GWEN IFILL: It was another rough day for the American economy. Declining supplies and the weak U.S. dollar pushed the price of crude oil up $5, to close above $136 a barrel.
The Energy Department said gas prices will remain around $4 a gallon for the foreseeable future. AAA reported the national average is now $4.05 cents a gallon.
And the Treasury Department reported the flood of economic stimulus check payments pushed the federal deficit to an all-time high for the month of May, to nearly $166 billion.
Altogether, it was just too much for Wall Street today. The Dow Jones Industrial Average lost nearly 206 points to close at 12,083. The Nasdaq fell nearly 55 points to close at 2,394.
Presidential candidates also spent the day trading barbs on the economy. Speaking at the National Constitution Center in Philadelphia, Republican John McCain criticized Democrat Barack Obama for proposing to increase the tax rate on investments.
SEN. JOHN MCCAIN (R), Arizona: Why in the world would anyone consider raising your taxes in difficult economic times? Senator Obama wants to raise the capital gains tax.
My friends, there's 100 million people that have some kind of investment that is affected by capital gains. Why would we want to take more of the people's money and send it to Washington to spend on a bridge in Alaska to an island with 50 people on it?
GWEN IFILL: Obama, meanwhile, talked credit card debt in Chicago and used the opportunity to declare McCain's economic proposals out of step with the needs of the American people.
SEN. BARACK OBAMA (D), Illinois: Just look at the proposal he's been making on this campaign. He's calling for nearly $2 trillion, $2 trillion in corporate tax cuts over the next decade, but he has not proposed a single measure to protect hard-working Americans from credit card companies that are trying to take advantage of them. That's not the kind of change that people I meet are looking for.
GWEN IFILL: Obama also bowed today to additional pressure from McCain, accepting the resignation of one of the leaders of his vice presidential search committee. James Johnson, the former head of the mortgage giant Fannie Mae, came under fire this week for loans he received from subprime lender Countrywide Financial with below-market rates. The two remaining members of the vetting team are Caroline Kennedy and former Deputy Attorney General Eric Holder.
Under the threat of a presidential veto, the House defeated a bill to extend jobless benefits today for the nation's 8.5 million unemployed workers. The bill would have provided an additional three months of checks on top of the current 26 weeks. The Bush administration said the unemployment rate had not yet risen high enough to justify broadening the program.
Tomatoes grown in California and northern Florida are now safe to eat; the Food and Drug Administration announced that late last evening. Those states are the nation's top tomato producers. More than 160 people have been sickened by contaminated tomatoes since mid-April.
There was no let-up for the flooded areas of the Midwest today, where residents braced for more storms. In Indiana, a 40-yard stretch of a levee near the town of Capehart was wiped out, forcing more evacuations.
The scene was different in Iowa, where a wall of sandbags kept the swollen Cedar River from breaching its banks. Still, authorities warned the 35,000 residents in nearby Cedar Falls should prepare for the worst. Forecasters predict a dry spell could come at the start of next week.
In Germany today, President Bush expressed regret over his tough talk leading up to the Iraq war. He told a British newspaper, "I think that, in retrospect, I could have used a different tone, a different rhetoric."
But at a news conference with German Chancellor Merkel, the president still defended the decision to go to war.
GEORGE W. BUSH, President of the United States: Removing Saddam Hussein made the world a safer place. And, yes, I told the guy -- the guy said, "Now, what could you do over?"
First of all, you don't get to do things over in my line of work. But I could have used better rhetoric to indicate that, one, we tried to exhaust the diplomacy in Iraq; two, that I don't like war. But, no, the decision to remove Saddam Hussein was the right decision.
GWEN IFILL: The president also issued a fresh warning to Iran today, threatening its government with new economic sanctions unless it halts uranium enrichment.
South Korea's president vowed today to reorganize his administration in an effort to quell weeks of protests. Reuters News Agency reported President Lee Myung-bak offered the post of prime minister to his conservative party rival. The demonstrations began after the new government agreed to lift restrictions on U.S. beef, sparking fears of mad cow disease. We'll have more on this story right after the news summary.
In an interview with the NewsHour today, former U.N. Secretary-General Kofi Annan called for new international monitors for Zimbabwe's run-off election. He said they were needed to ensure a fair outcome between President Robert Mugabe and opposition candidate Morgan Tsvangirai.
Annan spoke to Judy Woodruff.
KOFI ANNAN, Former U.N. Secretary-General: What we need to do is to make sure that the elections are well-organized and that there are lots of observers to ensure that it is run competently. Because of the way the first round was handled, there's great concern that the second round may go through the same sort of -- how should I put it -- manipulation.
GWEN IFILL: The run-off is scheduled for later this month. We'll have more from the interview with Kofi Annan later in the program.
Authorities in Pakistan today confirmed 11 of their troops were killed in a U.S. and coalition air strike. It happened overnight, along Pakistan's border with Afghanistan. The Pakistani army called the strike an "unprovoked and cowardly" attack and said it "hit at the very basis of cooperation between the U.S. and Pakistan in combating terrorism."
But a U.S. military spokesman maintained the strike was justified.
GEOFF MORRELL, Pentagon Press Secretary: Our forces came under attack, came under fire from forces that had come over from the Pakistani side into Afghan territory, and then retreated into Afghan -- into Pakistani territory, and continued to fire upon our forces, even though we did not pursue them into Pakistan.
GWEN IFILL: Clashes with insurgents along the Afghan-Pakistan border have spiked in recent months.
The death toll in yesterday's plane crash in Sudan was lowered to at least 30 today. The Sudan Airways jetliner veered off the runway and exploded into flames last night as it landed in Khartoum. About 170 passengers escaped, but investigators are still searching for 14 missing people. News reports initially put the death toll much higher.
