US lawmakers hunt for debt deal as deadline looms (AFP)

WASHINGTON (AFP) – Three days before a critical deadline, US President Barack Obama pressed polarized lawmakers Saturday to reach an urgent deal to avert a US debt default that could plunge the world economy into chaos.

With cash-strapped Washington facing a midnight Tuesday deadline when it runs out of cash to pay its bills, Obama said in his weekly address that "there are plenty of ways out of this mess. But there is very little time."

Obama noted that a stalemate could lead ratings agencies to downgrade the sterling US debt rating of Triple-A, causing a spike in interest rates that would throw a wrench into the gears of the already sputtering US economy.

"That would be inexcusable, and entirely self-inflicted by Washington. The power to solve this is in our hands," he said, as senators made a beat-the-clock push to hack a path to compromise through a jungle of partisan politics.

Number-two Senate Republican Jon Kyl accused Obama's Democrats of being unserious about making deep spending cuts and warned that the United States could soon face a Greece-style "debt crisis" of its own.

"With debt crises rolling across Europe, we know it is only a matter of time before people start to question whether America can sustain its huge and growing debt," he said in the weekly Republican rejoinder to Obama.

The rival appeals with the Republican-led House of Representatives due to kill a proposal from Democratic Senate Majority Leader Harry Reid, a tit-for-tat strike after the Senate beat back a House-passed Republican bill late Friday.

The Democratic-held Senate, meanwhile, was on course for a 1:00 am (0500 GMT) Sunday procedural vote on Reid's proposal to end the angry stalemate.

Behind closed doors, lawmakers tussled over the contours of a compromise expected to call for spending cuts roughly equal to Obama's request for a $2.4 debt limit increase, no tax hikes, and the creation of a special committee of lawmakers tasked with finding savings in the social safety net.

The US economy hit its $14.3 trillion debt ceiling on May 16 and has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally -- but can only do so through Tuesday.

Business and finance leaders have warned that default would send crippling aftershocks through the fragile US economy, still wrestling with stubbornly high unemployment of 9.2 percent in the wake of the 2008 global meltdown.

Absent a deal, the US government will have to cut an estimated 40 cents out of every dollar it spends, forcing grim choices between paying its debt or cutting back on programs like those that help the poor, disabled, and elderly.

In a grim warning of what may come if there is no breakthrough by Tuesday, US markets fell for a fifth straight day on Friday -- a month of gains wiped out in a week of losses due to poor US growth and the political stalemate.

The House late Friday passed Speaker John Boehner's bill to avert a default, with 22 Republicans joining all 188 Democrats who voted in opposition to the plan, while 218 Republicans backed it -- eking out the 216 votes needed.

Within two hours, the Senate had rejected it in a 59-41 vote, with all of the White House's allies voting against the plan, joined by six Republicans who rejected it as insufficiently stringent.

Reid said he hoped Republican Senate Minority Leader Mitch McConnell would now help work out a final deal.

A key sticking point was the duration of any debt limit increase: Boehner's plan set the stage for another high-stakes showdown in a few months, while Reid's approach met Obama's goal of putting off another politically fraught debt battle until after the November 2012 elections in which he seeks a second term.

Boehner's bill had sought to pair raising the debt ceiling by $900 billion with spending cuts of some $917 billion over 10 years, while requiring later debt limit increases to be tied to congressional passage of a balanced budget amendment to the US Constitution for ratification by the 50 states.

Reid, whose Democrats oppose tying the debt limit to such an amendment, has offered a blueprint that would raise the debt ceiling by $2.4 trillion while cutting spending by some $2.4 trillion over 10 years.

And he grafted onto his bill a two-week-old "backup plan" mechanism by McConnell that would effectively allow Obama to raise the debt limit by that amount in three steps with only Democratic votes.

Neel Kashkari, who served as an assistant Treasury secretary during the George W. Bush administration and managed the fallout from the 2008 collapse of investment giant Lehman Brothers, said the global economic context in September 2008 was probably worse than today, but the US economy remains vulnerable.

"These factors suggest that a US downgrade has the potential to be as bad or perhaps worse than the Lehman shock," Kashkari wrote in The Washington Post.

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Rival debt plans pushed as deadline looms (Reuters)

WASHINGTON (Reuters) – Lawmakers were locked in a standoff on Monday over dueling debt plans that offered little prospect for compromise, increasing the threat of a ratings downgrade and national default that could sow chaos in global markets.

Little more than a week before the August 2 deadline to raise the $14.3 trillion debt ceiling, President Barack Obama's Democrats and their Republican rivals pursued separate budget proposals in Congress, with no clear path to bring them together.

The impasse rattled investors worldwide, sending stocks and the dollar down and pushing gold to a record high, but falling far short of the panicky sell-off that some politicians in Washington had feared after weekend talks broke down.

Details emerged of the House of Representatives Republicans' two-stage deficit reduction plan that would start with an initial $1.2 trillion in savings over 10 years. It is sure to be rejected by Obama because it would raise the U.S. debt limit for only a few months, meaning the issue likely would have to be revisited early next year.

Meanwhile, congressional Democrats detailed their competing plan for $2.7 trillion in deficit reduction over the next decade but with a debt limit increase that would carry through the November 2012 presidential and congressional elections. Republicans appear unlikely to support this approach.

Republicans control the House and Democrats control the Senate.

Market players warned of a damaging downgrade of the United States' gold-plated AAA rating if the stalemate goes down to the wire.

Neither plan being discussed by lawmakers may be enough to avert a downgrade by ratings agency S&P, which has indicated it wants to see a $4 trillion deficit reduction plan over 10 years. The risk of a lower U.S. credit rating has become the markets' main worry.

Joining a growing chorus of global concern as the world's largest economy showed signs of legislative dysfunction, the International Monetary Fund urged swift U.S. action on its debt to avert broad negative fallout.

Obama and congressional leaders have tried to reassure global markets that the country will be able to service its debt and meet other obligations after August 2, when the United States will run out of money to pay all of its bills.

Ratings agencies have warned that even if Congress raises the debt ceiling and averts a default, they may still strip the United States of its Triple-A credit rating if lawmakers fail to agree on deeper long-term budget cuts.

Republican House Speaker John Boehner's plan would raise the debt limit in stages, forcing Congress to confront the politically painful issue again before the November 2012 election, when Obama is seeking a second term.

Boehner will push for legislation to cut $1.2 trillion in spending over 10 years and provide a short-term, $1 trillion increase in the government's borrowing limit but include no tax increases. Obama has said he opposes a short-term debt limit hike and instead wants about $2.4 trillion in new borrowing authority, which would extend through 2012.

Senate Majority Leader Harry Reid, a Democrat, laid out a $2.7 trillion spending-cut plan that includes large savings from domestic and defense programs to try to break the impasse and would provide enough borrowing authority to meet needs through 2012.

It would include $1.2 trillion in savings that Democrats say Republicans already had agreed to.

"The Republicans are more interested in embarrassing the president than doing what is right for the country," Reid told reporters. "We should not let these extremists dictate the outcome of this debate or the direction of our country. The time for ideological extremism should end."

(Additional reporting by Richard Cowan, Caren Bohan, Alister Bull, Laura MacInnis and Deborah Charles in Washington, Ryan Vlastelica in New York, Emily Kaiser in Singapore, Yoo Choonsik in Seoul; Editing by Will Dunham)

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Reagan looms over debt debate inspiring both sides (AP)

WASHINGTON – Ronald Reagan might as well be sitting in on the troubled debt talks, so frequently is his memory invoked by both sides. But for vastly different reasons. Conservative Republicans praise the 40th president's steely advocacy for smaller government and lower taxes.

President Barack Obama and his Democratic allies praise Reagan because, they say, he was the sublime compromiser, willing to work with Democrats such as House Speaker Thomas P. "Tip" O'Neill of Massachusetts to forge landmark tax and Social Security deals and willing to raise the federal debt ceiling so the government could keep borrowing to pay its bills.

Can both be true?

In fact, both camps are experiencing a touch of Reagan amnesia.

Debt talks between Obama and House Speaker John Boehner came to a grinding halt Friday night when Boehner abruptly broke them off, raising new uncertainties that a deal could be struck to avert a threatened government default.

Reagan did push through deep, across-the-board cuts in tax rates in his first year of the presidency in 1981, fulfilling a campaign promise.

But the following year he signed the largest peace-time tax increase in U.S. history, the Tax Equity and Fiscal Responsibility Act of 1982. He raised taxes in every succeeding year of his presidency except the last. As California governor, Reagan also signed the biggest tax increase in state history.

"There was a consistency to Reagan on taxes, which was basically that he cut them when he could, but raised them when he had to. He was not dogmatic on this issue, as his current day followers seem to think," said economist Bruce Bartlett, a senior policy analyst in the Reagan White House and a top Treasury official in President George H.W. Bush's administration.

Bartlett noted that Reagan's tax increases took back about half of his signature 1981 tax cut. When he left office in 1989, federal taxes accounted for 18.4 percent of the nation's gross domestic product, compared with the 18 percent average for the two decades before he took office. By contrast, tax revenues are forecast to be just 14.4 per cent of GDP in 2011.

Some tea party-courting Republicans cite Reagan's low-tax, small-government mantra as they insist they won't support any increase in the government's borrowing power past Aug. 2, unless significant budget cuts are made and taxes kept constant.

Yet during Reagan's two terms, he presided over 18 increases in the debt ceiling. He even publicly scolded Congress for playing hardball politics with the debt limit and bringing the nation "to the edge of default before facing its responsibility." That's a passage the White House and congressional Democrats are now fond of recycling to their advantage.

Obama has been paying new homage to the former Republican president he once called transformative as he remains locked in a standoff with Republicans.

"Ronald Reagan worked with Tip O'Neill and Democrats to cut spending, raise revenues and reform Social Security," Obama noted a few days ago. "That kind of cooperation should be the least you expect from us."

In a recent exchange with House Majority Leader Eric Cantor, R-Va., Obama complained that House Republicans weren't giving an inch on raising taxes and were frustrating compromise efforts. According to Cantor, Obama ended the meeting saying, "Can you imagine Ronald Reagan sitting here?"

It was an apparent suggestion that Reagan would have been more accommodating or less likely to engage in political trench warfare.

The facts: The big 1980s domestic-policy deals cited by Obama happened at a time when there were more politically moderate members in both parties than in these highly polarized times, and when congressional leaders had more flexibility in finding common ground.

It's true that Reagan did not engage as much in the day-to-day bargaining. The big bipartisan agreements of the Reagan years were mostly cobbled together by O'Neill's forces and moderate Republican leaders such as Sens. Howard Baker of Tennessee and Bob Dole of Kansas, and Rep. Barber Conable of New York.

Still, Reagan and O'Neill clearly liked each other and enjoyed socializing. Although House Speaker John Boehner, R-Ohio, played golf with Obama and had tried for a "grand bargain" compromise with him, their relationship does not seem to be anywhere near at the same comfort level as that between Reagan and O'Neill, two gregarious Irish-Americans.

That may have become clear late Friday, when the talks collapsed, with each side blaming the other.

Looking back to the 1980s, with the exception of a few major deals like on Social Security, the day-to-day dealings between the Reagan administration and O'Neill were largely contentious and partisan.

Yet that Social Security agreement remains a model for those who yearn for less partisan times now.

Threats of approaching economic chaos were as much in the air in early 1983 as they are now, as Social Security was fast running out of money and benefit checks were at risk.

The eventual deal that rescued the program involved changing Social Security tax-rate schedules, imposing income taxes on the benefits of higher-income individuals, and raising the retirement age in steps to 67 for those born after 1960. It was put in play by a bipartisan commission headed by Republican economist Alan Greenspan, later to become chairman of the Federal Reserve.

It was fine-tuned by a high-level group of nine House and Senate members.

That bipartisan group met in secret locations for weeks to hammer out the final details, remembers Paul Light, who at the time was a congressional fellow with Conable, the senior Republican on the House Ways and Means Committee and one of the negotiators.

The talks coincided with the Washington Redskins' march to the team's Super Bowl victory over the Miami Dolphins in January 1983.

"The Gang of Nine could actually sit around the table and say, `Go Redskins.' That just created camaraderie that I don't see now," said Light, now a public policy professor at New York University. "And the compromise lasted 30 years, which isn't bad."

So in the end, how can Reagan be both a hero to Republicans for arguing against tax increases — and to Democrats for agreeing to them?

"That's what made him such an incredibly good politician," said Stephen Hess, a presidential scholar at the Brookings Institution.

Reagan was a master of blurring distinctions with compelling rhetoric, Hess suggested.

"People often see in him what they want to see, or what they are looking for. And that has been certainly true of other great politicians in their time as well."

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Debt talks get messy as deadline looms (Reuters)

WASHINGTON (Reuters) – Facing a looming deadline to avoid a default, Republican and Democratic lawmakers on Wednesday worked to combine elements of a plan to raise the debt ceiling with market-pleasing proposals to cut spending.

An ambitious new deficit reduction plan, unveiled on Tuesday by a group of senators known as the "Gang of Six," offers a ray of hope in an increasingly grim standoff that has threatened the United States' top-notch credit rating.

Congress must approve an increase in the $14.3 trillion U.S. debt ceiling by August 2 or the government will run out of money to pay its bills. Republicans and Democrats agree that spending cuts should accompany a debt-limit increase to tame mounting debt but have been unable to agree on the details.

White House talks on a comprehensive deficit-reduction deal stalled over tax increases, which Republicans still rule out.

President Barack Obama will meet with the Democratic leadership of the Senate and the House of Representatives at 2:50 p.m. EDT (1850 GMT) on Wednesday to discuss progress on the debt negotiations, the White House said.

Lawmakers have been scrambling to find a solution, and there is no single plan. The best option remains the one first billed as a backup, which passes responsibility, authority and potentially blame for raising the debt ceiling to Obama.

That might not be enough for Wall Street. The stalemate on debt talks has shaken global markets, and credit rating agencies have said that even if lawmakers raise the debt limit in time, America's top-notch triple-A credit rating will still be under pressure without a broad deficit-reduction plan.

Congressional leaders are looking to the Gang of Six plan for a way out of the impasse. A more modest proposal may be needed to avert default by August 2, but the $3.75 trillion Gang of Six plan could help lawmakers reach a broader deal shortly after that to address long-term fiscal problems and alleviate credit raters' concerns.

Initial reaction was positive. Obama seized on the plan as a "very significant step" on Tuesday and urged congressional leaders to start discussing it. Senators from both parties embraced it while Republican leaders in the House said it contained some good elements.

Investors welcomed the plan on Tuesday, driving up the price of 30-year Treasury bonds sharply and pushing global stocks higher. But on Wednesday, bond prices eased as Wall Street realized the road ahead remains long.

"We think that an agreement will be made, with a smaller package tied to an extension (of the debt limit) to the end of 2011 or even 2012, leaving the difficult decisions on entitlement reform or tax increases postponed to later in the year or more likely after the November 2012 election," said Carl Leahey, senior economist at Decision Economics.

An analyst from Fitch Ratings said it was encouraging that progress appeared to be being made on a substantial U.S. deficit-reduction deal and said the credibility of the bipartisan plan was as important as the overall savings amount.

(Additional reporting by Thomas Ferraro and Alister Bull; Writing by Deborah Charles; Editing by Will Dunham and Eric Beech)

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Lawmakers work on debt Plan B as deadline looms (Reuters)

WASHINGTON (Reuters) – With five days to go before President Barack Obama's deadline for a debt ceiling deal and no agreement in sight, Republicans and Democrats on Monday were crafting a fallback plan to avert a default.

Both parties agree on the need to raise the debt ceiling, which caps how much the United States can borrow, but are deeply divided along ideological lines over how to do it.

Treasury Secretary Timothy Geithner, however, remained optimistic that a deal was possible.

"Despite what you hear, people are moving closer together," Geithner, who met with top House of Representatives Republicans on Friday, told CNBC television. "You have seen the leadership of the Republican Party ... take default off the table. That's encouraging."

But the stalemate in Washington, along with debt problems in Europe, is unnerving financial markets worldwide amid fears that they could spiral into a global crisis. World stocks dipped and gold prices hit record highs above $1,600 an ounce as nervous investors sought a safe haven.

"There's a perfect storm happening on a global macroeconomic basis with no debt deal here and the ongoing issues in Europe, and the market is looking at all these things and is fairly anxious," said Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, New York.

The top Republican in the Senate, Mitch McConnell, has submitted a plan that would essentially give Obama the power to raise the debt limit and take the political heat off Republicans. Senate leader Harry Reid hopes to begin debate on a modified version in the Democratic-led Senate this week.

McConnell's complicated plan to increase the debt limit in three stages has moved to the forefront as efforts to reach a comprehensive deficit-reduction deal have hit a wall.

Democrats and Republicans -- with an eye on 2012 elections -- are digging deeper into entrenched positions on taxes and entitlement programs such as Social Security and the Medicare healthcare program for the elderly.

Democrats want tax increases to be part of any final deficit reduction deal. Republicans say that would hurt a sputtering economic recovery and have taken aim at entitlement programs that Democrats have vowed to protect.

McConnell's plan, initially presented last week as a fallback option, is gaining traction as a viable solution in part because it would allow Republicans to avoid having to take a politically toxic vote on raising the debt limit.

Democratic aides said Reid and McConnell's staff were still trying to work out details of the plan, including spending cuts of about $1.5 trillion.

"The plan is still tenuous. We don't have the details yet. Everything is extremely fluid," a Democratic aide said.

The Senate, where Democrats have a majority, is expected to approve the final fallback plan but it is uncertain if the Republican-led House will go along.

"We (the Senate) are going to throw it to them (House Republicans) and see what happens," a Democratic aide said.

Democratic aides note that last week House Speaker John Boehner, the top U.S. Republican, declined to rule the McConnell plan in or out.

JULY 22

Obama had set a Friday deadline for Congressional leaders from both parties to agree on a deal to raise the country's debt ceiling. He said the July 22 deadline would give Congress enough leeway to write and pass legislation before August 2, when the government will run out of money to pay its bills.

Failure to increase the debt ceiling by then could send shockwaves through global financial markets and plunge the United States into another recession.

Credit rating agencies have signaled they may cut the top-notch AAA U.S. rating if the borrowing limit is not raised and deficit reduction measures are not laid out.

Fitch Ratings said on Monday if the debt ceiling is not raised before August 2 it would place the AAA rating on "watch negative," which means it could downgrade it within a three-to-six-month period. This echoed similar warnings from the other two big rating agencies, Moody's and S&P, last week.

Obama held White House talks with congressional leaders for five straight days last week. But no White House talks were listed on Obama's official schedule for Monday.

Senior Democratic aides said the Senate will likely begin considering the McConnell-initiated measure after "show votes" on a Republican balanced budget amendment as well as a Republican "cut, cap and balance" bill.

Boehner has scheduled a vote for Tuesday on his "cut, cap and balance" plan, which would condition an increase in the debt limit on passage of a constitutional amendment to require the federal government to balance its books each year.

That bill stands little chance of passing the Senate but it might buy some goodwill with conservatives to eventually allow for passage of a compromise, such as the McConnell plan.

"If by Friday there is no meaningful agreement on Plan B and the parties remain far apart, the greenback could see panic selling as fears of possible technical default grip the market," said Boris Schlossberg, director of currency research at GFT in New York.

(Additional reporting by Rachelle Younglai, Andy Sullivan and Caren Bohan in Washington and Wanfeng Zhou in New York; Editing by Ross Colvin and Bill Trott)

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Pakistan looms large as Clinton flies to India (Reuters)

ATHENS (Reuters) – Secretary of State Hillary Clinton hopes to cement gains in ties with emerging global power India when she flies to New Delhi on Monday ties while heading off new frictions with fragile U.S. ally Pakistan.

Clinton's two-day trip to India, her second as secretary of state, follows President Barack Obama's visit last November and underscores Washington's growing bonds with the world's second most populous country and its $1.6 trillion economy.

Clinton will meet Indian leaders for a U.S.-India "strategic dialogue" session, regular meetings designed to get officials from both sides working more closely together, and comes nearly a week after deadly triple bomb attack on India's financial hub of Mumbai.

She will then move on to Chennai, the eastern port city which has become a hub for U.S. trade and investment, including a major auto engine plant for Ford Motor Co..

U.S. officials say Clinton's trip will demonstrate the breadth of cooperation -- which ranges from expanding military and intelligence work to educational exchanges and nuclear and other hi-tech energy projects.

But the pending U.S. drawdown of forces in Afghanistan and Indian relations with traditional rival Pakistan will both be in focus as Indian security fears grow following Wednesday's attacks on Mumbai.

U.S. officials and political analysts say that Clinton will urge India to stay the course and not raise tension, concerned that any overreaction by New Delhi could upset an already fragile U.S. relationship with Islamabad.

"She will encourage India to do all it can to engage Pakistan, to find areas where they might be able to break down some of their barriers and build some kind of confidence in each other," said Karl Inderfurth, a former senior State Department official under the Clinton administration and now at the Center for Strategic and International Studies.

It will not be an easy sell -- although analysts say India itself is increasingly worried over the stability of its neighbor and has its own reasons for moving cautiously.

No one has claimed responsibility for last week's Mumbai blasts, the worst such attack since Pakistan-based militants struck India's financial hub in 2008, killing 166 people and raising tensions with Islamabad.

Indian police have questioned members of a home-grown militant group, taking some of the immediate heat off Pakistan.

But both New Delhi and Washington suspect that elements of the Pakistani establishment may not be fully onboard with the U.S.-led fight against Islamic militants, doubts underscored in May when U.S. forces killed al Qaeda leader Osama bin Laden in a compound not far from Islamabad without telling the government in advance.

"The Indians see the United States as finally waking up to the problem of Pakistan, and they will not want to interject themselves into that process," said Ashley Tellis, an India expert at the Carnegie Endowment for International Peace.

LOOKING AHEAD

Clinton will update Indian Prime Minister Manmohan Singh and other officials on Pakistan, as well as on U.S. plans to draw down about a third of the 100,000 U.S. forces from Afghanistan during the next year.

Indian officials are concerned an overly hasty U.S. departure could benefit the Taliban and by extension Pakistan, and Clinton will outline how Washington plans to both stay engaged amid growing talk of a political settlement.

Despite shared concerns, which include China's growing assertiveness and traditional friendship with Pakistan, Clinton will spend much of her time highlighting U.S.-India economic ties -- a relationship both sides say holds great promise, but has yet to fulfill its potential.

The United States was disappointed when India rejected U.S. bids for an $11 billion fighter aircraft contract in April, but still hopes to profit from New Delhi's ongoing military shopping spree such as a $4.1 billion purchase of Boeing C-17 military transport planes in June.

U.S. firms want to take a slice of India's $150 billion nuclear energy market but have lagged state-backed rivals from Russia and France.

U.S. power giants such as General Electric are hoping to get a foothold after a landmark 2008 nuclear cooperation accord, although progress has been slow.

Washington has been pushing India to water down a law passed in 2010, which would force all private nuclear reactor builders to take on uncapped compensation in the event of a nuclear disaster and is considered tougher than in other nuclear power-producing countries.

And U.S. hopes for Indian moves to open up potentially lucrative sectors such as insurance and large-scale "big box" retail have been repeatedly set back, while outsourcing of U.S. jobs to cheaper Indian workers has also been a concern.

(Editing by Paul de Bendern and Nick Macfie)

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In LA, dire warnings as freeway closure looms (AP)

LOS ANGELES – Thousands of doctors and nurses will bunk at hospitals, an emergency operation center will be set up and Southern California residents are being urged to stay home and stock up on food.

One major airline offered $4 seats to help people avoid the looming mess, selling out of tickets in three hours.

The crisis?

A 10-mile stretch of Interstate 405 — a vital artery that links population centers north and south of the Santa Monica Mountains — is shutting down for 53 hours this weekend. The closure, a necessary part of a major highway reconstruction project, is being dubbed "Carmageddon," evoking images of gridlock, road rage and other traffic nightmares that it might spawn in car-dependent Southern California.

Celebrities are among those sounding the alarm, via Twitter messages urging residents to stay off the road starting at midnight Friday.

"This weekend, LA! Avoid Carmageddon, Gas-zilla, 405-enstein, Grid-lock-apalooza! STAY HOME. Eat & shop local," Tom Hanks tweeted this week.

Beyond tongue-in-cheek apocalyptic warnings, city leaders stressed that real public safety concerns exist: Helipads have been cleared for air ambulances and 200 extra firefighters and paramedics will be on duty, some of them positioned along the shuttered freeway to protect fire-prone hillsides in the area. Four big hospitals near the freeway on the city's west side are setting up cots and putting thousands of doctors, nurses and medical personnel in hotels and dorm rooms so they don't show up late to their shifts.

The UCLA Health System placed advanced orders for medical supplies and food, even preparing 5,200 box lunches for staff, ahead of the shutdown. It has three helicopter companies on standby to transport patients and human organs in the event of emergency operations.

"You can't take a chance when you deal with patient safety and patient care," said Dr. Wally Ghurabi, the emergency director of Santa Monica-UCLA Medical Center. He planned to sleep in the E.R. throughout the weekend instead of commuting the 20 miles from his home in Torrance to the hospital.

Authorities are hammering the same message to drivers. Starting last month, they flashed freeway electronic signs warning drivers to "EXPECT BIG DELAYS."

"The best thing is to stay home if you can, don't drive if you don't have to," said Michael Miles, a California Department of Transportation official. "Be prepared, treat it like it's a disaster."

On a typical July weekend, about a half-million vehicles use the section of the freeway, known locally as the 405, to get to major destinations such as the airport, beaches and interchanges to other major highways. Transportation officials said a full shutdown is necessary to replace the 50-year-old Mulholland Bridge as part of a $1 billion project to widen the perpetually bottlenecked segment through the Sepulveda Pass.

Authorities said a full closure was necessary to demolish one side the span, and they picked this weekend to minimize impact to traffic on a workday. They expect another closure next year to replace the other half.

To discourage driving, transit officials will offer free rides on the subway and certain bus lines and add more train service.

Anticipating potential backups caused by drivers who won't heed the warnings, the city plans to deploy traffic engineers to monitor the ripple effect on roads and to manage key intersections. Mayor Antonio Villaraigosa is urging residents to stay close to home and shop locally if they must go out.

"We need every Angeleno to chip in and turn this Carmageddon into a unique opportunity," he said Wednesday.

Villaraigosa's not the only one seizing the opportunity to drum up business this weekend.

A helicopter company is advertising $150 rides to zip people to downtown and Los Angeles International Airport. JetBlue is providing $4 to $5, 30-minute "Over the 405" flights between Long Beach Airport and Bob Hope Airport in Burbank, calling the service a "planepool" between the San Fernando Valley and the beach.

Hotels and restaurants are offering discounts, movie theaters along the freeway are giving away popcorn. A fitness instructor suggests "Carmageddon yoga" for stressed-out drivers. And Dr. Arnold Klein, Michael Jackson's longtime dermatologist, is giving 25 percent off on Botox injections.

"Instead of being stuck on the freeway and not being able to do anything you could be in my office and be more beautiful," Klein said.

Waze, a company that provides GPS navigation applications for smartphones, set up a website and plastered posters across the city to urge drivers to sign up for its service and survive "this imminent disaster."

Dire warnings have been shown to work during the 1984 summer Olympics and a 1987 visit by Pope John Paul II. The city braced for the worst, but traffic flowed freely because people avoided driving.

Some people are making the best of the circumstance by organizing mass bicycle rides and neighborhood parties.

The pastor of a church on Mulholland Drive moved his Sunday service to a theater so his roughly 3,000 congregants can worship.

Mark Wadsworth of Bel Air Presbyterian Church said he doesn't expect everyone to attend. He compared the circumstance to Colorado, where he previously preached, when fewer people showed on snowy days.

"This is the L.A. version of a snow Sunday," he said.

Meanwhile Moshe Shmuel, who's expecting 120 guests at his Saturday wedding, said he was worried that some people flying in from Israel and South Africa may have trouble getting from the airport to the ceremony at a private estate in Bel Air. He told his guests to leave extra early so they can show up on time.

"Lucky for us, the rabbi lives close-by. He doesn't need to take the freeway," Shmuel said.

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Anti-tax diehard looms large in spending showdown (AP)

WASHINGTON – Without a bipartisan agreement this summer to reduce the federal deficit and raise the debt limit, the economy could suffer a horrendous blow, leaders of both parties say. If that happens, some will point fingers at a bearded, slightly disheveled man who's barely known outside political circles in Washington.

For two decades, Grover Norquist has been the driving force in pushing the Republican Party toward an ever-more rigid position of opposing any tax increase, of any kind, at any time. He has been so successful that some GOP officials fear they've let Norquist squeeze them into a corner where they'll be unable to declare victory even if they win the great majority of their budget demands in negotiations with congressional Democrats and President Barack Obama.

Democrats, meanwhile, use Norquist to paint the GOP as an unreasonable party that kowtows to billionaires at the expense of middle-class Americans.

Obama is insisting that even if a deficit-reduction accord relies overwhelmingly on spending cuts, it also must have some revenue increases. Democrats say they should start with eliminating some not-so-popular tax breaks that Norquist and his allies stoutly defend.

Senate Republican leader Mitch McConnell "has decided to walk out on the same limb as Grover Norquist," Sen. Chuck Schumer, D-N.Y., told reporters last week. "It seems leader McConnell is willing to tank the economy for the sake of protecting tax breaks for oil companies and corporate jets."

Obama didn't name Norquist in his feisty news conference Wednesday, but he cited the same tax breaks.

"I've said to some of the Republican leaders: You go talk to your constituents, the Republican constituents, and ask them, are they willing to compromise their kids' safety so that some corporate-jet owner continues to get a tax break?" Obama said.

Republican lawmakers scoff at the notion that killing a $3 billion tax break for small jets would make a dent in the $14 trillion debt. But they have complicated their ability to parry the Democrats on such matters by signing the famous anti-tax "pledge" of Americans for Tax Reform, which Norquist heads.

All but a handful of House and Senate Republicans have signed it. By doing so, they vow to oppose any effort to increase marginal income tax rates and "any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates."

In other words, even a "temporary" tax cut cannot be undone. Even a tax break that seems to have lost its purpose, when economic conditions change, cannot be touched unless it is offset elsewhere.

Some Senate Republicans have grown weary of Norquist's strict interpretation of the pledge, and a mini-revolt occurred in mid-June.

Thirty-four of the Senate's 47 Republicans voted to end a tax break for ethanol production, which has come under political fire in recent years. Norquist strongly opposed the move, and denounced its leader, conservative Sen. Tom Coburn, R-Okla.

Coburn, who says some revenue increases must join deep spending cuts to reduce the deficit, claimed a turning point.

"You've got 34 Republicans that say they're willing to end this, regardless of what Grover says," he told reporters. "That's 34 Republicans that say this is more important than a signed pledge" to Norquist's group.

Norquist denies suffering a setback. He said the GOP senators willing to end the ethanol subsidy have also backed a proposed end to the estate tax, a favorite Republican target. The two tax moves, if enacted, would offset each other, Norquist said, fulfilling the pledge's demand to avoid "any net reduction" of tax breaks.

"We are pleased as punch. The pledge is defended," he said in an interview. With the 2012 presidential race gearing up, and Congress facing high-stakes decisions on spending and deficits, the anti-tax pledge "has never been more important, and it has never played a bigger role," he said.

Few elected Republicans will openly feud with Norquist. His power derives from his relentless pressure on state and federal officials to sign his pledge, and his thinly veiled threats to support primary opponents against them if they break it. His website names 41 senators, 236 House members and 1,263 state legislators who have signed the pledge.

"We list who has taken the pledge, and who has not," said Norquist.

Most Republican lawmakers, and many Democrats, innately oppose tax hikes, so Norquist's achievements are unremarkable in some respects. But the pledge's rigidity tends to squelch even modest flexibility. Die-hard conservatives such as tea party activists see that as an asset. Others, however, say the inflexibility hampers GOP efforts to negotiate tough agreements with Democrats.

"It's a disservice to our nation for someone to be allowed to set a standard which really could threaten our economy," said Democratic Sen. Dick Durbin of Illinois. "I've grown up in life with bullies, and there's a point that you just have to say, `I'm not going to be frightened by them anymore.'"

Norquist focuses less on the deficit than on his relentless campaign against federal spending, which is fed by taxes. This troubles some lawmakers, who note that both parties historically have been willing to cut taxes while doing little or nothing to reduce spending, causing the deficit to soar.

Partly because of this, federal tax collections, as a proportion of the overall economy, are the lowest since 1950, at 14.9 percent. Yet Congress's Republican leaders say tax increases of any type cannot be part of a deal to resolve the debt-ceiling showdown this summer.

It's the type of scenario the Harvard-educated Norquist had in mind when he founded Americans for Tax Reform in 1985. He says the pledge helps "brand" Republicans as the anti-tax party, clarifying voters' choices.

The image ignores the fact that Republican presidents including Richard Nixon, Ronald Reagan and George H.W. Bush raised taxes at times as economic conditions changed. It was Bush's 1990 reversal of his "read my lips" vow not to raise taxes that outraged many conservatives.

Several factors contributed to Bush's 1992 loss to Bill Clinton, but Norquist pins it almost entirely on the tax decision. Since then, he said, the anti-tax pledge "has become a powerful tool for any candidate."

Norquist is delighted that the pledge is making it harder for Republicans and Democrats to reach a spending accord that might include small tax hikes along with larger spending cuts.

"The Democrats have run into a brick wall," he said, "and the pledge is there."

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NBA players, owners meet as lockout looms (AP)

NEW YORK – Representatives for NBA players and owners have arrived for a meeting that could determine if there is a lockout.

The sides started their meeting about 12 hours before the expiration of the collective bargaining agreement.

They remain far apart on nearly every important issue, and owners could lock out the players if a deal is not reached by the end of the day. Or they could extend the deadline if progress has been made.

Both sides, however, indicated last week they may not have any more concessions to make, with players declining to offer a new proposal in the most recent session.

The league hasn't had a work stoppage since the 1998-99 season was reduced to 50 games.

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