House Speaker John Boehner says the pact he’s reached with President Barack Obama and other leaders of Congress on lifting the debt limit and taming the budget “isn’t the greatest deal” but lives up to the GOP’s principles on taxes and spending.
The agreement pairs spending cuts demanded by Republicans with an immediate increase in the government’s borrowing cap that’s needed to avoid a first-ever default after Tuesday.
Boehner said the deal with Obama _ which contains no tax increases and sets the stage for more than $2 trillion in spending cuts _ shows how Republicans have changed the terms of debate in Washington.
The Ohio Republican says he wants to bring the measure to a vote as soon as possible.
Torstar Corp., publisher of the Toronto Star, reported higher revenues in the second quarter of 2011, the company said Thursday.
The endgame at hand, House Republicans lined up Thursday to pass legislation to prevent looming government default while slicing nearly $1 trillion from federal spending. Senate Democrats pledged to scuttle the bill swiftly in hopes of forcing a final compromise.
“Let’s pass this bill and end the crisis,” said House Speaker John Boehner, the president’s principal Republican antagonist in a new and contentious era of divided government. “It raises the debt limit and cuts government spending by a larger amount.”
President Barack Obama has threatened to veto the measure, and in debate on the House floor, Rep. Debbie Wasserman Schultz of Florida savaged it as a “Republican plan for default.” She said the GOP hoped to “hold our economy hostage while forcing an ideological agenda” on the country.
Despite the sharp rhetoric, there were signs that gridlock might be giving way.
“Around here you’ve got to have deadlock before you have breakthrough,” said Sen. Kent Conrad, D-N.D. “We’re at that stage now.”
Wall Street suffered fresh losses as Congress struggled to break its long gridlock. The Dow Jones industrial average was down for a fifth straight session.
The Treasury Department moved ahead with plans to hold its regular weekly auction of three-month and six-month securities on Monday. Yet officials offered no information on what steps would be taken if Congress failed to raise the nation’s $14.3 trillion debt limit by the following day.
Without signed legislation by Aug. 2, the Treasury will not have enough funds to pay all the nation’s bills. Administration officials have warned of potentially calamitous effects on the economy if that happens _ a spike in interest rates, a plunge in stock markets and a tightening in the job market in a nation already struggling with unemployment over 9 percent.
White House press secretary Jay Carney outlined White House compromise terms: “significant deficit reduction, a mechanism by which Congress would take on the tough issues of tax reform and entitlement reform and a lifting of the debt ceiling beyond … into 2013.”
The last point loomed as the biggest obstacle.
The House bill cuts spending by $917 billion over a decade, principally by holding down costs for hundreds of government programs ranging from the Park Service to the Agriculture Department and foreign aid.
It also provides an immediate debt limit increase of $900 billion, which is less than half of the total needed to meet Obama’s insistence that there be no replay of the current crisis in the heat of the 2012 election campaigns.
An additional $1.6 trillion in borrowing authority would be conditioned on passage of at least $1.8 trillion in further savings to be recommended by a newly created committee of lawmakers. Those deficit reductions would presumably come from cuts to benefit programs such as Social Security and Medicare, as well as an overhaul of the tax code generating additional government revenue.
The GOP bill’s $917 billion in upfront spending cuts was trillions less than many tea party-backed rank-and-file Republican lawmakers wanted, but a total that seemed nearly unimaginable when they took power in the House last winter with an agenda of reining in government. Numerous Republicans grumbled that the legislation didn’t cut more deeply, and Boehner and the rest of the GOP leadership have spent their week cajoling reluctant conservatives to provide the votes needed to pass it.
By most accounts, they were succeeding.
“It gives us a little bit of heartburn because it doesn’t go big enough,” said Rep. Sean Duffy, R-Wis., a first-term lawmaker who said he would vote for the bill as the best one available.
Another first-term Republican, Rep. Martha Roby of Alabama, said the bill was “far from perfect. But I don’t have the luxury of writing the plan by myself, and neither does Speaker Boehner.”
While the White House and Democrats objected to the House bill, they readied an alternative that contained similarities.
Drafted by Senate Majority Leader Harry Reid, it provides for $2.7 trillion in additional borrowing authority for the Treasury. It also calls for cuts of $2.2 trillion, including about $1 trillion in Pentagon savings that assume the end of the wars in Iraq and Afghanistan.
Even before the House voted, Reid served notice he would stage a vote to kill the legislation almost instantly.
“No Democrat will vote for a short-term Band-Aid that would put our economy at risk and put the nation back in this untenable situation a few short months from now,” he said.
With the House and Senate focused on debt-limit legislation at opposite ends of the Capitol, eleven religious leaders protesting budget cuts were arrested in the Rotunda midway between the two chambers.
Democratic Rep. Chellie Pingree of Maine said on the House floor that they were praying for those who will be “hurt the hardest” by the bill being considered.
Rep. David Dreier, R-Calif., countered that he, too was praying _ to avoid a default.
The day’s events marked the climax of a struggle that began last winter, when the Treasury Department notified Congress it would need additional borrowing authority, and Boehner said any increase would have to include steps to reduce future spending.
At first the White House balked at the terms, then relented. That gradually morphed into a series of bipartisan negotiations, one led by Vice President Joe Biden, then another by Obama, and finally, a round of golf that led to stab at a “grand bargain” between the president and Boehner.
Boehner announced last Friday he was calling off the talks, setting in motion a frantic week of maneuvering as the default deadline grew near.
3M’s second-quarter profit rose 3.4 percent as slowing demand for films for LCD televisions dampened strong growth in its other businesses.
3M Co. makes office supplies such as Scotch tape and Post-it notes, coatings for television screens, roofing shingles and other industrial supplies.
The company said Tuesday that it earned $1.16 billion during the quarter, or $1.60 per share. Revenue rose 14 percent to $7.68 billion. That topped analyst expectations for net income of $1.59 per share on revenue of $7.52 billion, according to FactSet.
The Japan earthquake in March hurt sales growth by 2.4 percentage points, and cut 7 cents per share from 3M’s profit.
3M has been coping with a slowdown in films that coat the screens of LCD televisions. But sales of those screens fell 22 percent in the last quarter, faster than expected. 3M said too much inventory and a maturing market are driving TV manufacturers to go with cheaper films. Sales fell 10.6 percent to $973 million in 3M’s Display and Graphics business, the only one of its six big divisions to post a sales decline payday loans direct lenders. That division still had operating income of $222 million.
Its biggest division, Industrial and Transportation, saw operating profits of $544 million on sales of $2.6 billion.
Not counting companies it bought, 3M sales volumes rose 3.2 percent, and prices rose 0.8 percent.
Investors consider 3M an economic bellwether because of the diversity of its businesses.
“While economic growth moderated a bit in the second quarter, we believe that the global economy will continue to expand and 3M is well-positioned to capitalize on that growth,” said Chairman and CEO George Buckley.
Maplewood, Minn.-based 3M raised the low end of its full-year guidance by 5 cents, to $6.05 to $6.25 per share. Analysts have been expecting $6.23. It expects full-year profits to be hurt by 11 cents to 12 cents per share by the impact of the Japan earthquake.
Stock futures are falling a day after congressional leaders failed to agree on a deal to raise the nation’s debt limit.
Lawmakers hoped to reach a compromise on debt Sunday. But those talks stalled. President Barack Obama wants to raise revenues by letting tax cuts for wealthy Americans expire. Republicans have pushed for more spending cuts and have rejected higher taxes.
If an agreement is not reached by Aug. 2, the U.S. could default on its debt. That could have a catastrophic impact on financial markets.
Ahead of the opening bell Monday, Dow Jones industrial average futures are down 85 points, or 0.7 percent, at 12,536. Standard & Poor’s 500 futures are down 10, or 0.8 percent, at 1,331. Nasdaq 100 futures are down 14, or 0.6 percent, at 2,414.
A few thousand protesters rallied in Cairo and other Egyptian cities Friday to press the country’s military rulers for faster change, but searing summer heat and a growing weariness among some Egyptians with continual protest diminished the large numbers seen in past weeks.
The smaller number came a day after the prime minister replaced nearly half his Cabinet in a nod to demands from the protesters that most activists dismissed as not going far enough.
Still, a die-hard core of several hundreds activists who have been camped out in Cairo’s Tahrir Square for more than two weeks in continual protest insisted they would go on.
More than five months after mass street demonstrations drove President Hosni Mubarak from power, many Egyptians worry that their “revolution” has stalled.
While Mubarak, his sons and a number of his associates are behind bars, protesters see traces of his regime throughout the government. Some have also come to distrust the military council that assumed power after Mubarak’s fall, accusing it of dragging its feet on trials of former regime officials and those accused of killing protesters during the uprising.
“The military council is against the revolution, and we’re here to put pressure on them to stay with the revolution,” said Ahmed al-Sharawi, 21, an engineering student who has been camped out in Tahrir. “If we go home, the revolution will fail,” he said.
Others come to the square for different reasons, not least the carnival-like atmosphere that has taken over.
Activists have blocked traffic on all streets leading in, turning the large interchange at Cairo’s heart into a pedestrian-zone _ a rare luxury in this overcrowded city of 18 million, famous for it reckless drivers and traffic jams.
Inside, vendors have wheeled in carts or set up shop on the sidewalks, selling pretzels, fruit, plastic guns and revolution-themed T-shirts, headbands and wall clocks. Cold drinks are the biggest seller, necessary in a season when midday temperatures regularly top 100 Fahrenheit (38 Celsius).
In the southern city of Luxor, usually hotter than Cairo, activists postponed midday protests for what they called “the Friday of decisiveness” until evening because of the heat.
Also limiting the protests’ size was the decision by the Muslim Brotherhood, Egypt’s best organized political force, not to participate.
Some who come for the atmosphere in Tahrir oppose the sit-in.
“I don’t like the way the tents look,” said Haisam al-Halawani, 28, who strolled in Friday afternoon with his wife Rasha. “Sure, people should come and say what they want, but then they should go home. We don’t need all these tents.”
Still, the pair visits the square weekly, to people-watch, listen to speeches and have a snack and a cold drink.
Al-Halawani agrees with many of the protesters’ demands, especially that former regime officials face prosecution, but he said the protesters expect too much, too fast.
“Not everything will change in one day,” he said.
In another square across town, a few hundred protesters calling themselves “the silent majority” held a counter-demonstration in support of the military council.
Inside the Tahrir tent camp, al-Sharawi, the engineering student, listed the reasons he’s been sleeping in a tent in a traffic circle for more than two weeks: He distrusts the military, wants to see former regime officials tried and said the Cabinet is stocked with Mubarak associates.
But when asked about the new Cabinet sworn in the day before, whose members have few links to Mubarak, he confessed ignorance.
“I haven’t read about that yet,” he said. “I was just going to look for a newspaper.”
He and his fellow tent-dweller Mohammed Shaban rejected the idea that other Cairenes say blocking traffic impedes work.
“If they want to work, they need to protest with us so we can get all our demands and go home,” said Shaban, 22.
In the meantime, the men live on pita bread and preserved cheese, do their laundry in a bucket and wash at a nearby mosque.
“We were in the army, where they give you a cup of water and say, Take a bath! So we’re used to it,” said al-Sharawi, recalling the compulsory stint in the military that Egyptian young men must serve.
They say they’ll remain until “the revolution” is complete.
“Other people bring KFC with them when they protest,” he said. “Not us. We don’t want food or money. If we get all of our demands, Egypt will be richer than America.”
Relief at the approval of a second bailout package for Greece is driving global stocks higher.
The euro109 billion ($156 billion) deal will not only lend money to the financially struggling country, but also reduces the size of Greece’s crushing debts by asking investors who hold Athens’ bonds to make sacrifices.
A first bailout of euro110 billion last year did not put Greece back on its feet financially cash advances pay day loan.
The three major European indexes rose, led by banking stocks. Asian shares were also up strongly. Commerzbank was up 1.1 percent, Deutsche Bank 1.3 percent, and Italy’s Unicredit 0.5 percent.
The top Democrat in the House reacted positively to a new bipartisan budget plan emerging in the Senate, even as a top House GOP military hawk said it would cut defense way too much.
Asked about the budget unveiled Tuesday by the Senate’s “Gang of Six” at a brief appearance with reporters Wednesday morning, House Minority Leader Nancy Pelosi, D-Calif., said, “It has some good principles in it.”
The group’s budget, which would slash the deficit by almost $4 trillion over a decade through a mix of spending cuts and new tax revenues, has also earned praise from President Barack Obama and many senators.
But House Armed Services Committee Chairman Howard “Buck” McKeon, R-Calif., blasted the Gang of Six plan in a missive to his panel members, saying it would cut the Pentagon way too deeply and would unfairly curb military health and retirement benefits.
“This proposal raises serious implications for defense and would not allow us to perform our constitutional responsibility to provide for the safety and security of our country,” McKeon wrote in a memo to panel Republicans.
The mixed reviews came as an impasse in Washington over how to raise the nation’s borrowing cap to avoid a default on U.S. obligations dragged on with less than two weeks to an Aug. 2 deadline.
On Tuesday, the House doubled down on a symbolic vote to condition any increase in the government’s borrowing authority on congressional passage of a balanced budget constitutional amendment and a fresh wave of spending cuts. In the Senate, however, many Republicans warmed to a new bipartisan budget plan revealed a thawing in GOP attitudes on new tax revenues.
The plan by the Gang of Six is far too complicated and contentious to advance before an Aug. 2 deadline to avoid a default that Treasury Secretary Timothy Geithner and other experts warn would shake the markets, drive up interest rates and threaten to take the country back into a recession. But the plan’s authors clearly hope it could serve as a template for a “grand bargain” later in the year that could erase perhaps $4 trillion from the deficit over the coming decade.
Speaking on the Senate floor Wednesday morning, Democratic leader Harry Reid said he was confident Obama and congressional negotiators could avoid a government default, but the Senate still needed to hear from the House.
“We have a plan to go forward over here so I await word from the Speaker,” said the Nevada lawmaker, who also mentioned that he spoke to Obama Tuesday night. Reid was referring to a plan he’s working on with GOP leader Mitch McConnell of Kentucky to give Obama new powers to obtain an increase in the borrowing cap unless overridden by Congress.
In the House, the 234-190 vote Tuesday to pass the House GOP “cut, cap and balance” plan reflected the strength of tea party forces elected in last year’s midterm election. GOP conservatives reveled in their victory, however temporary it may be, since the plan faces a White House veto threat and is a dead letter in the Senate anyway.
“Let me be clear. This is the compromise. This is the best plan out there,” said Rep. Jim Jordan, R-Ohio, head of a conservative House group known as the Republican Study Committee.
The GOP measure would impose an estimated $111 billion in immediate spending cuts next year and would cap overall spending at levels called for in the House’s April budget plan, backed up by the threat of automatic spending cuts. But what conservatives like most about it is its requirement that Congress approve a balanced budget amendment to the Constitution _ a step that requires a two-thirds vote in both House and Senate _ before any increase in the current $14.3 trillion debt limit can be shipped to Obama.
The balanced budget amendment requires limiting the size of government to 18 percent of the size of the economy, sparking a furious assault from Democrats who say it would force Medicare cuts much deeper than the controversial House GOP budget plan that passed in April _ which cut spending to 20 percent of the gross domestic product.
“The most elementary budget arithmetic dictates that you cannot limit the federal budget to 18 percent of GDP and continue to sustain Medicare,” said Sen. Tom Harkin, D-Iowa.
Now that the House has blown off steam, Obama said Tuesday that he wants to “start talking turkey” with top congressional leaders like House Speaker John Boehner, R-Ohio, Senate Majority Leader Harry Reid, D-Nev., and Senate GOP leader Mitch McConnell of Kentucky. A White House meeting had yet to be scheduled, though Obama seemed to hint one could take place Wednesday.
Reid has lined up behind a controversial McConnell plan to allow Obama to order up as much as $2.5 trillion in new debt without approval by Congress, which could only block the administration from issuing new debt if Congress disapproves by a veto-proof two-thirds margin in both House and Senate.
In exchange, Reid wants to attach to the McConnell plan a requirement for a bipartisan panel of 12 lawmakers to negotiate on a compromise that could come up for a vote later this year.
The Gang of Six plan promises almost $4 trillion in deficit cuts, including an immediate 10-year, $500 billion down payment that would come as Congress sets caps on the agency budgets it passes each year. It also requires an additional $500 billion in cost curbs on federal health care programs, cuts to federal employee pensions, curbs in the growth of military health care and retirement costs, and modest cuts to farm subsidies.
It also requires a major influx of new tax revenues as Congress overhauls the loophole-choked U.S. tax code. It calls for getting rid of myriad tax loopholes, preferences and deductions and using the savings to sharply lower income tax rates. But $1 trillion to $2 trillion would be skimmed off the top and used to reduce the deficit, depending on who does the calculations.
House GOP leaders were muted in their criticism and pointed to promised reductions in income tax rates rather than the net increase in overall tax collections.
“On the positive side, the tax rates identified in the Gang’s plan _ with a top rate of no more than 29 percent _ and the president’s endorsement of them are a positive development and an improvement over previous discussions,” House Majority Leader Eric Cantor, R-Va., said. “That said, I am concerned with the Gang of Six’s revenue target.”
The tax reform outline would set up three income tax rates _ a bottom rate of 8-12 percent, a middle rate of 14-22 percent and top rate of 23-29 percent _ to replace the current system, which has a bottom rate of 10 percent with five additional rates, topping out at 35 percent. It would reduce but not eliminate tax breaks on mortgage interest, higher-cost health plans, charitable deductions, retirement savings and families with children.
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Rebekah Brooks, Rupert Murdoch’s former British CEO, says she is “assisting the police with their inquiries” after being arrested in the British phone hacking and police bribery scandal.
Brooks, 43, was arrested at a London police station at noon Sunday by appointment. She is being questioned on suspicion of conspiring to intercept communications _ phone hacking _ and on suspicion of corruption, which relates to bribing police for information free instant credit score.
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