Report Details FBI's

'Significant Failure' in 9/11

The inability to detect the Sept. 11, 2001, hijacking plot amounts to a "significant failure" by the FBI and was caused in large part by "widespread and longstanding deficiencies" in the way the agency handled terrorism and intelligence cases, according to a report by Justice Department Inspector General Glenn A. Fine.

The report concluded that the FBI missed at least five chances to detect the presence of two of the suicide hijackers -- Nawaf Alhazmi and Khalid Almihdhar -- after they first entered the United States in early 2000.

Although many of the missteps surrounding Alhazmi and Almihdhar have become well known, Fine's report adds significant new details about the FBI's role in fumbling the case.

The FBI said in a statement that it agrees with many of Fine's conclusions but "has taken substantial steps to address the issues presented in the report."

"We believe that widespread and longstanding deficiencies in the FBI's operations and Counterterrorism Program caused the problems we described in this report," Fine's investigators wrote, including a shoddy analytical program, problems sharing intelligence information and "the lack of priority given to counterterrorism investigations by the FBI before September 11."

Fine's investigation focuses on three major episodes before the Sept. 11 attacks: the missteps in tracking Alhazmi and Almihdhar, the failure to connect al Qaeda operative Zacarias Moussaoui to the hijacking plot, and the handling of a July 2001 memo theorizing that al Qaeda leader Osama bin Laden might be sending operatives to U.S. flight schools.

-- Dan Eggen

FAA's Inspection Program

Is Criticized in Report

The Federal Aviation Administration is failing to effectively oversee new safety risks posed by sharp cost-cutting in the airline industry and rapid growth of budget carriers, a government report concludes.

U.S. airlines -- many of which continue to struggle financially -- are looking for new ways to cut costs by outsourcing maintenance and reducing the time that planes are parked at gates. At the same time, new low-fare carriers are expanding to dozens of cities. Both trends have created safety concerns that the FAA has not adequately addressed in its inspection program, according to a Transportation Department inspector general report.

U.S. carriers, which ultimately are responsible for safety, said they have not lowered their standards despite losing billions of dollars a year.

The FAA defended the work of its inspectors, whose job is to ensure that airlines meet safety standards, and disagreed with many of the inspector general's findings. But it agreed that it has been constrained by budget cuts that will result in 300 fewer inspectors this year. The agency has asked for money to add about 100 inspectors next year to its 3,400-inspector workforce.

The report says the FAA did not complete 26 percent of its planned inspections on five major carriers in fiscal 2003. It also criticizes the agency for stepping up oversight of only three carriers in or near bankruptcy protection when at least five network carriers are losing record amounts of money. The report reviewed legacy carriers United, Northwest, US Airways, Delta and American. It also reviewed five low-fare carriers: JetBlue, ATA, AirTran, Frontier and Spirit.

-- Sara Kehaulani Goo

U.S. Reduces Damages

Sought in Tobacco Case

The government announced that it would scale back its demands for penalties on the tobacco industry in a landmark civil racketeering case, requesting that the tobacco companies pay $10 billion for smoking cessation programs for an unspecified number of future smokers who become addicted to cigarettes in the first year after the trial concludes.

The government first stunned anti-smoking activists and some industry lawyers by requesting that tobacco companies pay $10 billion, rather than the $130 billion a government expert had testified was necessary to aid 45 million current smokers. Two days later, it explained that it needed the smaller amount because it would help only future smokers.

Anti-smoking activists and industry said Justice officials seemed unable to answer basic questions about how many people the new cessation program would cover, how the government would verify which smokers became addicted in the first year and who would be barred from getting help.

During six years of litigation, the government has argued that the six largest American tobacco companies conspired for 50 years to conceal the dangers and addictiveness of smoking from the public, and lied about efforts to lure young people to tobacco use.

But in February, an appeals court ruled that the government could not legally force the tobacco industry to pay $280 billion for allegedly ill-gotten past profits from tobacco sales, leaving the cessation program as the most expensive penalty facing the industry.

-- Carol D. Leonnig

GM to Cut 25,000 Jobs

And Close Auto Plants

General Motors Corp. announced that it will eliminate 25,000 jobs by 2008 and close an unspecified number of plants to trim costs and reinvigorate its North American auto business.

GM Chairman and Chief Executive G. Richard Wagoner Jr. said at a meeting in Wilmington, Del., that the closings and job cuts should save about $2.5 billion a year. GM now employs 110,000 hourly workers in the United States.

GM has closed or stopped production at several plants this year, including one in Baltimore in May. It also closed a Linden, N.J., plant in April and two plants in Lansing, Mich., last month.

GM North America lost $1.3 billion in its first quarter this year, while the company's other divisions fared better. The company's bonds were downgraded to junk status last month.

-- Amy Joyce

Younger Hispanics Drive

U.S. Population Growth

Hispanics accounted for about half the growth in the U.S. population since 2000, according to a Census Bureau report that indicates the nation's largest minority group is increasing its presence even faster than in the previous decade.

In another contrast to the 1990s, births have overtaken immigration this decade as the largest source of Hispanic growth.

The new census figures paint a portrait of a Hispanic population dominated by the young: Half are younger than 27. By comparison, half of non-Hispanic whites are older than 40.

In July 2004, Hispanics numbered 41.3 million out of a national population of nearly 293.7 million. They have the fastest growth rate among the nation's major racial and ethnic groups. In the 1990s, they accounted for 40 percent of the country's population increase. From 2000 to 2004, that figure grew to 49 percent.

-- By D'Vera Cohn