, 49, and his wife, Wanda Barzee, 57, who have said they kidnapped the girl after receiving divine commands to build a polygamist family with seven young wives. The abduction gripped the nation's attention in June 2002 when Elizabeth was taken from her bedroom in the middle of the night at knifepoint, and again when she was found March 12, in good health.
Salt Lake County Attorney David Yocom, in the formal charges, included descriptions of sexual assaults by Mitchell. The prosecutor conceded that the sexual element might cause difficulty for Elizabeth at a public trial.
-- T.R. Reid