House GOP leader says deficit deal likely (AP)

WASHINGTON – The No. 2 Republican in the House says he's still confident that a bipartisan deficit "supercommittee" will be able to reach agreement even though there's little more than a week to go before its deadline.

Majority Leader Eric Cantor said he knows the panel is under great pressure but he believes its members can succeed by Nov. 23.

The panel is charged with coming up with at least $1.2 trillion worth of deficit cuts over the coming decade but has been deadlocked over taxes and cuts to benefit programs. Failure would trigger automatic spending cuts to the Pentagon budget and a wide range of domestic programs.

The Virginia Republican declined to otherwise comment on the committee's work, including last week's GOP proposal for revenue hikes.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

Despite prodding from President Barack Obama, members of Congress' supercommittee concede no deal is in sight to meet their goal of $1.2 trillion or more in deficit savings over the next decade.

Instead, with only 10 days remaining until a Nov. 23 deadline, the panel is divided along partisan lines and Rep. James Clyburn, D-S.C., said Sunday the six committee members of his own party "have not coalesced around a plan."

Despite the difficulties, Clyburn and Republicans on the deficit panel all said they haven't given up hope of a deal by the deadline.

"But if this was easy, the president of the United States and the speaker of the House would have gotten it done themselves," said Rep Jeb Hensarling of Texas, the Republican chairman of the committee.

Obama mentioned his own unsuccessful negotiations with Speaker John Boehner in passing at a news conference in Hawaii on Sunday where he urged the members of the committee to show more flexibility. "It feels as if people continue to try to stick with their rigid positions rather than solve the problem," he said.

"There's no magic formula. There are no magic beans that you can toss on the ground and suddenly a bunch of money grows on trees," Obama added. "We got to just go ahead and do the responsible thing."

Despite some concessions, the two sides remain divided over the same basic issues that thwarted earlier deficit reduction efforts — finding a mutually agreeable blend of tax increases and cuts in the largest government benefit programs.

Democrats on the supercommittee say they are willing to make significant reductions in programs such as Social Security, Medicare and Medicaid only after Republicans agree to higher tax revenue, including a larger bite out of the income of the wealthy.

Republicans say that the soaring deficits result from too much spending, and not from a shortage of revenue to the Treasury, and tax increases would crimp efforts to create jobs.

In an offer they said marked a significant concession, GOP members on the panel offered last week to raise taxes by $250 billion over a decade as part of an overhaul of the tax code that simultaneously would cut the top rate from 35 percent to 28 percent.

Democrats swiftly rejected that as a tax cut for the wealthy in disguise, and separately jettisoned an earlier proposal that would have slowed the growth in cost of living increases under Social Security.

There has been little, if any, indication of progress in the talks since then.

But Hensarling seemed to suggest in an interview Sunday that the two parties could find a way around the fast-approaching Thanksgiving deadline by coming to a general understanding with respect to raising new revenue, without actually having to agree on a process or specific remedy.

"There could be a two-step process that would hopefully give us pro-growth tax reform, which by the way, every other bipartisan effort that has said that some revenues have to be raised in this method," he told CNN in an interview. "That is again broaden the base, historically this is how we both produce jobs and more revenues for the government."

For the most part, however, officials in both parties seem to be positioning themselves publicly for political advantage in case the talks falter.

Hensarling said the panel has a goal of cutting deficits by $1.2 trillion, but added it also has a duty.

"The duty is to put forth legislation that actually addresses long-term structural debt. Now the president himself has said that the drivers of our debt are Medicare, Medicaid and health care. Nothing else comes close," he said, adding that Republicans have done that.

But Obama described the situation differently at a news conference after wrapping up an economic summit with leaders of Pacific-region nations.

"If we've got to raise money, it makes sense for us to start by asking the wealthiest among us to pay a little bit more before we start asking seniors, for example, to pay a lot more for their Medicare," he said.

Nor do the two sides agree about a fallback plan already in place to make sure deficits are reduced even if the panel fails to reach an agreement.

Obama said twice over the weekend Congress shouldn't count on being able to change the automatic spending cuts that would take effect beginning on Jan. 1, 2013.

About $450 billion in cuts would come from defense and the same amount from domestic accounts, with savings on interest payments making up the balance of a $1.2 trillion total.

Republicans, joined by Defense Secretary Leon Panetta, say the Pentagon couldn't sustain reductions of that magnitude, and Sen. Pat Toomey, R-Pa., said there would be a "lively debate" in Congress on changing which programs the cuts would affect.

Clyburn and Toomey appeared on Fox. Hensarling was interviewed on CNN.

_____

AP reporter Erica Werner in Hawaii contributed to this story.

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Solyndra scandal probe widens as White House orders new review (The Christian Science Monitor)

The Obama administration has ordered an independent review of loans made by the Energy Department to energy companies – a clear response to the controversial and now-bankrupt Solyndra Inc. solar energy company.

It’s the latest step in the face of growing criticism over the $528 million government loan to Solyndra, which was part of the administration’s economic stimulus package meant to advance green energy. Last month, FBI agents and investigators from the Department of Energy's Office of Inspector General searched Solyndra headquarters in California for documents and other information.

Heading the review announced Friday is former Treasury official Herbert Allison, who oversaw the Troubled Asset Relief Program, part of the 2008 Wall Street bailout.

"Today we are directing that an independent analysis be conducted of the current state of the Department of Energy loan portfolio, focusing on future loan monitoring and management," White House chief of staff Bill Daley said Friday afternoon – the traditional time for burying announcements. "While we continue to take steps to make sure the United States remains competitive in the 21st century energy economy, we must also ensure that we are strong stewards of taxpayer dollars."

Announcement of the internal review of procedures dealing with Solyndra was not enough to satisfy congressional critics.

Leaders of the Energy and Commerce Committee subcommittee on oversight and investigations say they’ll meet this coming week to consider a resolution authorizing the issuance of a subpoena for internal White House communications relating to the Solyndra loan guarantee.

“Subpoenaing the White House is a serious step that, unfortunately, appears necessary in light of the Obama administration’s stonewall on Solyndra,” Fred Upton (R) of Michigan and Cliff Stearns (R) of Florida said in a statement. “Since we launched the Solyndra investigation over eight months ago, the Obama administration has unfortunately fought us every step of the way, even forcing us to subpoena documents from [the White House Office of Management and Budget].”

Apparently, White House officials weren’t the only ones pushing special consideration for green energy.

Sen. Orrin Hatch (R) of Utah, who has criticized the Obama administration’s backing of Energy Department loan guarantees to Solyndra, pushed for more than $20 million in government funding for a clean energy firm in his home state, reports USA Today.

“Hatch aides [said] earlier this month that the Republican lawmaker had never pushed for taxpayer money to be used for Raser Technologies, which operated a geothermal power plant in southern Utah and also developed hybrid plug-in vehicles,” the newspaper reported Friday. “But on Friday, Hatch spokesman Matthew Harakal said that after an internal audit following publication of the USA Today story on Hatch's support for Raser, the Utah senator's office found that Hatch actually requested seven earmarks for more than $20 million from 2006 to 2008 to help fund research and development projects for the automotive wing of the company.”

None of the requests were funded, and Raser Technologies filed for bankruptcy in April.

Meanwhile, the Solyndra scandal – if that’s what it is – has indirectly touched at least one Republican presidential hopeful.

“Mitt Romney is facing scrutiny this week for associating himself with a lobbyist whose firm worked for failed California solar panel company Solyndra,” The Hill newspaper in Washington reported this week. “Lobbyist Alex Mistri co-hosted a Romney fundraiser Wednesday that included a number of lobbyists and members of Congress, held at the American Trucking Association near Capitol Hill.”

Also attending the Romney fundraiser co-hosted by lobbyist Mistri was Rep. Darrell Issa (R) of California, chairman of the House Committee on Oversight and Government Reform investigating Solyndra.

Material from the Associated Press was used in this report.

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Why China 'trade war' bill is tying House Republicans in knots (The Christian Science Monitor)

Washington – The bill to punish China for manipulating its currency – and allegedly stealing American jobs – is setting off a clash within Republican ranks on Capitol Hill.

The bill, which would impose tariffs on Chinese goods, has already passed the Senate with bipartisan support and would likely pass the House if brought to the floor. But so far, House Speaker John Boehner refused to do so.

With multinational corporations and conservative antitax groups – key Republican constituencies – opposed to the bill, Mr. Boehner has been loath to let it see the light of day, given that it could be vetoed by President Obama anyway.

How much do you know about China? Take our quiz.

But pressure on Boehner is mounting. Lawmakers representing states hardest hit by the rise of Chinese manufacturing want to go on the record supporting the bill, and GOP presidential hopeful Mitt Romney has taken a stand on China currency even more aggressive than the Senate bill.

Boehner has called the measure “very dangerous.” His concern is that raising tariffs on Chinese goods could spark a damaging trade war at a time when the economy is ill-suited to absorb another blow.

“I have made my position pretty clear that I’ve got grave concerns about this bill,” he added at a briefing on Wednesday. For Congress to act now “poses a very severe risk of a trade war and unintended consequences that could come as a result.”

RECOMMENDED: How much does US-China trade hurt American workers? Slowly, a clearer picture.

Boehner is asking the president to stick his neck out and clarify whether he would veto the bill. a€?Ita€?s time for the president to lead,a€

China's manipulation of its currency has long angered Washington. But the current jobs crisis has given the issue added impetus. Backers of the bill say that, by keeping the value of its currency artificially low, China gives its goods as much as a 30 percent price edge in US markets and a comparable disadvantage for American goods in China. The Senate bill would authorize economic sanctions if a trading partner is found to be maintaining its currency at an artificially low level to gain a trade advantage.

China has already signaled its displeasure. It let the value of its currency sink for the second day in a row on Thursday – a move analysts interpret as a rebuff of the Senate vote.

For their part, major US corporations are also worried.

“The American companies who have become invested in China don’t want change,” says Peter Morici, former chief economist at the US International Trade Commission and a professor at the University of Maryland.

“American companies like GE and Caterpillar, who have outsourced American jobs and corporate functions to China and are now clients of Beijing’s protectionism, have convinced President Obama the China currency bill is protectionist and would start a trade war,” he adds.

Technically, the bill has already come to the House floor for a vote. But Democrats brought it up via a highly partisan legislative procedure that would have also forced Republicans to vote against a popular trade bill with Colombia, so the motion failed. But GOP senators are pushing House Republicans to take up the bill themselves.

“You’re miscalculating where the country is on this issue,” said Sen. Lindsey Graham (R) of South Carolina, in remarks addressing House Republicans at a briefing on Wednesday. South Carolina has lost some 41,800 jobs due to trade with China since 2001, according to a recent report by the Economic Policy Institute.

A critical mass of House Republicans are on record supporting the aims of the Senate bill. A similar House measure attracted 63 Republican sponsors, despite opposition from House GOP leaders. Overall, the bill has 225 sponsors – enough to pass the bill.

In 2010, when the House was in Democratic hands, 99 Republicans voted to back a similar bill, which passed, 348 to 79, but was never taken up by the Senate.

Supporters say that if a currency vote is to occur in the House this time, it’s going to require action on the presidential level – or a stronger push from public opinion. If Obama commits to signing the bill, it puts renewed pressure on House GOP leaders.

At the same time, should former Massachusetts Governor Romney pick up momentum in the GOP primary, his outspoken stands on China trade could also have more sway with House Republicans.

In his economic plan, released Sept. 5, Romney called for confronting China on trade abuses. He pledges on Day 1 to issue an executive order listing China as a currency manipulator and directing the Department of Commerce to assess countervailing duties on Chinese imports, if China does not quickly move to float its currency.

“I'm afraid that people who've looked at this in the past have been played like a fiddle by the Chinese,” said Romney at a presidential debate in Hanover, N.H., on Tuesday. “And the Chinese are smiling all the way to the bank, taking our currency and taking our jobs and taking a lot of our future. And I'm not willing to let that happen.”

“Governor Romney last night couldn’t have been clearer,” said Sen. Jeff Sessions (R) of Alabama, a Senate sponsor of the China currency bill. “I was very pleased with what he said.”

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House Democrats vow continued push on China bill (Reuters)

WASHINGTON (Reuters) – Democratic lawmakers vowed on Friday to keep pressing for a vote on China currency legislation, now blocked by Republican leaders, which they said is vital for U.S. competitiveness in global markets.

"It is estimated that currency manipulation costs our economy over a million jobs," said Steny Hoyer, the No. 2 in the House of Representatives Democratic leadership. "I urge the Republican leadership to put the currency bill on the floor."

Earlier this week, the Senate voted 63-35 to pass a bill aimed at China by allowing companies to seek U.S. government "countervailing duties" against goods from countries with undervalued currencies.

Many U.S. lawmakers contend that China undervalues its currency by as much as 15 to 40 percent to give its companies an unfair price advantage in international trade.

House Speaker John Boehner says he fears the bill could start a trade war and has refused to bring it to the floor for a vote, even though a similar measure passed the House last year 348-79.

"They don't want this bill on the floor for one reason: it would pass," said Representative Sander Levin, the top Democrat on the House Ways and Means Committee. "The speaker should let the House work its will."

Representatives Tim Ryan and Betty Sutton, two Democrats from Boehner's home state of Ohio, also said they had no intention of letting the issue drop.

Democrats hope Republican lawmakers will hear from constituents on the issue when they return to their districts next week.

The Obama administration says it shares the goal of the legislation, which is getting China to revalue its currency. But it has raised concern that some provisions in the Senate bill could violate World Trade Organization rules.

Meanwhile, the Treasury Department faces a Saturday deadline to issue an semi-annual report on whether any country is manipulating its currency for an unfair trade advantage.

The Obama administration, in five previous reports, has pushed China to move more quickly to revalue its currency. However, it has declined to take the step of formally labeling China a currency manipulator.

(Editing by Vicki Allen)

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Stalled free trade deals now on a fast track, White House says (The Christian Science Monitor)

Washington – By the time South Korea’s President Lee Myung-bak arrives at the White House for a state dinner honoring him next Thursday, President Obama will be able to present him with a ratified US-Korea free trade agreement.

That’s the prediction of White House Chief of Staff William Daley, who confidently told a Washington audience of business leaders and diplomats Wednesday night that Congress will approve a package of three free-trade deals and domestic trade-impact legislation by the middle of next week.

Mr. Daley told guests at the National Foreign Trade Council’s annual black-tie dinner that the four-part trade package – free trade deals with South Korea, Colombia, and Panama, plus legislation that renews funding for retraining workers who lose jobs to foreign competition – will move “across the finish line” next Wednesday.

RECOMMENDED: 'Zero job' economy: 11 ways Washington can fix it

If he’s right, it will be uncharacteristically quick work for Washington, and will constitute a striking turnaround for trade deals that have languished for years.

One incentive for the Obama administration to get quick passage of the trade package is President Lee’s state visit. The Korea deal is the largest US trade pact since the landmark NAFTA (the North American Free Trade Agreement) accord with Canada and Mexico. It is expected to generate about $11 billion of the total $13 billion in new US exports the administration says the three free-trade agreements (FTAs) will deliver. Obama, who fine-tuned the South Korea trade deal originally negotiated under President George W. Bush, did not want to greet his White House guest empty-handed.

Another incentive is that Obama made implementation of the three FTAs part of his jobs bill now before Congress. Daley called the four-part trade package an “essential part of the president’s jobs agenda,” and predicted that the Korea deal alone will “support” 70,000 US jobs and open up markets to allow for creating thousands of new jobs.

Outside of government, business and labor organizations disagree on the jobs impact of the three pending FTAs. The US Chamber of Commerce predicts the deals will prevent hundreds of thousands of job losses by keeping exporting companies humming, while the AFL-CIO says the pacts spell doom for more than 150,000 jobs.

Daley, who helped the Clinton administration usher NAFTA through Congress in 1993, described Obama as coming down in the middle of the polar views on tradea€?s impact. On one hand, the president believes that trade agreements create jobs, but on the other he realizes that a€?there are people who are negatively hurt by trade,a€

He said that explains Obamaa€?s insistence that renewed funding for Trade Adjustment Assistance, the program that enables worker retraining, accompany the three trade deals.

Going a step further, Daley also warned his audience of mostly pro-trade business representatives that this kind of “balanced” approach to trade will be necessary if the American public is to be convinced that more trade liberalization is in the national interest. For example, the administration is currently pursuing a huge Pacifc-region trade agreement.

“We’ve got to reach out to people who are negatively affected, especially at this crisis time,” Daley said. “If we don’t continue to build a consensus, these [trade] fights will get more and more difficult.”

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Struggling Pawlenty exits White House race (Reuters)

WASHINGTON (Reuters) – Former Minnesota Governor Tim Pawlenty became the first major casualty in the marathon presidential campaign on Sunday while fellow Republicans Michelle Bachmann and Rick Perry built momentum in the race.

Pawlenty, once seen as a strong contender for the Republican nomination to face Democratic President Barack Obama in the November 2012 election, dropped out a day after a disappointing showing in Iowa's straw poll, a key early test of strength among his party's candidates.

Former Massachusetts governor Mitt Romney is the early front-runner in the Republican race, but he must fend off a surging Bachmann -- who won the poll -- and Perry, the governor of Texas who announced his candidacy on Saturday in South Carolina.

Some experts felt Romney may benefit most from the departure of Pawlenty -- neither of whom are favorites of the conservative Tea Party movement that likes Bachmann and Perry.

Pawlenty touted a record of balancing the budget, cutting spending and down-sizing government in Minnesota, but his "nice guy" image failed to gain traction after entering the race in May, particularly among Republican conservatives.

"I wish it would have been different. But, obviously, the pathway forward for me doesn't really exist. And so we're going to end the campaign," Pawlenty told the ABC program "This Week" after his distant third-place finish in the Iowa straw poll.

"You know, I'm from a small state. I don't have a big national financial network or political network," he said.

Bachmann won the Iowa straw poll on Saturday with 29 percent of the vote, with Ron Paul, a congressman from Texas, was second with 28 percent and Pawlenty at 14 percent. Romney was on the straw ballot but did not participate.

The straw poll is a nonbinding mock election that serves as an early gauge of strength in the state that holds the first 2012 Republican nominating contest -- the Iowa caucuses scheduled for next February.

In a round of appearances on the Sunday morning U.S. news programs, Bachmann, a U.S. congresswoman from Minnesota, defended her credentials to be president and called herself a leader in the U.S. Congress fighting against Obama's agenda.

Critics question her accomplishments in the U.S. Congress.

"So being a governor and having governor-level experience isn't the number-one requirement. It's really, who is the person? What is their character?" Bachmann said on ABC.

"What I've demonstrated is that I have a core set of principles that I believe in. I'll fight for them. That's what we need in a president of the United States because a president is more than just a manager," Bachmann added.

'SOMETHING DIFFERENT'

Pawlenty said that what he brought as a candidate was "a rational, established, credible, strong record of results" as a two-term governor in Minnesota. "But I think the audience, so to speak, was looking for something different," he added.

University of Minnesota political scientist Larry Jacobs said Pawlenty's departure "shows the Republican voter is angry and has moved in a pretty conservative direction."

On NBC's "Meet the Press," Bachmann sidestepped a question on whether she would seek the endorsement of fellow Minnesotan Pawlenty. "I'll be calling him today to wish him well. And he brought a very important voice to the race. I have a lot of respect for the governor," Bachmann said.

Perry's candidacy could steal support from Bachmann, replacing her as Romney's top rival and potentially bridging the gap between the party's establishment center and right-wing activists.

Pawlenty had been seen as a Republican candidate who could attract vital support from independent voters wary of more conservative candidates in a general election against Obama.

He raised $4.3 million in the most recent quarter, on par with other Republicans jockeying to run against Obama but lagging well behind the $18 million brought in by Romney.

But in an ominous sign, some donors to Pawlenty's campaign began to express second thoughts about supporting him.

"Well, there's a lot of factors that go into a successful campaign. Obviously, we had some success raising money, but we needed to continue that, and Ames was a benchmark for that. And if we didn't do well in Ames, we weren't going to have the fuel to keep the car going down the road," he said.

(Additional reporting by Lisa Lambert and Eric Beech in Washington and Todd Melby in Iowa; Editing by Jackie Frank)

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Obama celebrates 50th birthday at White House (AP)

WASHINGTON – President Barack Obama was counting on at least one birthday greeting when he turned 50 on Thursday.

"By the time I wake up, I'll have an email from AARP asking me to call President Obama and tell him to protect Medicare," Obama joked during a fundraiser in Chicago on the eve of his birthday.

Obama's big birthday comes just days after he reached a deal with Republicans to raise the nation's debt ceiling and avert a calamitous government default. While the mood around the White House hasn't exactly been festive since the deal was reached — Obama didn't get much of what he wanted — there will be plenty of celebration there Thursday for the president's 50th.

Senior members of Obama's staff will toast the president in the Blue Room of the White House Thursday afternoon. At night, he'll celebrate with family and friends, including some coming in from his hometown of Chicago, then cap the festivities with a weekend trip to Camp David, the presidential retreat in Maryland.

An administration official said the Obamas will pay for the president's birthday party at the White House.

First lady Michelle Obama used her husband's birthday as an opportunity to both poke fun at his graying hair and rally support for his re-election. In an email to supporters Thursday — subject line "Gray Hairs" — Mrs. Obama asked supporters to sign an electronic birthday card for the president. When they do so, the campaign gets valuable contact information for its databases.

"I see Barack make choices he knows will affect every American family. That's no small task for anyone — and more proof that he's earning every last one of those gray hairs," Mrs. Obama wrote.

The president also used his re-election campaign as an opportunity to start his birthday celebrations early. He headlined birthday-themed fundraisers in Chicago Wednesday night and spoke via video conference to supporters holding their own presidential birthday events around the country.

A group from North Carolina sang "Happy Birthday," while another in Ohio held up signs wishing the president a happy 50th.

With the cloud of uncertainty that surrounded the debt debate now lifted, Obama had a wide smile on his face for much of the night. He got another birthday serenade from musicians Jennifer Hudson, Herbie Hancock and the band OK Go, along with the crowd of about 2,400 gathered at Chicago's historic Aragon Ballroom.

At a small dinner for high-dollar donors later in the night, Obama said there would be one very important present waiting for him in back in Washington on Thursday. His oldest daughter, Malia, was coming home from camp to celebrate his father's birthday.

Obama was born Aug. 4, 1961, near the end of the baby boom years of 1946-64. He's the third U.S. president who belongs to the baby boom generation, a population of more than 76 million. Bill Clinton was the first, followed by George W. Bush.

___

Julie Pace can be reached at http://twitter.com/jpaceDC

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Boehner: House will compromise on debt limit (AP)

WASHINGTON – House Speaker John Boehner predicted Thursday that a majority of House Republicans will end up supporting some kind of compromise as the Senate began debating a House-passed effort to tie an increase in the debt ceiling to conservative demands for a balanced budget amendment to the Constitution.

Majority Leader Harry Reid, D-Nev., called up the measure to placate Republicans demanding a vote. But he said it "doesn't have one chance in a million of passing the Senate."

At a news conference, Boehner told reporters, "Frankly, I think it would be irresponsible on behalf of the Congress and the president not to be looking at back-up strategies for how to solve this problem."

"At the end of the day, we have a responsibility to act," the Ohio Republican said.

Asked whether GOP lawmakers supporting the House's "cut, cap and balance" debt limit measure would be unwilling to ultimately compromise, Boehner said, "I'm sure we've got some members who believe that, but I do not believe that would be anywhere close to the majority."

Meanwhile, White House spokesman Jay Carney reported little progress from private meetings President Barack Obama held Wednesday with Boehner and House Majority Leader Eric Cantor, and separately with congressional Democratic leaders.

"There is no deal, we are not close to a deal," Carney said.

"There is no progress to report but we continue to work on getting the most significant deficit reduction package possible because we think it's the right thing for the economy," he said.

Boehner's talk of possible accommodation in the protracted political stalemate over federal budget policy came as the Senate took up the tea party-backed House legislation Thursday. It ties an increase in the government's borrowing authority to a series of conservative demands, including immediate spending cuts and a constitutional balanced budget amendment.

Democrats argue that the so-called "cut, cap and balance" measure would impose untenable spending restraints and set spending levels, as a percentage of the overall economy, on par with the mid-1960s — before the advent of Medicare and automatic Social Security cost-of-living adjustments.

The development Thursday reflected the reality that there's more talk than progress as official Washington wrangles daily over finding a way out of a debt dilemma that has the government sliding inexorably toward a first-ever default on its financial obligations.

Senate Minority Leader Mitch McConnell, R-Ky., said Thursday the legislation now before his chamber would be an opportunity for lawmakers to "go on record in support of balancing our books or against it." He urged Democrats to join GOP senators in backing it.

Democrats are expected to kill the measure — which they say would demand debilitating cuts to Medicare — in a vote on Saturday if not before.

Meanwhile, momentum on a separate bipartisan budget plan by the Senate's "Gang of Six" seemed to ebb as critics warned the measure contains larger tax increases than advertised and it became plain that the measure comes too late and is too controversial to advance quickly — particularly as a part of a debt limit package that already would be teetering on a knife's edge.

Sen. Kent Conrad, D-N.D., a member of the Gang of Six, said Thursday that some 40 senators of both parties back the plan his group has brought forward. It generally takes 60 votes to pass legislation in the 100-member Senate because the rules permit unlimited debate unless a supermajority votes to limit it.

But Conrad also said he feels there's too little time between now and Aug. 2 to complete a comprehensive package of spending cuts, benefit program changes and an overhaul of the tax code.

Conrad said doing nothing is not an option, saying that "we're all going to have to do things we'd prefer in a perfect world not to have to do."

Absent a breakthrough between Obama and Republicans, there is a hotly contested backup plan by McConnell that would give Obama broad new powers to obtain increases in the government's borrowing unless blocked by veto-proof two-thirds margins in both the House and Senate.

Many conservative Republicans are in an uproar over the McConnell plan, and more than 70 House members signed a letter circulated by members of the conservative Republican Study Committee calling on Boehner to come out in public opposition to the McConnell-Reid plan..

In a shift, said Wednesday that Obama would back a short-term deal to prevent a disastrous financial default on Aug. 2 but only if a larger and still elusive deficit-cutting agreement was essentially in place.

Officially, the president continued to push for a big compromise that would cut the nation's budget deficit and extend the government's tapped-out borrowing power above the current $14.3 trillion cap. Obama had threatened to veto any stopgap expansion of the nation's debt limit, at one point last week even challenging House Majority Leader Eric Cantor, R-Va., not to call his bluff about it.

Carney said if a divided Congress and the White House can agree on a significant deal, Obama would accept a "very short-term extension" of the debt limit to let bigger legislation work its way through Congress.

Obama also is open to the McConnell plan, but it seems barely aloft due to fervent tea party opposition in the House. The hope appears to be that such an option will look a lot better to the House in a week or so, given the lack of other ideas.

The Gang of Six plan has come under assault from critics like House Budget Committee Chairman Paul Ryan, R-Wis., who say the plan would increase taxes by $2 trillion over the next 10 years instead of the $1 trillion-plus claimed by proponents like Conrad — a development likely to stunt momentum among Republicans.

The revenue increase is larger than advertised because the $1.2 trillion in new taxes comes on top of an underlying assumption used by Obama's deficit commission — and incorporated by the Senate group in its plan — that the Bush-era income tax brackets for family income exceeding $250,000 would revert to the higher, Clinton administration levels. The deficit panel's assumption was made before Obama buckled in December and signed a full extension of the Bush tax cuts.

The Gang of Six plan also earned poor reviews from liberals like Rep. Jerrold Nadler, D-N.Y., who said it would "balance the budget on the backs of the vulnerable."

And Rep. Howard "Buck" McKeon, R-Calif., who is chairman of the House Armed Services Committee, blasted the plan in a missive to his panel members, saying it would cut the Pentagon much too deeply and would unfairly curb military health and retirement benefits.

The Gang of Six plan promises almost $4 trillion in deficit cuts, including an immediate 10-year, $500 billion down payment that would come as Congress sets caps on the agency budgets it passes each year. It also requires an additional $500 billion in cost curbs on federal health care programs, cuts to federal employee pensions, curbs in the growth of military health care and retirement costs, and modest cuts to farm subsidies.

Conrad made his remarks in an interview Thursday on MSNBC.

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Obama calls Democratic leaders to White House (AP)

WASHINGTON – President Barack Obama summoned top Democratic lawmakers back to the White House Wednesday to resume negotiations on averting a potentially crippling government default, as attention focused on a new bipartisan budget plan emerging in the Senate.

The White House also indicated Obama would be willing to sign a short-term debt limit increase — something he's opposed — if it's merely a stop-gap measure to allow time for a broader plan to get into place, something that likely couldn't be finished by the Aug. 2 deadline to increase the government's borrowing limit.

Obama's meeting with House and Senate Democratic leaders, planned for mid-afternoon Wednesday, marked a partial resumption of talks that ended last week after five days straight of Obama huddling with lawmakers from both parties, with little progress to show for it. But the announcement Tuesday of a possible deal by the Senate "Gang of Six" was seized on by Obama as a possible breakthrough. Now the job ahead for the president, if he is to build momentum behind the plan, includes selling members of his own party on the cuts to entitlement programs that it embraces.

"We are in the 11th hour," said White House press secretary Jay Carney, repeating what Obama had said Wednesday. "We need to meet, talk, consult and narrow down in fairly short order what train we're riding into the station."

Carney also indicated that the president would be willing to support a short-term extension as a stop-gap measure. Carney said Obama would not support a short-term extension "absent an agreement on a larger deal."

The plan by the Gang of Six is far too complicated and contentious to advance before the Aug. 2 deadline to avoid a default that Treasury Secretary Timothy Geithner and other experts warn would roil the markets, drive up interest rates and threaten to take the country back into a recession. But the plan's authors clearly hope it could serve as a template for a "grand bargain" later in the year that could erase perhaps $4 trillion from the deficit over the coming decade.

It includes tax hikes on some that are opposed by Republicans and cuts to Medicare and other entitlements that many Democrats are against.

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Latest House debt plan may lead to compromise (Reuters)

WASHINGTON (Reuters) – The latest Republican plan to avert a looming U.S. default is a fierce statement of conservative principles that pushes the party's negotiating position farther to the right.

That's why it may be the first step on the road to compromise.

By giving Tea Party conservatives in the House of Representatives a chance to take their favored legislation as far as it will go, House Speaker John Boehner may buy himself some needed goodwill from a vocal segment of his party that has sometimes viewed his deal-making efforts with suspicion.

That could make it easier for Boehner to eventually pass legislation that could be acceptable to President Barack Obama and the Democratic-controlled Senate, clearing the way for an increase in the debt ceiling before August 2 when the federal government faces a default on its financial obligations.

Even as Boehner touted his party's latest plan at a news conference on Friday, he left open the possibility that the House may take up a compromise being shaped in the Senate that so far has failed to catch on with junior lawmakers.

"The cut, cap and balance plan that the House will vote on next week is a solid plan for moving forward. Let's get through that vote, and then we'll make decisions about what will come after," he said at a news conference.

The cut, cap and balance bill conditions a debt-limit increase on passage of a constitutional amendment that would require the federal government to balance its books each year.

Constitutional amendments require a two-thirds vote. That's not likely in the Democratic-controlled Senate, and may even be a stretch in the House.

Even if it were to pass Congress, the amendment would not take effect until at least 38 of the 50 state legislatures ratify it.

Economists say a balanced-budget requirement would tie the federal government's hands during a recession, when tax revenues plummet and welfare costs rise, by forcing it to slash spending or raise taxes.

"That would make a recession worse," said Dan Seiver, a professor of finance at San Diego State. "It's exactly the opposite of what intelligent fiscal policy should do."

SMART POLITICS

But it's smart politics. Polls show that the public, and especially Republican voters, favor a balanced-budget requirement by wide margins.

"This is a vote where ... the House Republican majority gets to align itself with the American public at large," said Kevin Madden, a Republican strategist and former Boehner spokesman.

Some Democrats have lined up behind a balanced-budget amendment, but few are expected to back the Republican version, which also limits spending to 18 percent of gross domestic product and requires a two-thirds vote for tax increases.

The House is expected to vote on the cut, cap and balance plan on Tuesday, but has not yet set a vote for the balanced-budget amendment.

The Senate could vote on several balanced-budget amendments next week, a Democratic aide said. All are expected to fail.

That would clear the way for a so-called "Plan B" introduced last week by Senate Republican Leader Mitch McConnell, which would essentially pin the onus for a debt-ceiling increase on Obama and his Democrats.

Senate Democratic Leader Harry Reid is currently working with McConnell to make the plan more palatable to his party.

Democrats want to include about $1.5 trillion in spending cuts, including military cuts, along with a payroll tax-cut extension to boost the economy and an agreement on funding levels for the coming two fiscal years to avoid further budget showdowns, aides said.

The plan would also include a special deficit-reduction committee, made up of equal numbers of Republicans and Democrats, that would examine more sensitive budget topics like taxes and benefits. The panel would be guaranteed a vote on its findings, due by the end of the year.

House Republicans and outside conservative groups have been cool or hostile to the plan so far. While McConnell hopes to win control of the Senate in the 2012 elections by embarrassing Democrats, House Republicans are focused on delivering the deep spending cuts they promised voters last fall.

They might warm to McConnell's plan if they are allowed input on the spending cuts, as a Democratic aide suggests.

The failure of cut, cap and balance, coupled with an increasingly frantic lobbying campaign by business allies, could soften their opposition as August 2 approaches.

A sharp drop in the markets could change minds as well.

"What may look like something less than optimal today, if we're unable to get to an agreement might look pretty good a couple of weeks from now," Boehner said at a news conference on Thursday. "I think it's an option that may be worthy at some point."

(Editing by Eric Beech)

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White House: US suspending $800M in Pakistan aid (AP)

WASHINGTON – President Barack Obama has ordered the suspension of $800 million in aid to the Pakistani military, his chief of staff said Sunday, as part of what experts say is a tougher line with a critical U.S. partner in the fight against terrorism.

Top aide William Daley described the U.S. relationship with Pakistan as "difficult" and said it must be made "to work over time." But he added that until "we get through that difficulty, we'll hold back some of the money that the American taxpayers are committed to give" Pakistan.

The suspension of U.S. aid, first reported by the New York Times, followed a statement last week by Adm. Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, that Pakistan's security services may have sanctioned the killing of a Pakistani journalist who wrote about infiltration of the military by extremists.

The allegation was rejected by Pakistan's powerful military establishment, including the Inter-Services Intelligence Agency, which has historic ties to the Taliban and other militant groups and which many Western analysts regard as a state-within-a-state.

Daley, interviewed on ABC's "This Week," suggested the decision to suspend military aid resulted from the increasing estrangement between the U.S. and Pakistan, especially since the U.S. raid in May that killed al-Qaida leader Osama bin Laden not far from Pakistan's equivalent of the U.S. Military Academy at West Point.

"Obviously there's still a lot of pain that the political system in Pakistan is feeling by virtue of the raid that we did to get Osama bin Laden," Daley said.

A senior U.S. official said the suspension was triggered by the Pakistani army's decision to significantly reduce the number of visas for U.S. military trainers. "We remain committed to helping Pakistan build its capabilities, but we have communicated to Pakistani officials on numerous occasions that we require certain support in order to provide certain assistance," said the official, who was not authorized to discuss the issue publicly and spoke only on condition of anonymity.

Secretary of State Hillary Clinton recently told senators that "when it comes to our military aid, we are not prepared to continue providing that at the pace we were providing it unless we see certain steps taken."

Pakistan army spokesman Maj. Gen. Athar Abbas declined comment on the suspension. He pointed to comments by Army Chief Ashfaq Parvez Kayani, who last month said U.S. military aid should be diverted to civilian projects.

Hasan-Askari Rizvi, a Pakistani political and defense analyst, said the U.S. decision to suspend aid is an attempt to increase pressure on Pakistan, but he believes it could hurt both sides.

"The Pakistani military has been the major supporter of the U.S. in the region because it needed weapons and money," said Rizvi. "Now, when the U.S. builds pressure on the military, it will lose that support."

George Perkovich, an expert on Pakistan with the Carnegie Endowment for International Peace in Washington, called the suspension "overdue."

"We've been trying for years to get, persuade, push the Pakistani army to conduct military operations on their border with Afghanistan, especially in North Waziristan, and they've said it's not in their interest, that they're overstretched already," Perkovich said in a telephone interview from Paris. "I think it's smart to say, `We hear you.'"

Perkovich said if U.S. financial aid didn't change the behavior of the Pakistan military, then withdrawing it probably wouldn't either. But he said the termination of the $800 million in assistance could lead to a re-examination of the military's role in that country.

"Internally in Pakistan, there's going to be a much more intense debate now on whether the Army has put the country on a good course," he said.

___

Associated Press writers Matthew Lee in Washington and Sebastian Abbot in Islamabad contributed to this report.

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U.S. withholds $800 million in aid to Pakistan: White House (Reuters)

WASHINGTON (Reuters) – The United States is withholding some $800 million in military assistance to Pakistan in a show of displeasure over its cutback on U.S. trainers, limits on visas for U.S. personnel and other bilateral irritants, the Obama administration said on Sunday.

Pakistani authorities have "taken some steps that have given us reason to pause on some of the aid which we're giving to the military," White House Chief of Staff William Daley said on ABC television's "This Week with Christiane Amanpour."

As a result, "We'll hold back some of the money that the American taxpayers have committed to give," he said, adding this amounted to about $800 million, or more than a third of the $2 billion given to Pakistan for security assistance.

The U.S. Defense Department said Pakistan's army had requested a "significant cutback" of U.S. military trainers and limited the ability of U.S. personnel to obtain visas.

"While the Pakistani military leadership tells us this is a temporary step, the reduced presence of our trainers and other personnel means we can't deliver the assistance that requires training and support to be effective," the department said in a written response to questions.

Bilateral ties have been under mounting strain as the United States has pushed one of its key counterterrorism partners to boost efforts against Taliban and other militants fighting western forces in neighboring Afghanistan.

Pakistan also is smarting from the surprise U.S. raid that killed al Qaeda leader Osama bin Laden on May 2 in a Pakistani garrison town, as well as U.S. drone attacks and night raids that have killed civilians as well as militants.

The New York Times, which reported the aid curtailment in its Sunday editions, said Pakistan has shut down a U.S. program that had been training paramilitary forces, sending home more than 100 U.S. trainers in recent weeks, and has threatened to close the base the CIA has been using for pilotless plane attacks on militant targets.

The U.S.-Pakistan relationship also was damaged last year after a CIA contractor in Lahore killed two Pakistanis he said were trying to rob him.

The Defense Department in its reply said a series of events over the last eight months "have affected our bilateral relations."

"We remain committed to helping Pakistan build it's capabilities, but we have communicated to Pakistani officials on numerous occasions that we require certain support in order to provide certain assistance," the Pentagon said.

"Working together, allowing an appropriate presence for U.S. military personnel, providing necessary visas, and affording appropriate access are among the things that would allow us to effectively provide assistance," it added.

The State Department added: "We are taking a very clear-eyed approach to our relationship with Pakistan - weighing both the importance of a continued long-term relationship and the importance of near-term action on key issues.

The United States will continue to work with Pakistani leaders "to affirm the importance of cooperating toward our shared national security objectives," the department added in a written reply to a query.

(with additional reporting by John Crawley, editing by Cynthia Osterman)

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Texas executes Mexican despite White House plea (AP)

HUNTSVILLE, Texas – The U.S. Supreme Court refused to block Texas from executing a Mexican citizen despite a White House-backed appeal that claimed the case could affect other foreigners arrested in the U.S. and Americans in legal trouble abroad.

Humberto Leal was executed Thursday evening for the 1994 rape and murder of a San Antonio teenager after his attorneys, supported also by the Mexican government and other diplomats, unsuccessfully sought a stay. They argued that Leal was denied help from his home country that could have helped him avoid the death penalty.

From the death chamber, Leal repeatedly apologized and then shouted "Viva Mexico!" as the lethal drugs began taking effect. The 38-year-old mechanic was sentenced to death for killing 16-year-old Adria Sauceda, whose brutalized nude body was found hours after the two left a street party.

Leal was just a toddler when he and his family moved to the U.S. from Monterrey, Mexico, but his citizenship became a key element of his attorneys' appeals. They said police never told him following his arrest that he could seek legal assistance from the Mexican government under an international treaty.

Mexico's government, President Barack Obama's administration and others wanted the Supreme Court to stay the execution to allow Congress time to consider legislation that would require court reviews for condemned foreign nationals who aren't offered the help of their consulates. The high court rejected the request 5-4.

But questions remain over how Leal's execution may affect relations between Mexico and the U.S. — and Texas, the country's busiest death penalty state that shares a roughly 1,250-mile border with Mexico.

Leal's relatives who gathered in Guadalupe, Mexico, burned a T-shirt with an image of the American flag as a sign of protest. Leal's uncle, Alberto Rodriguez, criticized the U.S. justice system and the Mexican government, saying "there is a God who makes us all pay."

Mexico's foreign ministry said in a statement that the government condemned Leal's execution and sent a note of protest to the U.S. State Department. The ministry said Mexican ambassador Arturo Sarukhan attempted to contact Texas Gov. Rick Perry, who refused to speak on the phone.

The governor's office declined to comment on the execution Thursday.

Relatives said Leal would be buried in a cemetery next to his grandmother in Monterrey, Mexico, as he requested.

"I have hurt a lot of people," Leal said during his final minutes Thursday. "I take full blame for everything. I am sorry for what I did."

"One more thing," he said, then twice shouted "Viva Mexico!" He told the prison warden he was ready, adding "let's get this show on the road."

He grunted, snored several times and appeared to go to sleep. He was pronounced dead at 6:21 p.m., 10 minutes after the lethal drugs began flowing into his arms.

In denying his attorneys' appeal, the Supreme Court's five more conservative justices doubted that executing Leal would cause grave international consequences. "Our task is to rule on what the law is, not what it might eventually be," the majority said.

The court's four liberal-leaning justices said they would have granted the stay.

Leal's attorney Sandra L. Babcock said that with consular help her client could have shown that he was not guilty. But, she said, "this case was not just about one Mexican national on death row in Texas.

"The execution of Mr. Leal violates the United States' treaty commitments, threatens the nation's foreign policy interests, and undermines the safety of all Americans abroad."

Prosecutors said Congress was unlikely to pass the legislation and Leal's appeals were simply an attempt to evade justice for a gruesome murder.

Leal's argument that he should have received consular legal aid wasn't new — Texas has executed other condemned foreign nationals who raised similar challenges, most recently in 2008.

Leal's appeals, however, focused on legislation introduced last month in the U.S. Senate by Vermont Democrat Patrick Leahy. The bill would bring the U.S. into compliance with the Vienna Convention on Consular Relations provision regarding the arrests of foreign nationals. It would ensure court reviews for condemned foreigners to determine if a lack of consular help made a significant difference in the outcome of their cases.

"Americans detained overseas rely on their access to U.S. consulates every day," Leahy said after the Supreme Court decision was announced. "If we expect other countries to abide by the treaties they join, the United States must also honor its obligations."

The Obama administration took the unusual step of intervening in a state murder case last week when Solicitor General Donald Verrilli Jr. joined Leal's appeal, asking the high court to halt the execution and give Congress at least six months to consider Leahy's bill.

The Mexican government and other diplomats also contended that Leal's case needed to be thoroughly reviewed. Some warned his execution would violate the treaty provision and could endanger Americans in countries that deny them consular help.

Measures similar to Leahy's have failed at least twice in recent congressional sessions. The Texas Attorney General's office, opposing the appeals, pointed to those failures in its Supreme Court arguments and said "legislative relief was not likely to be forthcoming."

Stephen Hoffman, an assistant attorney general, said evidence against Leal was strong.

"At this point, it is clear that Leal is attempting to avoid execution by overwhelming the state and the courts with as many meritless lawsuits and motions as humanly possible," Hoffman said.

Prosecutors said Sauceda was drunk and high on cocaine the night she was killed, and that Leal offered to take her home. Witnesses said Leal drove off with her around 5 a.m. Some partygoers found her body later that morning and called police. There was evidence Sauceda had been bitten, strangled and raped, and bludgeoned with a large chunk of asphalt.

A witness testified that Leal's brother appeared at the party, agitated that Leal had arrived home bloody and saying he had killed a girl.

In his first statement to police, Leal said Sauceda bolted from his car and ran off. After he was told his brother had given detectives a statement, he changed his story, saying Sauceda attacked him and fell to the ground after he fought back. He said when he couldn't wake her and saw bubbles in her nose, he got scared and went home.

Testifying during his trial's punishment phase, Leal acknowledged being intoxicated and doing wrong but said he wasn't responsible for what prosecutors alleged. A psychiatrist testified Leal suffered from alcohol dependence and pathological intoxication.

Sauceda's mother, Rachel Terry, told San Antonio television station KSAT her family already had suffered too long.

"A technicality doesn't give anyone a right to come to this country and rape, torture and murder anyone," she said.

In 2005, President George W. Bush agreed with an International Court of Justice ruling that Leal and 50 other Mexican-born inmates nationwide should be entitled to new hearings in U.S. courts to determine if their consular rights were violated. The Supreme Court later overruled Bush.

___

Associated Press Writers Jesse J. Holland in Washington and Porfirio Ibarra in Monterrey, Mexico, contributed to this report.

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House passes $649B defense spending bill (AP)

WASHINGTON – The House on Friday overwhelmingly passed a $649 billion defense spending bill that boosts the Pentagon budget by $17 billion and covers the costs of wars in Iraq and Afghanistan.

The strong bipartisan vote was 336-87 and reflected lawmakers' intent to ensure national security, preserve defense jobs across the nation and avoid deep cuts while the country is at war.

While House Republican leaders slashed billions from all other government agencies, the Defense Department is the only one that will see a double-digit increase in its budget beginning Oct. 1.

Amid negotiations to cut spending and raise the nation's borrowing limit, the House rejected several amendments to cut the Pentagon budget, including a measure by Rep. Barney Frank, D-Mass., to halve the bill's increase in defense spending.

"We are at a time of austerity. We are at a time when the important programs, valid programs, are being cut back," Frank said.

Scoffing at the suggestion that "everything is on the table" in budget negotiations between the Obama administration and congressional leaders, Frank said, "The military budget is not on the table. The military is at the table, and it is eating everybody else's lunch."

Still, the overall bill is $9 billion less than President Barack Obama sought. The White House has threatened a veto, citing limits on the president's authority to transfer detainees from the U.S. prison at Guantanamo Bay, Cuba, and money for defense programs it didn't want.

The measure includes $119 billion for the wars in Iraq and Afghanistan.

The House also voted to slow repeal of the policy allowing gays to serve openly in the military, backing an amendment to block funds for the training manual for the Chaplain Corps on ending the so-called "don't ask, don't tell" policy.

Rep. Tim Huelskamp, R-Kan., sponsor of the amendment, said its purpose was to prohibit chaplains from performing same-sex marriages on Navy bases regardless of a state's law. The House approved the measure 236-184.

The overall bill must be reconciled with a still-to-be-completed Senate version.

The final vote came after the House turned back an amendment by Democratic Rep. Dennis Kucinich of Ohio that would have barred funds for the U.S. operation against Libya. The vote was 251-169.

The House has sent mixed signals on Obama's military action against Libya, voting to prohibit weapons and training to rebels looking to oust Moammar Gadhafi but stopping short of trying to cut off money for American participation in the NATO-led mission.

In a series of votes Thursday, Republicans and Democrats expressed their dissatisfaction with the Libya operation, now in its fourth month with no end in sight and waning support from some nations in the international coalition. The House voted to bar military aid to the rebels but moments later rejected efforts to prevent funding for the limited U.S. mission.

The votes mirrored the contradictory actions of the House last month, when lawmakers refused to approve the operation but declined to cut off the money.

The congressional unrest over Libya stems from a stalemated civil war and Obama's contention that he didn't need congressional authorization to engage in another war on top of Afghanistan and Iraq because Libya fighting isn't full-blown hostilities. Among war-weary NATO allies, Italy announced that it was reducing its participation in the campaign by removing an aircraft carrier from the region and pulling thousands of troops home.

"Libya did not attack us. Libya did not attack NATO," Rep. Tom Cole, R-Okla., said. "However much we detest Mr. Gadhafi and his regime, we have no reason to be at war."

The House voted 225-201 for an amendment sponsored by Cole to bar the Pentagon from providing "military equipment, training or advice or other support for military activities" to an outside group, such as rebel forces, for military action in or against Libya.

Forty-eight Democrats backed the Republican-sponsored measure.

The intent of the measure was to prohibit aid to the rebels such as weapons and assistance to their Transitional National Council, including operational planning. The broad effort also would target contractors in Libya.

Obama already has authorized $25 million in nonlethal assistance to the rebels, including thousands of meals from Pentagon stocks. The U.S. also has supplied $53 million in humanitarian aid. Neither would be affected by the bill.

Moments after that vote Thursday, the House rejected a measure that would have prohibited funds for the U.S. military to continue its limited role. The vote was 229-199, with 67 Democrats breaking with the administration to support the amendment, which Kucinich cosponsored with freshman Rep. Justin Amash, R-Mich.

Lawmakers argue that Obama violated the 1973 War Powers Resolution, which requires a president to seek congressional approval within 60 days of the first military strikes, a move the commander in chief did not make.

In a reflection of congressional anger toward the administration, the House voted overwhelmingly for an amendment that prohibits spending that violates the War Powers Resolution and focuses on future military operations.

The House also rejected two other efforts to prohibit funds for the U.S. military operation in Libya.

Sen. John McCain, top Republican on the Senate Armed Services Committee, criticized the House vote on aid to the rebels, arguing that it sends the wrong message to Gadhafi and those challenging the long-time leader.

"I am saddened by the abandonment of America's traditional support for those struggling for freedom and democracy, which has been a hallmark of our Republican Party for decades," said the Arizona Republican, who traveled to Benghazi in April to meet with the rebels.

Since NATO took command of the Libya operation in early April, the U.S. role has largely been limited to support efforts such as intelligence, surveillance and electronic warfare. The U.S. has launched drone attacks and other airstrikes, flying more than 3,400 sorties.

The Senate has delayed consideration of a resolution authorizing the U.S. mission in Libya.

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Strauss-Kahn freed from house arrest (AFP)

NEW YORK (AFP) – A US judge released Dominique Strauss-Kahn on his "own recognizance" Friday, but prosecutors who consented to the easing of bail restrictions did not agree to dismiss the sexual assault case against the former IMF chief.

The French politician was in a New York courtroom for a brief but extraordinary hearing that came in the wake of reports that prosecutors had grave doubts about the credibility Strauss-Kahn's accuser, and while sources suggested to US media that the case had serious problems, the judge stressed that the "case is not over."

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Strauss-Kahn free from house arrest; charges stand (AP)

By JENNIFER PELTZ and TOM HAYS, Associated Press Jennifer Peltz And Tom Hays, Associated Press – 2?mins?ago

NEW YORK – Former International Monetary Fund leader Dominique Strauss-Kahn walked out of court without bail and free from house arrest Friday after prosecutors said an extensive background investigation of the hotel housekeeper accusing him of sexual assault gave them pause.

Strauss-Kahn had been confined for weeks to a ritzy Manhattan loft on $6 million in cash and bond. The charges, which include attempted rape, have not been reduced, but the changes signal that prosecutors do not believe the accusations are as ironclad as they once seemed.

The 32-year-old hotel maid accused Strauss-Kahn of chasing her through his luxury suite in May, trying to pull down her pantyhose and forcing her to perform oral sex. Authorities have said they have forensic evidence of a sexual encounter, but defense lawyers have said it wasn't forced.

"It is a great relief," said Strauss-Kahn's attorney, William Taylor, adding that the case underscores "how easy it is for people to be charged with serious crimes and for there to be a rush to judgment."

"It is so important in this country that people, especially the media, refrain from judgment until the facts are all in," he said.

The stark turn in the case came after the woman admitted to prosecutors she had made up a story of being gang raped and beaten in her homeland to enhance her application for political asylum, prosecutors said in a letter to defense lawyers.

She also misrepresented what she did after the alleged attack — instead of fleeing to a hallway and waiting for a supervisor, she went to clean another room and then returned to clean Strauss-Kahn's suite before telling her supervisor that she had been attacked, prosecutors said.

She also misrepresented her income and claimed someone else's child as her own dependent on tax returns, they said.

The details speak to the maid's credibility and whether her story would stand up under oath in a prosecution that would rely heavily on her testimony.

The woman's attorney, Ken Thompson, fired back outside court, saying the district attorney's office was backing away from the case because it was too scared to prosecute it. He said she would come out in public to tell her story but didn't specify when.

Thompson said the woman went to the district attorney with information that her asylum application was flawed, but that she exaggerated on it because she was scared she would be sent back to Guinea. He said she came to the U.S. because she was a victim of female genital mutilation, and she worried her daughter, now 15, would be victimized as well. He also said she had been raped by soldiers there, but that attack did not occur as it was written in her asylum application.

Thompson did not back down on the seriousness of the charges, delivering intimate and specific details from her perspective on a violent attack, saying Strauss-Kahn bruised her vagina, tore a ligament in her shoulder and ripped her stockings.

"When she was fighting to get away, when she was on her knees and he was sexually assaulting her, after he finished, she got up and started to run to the door and started spitting Dominique Strauss-Kahn's semen out of her mouth in disgust all over that hotel room," he said.

Investigators have said they found traces of his semen on her uniform.

"From day one she has described a violent sexual assault that Dominique Strauss-Kahn committed against her," Thompson said. "She has described that sexual assault many times, to prosecutors and to me, and she has never once changed a single thing about that encounter."

Thompson also referred to media reports that his client was involved with a drug dealer, calling them lies.

The New York Times, quoting law enforcement officials it didn't name, reported that the woman was recorded on the phone with an incarcerated man around the day she made the allegations, discussing whether to press her case in court.

The newspaper said the man had been arrested on marijuana possession charges and had deposited cash in the woman's bank account.

"It is clear that this woman made some mistakes, but that doesn't mean she's not a rape victim," Thompson said.

Strauss-Kahn arrived at the courthouse Friday morning in a Lexus SUV and strode confidently up the granite steps with his wife, French journalist Anne Sinclair, at his side.

After the hearing, he slowly walked out the building with his arm on her shoulder, smiling at the throng gathered outside.

His passport remained surrendered, and he will not yet be allowed to leave the country. His other attorney, Benjamin Brafman, said Strauss-Kahn would be free to travel within the United States.

Prosecutors offered few details inside court on the turn in the case. Assistant district attorney Joan Illuzzi-Orbon said a further investigation caused them to reassess it.

"At the time this case came to the district attorney's office, we were faced with a credible claim of a serious sexual assault," she said, noting the accuser had promptly reported the alleged attack and had a "solid work history."

State Supreme Court Justice Michael Obus, in releasing Strauss-Kahn, said there would be no rush to judgment either way.

Illuzzi-Orbon said, "Although it is clear that the strength of the case has been affected by the substantial credibility issues regarding the complainant, we are not moving to dismiss the case at this time."

If the case collapses, it could once again shake up the race for the French presidency. Strauss-Kahn, a prominent Socialist, had been seen as a leading potential challenger to conservative President Nicolas Sarkozy in next year's elections — until the New York allegations embarrassed his party and led to his resignation from the IMF.

"Those who know Dominique Strauss-Kahn will not be surprised by this evolution of events," one of his French lawyers, Leon Lef Forster, told the AP in Paris. "What he was accused of has no relation to his personality. It was something that was not credible."

New doubts about Strauss-Kahn's accuser would also revive speculation of a conspiracy against Strauss-Kahn aimed at torpedoing his presidential chances. Within days of his arrest, a poll suggested that a majority of French think Strauss-Kahn, who long had a reputation as a womanizer and was nicknamed "the great seducer," was the victim of a plot.

Socialist Party chief Martine Aubry announced her own presidential bid this week, after having long been expected to throw her weight behind a Strauss-Kahn candidacy. French politician Michele Sabban said Friday that the Socialists should suspend the presidential primary calendar because of the new developments.

In arguing against his release in May, prosecutors cited the violent nature of the alleged offenses and said his wealth and international connections would make it easy for him to flee.

Strauss-Kahn was in New York on a personal trip when the maid made her accusations. Prosecutors have said in court that Strauss-Kahn appeared on surveillance tapes to be in a hurry as he left the hotel, though his lawyers have said he was merely rushing to lunch.

Strauss-Kahn was held without bail for nearly a week after his May arrest. His lawyers ultimately persuaded a judge to release him by agreeing to extensive — and expensive — conditions, including an ankle monitor, surveillance cameras and armed guards. He was allowed to leave for only for court, weekly religious services and visits to doctors and his lawyers.

The security measures were estimated to cost him about $200,000 a month, on top of the $50,000-a-month rent on the town house in trendy TriBeCa.

Under New York law, judges base bail decisions on factors including defendants' characters, financial resources and criminal records, as well as the strength of the case against them — all intended to help gauge how likely they are to flee if released.

___

Online:

Prosecutors' letter: http://www.courts.state.ny.us/press/index.shtml

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Outspoken Bachmann launches White House bid (AP)

WATERLOO, Iowa – Outspoken tea party favorite Michele Bachmann cast herself as the "bold choice" for the Republican presidential nomination as she formally kicked off her campaign Monday in her Iowa home town.

Outside a sun-splashed historic mansion in Waterloo, Bachmann told a crowd of more than 100 family members, friends, supporters and others that she is waging her campaign "not for vanity," but because voters "must make a bold choice if we are to secure the promise of the future."

The three-term Minnesota congresswoman railed against the Democrat she hopes to oust — President Barack Obama.

"We can't afford four more years of Barack Obama," she said.

Bachmann steered clear of specific proposals she'd advance as president, a day after suggesting that the concerns over averting a debt crisis were "scare tactics" that could be solved by paying only the interest on U.S. obligations while lawmakers work on a deal to cut spending as part of a new debt ceiling. The idea has been dismissed as unworkable by Treasury Secretary Tim Geithner.

She reminisced about her childhood in a Democratic household — and her own volunteer work for Democratic President Jimmy Carter's 1976 campaign. But she made clear her allegiances long ago shifted, stressing her tea party connections.

"The liberals, and to be clear I am not one of those, want you to believe the tea party movement is just the right wing of the Republican Party," she said. "Nothing could be further from the truth."

As a new Iowa poll this past weekend signaled she'll be a force in the state that opens the Republican nomination contest, Bachmann hopes to reshape the GOP field and how she's viewed by voters. After the formal Iowa kickoff, she planned to shift her focus to New Hampshire and South Carolina, other early voting states with traditions of separating the viable contenders from the political also-rans.

Bachmann, 55, has many wondering if the edgy side that turned her into a conservative star will be the one she shows on the presidential campaign trail. Her say-anything approach has earned her a loyal following but also plenty of guff from detractors who see her as a fringe politician prone to missteps.

In March, she famously flubbed Revolutionary War geography. She told a group of students and conservative activists in Manchester, N.H. "You're the state where the shot was heard around the world in Lexington and Concord." Those first shots of the Revolutionary War were fired in Massachusetts, not New Hampshire. She later admitted she made a mistake.

For this campaign, she has surrounded herself with no-nonsense veterans of national politics, some of whom have deep ties to the political establishment Bachmann typically eschews.

Striking a less contentious tone, Bachmann told the Iowa crowd.

"Our problems don't have an identity of party, they are problems that were created by both parties," she said, adding, "Americans aren't interested in affiliation, they're interested in solutions."

Bachmann's unswerving style provides a sharp contrast with the more measured way of 2012 rivals, such as former Govs. Mitt Romney, Tim Pawlenty and Jon Huntsman and former House Speaker Newt Gingrich. Others vying for the nomination are ex-Sen. Rick Santorum, Texas Rep. Ron Paul and businessman Herman Cain.

Possible late entrants include Texas Gov. Rick Perry and 2008 vice presidential nominee Sarah Palin.

A Des Moines Register poll published Sunday showed Bachmann and Romney far out front of the others in Iowa.

Some at Monday's event said they were giving her a hard look and could see supporting her at February's caucus.

Marv Dillavou, a firearms salesman, said he's not ready to commit to a candidate but likes what he's seen from Bachmann.

"I'm happy to see a serious female candidate. She's very accomplished," Dillavou said. Critics, he added, "make too much of every word, every innuendo gets blown out of proportion. It's good that she speaks her mind."

Cedar Falls retiree Terrye Kizlyk was also impressed.

"She speaks from here," Kizlyk said, pointing to her heart.

Bachmann's political climb has been swift, brushing off a school board race defeat just 12 years ago and moving rapidly from Minnesota's state Senate to Congress. In Washington, Bachmann vaulted to prominence by trying to block and now promising to repeal President Barack Obama's health care law. She has also tangled with GOP House leaders over her concerns they are too timid on federal spending cuts.

She's staunchly conservative on social issues, too, calling for more abortion restrictions and constitutional amendments to ban gay marriage.

In her latest national introduction, Bachmann has played up a softer side by highlighting her role in raising five children and 23 foster kids. But she's also gone hard at Obama, laying federal debt and deficits at his feet and accusing him of pushing the nation toward socialism.

Dubbing herself a "constitutional conservative," Bachmann said she would bring a vastly different philosophy to the White House.

"I don't believe that the solutions to our problems are Washington centric, I believe they are every American centric," she said.

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House rejects measure to continue US role in Libya (AP)

WASHINGTON – The House on Friday overwhelmingly rejected a measure giving President Barack Obama the authority to continue the U.S. military operation against Libya, a major repudiation of the commander in chief.

The vote was 295-123, with Obama losing the support of 70 of his Democrats one day after Secretary of State Hillary Rodham Clinton made a last-minute plea for the mission.

While the congressional action has no immediate effect on American involvement in the NATO-led mission, it was an embarrassment to a sitting president and certain to have reverberations in Tripoli and NATO capitals.

The vote marked the first time since 1999 that either House has voted against a president's authority to carry out a military operation. The last time was to limit President Bill Clinton's authority to use ground forces in Kosovo.

The House planned a second vote on legislation to cut off money for the military hostilities in the operation.

House Republican leaders pushed for the vote, with rank-and-file members saying the president broke the law by failing to seek congressional approval for the 3-month-old war.

Speaker John Boehner, R-Ohio, said he supported the president's authority as commander in chief. "But when the president chooses to challenge the powers of the Congress, I as speaker of the House will defend the constitutional authority of the legislature," he said.

Some Democrats accused the GOP of playing politics with national security. They said the vote would send the wrong message to Gadhafi.

Rep. Adam Smith of Washington, the top Democrat on the Armed Services Committee, said the vote would essentially "stop the mission in Libya and empower Moammar Gadhafi."

Speaking to reporters aboard Air Force One, White House spokesman Jay Carney expressed disappointment.

"We think now is not the time to send the kind of mixed message that it sends when we're working with our allies to achieve the goals that we believe that are widely shared in Congress: protecting civilians in Libya, enforcing a no-fly zone, enforcing an arms embargo and further putting pressure on Gadhafi," Carney said. "The writing's on the wall for Colonel Gadhafi and now is not the time to let up."

Carney also dismissed the action as just one House vote.

The defeated resolution mirrors a Senate measure sponsored by Sens. John Kerry, D-Mass., and John McCain, R-Ariz., that Obama has indicated he would welcome. The Senate Foreign Relations Committee will consider the resolution on Tuesday.

The second vote to eliminate money for the Libya operation would make an exception for search and rescue efforts, intelligence, surveillance, reconnaissance, aerial refueling and operational planning to continue the NATO effort in Libya. That measure has no chance in the Democratic-controlled Senate.

House Republicans and Democrats are furious with Obama for failing to seek congressional authorization as required under the War Powers Resolution. The 1973 law, often ignored by Republican and Democratic presidents, says the commander in chief must seek congressional consent for military actions within 60 days. That deadline has long passed.

Obama stirred congressional unrest last week when he told lawmakers he didn't need authorization because the operation was not full-blown hostilities. NATO commands the Libya operation, but the United States still plays a significant support role that includes aerial refueling of warplanes and intelligence, surveillance and reconnaissance work as well as drone attacks and bombings.

A New York Times report that said Obama overruled some of his legal advisers further incensed members of Congress.

In a last-ditch effort Thursday, Clinton met with rank-and-file Democrats to explain the mission and discuss the implications if the House votes to cut off funds. The administration requested the closed-door meeting.

Rep. Tim Walz, D-Minn., said Clinton apologized for not coming to Congress earlier. But he said she warned about the implications of a House vote to cut off money.

"The secretary expressed her deep concern that you're probably not on the right track when Gadhafi supports your efforts," Walz said.

Rep. Howard Berman of California, the top Democrat on the House Foreign Affairs Committee, said such a vote "ensures the failure of the whole mission."

Earlier this week Clinton said lawmakers were free to raise questions, but she asked, "Are you on Gadhafi's side, or are you on the side of the aspirations of the Libyan people and the international coalition that has been bringing them support?"

In the Senate, backers of a resolution to authorize the operation wondered whether the administration had waited too long to address the concerns of House members.

"It's way late," said McCain, the top Republican on the Armed Services Committee. "This is one of the reasons why they're having this veritable uprising in the House, because of a lack of communication. And then the icing on the cake was probably for them when he (Obama) said that we're not engaged in hostilities. That obviously is foolishness."

He added, however, "That is not a reason to pass a resolution that would encourage Moammar Gadhafi to stay in power."

Earlier this month, the House voted 268-145 to rebuke Obama for failing to provide a "compelling rationale" for the Libyan mission and for launching U.S. military forces without congressional approval.

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