Sober look at Y2K (from AZ Republic, 19990224) Senate report finds economy 'at risk' By Robert A. Rankin -- Knight Ridder Newspapers WASHINGTON -- After almost a year of systematic investigation, a special Senate committee warns in a report to be released within days that all segments of the U.S. economy -- from hospitals to electric power plants -- remain "at risk" from the year 2000 computer problem that looms less than one year away. The sober study -- a draft was obtained by Knight Ridder Newspapers -- concludes that while both government and business have worked hard to correct the Y2K problem, their efforts began late and remain insufficient, and consequently some incalculable level of economic disruption is inevitable. "Make no mistake," the Senate panel's co-chairmen warn in a letter to their colleagues at the report's front, "this problem will affect us all individually and collectively in very profound ways.... It will indeed impact individual businesses and the global economy. In some cases, lives could even be at stake." The authors of the carefully low-key report take care to avoid either undue alarm or unfounded optimism. For example, they conclude that while local electricity blackouts are likely, a national power breakdown is not. The study notes that most small to midsize businesses have yet to make Y2K repairs. And many of America's trade partners are far behind in taking corrective steps, posing risks of worldwide ripple effects. Banks and other financial service companies are well-prepared, the Senate panel finds. Social Security checks should not face interruption. And air-traffic control should be able to avoid major disruptions to air travel, although some "flight rationing" may be necessary. "The committee has no data to suggest that the United States will experience nationwide social or economic collapse," the Senate co-chairmen wrote, "but we believe that disruptions will occur that in some cases will be significant. The international situation will be more disturbing. Those who suggest that it will be nothing more than a 'bump in the road' are simply misinformed." Chairman Robert Bennett, R-Utah, and Vice Chairman Christopher Dodd, D-Conn., have led their special Senate select committee through nine hearings since last April examining the state of Y2K preparedness in seven critical U.S. industries. ------------------------------------------------ Senate report highlights potential trouble spots Here Is how the Senate panel sees Y2K affecting various sectors of the U.S. economy: UTILITIES: Only about 50 percent of electric utilities had repaired Y2K systems as of December. "Of greatest concern are about 1,000 small, rual electric utilities." Local and regional blackouts are "likely," but a "prolonged, nationwide blackout" is not. HEALTH CARE: About 64 percent of hospitals have no plans to test their Y2K fixes before the crunch date. And 90 percent of doctors' offices are unaware of how exposed they are to Y2K problems. Federal payment systems for Medicare and other health insurance programs are behind schedule for repair. "The health care industry is one of the worst-prepared for Y2K and carries a significant potential for harm." TELECOMMUNICATIONS: About 95 percent of telephone systems are expected to be ready. No reliable data exist on readiness to test data networks, cellular or satellite communications systems, or 1,400 regional carriers. TRANSPORTATION: "On average, the nation's 670 domestic airports started Y2K compliance too late," the report states. The Federal Aviation Administration has "made great strides". but "it still has a way to go... Planes will not fall out of the sky, but flight rationing to some areas and countries is possible." Aviation problems will be "much worse" abroad. FINANCE: Banks and automated tellers are expected to function and to have enough cash. The Federal Reserve intends to expand available currency by one-third, to about $200 billion, to cover withdrawals "and has other contingency arrangements available if needed," Fed Chairman Alan Greenspan told the Senate Banking Committee on Tuesday. GOVERNMENT: Federal agencies vary widely in preparedness; among the least prepared is the Department of Defense. A House panel monitoring federal Y2K efforts issued an overall grade of C+ on Tuesday. Defense reported that only 12 percent of its "mission-critical systems" are ready; Transportation, only 53 percent. BUSINESS: Heavily regulated fields such as: banking, insurance and finance "are furthest ahead," but "health care, oil, education, agriculture, farming, food processing and the construction industry are lagging behind," the report said. Any failure of a critical system is likely to cost up to $3.5 million to repair and to take three to 15 days. INTERNATIONAL: Venezuela and Saudi Arabia, which together supply 30 percent of U.S. oil imports, are both 12 to 18 months behind U.S. Y2K repair efforts, exemplifying how problems abroad might have an impact here. Infection of repaired U.S. computer systems from links to unfixed foreign ones is also worrisome. ----------- N E W ! 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