Analysis: For Senate leaders, a mission impossible from Obama

U.S. President Barack Obama makes a statement to reporters after meeting with congressional leaders at the White House in Washington December 28, 2012.

Credit: Reuters/Jonathan Ernst

By Richard Cowan

WASHINGTON | Sat Dec 29, 2012 1:02am EST

WASHINGTON (Reuters) - Following a Friday meeting with congressional leaders, an impatient and annoyed President Barack Obama said it was "mind boggling" that Congress has been unable to fix a "fiscal cliff" mess that everyone has known about for more than a year.

He then dispatched Senate Majority Leader Harry Reid, a Democrat, and Minority Leader Mitch McConnell, a Republican, on a mind-boggling mission: coming up with a bipartisan bill to break the "fiscal cliff" stalemate in the most partisan and gridlocked U.S. Congress of modern times - in about 48 hours.

Reid and McConnell, veteran tacticians known for their own long-running feud, have been down this road before.

Their last joint venture didn't turn out so well. It was the deal in August 2011 to avoid a U.S. default that set the stage for the current mess. That effort, like this one, stemmed from a grand deficit-reduction scheme that turned into a bust.

But they have never had the odds so stacked against them as they try to avert the "fiscal cliff" - sweeping tax increases set to begin on Tuesday and deep, automatic government spending cuts set to start on Wednesday, combined worth $600 billion.

The substantive differences are only part of the challenge. Other obstacles include concerns about who gets blamed for what and the legacy of distrust among members of Congress.

Any successful deal will require face-saving measures for Republicans and Democrats alike.

"Ordinary folks, they do their jobs, they meet deadlines, they sit down and they discuss things, and then things happen," Obama told reporters. "If there are disagreements, they sort though the disagreements. The notion that our elected leadership can't do the same thing is mind-boggling to them."

CORE DISAGREEMENT

The core disagreement between Republicans and Democrats is tough enough. It revolves around the low tax rates first put in place under Republican former President George W. Bush that expire at year's end. Republicans would extend them for everyone. Democrats would extend them for everyone except the wealthiest taxpayers.

The first step for Reid and McConnell may be to find a formula acceptable to their own parties in the Senate.

While members of the Senate, more than members of the House of Representatives, have expressed flexibility on taxes, it's far from a sure thing in a body that ordinarily requires not just a majority of the 100-member Senate to pass a bill, but a super-majority of 60 members.

With 51 Democrats, two independents who vote with the Democrats and 47 Republicans, McConnell and Reid may have to agree to suspend the 60-vote rule.

Getting a bill through the Republican-controlled House may be much tougher. The conservative wing of the House, composed of many lawmakers aligned with the Tea Party movement who fear being targeted by anti-tax activists in primary elections in 2014, has shown it will not vote for a bill that raises taxes on anyone, even if it means defying Republican House Speaker John Boehner.

Many Democrats are wedded to the opposite view - and have vowed not to support continuing the Bush-era tax rates for people earning more than $250,000 a year.

Some senators are wary of the procedural conditions House Republicans are demanding. Boehner is insisting the Senate start its work with a bill already passed by the House months ago that would continue all Bush-era tax cuts for another year. The Democratic-controlled Senate may amend the Republican bill, he says, but it must be the House bill.

For Boehner, it's the regular order when considering revenue measures, which the U.S. Constitution says must originate in the House.

SHIFT BLAME

As some Democrats see it, it's a way to shift blame if the enterprise goes down in flames. House Republicans would be able to claim that since they had already done their part by passing a bill, the Senate should take the blame for plunging the nation off the "cliff."

And that could bring public wrath, currently centered mostly on Republicans, onto the heads of Democrats.

Voters may indeed be looking for someone to blame if they see their paychecks shrink as taxes rise or their retirement savings dwindle as a result of a plunge in global markets.

If Reid and McConnell succeed, there could be political ramifications for each side. For example, a deal containing any income tax hikes could complicate McConnell's own 2014 re-election effort in which small-government, anti-tax Tea Party activists are threatening to mount a challenge.

If Obama and his fellow Democrats are perceived as giving in too much, it could embolden Republicans to mount challenge after challenge, possibly handcuffing the president before his second term even gets off the ground.

It could be a sprint to the finish. One Democratic aide expected "negotiation for a day." If the aide is correct, the world would know by late on Saturday or early on Sunday if Washington's political dysfunction is about to reach a new, possibly devastating, low.

If Reid and McConnell reach a deal, it would then be up to the full Senate and House to vote, possibly as early as Sunday.

Reid and McConnell have been through bitter fights before. The deficit reduction and debt limit deal that finally was secured last year was a brawl that ended only when the two leaders agreed to a complicated plan that secured about $1 trillion in savings, but really postponed until later a more meaningful plan to restore the country's fiscal health.

That effort led to the automatic spending cuts that form part of the "fiscal cliff."

Just months later, in December 2011, Reid and McConnell were going through a tough fight over extending a payroll tax cut.

In both instances, it was resistance from conservative House Republicans that complicated efforts, just as is the case now with the "fiscal cliff."

(Editing by Fred Barbash and Will Dunham)

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Approaching comet may outshine the moon

By Irene Klotz

Fri Dec 28, 2012 5:29pm EST

n">(Reuters) - A comet blazing toward Earth could outshine the full moon when it passes by at the end of next year - if it survives its close encounter with the sun.

The recently discovered object, known as comet ISON, is due to fly within 1.2 million miles (1.9 million km) from the center of the sun on November 28, 2013 said astronomer Donald Yeomans, head of NASA's Near Earth Object Program at the Jet Propulsion Laboratory in Pasadena, Calif.

As the comet approaches, heat from the sun will vaporize ices in its body, creating what could be a spectacular tail that is visible in Earth's night sky without telescopes or even binoculars from about October 2013 through January 2014.

If the comet survives, that is.

Comet ISON could break apart as it nears the sun, or it could fail to produce a tail of ice particles visible from Earth.

Celestial visitors like Comet ISON hail from the Oort Cloud, a cluster of frozen rocks and ices that circle the sun about 50,000 times farther away than Earth's orbit. Every so often, one will be gravitationally bumped out from the cloud and begin a long solo orbit around the sun.

On September 21, two amateur astronomers from Russia spotted what appeared to be a comet in images taken by a 16-inch (0.4-meter) telescope that is part of the worldwide International Scientific Optical Network, or ISON, from which the object draws its name.

"The object was slow and had a unique movement. But we could not be certain that it was a comet because the scale of our images are quite small and the object was very compact," astronomer Artyom Novichonok, one of the discoverers, wrote in a comets email list hosted by Yahoo.

Novichonok and co-discoverer Vitali Nevski followed up the next night with a bigger telescope at the Maidanak Observatory in Uzbekistan. Other astronomers did likewise, confirming the object, located beyond Jupiter's orbit in the constellation Cancer, was indeed a comet.

"It's really rare, exciting," Novichonok wrote.

Comet ISON's path is very similar to a comet that passed by Earth in 1680, one which was so bright its tail reportedly could be seen in daylight.

The projected orbit of comet ISON is so similar to the 1680 comet that some scientists are wondering if they are fragments from a common parent body.

"Comet ISON…could be the brightest comet seen in many generations - brighter even than the full moon," wrote British astronomer David Whitehouse in The Independent.

In 2013, Earth has two shots at a comet show. Comet Pan-STARRS is due to pass by the planet in March, eight months before ISON's arrival.

NASA's Mars Curiosity rover may be able to provide a preview.

Comet ISON is due to pass by the red planet in September and could be a target for the rover from its vantage point inside Gale Crater.

The last comet to dazzle Earth's night-time skies was Comet Hale-Bopp, which visited in 1997. Comet 17P/Holmes made a brief appearance in 2007.

(Editing by Kevin Gray and Leslie Gevirtz)

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Sex, drugs and rock and roll: Australia's other boom

A container ship passes in front of the Sydney skyline as it departs from Port Botany terminal February 24, 2010.

Credit: Reuters/Tim Wimborne

By James Grubel

CANBERRA | Sat Dec 29, 2012 9:25pm EST

CANBERRA (Reuters) - Forget Australia's mining boom. The nation's strong economy, high currency and wages have made it a magnet for sex, drugs and rock and roll.

Foreign sex workers, drug smugglers and global rock acts are all targeting Australia to cash in on an economy growing at 3.1 percent when other developed nations are struggling to expand at all.

The alternative boom has emerged as Australian average full-time wages hit $72,500 a year, and with the Australian dollar trading stubbornly above parity with the U.S. dollar for the past two years.

That has made Australia even more profitable for fly-in and fly-out rock acts and prostitutes, and especially for drug traffickers who are taking bigger risks with the hope of windfall profits.

"Offshore organized crime syndicates perceive Australia to have a robust economy and to have been less affected by the global financial crisis than other jurisdictions," said Paul Jevtovic, the Australian Crime Commission's executive director of intervention and prevention.

DRUG PROFITS

Australian police made 69,500 illicit drug busts in the year to June 30, 2012, the highest in a decade, and have made record arrests in the first six months of this financial year.

In recent months, police have intercepted drugs hidden in a 20-tonne steamroller and heavy machinery, in a large wooden altar, and they have broken up a drug ring involving smugglers in Australia, Japan and Vietnam.

One of the biggest smuggling operations was a failed bid to bring in more than 200 kg (440 lb) of cocaine across the Pacific Ocean from Ecuador on a 13-metre (40-foot) yacht, found grounded on a small atoll in Tonga with a dead crewman aboard.

Australian police, who work closely with the U.S. Drug Enforcement Administration and authorities throughout Asia and the South Pacific, said the high prices paid in Australia and the strong dollar all helped make the country attractive for smugglers.

Crime statistics show why some are willing to risk up to 20 years in prison.

The Australian Crime Commission, which examines trends and works closely with police agencies, said heroin and MDMA, also known as ecstasy, sell for about eight times more in Australia than in Britain and the United States, though Australia is a much smaller market.

Crime Commission data given to Reuters shows a kilogram of cocaine is worth about $2,400 in Colombia, $12,500 in Mexico, and $33,000 in the United States.

The same kilogram of cocaine is worth $220,000 in Australia.

ROCK REVIVAL

Once a remote destination for big rock acts, Australia has been flooded with talent over the past year and faces a steady stream of musicians, including heritage acts, in 2013.

The strong dollar has made Australia the ideal place to perform for musicians wanting to make money at a time when touring rather than album sales is the main driver of income, with many acts charging a premium in a cashed-up economy.

In the first half of 2013, Australia will see tours by Bruce Springsteen, Pink, Guns N'Roses, Ringo Starr, ZZ Top, Thin Lizzy, the Steve Miller Band, Deep Purple, Santana, Status Quo, Robert Plant, Neil Young, Carole King, Paul Simon and Kiss.

The high ticket prices have upset some fans, who question why an artist like Springsteen charges $220 for a premium ticket in Australia, when the same ticket to the same show in Connecticut in October cost $90.

"You can't tell me it costs more than double per head to stage a concert here in Australia," said music fan Robin Pash, who has just returned from the United States, where he saw Springsteen and a series of acts for what would be considered bargain prices.

Entertainment journalist Jonathon Moran, however, said the higher prices reflected the higher cost in Australia, although Australia's strong dollar did make it more attractive to perform downunder.

"More people want to come here, and Australian audiences are comparatively well off and can afford the tickets," Moran, from Sydney's Sunday Telegraph, told Reuters.

SEX AND THE BOOM

Sex workers are also cashing in on the boom, particularly in remote mining towns, where the world's oldest profession is the latest to adopt fly-in, fly-out work practices. And more overseas sex workers are heading for Australia.

A 2012 report for the government in the most populous state, New South Wales, found a marked rise in the number of female sex workers from Thailand, Korea and China since 2006, with 53 percent of sex workers from Asia and a further 13.5 percent from other non-English-speaking countries.

The report, by the University of New South Wales, found a median hourly rate of A$150 for sex services in Australia's largest city of Sydney, although sex workers can charge double that in remote mining towns full of cashed up men.

In the gold mining town of Kalgoorlie in the Western Australia state, the Red House brothel, which has operated since 1934, advertises services starting at A$300 an hour.

Proprietor Bruna Meyers said women in her establishment earned up to A$4,000 a week at a busy time, or about three times the average full-time Australian wage.

"The girls who come here are mainly from over east (eastern Australian states). They come in, sometimes for two or three weeks at a time. Some are just girls who are travelling around the world," Meyers told Reuters.

($1 = 0.9652 Australian dollars)

(Editing by Ron Popeski)

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Pakistani Taliban execute 21 captured paramilitary men

A badly injured Pakistani paramilitary soldier, who survived a shooting by Taliban militants, receives treatment at a hospital in Peshawar December 30, 2012.

Credit: Reuters/Fayaz Aziz

By Jibran Ahmad

PESHAWAR Pakistan | Sun Dec 30, 2012 3:20am EST

PESHAWAR Pakistan (Reuters) - Pakistani Taliban militants have executed 21 paramilitary force men who were captured in attacks on their posts late last week, government officials said on Sunday.

The men, who were kidnapped on Friday in attacks on three checkpoints near the city of Peshawar, were lined up before being shot one-by-one, officials said.

"They were tied up and blindfolded," Naveed Anwar, a senior administration official in the Khyber region, said by telephone.

One man was badly wounded but survived, Anwar said, adding that the 21 bodies had been found after local tribesmen notified security services.

"They were lined up and shot in the head," said Habibullah Arif, another local official. He said the wounded man and another man had managed to escape.

A Taliban spokesman claimed responsibility and pledged to carry out further attacks on Pakistani security forces.

"We killed all the kidnapped men after a council of senior clerics gave a verdict for their execution. We didn't make any demand for their release because we don't spare any prisoners who are caught during fighting," said Ihsanullah Ihsan.

The men were from a paramilitary force recruited from members of ethnic Pashtun tribes in northwestern Pakistan. The militias support the government in its efforts against Islamist militants battling the state.

The killing of the men followed two high-profile attacks in Peshawar this month. Suicide bombers attacked Peshawar's airport on December 15 and a bomb killed a senior Pashtun nationalist politician and eight other people at a rally on December 22.

The violence underscores the Taliban's ability to carry out high-profile attacks in major cities even as the amount of territory they control has shrunk over the past three years.

(Additional reporting by Saud Mehsud in Dera Ismail Khan.; Writing by Katharine Houreld; Editing by Robert Birsel and Ron Popeski)

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Ford on track to sell 2.2 million cars in U.S. this year

A logo of a Ford car is pictured during a press presentation prior to the Essen Motor Show in Essen November 30, 2012.

Credit: Reuters/Ina Fassbender

By Deepa Seetharaman

DETROIT | Sat Dec 29, 2012 9:11pm EST

DETROIT (Reuters) - Ford Motor Co is on track to sell 2.2 million cars under its main brand this year, up 7 percent from 2011, the automaker said on Saturday, but the company has acknowledged losing market share as it struggled to keep up with consumer demand.

It marks the second straight year the No. 2 U.S. automaker has surpassed the 2 million threshold.

The projected sales jump for the Ford brand falls short of the overall industry's gains, which many analysts expect to exceed 13 percent in 2012.

This year is the third in a row that industry sales have climbed by double digits, as American automakers rebound from a deep recession that pushed Ford's rivals, General Motors Co and Chrysler Group LLC, into bankruptcy in 2009.

Earlier this year, Ford said it expected to lose market share in the United States because it could not build enough cars and trucks to satisfy consumer demand. Consumers also are buying fewer pickup trucks than in past years.

Last year, Ford sold just under 2.1 million cars and trucks under its main brand in the United States. When adding its upscale Lincoln brand, Ford sold more than 2.1 million cars last year.

(Editing by Dan Wilchins, Steve Gorman and Peter Cooney)

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Senate leaders to make last-ditch "fiscal cliff" effort

1 of 12. U.S. Senate Minority Leader Mitch McConnell (R-KY) speaks to reporters on his way to lunch at the U.S. Capitol in Washington December 28, 2012.

Credit: Reuters/Mary F. Calvert

By Roberta Rampton and Richard Cowan

WASHINGTON | Fri Dec 28, 2012 8:35pm EST

WASHINGTON (Reuters) - President Barack Obama and U.S. congressional leaders agreed on Friday to make a final effort to prevent the United States from going over the "fiscal cliff," setting off intense bargaining over Americans' tax rates as a New Year's Eve deadline looms.

With only days left to avoid steep tax hikes and spending cuts that could cause a recession, two Senate veterans will try to forge a deal that has eluded the White House and Congress for months.

Obama said he was "modestly optimistic" an agreement could be found. But neither side appeared to give much ground at a White House meeting of congressional leaders on Friday.

What they did agree on was to task Harry Reid, the Democratic Senate majority leader, and Mitch McConnell, who heads the chamber's Republican minority, with reaching a budget agreement by Sunday at the latest.

"The hour for immediate action is here. It is now. We're now at the point where in just four days, every American's tax rates are scheduled to go up by law. Every American's paycheck will get considerably smaller. And that would be the wrong thing to do," Obama told reporters.

A total of $600 billion in tax hikes and automatic cuts to government spending will start kicking in on Tuesday - New Year's Day - if politicians cannot reach a deal. Economists fear the measures will push the U.S. economy into a recession.

Pessimism about the fiscal cliff helped push U.S. stocks down on Friday for a fifth straight day. The Dow Jones industrial average dropped 158.20 points, or 1.21 percent. Retailers are blaming worries about the "fiscal cliff" for lackluster Christmas season shopping.

Under the plan hashed out on Friday, any agreement between McConnell and Reid would be backed by the Senate and then approved in the Republican-controlled House of Representatives before the end of the year.

But the House could well be the graveyard of any accord.

A core of fiscal conservatives there strongly opposes Obama's efforts to raise taxes for the wealthiest as part of a plan to close America's budget deficit. House Republicans also want to see Obama commit to major spending cuts.

Talks between Obama and Republican House Speaker John Boehner collapsed last week when several dozen Republicans defied their leader and rejected a plan to raise rates for those earning $1 million and above.

A Democratic aide said Boehner stuck mainly to "talking points" in Friday's White House meeting, with the message that the House had acted on the budget and it was now time for the Senate to move.

TALKS ON 'BIG NUMBERS'

The two Senate leaders and their aides will plunge into talks on Saturday that will focus mainly on the threshold for raising income taxes on households with upper-level earnings, a Democratic aide said. Analysts say both sides could agree on raising taxes for households earning more than $400,000 or $500,000 a year.

The pair will also discuss whether the estate tax should be kept at current low levels or allowed to rise, the aide said.

Democrat Reid warned of tough talks.

"It's not easy, we're dealing with big numbers, and some of that stuff we do is somewhat complicated," he said.

McConnell described Friday's White House summit, also attended by Democratic House Minority Leader Nancy Pelosi, as "a good meeting."

"So we'll be working hard to try to see if we can get there in the next 24 hours. So I'm hopeful and optimistic," he said.

If things cannot be worked out between the Senate leaders, Obama said he wanted both chambers in Congress to vote on a backup plan that would increase taxes only for households with more than $250,000 of annual income.

The plan would also extend unemployment insurance for about 2 million Americans and set up a framework for a larger deficit reduction deal next year.

There are signs in the options market that investor fear is taking hold. The CBOE Volatility Index, or the VIX, the market's favored anxiety indicator, has remained at relatively low levels throughout this process, but it moved on Friday above 22, the highest level since June.

But some in the market were resigned to Washington going beyond the New Year's Day deadline, as long as a serious agreement on deficit reduction comes out of the talks in early January.

"Regardless of whether the government resolves the issues now, any deal can easily be retroactive. We're not as concerned with January 1 as the market seems to be," said Richard Weiss, a senior money manager at American Century Investments.

Another component of the "fiscal cliff" - $109 billion in automatic spending cuts to military and domestic programs - is set to kick in on Wednesday.

S&P rating agency said on Friday the fiscal cliff impasse did not affect the U.S. sovereign rating.

That lifted the immediate threat of a downgrade from the agency, which cut the United States' triple-A rating in August, 2011 in an unprecedented move after a similar partisan budget fight.

(Additional reporting by David Lawder, Thomas Ferraro, Rachelle Younglai and Mark Felsenthal; Writing by Alistair Bell; Editing by Peter Cooney)

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Claim seeks $100 million for child survivor of Connecticut school shooting

A U.S. flag hangs over stockings left as a memorial for victims of the Sandy Hook Elementary School shooting, along a fence surrounding the Sandy Hook Cemetery in Newtown, Connecticut December 27, 2012.

Credit: Reuters/Adrees Latif

By Mary Ellen Godin

MERIDEN, Connecticut | Fri Dec 28, 2012 7:36pm EST

MERIDEN, Connecticut (Reuters) - A $100 million claim on behalf of a 6-year-old survivor is the first legal action to come out of the Connecticut school shooting that left 26 children and adults dead two weeks ago.

The unidentified client, referred to as Jill Doe, heard "cursing, screaming, and shooting" over the school intercom when the gunman, 20-year-old Adam Lanza, opened fire, according to the claim filed by New Haven-based attorney Irv Pinsky.

"As a consequence, the ... child has sustained emotional and psychological trauma and injury, the nature and extent of which are yet to be determined," the claim said.

Pinsky said he filed a claim on Thursday with state Claims Commissioner J. Paul Vance Jr., whose office must give permission before a lawsuit can be filed against the state.

"We all know its going to happen again," Pinsky said on Friday. "Society has to take action."

Twenty children and six adults were shot dead on December 14 at the Sandy Hook Elementary School in Newtown, Connecticut. The children were all 6 and 7 years old.

Pinsky's claim said that the state Board of Education, Department of Education and Education Commissioner had failed to take appropriate steps to protect children from "foreseeable harm."

It said they had failed to provide a "safe school setting" or design "an effective student safety emergency response plan and protocol."

Pinsky said he was approached by the child's parents within a week of the shooting.

The shooting, which also left the gunman dead, has prompted extensive debate about gun control and the suggestion by the National Rifle Association that schools be patrolled by armed guards. Police have said the gunman killed his mother at their home in Newtown before going to the school.

(Reporting by Mary Ellen Godin Editing by Ellen Wulfhorst)

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