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Boehner’s 2-Step Debt-Ceiling Plan Attacked From All Sides As Obama Threatens Veto

WASHINGTON (AP) — The White House threatened on Tuesday to veto emergency House legislation that aims to avert a threatened national default, a pre-emptive strike issued as Republican Speaker John Boehner labored to line up enough votes in his own party to pass the measure.

Boehner faced criticism from some conservatives in advance of an expected vote on Wednesday.

The bill would raise the debt limit by $1 trillion while making cuts to federal spending of $1.2 trillion — reductions that conservatives say aren’t enough.

The measure also would establish a committee of lawmakers to recommend additional budget savings of $1.8 trillion, which would trigger an additional $1.6 trillion increase in the debt limit.

The White House objects to the requirement for a second vote before the 2012 elections.

Majority Leader Harry Reid said the measure stood no chance of passing the Senate even if it cleared the House. He pronounced it “dead on arrival.”

Washington and the nation are staring down an Aug. 2 deadline to raise the debt limit or face national default.

Flanked by conservative colleagues, Rep. Jim Jordan, R-Ohio, told reporters he could not back the Boehner proposal and said it doesn’t have the votes to pass in the Republican-controlled House. In a two-step plan, Boehner is pressing for a vote on Wednesday and a second vote Thursday on a balanced-budget amendment to the Constitution.

“We think there are real problems with this plan,” said Jordan, who heads the Republican Study Group. He argued that the spending cuts are insufficient and expressed opposition to likely tax increases.

Added Rep. Steve Southerland, R-Fla.: “If I had to vote right now, my vote would be no.”

And Rep. Michele Bachmann of Minnesota, campaigning for the Republican presidential nomination in Iowa, said she would vote against any bill in Congress to raise the debt ceiling. She said that included Boehner’s plan.

The conservative challenge came just hours after House Majority Leader Eric Cantor told the Republican rank and file to stop grumbling as he sought to rally lawmakers for the Boehner plan. In a closed-door session, the Virginia Republican acknowledged the resistance to increasing the nation’s borrowing authority. “The debt limit vote sucks,” he told his caucus. But Cantor insisted that it must be done.

Cantor spelled out the options for the GOP — allowing default and stepping into an economic abyss, backing the Senate Democratic plan or calling President Barack Obama’s bluff by backing the GOP’s own proposal.

Neither of the rival plans offered by Boehner in the House and Reid in the Senate seemed to have the necessary votes in Congress amid a bitter stalemate that could have far-reaching repercussions for the fragile U.S. economy as well as global markets. Stocks declined Tuesday as U.S. markets registered their nervousness over the Washington gridlock between Obama and Republicans.

At the White House, spokesman Jay Carney said the administration remains in contact with congressional leaders despite the collapse of talks last Friday and inconclusive discussions this past weekend.

“We’re working on Plan B. … There has to be a product that can pass the House and the Senate and be signed into law,” said Carney, who argued that the Boehner plan had no chance of passing in the Senate.

Carney insisted that Aug. 2 is the drop-dead date for the Treasury’s cash flow — “beyond that date we lose our capacity to borrow” — and expressed confidence that the debt ceiling would be raised by the deadline.

The continued bickering on Capitol Hill overshadowed any signs of emerging common ground.

Two major groups who carry some sway with conservative lawmakers — the Club for Growth and Heritage Action for America — said the Boehner plan failed to address the fiscal mess and they urged members to contact lawmakers and express their opposition.

Countering the criticism, the U.S. Chamber of Commerce backed the legislation.

“We are going to have some work to do to get it passed, but I think we can do it,” Boehner told reporters.

In an address Monday night, Obama pleaded for compromise and urged Americans to contact their lawmakers.

“We can’t allow the American people to become collateral damage to Washington’s political warfare,” Obama told the nation.

Boehner, in a rebuttal, said he had given “my all” to work out a deal with Obama.

“The president would not take yes for an answer,” he said.

House offices experienced a spike in telephone calls, receiving 35,000 per hour, said Salley Wood, communications director for the House Administration Committee. On an average day, the House gets about 20,000 calls per hour. During the rancorous health care debate, House offices received about 50,000 plus calls per hour.

Wood also said some congressional websites experienced problems dealing with the high volume of traffic, especially those operated by outside vendors.

Unclear was whether the callers echoed Obama’s argument or backed Boehner’s call for his approach.

In the Senate, Reid challenged Republicans to back his competing legislation, arguing that the no-taxes, government-cuts proposal was just what they wanted.

“In short, it’s everything the Republicans have demanded wrapped up in a bow and delivered to their door,” Reid said at the start of the Senate session.

In afternoon trading on Wall Street, stocks were mixed as the financial markets warily watched the standoff.

The extraordinary back-to-back appeals by Obama and Boehner gave no indication that weeks of brinkmanship and sputtering talks over long-term deficit reductions were on the verge of ending. With the deadline rapidly closing, Congress and the White House had limited options to avoid a potential government default that could send the already weak economy into a damaging swoon.

Obama reiterated his call for achieving lower deficits though spending cuts and new tax revenues. But in a notable retreat, he voiced support for a Senate Democratic plan that would reduce deficits by about $2.7 trillion over 10 years only with spending cuts, not with additional revenue.

The Senate plan, unveiled by Reid, and the proposal announced the same day by Boehner overlap in significant ways. Both identify about $1.2 trillion in spending cuts to the day-to-day operating budgets of government agencies, though Reid’s proposal also counts an extra $1 trillion in savings from winding down wars in Iraq and Afghanistan. Both proposals would create a bipartisan congressional commission to identify further deficit reductions, especially in major health care programs such as Medicare and Medicaid.

The primary difference between the two is timing. Reid’s proposal would raise the debt ceiling enough so that it wouldn’t have to be reconsidered until 2013, beyond the 2012 elections, as demanded by Obama. The GOP plan would only extend the debt ceiling for about six months.

For Republicans, the timing provides crucial leverage to force Democrats and the president to cut spending in Medicare, Medicaid and Social Security, expensive benefit programs that Democrats have long protected, despite escalating costs.

Credit rating agencies such as Moody’s and Standard & Poor’s have threatened to downgrade the United States’ gold-plated AAA rating if Congress and the White House don’t extend the debt ceiling and take steps to bring long-term deficits under control.

While both plans would increase the debt ceiling, ratings agencies have said a short-term increase such as the one proposed by House Republicans may not be enough to protect the U.S. from a ratings downgrade. What’s more, neither plan offers the larger deficit-reducing assurances that credit ratings have said they need for the U.S. to retain its place as one of the most secure investments in the world.

Associated Press writers David Espo, Erica Werner and Jim Abrams contributed to this report.

Copyright 2011 The Associated Press.

Not So Fast: Obama, Boehner Deny Reaching Any Deal on Debt Ceiling

WASHINGTON (AP) — House Speaker John Boehner predicted Thursday that a majority of House Republicans will end up supporting some kind of compromise to avoid a government default. Democrats insisted that higher tax revenue be part of a deal.

White House budget chief Jacob Lew told reporters at the Capitol that “I’m unaware of a deal” between President Barack Obama and congressional Republicans and he repeated that “we’ve made clear revenues have to be included.”

All sides pushed against media reports that Obama and House Speaker John Boehner, R-Ohio, were near an agreement on a grand bargain trading $3 trillion or so in spending cuts and a promise of $1 trillion in tax revenues through a later overhaul of the tax code as part of a deal to extend the government’s borrowing authority.

“We’re not close to a deal,” White House spokesman Jay Carney said.

“While we are keeping the lines of communication open, there is no ‘deal’ and no progress to report,” Boehner spokesman Michael Steel said.

What seems clear is that the White House and Boehner continue to negotiate in hopes of a large deficit-cutting package as an Aug. 2 deadline looms on extending the debt limit.

“”There has been a meeting of the minds … to try and get a grand bargain, a big deal,” said Rep. Chris Van Hollen, D-Md. “I think both sides have remained focused on that.”

“I only know what you know about the agreement — the potential agreement,” Senate Majority Leader Harry Reid, D-Nev., said. “What I have to say is this: The president always talked about balance. That there had to be some fairness in this. That this can’t be all cuts. There has to be a balance. There has to be some revenue.”

Earlier, Reid called up for Senate consideration a House-passed “cut, cap, and balance” measure that would increase the debt limit by $2.4 trillion, but which would condition the increase on immediate spending cuts and a balanced budget amendment to the Constitution. 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.”

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.

Democrats argue that the 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.

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.

Copyright 2011 The Associated Press.

Democratic Congresswomen Criticize Tea Party Rep. Allen West for “Sexist” Remarks

“You are the most vile, unprofessional, and despicable member of the U.S. House of Representatives.”

So Republican Congressman and Tea Partier Allen West said of his colleague Debbie Wasserman Schultz, representative of Florida’s 20th District and chairwoman of the DNC, in a widely circulated email that has raised eyebrows on Capitol Hill.

It all started when Schultz delivered seemingly benign remarks regarding West’s support for the GOP’s “Cut, Cap and Balance” plan. “The gentleman from Florida, who represents thousands of Medicare beneficiaries, as do I, is supportive of this plan that would increase costs for Medicare beneficiaries — unbelievable from a member from South Florida,” she said during remarks on the House Floor. The plan, which makes raising the debt ceiling contingent upon massive cuts in spending and a balanced-budget amendment for the federal government, has virtually no chance of becoming law.

In response to her criticism, West wrote, “You have proven repeatedly that you are not a Lady, therefore, shall not be afforded due respect from me!”

Several Democratic congresswomen, including Carolyn Maloney of New York City, have written in outrage to the House leadership, demanding an apology from West, citing his “clearly sexist tone” and asking others to “disavow” his remarks “in the strongest of terms.”

So far, West has refused to apologize. On the contrary, he has attempted to utilize the growing outrage in order to raise money for his next election campaign, citing a “vast left wing conspiracy” against him in a fundraising email to constituents. In comments to Fox News, West insisted that he, not the Congresswoman, is the victim. “I’m not going to allow anyone take advantage of me and the niceness that I exhibit.”

Jury’s out on when we’ll get a chance to see more niceness from West.

Obama Praises ‘Gang of Six’ Debt Deal

WASHINGTON (AP) — Declaring “11th hour” urgency” to raise the government’s borrowing limit, President Barack Obama on Tuesday hailed a plan by “Gang of Six” senators from both parties to reduce federal deficits as the kind of balanced approach that could break the economy-threatening deadlock. He said it was time for Congress to rally around such a proposal.

“We don’t have any more time to engage in symbolic gestures, we don’t have any more time to posture. It’s time to get down to the business of actually solving this problem,” the president said.

Obama spoke even as House Republicans pushed toward a vote on separate legislation that would require trillions in spending cuts and agreement on a balanced-budget constitutional amendment in exchange for an increase in the debt ceiling, which the government says must be raised by Aug. 2 to avoid economic calamity. That House plan, expected to come to a vote Tuesday evening, was unlikely to get through the Senate, and Obama has said he would veto it if it ever arrived at his desk.

Facing the deadline in two weeks, Obama said he would call House Speaker John Boehner after Tuesday’s vote to invite him and other leaders back to the White House for meetings in coming days.

Obama, Boehner and other top leaders met last week for five days straight without reaching agreement, leading to warnings from credit agencies about dire consequences if the U.S. defaults on its obligations for the first time, rendering it unable to pay its bills.

Obama added his own warning Tuesday, saying that while financial markets have shown confidence thus far in Washington, it won’t last much longer if lawmakers fail to act.

But he found cause for optimism in the announcement Tuesday by leaders of a bipartisan “Gang of Six” senators that they’re nearing agreement on a major plan to cut the deficit by more than $4 trillion over the coming decade.

“I think it’s a very significant step,” Obama said, calling it “broadly consistent with the approach I’ve urged.”

The Gang of Six plan calls for an immediate $500 billion “down payment” on cutting the deficit as the starting point toward cuts of more than $4 trillion that would be finalized in a second piece of legislation. It would raise revenues by about $1 trillion over 10 years and cut popular benefit programs like Medicare and Medicaid — dealing out political pain to Republicans and Democrats.

That mixture of cuts and new revenue is the “balanced approach” Obama has urged, though it’s rejected by many Republicans because it would require higher taxes for some.

Rep. Dave Camp, Republican chairman of the House Ways and Means Committee, said the spending cuts and budget mechanisms in the plan could form the basis of a deal but tax increases would be a big problem for him and fellow GOP lawmakers.

“A trillion dollars is a lot, by any measure,” Camp said of the tax increases in the plan.

While praising the broader plan, Obama said it was still important to have a “Plan B” option being worked on by Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell as a fallback. The McConnell-Reid plan would give Obama the ability to raise the debt limit by $2.5 trillion in three installments over the next year without a separate vote by lawmakers. Instead, a panel of House and Senate members would be created to recommend cuts in benefit programs, with their work guaranteed a yes-or-no vote in the House or Senate.

While all that was going on behind the scenes, advocates of the legislation to be voted on in the House on Tuesday said it would cut spending by an estimated $111 billion in the next budget year and then by more than an additional $6 trillion over a decade — and require Congress to send a balanced budget amendment to the Constitution to the states for ratification — in exchange for raising the debt limit by $2.4 trillion.

With the measure facing a veto threat from the White House, Boehner said he was exploring other alternatives to avoid government default.

“I do think it’s responsible for us to look at what Plan B would look like,” he said at a news conference a few hours before the opening of debate on the legislation backed by conservative lawmakers.

Said Obama: “The problem we have now is, we’re in the 11th hour, and we don’t have a lot more time left.”

On a day of political theater, a group of House Republicans also boarded a bus for a 16-block ride to deliver a letter asking Obama to disclose his own plan for reducing federal deficits.

No administration officials were present to meet the delegation when the bus rolled to a stop outside the White House gates, and lawmakers gave copies of the letter to reporters.

Democrats said it was urgent that the debt ceiling be raised.

In a closed-door meeting in the Capitol, House Democrats listened to an audio of Republican President Ronald Reagan urging lawmakers in 1987 to raise the debt limit. “This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans’ benefits,” he said then.

Nearly a quarter of a century — and numerous trillions of dollars in debt — later, Obama needs acquiescence from the Republican-controlled House and the Democratic-controlled Senate to win another debt ceiling increase. So far, efforts to agree on a package of spending cuts — the price demanded by GOP lawmakers for their votes — have proved futile.

Barring action by Congress to raise the $14.3 trillion debt ceiling, the Treasury will be unable to pay all the government’s bills that come due beginning Aug. 3. Administration officials, Federal Reserve Chairman Ben Bernanke and others say the resulting default would inflict serious harm on the economy, which is still struggling to recover from the worst recession in decades.

Reid announced Monday that the Senate would meet each day until the issue was resolved, including weekends.

Associated Press writers Erica Werner, Stephen Ohlemacher, Darlene Superville and David Espo contributed to this article.

Copyright 2011 The Associated Press.

New York Clerks Choose to Resign Rather than Marry Gay Couples

Just as dozens of New York judges are signing up for rare Sunday duty in order to officiate at gay weddings on July 24, when the state’s marriage equality law takes effect, one town clerk has resigned and another recused herself in opposition to the act.

Laura Fotusky, the elected town clerk for Broome County, submitted her resignation earlier this month, saying that she could not in good conscience marry gay and lesbian couples. “The Bible clearly teaches that God created marriage between male and female as a divine gift that preserves families and cultures,” she wrote in her letter of resignation, which the anti-gay-marriage group New Yorkers for Constitutional Freedoms posted on its website. “Since I love and follow Him, I cannot put my signature on something that is against God.”

A few days after Fotusky’s announcement, Rosemary Centi, the town clerk for Guilderland, said she will give up her appointment as marriage officer in order to avoid officiating at gay weddings. Centi has not resigned from her position as town clerk and will continue to grant marriage licenses to all eligible applicants, the Times Union reports. Citing several gay friends, Centi insists she does not oppose gay rights in general. But to preside over the marriage ceremonies, she claims, would violate her faith.

The Alliance Defense Fund, an organization opposed to same-sex marriage, recently issued a memorandum in support of clerks who do not wish to preside over gay weddings. The organization argues that clerks deserve religious accommodation by the state, claiming that New York law requires local governments to respect “an employee’s sincerely held religious beliefs,” unless they pose an “undue hardship” to the employer.

It’s common in many fields for professionals to cite conscience in order to avoid performing certain services. Just last month, legislators in Kansas proposed legal protections for pharmacists and health care providers who do not wish to perform abortions for religious reasons. Proponents argued that no person should be required to participate in any health care service that “violates his conscience.”

So far, state officials in New York have been unsympathetic to the conscience argument, at least in regards to public servants. “We all take oaths to follow the laws of the state and the town and the federal government,” Centi’s supervisor told the Times Union. “Same-sex marriages are permitted under the law and it’s our duty to perform them.”

When asked about the clerks’ decisions on Friday, Governor Cuomo took a similar line. ”The law is the law. You enforce the law as is, you don’t get to pick and choose those laws,” he said. “If you can’t enforce the law, you shouldn’t be in that position.”

In choosing to resign, Fotusky appears to agree.

Murdoch Scandal Leads to Resignation of Second Scotland Yard Official

LONDON (AP) — Claims of illegal eavesdropping, bribery and collusion hit at the heart of Britain’s police on Monday with the rapid-fire resignations of two of its top officers.

Prime Minister David Cameron on Monday called an emergency session of Parliament on the phone hacking crisis that has spread from slashing billions off of Rupert Murdoch’s News Corp. media empire to threatening his Cameron’s own leadership.

The crisis triggered upheaval in the upper ranks of Britain’s police, with Monday’s resignation of Assistant Commissioner John Yates — Scotland Yard’s top anti-terrorist officer — following that of police chief Paul Stephenson, over their links to an arrested former executive from Murdoch’s shuttered News of the World tabloid.

The high-profile resignations are making it harder for Cameron to contain the intensifying scandal on the eve of an unwelcome public grilling by lawmakers for Murdoch and his son James.

The government quickly announced an inquiry into police-media relations and corruption.

Home Secretary Theresa May said that people were naturally asking “who polices the police,” and announced an inquiry into “instances of undue influence, inappropriate contractual arrangements and other abuses of power in police relationships with the media and other parties.”

Also Monday, Britain’s police watchdog said it had received allegations of potential wrongdoing in connection with phone hacking against four senior officers — Stephenson, Yates and two former senior officers. One of the claims is that Yates inappropriately helped get a job for the daughter of former News of the World editor, Neil Wallis.

The Independent Police Complaints Commission said it was looking into the claims.

Yates said he had done nothing wrong.

“I have acted with complete integrity,” he said. “My conscience is clear.”

Cameron is under heavy pressure after the resignations of Stephenson and Yates, and Sunday’s arrest of Murdoch executive Rebekah Brooks — a friend and neighbor whom he has met at least six times since entering office 14 months ago — on suspicion of hacking into the cell phones of celebrities, politicians and others in the news and bribing police for information.

His critics grew louder in London as the prime minister visited South Africa on a two-day visit to the continent already cut short by the crisis

He trimmed another seven hours from his itinerary — having already jettisoned stops in Rwanda and South Sudan — as his government faces a growing number of questions about its cozy relationship with the Murdoch empire during a scandal that has taken down top police and media figures with breathtaking speed and knocked billions off the value of Rupert Murdoch’s global media empire.

Parliament was to break for the summer on Tuesday after lawmakers grilled Murdoch, his son James and Brooks, in a highly anticipated public airing about the scandal. Cameron, however, said lawmakers should reconvene Wednesday “so I can make a further statement.”

Cameron insisted his Conservative-led government had “taken very decisive action” by setting up a judge-led inquiry into the wrongdoing at the now-defunct Murdoch tabloid News of the World and into the overall relations between British politicians, the media and police.

“We have helped to ensure a large and properly resourced police investigation that can get to the bottom of what happened, and wrongdoing, and we have pretty much demonstrated complete transparency in terms of media contact,” Cameron said.

Opposition leader Ed Miliband, however, said Cameron needed to answer “a whole series of questions” about his relationships with Brooks, James Murdoch and Andy Coulson, the former News of the World editor whom Cameron later hired as his communications chief. Coulson resigned from that post in January was arrested earlier this month in the scandal.

“At the moment, he seems unable to provide the leadership the country needs,” Miliband said of Cameron.

Rupert Murdoch, too, faces a major test Tuesday in his bid to tame a scandal that has already destroyed the News of the World, cost the jobs of Brooks and Wall Street Journal publisher Les Hinton and sunk the media baron’s dream of taking full control of a lucrative satellite broadcaster, British Sky Broadcasting.

At the televised hearing, politicians will seek more details about the scale of criminality at the News of the World. The Murdochs will try to avoid incriminating themselves or doing more harm to their business without misleading Parliament, which is a crime.

The showdown comes as James Murdoch — chairman of BSkyB and chief executive of his father’s European and Asian operations — appears increasingly isolated following the departure of Brooks, a possible candidate for arrest or resignation.

James Murdoch did not directly oversee the News of the World, but he approved payments to some of the paper’s most prominent hacking victims, including 700,000 pounds ($1.1 million) to Professional Footballers’ Association chief Gordon Taylor.

James Murdoch said last week that he “did not have a complete picture” when he approved the payouts.

Murdoch is eager to stop the crisis from spreading to the United States, where many of his most lucrative assets — including the Fox TV network, 20th Century Fox film studio, The Wall Street Journal and the New York Post — are based.

News Corp. on Monday appointed commercial lawyer Anthony Grabiner to run its Management and Standards Committee, which will deal with the phone hacking scandal. It said the committee will cooperate with all investigations on hacking and alleged police payments, and carry out its own inquiries.

Copyright 2011 The Associated Press.

Brooks is Out: Top Murdoch Lieutenant Resigns

LONDON (AP) — Rebekah Brooks, Rupert Murdoch’s loyal lieutenant, resigned Friday as chief executive of his embattled British newspapers, becoming the biggest casualty so far in the phone hacking scandal at a now-defunct Sunday tabloid.

Murdoch had defended the 43-year-old Brooks in the face of demands from British politicians that she step down, and had previously refused to accept her resignation. He made an abrupt switch, however, as his News Corp. company struggled to contain a U.K. crisis that is threatening his entire global media empire.

Brooks was editor of the News of the World tabloid between 2000 and 2003, when the paper’s employees allegedly hacked into the telephone of 13-year-old murder victim Milly Dowler when police were searching for her in 2002. That has raised allegations of interfering in a police investigation.

That allegation last week provoked outrage far beyond previous revelations of snooping on celebrities, politicians and top athletes, and knocked billions off the value of News Corp. In quick succession, Murdoch closed the 168-year-old News of the World and abandoned his multibillion-pound attempt to take full control of the lucrative British Sky Broadcasting, while Prime Minister David Cameron appointed a judge to conduct a sweeping inquiry into criminal activity at the paper and in the British media.

Brooks said the debate over her position as CEO of News International was now too much of a distraction for parent company News Corp. and she would concentrate on refuting allegations in the scandal.

“I have believed that the right and responsible action has been to lead us through the heat of the crisis. However my desire to remain on the bridge has made me a focal point of the debate,” Brooks said in an email Friday to colleagues that was released by News International. “This is now detracting attention from all our honest endeavors to fix the problems of the past.”

Tom Mockridge, chief executive of News Corp.’s Sky Italia television unit, was appointed to succeed Brooks immediately. Mockridge began his career at a paper in New Zealand and then served as a spokesman for the Australian government before joining News Corp. in 1991.

News Corp. also announced Friday it would run advertisements in all of Britain’s national papers soon to “apologize to the nation for what has happened.”

“We will follow this up in the future with communications about the actions we have taken to address the wrongdoing that occurred,” said James Murdoch, who heads the international operations of the New York-based News Corp. and has been considered to be his father’s heir apparent.

He said News Corp. had set up an independent Management & Standards Committee to establish and enforce clear standards of operation.

That was an abrupt shift in tone from Rupert Murdoch’s comments Thursday to The Wall Street Journal — one of his own papers — saying that News Corp. management had handled the crisis “extremely well in every way possible” with just a few “minor mistakes.”

Brooks has been in charge of News International’s four British newspapers since 2007, following a four-year stint as editor of the market-leading daily tabloid, The Sun. Just a week ago, she faced 200 angry employees at the News of the World who had lost their jobs when Murdoch shut down the paper amid the scandal.

The news of her resignation was greeted with relief by British politicians.

“It is right that Rebekah Brooks has finally taken responsibility for the terrible events that happened on her watch, like the hacking of Milly Dowler’s phone,” said opposition Labour Party leader Ed Miliband. “No one in this country should exercise power without responsibility.”

“(It is) the right decision,” said Steve Field, a spokesman for Cameron who had also called for Brooks to resign.

Brooks agreed Thursday to answer questions next week from a U.K. parliamentary committee. Rupert and James Murdoch initially resisted, but also agreed to appear after the committee raised the stakes by issuing formal summonses.

Police have arrested seven people in their investigation of phone hacking, and two others in a parallel investigation of alleged bribery of police officers for information.

Appearing before another U.K. parliamentary committee in 2003, Brooks had been asked whether News of the World or The Sun had ever paid police for information.

“We have paid the police for information in the past,” she said.

Asked if she would do it again, she said: “It depends.”

Andy Coulson, then the editor of News of the World who was arrested last week in the hacking investigation, interrupted to say: “We operate within the (press) code and within the law and if there is a clear public interest then we will.”

In an example of the cozy ties between the British press and politicians, Coulson had been Cameron’s communications chief before resigning in January as the hacking allegations grew.

Murdoch flew into London last weekend to take charge of the response to the mushrooming phone scandal. Asked by reporters what his priority was, Murdoch gestured to Brooks and said, “This one.”

In her statement Friday, Brooks thanked the Murdochs for their support.

“Rupert’s wisdom, kindness and incisive advice has guided me throughout my career and James is an inspirational leader who has shown me great loyalty and friendship,” she said.

James Murdoch praised Brooks as “one of the outstanding editors of her generation and she can be proud of many accomplishments as an executive.”

“We support her as she takes this step to clear her name,” he said.

On Thursday, police arrested Neil Wallis, former deputy editor and then executive editor of the News of the World, in their investigation into phone hacking and bribing police for information.

In the United States, meanwhile, the Federal Bureau of Investigation opened an investigation into claims that News Corp. journalists may have sought to hack into the phones of Sept. 11 victims in a quest for sensational scoops.

The U.K. investigation of phone hacking appears still to be at an early stage. Police say they have recovered a list of 3,700 names — regarded as potential victims — but so far had been in touch with fewer than 200 people.

While largely still on the defensive, another one of Murdoch’s British papers, The Sun tabloid, scored one point Friday against former Prime Minister Gordon Brown, who had accused the paper of obtaining confidential medical files on his younger son, who has cystic fibrosis.

The Sun had vigorously rebutted the claim, saying it got its information from another parent, so far unidentified, allegedly motivated by a hope of raising awareness of the disease.

On Friday, The Guardian newspaper apologized for accepting Brown’s version of events.

“Articles in the Guardian of Tuesday 12 July incorrectly reported that the Sun newspaper had obtained information on the medical condition of Gordon Brown’s son from his medical records,” the newspaper said in its corrections column. “In fact, the information came from a different source and the Guardian apologizes for its error.”

Copyright 2011 The Associated Press.

Iconic Bookstore Chain Likely Headed For Liquidation

NEW YORK (AP) — Borders Group, the nation’s second largest book store chain that once operated over 1,000 stores, appears headed for liquidation after a judge on Thursday approved its motion to auction itself off with a team of liquidators as its opening bid.

The move came after an offer made earlier this month from a private-equity investor disintegrated overnight.

Borders said it will accept bids until 5 p.m. Sunday and will give notice by Monday if no other bidder emerges.

Earlier this month private-equity investor from Phoenix offered $215 million for the company, plus the assumption of $220 million in debt.

But on Wednesday, creditors objected, saying that the agreement would not prevent Najafi from taking possession of the company and liquidating it immediately for profit. Landlords also objected.

Creditors said a bid from liquidators Hilco Merchant Resources and Gordon Brothers is stronger. They believe it would pay out between $252 million and $284 million in cash.

Creditors said in a court filing that they were hopeful Najafi would submit a higher bid, but Najafi stood by its original offer.

On Thursday, Borders said it wouldn’t seek approval for Najafi’s bid at a scheduled hearing in the U.S. Bankruptcy Court Southern District of New York and designated the liquidators as the primary, or “stalking horse” bid.

Meanwhile, one analyst speculated that if Borders liquidates, that could spark a higher bid for its chief rival Barnes & Noble. Financier John Malone’s Liberty Media made a $1 billion offer to buy Barnes & Noble in May.

Liberty Media has said it values Barnes & Noble for both its Nook e-reader business and its retail stores, so a full liquidation of Borders would increase the value of the retail side of the business, Janney Capital Markets analyst David Strasser said.

“This is perhaps an opportunity for a higher negotiated bid via Liberty or an entrance of another bidder,” he wrote in a note.

Borders Group Inc., based in Ann Arbor, Mich., filed for bankruptcy protection in February. The company started with a single store in 1971, and helped pioneer the book superstore concept along with larger rival Barnes & Noble Inc. It was brought down by heightened competition by discounters and online booksellers, as well as the growth in popularity of electronic books. It currently operates about 400 stores, down from its peak in 2003 of 1,249 Borders and Waldenbooks, and has about 11,000 employees.

Copyright 2011 The Associated Press.

Report: FBI Is Investigating Murdoch

NEW YORK (AP) — The FBI has opened an investigation into allegations that media mogul Rupert Murdoch’s News Corp. sought to hack into the phones of Sept. 11 victims, a law enforcement official said Thursday.

The official spoke Thursday to The Associated Press on condition of anonymity because he was not authorized to speak publicly.

New York City-based News Corp. has been in crisis mode.

A rival newspaper reported last week that the company’s News of the World had hacked into the phone of U.K. teenage murder victim Milly Dowler in 2002 and may have impeded a police investigation into the 13-year-old’s disappearance.

More possible victims soon emerged: other child murder victims, 2005 London bombing victims, the families of dead soldiers and former Prime Minister Gordon Brown.

The FBI’s New York office didn’t immediately comment Thursday. There was no immediate response to messages left for News Corp. and the U.S. attorney’s office in Manhattan.

On Thursday, Murdoch caved in to pressure from Britain’s Parliament as he and his son James first refused, then agreed, to appear next week before lawmakers investigating phone hacking and bribery by employees of their newspaper empire.

Murdoch began his media career in Australia in 1952 after inheriting The News newspaper after the death of his father, and he has built News Corp. into one of the world’s biggest media groups. Assets include Fox News, the 20th Century Fox movie studio, The Wall Street Journal, the New York Post and three newspapers in Britain — down from four with the death of the News of the World.

Copyright 2011 The Associated Press.

Prosecution Strikes Out as Judge Rules Mistrial in Clemens Case

WASHINGTON (AP) — The judge declared a mistrial Thursday in baseball star Roger Clemens’ perjury trial after prosecutors showed to jurors evidence that he had ruled would be out of bounds in the case.

U.S. District Judge Reggie Walton said Clemens could not be assured a fair trial after prosecutors showed jurors evidence against his orders in the second day of testimony.

Walton scheduled a Sept. 2 hearing to determine whether to hold a new trial. He told jurors he was sorry to have wasted their time and spent so much taxpayer money, only to call off the case.

“There are rules that we play by and those rules are designed to make sure both sides receive a fair trial,” Walton told the jury, saying such ground rules are critically important when a person’s liberty is at stake.

He said that because prosecutors broke his rules, “the ability with Mr. Clemens with this jury to get a fair trial with this jury would be very difficult if not impossible.”

Prosecutors suggested the problem could be fixed with an instruction to the jury to disregard the evidence, but Walton seemed skeptical. He said he could never know what impact the evidence would have during the jury’s deliberations “when we’ve got a man’s liberty at interest.”

“I don’t see how I un-ring the bell,” he said.

Walton interrupted the prosecution’s playing of a video from Clemens’ 2008 testimony before Congress and had the jury removed from the courtroom. Clemens is accused of lying during that testimony when he said he never used performance-enhancing drugs during his 24-season career in the Major Leagues.

One of the chief pieces of evidence against Clemens is testimony from his former teammate and close friend, Andy Pettitte, who says Clemens told him in 1999 or 2000 that he used human growth hormone. Clemens has said that Pettitte misheard him. Pettitte also also says he told his wife, Laura, about the conversation the same day it happened.

Prosecutors had wanted to call Laura Pettitte as a witness to back up her husband’s account, but Walton had said he wasn’t inclined to have her testify since she didn’t speak directly to Clemens.

Walton was angered that in the video prosecutors showed the jury, Rep. Elijah Cummings, D-Md., referred to Pettitte’s conversation with his wife.

“I think that a first-year law student would know that you can’t bolster the credibility of one witness with clearly inadmissible evidence,” Walton said.

He said it was the second time that prosecutors had gone against his orders — the other being an incident that happened during opening arguments Wednesday when assistant U.S. attorney Steven Durham said that Pettite and two other of Clemens’ New York teammates, Chuck Knoblauch and Mike Stanton, had used human growth hormone.

Walton said in pre-trial hearings that such testimony could lead jurors to consider Clemens guilty by association. Clemens’ defense attorney objected when Durham made the statement and Walton told jurors to disregard Durham’s comments about other players.

There was no objection from Clemens’ team during the Laura Pettitte reference, but the judge stopped the proceedings, called attorneys up to the bench and spoke to them privately for several minutes. Hardin pointed out during that time, the video remained frozen on the screen in front of jurors with a transcript of what was being said on the bottom.

Cummings had been quoting from Laura Pettitte’s affidavit to the committee. “I, Laura Pettitte, do depose and state, in 1999 or 2000, Andy told me had a conversation wth Roger Clemens in which Roger admitted to him using human growth hormones,” the text on the screen read.

The judge eventually told the jurors to leave while he discussed the issue with attorneys in open court.

“Government counsel should have been more cautious,” Walton said, raising his voice and noting that the case has already cost a lot of taxpayer money. He then left the courtroom and said he would go consult with a colleague on what to do.

Another State Joins Attacks on Planned Parenthood

Following the lead of several other states, New Hampshire cancelled funding for Planned Parenthood that had already been allocated in the state’s budget. Even though laws seeking to deny the organization funding failed in the state legislature, the state’s five-person executive council, which has the power to regulate state contracts, decided to act on its own. State funds accounted for roughly 20% of the organization’s budget.

Indiana, Montana, Texas, and, most recently, North Carolina have passed laws denying any state funds to Planned Parenthood. The organization is in the process of suing several of these states, arguing that recent laws unfairly single out their group. A spokesperson for Planned Parenthood, Tait Sye, told ABC News:

“The reality is that it has nothing to do with abortion at all. What these laws are saying is these women can’t go to Planned Parenthood and get care for birth control or cancer screenings,” he said.

Perhaps no law, though, rivals the one that recently passed in Kansas, which imposes exceedingly burdensome restrictions on hospitals that provide abortions. Among its more arcane regulations, the new law dictates the temperature of waiting rooms must be between 68 and 73 degrees and that janitors’ closets must be at least 50 square feet. Several Kansas abortion providers have called the rules arbitrary and unfair, designed simply to keep them from operating.

“There is absolutely no way that they could have complied with those requirements,” argued Teresa Woody, an attorney representing two affected abortion providers in Kansas. “There is an undue burden both on the doctors and the patients.”

U.S. District Judge Carlos Murguia issued a temporary injunction on the controversial abortion law that recently passed the state legislature, until the Court issues a judgment on the law.

The Costs of Shutting Down

What happens to the state economy when the government shuts down? Minnesotans are finding out. The state government cut off most nonessential services on July 1, and unless Minnesota Republicans and Democrats overcome their recent budget impasse, the state economy will continue to suffer severe losses, some obvious and others more subtle.

22,000 state workers lost their jobs when the government shut down last week. That’s $23M in lost wages—and lost purchasing power.

Many working parents who rely on state-funded childcare programs are finding themselves out of luck. Economists project the cutoff in funding for childcare will force workers to take more days off and decrease employee productivity.

Haven’t paid your taxes? You may be in luck, as Minnesota’s Tax Compliance Office is closed during the shutdown. The state isn’t collecting its average of $52M a month from delinquent taxpayers.

Minnesota is losing an estimated $1.25M in revenue from the state lottery every day. It’s also losing $1M a month in visitors fees as long as state parks remain closed.

As the legislature refuses to close budget holes for school districts, local governments must find the money elsewhere—in some cases, through steep increases in property taxes.

Fitch’s has downgraded Minnesota’s credit rating, raising doubts about the state’s willingness and ability to pay its bills. That means higher interest rates on state bonds, likely to cost taxpayers untold amounts even after the shutdown ends.

With their liquor licenses set to expire, many Minnesota restaurants—which rely heavily on profits from the bar—are considering closing their doors altogether. And it’s a bad beat for workers, too: If you were out of a job for the foreseeable future, wouldn’t you want a drink?

Robert Petito contributed to this report.