The debate about how to balance the federal budget is distorted by a singular phenomenon. Both sides, president and congressional Republicans, treat as untouchable one of the biggest spending categories: defense. At around $265 billion, defense accounts for nearly half of what is called "discretionary" federal spending. But Congress and the president are doing all their cutting in the other half: domestic and international programs.

With another deadline approaching in the partisan battle over the federal budget, a leading congressional Republican indicated Sunday that a new, more optimistic forecast of the nation's economy will bring the two sides closer to agreement. "The economy's gotten a little bit better," said House Budget Committee Chairman John R. Kasich, R-Ohio. "We'll have a few extra dollars to spend."

Energy Department chief Hazel O'Leary File/Associated Press

President Clinton decided Thursday to sign a defense spending bill, which he has said is too costly, because it will provide the money to send troops and other support to Bosnia. "This legislation is vital to fund our national defense so that the United States remains the strongest force for peace in the world," Clinton said in a statement Thursday night.

Since 1988, millions of state and local tax dollars have been unnecessarily diverted from basic education services to the special education of disabled poor children that the federal government would have paid, legislative evaluators said Monday. And a Batt administration official acknowledged that and other failures to take advantage of federal matching funds will limit the state's allocation if Congress turns the Medicaid program back to the states on a block grant basis.

Spokane's advocates for the poor rallied Monday to turn the public against federal plans to cut spending on social programs. Last month, activists drove a steamroller to U.S. Rep. George Nethercutt's office. On Monday, they released a report that depicts Spokane as the target of a mob hit. "There's a Contract Out on Spokane" is the title of the report, which shows a rifle sight fixed on the city.

The city's money blues made for deep cuts in Spokane's 1996 proposed spending plan. City Manager Roger Crum delivered a proposal to the City Council on Monday that took a chunk from nearly every department. Under the proposal, DARE would be out. So would the city's international development office.

The snowmobiles were never used. The uniforms weren't needed. Many of 1,400 generators never made it out of their crates. And that was just Bosnia. A U.N. report about internal waste, released Wednesday, comes after dozens of world leaders, including President Clinton, marked the 50th anniversary of the organization with demands for financial reform and streamlining.

Democrats make the claim that poor people are not the only feeders at the government trough. They are right. What they don't say is that the Democrats, who held power for 40 years, were equal-opportunity Santa Clauses, giving taxpayers' money to every special interest - from the poor to the rich - who asked for it. The battle now being waged by Rep. John Kasich, R-Ohio; Sen. Spencer Abraham, R-Mich.; Rep. Dick Chrysler, R-Mich., and others will determine whether the Republican Party is truly the party of smaller government or not. They are trying to de-fund "corporate welfare" - the web of tax breaks, incentives and subsidies threaded throughout the federal budget that benefits corporations at taxpayers' expense.

An erosion of trust Naomi Landon of Northstar Enterprises flags traffic around the Highway 2 project near Priest River. Photo by Craig Buck/The Spokesman-Review

State Insurance Commissioner Deborah Senn says she likes her job fine, thank you, but that doesn't rule out a challenge to Gov. Mike Lowry in 1996. Senn is the first statewide Democratic incumbent to say she'd consider taking on the embattled governor.

It takes more than around-the-clock care to keep Baby Ryan alive. It takes a pile of money, too. The tab already has soared far beyond a half-million dollars, not including hefty doctor bills. The meter started running at Sacred Heart Medical Center in Spokane, where Ryan was born prematurely Oct. 27. He was there six weeks. The bill topped $181,000. Next stop: Legacy Emanuel Children's Hospital in Portland, where doctors took him off kidney dialysis and removed a blockage from his intestines.

The Spokane City Council has spent nearly $500,000 this year to hire consultants. They include $7,200 for a clinical psychologist to help council members communicate, nearly $47,000 for a grant writer and administrator for the police department and $60,000 for a "facilitator" to lead discussions about wastewater issues.

President Clinton signed $16.3 billion in social-program cuts Thursday in a compromise with Congress, and won another victory as the House overwhelmingly voted to protect the administration-backed space station from elimination. But in a day of mixed budget messages, representatives also neared approval of new slashes in housing and environmental efforts that steered the two sides back to a collision course.

The U.S. Forest Service has been giving Mother Nature a hand - painting rock faces newly exposed by construction or landslides along scenic highways to make them look older. "I said it can't be true. Nobody is that stupid," said Rep. Jack Metcalf, R-Wash., who persuaded the agency to postpone some rock-painting plans on a highway through the Cascade Mountains.

After four days of closed-door sessions, the Senate Armed Services Committee passed a 1996 authorizing bill that saves the much-disputed $1.5 billion third Seawolf submarine, limits the number of B-2 bombers to the 20 currently ordered and calls for the deployment of a national missile defense system at multiple sites by 2003. In many areas, the committee either split the difference or went in the opposite direction as the House National Security Committee, whose authorization bill has already passed the House floor. This means there will be major issues to be settled in the House- Senate conference this summer, where both sides must reconcile their differences.

In another display of division between President Clinton and congressional Democrats, two liberal senators on Friday stalled a White House-backed compromise to cut more than $16 billion from current federal spending and provide almost $7 billion in emergency aid to California, Oklahoma and other states. Senate Majority Leader Bob Dole, R-Kan., cut off debate on the spending bill, a revised version of legislation vetoed by Clinton in early June, after Sens. Paul Wellstone, D-Minn., and Carol Moseley-Braun, D-Ill., objected to proposed cuts in social spending and demanded more time to debate and vote on amendments.

1. Drummond 2. Smith

With veterans' hospitals emptying and the vet population declining; With VA nursing homes costing the taxpayer twice as much as comparable community facilities;