WASHINGTON -- President Barack Obama is kicking off budget dealings with congressional leaders with new leverage from last week's big win, but he confronts a decidedly tricky path to avoiding a market-rattling "fiscal cliff" that could imperil a still-fragile economy.
Obama's GOP rivals promise greater flexibility on new tax revenues, but Democrats face pressure from liberal interest groups urging the president to take a hard line and avoid cutting big benefit programs like Medicare and food stamps. It's up to Obama to navigate the course toward an agreement.
At issue is a one-two punch of expiring Bush-era tax reductions and across-the-board spending cuts set to hit in January as the consequences for the failure of a gridlocked Congress to reach a deficit-cutting deal last year. Economists and business leaders warn the combination could send the economy back into recession, and all sides in Washington say they want to avoid going over the cliff.
Attending the meeting with Obama are the top four leaders of Congress: House Speaker John Boehner, R-Ohio, Minority Leader Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky.
The White House said Obama's starting point for negotiations is his February budget plan, which combined $1.6 trillion in new revenues over the coming decade -- chiefly from upper-income earners -- with modest cuts to benefits programs. Obama's plan promises $4.4 trillion in deficit cuts over 10 years, but more than half of that comes by banking already accomplished cuts and questionable savings from winding down military operations in Iraq and Afghanistan.
Set to hit the road again: After playing in the sand, the Curiosity rover is poised to trek across the Martian landscape in search of a rock to drill into, scientists reported Thursday. The six-wheel rover has been parked for more than a month at a sand dune where it has been busy scooping up soil, sniffing the atmosphere and measuring radiation levels on the surface. Its next task is to zero in on a rock and that requires driving to a new location.
Fed details stress tests: The Federal Reserve says the nation's biggest banks will be tested next year on their ability to survive not only a severe U.S. recession but also a global downturn. The latest round of "stress tests" will test how the banks would handle recessions in Europe and Japan and severe slowdowns in other Asian countries including China. Under the Fed's most severe scenario, the United States would undergo a recession in which unemployment would reach nearly 12 percent, stocks would lose half their value and home prices would plunge 20 percent. The nation's 19 biggest banks must submit reports on how they would fare under various scenarios. The central bank will release the results by late March. The Fed has conducted stress tests of the banks every year since 2009.
Foreclosure starts down: U.S. homes are entering the foreclosure process at a slower pace than a year ago, and fewer properties are being repossessed by lenders, new data show. Between January and October, 971,533 homes were placed on the path to foreclosure, down 8 percent from the same period last year, foreclosure listing firm RealtyTrac Inc. said Thursday. At the other end of the foreclosure process, banks repossessed 559,063 homes through the end of last month, a decline of nearly 19 percent from a year earlier. That puts lenders on pace to complete 650,000 foreclosures this year, down from 800,000 in 2011, the firm said.
Lugar considering options: Indiana Sen. Richard Lugar is planning to take a job outside government when he leaves the Senate in January. A spokesman for Lugar says the senator has been talking with some think tanks and universities about positions taking advantage of his long tenure as a leading member of the Senate's Foreign Relations Committee. The Republican senator has been mentioned as a possible secretary of state or CIA director under President Barack Obama, but Lugar spokesman Andy Fisher told WIBC-FM (http://bit.ly/SXCHBy ) that such reports are "without any forethought or knowledge."
Robber gives ex-con a pass: A 51-year-old Wichita, Kan., man has his wallet back after a would-be robber recognized him as a former fellow inmate. Wichita police say the man was walking home from work late Wednesday when he was approached by two young men, including one with a gun. The gunman demanded the victim's wallet and cellphone. As the older man handed over his wallet, the second suspect realized they had spent time together in prison. Police say the suspects then stopped the robbery, returned the wallet and apologized before leaving the scene. No arrests had been made Thursday. The victim told police he didn't think he could identify the robbers.
Woman pulls gun, flasher runs: A man who exposed himself took off running when a Washington state woman pulled out a gun and pointed it at him. The Longview Daily News reported (http://bit.ly/UtFUYG) that the Longview, Wash., woman was at Lake Sacajawea Wednesday evening when a man approached her aggressively while masturbating and suggested she should watch him. Instead the woman produced her gun. Longview police detective Kyle Sahim said officers haven't found the man Thursday evening but are investigating several suspects. He was described as a white, in his early 20s, with short dark-blond hair.