THE WEEK

By KATHLEEN ADAMS, NICK CATTOGIO, LINA LOFARO, LAWRENCE MONDI, MICHAEL QUINN, JEFFERY C. RUBIN, ALAIN L. SANDERS AND SIDNEY URQUHART

NATION

CLINTON'S FIRST VETO

President Clinton actually carried out his threat and cast his first veto, against a spending-cuts measure that would have stripped $16.4 billion from current expenditures. "I cannot in good conscience sign a bill that cuts education to save pet congressional projects," said the President. The Republican-sponsored legislation would have trimmed a host of social programs in the current budget while continuing to funnel funds for certain road and courthouse projects. Lacking the votes for an override, G.O.P. leaders said they would try to craft a compromise bill with the President.

SENATE FIGHTS TERRORISM

By a vote of 91 to 8, the Senate adopted a broad package of antiterrorism measures after the President and Republican leaders settled their differences over the plan. The bill includes some $2 billion for stepped-up counterterrorism programs, broadened wiretapping authority (a presidential request) and -- most controversial of all -- a limit of one federal habeas corpus appeal for most prisoners on death row (a Republican request). The House is expected to act soon on similar legislation.

A GOVERNOR INDICTED

Following through on a peripheral investigation, Whitewater independent counsel Kenneth Starr obtained a federal indictment against Arkansas Governor Jim Guy Tucker, accusing him of submitting a false loan application and of conspiring to defraud the irs in connection with a complex cable-TV deal. Tucker denied any wrongdoing. In a separate development, the counsel obtained a guilty plea from Stephen Smith, a former Clinton gubernatorial aide, for conspiring to misapply loan funds. Neither the Tucker charges nor the Smith plea implicate either the President or Hillary Rodham Clinton.

NUCLEAR BLACK-MARKET STING

Capping a yearlong sting operation, federal authorities in New York arrested three men on charges of storing nearly 8 tons of zirconium -- a material used to make nuclear weapons -- and trying to sell part of it to undercover agents posing as Iraqi-backed arms merchants. The ease with which the zirconium was obtained should serve as a dramatic "wake-up call," said the FBI.

THE SIMPSON TRIAL

The O.J. Simpson double-murder trial got down to the stomach-wrenching details of the crime itself. The prosecution introduced graphic autopsy pictures of the victims, as the county coroner described in meticulous detail how the wounds and brutal knife gashes were inflicted. In a familiar and increasingly troubling development, two more jurors were replaced; only two alternates remain.

THE REAL SLICK WILLIE

California Democrat Willie Brown did it again. Having only recently outmaneuvered a Republican majority to remain the state assembly speaker, Brown outflanked the G.O.P. one last time before stepping down from the post he has held for 15 years. Capitalizing on the parties' even split of the current chamber, Brown recruited a dissident Republican, Doris Allen, to take over his job, put her over the top with the votes of all Democrats and then got himself appointed "speaker emeritus" -- a position that will allow him to "assist" the new speaker while he focuses on running for mayor of San Francisco. Allen is the first woman to hold the post.

CAPITAL CURFEW

Reacting to an epidemic of juvenile crime in the nation's capital, the Washington city council adopted a measure that would impose a curfew on youths 17 and under. The bill would require youngsters to be off city streets after 11 p.m. on weeknights and after midnight on weekends. Mayor Marion Barry has yet to decide whether he will sign the measure.

WORLD

SOBBING, HEARTFELT "THANK YOU!"

The American F-16 pilot shot from the sky by Bosnian Serbs was rescued by a force of U.S. aircraft after surviving on rainwater, insects and grass for six days in Serb-held territory. Captain Scott O'Grady emerged from a pine forest with his pistol in hand and fell exhausted into the just opened helicopter door. "Thank you! Thank you!'' he yelled over the engines before collapsing in sobs as the door shut behind him. Though the rescuers were the target of intermittent ground fire, there were no American casualties.

SERBS FREE 111 U.N. HOSTAGES

The Bosnian Serbs released 111 more U.N. peacekeepers but kept 53 in custody; 93 other hostages were held at their posts by the surrounding Bosnian Serb forces. Western and U.N. officials welcomed the move but demanded that all the Blue Helmets be freed unconditionally. The Bosnian Serbs, meanwhile, intensified their shelling of Sarajevo and increased their sniper attacks on civilians, confident that nato air strikes against them were out of the question while they held their pawns.

CALI CRACKDOWN

Colombian police captured one of the principal leaders of the Cali drug ring that supplies 80% of the world's cocaine and increasing amounts of heroin. "I am a man of peace," Gilberto Rodriguez Orejuela protested when he was discovered in a house, hiding in a closet. Four days earlier in Miami, U.S. authorities filed charges against scores of suspected cartel members and accomplices, including the former head of the Justice Department's international criminal-affairs office.

HANSEI, BUT NO SHAZAI

Despite the boycott by the main opposition party, Japan's coalition government rammed a resolution through parliament expressing the "deep remorse" of Japan for its "colonial rule and acts of aggression" during World War II. The Socialists and their conservative partners, the Liberal Democrats, reached an agreement after weeks of wrangling over the wording. The watered-down declaration stopped short of a full apology, however; it used the word hansei (remorse), rather than the stronger shazai (apology).

TAIWANESE RAPT OVER U.S. TRIP

Taiwan hailed the visit of President Lee Teng-hui to the U.S. as a giant crack in the 16-year diplomatic isolation forced upon it by China, which regards Taiwan as a rogue province. Officially, Lee is visiting the U.S. only for an alumni gathering at his alma mater, Cornell University, although more than 300 journalists are accompanying him. Beijing protested the visit by canceling high-level talks with the U.S.

ARGENTINA WANTS THE FALKLANDS

Argentina, which waged a losing war against Britain for control of the Falkland Islands in 1982, now wants to buy them. Argentine Foreign Minister Guido Di Tella said his government was prepared to offer the more than 2,000 Falklanders up to $800,000 per inhabitant. The British government says the islanders have a right to self-determination, but the Falklands' governor insists they will not sell their nationality.

BUSINESS

LOTUS EATERS

IBM looked to reassert itself in the personal-computer software market by tendering a hostile $3.3 billion bid for Lotus Development Corp. Its star asset: the popular Lotus Notes groupware program, which allows far-flung users to work simultaneously on the same document. Lotus' stock jumped more than $3 just before IBM's bid was announced, raising suspicions on Wall Street of insider trading. NOVITZ

Michael Ovitz isn't going anywhere. Negotiations for the Creative Artists Agency chairman to head MCA collapsed as Seagram completed its $5.7 billion purchase of 80% of the entertainment giant. Disputes between Ovitz and Seagram ceo Edgar Bronfman Jr. over executive autonomy and a compensation package worth more than $200 million are speculated to have caused the impasse.

SMOKED

Philip Morris studied nicotine for 15 years and found "pharmacologic" effects on smokers' brains and bodies, according to documents obtained by the New York Times. A lawyer for the cigarette manufacturer denied it used data gathered in the research to manipulate nicotine levels.

SPORT

MORE THAN THE TRIPLE CROWN

Thanks to Thunder Gulch, which won the Belmont Stakes last week, D. Wayne Lukas became the first horse trainer ever to win five consecutive Triple Crown races. His horses took the Preakness and Belmont last year and this, as well as this year's Kentucky Derby (Thunder Gulch again).

--By Kathleen Adams, Nick Cattogio, Lina Lofaro, Lawrence Mondi, Michael Quinn, Jeffery C. Rubin, Alain L. Sanders and Sidney Urquhart