Struggling to avert an unprecedented national default, congressional leaders jettisoned negotiations on a sweeping deficit-reduction package Friday despite a plea from President Barack Obama to “do something big” to stabilize America’s finances.
Instead, lawmakers embarked on rival fallback plans as a critical Aug. 2 deadline neared, a House version given little chance of success, even by some supporters, and a bipartisan Senate approach holding out more promise.
At the behest of conservatives, House Republicans announced plans to vote next week on legislation to raise the $14.3 trillion debt limit automatically if Congress approves a balanced-budget constitutional amendment. Senate approval of that amendment seemed extremely unlikely in a vote set for the next few days.
Senate leaders from both parties worked on their own measure that would allow Obama to raise the debt limit without a prior vote by lawmakers. That plan was likely to include limits on spending across thousands of government programs, and possibly a down payment on cuts, as well.
As part of that proposal, a panel of lawmakers would recommend cuts in benefits programs by the end of the year, with the House and Senate required to vote yes-or-no on the package without possibility of changes.
“If they show me a serious plan I’m ready to move,” declared Obama at his second news conference of the week, even though he said he wanted a far more sweeping deal that might even have raised the age of Medicare eligibility from 65 to 67 if Republicans would increase selected taxes.
“We are obviously running out of time,” he said.
Numerous officials have cautioned that a default will occur if the debt limit is not increased by Aug. 2, warning also of a calamitous effect on an economy struggling to recover from the worst recession in decades.
“Now the debate will move from a room in the White House to the House and Senate floors,” said Senate Republican leader Mitch McConnell, indicating that the daily closed-door negotiations at the White House were a thing of the past.
The House Republican rank and file were advised in a GOP meeting that, barring action by Congress, the government would be able to pay only about half its bills after Aug. 2, and separately that a default could cost the government trillions of dollars in the form of higher interest rates on the debt.
“No matter what 50 percent you choose to pay, there are things in that 50 percent you don’t pay that would have really severe consequences,” Rep. John Campbell, R-Calif., said afterward.
“There are people out there who keep saying we don’t need to increase the debt limit at all. I think this was a way of saying, the people who are saying that need to look at the practical consequences of what they are saying.”
Rep. Paul Ryan, of Wisconsin, chairman of the House Budget Committee, told reporters after the meeting he had discussed the additional costs generated by a default _ an event that would be likely to raise interest rates no fax cash advance.
At his news conference, Obama said that would mean “effectively a tax increase on everybody” by affecting car purchasers, students and businesses.
The second White House news conference in a week was a testament to the overriding political and economic significance of the issue that has convulsed Congress as well as the administration.
Urging lawmakers to cut trillions from deficits at the same time they raise the debt limit, the president said he favored a balanced approach that included spending cuts, changes to huge government benefit programs and higher taxes on wealthy individuals and certain industries.
It was an offer Republicans could _ and did _ refuse.
“There are going to be no tax hikes because tax hikes destroy jobs,” said House Speaker John Boehner of Ohio.
While Boehner had earlier shown some flexibility on closing tax loopholes as part of an unprecedented deal with Obama, many Republican lawmakers are adamant that deficit reductions be limited to spending cuts.
To underscore their conservative priorities, GOP leaders scheduled a vote for next week on legislation they said would cut $111 billion in the budget year that begins Oct. 1. It would also require a steady decline in spending as a percentage of the overall economy over the next decade.
Even some supporters conceded it was a symbolic gesture given the realities of divided government.
“I think everybody knows the president won’t sign this,” Campbell said after the closed-door Republican meeting.
“But we’re putting a marker down, and that’s an important step that begins the process of resolving this,” he added.
If so, it was in a style that only congressional insiders might recognize as the beginning of the endgame to an unprecedented problem.
McConnell issued a statement announcing the Senate would vote on both a balanced budget amendment and the House’s “Cut, Cap and Balance Plan.”
His statement didn’t say so, but neither measure has much, if any, chance of passage in the Democratic-controlled Senate.
Still, the votes themselves would clear the way for debate on the fallback plan the two Senate leaders have been working on for the past several days.
Senate aides said the measure was not yet fully drafted, but likely to come up for debate by the end of next week.
A two-thirds vote of each house is required for passage of a constitutional amendment. Approval would send the issue to the states, where ratification by three quarters of the legislatures is needed to make it part of the Constitution.
Presidents play no official role in amending the Constitution, but Obama expressed his opposition to the GOP-backed measure anyway.
“We don’t need a constitutional amendment to do that. What we need to do is do our jobs,” he said.
UNIVERSITY CITY
The departure of Yemen’s battle-wounded president for treatment in Saudi Arabia set off wild street celebrations Sunday in the capital, where crowds danced, sang and slaughtered cows in hopes that this spelled a victorious end to a more than three-month campaign to push their leader from power.
Behind the festive atmosphere, many feared Ali Abdullah Saleh, a masterful political survivor who has held power for nearly 33 years, will yet return _ or leave the country in ruins if he can’t. Hanging in the balance was a country that even before the latest tumult was beset by deep poverty, malnutrition, tribal conflict and violence by an active al-Qaida franchise with international reach.
Saleh, who was taken overnight to a military hospital in the Saudi capital, Riyadh, underwent successful surgery on his chest to remove jagged pieces of wood that splintered from a mosque pulpit when his compound was hit by rockets on Friday, said medical officials and a Yemeni diplomat. They spoke on condition of anonymity because they did not have permission to release the information.
The stunning rocket attack, which the government first blamed on tribal fighters who in recent weeks turned against the president and later on al-Qaida, killed 11 bodyguards and seriously injured five senior officials worshipping just alongside Saleh.
While Saleh is away, Vice President Abed Rabbo Mansour Hadi is acting as temporary head of state, said the deputy information minister, Abdu al-Janadi. The minister said the president would return to assume his duties after his treatment, though experts on Yemeni affairs questioned whether a return is possible in the face of so much opposition.
“Saleh will come back. Saleh is in good health, and he may give up the authority one day but it has to be in a constitutional way,” al-Janadi said. “Calm has returned. Coups have failed. … We are not in Libya, and Saleh is not calling for civil war.”
His sudden departure raised many questions, including whether his Saudi hosts would bless his return. The Saudis have backed Saleh and cooperated over the years in confronting al-Qaida and other threats, but they are now among those pressing him to give up power as part of a negotiated deal. Saudi Arabia has watched with concern the anti-government protests that have spread to other neighboring countries like Bahrain and is eager to contain the unrest on its doorstep.
The president’s absence raised the specter of an even more violent power struggle between the armed tribesmen who have joined the opposition and loyalist military forces under the command of Saleh’s son and other close relatives. Street battles between the sides have already pushed the political crisis to the brink of civil war.
In an attempt to cool the situation, the vice president offered through mediators to pull government forces back from the neighborhood of the capital where they’ve battled fighters loyal to Sheik Sadeq al-Ahmar, who heads Yemen’s most powerful tribal confederation, the Hashid.
Al-Ahmar said in a statement he agreed to the deal, which requires his forces to leave the streets and government ministries they seized starting Monday.
In the streets of the capital, Sanaa, joyful crowds celebrated what they hoped would be Saleh’s permanent exit.
Crowds danced, sang and slaughtered a few cows in what demonstrators have dubbed Change Square, the epicenter of the nationwide protest movement since mid-February calling for Saleh to step down immediately. Some uniformed soldiers joined those dancing and singing patriotic songs and were hoisted on the shoulders of the crowd. Many in the jubilant crowd waved Yemeni flags, joyfully whistling and flashing the “V” for victory signs.
“Who would have believed that this people could have removed the tyrant?” said 30-year-old teacher Moufid al-Mutairi.
Women in black veils joined demonstrators carrying banners that hailed Saleh’s departure low interest personal loan. One read: “The oppressor is gone, but the people stay.”
But there were also fears that the president would attempt a comeback or try to transfer power to his son Ahmed, who heads the Republican Guard and remains in Yemen. Some worried Saleh and his allies could even try to leave the country in ruins if they feel there is no way to stay in power.
“Saleh is never true to his word,” said al-Mutairi, the teacher. “If the medical reports are true that his wounds are light, then he will for sure return. Our challenge now is to remove the rest of the regime.”
“If he returns, it will be a disaster.”
Yemen’s unrest began as a peaceful protest movement that the government at times used brutal force to try to suppress, killing at least 166 people, according to Human Rights Watch. It transformed in the past two weeks into armed conflict after the president’s forces attacked the home of a key tribal leader and one-time ally who threw his support behind the uprising. The fighting turned the streets of the capital into a war zone.
Other forces aligned against Saleh at the same time. There were high-level defections within his military, and Islamist fighters took over at least one town in the south in the past two weeks.
In Taiz, Yemen’s second-largest city, dozens of gunmen attacked the presidential palace on Sunday, killing four soldiers in an attempt to storm the compound, according to military officials and witnesses. They said one of the attackers was also killed in the violence. The attackers belong to a group set up recently to avenge the killing of anti-regime protesters at the hands of Saleh’s security forces.
Elsewhere in the south, gunman ambushed a military convoy, killing nine soldiers, officials said. They spoke on condition of anonymity because they were not authorized to talk to the media.
Saleh has been under intense pressure to step down from his powerful Gulf neighbors, who control a large share of the world’s oil resources, and from longtime ally Washington. They all fear Yemen could be headed toward a failed state that will become a fertile ground for al-Qaida’s most active franchise to operate and launch attacks abroad.
In a display of the kind of political maneuvering that has helped keep Saleh in power through numerous perils, he agreed three times to a U.S.-backed Gulf Arab proposal for ending the crisis only to back out at the last minute.
Now, Saleh’s injuries and his treatment abroad provide him with what could turn out to be a face-saving solution to exit power.
“This is exactly what needed to happen,” said Christopher Boucek, a Yemen expert with the Carnegie Endowment for International Peace. “He needed to leave in order to get past this political deadlock that has been cursing Yemen for the past few months.”
Rick Nelson, a counterterrorism expert at the Center for Strategic and International Studies in Washington, said there is no chance of Saleh returning to Yemen and it’s unlikely anyone linked to him can maintain power and control.
“I can’t see any remnant of the saleh government staying in place after this,” Nelson said.
The fact that powerful members of Saleh’s family have remained behind in Sanaa suggests vigorous attempts to hold power will be made.
Significantly, military officials said Hadi, the vice president, met late Saturday night in Sanaa with several members of Saleh’s family, including his son and one-time heir apparent Ahmed, who commands the powerful Republican Guard. Others who attended the meeting included two of the president’s nephews and two half brothers. All four head well-equipped and highly trained units that constitute the president’s main power base in the military.
Greater Toronto Area home sales and prices increased in May, making it the second best month ever on record, according to figures released Friday.
The Toronto Real Estate Board reported (PDF) 10,046 sales, up six per cent from May of 2010.
Average prices were also up by 9 per cent to $485,520, compared with $446,593 in 2010.
Strongest price growth was for single-detached homes in the City of Toronto.
LinkedIn priced its IPO at $45 per share to set up the first stock market debut among a fraternity of Internet networking services that’s captivating investors.
The pricing completed late Wednesday marks the final step before LinkedIn Corp.’s shares are available in the public market for the first time in the company’s eight-year history. Shares are expected to begin trading Thursday morning.
Most analysts believe the shares are likely to rise Thursday, even though LinkedIn raised the IPO price by 30 percent from its initial target of $32 to $35 per share paydayloan.
The IPO puts a $4.3 billion market value on LinkedIn, the highest for a U.S. Internet company taking its first bow on Wall Street since Google Inc. went public nearly seven years ago.
Canadian Tire has made a friendly offer for the country
Apparently people don’t like paying $5 to withdraw their own money from an ATM.
JPMorgan Chase (JPM, Fortune 500) said Monday it has finished testing $4 and $5 ATM fees for non-customers in two states, and it is now going back to the $3 fees it previously charged.
Earlier this year,the bank had been testing a $5 ATM fee in Illinois and a $4 ATM fee in Texas — both for non-customers who use its ATMs — to see if they brought in enough revenue to introduce nationwide, according to a spokesman for the company.
Out of the bank’s network of 16,000 ATMs, more than 20% — or about 3,600 — are located in these two states.
Chase spent an estimated $400 million to build the entire network and pays $200 million a year to run it. So the bank wanted non-customers to pay a little extra for the convenience of using its large network.
But the $5 fee meant that a $20 withdrawal would cost you a 25% premium for that convenience. And that doesn’t even include what your own bank charges you for going out of network — typically around $3.
But it looks like that $5 threshold inconvenienced enough customers, and convinced them to trek an extra few blocks to their own banks.
So Chase threw in the towel, and the $3 ATM fees you’re used to paying are back — for now.
Stocks lost some of their early gains and turned mixed Monday despite the death of Osama bin Laden, several strong earnings reports and a major drug industry acquisition.
The Dow Jones industrial average rose 27 points, or 0.2 percent, to 12,839 in afternoon trading. It had been up as many as 65 points earlier in the day.
President Barack Obama said late Sunday that bin Laden, the al-Qaida chief who masterminded the Sept. 11, 2001 attacks, had been killed by American forces in Pakistan. That helped to raise investors’ confidence when the market opened.
“It’s a feel-good item,” said Howard Silverblatt, senior index analyst at Standard & Poor’s. “It gives closure to a lot people.”
But Silverblatt, like many analysts, cautioned that the news would likely result in only a short-term gain for the market. Most traders were instead focused on earnings and economic news. So far, strong earnings results over the last two weeks helped the Standard & Poor’s 500 reach its highest levels since the financial crisis, closing at 1363.61 on Friday.
Dish Network Corp., Chrysler Group LLC and Humana Inc. all reported strong earnings. Dish Network’s first-quarter net income more than doubled, in part, because of a patent settlement with TiVo Inc. Its stock rose 16 percent.
Humana’s profit rose 22 percent. The company benefited from more people enrolling in its Medicare plans. Its stock was flat.
Chrysler reported its first profit since leaving bankruptcy two years ago thanks to growing sales.
Whole Foods Market Inc. fell 4 percent, though, after a Jefferies analyst downgraded the company and said sales could stagnate as shoppers feel the pinch of higher gas prices.
In corporate news, Israeli drug maker Teva Pharmaceutical Industries Ltd. said it would buy Cephalon Inc. for $81.50 per share, or $6.8 billion. Cephalon’s key drugs include the sleep disorder treatment Provigil and the cancer drug Treanda. Cephalon’s shares rose 4 percent.
The S&P 500 index rose a point, or 0.1 percent, to 1,365. It had been up 7 points earlier. The Nasdaq composite index fell 2 points, or 0.1 percent, to 2,871.
Bond prices rose, sending yields lower. The yield on the 10-year Treasury note fell to 3.28 percent from 3.29 percent late Friday. The dollar fell 0.2 percent against an index of six other heavily traded currencies.
The Institute of Supply Management reported that manufacturing activity increased for the 21st month in April, though at a slightly slower pace than the month before. This was expected by economists. The Commerce Department also reported that builders started work on more projects in March after three straight monthly declines in construction spending.
Merck & Co. says its first-quarter profit more than tripled despite only slightly higher sales because of much lower restructuring and merger costs.
The results beat Wall Street expectations. Merck’s stock rose 61 cents in premarket trading to $36.38.
The maker of Singulair for asthma and allergies and Januvia for diabetes says net income was $1.04 billion, or 34 cents per share, up from $299 million, or 9 cents a share, in 2010’s first quarter.
Revenue edged up 1 percent to $11.58 billion. That includes several billion dollars from products acquired when Merck bought Schering-Plough Corp. in November 2009 for $49 billion.
Excluding numerous one-time items, net income was $2.86 billion, or 92 cents per share.
Analysts forecast earnings per share of 84 cents and revenue of $11.38 billion. Analysts typically exclude one-time items in their estimates.
The $1.82 billion in net charges included $1.58 billion in merger-related writedowns on the value of assets and research, $126 million in restructuring costs and a $500 million payment to settle arbitration with Johnson & Johnson over rights to two drugs.
Merck raised the bottom end of its 2011 adjusted profit forecast by 2 cents, predicting $3.66 to $3.76 per share.
“It is clear that Merck’s business momentum is building, and we continue to demonstrate the ongoing value of the merger,” Chief Executive Kenneth Frazier said in a statement.
Sales were driven by strong performance from Singulair, Januvia, Remicade for immune disorders and other key drugs. Their growth was partly offset by lower sales of former blockbuster heart drugs Cozaar and Hyzaar, which got generic competition last year.
Nuclear safety officials say the first radiation measurements taken inside two reactor buildings at Japan’s crisis-stricken nuclear plant show a harsh environment but not one that will be impossible for humans to work in.
Nuclear safety agency official Hidehiko Nishiyama said Monday the measurements taken by two robots sent in to units 1 and 3 of the tsunami-wrecked Fukushima Dai-ichi nuclear plant mean that workers trying to restore plant systems will only be able to stay for short intervals inside the reactor buildings.
He said the radiation would not delay progress toward achieving a cold shutdown of the plant within nine months.
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