Bigger fights loom after tax deadline deal

WASHINGTON (Reuters) - President Barack Obama and congressional Republicans looked ahead on Wednesday toward the next round of even bigger budget fights after reaching a hard-fought "fiscal cliff" deal that narrowly averted potentially devastating tax hikes and spending cuts.

The agreement, approved late on Tuesday by the Republican-led House of Representatives after a bitter political struggle, was a victory for Obama, who had won re-election on a promise to address budget woes in part by raising taxes on the wealthiest Americans.

But it set up political showdowns over the next two months on spending cuts and on raising the nation's limit on borrowing. Republicans, angry the deal did little to curb the federal deficit, promised to use the debt ceiling debate to win deep spending cuts next time.

"Our opportunity here is on the debt ceiling," Republican Senator Pat Toomey of Pennsylvania said on MSNBC, adding Republicans would have the political leverage against Obama in that debate. "We Republicans need to be willing to tolerate a temporary, partial government shutdown, which is what that could mean."

Republicans, who acknowledged they had lost the fiscal cliff fight by agreeing to raise taxes on the wealthy without gaining much in return, vowed the next deal would have to include significant cuts in government benefit programs like Medicare and Medicaid health care for retirees and the poor that were the biggest drivers of federal debt.

"This is going to be much uglier to me than the tax issue ... this is going to be about entitlement reform," Republican Senator Bob Corker of Tennessee said on CNBC.

"This is the debate that's going to be far more serious. Hopefully, now that we have this other piece behind us - hopefully - we'll deal in a real way with the kinds of things our nation needs to face," he said.

Obama urged "a little less drama" when the Congress and White House next address thorny fiscal issues like the government's rapidly mounting $16 trillion debt load.

The fiscal cliff showdown had worried businesses and financial markets, and U.S. stocks soared at the opening after lawmakers agreed to the deal.

The Dow Jones industrial average surged 262.45 points, or 2.00 percent, at 13,366.59. The Standard & Poor's 500 Index was up 29.79 points, or 2.09 percent, at 1,455.98. The Nasdaq Composite Index was up 77.45 points, or 2.57 percent, at 3,096.97.

The crisis ended when dozens of Republicans in the House of Representatives buckled and backed a bill passed by the Democratic-controlled Senate that hiked taxes on households earning more than $450,000 annually. Spending cuts of $109 billion in military and domestic programs were delayed only for two months.

Economists had warned the fiscal cliff of across-the-board tax hikes and spending cuts would have punched a $600 billion hole in the economy this year and threatened to send the country back into recession.

Obama Praises Deal, Says There's More to Be DonePresident Obama is praising the bill that staves off the fiscal cliff tax hikes and spending cuts. The House of Representatives followed the Senate's lead, and passed the bill late Tuesday. (Jan. 2)

RELUCTANT REPUBLICANS

House Republicans had mounted a late effort to add hundreds of billions of dollars in spending cuts to the package and spark a confrontation with the Senate, but it failed.

In the end, they reluctantly approved the Senate bill by a bipartisan vote of 257 to 167 and sent it on to Obama to sign into law. "We are ensuring that taxes aren't increased on 99 percent of our fellow Americans," said Republican Representative David Dreier of California.

The vote underlined the precarious position of House Speaker John Boehner, who will ask his Republicans to re-elect him as speaker on Thursday when a new Congress is sworn in. Boehner backed the bill but most House Republicans, including his top lieutenants, voted against it.

The speaker had sought to negotiate a "grand bargain" with Obama to overhaul the U.S. tax code and rein in health and retirement programs that will balloon in coming decades as the population ages.

But Boehner could not unite his members behind an alternative to Obama's tax measures.

Income tax rates will now rise on individuals earning more than $400,000 and families earning more than $450,000 per year, and the amount of deductions they can take to lower their tax bill will be limited.

Low temporary rates that have been in place for the past decade will be made permanent for less-affluent taxpayers, along with a range of targeted tax breaks put in place to fight the 2009 economic downturn.

However, workers will see up to $2,000 more taken out of their paychecks annually with the expiration of a temporary payroll tax cut.

The non-partisan Congressional Budget Office said the bill will increase budget deficits by nearly $4 trillion over the coming 10 years, compared to the budget savings that would occur if the extreme measures of the cliff were to kick in.

But the measure will actually save $650 billion during that time period when measured against the tax and spending policies that were in effect on Monday, according to the Committee for a Responsible Federal Budget, an independent group that has pushed for more aggressive deficit savings.

(Additional reporting by Susan Heavey and Richard Cowan; Editing by Jackie Frank)

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Bigger fights looming after cliff deal

WASHINGTON (Reuters) - President Barack Obama and congressional Republicans looked ahead on Wednesday toward the next round of even bigger budget fights after reaching a hard-fought "fiscal cliff" deal that narrowly averted potentially devastating tax hikes and spending cuts.

The agreement, approved late on Tuesday by the Republican-led House of Representatives after a bitter political struggle, was a victory for Obama, who had won re-election on a promise to address budget woes in part by raising taxes on the wealthiest Americans.

But it set up political showdowns over the next two months on spending cuts and on raising the nation's limit on borrowing. Republicans, angry the deal did little to curb the federal deficit, promised to use the debt ceiling debate to win deep spending cuts next time.

"Our opportunity here is on the debt ceiling," Republican Senator Pat Toomey of Pennsylvania said on MSNBC, adding Republicans would have the political leverage against Obama in that debate. "We Republicans need to be willing to tolerate a temporary, partial government shutdown, which is what that could mean."

Republicans, who acknowledged they had lost the fiscal cliff fight by agreeing to raise taxes on the wealthy without gaining much in return, vowed the next deal would have to include significant cuts in government benefit programs like Medicare and Medicaid health care for retirees and the poor that were the biggest drivers of federal debt.

"This is going to be much uglier to me than the tax issue ... this is going to be about entitlement reform," Republican Senator Bob Corker of Tennessee said on CNBC.

"This is the debate that's going to be far more serious. Hopefully, now that we have this other piece behind us - hopefully - we'll deal in a real way with the kinds of things our nation needs to face," he said.

Obama urged "a little less drama" when the Congress and White House next address thorny fiscal issues like the government's rapidly mounting $16 trillion debt load.

The fiscal cliff showdown had worried businesses and financial markets, and U.S. stocks soared at the opening after lawmakers agreed to the deal.

The Dow Jones industrial average surged 262.45 points, or 2.00 percent, at 13,366.59. The Standard & Poor's 500 Index was up 29.79 points, or 2.09 percent, at 1,455.98. The Nasdaq Composite Index was up 77.45 points, or 2.57 percent, at 3,096.97.

The crisis ended when dozens of Republicans in the House of Representatives buckled and backed a bill passed by the Democratic-controlled Senate that hiked taxes on households earning more than $450,000 annually. Spending cuts of $109 billion in military and domestic programs were delayed only for two months.

Economists had warned the fiscal cliff of across-the-board tax hikes and spending cuts would have punched a $600 billion hole in the economy this year and threatened to send the country back into recession.

Obama Praises Deal, Says There's More to Be DonePresident Obama is praising the bill that staves off the fiscal cliff tax hikes and spending cuts. The House of Representatives followed the Senate's lead, and passed the bill late Tuesday. (Jan. 2)

RELUCTANT REPUBLICANS

House Republicans had mounted a late effort to add hundreds of billions of dollars in spending cuts to the package and spark a confrontation with the Senate, but it failed.

In the end, they reluctantly approved the Senate bill by a bipartisan vote of 257 to 167 and sent it on to Obama to sign into law. "We are ensuring that taxes aren't increased on 99 percent of our fellow Americans," said Republican Representative David Dreier of California.

The vote underlined the precarious position of House Speaker John Boehner, who will ask his Republicans to re-elect him as speaker on Thursday when a new Congress is sworn in. Boehner backed the bill but most House Republicans, including his top lieutenants, voted against it.

The speaker had sought to negotiate a "grand bargain" with Obama to overhaul the U.S. tax code and rein in health and retirement programs that will balloon in coming decades as the population ages.

But Boehner could not unite his members behind an alternative to Obama's tax measures.

Income tax rates will now rise on individuals earning more than $400,000 and families earning more than $450,000 per year, and the amount of deductions they can take to lower their tax bill will be limited.

Low temporary rates that have been in place for the past decade will be made permanent for less-affluent taxpayers, along with a range of targeted tax breaks put in place to fight the 2009 economic downturn.

However, workers will see up to $2,000 more taken out of their paychecks annually with the expiration of a temporary payroll tax cut.

The non-partisan Congressional Budget Office said the bill will increase budget deficits by nearly $4 trillion over the coming 10 years, compared to the budget savings that would occur if the extreme measures of the cliff were to kick in.

But the measure will actually save $650 billion during that time period when measured against the tax and spending policies that were in effect on Monday, according to the Committee for a Responsible Federal Budget, an independent group that has pushed for more aggressive deficit savings.

(Additional reporting by Susan Heavey and Richard Cowan; Editing by Jackie Frank)

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House faces test on ‘fiscal cliff’ deal

Vice President Joe Biden gives two thumbs up following a Senate Democratic caucus meeting about the fiscal cliff …The Republican-held House of Representatives faced a tough vote Tuesday on a last-minute “fiscal cliff” compromise to cut taxes on all but the richest Americans and stall some painful spending cuts.  The deal, cut in secret weekend talks and passed by the Senate by a lopsided 89-9 margin shortly after 2 a.m. New Year's Day, could face stiff opposition from conservatives who hoped it would contain more spending cuts and liberals who wanted to raise more taxes.

Financial markets were closed for the holiday, but lawmakers were keenly aware of the potential impact of failing to address the so-called cliff, which some experts warned could plunge the still-fragile economy into a new recession.

Vice President Joe Biden, who took the lead for Democrats in negotiating the deal over the weekend with Republican Senate Minority Leader Mitch McConnell, was scheduled to join House Democrats at a behind-closed-doors meeting at 12:15 p.m. Biden paid a similar call on Senate Democrats late Monday.

House Republicans were also slated to huddle behind the scenes to discuss what to do about the Senate-passed measure. The anti-tax Club for Growth warned lawmakers to oppose the compromise because “this bill raises taxes immediately with the promise of cutting spending later.”

Under the compromise arrangement approved by the Senate, taxes would rise on income above $400,000 for  individuals and $450,000 for households, while exemptions and deductions the wealthiest Americans use to reduce their tax bill would face new limits. The accord would also raise the taxes paid on large inheritances from 35% to 40% for estates over $5 million. And it would extend by one year unemployment benefits for some two million Americans. It would also prevent cuts in payments to doctors who treat Medicare patients and spare tens of millions of Americans who otherwise would have been hit with the Alternative Minimum Tax.

The middle class will still see its taxes go up: The final deal did not include an extension of the payroll tax holiday. And the overall package will deepen the deficit by an estimated $3.9 trillion dollars by extending the overwhelming majority of the Bush tax cuts. Many Democrats had opposed those measures in 2001 and 2003. Obama agreed to extend them in 2010.

Efforts to modify the first installment of $1.2 trillion in cuts to domestic and defense programs over 10 years -- the other portion of the “fiscal cliff,” known as sequestration -- had proved a sticking point late in the game. Democrats had sought a year-long freeze but ultimately caved to Republican pressure and signed on to just a two-month delay while broader deficit-reduction talks continue.

That would put the next major battle over spending cuts right around the time that the White House and its Republican foes are battling it out over whether to raise the country's debt limit. Republicans have vowed to push for more spending cuts, equivalent to the amount of new borrowing.

Obama has vowed not to negotiate as he did in 2011, when a bruising fight threatened the first-ever default on America's obligations and resulted in the first-ever downgrade of the country's credit rating. Biden sent that message to Democrats in Congress, two senators said.

“This agreement is the right thing to do for our country and the House should pass it without delay,” President Barack Obama said in a written statement shortly after the Senate vote.

There were signs that the 2016 presidential race shaped the outcome in the Senate. Republican Senator Marco Rubio, widely thought to have his eye on his party’s nomination, voted no. Republican Senator Rand Paul, who could take up the libertarian mantle of his father Ron Paul, did as well. Observers were watching to see how Republican Rep. Paul Ryan, the Budget Committee chairman and his party's failed vice presidential nominee in 2012, would vote Tuesday.

In remarks just before the Senate adopted the compromise, McConnell repeatedly called the agreement “imperfect” but said it beat allowing income tax rates rise across the board.

“I know I can speak for my entire conference when I say we don’t think taxes should be going up on anyone, but we all knew that if we did nothing they’d be going up on everyone today,” he said. “We weren’t going to let that happen.”

“Our most important priority was to protect middle-class families. This legislation does that,” Democratic Senate Majority Leader Harry Reid said. But Reid cautioned that “passing this agreement does not mean negotiations halt. Far from it.”

The House’s Republican leaders, including Speaker John Boehner, hinted in an unusual joint statement that they might amend anything that clears the Senate – a step that could kill the deal.

“Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members -- and the American people -- have been able to review the legislation,” they said.

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House faces test on ‘fiscal cliff’ deal

Vice President Joe Biden gives two thumbs up following a Senate Democratic caucus meeting about the fiscal cliff …The Republican-held House of Representatives faced a tough vote Tuesday on a last-minute “fiscal cliff” compromise to cut taxes on all but the richest Americans and stall some painful spending cuts.  The deal, cut in secret weekend talks and passed by the Senate by a lopsided 89-9 margin shortly after 2 a.m. New Year's Day, could face stiff opposition from conservatives who hoped it would contain more spending cuts and liberals who wanted to raise more taxes.

Financial markets were closed for the holiday, but lawmakers were keenly aware of the potential impact of failing to address the so-called cliff, which some experts warned could plunge the still-fragile economy into a new recession.

Vice President Joe Biden, who took the lead for Democrats in negotiating the deal over the weekend with Republican Senate Minority Leader Mitch McConnell, was scheduled to join House Democrats at a behind-closed-doors meeting at 12:15 p.m. Biden paid a similar call on Senate Democrats late Monday.

House Republicans were also slated to huddle behind the scenes to discuss what to do about the Senate-passed measure. The anti-tax Club for Growth warned lawmakers to oppose the compromise because “this bill raises taxes immediately with the promise of cutting spending later.”

Under the compromise arrangement approved by the Senate, taxes would rise on income above $400,000 for  individuals and $450,000 for households, while exemptions and deductions the wealthiest Americans use to reduce their tax bill would face new limits. The accord would also raise the taxes paid on large inheritances from 35% to 40% for estates over $5 million. And it would extend by one year unemployment benefits for some two million Americans. It would also prevent cuts in payments to doctors who treat Medicare patients and spare tens of millions of Americans who otherwise would have been hit with the Alternative Minimum Tax.

The middle class will still see its taxes go up: The final deal did not include an extension of the payroll tax holiday. And the overall package will deepen the deficit by an estimated $3.9 trillion dollars by extending the overwhelming majority of the Bush tax cuts. Many Democrats had opposed those measures in 2001 and 2003. Obama agreed to extend them in 2010.

Efforts to modify the first installment of $1.2 trillion in cuts to domestic and defense programs over 10 years -- the other portion of the “fiscal cliff,” known as sequestration -- had proved a sticking point late in the game. Democrats had sought a year-long freeze but ultimately caved to Republican pressure and signed on to just a two-month delay while broader deficit-reduction talks continue.

That would put the next major battle over spending cuts right around the time that the White House and its Republican foes are battling it out over whether to raise the country's debt limit. Republicans have vowed to push for more spending cuts, equivalent to the amount of new borrowing.

Obama has vowed not to negotiate as he did in 2011, when a bruising fight threatened the first-ever default on America's obligations and resulted in the first-ever downgrade of the country's credit rating. Biden sent that message to Democrats in Congress, two senators said.

“This agreement is the right thing to do for our country and the House should pass it without delay,” President Barack Obama said in a written statement shortly after the Senate vote.

There were signs that the 2016 presidential race shaped the outcome in the Senate. Republican Senator Marco Rubio, widely thought to have his eye on his party’s nomination, voted no. Republican Senator Rand Paul, who could take up the libertarian mantle of his father Ron Paul, did as well. Observers were watching to see how Republican Rep. Paul Ryan, the Budget Committee chairman and his party's failed vice presidential nominee in 2012, would vote Tuesday.

In remarks just before the Senate adopted the compromise, McConnell repeatedly called the agreement “imperfect” but said it beat allowing income tax rates rise across the board.

“I know I can speak for my entire conference when I say we don’t think taxes should be going up on anyone, but we all knew that if we did nothing they’d be going up on everyone today,” he said. “We weren’t going to let that happen.”

“Our most important priority was to protect middle-class families. This legislation does that,” Democratic Senate Majority Leader Harry Reid said. But Reid cautioned that “passing this agreement does not mean negotiations halt. Far from it.”

The House’s Republican leaders, including Speaker John Boehner, hinted in an unusual joint statement that they might amend anything that clears the Senate – a step that could kill the deal.

“Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members -- and the American people -- have been able to review the legislation,” they said.

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Obama: Deal to avert fiscal cliff 'in sight'

WASHINGTON (AP) — Working with Congress against a midnight deadline, President Barack Obama said Monday that a deal to avert the "fiscal cliff" was in sight but not yet finalized. The emerging deal would raise tax rates on family income over $450,000 and individual income over $400,000 a year, increase the estate tax rate and extend unemployment benefits for one year.

"There are still issues left to resolve but we're hopeful Congress can get it done," Obama said at a campaign-style event at the White House. "But it's not done."

In the building New Year's Eve drama, the parties still were at an impasse over whether to put off the automatic, across-the-board spending cuts set to take effect at the beginning of the year and if so, how to pay for that.

One official said talks were focused on a two-month delay in the across-the-board cuts but negotiators had yet to agree on about $24 billion in savings from elsewhere in the budget. Democrats had asked for the cuts to be put off for one year and be offset by unspecified revenue.

The president said that whatever last-minute fixes are necessary, they must come from a blend of tax revenue and constrained spending, not just budget cuts.

Officials emphasized that negotiations were continuing and the emerging deal was not yet final. And a confident Obama, flanked by cheering middle class Americans in a White House auditorium, jabbed Congress, saying lawmakers were prone to last-minute delays.

"One thing we can count on with respect to this Congress is that if there's even one second left before you have to do what you're supposed to do, they will use that last second," he said.

Speaking shortly afterward on the Senate floor, Sen. John McCain said that "at a time of crisis, on New Year's Eve...you had the president of the United States go over and have a cheerleading, ridiculing-of-Republicans exercise." The Arizona Republican lost the 2008 presidential race to Obama.

Unless an agreement is reached and approved by Congress at the start of the New Year, more than $500 billion in 2013 tax increases will take effect immediately and $109 billion in cuts will be carved from defense and domestic programs

Though the tax hikes and budget cuts would be felt gradually, economists warn that if allowed to fully take hold, their combined impact — the so-called fiscal cliff — would rekindle a recession.

The current proposal in the works would raise the tax rates on family income over $450,000 and individual income over $400,000 from 35 percent to 39.6 percent, the same level as under former President Bill Clinton. Also, estates would be taxed at 40 percent after the first $5 million for an individual and $10 million for a couple, up from 35 percent to 40 percent.

Unemployment benefits would be extended for one year. Without the extension, 2 million people would lose benefits beginning in early January.

A Republican official familiar with the plans confirmed the details described to The Associated Press.

The officials requested anonymity in order to discuss the internal negotiations.

The president said his hopes for a larger, more sweeping deal have been dashed and said that such an accommodation was not possible "with this Congress at this time."

But even with this fight not finished, Obama warned Republicans, specifically, about the battles still ahead. He said he would not accept any debt-reduction deals in the new year that rely on slashing spending without raising taxes, too. Cuts alone won't happen anymore "at least as long as I'm president, and I'm going to be president for the next four years."

Urgent talks were continuing Monday afternoon between the White House and congressional Republicans, with longtime negotiating partners Vice President Joe Biden and Senate Republican leader Mitch McConnell at the helm. Underscoring the flurry of activity, another GOP aide said the two men had conversations at 12:45 a.m. and 6:30 a.m. Monday.

An agreement on the proposed deal would also shield Medicare doctors from a 27 percent cut in fees and extend tax credits for research and development, as well as renewable energy.

The deal would also extend for five years a series of tax credits meant to lessen the financial burden on poorer and middle-class families, including one credit that helps people pay for college.

The deal would achieve about $600 billion in new revenue, the officials said.

Despite the progress in negotiations, Senate Majority Leader Harry Reid warned that time was running out to finalize the deal.

"Americans are still threatened with a tax hike in just a few hours," said Reid, D-Nev., as the Senate began an unusual New Year's Eve session.

Liberal Sen. Tom Harkin, D-Iowa, took to the Senate floor after Reid to warn Democratic bargainers against lowering levies on large inherited estates and raising the income threshold at which higher tax rates would kick in.

"No deal is better than a bad deal. And this look like a very bad deal the way this is shaping up," said Harkin.

Letting tax rates rise for couples with incomes of $450,000 a year is a concessions for Obama, who campaigned for re-election on a pledge to set the levels at $200,000 for individuals and $250,000 for couples. It also marked a significant concession by Republican leaders who pledged to continue the George W. Bush-era tax cuts for all income earners. .

The hope of the White House and lawmakers was to seal an agreement, enact it and send it to Obama for his signature before taxpayers felt the impact of higher income taxes or federal agencies began issuing furloughs or taking other steps required by spending cuts.

Regardless of the fate of the negotiations, it appeared all workers would experience a cut in their take-home pay with the expiration of a two-year cut in payroll taxes.

In a move that was sure to irritate Republicans, Reid was planning — absent a deal — to force a Senate vote Monday on Obama's campaign-season proposal to continue expiring tax cuts for all but those with income exceeding $200,000 for individuals and $250,000 for couples.

As the New Year's Eve deadline rapidly approached, Democrats and Republicans found themselves at odds over a host of issues, including taxing large inherited estates. Republicans wanted the tax left at its current 35 percent, with the first $5.1 million excluded, while Democrats wanted the rate increased to 45 percent with a smaller exclusion.

The two sides were also apart on how to keep the alternative minimum tax from raising the tax bills of nearly 30 million middle-income families and how to extend tax breaks for research by business and other activities.

Republicans were insisting that budget cuts be found to pay for some of the spending proposals Democrats were pushing.

These included proposals to erase scheduled defense and domestic cuts exceeding $200 billion over the next two years and to extend unemployment benefits. Republicans complained that in effect, Democrats would pay for that spending with the tax boosts on the wealthy.

"We can't use tax increases on anyone to pay for more spending," said Sen. Kay Bailey Hutchison, R-Texas.

_____

Eds: Associated Press writers David Espo, Andrew Taylor, Alan Fram and Josh Lederman contributed to this report.

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Possible deal emerging in debt talks

WASHINGTON (AP) — The contours of a deal to avert the 'fiscal cliff' emerged Monday, with Democrats and Republicans agreeing to raise tax rates on family income over $450,000 a year, increase the estate tax rate and extend unemployment benefits for one year, officials familiar with the negotiations said.

But with a midnight deadline rapidly approaching, both sides were at an impasse over whether to put off automatic, across-the-board spending cuts set to take effect on Jan. 1, and if so, how to pay for that. Democrats want to put off the cuts for one year and offset the so-called sequester with unspecified revenue.

Officials emphasized that negotiations were continuing and the emerging deal was not yet final. President Barack Obama was to speak about the status of the negotiations from the White House Monday afternoon.

The proposal in the works would raise the tax rates on family income over $450,000 from 35 percent to 39.6 percent, the same level as under former President Bill Clinton. Also, estates would be taxed at 40 percent after the first $5 million for an individual and $10 million for a couple, up from 35 percent to 40 percent.

Unemployment benefits would be extended for one year. Without the extension, 2 million people would lose benefits beginning in early January.

A Republican official familiar with the plans confirmed the details described to The Associated Press.

The officials requested anonymity in order to discuss the internal negotiations.

Unless an agreement is reached and approved by Congress by the start of New Year's Day, more than $500 billion in 2013 tax increases will begin to take effect and $109 billion will be carved from defense and domestic programs

Though the tax hikes and budget cuts would be felt gradually, economists warn that if allowed to fully take hold, their combined impact — the so-called fiscal cliff — would rekindle a recession.

Urgent talks were continuing Monday afternoon between the White House and congressional Republicans, with longtime negotiating partners Vice President Joe Biden and Senate Republican leader Mitch McConnell at the helm. Underscoring the flurry of activity, another GOP aide said the two men had conversations at 12:45 a.m. and 6:30 a.m. Monday.

An agreement on the proposed deal would also shield Medicare doctors from a 27 percent cut in fees and extend tax credits for research and development, as well as renewable energy.

The deal would also extend for five years a series of tax credits meant to lessen the financial burden on poorer and middle-class families, including one credit that helps people pay for college.

The deal would achieve about $600 billion in new revenue, the officials said.

Despite the movement, Senate Majority Leader Harry Reid warned that time was running out to finalize an agreement.

"Americans are still threatened with a tax hike in just a few hours," said Reid, D-Nev., as the Senate began an unusual New Year's Eve session.

Liberal Sen. Tom Harkin, D-Iowa, took to the Senate floor after Reid to warn Democratic bargainers against lowering levies on large inherited estates and raising the income threshold at which higher tax rates would kick in.

"No deal is better than a bad deal. And this look like a very bad deal the way this is shaping up," said Harkin.

Letting tax rates rise for couples with incomes of $450,000 a year is a concessions for Obama, who campaigned for re-election on a pledge to set the levels at $200,000 for individuals and $250,000 for couples. It also marked a significant concession by Republican leaders who pledged to continue the George W. Bush-era tax cuts for all income earners. .

The hope of the White House and lawmakers was to seal an agreement, enact it and send it to Obama for his signature before taxpayers felt the impact of higher income taxes or federal agencies began issuing furloughs or taking other steps required by spending cuts.

Regardless of the fate of the negotiations, it appeared all workers would experience a cut in their take-home pay with the expiration of a two-year cut in payroll taxes.

"This whole thing is a national embarrassment," Sen. Bob Corker, R-Tenn., said Monday on MSNBC, adding that any solution Congress would swallow at this late stage would be inconsequential. "We still haven't moved any closer to solving our nation's problems."

In a move that was sure to irritate Republicans, Reid was planning — absent a deal — to force a Senate vote Monday on Obama's campaign-season proposal to continue expiring tax cuts for all but those with income exceeding $200,000 for individuals and $250,000 for couples.

In one sign of movement on Sunday, Republicans dropped a demand to slow the growth of Social Security and other benefits by changing how those payments are increased each year to allow for inflation.

Obama had offered to include that change, despite opposition by many Democrats, as part of earlier, failed bargaining with House Speaker John Boehner, R-Ohio, over a larger deficit reduction agreement. But Democrats said they would never include the new inflation formula in the smaller deal now being sought to forestall wide-ranging tax boosts and budget cuts, and Republicans relented.

"It's just acknowledging the reality," Sen. Susan Collins, R-Maine, said of the GOP decision to drop the idea.

As the New Year's Eve deadline rapidly approached, Democrats and Republicans found themselves at odds over a host of issues, including taxing large inherited estates. Republicans wanted the tax left at its current 35 percent, with the first $5.1 million excluded, while Democrats wanted the rate increased to 45 percent with a smaller exclusion.

The two sides were also apart on how to keep the alternative minimum tax from raising the tax bills of nearly 30 million middle-income families and how to extend tax breaks for research by business and other activities.

Republicans were insisting that budget cuts be found to pay for some of the spending proposals Democrats were pushing.

These included proposals to erase scheduled defense and domestic cuts exceeding $200 billion over the next two years and to extend unemployment benefits. Republicans complained that in effect, Democrats would pay for that spending with the tax boosts on the wealthy.

"We can't use tax increases on anyone to pay for more spending," said Sen. Kay Bailey Hutchison, R-Texas.

_____

Eds: Associated Press writers David Espo, Andrew Taylor, Alan Fram and Josh Lederman contributed to this report.

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Obama boasts support of American people in ‘fiscal cliff’ fight

As Congress races to pass legislation before the Jan. 1 "fiscal cliff" deadline, President Barack Obama in an interview which aired Sunday publicly touted the support of the American people for the plan he offered to Republicans.

"We have put forward not only a sensible deal, but one that has the support of the majority of the American people including close to half of Republicans," the president told NBC "Meet the Press" host David Gregory in a taped interview.

The president said the American people support raising taxes on the wealthiest earners-- something the Republicans have staunchly opposed as a means to generate revenue and reduce the nation's deficit.

"At a certain point, if folks can’t say 'yes' to good offers, than I also have an obligation to the American people to make sure that the entire burden of deficit reduction doesn't fall on seniors who are relying on Medicare... families who rely on Medicaid to take care of a disabled child" and middle class families, he said. "There is a basic fairness that is at stake in this whole thing."

Obama held firm to his demands Sunday, blaming congressional Republicans for the failure to reach a deal to avoid the automatic spending cuts and tax increases set to go into effect Jan. 1.

The president conceded that markets will be adversely affected if America "goes over" the fiscal cliff, as Gregory phrased it.

"Businesses and investors are going to feel more negative about the economy," the president said, adding that employment will also "tick down."  "But what’s been holding us back has been the dysfunction here in Washington."

Obama took no responsibility for that dysfunction in the interview, and repeated his argument that Republican leaders have difficulty "saying yes" to the president and are rejecting the desires of the American public.

Republicans say their "biggest priority" is the nation's debt, the president said, "but the way they’re behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected."

The president announced Friday that he had tasked Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell this weekend with producing a deal to avoid the fiscal cliff before the Jan. 1 deadline.

The president remained optimistic that in the short term, congressional leaders can pass legislation to prevent tax increases on the middle class ahead of the Jan. 1 deadline. "That's something we all can agree on," he said.

Passing legislation to protect middle class tax rates will "take a big bite out of the fiscal cliff," the president said, leaving Congress to deal with the remainder of deficit reduction, spending and tax issues in the future.

Pivoting to his future final term in office, the president reconfirmed his commitment to gun control and other legislative action to prevent shooting tragedies such as the Sandy Hook Elementary School shooting in Newtown, Conn.

"I’d like to get it done in the first year," he said.

When asked, Obama expressed doubt about the National Rifle Association's proposal to place armed security in every school in America to protect students and teachers.

"I’m not going to pre-judge recommendations given to me," Obama said. "But I'm skeptical that the only answer is putting more guns in schools."

The president also conceded that the circumstances surrounding the Sept. 11, 2012 attack on the U.S. consulate in Benghazi, Libya weren't ideal.

“There was just some sloppiness" in how we secure some embassies, he said and pledged to follow recommendations offered by the review board.

"We're not going to pretend that this was not a problem. This was a huge problem. And we're going to implement every single recommendation that's been put forward," he said.

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Obama boasts support of American people in ‘fiscal cliff’ fight

As Congress races to pass legislation before the Jan. 1 "fiscal cliff" deadline, President Barack Obama in an interview which aired Sunday publicly touted the support of the American people for the plan he offered to Republicans.

"We have put forward not only a sensible deal, but one that has the support of the majority of the American people including close to half of Republicans," the president told NBC "Meet the Press" host David Gregory in a taped interview.

The president said the American people support raising taxes on the wealthiest earners-- something the Republicans have staunchly opposed as a means to generate revenue and reduce the nation's deficit.

"At a certain point, if folks can’t say 'yes' to good offers, than I also have an obligation to the American people to make sure that the entire burden of deficit reduction doesn't fall on seniors who are relying on Medicare... families who rely on Medicaid to take care of a disabled child" and middle class families, he said. "There is a basic fairness that is at stake in this whole thing."

Obama held firm to his demands Sunday, blaming congressional Republicans for the failure to reach a deal to avoid the automatic spending cuts and tax increases set to go into effect Jan. 1.

The president conceded that markets will be adversely affected if America "goes over" the fiscal cliff, as Gregory phrased it.

"Businesses and investors are going to feel more negative about the economy," the president said, adding that employment will also "tick down."  "But what’s been holding us back has been the dysfunction here in Washington."

Obama took no responsibility for that dysfunction in the interview, and repeated his argument that Republican leaders have difficulty "saying yes" to the president and are rejecting the desires of the American public.

Republicans say their "biggest priority" is the nation's debt, the president said, "but the way they’re behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected."

The president announced Friday that he had tasked Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell this weekend with producing a deal to avoid the fiscal cliff before the Jan. 1 deadline.

The president remained optimistic that in the short term, congressional leaders can pass legislation to prevent tax increases on the middle class ahead of the Jan. 1 deadline. "That's something we all can agree on," he said.

Passing legislation to protect middle class tax rates will "take a big bite out of the fiscal cliff," the president said, leaving Congress to deal with the remainder of deficit reduction, spending and tax issues in the future.

Pivoting to his future final term in office, the president reconfirmed his commitment to gun control and other legislative action to prevent shooting tragedies such as the Sandy Hook Elementary School shooting in Newtown, Conn.

"I’d like to get it done in the first year," he said.

When asked, Obama expressed doubt about the National Rifle Association's proposal to place armed security in every school in America to protect students and teachers.

"I’m not going to pre-judge recommendations given to me," Obama said. "But I'm skeptical that the only answer is putting more guns in schools."

The president also conceded that the circumstances surrounding the Sept. 11, 2012 attack on the U.S. consulate in Benghazi, Libya weren't ideal.

“There was just some sloppiness" in how we secure some embassies, he said and pledged to follow recommendations offered by the review board.

"We're not going to pretend that this was not a problem. This was a huge problem. And we're going to implement every single recommendation that's been put forward," he said.

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Make-or-break moment for fiscal cliff talks

WASHINGTON (AP) — President Barack Obama was preparing to present a limited fiscal proposal to congressional leaders at a White House meeting Friday, a make-or-break moment for negotiations to avoid across-the-board tax increases and deep spending cuts at the first of the year.

Lawmakers and White House officials held out a slim hope for a deal before the new year, but it remained unclear whether congressional passage of legislation palatable to both sides was even possible.

The Friday afternoon meeting among congressional leaders and the president — their first since Nov. 16 — was likely to center on which income thresholds would face higher tax rates, extending unemployment insurance, and preventing a cut in Medicare payments to doctors, among other issues.

For Obama, the eleventh-hour scramble represented a test of how he would balance strength derived from his re-election against an avowed commitment to compromise in the face of divided government. Despite early talk of a grand bargain between Obama and House Speaker John Boehner that would reduce deficits by more than $2 trillion, the expectations were now far less ambitious.

Although there were no guarantees of a deal, Republicans and Democrats said privately that any agreement would likely include an extension of middle-class tax cuts with increased rates at upper incomes, an Obama priority that was central to his re-election campaign.

A key question was whether Obama would agree to abandon his insistence during the campaign on raising taxes on households earning more than $250,000 a year and instead accept a $400,000 threshold like the one he offered in negotiations with Boehner. Another was whether Republicans would seek a higher income threshold.

The deal would also likely put off the scheduled spending cuts. Such a year-end bill could also include an extension of expiring unemployment benefits, a reprieve for doctors who face a cut in Medicare payments and possibly a short-term measure to prevent dairy prices from soaring, officials said.

If a deal was not possible, it would become evident at Friday's White House meeting, and Obama and the leaders would leave a resolution for the next Congress to address in January.

Such a delay could unnerve the stock market, which edged lower for a fifth day Friday amid worries that lawmakers would fail to reach a budget deal. Economists say that if the tax increases are allowed to hit most Americans and if the spending cuts aren't scaled back, the recovering but fragile economy could sustain a traumatizing shock.

Obama called for the meeting as top lawmakers on Thursday alternately cast blame on each other while portraying themselves as open to a reasonable last-minute bargain.

Senate Democratic Leader Harry Reid all but conceded that any effort at this late date was a long shot. "I don't know timewise how it can happen now," he said.

The No. 2 Senate GOP leader, Jon Kyl of Arizona, said it is "pretty unlikely" that Senate Republicans would agree to legislation averting the fiscal cliff if it wouldn't pass muster in the House.

"If you know the House isn't going to do something, why go through the charade?" he told reporters. "That becomes political gamesmanship."

Obama and Reid, D-Nev., would have to propose a package that Senate Republican Leader Mitch McConnell would agree not to block with procedural steps that require 60 votes to overcome.

Sen. Chuck Schumer of New York said he still thinks a deal could be struck.

The Democrat told NBC's "Today" show Friday that he believes the "odds are better than people think."

Schumer said he based his optimism on indications that McConnell has gotten "actively engaged" in the talks.

Appearing on the same show, Republican Sen. John Thune noted the meeting scheduled later Friday at the White House, saying "it's encouraging that people are talking."

But Sen. Bob Corker, R-Tenn., predicted that "the worst-case scenario" could emerge from Friday's talks.

"We will kick the can down the road," he said on "CBS This Morning."

"We'll do some small deal and we'll create another fiscal cliff to deal with the fiscal cliff," he said. Corker complained that there has been "a total lack of courage, lack of leadership," in Washington.

If a deal were to pass the Senate, Boehner would have to agree to take it to the floor in the Republican-controlled House.

Boehner discussed the fiscal cliff with Republican members in a conference call Thursday and advised them that the House would convene Sunday evening. Rep. Tom Cole, R-Okla., an ally of the speaker, said Boehner told the lawmakers that "he didn't really intend to put on the floor something that would pass with all the Democratic votes and few of the Republican votes."

But Cole did not rule out Republican support for some increase in tax rates, noting that Boehner had amassed about 200 Republican votes for a plan last week to raise rates on Americans earning $1 million or more. Boehner ultimately did not put the plan to a House floor vote in the face of opposition from Republican conservatives and a unified Democratic caucus.

"The ultimate question is whether the Republican leaders in the House and Senate are going to push us over the cliff by blocking plans to extend tax cuts for the middle class," White House communications director Dan Pfeiffer said. "Ironically, in order to protect tax breaks for millionaires, they will be responsible for the largest tax increase in history."

Boehner, McConnell, Reid and House Democratic Leader Nancy Pelosi are all scheduled to attend Friday's White House meeting with Obama. Vice President Joe Biden will also participate in the meeting, the White House said.

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Associated Press writers Alan Fram, Charles Babington and David Espo contributed to this report.

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Follow Jim Kuhnhenn on Twitter: http://twitter.com/jkuhnhenn

Read More..

Make-or-break moment for fiscal cliff talks

WASHINGTON (AP) — President Barack Obama was preparing to present a limited fiscal proposal to congressional leaders at a White House meeting Friday, a make-or-break moment for negotiations to avoid across-the-board tax increases and deep spending cuts at the first of the year.

Lawmakers and White House officials held out a slim hope for a deal before the new year, but it remained unclear whether congressional passage of legislation palatable to both sides was even possible.

The Friday afternoon meeting among congressional leaders and the president — their first since Nov. 16 — was likely to center on which income thresholds would face higher tax rates, extending unemployment insurance, and preventing a cut in Medicare payments to doctors, among other issues.

For Obama, the eleventh-hour scramble represented a test of how he would balance strength derived from his re-election against an avowed commitment to compromise in the face of divided government. Despite early talk of a grand bargain between Obama and House Speaker John Boehner that would reduce deficits by more than $2 trillion, the expectations were now far less ambitious.

Although there were no guarantees of a deal, Republicans and Democrats said privately that any agreement would likely include an extension of middle-class tax cuts with increased rates at upper incomes, an Obama priority that was central to his re-election campaign.

A key question was whether Obama would agree to abandon his insistence during the campaign on raising taxes on households earning more than $250,000 a year and instead accept a $400,000 threshold like the one he offered in negotiations with Boehner. Another was whether Republicans would seek a higher income threshold.

The deal would also likely put off the scheduled spending cuts. Such a year-end bill could also include an extension of expiring unemployment benefits, a reprieve for doctors who face a cut in Medicare payments and possibly a short-term measure to prevent dairy prices from soaring, officials said.

If a deal was not possible, it would become evident at Friday's White House meeting, and Obama and the leaders would leave a resolution for the next Congress to address in January.

Such a delay could unnerve the stock market, which edged lower for a fifth day Friday amid worries that lawmakers would fail to reach a budget deal. Economists say that if the tax increases are allowed to hit most Americans and if the spending cuts aren't scaled back, the recovering but fragile economy could sustain a traumatizing shock.

Obama called for the meeting as top lawmakers on Thursday alternately cast blame on each other while portraying themselves as open to a reasonable last-minute bargain.

Senate Democratic Leader Harry Reid all but conceded that any effort at this late date was a long shot. "I don't know timewise how it can happen now," he said.

The No. 2 Senate GOP leader, Jon Kyl of Arizona, said it is "pretty unlikely" that Senate Republicans would agree to legislation averting the fiscal cliff if it wouldn't pass muster in the House.

"If you know the House isn't going to do something, why go through the charade?" he told reporters. "That becomes political gamesmanship."

Obama and Reid, D-Nev., would have to propose a package that Senate Republican Leader Mitch McConnell would agree not to block with procedural steps that require 60 votes to overcome.

Sen. Chuck Schumer of New York said he still thinks a deal could be struck.

The Democrat told NBC's "Today" show Friday that he believes the "odds are better than people think."

Schumer said he based his optimism on indications that McConnell has gotten "actively engaged" in the talks.

Appearing on the same show, Republican Sen. John Thune noted the meeting scheduled later Friday at the White House, saying "it's encouraging that people are talking."

But Sen. Bob Corker, R-Tenn., predicted that "the worst-case scenario" could emerge from Friday's talks.

"We will kick the can down the road," he said on "CBS This Morning."

"We'll do some small deal and we'll create another fiscal cliff to deal with the fiscal cliff," he said. Corker complained that there has been "a total lack of courage, lack of leadership," in Washington.

If a deal were to pass the Senate, Boehner would have to agree to take it to the floor in the Republican-controlled House.

Boehner discussed the fiscal cliff with Republican members in a conference call Thursday and advised them that the House would convene Sunday evening. Rep. Tom Cole, R-Okla., an ally of the speaker, said Boehner told the lawmakers that "he didn't really intend to put on the floor something that would pass with all the Democratic votes and few of the Republican votes."

But Cole did not rule out Republican support for some increase in tax rates, noting that Boehner had amassed about 200 Republican votes for a plan last week to raise rates on Americans earning $1 million or more. Boehner ultimately did not put the plan to a House floor vote in the face of opposition from Republican conservatives and a unified Democratic caucus.

"The ultimate question is whether the Republican leaders in the House and Senate are going to push us over the cliff by blocking plans to extend tax cuts for the middle class," White House communications director Dan Pfeiffer said. "Ironically, in order to protect tax breaks for millionaires, they will be responsible for the largest tax increase in history."

Boehner, McConnell, Reid and House Democratic Leader Nancy Pelosi are all scheduled to attend Friday's White House meeting with Obama. Vice President Joe Biden will also participate in the meeting, the White House said.

___

Associated Press writers Alan Fram, Charles Babington and David Espo contributed to this report.

___

Follow Jim Kuhnhenn on Twitter: http://twitter.com/jkuhnhenn

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Reid: U.S. is poised to go off fiscal cliff

Senate Majority Leader Harry Reid (R) (D-NV) hugs Speaker of the House John Boehner as Senate Minority Leader Mitch …With a deal to avert the so-called "fiscal cliff" nowhere in sight, Senate Majority Leader Harry Reid on Thursday predicted a compromise would not be reached in time to avert the tax increases and automatic spending cuts set to be triggered on January 1. Reid also criticized Republican House Speaker John Boehner in unusually personal terms, accusing him of running the House as a “dictatorship” and blasting him for letting lawmakers out for vacation.

Boehner will be to blame “if we go over the cliff, and it looks like that’s where we’re headed,” Reid insisted as the Senate returned to work for a post-Christmas session focused on disaster relief for Sandy victims and renewing key government surveillance powers.

Reid's speech on the Senate floor came shortly before President Barack Obama returned to Washington from Hawaii to resume discussions of how to avoid the fiscal cliff. White House Spokesman Dan Pfeiffer said Obama had spoken to Reid, Boehner, House Democratic Leader Nancy Pelosi and Senate Republican Leader Mitch McConnell Wednesday evening.

Reid, a Nevada Democrat, repeatedly pressed Boehner to have the House take up a Senate-passed bill extending income tax cuts on income under $250,000, calling that measure the only “viable escape route.” House Republicans have thus far balked at raising taxes at all.

“The Speaker just has a few days left to change his mind,” Reid said. “But I have to be very honest…I don’t know, time-wise, how it can happen now.”

"Speaker Boehner should call members of the House back today," Reid said, adding that the Ohio Republican "seems to care more about keeping his speakership" than pushing his party to accept a deal that would avert a tax increase for all but the highest income taxpayers. Democrats have repeatedly leveled that charge at Boehner, whose reelection on January 3 is not seriously in doubt despite ever-louder conservative grumbling.

Reid also accused Boehner of operating a "dictatorship" that had shut out House Democrats and all but the most conservative voices in the GOP, saying that the Senate-passed bill would pass with mostly Democratic votes but some Republican support as well.

“Nothing can move forward in regards to our budget crisis unless Speaker Boehner and Leader McConnell are willing to participate in coming up with a bipartisan plan,” Reid warned. “Speaker Boehner is unwilling to negotiate, we’ve not heard a word from Leader McConnell, nothing is happening. Democrats can’t put together a plan on their own,” he said.

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Reid: U.S. is poised to go off fiscal cliff

Senate Majority Leader Harry Reid (R) (D-NV) hugs Speaker of the House John Boehner as Senate Minority Leader Mitch …With a deal to avert the so-called "fiscal cliff" nowhere in sight, Senate Majority Leader Harry Reid on Thursday predicted a compromise would not be reached in time to avert the tax increases and automatic spending cuts set to be triggered on January 1. Reid also criticized Republican House Speaker John Boehner in unusually personal terms, accusing him of running the House as a “dictatorship” and blasting him for letting lawmakers out for vacation.

Boehner will be to blame “if we go over the cliff, and it looks like that’s where we’re headed,” Reid insisted as the Senate returned to work for a post-Christmas session focused on disaster relief for Sandy victims and renewing key government surveillance powers.

Reid's speech on the Senate floor came shortly before President Barack Obama returned to Washington from Hawaii to resume discussions of how to avoid the fiscal cliff. White House Spokesman Dan Pfeiffer said Obama had spoken to Reid, Boehner, House Democratic Leader Nancy Pelosi and Senate Republican Leader Mitch McConnell Wednesday evening.

Reid, a Nevada Democrat, repeatedly pressed Boehner to have the House take up a Senate-passed bill extending income tax cuts on income under $250,000, calling that measure the only “viable escape route.” House Republicans have thus far balked at raising taxes at all.

“The Speaker just has a few days left to change his mind,” Reid said. “But I have to be very honest…I don’t know, time-wise, how it can happen now.”

"Speaker Boehner should call members of the House back today," Reid said, adding that the Ohio Republican "seems to care more about keeping his speakership" than pushing his party to accept a deal that would avert a tax increase for all but the highest income taxpayers. Democrats have repeatedly leveled that charge at Boehner, whose reelection on January 3 is not seriously in doubt despite ever-louder conservative grumbling.

Reid also accused Boehner of operating a "dictatorship" that had shut out House Democrats and all but the most conservative voices in the GOP, saying that the Senate-passed bill would pass with mostly Democratic votes but some Republican support as well.

“Nothing can move forward in regards to our budget crisis unless Speaker Boehner and Leader McConnell are willing to participate in coming up with a bipartisan plan,” Reid warned. “Speaker Boehner is unwilling to negotiate, we’ve not heard a word from Leader McConnell, nothing is happening. Democrats can’t put together a plan on their own,” he said.

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As winter storm bears down on Midwest, death toll climbs

MOBILE, Ala. (AP) -- A powerful storm system that erupted Christmas Day with Gulf Coast tornadoes and snow in the nation's midsection headed for the Northeast on Wednesday, spreading blizzard conditions that slowed holiday travel.

The death toll rose to six with car accidents on snow and sleet-slickened highways in Arkansas and Oklahoma.

Post-Christmas travelers braced for flight delays and a raft of weather warnings for drivers, a day after rare winter twisters damaged buildings in Louisiana, Mississippi and Alabama.

Snow blew across southern Illinois and southern Indiana early Wednesday as the storm tracked up the Ohio River valley toward the Eastern seaboard and New England.

There were whiteout conditions in parts of southwestern Indiana, where 6 inches or more of snow had fallen by midmorning around Evansville. State police reported dozens of vehicles stuck after not being able to get up a hill on a central Indiana highway, while some roads around Evansville were impassable with wind gusts around 30 mph.

A blizzard warning was in effect for much of the state's southern two-thirds and more than a dozen counties issued travel watches asking residents to make only essential driving trips.

Indianapolis had 7 inches on the ground by 10 a.m. after receiving as much as 3 inches of snow in a single hour, said John Kwiatkowski, a meteorologist with the National Weather Service in Indianapolis. He said the storm's winds were just high enough to classify the storm as a blizzard, making it one of the strongest snowstorms in years to strike central and southern Indiana.

"The way I've been describing it is as a low-end blizzard, but that's sort of like saying a small Tyrannosaurus rex. Just to become a blizzard is quite an accomplishment. And it's sure a heck of a lot more than we've seen," he said.

In Arkansas, the storm left more than 189,000 customers without electricity Wednesday, utility Entergy Arkansas said.

Severe thunderstorms were forecast for the Carolinas while a line of blizzard and winter storm warnings stretched from Arkansas up the Ohio River to New York and on to Maine.

State police reported scores of accidents on snow-covered highways in central and western Maryland, where forecasters predicted up to 5 inches of snow in most counties west of the Baltimore-Washington area, followed by freezing rain.

Thirty-four tornadoes were reported in Texas, Louisiana, Mississippi and Alabama during the outbreak Tuesday, the National Weather Service said.

Rick Cauley's family was hosting relatives for Christmas when tornado sirens went off in Mobile. Not taking any chances, he and his wife, Ashley, hustled everyone down the block to take shelter at the athletic field house at Mobile's Murphy High School in Mobile.

It turns out, that wasn't the place to head.

"As luck would have it, that's where the tornado hit," Cauley said. "The pressure dropped and the ears started popping and it got crazy for a second." They were all fine, though the school was damaged, as were a church and several homes, but officials say no one was seriously injured.

Camera footage captured the approach of the large funnel cloud.

Mobile was the biggest city hit by numerous twisters. Along with brutal, straight-line winds, the storms knocked down countless trees, blew the roofs off homes and left many Christmas celebrations in the dark. Torrential rains drenched the region and several places saw flash flooding.

More than 900 flights around the U.S. were canceled as of Wednesday midday, according to the flight tracker FlightAware.com. The cancelations were mostly spread around airports that had been or soon would be in the path of the storm.

Holiday travelers in the nation's much colder midsection battled treacherous driving conditions from freezing rain and blizzard conditions from the same fast-moving storms. In Arkansas, highway department officials said the state was fortunate the snowstorm hit on Christmas Day when many travelers were already at their destinations.

Two passengers in a car on a sleet-slickened Arkansas highway died Wednesday when the vehicle crossed the center line and struck an SUV head-on. In Oklahoma, the Highway Patrol said a 76-year-old Wisconsin woman died Tuesday when the car she was riding in was hit head-on by a pickup truck on Interstate 44.

The Oklahoma Highway Patrol had earlier reported that a 28-year-old woman was killed in another crash Tuesday on a snowy highway. The storm's winds were blamed Tuesday for toppling a tree onto a pickup truck in Texas, killing the driver, and another tree onto a house in Louisiana, killing a man there.

Trees fell on homes and across roadways in several communities in southern Mississippi and Louisiana. Mississippi Gov. Phil Bryant declared a state of emergency, saying eight counties reported damages and some injuries.

It included McNeill, where a likely tornado damaged a dozen homes and sent eight people to the hospital, none with life-threatening injuries, said Pearl River County emergency management agency director Danny Manley.

The snowstorm that caused numerous accidents pushed out of Oklahoma late Tuesday, carrying with it blizzard warnings for parts of northeast Arkansas, where 10 inches of snow was forecast. Freezing rain clung to trees and utility lines in Arkansas and winds gusts up to 30 mph whipped them around, causing about 71,000 customers to lose electricity for a time.

Christmas lights also were knocked out with more than 100,000 customers without power for at least a time in Texas, Arkansas, Oklahoma, Mississippi, Louisiana and Alabama.

Blizzard conditions were possible for parts of Illinois, Indiana and Kentucky up to Cleveland with predictions of several inches to a foot of snow. By the end of the week, that snow was expected to move into the Northeast with again up to a foot predicted

Jason Gerth said the Mobile tornado passed by in a few moments and from his porch, he saw about a half-dozen green flashes in the distance as transformers blew. His home was spared.

"It missed us by 100 feet and we have no damage," Gerth said.

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As winter storm bears down on Midwest, death toll climbs

MOBILE, Ala. (AP) -- A powerful storm system that erupted Christmas Day with Gulf Coast tornadoes and snow in the nation's midsection headed for the Northeast on Wednesday, spreading blizzard conditions that slowed holiday travel.

The death toll rose to six with car accidents on snow and sleet-slickened highways in Arkansas and Oklahoma.

Post-Christmas travelers braced for flight delays and a raft of weather warnings for drivers, a day after rare winter twisters damaged buildings in Louisiana, Mississippi and Alabama.

Snow blew across southern Illinois and southern Indiana early Wednesday as the storm tracked up the Ohio River valley toward the Eastern seaboard and New England.

There were whiteout conditions in parts of southwestern Indiana, where 6 inches or more of snow had fallen by midmorning around Evansville. State police reported dozens of vehicles stuck after not being able to get up a hill on a central Indiana highway, while some roads around Evansville were impassable with wind gusts around 30 mph.

A blizzard warning was in effect for much of the state's southern two-thirds and more than a dozen counties issued travel watches asking residents to make only essential driving trips.

Indianapolis had 7 inches on the ground by 10 a.m. after receiving as much as 3 inches of snow in a single hour, said John Kwiatkowski, a meteorologist with the National Weather Service in Indianapolis. He said the storm's winds were just high enough to classify the storm as a blizzard, making it one of the strongest snowstorms in years to strike central and southern Indiana.

"The way I've been describing it is as a low-end blizzard, but that's sort of like saying a small Tyrannosaurus rex. Just to become a blizzard is quite an accomplishment. And it's sure a heck of a lot more than we've seen," he said.

In Arkansas, the storm left more than 189,000 customers without electricity Wednesday, utility Entergy Arkansas said.

Severe thunderstorms were forecast for the Carolinas while a line of blizzard and winter storm warnings stretched from Arkansas up the Ohio River to New York and on to Maine.

State police reported scores of accidents on snow-covered highways in central and western Maryland, where forecasters predicted up to 5 inches of snow in most counties west of the Baltimore-Washington area, followed by freezing rain.

Thirty-four tornadoes were reported in Texas, Louisiana, Mississippi and Alabama during the outbreak Tuesday, the National Weather Service said.

Rick Cauley's family was hosting relatives for Christmas when tornado sirens went off in Mobile. Not taking any chances, he and his wife, Ashley, hustled everyone down the block to take shelter at the athletic field house at Mobile's Murphy High School in Mobile.

It turns out, that wasn't the place to head.

"As luck would have it, that's where the tornado hit," Cauley said. "The pressure dropped and the ears started popping and it got crazy for a second." They were all fine, though the school was damaged, as were a church and several homes, but officials say no one was seriously injured.

Camera footage captured the approach of the large funnel cloud.

Mobile was the biggest city hit by numerous twisters. Along with brutal, straight-line winds, the storms knocked down countless trees, blew the roofs off homes and left many Christmas celebrations in the dark. Torrential rains drenched the region and several places saw flash flooding.

More than 900 flights around the U.S. were canceled as of Wednesday midday, according to the flight tracker FlightAware.com. The cancelations were mostly spread around airports that had been or soon would be in the path of the storm.

Holiday travelers in the nation's much colder midsection battled treacherous driving conditions from freezing rain and blizzard conditions from the same fast-moving storms. In Arkansas, highway department officials said the state was fortunate the snowstorm hit on Christmas Day when many travelers were already at their destinations.

Two passengers in a car on a sleet-slickened Arkansas highway died Wednesday when the vehicle crossed the center line and struck an SUV head-on. In Oklahoma, the Highway Patrol said a 76-year-old Wisconsin woman died Tuesday when the car she was riding in was hit head-on by a pickup truck on Interstate 44.

The Oklahoma Highway Patrol had earlier reported that a 28-year-old woman was killed in another crash Tuesday on a snowy highway. The storm's winds were blamed Tuesday for toppling a tree onto a pickup truck in Texas, killing the driver, and another tree onto a house in Louisiana, killing a man there.

Trees fell on homes and across roadways in several communities in southern Mississippi and Louisiana. Mississippi Gov. Phil Bryant declared a state of emergency, saying eight counties reported damages and some injuries.

It included McNeill, where a likely tornado damaged a dozen homes and sent eight people to the hospital, none with life-threatening injuries, said Pearl River County emergency management agency director Danny Manley.

The snowstorm that caused numerous accidents pushed out of Oklahoma late Tuesday, carrying with it blizzard warnings for parts of northeast Arkansas, where 10 inches of snow was forecast. Freezing rain clung to trees and utility lines in Arkansas and winds gusts up to 30 mph whipped them around, causing about 71,000 customers to lose electricity for a time.

Christmas lights also were knocked out with more than 100,000 customers without power for at least a time in Texas, Arkansas, Oklahoma, Mississippi, Louisiana and Alabama.

Blizzard conditions were possible for parts of Illinois, Indiana and Kentucky up to Cleveland with predictions of several inches to a foot of snow. By the end of the week, that snow was expected to move into the Northeast with again up to a foot predicted

Jason Gerth said the Mobile tornado passed by in a few moments and from his porch, he saw about a half-dozen green flashes in the distance as transformers blew. His home was spared.

"It missed us by 100 feet and we have no damage," Gerth said.

Read More..

Egypt constitution passes with 63.8 percent

CAIRO (AP) — Egypt's disputed Islamist-backed constitution passed with a 63.8 percent "yes" in a referendum, the election commission announced Tuesday, rejecting opposition allegations of significant vote fraud.

Turnout of 32.9 percent of Egypt's nearly 52 million registered voters was quite a bit lower than most other elections since the uprising nearly two years ago that ousted authoritarian leader Hosni Mubarak.

Mohammed Badie, leader of the Muslim Brotherhood, offered congratulations on the passing of the constitution and said Egyptians continue to "teach" the world.

"Let's all begin to build the renaissance of our country with free will, good intentions and strong determination, men, women, Muslims and Christians," Badie said on his Twitter account. The Brotherhood was the main group that backed the charter.

This is the first constitution since Mubarak's ouster. The opposition had campaigned against it with massive street protests that sometimes turned deadly, arguing that it will usher in Islamic rule in Egypt and restrict freedoms. It has vowed to challenge the referendum results and fight for a share of power in the upcoming parliamentary vote expected within two months.

Judge Samir Abou el-Maati, the head of the electoral commission, denied allegations that judicial supervision was lacking in the vote. He said the total number of people who voted against the constitution was 6.06 million out of 16.7 million valid votes, or about 36.2 percent.

Opposition spokesman Khaled Dawoud said the judge didn't address complaints about overcrowding of polling stations. The opposition says the overcrowding was due to a boycott by some judges who traditionally oversee elections and that was a major factor in the low turnout.

He also said Abou el-Maati did not address violations such as backers of the constitution instructing voters to cast a "yes" ballot within the polling stations.

"We still believe because of the low turnout, this is not the constitution the Egyptians people had aspired for," Dawoud said. "This is not a constitution that will last for a long time."

Dawoud said the National Salvation Front, the main opposition group that brings together liberal, leftists parties and groups, will continue to fight the constitution through preparing for the parliamentary elections. In the parliament, the group will work to amend the constitution, which he said restricts freedoms and undermines social and economic rights of Egyptians.

Abou el-Maati said results were thrown out from polling stations where violations, such as closing early or improper supervision.

He also denied that Christians were preventing from casting their ballots at some stations, a claim widely reported during the two stages of voting on Dec. 15 and Dec. 22.

The official results closely mirror unofficial results announced by the Muslim Brotherhood, which said 64 percent voted "yes."

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U.S. gun support runs far deeper than politics

BRYAN, Texas (AP) — Adam Lanza's mother was among the tens of millions of U.S. gun owners. She legally had a .223-caliber Bushmaster rifle and a pair of handguns, which her 20-year-old son used to kill 20 children and six adults in 10 minutes inside a Connecticut school.

In the raw aftermath of the second-worst school shooting in U.S. history, countless gun enthusiasts much like Lanza's mother complicate a gun-owning narrative that critics, sometimes simplistically, put at the feet of a powerful lobby and caricatured zealots. More civilians are armed in the U.S. than anywhere else in the world, with Yemen coming in a distant second, according to the independent Small Arms Survey in Geneva.

Take Blake Smith, a mechanical engineer who lives near Houston and uses an AR-15 style rifle in shooting competitions.

Texas Gov. Rick Perry, who famously claimed to have shot a coyote while jogging with a pistol holstered to his running shorts, has signed a half-dozen certificates applauding Smith as one of the state's top marksmen. "But I won't call myself a fanatic," said Smith, 54, whose father first let him handle a gun around age 6.

"I sit at a desk all day. And when I get out to the range, I don't hear any gunfire going on," said Smith, who likens his emotional detachment to his guns to the way he would feel about a car or any other machine. "I'm so intent on my sight alignment, my trigger pull, my position. I don't worry about anything. I don't think about anything. It's relieving. It's therapeutic. Everybody has to have their Zen."

Since the school shooting, President Barack Obama has asked for proposals on reducing gun violence that he can take to Congress in January, and he called on the National Rifle Association, the country's most powerful gun-rights organization, to join the effort.

Gun laws in the U.S. vary from state to state — for instance, as of last month it is now legal to carry a gun in public view in Oklahoma — and are defended by the firearms industry and the NRA. On Friday, the NRA broke a weeklong silence since the Connecticut massacre by calling for armed volunteers at public schools, prompting criticism from many quarters.

But in the U.S., gun-control advocates are up against a sizeable bloc of mainstream Americans for whom guns are central to their lives, whether for patriotism or personal sense of safety, or simply to occupy their spare time.

Dave Burdett, who owns an outdoors and adventure shop across the street from the sprawling Texas A&M University campus in College Station, says his affinity for guns is rooted in history, not sport.

"It isn't about hunting. Everyone says, 'Well, I can understand having a sporting rifle, but not an AR-15," Burdett said. "But wait a second — the idea of the Second Amendment was to preserve and protect the rights of individuals to have those guns."

"Remember that the (American) revolution was fought by citizen soldiers," he added. "To this day, that's one of the cornerstones of our military defense. We have an all-volunteer military."

An NRA poster picturing a bald eagle is taped to the glass door of his office. He started as a lawyer, dabbling in everything from commercial land to trying to block the deportation of an illegal immigrant, before seguing into selling guns.

When his daughter graduated with a business degree from Texas A&M, Burdett figured she would move somewhere cosmopolitan like Dallas and work in a downtown high-rise. She instead went to work in the store, built her own AR-15 out of spare parts and used it to join what her father described as the "let's-go-pig-hunting-tonight circuit." Those feral hog hunts often include high-powered rifles as well as night-vision goggles.

"The other thing is, shooting is fun. It really is," Burdett said.

Many think so. Smith, the mechanical engineer, said that includes teenage girls. At national shooting competitions, Smith has run into a group of girls around 13 or 14 years old who call themselves "The Pink Ladies," firing high-powered rifles at targets. He also recalls meeting Australians, whose country bans guns, who told him, "I love to shoot, so I'm going to the U.S."

Others add safety to the list of reasons for allowing people easy access to guns.

"To me it's obvious — the more people that have guns, or at least in their homes, it's more of a criminal deterrent," said Bill Moos, a local taxidermist in the small town of Bryan, near College Station. Moos, who owns more than 30 guns, can be spotted any given morning, prowling his roughly 40-acre (16-hectare) ranch with his dogs and a shotgun slung over his shoulder.

He tells a story of standing in the post office one day and hearing about a suspect driving around, wanted by the police. He thought of the woman behind the counter near him.

"My first thought was, 'How are you going to protect yourself?' Does she have a gun, in case someone tries to rob her?" he said. "It's the first thing you think of: How are you going to defend yourself?"

On the television in the corner of his workshop, above a stuffed gray fox and a clutch of animal jawbones dangling on a ring like a set of keys, Obama is holding his first press conference since the Connecticut tragedy. He's promising to send Congress legislation tightening gun laws and urging them to reinstate a ban on military-style assault weapons, like the one used by Lanza.

Moos turns down the volume.

"I guess it's something you get used to," he said of guns. "That you grow up around, and you enjoy them, and you accept the fact that you can own. It's a privilege. It's a whole different way of life. I guess I don't need three pick-ups and a Corvette. But I have them."

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Follow Paul J. Weber on Twitter: www.twitter.com/pauljweber

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Firefighters ambushed by gunman while responding to house fire

Residence near shooting and fire in Webster evacuated. (Max Schulte/Rochester Democrat&Chronicle via Twitter)

A man with a criminal history shot and killed two West Webster, N.Y. firefighters and seriously injured two others as they responded to a fire at his home in Webster, N.Y., police say.

William Spangler, 62, apparently started a 5:35 a.m. fire at his home on Lake Road  and then waited with an armament for first responders to arrive to the scene, Webster Police Chief Gerald Pickering said at an afternoon news conference.

“He was shooting from high ground or a berm," Pickering said. "He was barricaded with weapons to shoot first responders."

Spangler shot and killed himself at the scene, Pickering said.

Spangler was convicted in 1981 in the death of his grandmother a year earlier. He served time in prison and was released in 1998, Pickering said.

Local police had not noted any criminal activity in his recent past, Pickering said.

Pickering said they are looking into the apparent disappearance of Pickering's sister who is unaccounted for at this time.

Police and fire officials are continuing to gather evidence and will inspect the seven homes that were destroyed in the fire that spread to nearby houses in the small lakeside town located 10 miles east of Rochester.

The victims in the shooting are Mike Chiapperini, also a lieutenant and public information officer with the local police department, and Tomasz Kaczowka, Pickering said.

"These are volunteers who get up in the middle of the night to fight fires. They don't expect to be shot and killed," a tearful Pickering said at the press conference.

Chiapperini was described by Pickering as a lifelong firefighter who started with the department's explorer program and had about 20 years of experience. Kaczowka was a younger firefighter who was on the force for about two years and was also a 911 dispatcher, he said.

West Webster firefighters Joseph Hofsetter and Theodore Scardino were seriously injured and are at Strong Memorial Hospital with gunshot wounds, a hospital spokeswoman said.  Scardino  has  injuries to his chest and lungs. Hofsetter was injured in the pelvis, the spokeswoman said at a media briefing. Both are in guarded condition, she said.

An off-duty police officer from nearby Greece, N.Y., John Ritter was also injured by shrapnel during the shooting, Pickering said.

Pickering said that one of the firefighters who survived made his way across a bridge to safety. The other three did not make it across, Pickering said. Police arrived and rescued the other three firefighters, but two were fatally shot, Pickering said.

The morning scene was described as chaotic as police and firefighters dealt with an immense blaze as well as gunshots,  local news station WHAM-TV  reports.

“I’m not aware of anything like this happening in Webster, obviously not a firefighter being fired upon,” Webster Fire Marshal Rob Boutillier told the Democrat and Chronicle.  Pickering described Webster as resort lakeside community that is quiet and usually peaceful.

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Firefighters ambushed by gunman while responding to house fire

Residence near shooting and fire in Webster evacuated. (Max Schulte/Rochester Democrat&Chronicle via Twitter)

A gunman set a trap and shot and killed two firefighters responding to an early morning blaze in Webster, N.Y., police officials said. Two other firefighters were in serious condition.

"It does appear that it was a trap that was set for first responders, but the cause or reasons we don't have at this time," said Webster Police Chief Gerald Pickering as he described  the scene where shots were fired at West Webster firefighters when they arrived at 5:35 a.m. to battle the blaze along Lake Road.

The apparent gunman was found dead at the scene, but it’s unclear if he was killed by  a self-inflicted gunshot or if it was from a weapon from police officers who were chasing him.

The victims were Mike Chiapperini, also a lieutenant and public information officer with the local police department, and Tomasz Kaczowka, Pickering said.

Chiapperini was described by Pickering as lifelong firefighter who started with the department's explorer program and has about 20 years of experience. Kaczowka was a younger firefighter and was a 911 dispatcher, he said.

West Webster firefighters Joseph Hofsetter and Theodore Scardino were seriously injured and are at Strong Memorial Hospital with gunshot wounds, a hospital spokeswoman said.  Scardino had had injuries to chest and lungs. Hofsetter was injured in the pelvis, the spokeswoman said at a media briefing.

Pickering said that one of the injured firefighters made his way across a bridge to get to safety. The other three had to be rescued by police when they arrived at the scene.

"These are volunteers who get up in the middle of the night to fight fires, they don't expect to be shot and killed," a tearful Pickering said at the press conference.

No more details were released on the gunman. Pickering said he was found dead at the scene with the apparent weapons used in the shootings.

The morning scene was described as chaotic as police and firefighters dealt with an immense blaze as well as gunshots,  local news station WHAM-TV  reports. The station also reports the firefighters who are involved are volunteer firefighters.

“I’m not aware of anything like this happening in Webster, obviously not a firefighter being fired upon,” Webster Fire Marshal Rob Boutillier told the Democrat & Chronicle.  Pickering described Webster as resort lakeside community that is quiet and usually peaceful.

There at least four houses that have been damaged by the fire along Lake Road, WHAM-TV reported. Firefighters had to leave the scene and stop battling the blazes while police secured the scene. They are back to fighting the fires, the station reports. They continue to battle the blaze.

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