Stomach bug knocks Nadal from Australian Open


MADRID (AP) — Rafael Nadal will miss the Australian Open because of a stomach virus, further delaying his comeback after being sidelined since June.


The Spaniard also will skip the preceding Qatar Open. The Australian Open, the year's first Grand Slam tournament, begins Jan. 14. The virus kept Nadal from making his return at Abu Dhabi this week.


Nadal said Friday his withdrawals had nothing to do with the tendinitis in his left knee, which forced him to take a break last summer following his second-round loss at Wimbledon to then 100th-ranked Lukas Rosol. Nadal also missed the London Olympics.


"My knee is much better and the rehabilitation process has gone well as predicted by the doctors," Nadal said in a statement. "But this virus didn't allow me to practice this past week, and therefore I am sorry to announce that I will not play in Doha and the Australian Open."


The former No. 1 player hopes to return at Acapulco, Mexico, starting Feb. 27. However, he did not rule out playing an earlier tournament if his recovery went well enough.


"I always said that my return to competition will be when I am in the right conditions to play," he said. "And after all this time away from the courts I'd rather not accelerate the comeback and prefer to do things well."


Nadal, ranked No. 4, won the Australian Open in 2009. Last year, he lost to top-ranked Novak Djokovic in a title match that lasted 5 hours, 53 minutes, the longest recorded Grand Slam final.


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Animal rights group settles lawsuit with Ringling






WASHINGTON (AP) — An animal rights group will pay Ringling Bros. and Barnum & Bailey Circus $ 9.3 million to settle its part of a lawsuit stemming from claims the circus abused its elephants.


The circus company’s owners announced the settlement with the American Society for the Prevention of Cruelty to Animals on Friday. The animal rights group was one of several that in 2000 sued the circus’ owner, Feld Entertainment Inc., claiming elephants were abused. Courts later found that the animal rights activists had paid a former Ringling employee to bring the lawsuit and that the man didn’t have the right to sue the circus.






The Vienna, Va.-based Feld Entertainment then sued the animal rights groups, accusing them of conspiracy to harm its business other illegal acts. Friday’s settlement covers only the ASPCA.


Animal and Pets News Headlines – Yahoo! News





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2013: A year for big issues in the courts












By Jeffrey Toobin, CNN Senior Legal Analyst


December 27, 2012 -- Updated 1445 GMT (2245 HKT)







Chief Justice John Roberts re-administers the oath of office to Barack Obama at the White House on January 21, 2009.




STORY HIGHLIGHTS


  • Jeffrey Toobin: 2013 will see pivotal decisions in several key areas of law

  • He says Supreme Court could decide fate of same-sex marriage

  • Affirmative action for public college admissions is also on Court's agenda

  • Toobin: Newtown massacre put gun control debate back in the forefront




Editor's note: Jeffrey Toobin is a senior legal analyst for CNN and a staff writer at The New Yorker magazine, where he covers legal affairs. He is the author of "The Oath: The Obama White House and the Supreme Court."


(CNN) -- What will we see in 2013?


One thing for sure: The year will begin with Chief Justice John Roberts and President Obama getting two chances to recite the oath correctly.



Jeffrey Toobin

Jeffrey Toobin



After that, here are my guesses.


1. Same-sex marriage and the Supreme Court. There are two cases, and there are a Rubik's Cube-worth of possibilities for their outcomes. On one extreme, the court could say that the federal government (in the Defense of Marriage Act) and the states can ban or allow same-sex marriage as they prefer. On the other end, the Court could rule that gay people have a constitutional right to marry in any state in the union. (Or somewhere in between.)





CNN Opinion contributors weigh in on what to expect in 2013. What do you think the year holds in store? Let us know @CNNOpinion on Twitter and Facebook/CNNOpinion


2. The future of affirmative action. In a case pending before the Supreme Court, the Court could outlaw all affirmative action in admissions at public universities, with major implications for all racial preferences in all school or non-school settings.


3. Gun control returns to the agenda. The Congress (and probably some states) will wrestle with the question of gun control, an issue that had largely fallen off the national agenda before the massacre in Newtown. Expect many invocations (some accurate, some not) of the Second Amendment.




4. The continued decline of the death penalty. Death sentences and executions continue to decline, and this trend will continue. Fear of mistaken executions (largely caused by DNA exonerations) and the huge cost of the death penalty process will both accelerate the shift.


5. Celebrity sex scandal. There will be one. There will be outrage, shock and amusement. (Celebrity to be identified later.)


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The opinions expressed in this commentary are solely those of Jeffrey Toobin.











Part of complete coverage on







December 28, 2012 -- Updated 1356 GMT (2156 HKT)



Aaron Carroll says most of the changes in 2013 will be in preparation for 2014 when the Affordable Care Act really kicks into effect.







December 28, 2012 -- Updated 1351 GMT (2151 HKT)



Don't look for dramatic change in the troubled politics of the Middle East, says Aaron Miller.







December 28, 2012 -- Updated 1337 GMT (2137 HKT)



Sheril Kirshenbaum says natural gas fracking, climate change and renewables are likely to drive discussions of energy in the new year.







December 28, 2012 -- Updated 1354 GMT (2154 HKT)



Former CIA director Michael Hayden says the controversy over the film is one of two Washington debates in which politics obscures the real role of intelligence agencies.







December 28, 2012 -- Updated 1344 GMT (2144 HKT)



Even for someone who has written more than 2,000 columns over the last 20 years, sometimes the words come out wrong, says Ruben Navarrette.








Get the latest opinion and analysis from CNN's columnists and contributors.







December 28, 2012 -- Updated 0307 GMT (1107 HKT)



Kerry Cahill and Keely Vanacker, whose father was shot dead at Fort Hood, say the nation must address problems that lead to massacres.







December 27, 2012 -- Updated 1734 GMT (0134 HKT)



Gayle Tzemach Lemmon says it's vital that the withdrawal of NATO forces by 2014 doesn't endanger the progress Afghan women have made.







December 27, 2012 -- Updated 1445 GMT (2245 HKT)



Jeffrey Toobin says key rulings will likely be made regarding same-sex marriage and affirmative action for public college admissions.







December 28, 2012 -- Updated 0041 GMT (0841 HKT)



Frida Ghitis says that after years in which conservative views dominated the nation, there's now majority support for many progressive stances.







December 28, 2012 -- Updated 0316 GMT (1116 HKT)



John MacIntosh says gun manufacturer Freedom Group should be acquired by public-spirited billionaires and turned into a company with ethical goals.







December 26, 2012 -- Updated 1540 GMT (2340 HKT)



Dean Obeidallah says "Zero Dark Thirty" and "Promised Land" present hot button issues that fire up people from the left and right.







December 22, 2012 -- Updated 1706 GMT (0106 HKT)



David Gergen says the hope for cooperation is gone in the capital as people spar over fiscal cliff, gun control, and nominations


















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Putin signs ban on U.S. adoptions of Russian children










MOSCOW (Reuters) - President Vladimir Putin signed a law on Friday that bans Americans from adopting Russian children and imposes other sanctions in retaliation for a new U.S. human rights law that he says is poisoning relations.

Washington has called the new Russian law misguided, saying it ties the fate of children to "unrelated political considerations", and analysts say it is likely to deepen a chill in U.S.-Russia relations and harm Putin's image abroad.






Fifty-two children whose adoptions by American parents were underway will now remain in Russia, the Interfax news agency cited Russia's child rights commissioner, Pavel Astakhov, as saying.

The new law, which has also ignited outrage among Russian liberals and child rights' advocates, takes effect on January 1.

The legislation, whose text was issued by the Kremlin, will also outlaw some non-governmental organizations that receive U.S. funding and impose a visa ban and asset freeze on Americans accused of violating the rights of Russians abroad.

Pro-Kremlin lawmakers initially drafted the bill to mirror the U.S. Magnitsky Act, which bars entry to Russians accused of involvement in the death in custody of anti-corruption lawyer Sergei Magnitsky and other alleged rights abuses.

The restrictions on adoptions and non-profit groups were added to the legislation later, going beyond a tit-for-tat move and escalating a dispute with Washington at a time when ties are already strained by issues such as the Syrian crisis.

The adoption ban may further tarnish Putin's international standing at a time when the former KGB officer is under scrutiny over what critics say is a crackdown on dissent since he returned to the Kremlin for a third term in May.

"The law will lead to a sharp drop in the reputation of the Kremlin and of Putin personally abroad, and signal a new phase in relations between the United States and Russia," said Lilia Shevtsova, an expert on Putin with the Carnegie Moscow Centre.

"It is only the first harbinger of a chill."

Putin's spokesman, Dmitry Peskov, said the Magnitsky Act - the U.S. bill which prompted the new Russian law - had "seriously undermined" the "reset", the moniker for the effort U.S. President Barack Obama launched early in his first term to improve relations between the former Cold War foes.

Putin has backed the hawkish response with a mixture of public appeals to patriotism, saying Russia should care for its own children, and with belligerent denunciations of what he says is the U.S. desire to impose its will on the world.

SHARP CRITICISM

Seeking to dampen criticism of the move, Putin also signed a decree ordering an improvement in care for orphans.

Critics of the Russian legislation say Putin has held the welfare of children trapped in a crowded and troubled orphanage system hostage to political maneuvering.

"He signed it after all! He signed one of the most shameful laws in Russian history," a blogger named Yuri Pronko wrote on the popular Russian site LiveJournal.

A hashtag that translates as "Putin eats children" was being widely used on Twitter in Russia on Friday, and pro-Kremlin microbloggers hit back with: "Putin supported orphans".

Russian authorities say the deaths of 19 Russian-born children adopted by American parents in the past decade were one of the main motives for the law as well as what they perceive as the overly lenient treatment of those parents by U.S. courts and law enforcement agencies.

However, critics of the bill say Russian orphanages are woefully overcrowded and that adoptions by Russian families remain modest, with some 7,400 adoptions in 2011 compared with 3,400 adoptions of Russian children by families abroad.

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Syria opposition leader rejects Moscow invitation


ALEPPO PROVINCE, Syria/BEIRUT (Reuters) - Syria's opposition leader has rejected an invitation from Russia for peace talks, dealing another blow to international hopes that diplomacy can be resurrected to end a 21-month civil war.


Russia, President Bashar al-Assad's main international protector, said on Friday it had sent an invitation for a visit to Moaz Alkhatib, whose six-week-old National Coalition opposition group has been recognized by most Western and Arab states as the legitimate voice of the Syrian people.


But in an interview on Al Jazeera television, Alkhatib said he had already ruled out such a trip and wanted an apology from Moscow for its support for Assad.


"We have clearly said we will not go to Moscow. We could meet in an Arab country if there was a clear agenda," he said.


"Now we also want an apology from (Russian Foreign Minister Sergei) Lavrov because all this time he said that the people will decide their destiny, without foreign intervention. Russia is intervening and meanwhile all these massacres of the Syrian people have happened, treated as if they were a picnic."


"If we don't represent the Syrian people, why do they invite us?" Alkhatib said. "And if we do represent the Syrian people why doesn't Russia respond and issue a clear condemnation of the barbarity of the regime and make a clear call for Assad to step down? This is the basic condition for any negotiations."


With the rebels advancing steadily over the second half of 2012, diplomats have been searching for months for signs that Moscow's willingness to protect Assad is faltering.


So far Russia has stuck to its position that rebels must negotiate with Assad's government, which has ruled since his father seized power in a coup 42 years ago.


"I think a realistic and detailed assessment of the situation inside Syria will prompt reasonable opposition members to seek ways to start a political dialogue," Lavrov said on Friday.


That was immediately dismissed by the opposition: "The coalition is ready for political talks with anyone ... but it will not negotiate with the Assad regime," spokesman Walid al-Bunni told Reuters. "Everything can happen after the Assad regime and all its foundations have gone. After that we can sit down with all Syrians to set out the future."


BRAHIMI TO MOSCOW


Russia says it is behind the efforts of U.N. mediator Lakhdar Brahimi, fresh from a five-day trip to Damascus where he met Assad. Brahimi, due in Moscow for talks on Saturday, is touting a months-old peace plan for a transitional government.


That U.N. plan was long seen as a dead letter, foundering from the outset over the question of whether the transitional body would include Assad or his allies. Brahimi's predecessor, Kofi Annan, quit in frustration shortly after negotiating it.


But with rebels having seized control of large sections of the country in recent months, Russia and the United States have been working with Brahimi to resurrect the plan as the only internationally recognized diplomatic negotiating track.


Russia's Middle East envoy, Deputy Foreign Minister Mikhail Bogdanov, who announced the invitation to Alkhatib, said further talks were scheduled between the "three B's" - himself, Brahimi and U.S. Undersecretary of State William Burns.


Speaking in Damascus on Thursday, Brahimi called for a transitional government with "all the powers of the state", a phrase interpreted by the opposition as potentially signaling tolerance of Assad remaining in some ceremonial role.


But such a plan is anathema to the surging rebels, who now believe they can drive Assad out with a military victory, despite long being outgunned by his forces.


"We do not agree at all with Brahimi's initiative. We do not agree with anything Brahimi says," Colonel Abdel-Jabbar Oqaidi, who heads the rebels' military council in Aleppo province, told reporters at his headquarters there.


Oqaidi said the rebels want Assad and his allies tried in Syria for crimes. Assad himself says he will stay on and fight to the death if necessary.


In the rebel-held town of Kafranbel, demonstrators held up cartoons showing Brahimi speaking to a news conference with toilet bowls in front of him, in place of microphones. Banners denounced the U.N. envoy with obscenities in English.


DIPLOMATS IMPOTENT


Diplomacy has largely been irrelevant to the conflict so far, with Western states ruling out military intervention like the NATO bombing that helped topple Libya's Muammar Gaddafi last year, and Russia and China blocking U.N. action against Assad.


Meanwhile, the fighting has grown fiercer and more sectarian, with rebels mainly from the Sunni Muslim majority battling Assad's government and allied militia dominated by his Alawite sect, an offshoot of Shi'ite Islam.


Still, Western diplomats have repeatedly touted signs of a change in policy from Russia, which they hope could prove decisive, much as Moscow's withdrawal of support for Serbian leader Slobodan Milosevic heralded his downfall a decade ago.


Bogdanov said earlier this month that Assad's forces were losing ground and rebels might win the war, but Russia has since rowed back, with Lavrov last week reiterating Moscow's position that neither side could win through force.


Still, some Moscow-based analysts see the Kremlin coming to accept it must adapt to the possibility of rebel victory.


"As the situation changes on the battlefield, more incentives emerge for seeking a way to stop the military action and move to a phase of political regulation," said Dmitry Trenin, director of the Carnegie Moscow Center.


Meanwhile, on the ground the bloodshed that has killed some 44,000 people continues unabated. According to the pro-opposition Syrian Observatory for Human Rights, a monitoring group based in Britain, 150 people were killed on Thursday, a typical toll as fighting has escalated in recent months.


Government war planes bombarded the town of Assal al-Ward in the Qalamoun district of Damascus province for the first time, killing one person and wounding dozens, the observatory said.


In Aleppo, Syria's northern commercial hub, clashes took place between rebel fighters and army forces around an air force intelligence building in the Zahra quarter, a neighborhood that has been surrounded by rebels for weeks.


(Additional reporting by Omar Fahmy in Cairo, Dominic Evans in Beirut and Steve Gutterman and Alissa de Carbonnel in Moscow; Writing by Peter Graff; Editing by Giles Elgood)



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Wall Street falls as senator sees "fiscal cliff" fall

To a black ESPN sports analyst, this is the critical question: Is Robert Griffin III, aka RG III, the black rookie sensation Washington Redskins quarterback, "a brother, or is he a cornball brother?" What has RG III done or said to raise a suspicion about his bona fides as a black person? More importantly, what does this have to do with appreciating — or choosing not to appreciate — Griffin as an athlete?
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McElroy has concussion, Sanchez to start for Jets


FLORHAM PARK, N.J. (AP) — Greg McElroy has a concussion and will be replaced by Mark Sanchez as the New York Jets' starting quarterback in the season finale at Buffalo on Sunday.


Coach Rex Ryan says Thursday that McElroy, preparing to make his second NFL start in place of the benched Sanchez, was lifting weights and had headaches. He went to the team's training staff and then revealed he was suffering concussion-like symptoms after being sacked 11 times in the Jets' 27-17 loss to San Diego last Sunday.


Ryan says he chose to start Sanchez over Tim Tebow because the team has just two practices and a walkthrough to prepare before the game and he feels "more comfortable" with Sanchez. Sanchez was benched after turning the ball over five times at Tennessee on Dec. 17.


___


Online: http://pro32.ap.org/poll and http://twitter.com/AP_NFL


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How Not ‘Awesome’ Was Lisa Jackson at the EPA?






After almost four years of guiding controversial decisions on fracking, the Keystone XL pipeline, and coal, EPA Administrator Lisa Jackson is stepping down. Now, the hunt is on for a new director who won’t be able to please anyone.


RELATED: EPA Passes New Fracking Rules






Jackson—the EPA‘s first African American chief and a chemical engineer by training—wrote in a statement, “I will leave the EPA confident the ship is sailing in the right direction, and ready in my own life for new challenges, time with my family and new opportunities to make a difference.” President Obama said in a separate statement: 



Under her leadership, the EPA has taken sensible and important steps to protect the air we breathe and the water we drink, including implementing the first national standard for harmful mercury pollution, taking important action to combat climate change under the Clean Air Act and playing a key role in establishing historic fuel economy standards that will save the average American family thousands of dollars at the pump, while also slashing carbon pollution.



Congressional Republicans, however, won’t be sad to see her go. Caught between their hostility toward regulation and the Obama administration’s lack of emphasis on climate change, Jackson was unable to nix the Keystone XL oil pipeline, a planned route for bringing tar sand oil from Canada down to Texas. When confronted on the issue, Jackson simply said that holding conversations about the project is “awesome.” She also wasn’t able to get the EPA to take meaningful action on hydraulic fracturing, even after the agency found evidence that the practice contributes to groundwater pollution. 


RELATED: EPA Proposes First Fracking-Related Pollution Rules


Among her successes, Jackson can count a rule limiting mercury emissions in coal-fired plants and the doubling of fuel efficiency standards. It remains to be seen whether the EPA’s deputy administrator Robert Perciasepe—who looks prepped to take the reigns in the interim and potentially as full-time Administrator later on—can do any better. 


Green News Headlines – Yahoo! News





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A gunmaker ripe for an ethical takeover




Several .223 caliber rounds near a Bushmaster XM-15; the manufacturer's owner is putting its gun companies up for sale.




STORY HIGHLIGHTS


  • The owner of America's largest gunmaker is putting firm up for sale

  • John MacIntosh says billionaires should lead effort to acquire the gun manufacturer

  • He says they should change corporate practices to discourage violence

  • MacIntosh: One leading company could push gun industry in a more ethical direction




Editor's note: John MacIntosh was a partner at Warburg Pincus, a leading global private equity firm, where he worked from 1994 to 2006 in New York, Tokyo and London. He now runs a nonprofit in New York.


(CNN) -- In the 1970s and '80s, when corporate America was plagued with inefficiency, a new class of financially motivated takeover investor emerged to prey on the fattest in the corporate herd and scare the rest into line.


Today, as pockets of corporate America are plagued with immorality, we need a new class of socially motivated takeover investor to prey on the sociopaths in the corporate herd, turn them around and perhaps scare (or shame) others into line.



John MacIntosh

John MacIntosh



The upcoming sale by Cerberus Capital of the Freedom Group, the largest gun manufacturer in the United States, is a perfect opportunity to usher in this new era of muscular, socially responsible capitalism:


First, Michael Bloomberg, George Soros, David Geffen and the like should establish a nonprofit SPAC (Special-Purpose-Acquisition-Company) called BidForFreedom.org (BFF) with a mission to reduce needless deaths through gun violence in the United States and encourage the passage of sensible gun control regulations.



They should appoint George Clooney, Angelina Jolie and Matt Damon to the fundraising committee and recruit a loud-mouthed, poison-penned, but good-hearted activist hedge fund titan as chief investment officer (Bill Ackman? Dan Loeb?).


Opinion: Forgotten victims of gun violence


To be credible, BFF will probably need to start with at least $250 million in cash and commitments (no problem given the billionaire status of the sponsors) with additional firepower raised as needed from well-heeled individuals, foundations and through a broad-based Internet solicitation to an outraged-by-Newtown public.


Second, BFF should lobby all public pension funds that are part owners of the Freedom Group (by virtue of their investment in Cerberus) to roll their investment into BFF to reduce the need for outside funding, naming and shaming any unwilling public investors.


Newtown shooter's guns








Third, BFF should pay "whatever it takes" to acquire control of the Freedom Group in the upcoming auction by Cerberus (which has a fiduciary obligation to sell to the highest bidder) and then immediately implement a "moral turnaround" plan under which the Freedom Group:


(i) Appoints a high-profile CEO with impeccable credentials as a hunter and/or marksman who is nevertheless in favor of gun-control.


Opinion: Guns endanger more than they protect


(ii) Elects a new board of directors including representatives from the families of victims killed in Newtown (and/or other massacres perpetrated with Freedom Group weapons), military veterans and trauma surgeons with real experience of human-on-human gunfire, and law enforcement and mental health professionals.


(iii) Operates the business as if sensible gun laws were in place (this may turn out to be a wise investment in future-proofing the company): discontinuing sales of the most egregious assault weapons and modifying others as necessary so they cannot take huge-volume clips; offering to buy back all Freedom Group assault weapons in circulation; micro-stamping weapons for easy tracking; and providing price discounts for buyers willing to go through a background check and register in a database available to law enforcement.


(iv) Voluntarily waives its rights to support the NRA and other lobbying groups.


(v) Creates a fund to compensate those who, despite its best efforts, are killed or wounded by its weapons.


(vi) Agrees that if the effort to provide moral leadership in the weapons industry doesn't succeed within a year, BFF should consider corporate euthanasia, even though it entails a risk of allowing more retrograde manufacturers to fill the void in the market left by the then-deceased company.


Opinion: The case for gun rights is stronger than you think


In the face of horrors like Newtown, BFF would recognize that it's time to take a stand by acknowledging the impossibility of reaching closure after such a monstrous act while an unreconstructed Freedom Group continues to sell a huge volume of guns and ammunition rounds each year even if it is operating under new owners.


Like any Trojan Horse strategy, this is a long shot, but it must be tried. History suggests that only after the first company "turns" will an industry gradually return to the realm of the human (think of big tobacco). And without the tacit agreement, if not the outright support, of at least one important insider, policymakers seem utterly unable to pass tough regulations in the face of the predictable, but withering, assault by industry lackeys shrieking that any such regulation would be "impossible, impractical or too expensive."


In the face of a recalcitrant industry, we have to acknowledge that it is only the market for corporate control -- the real possibility that an outsider will take over one of the companies -- that puts limits on the behavior of board members and executives who, while perhaps decent enough in their family lives, display a limitless tolerance for the "banality of evil" at the office.


Opinion: Not man enough? Buy a gun


We must accept that the conventional, kid-gloves approach to socially responsible investing -- divesting shares in "bad" companies that nevertheless continue to exist -- is too weak an instrument to force change and its well-meaning practitioners too soft to enter the fray when emotionally and politically charged battles need to be fought.


And regardless of the viability of socially motivated takeovers in general, the Freedom Group looks like a great target. Cerberus is a motivated seller, the political macros look favorable, and it's a bite-sized company compared with many of the larger sociopaths in the corporate herd.


I'm even cautiously optimistic that the current impasse over gun regulation is a bad-equilibrium that few consumers actually want, and that a reconstructed Freedom Group, fighting for sensible change as a fifth column from within the industry, might well find that many people -- even a significant portion of the NRA's members -- would buy from a truly responsible (and high quality) gun maker if given the chance.


All in all, it's a pretty exciting deal, so if Mike and George are up for it, count me in.



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The opinions expressed in this commentary are solely those of John MacIntosh.






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Sen. Reid warns U.S. poised to go over 'fiscal cliff'

Rana Foroohar, Time magazine's assistant managing editor for business news, talks to Rebecca Jarvis and Jeff Glor about what a drop off the "fiscal cliff" could mean to businesses and consumers.










WASHINGTON (Reuters) - The top Democrat in the Senate warned on Thursday that the United States looks to be headed over the "fiscal cliff" of tax hikes and spending cuts that will start next week if squabbling politicians do not reach a deal.

Majority Leader Harry Reid told the Senate in a speech that "it looks like that is where we're headed."






He called on the Republicans who control the House of Representatives to prevent the worst of the fiscal shock by getting behind a Senate bill to extend existing tax cuts for all except those households earning more than $250,000 a year.

With the House not in session and the clock ticking toward the scheduled January start of tax increases and deep, automatic government spending cuts, Reid offered little hope.

"I don't know time-wise how it can happen now," he said.

President Barack Obama arrived at Andrews Air Force Base outside Washington after a flight from Hawaii on Thursday on his way back to the White House to try to restart stalled negotiations with Congress.

Obama made phone calls to congressional leaders on Wednesday from his vacation in Hawaii to try to revive the stalled talks to prevent the "fiscal cliff" scenario, which would worry world financial markets and could push the United States back into recession.

U.S. stocks fell to session lows after Reid's pessimistic remarks.

In addition, consumer confidence fell to a four-month low in December as the budget crisis sapped what had been a growing sense of optimism about the economy, a report released on Thursday showed.

"People are hearing about (the cliff) and it negatively impacts confidence and investor sentiment and even holiday sales," said Todd Schoenberger, managing partner at Landcolt Capital in New York.

The chances of a last-minute deal - at least one that would prevent tax hikes - remained uncertain, with Republicans and Democrats each insisting the other side move first amid continuing partisan gridlock.

The Senate, controlled by Democrats, was scheduled to meet later on Thursday but on matters unrelated to the "fiscal cliff."

Speaker John Boehner and other House Republican leaders, who say they are willing to take up a "fiscal cliff" measure only after the Senate acts on one, were to hold a conference call with Republican House members on Thursday.

The expectation for the call was that lawmakers would be told to get back to Washington within 48 hours to consider anything the Senate might pass.

Weather permitting, that would bring them to Washington with perhaps three days left before the deadline for action. Storms affecting the Midwest, the South and the Northeast played havoc with airline schedules.

'NOT WILLING'

"This isn't a one party or one house problem. This is (that) leaders in both parties in all branches of the government are not willing to make the deal that they know they have to make. Everybody wants their stuff but doesn't want to give up what they don't want to give up," Republican U.S. Representative Steven LaTourette told CNN.

The House and Senate passed bills months ago reflecting their own sharply divergent positions on the expiring low tax rates, which went into effect during the administration of Republican former President George W. Bush.

Democrats want to allow the tax cuts to expire on the wealthiest Americans. Republicans want to extend the tax cuts for everyone.

Congress has proven that it can act swiftly once an agreement is reached. Hope persisted that Republicans and Democrats might come up with a resolution before New Year's Day that could at least postpone the impact of the tax hikes and spending cuts while further discussions take place.

That gives some hope to world markets.

"There is still hope for a last-minute deal, otherwise we're in for a correction in January. People have already priced in an agreement. Without it, the market can't stay at these levels," a Paris-based trader said.

Another battle is just over the horizon in late January or early February over raising the debt ceiling, which puts a limit on the amount of money the U.S. government can borrow to pay its debts and can be raised only with the approval of Congress.

Republican leaders have said they will insist on more budget cuts as a condition of raising the ceiling. Without any action, the U.S. Treasury said on Wednesday the government is set to reach its $16.4 trillion debt ceiling on December 31.

The Treasury Department is to begin "extraordinary measures" to buy time. Many analysts believe the government can stave the default date off into late February.

(Additional reporting by Doina Chiacu, Alina Selyukh and Richard Cowan; Writing by Alistair Bell; Editing by Will Dunham)

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