“Fiscal cliff” struggle prompts Republican infighting

(Reuters) – Republicans in the Congress attacked each other on Tuesday over their leadership’s “fiscal cliff” offer to Democratic President Barack Obama as a group of governors visited the White House to voice concern about the impact on the states of the year-end tax-and-spending deadline.

The disarray in Republican ranks over how far to compromise the party’s anti-tax stance could complicate what are expected to be intense negotiations between House Speaker John Boehner and Obama. Each will need the backing of their respective troops in Congress in order to bargain credibly.

The fiscal cliff refers to steep tax increases and deep automatic spending cuts slated to start to take effect on New Year’s Day. If Congress and Obama do not act to stop them, economists have warned the U.S. economy could be thrown back into recession.

The disagreements among Republicans surfaced as negotiations on a deficit reduction plan designed to supplant and avert the automatic cuts and tax hikes got more serious, with both parties having presented opening offers.

Senator Jim DeMint, a South Carolinian with a following among small-government conservatives, lashed out at an offer sent on Monday to Obama by Boehner, a fellow Republican.

“Speaker Boehner‘s $ 800 billion tax hike will destroy American jobs and allow politicians in Washington to spend even more,” DeMint said in a statement.

In the House of Representatives, two first-term Republican Tea Party stalwarts – Tim Huelskamp of Kansas and Justin Amash of Michigan – were removed by party leadership from the powerful budget committee in what Huelskamp called “a vindictive move.”

The Republican leadership offered no immediate explanation for the unusual action, but Boehner has had problems bringing in line the large Tea Party wing in the House. Elected to Congress in force in 2010, they regard the speaker as too much of a compromiser and tied his hands during talks in 2011 on raising the debt ceiling.

“The GOP leadership might think they have silenced conservatives, but removing me and others from key committees only confirms our conservative convictions,” said Huelskamp.

Washington interest groups are now fully consumed by the cliff, and some are in a bit of a panic about what the talks might bring.

Tensions erupted on Tuesday at a forum convened by a fiscal responsibility group called Fix the Debt, which seeks to reduce the federal government’s debt and includes a range of business, think tank and political leaders.

Audience members stood and repeatedly interrupted Republican Senator Rob Portman of Ohio as he attempted to make a speech. They urged protections from cuts for the Social Security and Medicare social safety net programs.

Others shouted down the protesters until they marched out of the forum, where Democratic Senate Finance Committee Chairman Max Baucus also made remarks.

U.S. stock markets opened slightly higher, with the benchmark Dow Jones industrial average up less than 1 percent after weeks of gyrations tied to the debate on Capitol Hill.

GOP OFFER MADE

In an important step, Boehner on Monday called for steep spending cuts, but gave no ground on Obama’s proposal to raise tax rates on the wealthiest Americans.

The central dispute between the two parties has been what to do about low individual income tax rates that will expire at year-end. The low rates were first signed into law a decade ago by former President George W. Bush.

Obama wants to extend the low rates for 98 percent of taxpayers, but not for the top 2 percent. Republicans have insisted that the low tax rates be extended for the wealthy as well.

The White House dismissed Boehner’s proposal within an hour of its being made public, the same treatment Republicans gave Obama’s deficit reduction plan offered last week.

While the offers and counter-offers between Republicans and Democrats may ultimately create the conditions for actually getting in a room together and bargaining at length, so far the moves have been out in public and mostly for show.

Washington is awash in competing plans to cut the federal deficit. A think tank with ties to the Obama administration laid out another plan on Tuesday, urging the president to go bold and seek more concessions from Republicans on tax hikes.

(Reporting by Thomas Ferraro, David Lawder, Kim Dixon, Fred Barbash, Rachelle Younglai; Editing by Jackie Frank)

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Conservatives make Boehner's life difficult

WASHINGTON— Conservatives panned the House Republican proposal released Monday to avoid the so-called "fiscal cliff," yet again giving House Speaker and lead negotiator John Boehner little room to maneuver as he works toward a deal with the White House.

The proposal includes extending current tax rates for all income levels and raising revenue by closing loopholes in the tax code.

"Rarely in modern American politics have more counterproductive, more foolish words been set to paper," wrote researchers at the Heritage Foundation in response to part of the letter sent to the White House from seven House leaders that outlined the Republican plan. The Heritage analysis, co-written by Alison Acosta Fraser and J.D. Foster, went on to say: "[T]he Republican counteroffer, to the extent it can be interpreted from the hazy details now available, is a dud. It is utterly unacceptable. It is bad policy, bad economics, and, if we may say so, highly questionable as a negotiating tactic."

Heritage's response echoed the sentiment of many conservatives in Washington who are urging House Republicans to avoid cutting a deal with the president if it means raising taxes.

In an open letter signed by more than 100 prominent conservative activists and organized by the advocacy group Let Freedom Ring, House Republicans were warned that they would not receive support in the future if they "cave" during negotiations.

"In the House, the nation elected in 2012 one of the largest Republican majorities in the past 100 years. You have a mandate to fight for conservative principles that is arguably much broader than the one that narrowly reelected President Barack Obama claims to have for his leftist agenda," the letter read. It was signed by Republican activists like Richard Viguerie, Leadership Institute founder Morton Blackwell, Eagle Forum founder Phyllis Schlafly, Media Research Center president Brent Bozell, and Republican donor Foster Friess.

"And if Republicans cave in now, when it really counts," the letter continued, "next time you will be weaker, because your conservative base will be outraged.  Many who worked hard to elect you in the past will never lift a finger for you again."

In the Senate on Tuesday, South Carolina Republican Sen. Jim DeMint, one of the tea party's staunchest allies in the upper chamber, accused House Republicans of promoting a plan that would "destroy American jobs."

DeMint's remarks this week, however, seemed to be somewhat of a departure from his characterization of a possible deal before the election, when he said Republicans who don't want to see the automatic defense spending reductions set to automatically trigger next year go into effect "might as well cut a deal" that includes tax increases.

"You can't get a deal with Obama without raising taxes on the producing class of folks," DeMint said in September, according to a report by Bloomberg News. "We might as well cut a deal. If Republicans want to maintain the defense, we're going to have to give tax increases to Obama."

In a statement to Yahoo News, DeMint's spokesman moved to clarify the remarks, saying that he had "simply stated the obvious" and would never support a plan with more taxes.

"Before the election, he simply stated the obvious, that Obama would try to use a lame duck session to rush through tax hikes that will hurt the economy," DeMint spokesman Wesley Denton said. "His point then was that if Republican leadership wasn't going to stand strong against tax hikes in the lame duck, they might as well be honest with voters before the election. Sadly, his predictions have proven correct and his long opposition to tax hikes that destroy jobs hasn't changed."

The conservative backlash, of course, could amount to mere noise as Boehner continues his negotiations with the president in search of a deal. The speaker and his allies in the House have spent two years navigating the thorn-riddled path between his party's conservative base and Obama's demands.

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Officials: NATO to decide on missiles for Turkey

BRUSSELS (AP) — NATO foreign ministers are expected to approve Turkey‘s request for Patriot anti-missile systems to bolster its defense against possible strikes from neighboring Syria.

NATO foreign ministers are meeting on Tuesday and Wednesday in Brussels. Parliaments in both nations must approve the deployment, which would also involve several hundred soldiers.

Ankara, which has been highly supportive of the Syrian opposition, wants the Patriots to defend against possible retaliatory attacks by Syrian missiles carrying chemical warheads. NATO leaders have repeatedly said they would provide any assistance Turkey needs.

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Swiss spy agency warns U.S., Britain about huge data leak

ZURICH (Reuters) – Secret information on counter-terrorism shared by foreign governments may have been compromised by a massive data theft by a senior IT technician for the NDB, Switzerland‘s intelligence service, European national security sources said.

Intelligence agencies in the United States and Britain are among those who were warned by Swiss authorities that their data could have been put in jeopardy, said one of the sources, who asked for anonymity when discussing sensitive information.

Swiss authorities arrested the technician suspected in the data theft last summer amid signs he was acting suspiciously. He later was released from prison while a criminal investigation by the office of Switzerland’s Federal Attorney General continues, according to two sources familiar with the case.

The suspect’s name was not made public. Swiss authorities believe he intended to sell the stolen data to foreign officials or commercial buyers.

A European security source said investigators now believe the suspect became disgruntled because he felt he was being ignored and his advice on operating the data systems was not being taken seriously.

Swiss news reports and the sources close to the investigation said that investigators believe the technician downloaded terrabytes, running into hundreds of thousands or even millions of printed pages, of classified material from the Swiss intelligence service’s servers onto portable hard drives. He then carried them out of government buildings in a backpack.

One of the sources familiar with the investigation said that intelligence services like the U.S. Central Intelligence Agency and Britain’s Secret Intelligence Service, also known as MI6, routinely shared data on counter-terrorism and other issues with the NDB. Swiss authorities informed U.S. and British agencies that such data could have been compromised, the source said.

News of the theft of intelligence data surfaced with Switzerland’s reputation for secrecy and discretion in government and financial affairs already under assault.

Swiss authorities have been investigating, and in some cases have charged, whistleblowers and some European government officials for using criminal methods to acquire confidential financial data about suspected tax evaders from Switzerland’s traditionally secretive banks.

The suspect in the spy data theft worked for the NDB, or Federal Intelligence Service, which is part of Switzerland’s Defense Ministry, for about eight years.

He was described by a source close to the investigation as a “very talented” technician and senior enough to have “administrator rights,” giving him unrestricted access to most or all of the NDB’s networks, including those holding vast caches of secret data.

Swiss investigators seized portable storage devices containing the stolen data after they arrested the suspect, according to the sources. At this point, they said, Swiss authorities believe that the suspect was arrested and the stolen data was impounded before he had an opportunity to sell it.

However, one source said that Swiss investigators could not be positive the suspect did not sell or pass on any of the information before his arrest, which is why Swiss authorities felt obliged to notify foreign intelligence partners their information may have been compromised.

Representatives of U.S. and British intelligence agencies had no immediate response to detailed queries about the case submitted by Reuters, although one U.S. official said he was unaware of the case.

SECURITY PROCEDURES QUESTIONED

Swiss Attorney General Michael Lauber and a senior prosecutor, Carolo Bulletti, announced in September that they were investigating the data theft and its alleged perpetrator. A spokeswoman for the attorney general said she was prohibited by law from disclosing the suspect’s identity.

A spokesman for the NDB said he could not comment on the investigation.

At their September press conference, Swiss officials indicated that they believed the suspect intended to sell the data he stole to foreign countries. They did not talk about the possible compromise of information shared with the NDB by U.S. and British intelligence.

A European source familiar with the case said it raised serious questions about security procedures and structures at the NDB, a relatively new agency which combined the functions of predecessor agencies that separately conducted foreign and domestic intelligence activities for the Swiss government.

The source said that under the NDB’s present structure, its human resources staff – responsible for, among other things, ensuring the reliability and trustworthiness of the agency’s personnel – is lumped together organizationally with the agency’s information technology division. This potentially made it difficult or confusing for the subdivision’s personnel to investigate themselves, the source said.

According to the source, investigators now believe that in the months before his arrest, the data theft suspect displayed warning signs that should have been spotted by his bosses or by security officials.

The source said that the suspect became so disgruntled earlier this year that he stopped showing up for work.

However, according to Swiss news reports, the NDB did not realize that something was amiss until the largest Swiss bank, UBS, expressed concern to authorities about a potentially suspicious attempt to set up a new numbered bank account, which then was traced to the NDB technician.

A Swiss parliamentary committee is now conducting its own investigation into the data theft and is expected to report next spring. Investigators are known to be concerned that the NDB lacks investigative powers, such as to search premises or conduct wiretaps, which are widely used by counter-intelligence investigators in other countries.

(Reporting by Mark Hosenball; Editing by Mark Heinrich)

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Two conservative Republicans booted from House budget panel

WASHINGTON (Reuters) – Two of the most conservative Republicans in the House of Representatives have been kicked off the House Budget Committee, a rare move that could make it easier for the panel to advance a deal with Democrats to cut fiscal deficits.

Representatives Tim Huelskamp of Kansas and Justin Amash of Michigan – both favorites of the anti-tax Tea Party movement – are among those Republicans voting most often against House Speaker John Boehner.

Huelskamp and Amash, who both will begin second terms in the House next month, voted against last year’s deal to raise the federal debt limit and staunchly oppose any tax increases. Boehner has now included new revenue in his latest offer to avert the “fiscal cliff” of year-end tax hikes and automatic spending cuts. Given their voting records, winning support from Huelskamp and Amash for such a compromise seemed an uphill battle.

Huelskamp released a statement saying the Republican leadership “might think they have silenced conservatives but removing me and others from key committees only confirms our conservative convictions.

“This is clearly a vindictive move and a sure sign that the GOP establishment cannot handle disagreement,” he said.

Huelskamp and Amash had said that despite sweeping changes to the Medicare and Medicaid healthcare programs, committee chairman Paul Ryan’s budget did not make deep enough cuts to entitlement programs and military spending.

Boehner spokesman Michael Steel declined to be specific on the reasons for their ouster by the House Republican Steering Committee, which occurred Monday in a closed-door meeting.

“The Steering Committee makes decisions based on a range of factors,” Steel said.

Huelskamp said he was given “limited explanation” for his removal from the Budget Committee, a move he called “vindictive.” A spokesman for Amash could not be immediately reached for comment.

Huelskamp and Amash cast the only House Budget Committee votes against Ryan’s budget plan earlier this year.

While there is often wrangling over committee chairmanships just before a new Congress takes office, it is rare for rank-and-file committee members to be stripped of their assignments.

The 34-member Republican steering committee is headed by Boehner and includes members of House leadership, committee chairs and other lawmakers representing different regions of the country.

The same group last week recommended that Ryan, the conservative former Republican vice presidential candidate, be renewed as Budget Committee chairman.

(Editing by Bill Trott)

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GOP senator: Boehner’s budget proposal ‘will destroy American jobs’

South Carolina Republican Sen. Jim DeMint (Win McNamee/Getty Images)

WASHINGTON—South Carolina Republican Sen. Jim DeMint just gave Democrats a shiny new talking point.

The tea party-backed senator on Tuesday slammed House Republican leaders for the fiscal cliff proposal they offered earlier this week.

"Speaker [John] Boehner's $800 billion tax hike will destroy American jobs and allow politicians in Washington to spend even more, while not reducing our $16 trillion debt by a single penny," DeMint said in a statement. "This isn't rocket science. Everyone knows that when you take money out of the economy, it destroys jobs, and everyone knows that when you give politicians more money, they spend it. This is why Republicans must oppose tax increases and insist on real spending reductions that shrink the size of government and allow Americans to keep more of their hard-earned money."

Republican House leaders on Monday sent a letter to the White House with a plan to avoid a series of automatic tax increases and spending cuts set to begin on Jan. 1, 2013. With a 10-year price tag of about $2.2 trillion, the Republican proposal would raise federal revenue by closing loopholes and capping deductions within the tax code and making changes to entitlement programs. The letter was signed by seven House leaders, including Budget Committee Chairman Paul Ryan of Wisconsin and Ways and Means Committee Chairman Dave Camp of Michigan.

Democrats dismissed it quickly, calling for a bill that would increase taxes on households earning more than $250,000 per year and more federal spending on infrastructure, which were not included in the Republican plan.

DeMint's comment may be a bit of a sideshow—he's not directly involved in the negotiations and he represents just a single vote in Congress—but it's representative of how conservatives feel about the Republican proposal, and it offers ample ammunition to President Barack Obama and Democrats in the fiscal cliff media relations war.

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Howard Stern signs on for more “America’s Got Talent”

LOS ANGELES (Reuters) – Shock jock Howard Stern will return as a judge for his second season on NBC‘s summer talent show “America’s Got Talent,” the broadcaster said on Monday, although the high-priced radio host appears to have done little to improve the show’s ratings.

NBC hoped Stern, 58, known for this sexually explicit radio interviews, would attract bigger audiences, but the finale in September was watched by a record low of under 11 million viewers, according to ratings data.

“Howard Stern’s towering presence and opinions on last season’s show as a new judge made a dramatic impact and added a sharper edge to the fascinating developments on stage,” Paul Telegdy, president of alternative programming at NBC, said in a statement.

The show, which also features celebrity judges Sharon Osbourne and Howie Mandel, remained the top-rated summer series among adults aged 18-49, the demographic most coveted by advertisers.

NBC attributed the overall 2012 audience decline partly to an earlier start that pitted “Got Talent” against end-of-season original programming in May.

The network is still searching for a replacement for Osbourne, who has quit in a dispute with NBC over their decision to drop her son Jack from another reality show.

Unlike popular singing competitions “The Voice,” “The X Factor” and “American Idol,” “America’s Got Talent” is open to dancers, comics, dancers and other performers. It is produced by “The X Factor” creator and judge Simon Cowell.

Stern is noted for his say-anything and do-anything radio program but he toned down his act when he started appearing as a judge on the show.

(Reporting by Eric Kelsey; Editing by Jill Serjeant)

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Gunmen assassinate peasant leader in Paraguay

ASUNCION, Paraguay (AP) — Gunmen murdered one of the surviving leaders of a peasant movement whose land dispute with a powerful politician prompted the end of Fernando Lugo‘s presidency last June.

Vidal Vega, 48, was hit four times early Saturday by bullets from a 12-gauge shotgun and a .38-caliber revolver fired by two unidentified men who sped away on a motorcycle, according to an official report prepared at the police headquarters in the provincial capital of Curuguaty.

A friend, Mario Espinola, told The Associated Press that Vega was shot down when he stepped outside to feed his farm animals.

Vega was among the public faces of a commission of landless peasants from the settlement of Yby Pyta, which means Red Dirt in their native Guarani language.

He had lobbied the government for many years to redistribute some of the ranchland that Colorado Party Sen. Blas Riquelme began occupying in the 1960s.

By last May, the peasants finally lost patience and moved onto the land. A firefight during their eviction on June 15 killed 11 peasants and six police officers, prompting the Colorado Party and other leading parties to vote Lugo out of office for allegedly mismanaging the dispute.

Twelve suspects, nearly all of them peasants from Yby Pyta, have been jailed without formal charges since then on suspicion of murdering the officers, seizing property and resisting authority. The prosecutor had six months to develop the case and will present his findings Dec. 16.

Vega was expected to be a witness at the criminal trial, since he was among the few leaders who weren’t killed in the clash or jailed afterward.

He wasn’t charged because he was away getting supplies when the violence erupted at the settlement erected by the peasants inside Riquelme’s ranch, the Naranjaty Commission’s secretary, Martina Paredes, told the AP.

“We think he was assassinated by hit men who were sent, we don’t know by whom, perhaps to frighten us and frustrate our fight to recover the state lands that were illegally taken by Riquelme,” she said.

Riquelme, who died of natural causes about a month after the battle in June, occupied the land during the dictatorship of Alfredo Stroessner, whose government gave away land for free to anyone willing to put it to productive use.

A local court in Curuguaty upheld Riquelme’s claim to the land years later. Lugo’s government later sought to overturn the decision, but the case remains tied up in court.

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Nokia Siemens to sell optical networks unit

FRANKFURT (Reuters) – Mobile telecoms equipment joint venture Nokia Siemens Networks, which is focusing on its core business, is to sell its optical fiber unit to Marlin Equity Partners for an undisclosed sum.

Up to 1,900 employees, mainly in Germany and Portugal, will be transferred to the new company, NSN said on Monday.

The company, owned by Nokia and Siemens, has sold a number of product lines since it last year announced plans to divest non-core assets and cut 17,000 jobs, nearly a quarter of its total workforce.

Nordea Markets analyst Sami Sarkamies said he expected more divestments after the optical unit deal. This disposal was a small surprise, he said, because NSN needed some optical technology – where data is transmitted by pulses of light – for its main mobile broadband business.

The move may hint the company is preparing itself for further consolidation in the sector by cutting overlaps with other players, Sarkamies said.

The telecom equipment market is going through rough times with stiff competition. French Alcatel-Lucent is also cutting costs.

($ 1 = 0.7689 euro)

(Reporting by Harro ten Wold; Editing by Greg Mahlich and Dan Lalor)

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Palace says Duchess of Cambridge expecting a baby

LONDON (AP) — Get the nursery ready: Prince William and his wife Kate are expecting their first child.

St. James’s Palace announced the pregnancy Monday, saying that the Duchess of Cambridge — formerly known as Kate Middleton — has a severe form of morning sickness and is currently in a London hospital. William is at his wife’s side.

The palace said since the pregnancy is in its “very early stages,” the 30-year-old duchess is expected to stay in the hospital for several days and will require a period of rest afterward.

It would not say how far along she is, only that she has not yet reached the 12-week mark.

News of the pregnancy drew congratulations from across the world, with the hashtag “royalbaby” trending globally on Twitter.

Not only are the attractive young couple popular — with William’s easy common touch reminding many of his mother, the late Princess Diana — but their child is expected to play an important role in British national life for decades to come.

William is second in line to the throne after his father, Prince Charles, so the couple’s first child would normally eventually become a monarch.

In recent days, Middleton has kept up her royal appearances — recently playing field hockey with schoolchildren at her former school.

The confirmation of her pregnancy caps a jam-packed year of highs and lows for the young royals, who were married in a lavish ceremony at Westminster Abbey last year.

They have traveled the world extensively as part of Queen Elizabeth II’s Diamond Jubilee celebrations and weathered the embarrassment of a nude photos scandal, after a tabloid published topless images of the duchess.

Joe Little, managing editor of Majesty magazine, said the news bookended a year that saw the royal family riding high in popular esteem after celebrations of Queen Elizabeth II’s 60 years on the throne.

“We’re riding on a royal high at the moment at the end of the Diamond Jubilee year,” he said. “People enjoyed the royal romance last year and now there’s this. It’s just a good news story amid all the doom and gloom.”

Speculation about when the couple would start a family has been rife since their wedding.

William’s mother — the late Princess Diana — got pregnant just four months after her wedding in 1981. Diana reportedly suffered from morning sickness for months and complained of constant media attention.

“The whole world is watching my stomach,” Diana once said.

American tabloid speculation of the pregnancy has been rampant for months. One newspaper even cited anonymous sources talking about Kate’s hormone levels. Others have focused on the first signs of the royal bump.

The palace said the royal family was “delighted” by the news, while British Prime Minister David Cameron wrote on Twitter that the royals “will make wonderful parents.”

Whether boy or girl, the child will be next in line behind William in the line of succession to the throne, Cabinet Office officials have said.

Leaders of Britain and the 15 former colonies that have the monarch as their head of state agreed in 2011 to new rules which give females equal status with males in the order of succession.

Although none of the nations had legislated to make the change as of September 2012, the British Cabinet Office confirmed that this is now the de-facto rule.

On the couple’s recent tour of Malaysia, Singapore, the Solomon Islands and Tuvalu in September, William reportedly said he hoped he and Kate would have two children.

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Associated Press writers Jill Lawless and Paisley Dodds contributed to this report.

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