President Obama says deal in sight to avert fiscal cliff






WASHINGTON: President Barack Obama said on Monday a deal to avert the fiscal cliff budget crisis was in sight, as dramatic New Year's Eve negotiations went down to the wire ahead of a midnight deadline.

"It appears that an agreement to prevent this New Year's tax hike is within sight. It's not done. There are still issues left to resolve, but we're hopeful that Congress can get it done," Obama said at the White House.

The framework of a possible deal to head off automatic tax increases due to kick in with the turn of a year appeared to be in place after through the night negotiations between Democrats and Republicans on Capitol Hill.

But Obama hinted that the proposed pact would not deal with complementary and punishing cuts to government spending also due to take place in the New Year, which he said would have to be dealt with down the line.

The president said the deal would extend tax credits for clean energy firms and also unemployment insurance for two million people which are due to expire later Monday.

"For now, our most immediate priority is to stop taxes going up for middle class families, starting tomorrow. I think that is a modest goal that we can accomplish. Democrats and Republicans in congress have to get this done."

Even if the Democratic-controlled Senate does sign off on a deal Monday, avoiding the cliff could go down to the wire.

The bill must then go to the Republican-held House of Representatives.

The chamber is in session on Monday, but House Speaker John Boehner has struggled to control his party's restive conservatives, many of whom may balk at signing on to any Obama-approved deal that raises taxes.

The key areas of friction are the income threshold at which taxes should rise, Obama's insistence on extending unemployment benefits and Republican demands for increased federal spending cuts.

Reports said that the deal would see taxes rise for families earning more than $450,000 a year. Obama had originally campaigned for the threshold to kick in for those making $250,000 and above.

"There are a number of issues on which the two sides are still apart," Democratic Senate Majority Harry Reid conceded. "Negotiations are continuing as I speak, but we really are running out of time."

Days of last-gasp talks have produced no deal between US political leaders struggling for a compromise to head off a fiscal crisis that could roil global markets and plunge the United States back into a punishing recession.

Republicans have dropped their demand for a new way of calculating inflation that would have cut the level of benefits for Social Security recipients.

But they were reportedly maintaining their insistence that estate inheritance tax rates stay at current levels.

The two sides remained bitterly at odds over the $109 billion in automatic spending cuts set to hit the Pentagon as well as other federal agencies beginning in early January.

Democrats said they were pushing for a delay of the cuts, known as the "sequester," for about two years, while some Republicans, including Senator Roy Blunt, said it was inconceivable to allow a delay without imposing more targeted offsets to pay for such a postponement.

Don Stewart, McConnell's spokesman, said in a statement on Monday that the Republican leader and Biden had talked long into the night to try to hammer out a deal.

Democratic congressman Chris Van Hollen said there was better than a 50-50 chance of a pre-midnight agreement, but his Republican rivals were a question mark.

"One big question of course is whether an agreement put together by the senators on a bipartisan basis, whether that can pass the House of Representatives," he told CNN.

Republicans largely oppose raising taxes on anyone.

There may be a push by conservatives to let the economy slide off the cliff so that taxes rise on all Americans, only for lawmakers to quickly turn around and vote for a tax cut on the middle class.

- AFP/de



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13 things to watch in 2013




Among the few virtual certainties of 2013 is the ongoing anguish of Syria and the decline of its president, Bashar al-Assad.




STORY HIGHLIGHTS


  • Look for more unrest amid power transitions in the Middle East

  • Disputes and economic worries will keep China, Japan, North Korea in the news

  • Europe's economy will stay on a rough road, but the outlook for it is brighter

  • Events are likely to draw attention to cyber warfare and climate change




(CNN) -- Forecasting the major international stories for the year ahead is a time-honored pastime, but the world has a habit of springing surprises. In late 1988, no one was predicting Tiananmen Square or the fall of the Berlin Wall. On the eve of 2001, the 9/11 attacks and the subsequent invasion of Afghanistan were unimaginable. So with that substantial disclaimer, let's peer into the misty looking glass for 2013.


More turmoil for Syria and its neighbors


If anything can be guaranteed, it is that Syria's gradual and brutal disintegration will continue, sending aftershocks far beyond its borders. Most analysts do not believe that President Bashar al-Assad can hang on for another year. The more capable units of the Syrian armed forces are overstretched; large tracts of north and eastern Syria are beyond the regime's control; the economy is in dire straits; and the war is getting closer to the heart of the capital with every passing week. Russian support for al-Assad, once insistent, is now lukewarm.


Amid the battle, a refugee crisis of epic proportions threatens to become a catastrophe as winter sets in. The United Nations refugee agency says more than 4 million Syrians are in desperate need, most of them in squalid camps on Syria's borders, where tents are no match for the cold and torrential rain. Inside Syria, diseases like tuberculosis are spreading, according to aid agencies, and there is a danger that hunger will become malnutrition in places like Aleppo.


The question is whether the conflict will culminate Tripoli-style, with Damascus overrun by rebel units; or whether a political solution can be found that involves al-Assad's departure and a broadly based transitional government taking his place. U.N. envoy Lakhdar Brahimi has not been explicit about al-Assad's exit as part of the transition, but during his most recent visit to Damascus, he hinted that it has to be.









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"Syria and the Syrian people need, want and look forward to real change. And the meaning of this is clear to all," he said.


The international community still seems as far as ever from meaningful military intervention, even as limited as a no fly-zone. Nor is there any sign of concerted diplomacy to push all sides in Syria toward the sort of deal that ended the war in Bosnia. In those days, the United States and Russia were able to find common ground. In Syria, they have yet to do so, and regional actors such as Turkey, Qatar, Saudi Arabia and Iran also have irons in the fire.


Failing an unlikely breakthrough that would bring the regime and its opponents to a Syrian version of the Dayton Accords that ended the Bosnian war, the greatest risk is that a desperate regime may turn to its chemical weapons, troublesome friends (Hezbollah in Lebanon and the Kurdish PKK in Turkey) and seek to export unrest to Lebanon, Iraq and Jordan.


The Syrian regime has already hinted that it can retaliate against Turkey's support for the rebels -- not by lobbing Scud missiles into Turkey, but by playing the "Kurdish" card. That might involve direct support for the PKK or space for its Syrian ally, the Democratic Union Party. By some estimates, Syrians make up one-third of the PKK's fighting strength.


To the Turkish government, the idea that Syria's Kurds might carve out an autonomous zone and get cozy with Iraq's Kurds is a nightmare in the making. Nearly 800 people have been killed in Turkey since the PKK stepped up its attacks in mid-2011, but with three different sets of elections in Turkey in 2013, a historic bargain between Ankara and the Kurds that make up 18% of Turkey's population looks far from likely.


Many commentators expect Lebanon to become more volatile in 2013 because it duplicates so many of the dynamics at work in Syria. The assassination in October of Lebanese intelligence chief Brig. Gen. Wissam al-Hassan -- as he investigated a pro-Syrian politician accused of obtaining explosives from the Syrian regime -- was an ominous portent.


Victory for the overwhelmingly Sunni rebels in Syria would tilt the fragile sectarian balance next door, threatening confrontation between Lebanon's Sunnis and Hezbollah. The emergence of militant Salafist groups like al-Nusra in Syria is already playing into the hands of militants in Lebanon.


Iraq, too, is not immune from Syria's turmoil. Sunni tribes in Anbar and Ramadi provinces would be heartened should Assad be replaced by their brethren across the border. It would give them leverage in an ever more tense relationship with the Shia-dominated government in Baghdad. The poor health of one of the few conciliators in Iraqi politics, President Jalal Talabani, and renewed disputes between Iraq's Kurds and the government over boundaries in the oil-rich north, augur for a troublesome 2013 in Iraq.


More worries about Iran's nuclear program


Syria's predicament will probably feature throughout 2013, as will the behavior of its only friend in the region: Iran. Intelligence sources say Iran continues to supply the Assad regime with money, weapons and expertise; and military officers who defected from the Syrian army say Iranian technicians work in Syria's chemical weapons program. Al-Assad's continued viability is important for Iran, as his only Arab ally. They also share sponsorship of Hezbollah in Lebanon, which, with its vast supply of rockets and even some ballistic missiles, might be a valuable proxy in the event of an Israeli strike against Iran's nuclear program.


Speaking of which, there are likely to be several more episodes in the behind-closed-doors drama of negotiations on Iran's nuclear sites. Russia is trying to arrange the next round for January. But in public, at least, Iran maintains it has every right to continue enriching uranium for civilian purposes, such as helping in the treatment of more than 1 million Iranians with cancer.


Iran "will not suspend 20% uranium enrichment because of the demands of others," Fereydoun Abbasi-Davani, head of Iran's Atomic Energy Organization, said this month.


International experts say the amount of 20% enriched uranium (estimated by the International Atomic Energy Agency in November at 297 pounds) is more than needed for civilian purposes, and the installation of hundreds more centrifuges could cut the time needed to enrich uranium to weapons-grade. The question is whether Iran will agree to intrusive inspections that would reassure the international community -- and Israel specifically -- that it can't and won't develop a nuclear weapon.


This raises another question: Will it take bilateral U.S.-Iranian talks -- and the prospect of an end to the crippling sanctions regime -- to find a breakthrough? And will Iran's own presidential election in June change the equation?


For now, Israel appears to be prepared to give negotiation (and sanctions) time to bring Iran to the table. For now.


Egypt to deal with new power, economic troubles


Given the turmoil swirling through the Middle East, Israel could probably do without trying to bomb Iran's nuclear program into submission. Besides Syria and Lebanon, it is already grappling with a very different Egypt, where a once-jailed Islamist leader is now president and Salafist/jihadi groups, especially in undergoverned areas like Sinai, have a lease on life unimaginable in the Mubarak era.



The U.S. has an awkward relationship with President Mohamed Morsy, needing his help in mediating with Hamas in Gaza but concerned that his accumulation of power is fast weakening democracy and by his bouts of anti-Western rhetoric. (He has demanded the release from a U.S. jail of Sheikh Omar Abdel Rahman, convicted of involvement in the first bombing of the World Trade Center in 1993.)


The approval of the constitution removes one uncertainty, even if the opposition National Salvation Front says it cements Islamist power. But as much as the result, the turnout -- about one-third of eligible voters -- indicates that Egyptians are tired of turmoil, and more concerned about a deepening economic crisis.


Morsy imposed and then scrapped new taxes, and the long-expected $4.8 billion loan from the International Monetary Fund is still not agreed on. Egypt's foreign reserves were down to $15 billion by the end of the year, enough to cover less than three months of imports. Tourism revenues are one-third of what they were before street protests erupted early in 2011. Egypt's crisis in 2013 may be more about its economy than its politics.


Libya threatens to spawn more unrest in North Africa


Libya's revolution, if not as seismic as anything Syria may produce, is still reverberating far and wide. As Moammar Gadhafi's rule crumbled, his regime's weapons found their way into an arms bazaar, turning up in Mali and Sinai, even being intercepted off the Lebanese coast.


The Libyan government, such as it is, seems no closer to stamping its authority on the country, with Islamist brigades holding sway in the east, tribal unrest in the Sahara and militias engaged in turf wars. The danger is that Libya, a vast country where civic institutions were stifled for four decades, will become the incubator for a new generation of jihadists, able to spread their influence throughout the Sahel. They will have plenty of room and very little in the way of opposition from security forces.


The emergence of the Islamist group Ansar Dine in Mali is just one example. In this traditionally moderate Muslim country, Ansar's fighters and Tuareg rebels have ejected government forces from an area of northern Mali the size of Spain and begun implementing Sharia law, amputations and floggings included. Foreign fighters have begun arriving to join the latest front in global jihad; and terrorism analysts are seeing signs that al Qaeda in the Islamic Maghreb (AQIM) and groups like Boko Haram in Nigeria are beginning to work together.


There are plans for an international force to help Mali's depleted military take back the north, but one European envoy said it was unlikely to materialize before (wait for it) ... September 2013. Some terrorism analysts see North Africa as becoming the next destination of choice for international jihad, as brigades and camps sprout across a vast area of desert.


A bumpy troop transition for Afghanistan


The U.S. and its allies want to prevent Afghanistan from becoming another haven for terror groups. As the troop drawdown gathers pace, 2013 will be a critical year in standing up Afghan security forces (the numbers are there, their competence unproven), improving civil institutions and working toward a post-Karzai succession.



In November, the International Crisis Group said the outlook was far from assuring.


"Demonstrating at least will to ensure clean elections (in Afghanistan in 2014) could forge a degree of national consensus and boost popular confidence, but steps toward a stable transition must begin now to prevent a precipitous slide toward state collapse. Time is running out," the group said.


Critics have also voiced concerns that the publicly announced date of 2014 for withdrawing combat forces only lets the Taliban know how long they must hold out before taking on the Kabul government.


U.S. officials insist the word is "transitioning" rather than "withdrawal," but the shape and role of any military presence in 2014 and beyond are yet to be settled. Let's just say the United States continues to build up and integrate its special operations forces.


The other part of the puzzle is whether the 'good' Taliban can be coaxed into negotiations, and whether Pakistan, which has considerable influence over the Taliban leadership, will play honest broker.


Private meetings in Paris before Christmas that involved Taliban envoys and Afghan officials ended with positive vibes, with the Taliban suggesting they were open to working with other political groups and would not resist girls' education. There was also renewed discussion about opening a Taliban office in Qatar, but we've been here before. The Taliban are riven by internal dissent and may be talking the talk while allowing facts on the ground to work to their advantage.


Where will North Korea turn its focus?


On the subject of nuclear states that the U.S.-wishes-were-not, the succession in North Korea has provided no sign that the regime is ready to restrain its ambitious program to test nuclear devices and the means to deliver them.



Back in May 2012, Peter Brookes of the American Foreign Policy Council said that "North Korea is a wild card -- and a dangerous one at that." He predicted that the inexperienced Kim Jong Un would want to appear "large and in charge," for internal and external consumption. In December, Pyongyang launched a long-range ballistic missile -- one that South Korean scientists later said had the range to reach the U.S. West Coast. Unlike the failure of the previous missile launch in 2009, it managed to put a satellite into orbit.


The last two such launches have been followed by nuclear weapons tests -- in 2006 and 2009. Recent satellite images of the weapons test site analyzed by the group 38 North show continued activity there.


So the decision becomes a political one. Does Kim continue to appear "large and in charge" by ordering another test? Or have the extensive reshuffles and demotions of the past year already consolidated his position, allowing him to focus on the country's dire economic situation?


China-Japan island dispute to simmer


It's been a while since East Asia has thrown up multiple security challenges, but suddenly North Korea's missile and nuclear programs are not the only concern in the region. There's growing rancor between China and Japan over disputed islands in the East China Sea, which may be aggravated by the return to power in Japan of Shinzo Abe as prime minister.


Abe has long been concerned that Japan is vulnerable to China's growing power and its willingness to project that power. Throughout 2012, Japan and China were locked in a war of words over the Senkaku or Diaoyu islands, with fishing and Coast Guard boats deployed to support claims of sovereignty.


In the days before Japanese went to the polls, Beijing also sent a surveillance plane over the area, marking the first time since 1958, according to Japanese officials, that Bejing had intruded into "Japanese airspace." Japan scrambled F-15 jets in response.


The islands are uninhabited, but the seas around them may be rich in oil and gas. There is also a Falklands factor at play here. Not giving in to the other side is a matter of national pride. There's plenty of history between China and Japan -- not much of it good.


As China has built up its ability to project military power, Japan's navy has also expanded. Even a low-level incident could lead to an escalation. And as the islands are currently administered by Japan, the U.S. would have an obligation to help the Japanese defend them.


Few analysts expect conflict to erupt, and both sides have plenty to lose. For Japan, China is a critical market, but Japanese investment there has fallen sharply in the past year. Just one in a raft of problems for Abe. His prescription for dragging Japan out of its fourth recession since 2000 is a vast stimulus program to fund construction and other public works and a looser monetary policy.


The trouble is that Japan's debt is already about 240% of its GDP, a much higher ratio than even Greece. And Japan's banks hold a huge amount of that debt. Add a shrinking and aging population, and at some point the markets might decide that the yield on Japan's 10-year sovereign bond ought to be higher than the current 0.77%.


Economic uncertainty in U.S., growth in China


So the world's third-largest economy may not help much in reviving global growth, which in 2012 was an anemic 2.2%, according to United Nations data. The parts of Europe not mired in recession hover close to it, and growth in India and Brazil has weakened. Which leaves the U.S. and China.


At the time of writing, the White House and congressional leadership are still peering over the fiscal cliff. Should they lose their footing, the Congressional Budget Office expects the arbitrary spending cuts and tax increases to be triggered will push the economy into recession and send unemployment above 9%.



A stopgap measure, rather than a long-term foundation for reducing the federal deficit, looks politically more likely. But to companies looking for predictable economic policy, it may not be enough to unlock billions in investment. Why spend heavily if there's a recession around the corner, or if another fight looms over raising the federal debt ceiling?


In September, Moody's said it would downgrade the U.S. sovereign rating from its "AAA" rating without "specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term." In other words, it wants action beyond kicking the proverbial can.


Should the cliff be dodged, most forecasts see the U.S. economy expanding by about 2% in 2013. That's not enough to make up for stagnation elsewhere, so a great deal depends on China avoiding the proverbial hard landing.


Until now, Chinese growth has been powered by exports and infrastructure spending, but there are signs that China's maturing middle class is also becoming an economic force to be reckoned with. Consultants PwC expect retail sales in China to increase by 10.5% next year -- with China overtaking the U.S. as the world's largest retail market by 2016.


Europe's economic outlook a little better


No one expects Europe to become an economic powerhouse in 2013, but at least the horizon looks a little less dark than it did a year ago. The "PIGS' " (Portugal, Ireland/Italy, Greece, Spain) borrowing costs have eased; there is at least rhetorical progress toward a new economic and fiscal union; and the European Central Bank has talked tough on defending the Eurozone.


Mario Draghi, president of the European Central Bank, fended off the dragons with the declaration in July that "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough."



Draghi has promised the bank has unlimited liquidity to buy sovereign debt, as long as governments (most likely Spain) submit to reforms designed to balance their budgets. But in 2013, the markets will want more than brave talk, including real progress toward banking and fiscal union that will leave behind what Draghi likes to call Europe's "fairy world" of unsustainable debt and collapsing banks. Nothing can be done without the say-so of German Chancellor Angela Merkel, renowned for a step-by-step approach that's likely to be even more cautious in a year when she faces re-election.


Elections in Italy in February may be more important -- pitching technocrat Prime Minister Mario Monti against the maverick he replaced, 76-year old Silvio Berlusconi. After the collapse of Berlusconi's coalition 13 months ago, Monti reined in spending, raised the retirement age and raised taxes to bring Italy back from the brink of insolvency. Now he will lead a coalition of centrist parties into the election. But polls suggest that Italians are tired of Monti's austerity program, and Berlusconi plans a populist campaign against the man he calls "Germano-centric."


The other tripwire in Europe may be Greece. More cuts in spending -- required to qualify for an EU/IMF bailout -- are likely to deepen an already savage recession, threatening more social unrest and the future of a fragile coalition. A 'Grexit' from the eurozone is still possible, and that's according to the Greek finance minister, Yannis Stournaras.


Expect to see more evidence of climate change


Hurricane Sandy, which struck the U.S. East Coast in November, was the latest indicator of changing and more severe weather patterns. Even if not repeated in 2013, extreme weather is beginning to have an effect -- on where people live, on politicians and on the insurance industry.


After Sandy, New York Gov. Andrew Cuomo said that after "the last few years, I don't think anyone can sit back anymore and say, 'Well, I'm shocked at that weather pattern.' " The storm of the century has become the storm of every decade or so, said Michael Oppenheimer, professor of geosciences at Princeton.


"Climate change will probably increase storm intensity and size simultaneously, resulting in a significant intensification of storm surges," he and colleagues wrote in Nature.


In the U.S., government exposure to storm-related losses in coastal states has risen more than 15-fold since 1990, to $885 billion in 2011, according to the Insurance Information Institute. The Munich RE insurance group says North America has seen higher losses from extreme weather than any other part of the world in recent decades.


"A main loss driver is the concentration of people and assets on the coast combined with high and possibly growing vulnerabilities," it says.


Risk Management Solutions, which models catastrophic risks, recently updated its scenarios, anticipating an increase of 40% in insurance losses on the Gulf Coast, Florida and the Southeast over the next five years, and 25% to 30% for the mid-Atlantic and Northeastern states. Those calculations were done before Sandy.



Inland, eyes will be trained on the heavens for signs of rain -- after the worst drought in 50 years across the Midwest. Climatologists say that extended periods of drought -- from the U.S. Midwest to Ukraine -- may be "the new normal." Jennifer Francis at the Institute of Marine and Coastal Sciences at Rutgers University has shown that a warmer Arctic tends to slow the jet stream, causing it to meander and, in turn, prolong weather patterns. It's called Arctic amplification, and it is probably aggravating drought in the Northwest United States and leading to warmer summers in the Northern Hemisphere, where 2012 was the hottest year on record.


It is a double-edged sword: Warmer temperatures may make it possible to begin cultivating in places like Siberia, but drier weather in traditional breadbaskets would be very disruptive. The U.N. Food and Agriculture Organization reports that stocks of key cereals have tightened, contributing to volatile world markets. Poor weather in Argentina, the world's second-largest exporter of corn, may compound the problem.


More cyber warfare


What will be the 2013 equivalents of Flame, Gauss and Shamoon? They were some of the most damaging computer viruses of 2012. The size and versatility of Flame was unlike nothing seen before, according to anti-virus firm Kaspersky Lab.



Gauss stole online banking information in the Middle East. Then came Shamoon, a virus that wiped the hard drives of about 30,000 computers at the Saudi oil company Aramco, making them useless. The Saudi government declared it an attack on the country's economy; debate continues on whether it was state-sponsored.


Kaspersky predicts that in 2013, we will see "new examples of cyber-warfare operations, increasing targeted attacks on businesses and new, sophisticated mobile threats."


Computer security firm McAfee also expects more malware to be developed to attack mobile devices and apps in 2013.


U.S. Defense Secretary Leon Panetta is more concerned about highly sophisticated attacks on infrastructure that "could be as destructive as the terrorist attack on 9/11."


"We know that foreign cyber actors are probing America's critical infrastructure networks. They are targeting the computer control systems that operate chemical, electricity and water plants and those that guide transportation throughout this country," he said in October.


Intellectual property can be stolen, bought or demanded as a quid pro quo for market access. The U.S. intelligence community believes China or Chinese interests are employing all three methods in an effort to close the technology gap.


In the waning days of 2012, the interagency Committee on Foreign Investment in the United States said "there is likely a coordinated strategy among one or more foreign governments or companies to acquire U.S. companies involved in research, development, or production of critical technologies."


It did not name the country in its unclassified report but separately noted a growing number of attempts by Chinese entities to buy U.S. companies.


Who will be soccer's next 'perfect machine'?



There's room for two less serious challenges in 2013. One is whether any football team, in Spain or beyond, can beat Barcelona and its inspirational goal machine Lionel Messi, who demolished a record that had stood since 1972 for the number of goals scored in a calendar year. (Before Glasgow Celtic fans start complaining, let's acknowledge their famous win against the Spanish champions in November.)


Despite the ill health of club coach Tito Vilanova, "Barca" sits imperiously at the top of La Liga in Spain and is the favorite to win the world's most prestigious club trophy, the European Champions League, in 2013. AC Milan is its next opponent in a match-up that pits two of Europe's most storied clubs against each other. But as Milan sporting director Umberto Gandini acknowledges, "We face a perfect machine."


Will Gangnam give it up to something sillier?



Finally, can something -- anything -- displace Gangnam Style as the most watched video in YouTube's short history? As of 2:16 p.m. ET on December 26, it had garnered 1,054,969,395 views and an even more alarming 6,351,871 "likes."


Perhaps in 2013 the YouTube audience will be entranced by squirrels playing table tennis, an octopus that spins plates or Cistercian nuns dancing the Macarena. Or maybe Gangnam will get to 2 billion with a duet with Justin Bieber.







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Pakistan terror incidents threaten peace talks

ISLAMABAD The killing of 41 people in two separate terrorist incidents in Pakistan appeared on Sunday to temporarily halt prospects for immediate peace talks between Pakistani authorities and Taliban militants, two senior Pakistani intelligence officers and a senior western diplomat in Islamabad warned.

Both intelligence officers said that the fallout of the killings may even harm U.S. plans to peacefully draw down troops from Afghanistan, with Pakistan's active backing.

In the first incident, 21 Pakistani paramilitary guards working in the northern Khyber-Pakhtunkhwa province who were kidnapped last week by the Taliban were confirmed dead on Saturday.

"All the 21 young men were brutally killed by their captors," said one Pakistani intelligence officer who spoke to CBS News on condition of anonymity because intelligence officers are not allowed to speak to journalists.

He said that the kidnapped men's killings may have been triggered in part by the Pakistani government's refusal to release some Taliban militants in custody.

After the men were kidnapped, a senior government official in the northern city of Peshawar, the provincial capital, told CBS News that the Taliban were demanding the release of some of their fellow militants in Pakistan's custody in exchange for the 21 men.

In the second incident on Sunday, at least 20 Pakistanis of the Shia Muslim faith were killed and more than 20 wounded when a car bomb targeted their convoy of buses being driven through the southwestern Baluchistan province to the Iranian border.

Pakistani officials said the dead were heading to Iran's northern holy city of Mashhad to attend an important Shiite commemoration in the coming week.

The second Pakistani intelligence officer who spoke to CBS News said that the killings in Baluchistan "seem to be linked to factions associated with the Taliban.

"These killings make it practically impossible for the government to have a peace dialogue with the Taliban," the officer said. "No one will speak to these people while we have a gun pointed to our heads."

In the past, representatives of Pakistan's Shia Muslims have claimed that the Taliban (who belong to a hardline version of the Sunni Muslim faith) have been involved in attacks on Shiites in Baluchistan.

The two terrorist incidents were preceded by reports of the Taliban sending messages to senior leaders of President Asif Ali Zardari's administration in Islamabad, seeking peace talks to end a decade-long conflict with the Pakistan army.

Senior government officials have reacted cautiously, with some suggesting that the offer should be carefully considered, while others have warned that the Taliban will not agree to end their attacks on Pakistani troops until a final settlement, on their terms, comes together.

"The two brutal terrorist incidents are a major cause of concern. They suggest there's no appetite among the Taliban for a peaceful end to the war," said a senior Western diplomat in Islamabad who also spoke to CBS News on condition of anonymity.

He warned that in addition to Pakistan's own internal security conditions, more violence will make it harder for the country to cooperate with the U.S. in facilitating an orderly American troop drawdown from Afghanistan by end of 2014.

"Pakistan will be the main route for U.S. troops leaving Afghanistan. If there is no end to Taliban violence in Pakistan, the drawdown will face threats," added the diplomat.

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President Suggests Small 'Cliff' Deal Likely


With less than two days remaining for Congress to reach a budget agreement that would avoid the so-called “fiscal cliff,” President Obama today suggested that a small deal remains the best hope to avoid the perilous package of spending cuts and tax increases.


In an interview aired this morning on NBC’s “Meet the Press” the president said if Republicans agreed to raising taxes on top income earners it should be enough to avoid the triggers that would execute the $607 billion measure. Economists agree that going over the cliff would likely put the country back in recession.


“If we have raised some revenue by the wealthy paying a little bit more, that would be sufficient to turn off what’s called the sequester, these automatic spending cuts, and that also would have a better outcome for our economy long-term,” he said.


Saying the “pressure is on Congress to produce,” the president did not specify what income level his party would deem acceptable as the cutoff for those who would see their tax rates remain at current levels. The president has called for expiration of the “Bush-era” tax cuts to affect household earnings over $250,000 since the campaign, but has reportedly floated a $400,000 figure in past negotiations. Speaker John Boehner once offered a $1 million cut-off in his failed “Plan B” proposal, which failed to garner enough support among the House Republicans.


“It’s been very hard for Speaker Boehner and Republican Leader McConnell  to accept the fact that taxes on the wealthiest Americans should go up a little bit as part of an overall deficit reduction package,” the president said.


Domestic programs would lose $55 billion in funding should sequestration pass, including $2 billion to Medicare and unemployment benefits. The Pentagon would take a $55 billion loss as well, or 9 percent of their budget.


Repeating remarks he made Friday after a meeting with congressional leaders, Obama said that should negotiations fail he has asked Senate Majority Leader Harry Reid, D-Nev., to introduce a stripped- down proposal to Congress for a straight up-or-down vote – if it isn’t blocked.


“If all else fails, if Republicans do in fact decide to block so that taxes on the middle class do in fact go up on January 1, then we’ll come back with a new Congress on January 4, and the first bill that will be introduced on the floor will be to cut taxes on middle-class families,” he said of the worst case scenario. “I don’t think the average person is going to say, ‘Gosh, you know, that’s a really partisan agenda.’”


The interview was taped Saturday while Reid and his GOP counterpart Sen. Mitch McConnell of Kentucky scrambled to their offices for a solution behind closed doors. Press staking out Capitol Hill reported little public activity from the leaders or their surrogates. If negotiations are successful, the lawmakers could introduce a bill for vote this afternoon.


Republican leaders bit back at the president’s remarks. In a written statement Speaker Boehner said casting blame was “ironic, as a recurring theme of our negotiations was his unwillingness to agree to anything that would require him to stand up to his own party. ”


“In an effort to get the president to agree to cut spending – which is the problem – I put revenues on the table last year, and I put them on the table again last month,” he wrote. “Republicans made every effort to reach the ‘balanced’ deficit agreement that the president promised the American people, while the president has continued to insist on a package skewed dramatically in favor of higher taxes that would destroy jobs.”


Senator McConnell’s office issued this response to the NBC appearance:


“While the President was taping those discordant remarks yesterday, Sen. McConnell was in the office working to bring Republicans and Democrats together on a solution. Discussions continue today.”


Regardless of outcome, talk of a comprehensive budget deal is gone and any bill would likely set up a series of smaller partisan roadblocks in the weeks and months to come. For example, if any hypothetical legislation managed to dodge tax increases for the middle class it may still not address the looming debt ceiling, which Treasury can avoid using accounting tricks for approximately two months.


A small deal may also not address the estate tax, another central point of the brinkmanship. Currently standing at 35 percent, Republicans want to leave that rate as-is after exempting the first $5 million in estate value. Meanwhile Democrats have called for a 45 percent tax after a $3.5 million exemption. Should negotiations fail, it would climb to 55 percent after a $1 million exemption after the New Year.


ABC’s Sunlen Miller and the Associated Press contributed to this report, which has been updated.

Read More..

Today on New Scientist: 28 December 2012







Best videos of 2012: Rare view of Challenger tragedy

Watch a rare amateur video of the Challenger explosion, our most-viewed video of the year



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2012 review: The year in life science

The year's biggest stories in life science, including James Cameron's descent into the Mariana trench and efforts to break into Antarctica's buried lakes



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As the post-Sandy rebuild gets under way, coastal cities around the world will be watching



Best videos of 2012: First MRI movie of childbirth

Watch a unique view of a baby's birth, at number 2 in our countdown of the year's top science videos



Fleadom or death: Reviving the glorious flea circus

The parasite-based sideshows were almost done for by the domestic vacuum cleaner - but they are bouncing back, finds Graham Lawton



Approval for gene-modified salmon spawns controversy

Apparently months late, US regulators have declared genetically engineered fish safe to farm and eat, but final approval could be some way off



Best videos of 2012: New aircraft flies inside out

Watch a novel flying machine use a unique mechanism to propel itself, at number 3 in our countdown of the top videos of the year



2012 review: The year in technology

The year's biggest stories in technology, including Kinect devices that may spot signs of autism and controlling a robot by the power of thought



Superdoodles: The science of scribbling

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Obama, congressional leaders to meet on fiscal cliff






STORY HIGHLIGHTS


  • NEW: GOP Sen. Alexander says a deal will be reached, either now or soon

  • President Obama calls congressional leaders to the White House

  • Democrats, Republicans trade blame over who is preventing an agreement

  • Without an agreement, everyone's taxes go up next week




As the fiscal cliff looms, what's your New Year's message to Washington? Go to CNNiReport to share your video.


Washington (CNN) -- Is it political theater or a true last-ditch effort to avoid the fiscal cliff?


President Barack Obama and congressional leaders will discuss the looming combination of tax hikes and spending cuts at a White House meeting on Friday, as increasingly anxious markets and taxpayers look for any hint of progress.


Diminished hopes for a substantial agreement in Washington again depressed stock indexes on Wall Street despite other encouraging news on the economy. Consumer confidence has also softened due to political inaction.


Economists warn that continued stalemate could trigger recession as taxes go up on everyone with the expiration of lower rates from the administration of President George W. Bush, coupled with slashed government spending, including for the military.


The White House meeting scheduled for 3 p.m. ET will include Obama, Vice President Joe Biden, House Speaker John Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell.


It comes with the Senate back in town after a Christmas holiday for a rare end-of-year appearance before a new Congress convenes early in the new year. Boehner plans to bring the House back on Sunday.


Reid and McConnell took turns blaming the other side for the impasse on Thursday, but neither seized the chance to offer remarks when the Senate opened on Friday. Other senators expressed opinions on the negotiations ranging from optimism to frustration.


"When the dust settles and everything is said and done, federal individual income taxes are not going to go up on almost all Americans next year," GOP Sen. Lamar Alexander of Tennessee told reporters.


Democratic Sen. Chuck Schumer of New York told NBC's "Today" show he was "a little more optimistic today" about reaching a deal.


"Sometimes it's darkest before the dawn," Schumer said, noting the renewed engagement by McConnell and Boehner, the top congressional Republicans.










"The fact that (Boehner's) come back and the four of them are at the table means to me we could come up with some kind of agreement that would avoid the main parts of the fiscal cliff, particularly taxes going up on middle-class people," he added.


Sen. Olympia Snowe, R-Maine, told CNN's "Starting Point" that a deal must originate from talks between Obama and the four congressional leaders for Americans to regain confidence in the federal government.


"It's got to start with the leaders and the president at the White House this afternoon. Hopefully they'll agree to a framework," said Snowe, who is retiring.


"I hope the speaker can get this job done before the end of this year and not defer it to next year," she continued. "We've got to demonstrate we have some capacity left to make decisions in Washington on these very significant issues for the country."


However, Republican Sen. Bob Corker of Tennessee downplayed the importance of Friday's meeting on CBS "This Morning," saying it "feels too much to me like optics to make it look like we're doing something."


"This is a total dereliction of duty at every level," added Corker, who has called for Republicans to compromise on the central issue of allowing tax rates to increase on top income brackets. "I've been very surprised that the president has not laid out a very specific plan to deal with this, but candidly Congress could have done the same and I think the American people should be disgusted."


He predicted Friday's meeting would result in a "kick-the-can-down the road" solution, meaning larger questions on tax increases and spending cuts would be put off until next year.


On Thursday, McConnell said his side won't "write a blank check for anything Senate Democrats put forward just because we find ourselves at the edge of the cliff."


Reid, however, argued that Republicans undermined a potentially major agreement over the past two years by refusing to compromise on their opposition to higher tax rates for the wealthy. Hours before Friday's meeting was announced, he was doubtful there would be a deal by January 1.


"I don't know, timewise, how it can happen now," Reid said.








The principal dispute continues to be over taxes, specifically the demand by Obama and Democrats to extend most of the tax cuts passed under Bush while allowing higher rates of the 1990s to return on top income brackets.


Obama campaigned for re-election on keeping the current lower tax rates on family income up to $250,000, which he argues would protect 98% of Americans and 97% of small businesses from rates that increase on income above that level.


Republicans oppose any kind of increase in tax rates, and Boehner suffered the political indignity last week of offering a compromise -- a $1 million threshold for the higher rates to kick in -- that his GOP colleagues refused to support because it raised taxes and had no chance of passing the Senate.


Last Friday, the president proposed the scaled-back agreement that included his call for extending tax cuts on households with incomes under $250,000, as well as an extension of unemployment insurance.


Both sides say political concerns undermine a possible agreement.


On Thursday, Reid said Boehner wanted to wait until after the new House re-elects him as speaker early next month before proceeding with a compromise -- one that will need support from both Democrats and Republicans to pass.


Boehner is "more concerned about his speakership than putting the country on firm financial footing," Reid claimed.


In response, Boehner spokesman Michael Steel said Reid should stop talking and instead take up legislation passed by the House to avert the fiscal cliff.


Reid and Democrats reject the GOP proposals, which would extend all the Bush tax cuts and revamp the spending cuts of the fiscal cliff, calling them insufficient and saying they would shift too much deficit reduction burden on the middle class.


One possibility is the fiscal cliff takes effect and taxes go up in January, then Congress steps in to bring tax rates back down for at least some people -- allowing them to say they're lowering taxes, even if rates for top income brackets are higher in 2013 than they were in 2012.


Obama and Democrats have leverage, based on the president's re-election last month and Democratic gains in the House and Senate in the new Congress. In addition, polls consistently show majority support for Obama's position on taxes, and Democrats insist the House would pass the president's plan with Democrats joined by some Republicans if Boehner allowed a vote on it.


However, anti-tax crusader Grover Norquist has vowed to back primary challenges against Republicans who violate his widely signed pledge not to raise taxes. Even if a deal is reached, Norquist predicts budget showdowns will continue every time the government needs more money to operate.


"There the Republicans have a lot of clout because they can say we'll let you run the government for the next month, but you've got to make these reforms," he said this week.


On Wednesday, Treasury Secretary Timothy Geithner told Congress the government would reach its borrowing limit at year's end, but could take steps to create what he called "headroom" for two months or so.


However, Geithner said uncertainty about the fiscal cliff and deficit negotiations make it hard to predict precisely how long government measures to address the situation will last.


The possibility of a fiscal cliff was set in motion over the past two years as a way to force action on mounting government debt.


Now, legislators risk looking politically cynical by seeking to weaken the measures enacted to try to force them to confront tough questions regarding deficit reduction, such as changes to government programs like Social Security, Medicare and Medicaid.


The two sides seemingly had made progress early last week on forging a $2 trillion deficit reduction deal that included new revenue sought by Obama and spending cuts and entitlement changes desired by Boehner.


Obama's latest offer set $400,000 as the income threshold for a tax rate increase, up from his original plan of $250,000. It also had a new formula for the consumer price index -- called chained CPI -- that wraps in new assumptions on consumer habits in response to rising prices, such as seeking cheaper alternatives, and would result in smaller benefit increases.


Statistics supplied by opponents say the change would mean Social Security recipients would get $6,000 less in benefits over the first 15 years of chained CPI. Liberal groups have openly challenged the plan, calling it a betrayal of senior citizens who contributed all their lives for their benefits.


Boehner appeared to move on increased tax revenue, including higher rates on top income brackets and eliminating deductions and loopholes. But his inability to rally all House Republicans behind his plan last week raised questions about his role and what comes next.


What happens to the economy if we go over the cliff?


CNN's Dana Bash, Deirdre Walsh, Ted Barrett, Jessica Yellin and Kevin Liptak contributed to this report.






Read More..

East, Gulf Coast port strike averted, for now

Last Updated 12:15 p.m. ET

NEW YORK The union for longshoremen along the East Coast and Gulf of Mexico has agreed to extend its contract for 30 days, averting a possible strike that could have crippled operations at ports that handle about 40 percent of all U.S. container cargo, a federal mediator announced Friday.



The extension came after the union and an alliance of port operators and shipping lines resolved one of the stickier points in their months-long contract negotiations, involving royalty payments made to union members for each container they unload.

Negotiations will continue until at least midnight on Jan. 28. Some important contract issues remain to be resolved, but the head of the Federal Mediation and Conciliation Service, George Cohen, said the agreement on royalties was "a major positive step forward."

"While some significant issues remain in contention, I am cautiously optimistic that they can be resolved in the upcoming 30-day extension period," he said.

The terms of the royalty agreement were not announced.

  • Unionized dock workers threaten to strike at 15 ports
  • Tentative deal reached to end costly Calif. ports strike
  • The master contract between the International Longshoremen's Association and the U.S. Maritime Alliance, a group representing shipping lines, terminal operators and port associations, originally expired in September. The two sides agreed to extend it once before, for 90 days, but it had been set to expire again on 12:01 a.m. Sunday.

    As recently as Dec. 19, the president of the longshoremen, Harold Daggett, had said a strike was expected.

    A work stoppage would have idled shipments of a vast number of consumer products, from electronics to clothing, and kept U.S. manufacturers from getting pars and raw materials delivered easily.

    Major ports that would have been frozen included the Port Authority of New York and New Jersey, Savannah, Ga., Houston and Hampton Roads, Va.

    Other ports that would have been affected by a strike are Boston; Delaware River; Baltimore; Wilmington, N.C.; Charleston, S.C.; Jacksonville, Fla.; Port Everglades, Fla.; Miami; Tampa, Fla.; Mobile, Ala.; and New Orleans.

    The ports handle nearly 50 percent of all ocean-going container shipments to the United States, reports correspondent Anna Werner.

    Some estimate a shutdown could cost a billion dollars a day in delayed shipments and lost work along the supply chain.

    The Port of Houston - which handles 42 million tons of cargo every year - extended its hours this week to try and get shipments in and out before a strike could bring the port to a standstill.

Read More..

'Mom' Loses Russian Girl Weeks From Adoption













After a roller coaster week, Kendra Skaggs sat down to vent on her blog. She had used that space to document her 13 month journey of adopting a young girl named Polina from Russia. But now, with that dream just weeks away from fulfillment, she described her frustration, fear and anger as she watched it being snatched away.


"I have no control. I'm on the other side of the world and I can't hold and comfort my daughter as I wait to hear if we will forever be separated," she wrote in a passionate entry


Her writing seemed to speak for hundreds of American parents whose hopes of adopting a Russian orphan were dashed today when Russian President Vladimir Putin signed into law a controversial ban on adoptions to the United States. The move is part of Russia's retaliation for a set of human rights sanctions passed by the U.S. Congress and signed by President Obama earlier this month. Critics, including the U.S. State Department, say the adoption ban is playing politics with the lives of children.


Russia is the third most popular country for Americans to adopt from, but in recent years the issue has become a political football in Russia. Americans have adopted over 60,000 Russian children since the fall of the Soviet Union, but Russian officials have seized on the cases of 19 children who died after being adopted by Americans.












Soccer Player Kick-Starts New Career After Viral Video Watch Video





In 2010, a 7-year-old adopted boy named Artyom was put on a plane back to Russia alone by his adoptive mother from Tennessee with little more than a note saying she did not want him anymore. The case touched off a wave of fury in Russia and adoptions to the United States were nearly halted.


The Many Adventures of Vladimir Putin


Just a week ago Kendra and her husband visited Polina at her orphanage outside Moscow. The bubbly 5-year-old suffers from spina bifida, a condition that has left her numb from the waist down and unable to walk. They showed Polina photos of her new bedroom and told her about her new family. They played together, hugged each other, and promised to see each other soon when they returned in January to bring her home to Arkansas.


The adoption ban legislation, meanwhile, had just been introduced by Russian lawmakers. Kendra had hoped their case, which was nearly completed, would sneak in under the wire. She held out hope again after a Moscow court approved her adoption on Monday. All that was needed was a 30 day waiting period before they could bring Polina home.


It appears even that was too late. The law goes into effect on Jan. 1, but Russian officials have said even cases of 52 children who are within weeks of traveling to the United States are now frozen. Authorities have pledged to find new homes for them in Russia.


For the Skaggs family, it is agonizing to be so close to bringing her home, yet so far. Kendra fears Polina will think she was abandoned again.


"It's the fear of what she is going to think, that we forgot her," she said in an interview with ABC News.


"She's out there and I can't take care of her," she said, crying softly. "I can't help her. I can't tell her I love her. So it's really hard."


She also worries what will happen to Polina in Russia, a country with scarce accommodations for the handicapped.


"Russia really isn't set up for people with disabilities. You can't get into the metro even to get around because it's just levels and levels of stairs that you have to go up and down and there's no handicapped access to the buildings," Kendra said.






Read More..

Today on New Scientist: 28 December 2012







Best videos of 2012: Rare view of Challenger tragedy

Watch a rare amateur video of the Challenger explosion, our most-viewed video of the year



Strong jet stream super-charged US Christmas storms

Record snowfall and dozens of tornadoes snarled holiday travel as a powerful winter storm plowed across much of the US, while rainstorms battered the UK



2012 review: The year in life science

The year's biggest stories in life science, including James Cameron's descent into the Mariana trench and efforts to break into Antarctica's buried lakes



Superstorm lessons for adapting to climate change

As the post-Sandy rebuild gets under way, coastal cities around the world will be watching



Best videos of 2012: First MRI movie of childbirth

Watch a unique view of a baby's birth, at number 2 in our countdown of the year's top science videos



Fleadom or death: Reviving the glorious flea circus

The parasite-based sideshows were almost done for by the domestic vacuum cleaner - but they are bouncing back, finds Graham Lawton



Approval for gene-modified salmon spawns controversy

Apparently months late, US regulators have declared genetically engineered fish safe to farm and eat, but final approval could be some way off



Best videos of 2012: New aircraft flies inside out

Watch a novel flying machine use a unique mechanism to propel itself, at number 3 in our countdown of the top videos of the year



2012 review: The year in technology

The year's biggest stories in technology, including Kinect devices that may spot signs of autism and controlling a robot by the power of thought



Superdoodles: The science of scribbling

Far from being a distraction, doodling has an important purpose - and you can harness it



2013 Smart Guide: Wave goodbye to the mouse

The Leap, a 3D motion control device set to launch next year, will let you control your computer with touch-free hand and finger movements





Read More..

China sets date for 12th National People's Congress






BEIJING: China has fixed March 5, 2013, as the date it will convene a key legislative session, state media reported Friday, with new Communist Party chief Xi Jingping set to become president during the two-week meeting.

The date for the start of the first annual session of the 12th National People's Congress (NPC) was approved at an NPC Standing Committee meeting Friday, the official Xinhua news agency reported.

The announcement comes after the Communist Party in November chose current Vice President Xi to take over the reins of the ruling party from current President Hu Jintao.

That was the first step in China's highly choreographed once-a-decade leadership transition that sees the party change leaders first, with state positions, including president, premier and other key posts, filled at the NPC several months later.

Xi is set to be formally selected as president during the NPC session, while Li Keqiang, another top party official, is slated to become premier, replacing Wen Jiabao, the positions's current occupant.

Xinhua said the legislative session would last about two weeks and would also deal with other important matters including approving a draft plan on national economic and social development for next year.

The announcement of the start of the next NPC comes after November's party congress, which had been expected some time in October, was delayed amid an internal party scandal involving disgraced politician Bo Xilai.

Bo, the former party boss in the central mega-city of Chongqing, was once seen as a candidate for promotion to the party's top echelons but was brought down by murder allegations against his wife that came to light after his police chief sought refuge in a US consulate.

Gu Kailai, Bo's wife, was later given a suspended death sentence -- a judgment commonly commuted to a life sentence -- for fatally poisoning British businessman Neil Heywood.

Bo has been formally expelled from the party and is in custody awaiting trial for alleged corruption and abuse of power.

The months-long controversy exposed deep divisions in the party's top leadership ahead of the sensitive power transition, as Bo had influential patrons and a following among left-leaning members.

-AFP/ac



Read More..