Obama ups pressure ahead of Senate jobs bill vote (Reuters)

WASHINGTON (Reuters) – President Barack Obama maintained his attack against congressional Republicans over his jobs bill on Saturday, upping pressure before it faces a vote in the Senate next week.

Repeating a warning to make them explain to the American people why they oppose his measures, Obama said the country needed it as insurance against a double dip recession.

"This jobs bill can help guard against another downturn here in America," the president said in his weekly address.

Republicans, who complain Obama is more interested in keeping his own job in next year's election than creating work for ordinary Americans, dismissed the steps as more of the same policies they say have missed their mark in the past.

"It's nothing but a rehash of the same failed ideas he's already tried, combined with a huge tax increase," said Republican Senator John Thune in his party's weekly address.

The president has toured the country since he launched the proposal last month in a bid to enlist public opinion to pressure Congress to pass the bill, and he held a short-notice press conference on Thursday to hammer home this message.

"If their plan doesn't measure up, the American people deserve to know what it is that Republicans in Congress don't like about this jobs plan," Obama said.

Senate Democrats will vote on his $447 billion proposal for tax cuts and spending on Tuesday, after replacing Obama's suggestion of how to cover its cost with their own millionaire tax surcharge. However, the Senate is not expected to get enough votes to pave the way for the bill's passage.

If it does fail to win the 60 votes needed to avoid Republican delaying tactics in the Senate, congressional Democrats will likely look at other ways to advance bits of Obama's initiative, either through promoting individual bills or by attaching measures into other legislation.

Obama said action was needed and the latest monthly jobs data, released on Friday, bore him out.

It showed U.S. unemployment remained pinned at a historically lofty 9.1 percent last month -- a rate of joblessness the president must reduce to improve his hopes of winning reelection in November 2012.

Trade pacts between the United States and South Korea, Colombia and Panama that will be voted on by U.S. lawmakers on Wednesday could generate business that Obama says may create tens of thousands of new U.S. jobs.

He hosts South Korean President Lee Myung-bak to a White House state visit on Thursday and they will travel together to Detroit on Friday to discuss the job benefits of the pact.

But Republicans complain that he should have advanced these deals when he entered the White House 2-1/2 years ago.

"It's extremely unfortunate that we had to wait so long for the president to do something so simple, to help promote American exports, and create American jobs," Thune said.

(Reporting by Alister Bull; Editing by Paul Simao)

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Warren launches US Senate campaign with Mass. tour (AP)

BOSTON – Harvard Law professor and consumer advocate Elizabeth Warren officially launched her Democratic campaign for the U.S. Senate on Wednesday, hoping for a chance to take on Republican Sen. Scott Brown in next year's election.

Warren, who greeted commuters at a subway station in Boston before embarking on a tour of the state, cast herself as fighter for the middle class, saying she's "stood up to some pretty tough folks over the past few years."

"There's been a lot of very powerful interests who have tried to shut me down, squeeze me, push me sideways and so far it just hasn't worked," Warren said. "I'm willing to throw my body in front of a bus to try to stop bad ideas that are going to be harmful to the middle class."

Warren was heavily courted by Democrats hoping to win back the seat long held by the late Sen. Edward Kennedy. Democrats are also trying to hold onto their narrow Senate majority by ousting Brown.

Warren was tapped by President Barack Obama last year to set up a new consumer protection agency, but congressional Republicans opposed her leading the office. She returned to Massachusetts this summer.

Supporters say her image as a crusader against well-heeled Wall Street interests and her national profile will give her candidacy muscle, though she's never run for political office.

Some Democrats, including Boston Mayor Thomas Menino, have voiced skepticism about how strong a candidate she will be, given her lack of political experience.

Warren said she knows she has to make her case in a crowded primary if she wants a chance to challenge Brown next year.

Brown political adviser Eric Fehrnstrom called Warren's entrance into the race evidence of a "crowded, long and divisive Democratic primary."

"In the meantime, people are hurting and they are looking for work. Scott Brown is going to keep his focus on creating jobs, keeping taxes low, and getting spending and debt under control," Fehrnstrom said.

Republicans have already branded Warren as a liberal academic from Cambridge whose Harvard ties put her out of touch with working families. They've also mocked her as an outsider whose roots are in Oklahoma where she grew up and not Massachusetts.

Democratic leaders are banking that her national profile will help her raise the money needed to topple Brown, who has more than $10 million in his campaign account.

A recent Boston Globe poll showed Brown as the most popular major politician in the traditionally Democratic state. Brown shocked the political establishment by beating Attorney General Martha Coakley in last year's special election to succeed Kennedy. He was a little-known state senator who cast himself as a moderate, an average guy with his trademark barn coat and pickup truck. He once posed as a Cosmopolitan magazine centerfold.

Other Democrats already announced include Setti Warren, no relation to the consumer advocate, the first-term mayor of the affluent Boston suburb of Newton and the state's first popularly elected black mayor; City Year youth program co-founder Alan Khazei; immigration attorney Marisa DeFranco; state Rep. Tom Conroy; Newton resident Herb Robinson; and Robert Massie, who unsuccessfully ran for lieutenant governor in 1994.

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Associated Press writers Andrew Miga in Washington and Bob Salsberg in Boston contributed to this report.

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Senate postpones Libya vote amid budget dispute (AP)

WASHINGTON – Senate Democratic leaders abandoned plans for a test vote Tuesday on authorizing the U.S. military operation against Libya as Republicans insisted they should instead focus on government spending and the nation's borrowing limit.

Just hours before the vote, Senate Majority Leader Harry Reid, D-Nev., announced the change in plans, leaving the fate of the resolution in doubt. One after another, GOP senators had stood on the Senate floor and signaled they would oppose any effort to move ahead on the Libya measure, arguing that dealing with the debt was far more important than working on a resolution with no practical impact.

The Senate had already canceled this week's recess to deal with the financial issue.

"No real work is scheduled in the Senate this week on the budget, nor is any on the debt ceiling," said Sen. Jeff Sessions, R-Ala. "Instead, we are moving today to a Libya resolution. This resolution, not requested by the president, is not why we asked to cancel recess."

At least five Republican senators indicated they would oppose the vote.

"If the resolution we're debating is debated and passed, it would not affect one iota what we're doing in Libya," said Sen. Bob Corker, R-Tenn., a member of the Foreign Relations Committee.

Congress was already sending a muddled message on Libya to both U.S. allies and Moammar Gadhafi.

Bipartisan Senate support for giving President Barack Obama limited authority to continue military involvement against Gadhafi was at odds with overwhelming opposition in the House to the commander in chief's actions. Democrats as well as Republicans in the House have criticized Obama for failing to seek congressional consent for the operation in a constitutional stalemate that has dragged on for weeks.

The Senate had scheduled a vote on whether to proceed with a resolution authorizing "the limited use of United States Armed Forces in support of the NATO mission in Libya." The resolution would expire when the NATO operation ends or after one year, and it would prohibit the use of American ground forces or private security contractors in Libya. The Foreign Relations Committee easily adopted the measure on a 14-5 vote last week.

Leading backers of the resolution include Foreign Relations Committee Chairman John Kerry, D-Mass., and John McCain of Arizona, the top Republican on the Armed Services Committee. They have been the strongest voices in the Senate for the military action against Gadhafi's forces. Also sponsoring the resolution are Sen. Jon Kyl of Arizona, the No. 2 Republican, and Senate Intelligence Committee Chairwoman Dianne Feinstein, D-Calif.

McCain said he understood the reason for the Senate delay, but he hoped they would return to the resolution next week.

"The Senate does need to have a debate about United States policy and military action in Libya," McCain said.

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 airstrikes and drone attacks, flying more than 3,400 sorties.

"In Libya today, no American troop is being shot at," Kerry said last week.

But that hasn't silenced the congressional debate pitting the executive branch against the legislative.

Obama last week defended his decision to order U.S. military action more than three months ago and insisted he had not violated the 1973 War Powers Resolution, which demands congressional authorization within 60 days of first military strikes. The president contends American forces supporting the NATO-led operation are not engaged in full-blown hostilities, making congressional consent unnecessary.

Even members of the Foreign Relations Committee, which backed the resolution, rejected Obama's legal argument that the operation does not constitute full-blown hostilities. The panel adopted an amendment that specified the operation included "hostilities" that fall under the War Powers Resolution and require congressional authorization.

The sponsor of that amendment, Republican Richard Lugar of Indiana, is one of the strongest Senate critics of the Libya operation. He said Obama had ignored Congress, dealing a setback to the Constitution in a "fundamental failure of leadership that placed expedience above constitutional responsibility."

Lugar, the top GOP lawmaker on the Foreign Relations panel, also questioned the expensive, open-ended commitment of U.S. forces. Last month, the White House put the cost of U.S. military operations in Libya at about $715 million, with the total increasing to $1.1 billion by early September.

"Let us be clear that we are deliberately trying to overthrow the government of Libya with military force," Lugar said on the Senate floor.

In Libya on Tuesday, at least 11 people were killed in fighting that began late Monday and continued Tuesday as Gadhafi forces stepped up pressure to try to block rebel fighters from advancing toward the capital of Tripoli, rebels said.

Libyan government troops have been unable to retake two main rebel strongholds in the west — Misrata and several towns in the Nafusa mountain range. The rebels have been trying to break out of those bridgeheads.

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Senate cancels recess as budget battle heats up (Reuters)

WASHINGTON (Reuters) – Democrats stepped up their attack in a budget battle with Republicans on Thursday as the Senate canceled its July 4 recess and a top lawmaker accused Republicans of deliberately sabotaging the economic recovery.

With time running short before a possible default in early August, Senate Democratic Leader Harry Reid said he would hold the chamber in session next week to work on a budget deal that would allow the country to keep paying all its bills.

July 4 is the Independence Day holiday.

One day after President Barack Obama compared Senate Republicans to lazy schoolchildren, the Senate's top Republican, Mitch McConnell, said Obama should come to Capitol Hill as soon as possible to discuss what could pass Congress.

"The president says he wants us to get working. I can't think of a better way than to have him come right over today. We're waiting," McConnell said on the Senate floor.

There was no immediate response from the White House. Obama, who has challenged Congress to stay in town until a deal is reached, was scheduled to leave in the afternoon for an election fund-raiser in Philadelphia.

Obama and lawmakers have ratcheted up their rhetoric after budget talks collapsed last week. Republicans say tax increases cannot be part of the deal, and Democrats have ruled out cuts to healthcare benefits. But both sides have some wiggle room. A face-saving deal could close a few tax breaks and restructure health programs in a way that would not trim benefits.

Democrats said they were awaiting a response from House of Representatives Speaker John Boehner, the top Republican in Congress, over the general elements that would be possible.

Boehner aides said there was no firm offer on the table.

RACEHORSES, YACHTS AND JETS

Democrats took to the Senate floor to blast tax breaks for racehorses, yachts and corporate jets that benefit the wealthy. Democrats want to end $400 billion worth of these breaks.

The debate is getting increasingly personal. Democratic Senator Jeff Merkley called the racehorse tax break the "bluegrass boondoggle" in a slap at McConnell, whose home state of Kentucky is famous for horse racing.

"Giving Triple Crown treatment to millionaires while workers are put out to pasture, that's not right and it's not the American way," Merkley said, referring to thoroughbred racing's Triple Crown series of races.

Senator Charles Schumer, a member of the Senate Democratic leadership, said Republicans are pushing steep spending cuts and blocking job-creation efforts in order to pin the sluggish economy on Obama in the November 2012 elections.

"Republicans aren't just opposing the president any more," Schumer said at the Economic Policy Institute, a liberal think tank. "They are opposing the economic recovery itself."

Schumer said Democrats will advance a range of job-creation measures over the next six months. These will have a tough time becoming law but could put Republicans in an uncomfortable spot as the unemployment rate remains stuck at 9.1 percent and the 2012 election cycle heats up.

Those proposals, such as increased construction spending and an extended payroll tax break, could carry a price tag of hundreds of billions of dollars. That runs counter to the focus of the budget talks, where negotiators aim to reduce stubborn budget deficits by roughly $2 trillion over 10 years.

The deficit reduction measures would make it less politically painful for lawmakers to raise the $14.3 trillion debt ceiling before August 2, when the Treasury Department has warned it will run out of money to pay the country's bills.

Budget deficits in recent years have hovered near their highest levels relative to the size of the economy since World War Two. Experts warn that the United States could face a Greek-style crisis if it does not slow the growth of its debt.

The deficit for the current fiscal year, which ends September 30, is projected to hit $1.4 trillion.

McConnell said any deal that includes tax increases will not pass Congress, but other Republicans could be more flexible. Most in the Senate have voted to end a tax break for ethanol providers, and some have been working on a bipartisan deal that would include a range of revenue hikes.

Schumer said Democrats could back changes to the Medicare and Medicaid government health insurance programs that would not trim benefits. Compromise is also possible on military cuts, he said.

(Additional reporting by Deborah Charles and Thomas Ferraro; Editing by Will Dunham)

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Senate to work next week on debt limit impasse (AP)

WASHINGTON – The Senate abandoned plans for a July 4 break as time dwindled for lawmakers to strike a compromise on avoiding a government default and reducing mammoth federal deficits. In a challenge to President Barack Obama, the chamber's top Republican invited him to the Capitol to discuss the impasse with GOP lawmakers.

Senate Majority Leader Harry Reid, D-Nev., announced the scheduling change Thursday, a day after President Barack Obama prodded lawmakers to act swiftly to extend the government's ability to borrow money. The Senate had been scheduled to take a week's break but instead will meet beginning Tuesday.

"We'll do that because we have work to do," Reid said.

The House had already been scheduled to work next week.

Minutes later, Senate Minority Leader Mitch McConnell, R-Ky., took to the Senate floor to invite Obama to meet with Senate Republicans "anytime this afternoon" at the Capitol. He belittled Obama's demands to include increased tax revenues as part of a deficit-cutting package, repeating what GOP leaders have long said: Congress lacks the votes to approve a measure containing tax hikes.

By meeting directly with Republicans, "that way he can hear directly from Senate Republicans why what he's proposing will not pass," he said, adding, "And we can finally start talking about what's actually possible."

The White House said Obama had no plans to accept McConnell's invitation

"What the senator invited the president to do was to hear Senate Republicans restate their maximalist position. We know what that position is," Obama spokesman Jay Carney said. "He also invited the president to hear what would not pass. That's not a conversation worth having."

At a Wednesday news conference, Obama insisted there is no more time to add. And he beseeched and badgered lawmakers to complete a deal to cut long-term deficits and lift the nation's debt ceiling before Aug. 2 to avoid what his administration says would be a calamitous government default.

"There's no point in putting it off," he said Wednesday. "We've got to get this done."

But neither Obama nor the divided Congress is making it easier. The White House has identified at least $1.3 trillion in spending cuts over 10 years and is proposing up to $400 billion in new tax revenue. Republicans want more spending cuts and no tax increases.

Such brinkmanship relies on the clock; it is both a friend and an adversary. The problem with Aug. 2 is not that it's too soon, but that it's still four week away.

At a news conference, the president sought to upend the Republican argument that deficit-cutting negotiations had come to a standstill over the White House desire to increase taxes.

"The tax cuts I'm proposing we get rid of are tax breaks for millionaires and billionaires, tax breaks for oil companies and hedge fund managers, and corporate jet owners," Obama countered.

Ever since bipartisan debt negotiations led by Vice President Joe Biden broke down last week, the White House has gradually become more aggressive, culminating with Obama's spirited news conference.

He called on lawmakers to work through their July Fourth recess. He argued that his 12- and 10-year-old daughters show more discipline getting their work done. "They're not pulling all-nighters," he said.

"Call me naive," he said at another point, "but my expectation is that leaders are going to lead."

Obama is tilting at an institutional dysfunction — one that he himself once seemed to recognize: "If you don't set deadlines in this town, things don't happen. The default position is inertia," he said in 2009 during the health care debate. As it turned out, his deadline came and went, and it wasn't until 2010 that the health care overhaul legislation passed.

Some deadlines are too stark to avoid, but they get pushed to the brink. The government shutdown talks earlier this year came down to the final two hours. When asked what ultimately led to a deal to avoid halting government operations, one top Obama adviser said, "the clock."

Senior presidential adviser David Plouffe was asked in a nationally broadcast interview Thursday if the deadline was real.

"There's very little debate that that's going to change," he told NBC's "Today" show. Plouffe added, "We're in a danger zone now."

Plouffe, who was Obama's campaign manager when he ran for president in 2008, said he believes Democrats and Republicans alike are going to have to "get out of their comfort zone" to reach an agreement that would increase the government's borrowing authority and avert a default on the federal debt.

The Obama administration is warning that if the debt ceiling is not raised by Aug. 2, the U.S. would face its first default in history, potentially throwing world financial markets into turmoil. Many congressional Republicans aren't convinced, and some administration officials worry that it could take a financial plunge before Congress acts.

The pending debt ceiling vote would have to raise the current borrowing limit of $14.3 trillion by about $2.4 trillion to last until the end of 2012.

At his news conference, Obama took issue with criticism that he has not pushed for an agreement. He argued that he has spent an hour to an hour-and-a-half each with Republican senators, Democratic senators and House members from both parties.

"I've met with the leaders multiple times," he continued. "At a certain point, they need to do their job."

House Speaker John Boehner, R-Ohio, replied that an increase in the debt ceiling will pass only if the White House agrees to spending cuts in excess of the debt limit increase, holds down future spending and raises no taxes.

"The longer the president denies these realities," Boehner said, "the more difficult he makes this process."

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AP White House Correspondent Ben Feller contributed to this report.

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Obama meets Senate leaders, keeps debt talks alive (Reuters)

WASHINGTON (Reuters) – President Barack Obama sought on Monday to narrow the gap between his Democrats and Republicans over raising the debt ceiling, but neither side sounded inclined to compromise ahead of the talks.

Obama met Senate Democratic leader Harry Reid for a little over 30 minutes at the White House and is scheduled to sit down with Senate Republican leader Mitch McConnell at 5 p.m. (2100 GMT).

Reid left the White House without talking to reporters and it was not immediately clear if the ground covered in the meeting would be made public.

Time is running out ahead of an August 2 deadline to raise the borrowing limit. Administration officials said the most important thing was to keep both sides talking, which was why negotiations had escalated to the president.

Talks led by Vice President Joe Biden broke down last week over Democrats' demands to include raising tax revenues alongside spending cuts to lift the $14.3 trillion borrowing limit before the government runs out of cash on August 2.

Failure to act risks the United States defaulting on its financial obligations, which could push the country back into recession. Obama is also trying to ease public concern over his handling of the deficit, which is likely to be a key topic as he seeks re-election next year.

The federal deficit stands at $1.4 trillion, among the highest levels relative to the economy since World War Two.

McConnell has stuck firmly to his party's line that revenue-raising measures were off the table.

"America does not face a debt crisis because we tax too little, but because Washington spends too much. And tax hikes can't pass the Congress. Not only is there bipartisan opposition, the consequences of massive new tax hikes would be fewer jobs," he wrote in an opinion piece for CNN on Monday.

Obama met with House of Representatives Speaker John Boehner, a Republican, and House Minority Leader Nancy Pelosi, a Democrat, last week. The House is not in session this week and many members, including Boehner, are back in their districts.

AVOID STOP-GAP DEAL

The debt ceiling needs to be raised by around $2.4 trillion to ensure that the government has enough money to keep functioning through the November 2012 election.

McConnell has floated the idea of a short-term funding agreement to win a couple of extra months of funding, but the administration said this should not be necessary.

"I don't see any reason to doubt that we'll be able to do a long-term extension of the debt limit accompanied by very serious deficit reduction," a senior administration official said. "We should have a long-term extension that gives people security and confidence."

Republicans say they want spending cuts to equal any increase in the limit, but the administration is pushing for a package that also includes revenues. Obama favors $3 dollars in spending cuts for every extra dollar in revenue.

Democrats are aiming at tax subsidies for oil and gas companies, so-called "carried interest" tax breaks for hedge fund managers, and loopholes that favor corporate jets.

Obama has also backed limiting tax deductions for wealthier Americans which the White House says targets millionaires and billionaires.

But Republicans contend it would also hit hundreds of thousands of small business owners and raise taxes of many American families by limiting deductions for things like mortgage interest payments.

The administration wants to frame the debate as Republicans protecting tax breaks for the rich at the expense of older Americans, and says cuts in spending must also include the Defense Department budget that Republicans traditionally protect.

"Any package of any significance that passes is going to have to have significant spending reductions, including reductions in Pentagon spending. You are going to have some of these tax loopholes for the wealthy and special interests closed," said a senior administration official.

(Editing by Vicki Allen)

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