May 26, 1995

In what could be a first step toward a revolutionary change in Government economic policy, the Senate today approved a Republican road map that is supposed to put the Government on the course to a balanced Federal budget in seven years. After a week of highly partisan debate and votes on more than 50 amendments, most of them generally along party lines, the proposed budget calling for nearly $1 trillion in savings by 2002 was approved 57 to 42. The House endorsed a similar blueprint last week. All Republicans and three Democrats -- Bob Kerrey of Nebraska, Sam Nunn of Georgia and Charles S. Robb of Virginia -- voted for the measure today. The remaining Democrats voted "no."

WHAT a smart idea for the Museum of Modern Art to mount a design show about materials. At a time when so much fuss is being made over cyberspace, virtual reality and other odysseys into the immaterial realm of pixels, bytes and holograms, "Mutant Materials in Contemporary Design" reminds us that we still inhabit a world of things. But things aren't what they used to be, at least not in the design department of the Museum of Modern Art. Instead of Bauhaus classics like Mies van der Rohe's Barcelona chair, "Mutant Materials" serves up such goopy items as exercise putty, a product put out by Nordic Track that could serve as a symbol for the entire show. Made for exercising the forearm, the putty is a rubbery substance cooked up in a lab. It comes in yummy neon colors -- red, orange, blue -- that indicate the degree of firmness. But basically, it's a blob. A blob in a jar.

Golan May Be Key to Peace Foreign Minister Shimon Peres came as close as any top Israeli official has to saying that Israel will give up the Golan Heights. Page A2. Gain for Drug Companies The F.D.A. ruled that a new law gives drug makers patent extensions of up to three years, drawing fire from consumer groups. Page D1. Giuliani Nominee on Hold City Hall backed away from its choice to head a Bronx hospital pending further inquiry into his previous tenure in the post. Page B1.

A Democratic Congressman from New Jersey has turned to a former Republican colleague to act as his lawyer before the House Ethics Committee. Jim Courter, who is now with the law firm of Verner, Liipfert, Bernhard, McPherson & Hand, will represent Robert Torricelli, who is accused of revealing confidential intelligence information about the death of a United States citizen in Guatemala. SUSAN JO KELLER

Rolling over the protests of several Democrats, the House Commerce Committee voted today to kill most cable television price regulation and lift scores of restrictions on the number of television, radio and other media properties a single company can own. The committee voted 38 to 5 in favor of an overall bill to overhaul the laws governing virtually every sector of the nation's communications industry. But battles over several particular provisions, which came earlier in the day, were more bitter and partisan.

Confronting the Bosnian Serb leadership more directly than ever before, NATO warplanes bombed an ammunition depot today near the Serbs' political headquarters in the town of Pale. The NATO attack, in response to the Serbs' renewed use of heavy weapons around Sarajevo, was carried out mainly by American aircraft and was forcefully supported by President Clinton, who warned the Serbs to stop shelling the Bosnian capital.

From the viewpoint of some who want to make him President, Colin L. Powell is playing his cards too close to his vest. Either he gives a hint of interest soon, one of his main backers said last week, or people at the grass roots will dismiss him as "too coy." From his own perspective, his friends say, General Powell has no option except to allow the political drama to unfold. One of them put it this way: "Suppose, just suppose, he wants the job. He has nothing to gain by running after it months ahead of time. That makes him look like everyone else."

WHAT can be said about a painter who thinks it's radical to paint images upside down? That he needs to think again, is one possible answer, and it's one that frequently comes to mind in the middle of the large retrospective of Georg Baselitz's work at the Solomon R. Guggenheim Museum. In the middle; not in the beginning, or at the end. Organized by Diane Waldman, the museum's deputy director, this exhibition has a rousing start and regains speed, if unevenly, toward its finish. The big problem is a soggy midsection rife with the inverted, clumsily painted canvases of nudes and eagles from the late 1970's and early 80's with which Mr. Baselitz first made his presence felt in New York.

The State Comptroller erected a new roadblock on the path to a New York State budget agreement yesterday by rejecting a plan to save money by reducing scheduled payments to the pension system. Officials said there was a tentative agreement to provide financing for 19 stadium projects. Article, page B4.

Bill Would Overhaul Communications Industry In a 38-to-5 vote approving an overhaul of communications regulation, the House Commerce Committee voted to kill most cable TV price limits and to lift scores of restrictions on how many television, radio and other media properties a company can own. The bill would also let local telephone companies enter the long-distance and cable industries while forcing them to open up their own markets. [ Page A1. ] Senate Approves Plan To Balance Budget The Senate approved a Republican road map that is supposed to balance the Federal budget in seven years. The budget plan calls for nearly $1 trillion in savings. The House endorsed a similar plan last week. [ A1. ] House and Senate Republicans must now devise a compromise budget that confronts the incendiary issue of tax relief. [ A1. ] Judge Clears Suit Against Prodigy A New York judge ruled that Prodigy can be held liable for comments posted electronically by a user, clearing the way for a $200 million libel suit against the online service. [ D4. ] Bill on Securities Suits Gains The Senate Banking Committee approved a bill that would make it harder to bring lawsuits against publicly traded companies when stock prices drop sharply. [ D2. ] A California Republican has led an effort to overhaul Federal securities laws, making it tougher to sue executives for fraud. [ A19. ] Radio Host Indicted in Fraud Sonny Bloch, radio host of a popular financial call-in program, was charged with fraud by Federal prosecutors and the S.E.C., which said Mr. Bloch and his associates had bilked hundreds of investors of more than $21 million by using his broadcasts to promote fraudulent wireless cable and radio schemes. A Federal grand jury indicted Mr. Bloch and four other men on 35 counts of fraud. [ D3. ] Home Sales Fall 6.4 Percent Sales of existing homes fell 6.4 percent in April, to an annual rate of 3.39 million, the lowest level in almost three years. Separately, the Labor Department said first-time jobless claims rose 13,000 last week, to 380,000, the highest level since July. [ D6. ] Phar-Mor's Ex-President Convicted Michael Monus, the ousted president of Phar-Mor, was found guilty of Federal felony charges for his role in a $1 billion fraud that plunged the company into bankruptcy. The verdict came as Phar-Mor said its reorganization plan had been approved by major creditors. [ D3. ] Shell to Develop Gulf Gas Field Shell Oil plans to develop a gas field about a mile deep in the Gulf of Mexico that is expected to contain an estimated 720 billion cubic feet of natural gas. [ D18. ] Questions at Solomon-Page Shares of Solomon-Page Group have more than tripled in value since March, despite the company's widening loss. Market Place. [ D6. ] Ovitz in Talks to Head MCA Michael Ovitz, chairman of the Creative Artists Agency, has been negotiating with Edgar Bronfman Jr., Seagram's chief executive, about becoming head of MCA, people familiar with the talks said. [ D4. ] Money Keeps Flowing Into Funds Mutual funds that buy American stocks took in a net $8.6 billion in April, the highest flow for domestic funds since January 1994. The funds had just 6.8 percent of their assets in cash, the lowest level since 1978. [ D5. ] Evening Sun to Close The Evening Sun of Baltimore, the newspaper of H. L. Mencken, will be closed in September by Times Mirror. [ D4. ] Haagen-Dazs Tries a New Image In a $10 million campaign for the summer selling season, Haagen-Dazs will assert that its superpremium products are not rich treats only intended for special occasions. Stuart Elliott: Advertising. [ D4. ]

The murder trial of O. J. Simpson took yet another odd turn when a juror was dismissed after a mysterious closed-door meeting of four hours between Judge Lance A. Ito and lawyers for both sides. Article, page B18.

A power failure yesterday morning knocked out the air traffic control center that handles high-altitude flights in the New York area, blacking out radar screens and severing all radio links to some pilots. Tens of thousands of people were delayed. The shutdown was the third major failure in seven weeks at the control center, prompting the Secretary of Transportation, Federico Pena, to order an investigation by the Federal Aviation Administration. In a statement yesterday he said he was "greatly concerned about this series of outages in the New York center, the busiest in the world."