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CHARLOTTESVILLE, Va. (AP) — The man accused of driving into a crowd protesting a white nationalist rally in Charlottesville faces a new charge of first-degree murder after a court hearing Thursday in which prosecutors presented surveillance video and other evidence against him.
Prosecutors announced at the start of a preliminary hearing for James Alex Fields that they were seeking to upgrade the second-degree murder charge he previously faced in the Aug. 12 collision in Charlottesville that left 32-year-old Heather Heyer dead and dozens injured. The judge agreed to that and ruled there is probable cause for all charges against Fields, including nine lesser felony counts, to proceed.
Fields’ case will now be presented to a grand jury for an indictment.
Authorities say the 20-year-old, described by a former teacher as having a keen interest in Nazi Germany and Adolf Hitler, drove his speeding car into a group of counterprotesters the day of the “Unite the Right” rally that drew hundreds of white nationalist from around the country. The attack came after the rally in this Virginia college town had descended into chaos — with violent brawling between attendees and counterdemonstrators — and authorities had forced the crowd to disband.
Surveillance footage from a Virginia State Police helicopter, played by prosecutors in court, captured the moment of impact by the car and the cursing of the startled troopers on board. The video then showed the car as it reversed, drove away and eventually pulled over. The helicopter had been monitoring the violence, and prosecutors questioned Charlottesville Police Detective Steven Young about the video as it played.
Another surveillance video from a restaurant showed the car head slowly in what Young testified was the direction of the counterprotesters, who were not in view of the camera. The car reversed before speeding forward into the frame again.
After that footage, a man in the crowd shouted an expletive and cried out, “Take me out.” He and others left the courtroom.
Fields, of Maumee, Ohio, sat quietly in a striped jumpsuit with his hands cuffed during the hearing.
His attorney Denise Lunsford did not present evidence or make any arguments at the hearing, although she did cross-examine the detective.
Fields was photographed hours before the attack with a shield bearing the emblem of Vanguard America, one of the hate groups that took part in the rally, although the group denied any association with him.
A former teacher, Derek Weimer, has said Fields was fascinated in high school with Nazism, idolized Adolf Hitler, and had been singled out by officials at his Union, Kentucky, school for “deeply held, radical” convictions on race.
During her cross-examination of Young, Lunsford asked if searches of Fields’ computer, phone or social media revealed any evidence that he was part of Vanguard America or any other white nationalist group. Young said, “No.”
Young also testified that he was among the first officers to respond to the scene where Fields pulled over. No weapon was found in the car, he said.
Lunsford asked the detective what Fields said as he was being detained.
Fields said he was sorry and asked if people were OK, according to Young. When Fields was told someone had died, he appeared shocked and sobbed, Young said.
Young said authorities had identified 36 victims of the car attack, including Heyer — a number higher than officials have previously given. Some have significant injuries and are “wheelchair bound,” Young said.
Fields would have faced between five to 40 years in prison for a second-degree murder conviction. First-degree murder carries a penalty of 20 years to life in prison.
Charlottesville General District Court Judge Robert Downer Jr. also presided over preliminary hearings Thursday for three other defendants. Charged in cases related to the August rally are Richard Preston, who is accused of firing a gun, and Jacob Goodwin and Alex Ramos, who are accused in an attack on a man in a parking garage that was captured in photos and video that went viral.
The judge certified the charges against all three men. All those cases will also head to a grand jury.
Jason Kessler, the main organizer of the Unite the Right rally, was in court to watch the proceedings. When he arrived Thursday, a small crowd of angry protesters outside the courthouse chanted, “Blood on your hands.”
HARARE, Zimbabwe (AP) — In an open space that Zimbabwe’s ruling party has called Robert Mugabe Square, delegates gathered Friday to seal the fate of a man they had revered for decades but removed from power in dramatic scenes last month.
Emmerson Mnangagwa has already been inaugurated as the new president and party leader, replacing Mugabe, who had led the party since 1975 and the country since independence from white minority rule in 1980.
Friday’s ZANU-PF party meeting is the final step in Mugabe’s fall from grace after the military put him under house arrest, hundreds of thousands rallied in the streets and lawmakers began impeachment proceedings. Under the growing pressure, the 93-year-old who had vowed to rule for life finally resigned.
The decision to remove Mugabe as party leader was made by the Central Committee, and “it is a foregone conclusion delegates will ratify,” party spokesman Simon Khaya Moyo said.
Images of Mugabe’s face, usually plastered on delegates’ dress and other paraphernalia, were conspicuously missing, as was Mugabe himself. He flew to Malaysia and Singapore earlier this week to visit family and seek medical treatment in his first overseas trip since last month’s events.
Mnangagwa at his inauguration described Mugabe as a “father, comrade-in-arms and my leader,” even though his firing by Mugabe as vice president early last month set the events in motion amid concerns that unpopular first lady Grace Mugabe might succeed him.
Mugabe’s time was up the moment he surrendered power to his wife, some party delegates said.
The ruling party also was expected to endorse the 75-year-old Mnangagwa as party leader and its presidential candidate for next year’s elections, Moyo said.
Now Mnangagwa must find a way out of his longtime mentor’s shadow, revive the severely weakened economy and win over voters ahead of elections.
He told Friday’s gathering that the vote will be held as scheduled, without mentioning a date. The elections should be held in July or August, according to the constitution.
The opposition, shut out of Mnangagwa’s Cabinet in favor of military and ruling party members, has joined the United States and others in the international community in urging Zimbabwe’s new government to make sure the elections are democratic.
Mnangagwa, sanctioned by the U.S. years ago for his activities as a top Mugabe aide, has said the government will do all in its power to make sure the elections are “credible, free and fair.”
On Thursday, he called for longtime sanctions to be lifted to ease foreign investment and promised measures to make the once-prosperous southern African nation “a place where capital feels safe.”
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VILLEVENARD, France (AP) — Frederic Berthelot has eight hectares (20 acres) of vines on the slopes above this tiny village in France’s Champagne region, his vineyard distinguishable from others in the area by the tiny rose bushes planted at the base of each vine.
The roses are a bellwether for parasites. But as Britain and the European Union crawl through a protracted divorce, Berthelot has more to worry about than bugs. His century-old business decided to start exporting to Britain for the first time just as the country voted to leave the EU. The pound immediately plunged, making imported wine more expensive in Britain. Eighteen months later, Berthelot and his British trading partner are still waiting to find out what rules will govern future trade.
“We are in a period of transition, of uncertainty,” he said. “There are worries.”
While British and EU officials last week trumpeted their success in reaching a deal on preliminary Brexit issues such as the rights of citizens in each other’s territories and the status of Britain’s physical border with the Republic of Ireland, the future relationship between the two sides remains in limbo. Even if European leaders authorize the start of trade talks during a meeting this week in Brussels, it may be another year before any concrete decisions are reached.
That is likely to take a toll on economic growth —and jobs — because businesses will delay investment as they wait to see what the final deal looks like, said Jeffrey Bergstrand, an expert on international trade at the University of Notre Dame in Indiana.
“It creates uncertainty about the direction of economic activity,” he said. “The uncertainty creates waiting, and waiting creates a negative impact.”
Britain’s economy has already slowed markedly this year amid the Brexit uncertainty. At the start of the year, it was the fastest-growing economy in the Group of Seven industrialized democracies. Now it is the slowest.
A study by the U.S.-based RAND Corp. suggests the U.K. economy is likely to suffer under the most likely Brexit scenarios. If Britain were to leave without a deal, forcing trade to be conducted under generic World Trade Organization rules, the country’s economic output in 2029 would be about 5 percent lower than if Britain had stayed in the bloc, the study found.
Wine drinkers are among the first to feel the effects.
The drop in the value of the pound has made wine more expensive in Britain. In addition, consumers are likely to cut back on luxury spending as rising inflation reduces disposable income and the steady drumbeat of negative Brexit news — stalled talks, squabbling leaders, political instability — makes people more cautious, said Jonny Forsyth of Mintel, an international market research firm.
“It’s not good news for alcohol. Full stop,” Forsyth said. “When consumers are faced with uncertainty they tighten their belts a bit. It will get even more so next year.”
That’s bad news for winemakers because Britain is the world’s fourth-biggest wine consumer, behind the United States, Germany and France. Retail sales of wine in the U.K. reached almost 1.1 billion liters last year, the vast majority of it imported.
It’s potentially even tougher for old world winemakers like Berthelot — small business owners who face competition from New World brands that can be cheaper and who deploy marketing strategies to entice consumers confused by the “wall of wine” encountered at grocery stores.
That advertising taps into Britain’s longtime love affair with Champagne, the favorite drink of Winston Churchill, who was a fan of Pol Roger, made in the famed Champagne town of Epernay. And at this time of year Britons, who often repress their admiration for all things French, love to put this little luxury on their Christmas tables. Supermarkets offer loss leader discounts that have made sparkling wine a British institution as well as a French one.
Berthelot, whose Roger Barnier brand is named after his grandfather, hoped to take advantage of that thirst. He recently opened a new horizon for his business, partnering with London-based entrepreneur Richard Ellison to export his champagne to Britain for the first time, despite the specter of Brexit.
Although shipments have been disappointing, Berthelot is playing the long game from this village of 220.
Wearing only a sweater and neck scarf against the December cold, the 54-year-old is quietly passionate and proud of his product. The business has been in his family for five generations. His oldest vines, from 1910 and 1915, survived both world wars and a bug that damaged other vines in the region in the late 19th and early 20th centuries. The house supplied Champagne to the French presidential palace under Nicolas Sarkozy and Francois Hollande. A thank you card from the palace hangs among award certificates.
He’s confident that sales will eventually improve as he is in a quality-price ratio that’s doing well globally.
“Well, at least I hope I’m not wrong,” he says with a laugh.
Ellison started Wanderlust Wine just before Brexit with the idea of shipping wine from a group of small producers not found in the U.K. direct to individuals in Britain. He is still betting the model will succeed, even though he’s frustrated with the Brexit headaches caused by warring politicians.
“As a small business, I don’t understand why it’s taking so long to make a decision,” he said during a tour of Berthelot’s vineyard. “We still don’t have a decision about how it’s going to affect everyone longer term.”
Ellison and Berthelot clink glasses as they discuss their partnership. They make a funny pair: Berthelot has the unhurried dignity of a man who works the land and crafts a treasured product; the boyish, fast-talking Ellison is a former banker with a global world view.
But they agree on one thing: whatever havoc Brexit might cause now, the British will always drink Champagne.
“Champagne is part of the lifeblood of the Brits really, part of what bonds us to France,” Ellison said. “We drank it for centuries. So why stop now?”
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WASHINGTON (AP) — Republican Marco Rubio’s potential defection over a tax credit for low-income parents put a speed bump into GOP leaders’ drive to push their big tax package through the Senate, but it’s a complication that’s likely to be resolved.
The Florida senator declared Thursday that he’ll vote against the $1.5 trillion bill unless House and Senate negotiators expand the tax credit that low-income Americans can claim for their children.
That puts the Republicans’ razor-thin margin in the Senate closer to the edge. The GOP leaders are straining to muscle the bill through Congress next week, handing President Donald Trump his first major legislative victory by Christmas.
Senate Republicans could still pass the package without Rubio’s vote, but they would be cutting it extremely close. An original version was approved 51-49 — with Rubio’s support. The co-sponsor of Rubio’s proposed change, Republican Sen. Mike Lee of Utah, is undecided on the overall bill and is pushing to make the credit as generous as possible, said Lee spokesman Conn Carroll.
The Senate turmoil erupted the same day that a key faction of House Republicans came out in favor of the bill, boosting its chances. Members of the conservative House Freedom Caucus predicted the vast majority of their members would support the package.
The up-and-down turns came a day after House and Senate Republican leaders forged an agreement in principle on the most sweeping overhaul of the nation’s tax laws in more than 30 years. The package would give generous tax cuts to corporations and the wealthiest Americans, and more modest tax cuts to low- and middle-income families.
Republican leaders predicted swift passage next week, sending the bill to Trump for his signature.
At the White House, Trump said he was confident that Rubio will get onboard.
“He’s really been a great guy and very supportive. I think that Sen. Rubio will be there,” said Trump, who belittled Rubio during the 2016 GOP presidential primaries, calling him “little Marco.”
The tax package would double the per-child tax credit from $1,000 to $2,000. The bill makes a portion of the credit — $1,100 — available to families even if they owe no income tax. They would receive the money in the form of a tax refund, which is why it’s called a “refundable” tax credit. Rubio wants to increase this amount but wouldn’t say by how much.
“Given all the other changes they made in the tax code leading into it, I can’t in good conscience support it unless we are able to increase the refundable portion of it. And there’s ways to do it, and we’ll be very reasonable about it,” Rubio said.
During debate on the Senate version of the bill, Rubio proposed a change that would have made the entire $2,000 credit available to families, even if they owe no income tax, but it was soundly defeated. To pay for the expanded credit, he proposed to slightly scale back a steep cut in the corporate income tax rate.
A few days after the earlier Senate vote, Rubio tweeted a link to a news story that said GOP leaders were indeed considering scaling back the corporate tax cut — but not to pay for an expanded child tax credit.
“They freaked out when I proposed small reduction in Corporate tax cut to pay for cut for working families. Now this?” Rubio tweeted.
The final package slashes the corporate rate from 35 percent to 21 percent. The initial Senate and House bills had set it at 20 percent.
Sen. Rob Portman, R-Ohio, said Senate negotiators got the best deal they could on the overall child tax credit. House GOP negotiators were proposing a $1,600 tax credit.
“We won everything in the child tax credit,” Portman said. When asked if it could be changed further to appease Rubio, Portman said: “We’ve already won. I mean, we should celebrate our victory.”
Rubio’s opposition comes at a bad time for Senate Republicans, with two of them missing votes this week because of illness.
John McCain of Arizona, who is 81, is at a Washington-area military hospital being treated for the side effects of brain cancer treatment, and 80-year-old Thad Cochran of Mississippi had a non-melanoma lesion removed from his nose earlier this week. GOP leaders are hopeful they will be available next week.
Associated Press writers Kevin Freking and Ken Thomas contributed to this report.
Follow Stephen Ohlemacher on Twitter at http://twitter.com/stephenatap
HONG KONG (AP) — Asian share benchmarks were mostly lower Friday as uncertainty over U.S. tax reform legislation outweighed upbeat data from Japan.
KEEPING SCORE: Japan’s benchmark Nikkei 225 index dipped 0.6 percent to 22,553.22 but South Korea’s Kospi climbed 0.4 percent to 2,478.50. Hong Kong’s Hang Seng shed 1.2 percent to 28,813.34 and the Shanghai Composite index lost 0.7 percent to 3,270.93. Australia’s S&P/ASX 200 sank 0.2 percent to 5,997.00. Indexes in Taiwan and Southeast Asia declined.
JAPAN SURVEY: Corporate sentiment in Asia’s second biggest economy is at an 11-year high, according to a quarterly survey. The Bank of Japan’s “tankan” business outlook based on a poll of more than 10,000 companies posted its strongest reading since late 2006, in the latest sign that the economy is gaining momentum.
TAXING TIME: President Donald Trump’s $1.5 trillion U.S. tax overhaul was teetering on a knife-edge in the Senate, complicating Republican leaders’ goal of pushing it through Congress next week and shaking investor confidence. Senator Marco Rubio vowed to vote against the bill, which gives generous tax cuts to corporations and the wealthy, unless child tax credits are expanded. The bill’s original version was approved by only 51-49, with Rubio’s support.
MARKET INSIGHT: “A sustained slide into the end of the week may be the case as the tax reform jitters induced a risk-off mood for markets in the region this morning,” said Jingyi Pan, strategist at IG Markets.
CENTRAL BANKING: Markets were digesting the impact of a raft of decisions by major global central banks over the previous day. The U.S. Federal Reserve raised its benchmark rate for the third time this year as anticipated and indicated three more hikes are in store next year. Policymakers in China and Hong Kong followed suit with their own increases while the European Central Bank and the Bank of England kept their main rates on hold, as expected.
WALL STREET: Major U.S. benchmarks ended lower. The Standard & Poor’s 500 index fell 0.4 percent to close at 2,652.01. The Dow Jones industrial average lost 0.3 percent to 24,508.66. The Nasdaq shed 0.3 percent to 6,856.53.
CURRENCIES: The dollar weakened to 112.19 yen from 112.37 yen on Wednesday. The euro rose to $1.1785 from $1.1776.
ENERGY: Oil futures advanced. Benchmark U.S. crude rose 9 cents to $57.13 a barrel on the New York Mercantile Exchange. The contract rose 44 cents to close at $57.04 a barrel on Thursday. Brent crude, used to price international oils, added 2 cents to $63.33 per barrel in London.
HOLIDAY SPENDING STRONGER THAN LAST YEAR
Payment technology company First Data says that the overall pace of holiday shoppers’ spending is stronger than a year ago. It says overall spending, excluding gas, rose 6 percent from Nov. 1 through Monday, outpacing the 3.7 percent pace for the year-ago period. The buying was helped by cooler weather, higher consumer confidence and low unemployment.
RUBIO THREAT ON CHILD TAX CREDIT PUTS BUMP IN GOP TAX PATH
Republican Marco Rubio’s potential defection over a tax credit for low-income parents put a speed bump into GOP leaders’ drive to push their big tax package through the Senate, but it’s a complication that’s likely to be resolved. The Florida senator declared Thursday that he’ll vote against the $1.5 trillion bill unless House and Senate negotiators expand the tax credit that low-income Americans can claim for their children.
EU CLEARS WAY TO 2ND ROUND OF BREXIT TALKS
European Union leaders have given the go-ahead to Brexit talks with Britain to move onto the next stage, which will involve discussions over future relations and trade. In a tweet on the second day of an EU summit, EU chief Donald Tusk said EU leaders “agree to move on to the second phase” in Brexit talks and congratulated British Prime Minister Theresa May.
LUXEMBOURG APPEALS $295M EU AMAZON RULING
Luxembourg is appealing a European Union decision that it has to claw back some 250 million euros ($300 million) in back taxes from Amazon. The EU decision in October was another attempt to tighten the screws on multinationals it says are avoiding taxes through sweetheart deals with individual EU states.
ASIAN, EUROPEAN STOCKS FALL AS MARKETS AWAIT US TAX DEAL
Asian and European share benchmarks were mostly lower Friday as investors shrugged off upbeat data from Japan and waited to see if U.S. politicians could pass tax reform legislation before Christmas. France’s CAC 40 shed 0.4 percent to 5,336.39, Germany’s DAX lost 0.3 percent to 13,025.17, Dow futures rose 0.1 percent to 24,592.00, the broader S&P 500 futures added 0.1 percent to 2,659.20 and Japan’s benchmark Nikkei 225 index dipped 0.6 percent to close at 22,553.22.
JERUSALEM (AP) — Pedestrians walk on a thick layer of soot from tires set ablaze in frequent clashes with Israeli troops. Cars navigate around potholes in streets littered with garbage. Motorists honk in a traffic jam near an Israeli checkpoint that is framed by the towering cement slabs of Israel’s separation barrier.
It’s morning rush hour in Ras Khamis, a neglected, restive Arab neighborhood of Jerusalem where President Donald Trump’s recent recognition of the contested city as Israel’s capital has been met by cynicism, defiance and new fears that Palestinians will increasingly be marginalized.
Trump’s pivot on Jerusalem “is regrettable, saddening and unfair,” said Yasser Khatib, 42, who runs a supermarket across the street from the barrier that separates several Arab neighborhoods of Jerusalem from the rest of the city.
Khatib said he has strong religious ties to the city and that his family’s roots go back generations. “We have no life without Jerusalem,” he said as he sold snacks to school children. “Trump can say whatever he wants.”
Palestinians make up 37 percent of Jerusalem’s population of 866,000, up from 26 percent in 1967 when Israel captured east Jerusalem, expanded the city’s boundaries into the West Bank and annexed the enlarged municipal area to its capital.
The international community says east Jerusalem is occupied territory and that the city’s fate must be determined in negotiations with the Palestinians who seek a capital in the eastern sector.
Trump couched his Jerusalem comments — viewed in the Arab world as a show of pro-Israel bias — by saying he is not taking a position on the boundaries of Israeli sovereignty in the city.
Yet he made no specific mention of the city’s large Palestinian population, which could reach 44 percent by 2040, according to the Jerusalem Institute for Policy Research think tank.
Despite Israel’s portrayal of Jerusalem as united, there are stark differences between Arab and Jewish areas after what critics say is half a century of neglect and discrimination.
“On the ground, Israel is not investing much in developing the Arab neighborhoods of Jerusalem,” said Yitzhak Reiter, in charge of the Jerusalem Institute’s mapping of the physical and social infrastructure of Arab neighborhoods.
In many spheres, “the city is still divided, with two different transport systems, two different policies on building and construction.”
Israel would have to invest billions of dollars in Arab areas to reach parity with Jewish neighborhoods, he said.
For now, 79 percent of Arab residents fall below the poverty line, compared to 27 percent of Jews, according to Jerusalem Institute figures.
Welfare services maintain four offices in the Arab east, compared to 19 offices in Jewish areas, said the Association for Civil Rights in Israel. Arab schools have a shortage of hundreds of classrooms, ACRI said. The west has 34 post offices, compared to nine in the east.
Mayor Nir Barkat’s office said he developed a plan “unprecedented in scope and budget allocation to reduce gaps in east Jerusalem” and made progress in alleviating “50 years of neglect” inherited from predecessors. Among other things, the city opened more than 800 classrooms in Arab schools, with 1,000 more in the pipeline, the statement said.
ACRI said the added classrooms included many spaces rented in existing residential buildings.
Jerusalem is the largest mixed city in the Holy Land, and Arabs and Jews interact in daily life, including in malls and hospitals. Many Palestinians work in shops and restaurants in west Jerusalem, typically earning more there than on the east side.
Yet east-west infrastructure gaps remain wide.
Israel may be unwilling to invest heavily in areas that could one day come under Palestinian rule, said Reiter, adding that efforts to maintain a strong Jewish majority may also play a role.
Palestinians claim Israel is trying to drive Arabs out of Jerusalem.
Ziad Hammouri, a community organizer, said Trump’s new position on Jerusalem boosts Israel’s attempts to “control east Jerusalem and to exclude Palestinians from Jerusalem.”
One plan floated by a Cabinet minister — and opposed by Barkat — would place tens of thousands of Palestinians who live inside the municipal boundaries but beyond the separation barrier under a new Israeli-run municipality, thus sharply reducing the number of Palestinians counted as Jerusalemites.
These areas, including Ras Khamis, have seen apartment towers rise in recent years as Israel stopped enforcing building restrictions there.
East Jerusalemites desperate for housing moved there in large numbers, despite fears that they would eventually be “zoned out” of Jerusalem.
On the “Jerusalem side” of the barrier, it’s difficult for Palestinians to obtain building permits, because of lack of outline plans or discriminatory zoning, said Israeli rights groups. Many Palestinians built without permits, and 88 homes were demolished in 2016, the most in a decade, ACRI said.
Barkat’s office said a low share of permit application come from Arab neighborhoods, and that a high percentage of those are approved.
Since 1967, Israel has built large neighborhoods for Jews in the annexed east, now home to 212,000 Israelis.
Palestinian Ismail Siam said a one-story home he built on his land for two adult children was demolished by Israel twice in 14 months, on grounds that he did not have a building permit.
“They want to expel us from the city,” said Siam, 54, standing near patches of floor tiles left from the demolished house.
The plot faces large construction sites for Jewish neighborhoods across a ravine.
Most Palestinians in Jerusalem have residency status.
After 1967, most Palestinians didn’t consider the more secure citizenship option, which would have meant recognizing Israeli rule. In recent years, growing numbers have applied, but increasingly encountered bureaucratic hurdles.
Prolonged absence can put Palestinian residents at risk of expulsion; close to 15,000 have been stripped of residency rights since 1967.
Palestinians in the city can vote in local elections, but have largely refrained from doing so, to avoid the perception that they accept Israeli rule.
East Jerusalem residents also feel increasingly abandoned by Palestinian President Mahmoud Abbas’s West Bank self-rule government. Israel clamps down on Palestinian Authority activities in Jerusalem, limiting Abbas’ influence in the city.
The leadership vacuum was briefly filled over the summer when Muslim clerics led a successful grassroots campaign against metal detectors Israel had installed at east Jerusalem’s Al Aqsa Mosque compound. Islam’s third-holiest shrine, built on the remnants of Judaism’s holiest site, is a frequent flashpoint of violence.
After Trump’s decision, city residents mounted only small protests, compared to larger marches in the West Bank and elsewhere.
Activist Yara Hawari said rallying large crowds is difficult when there is no narrow objective, such as removing the metal detectors.
“What we are asking is simple, an end to colonization,” she said. “But it’s not as tangible.”
Associated Press writer Mohammed Daraghmeh in Jerusalem contributed reporting.
WASHINGTON (AP) — Generous tax cuts for corporations and the wealthiest Americans would be delivered in a sweeping overhaul of the tax laws, under a new agreement crafted by Republicans in Congress.
Middle- and low-income families would receive smaller tax cuts, though President Donald Trump and Republican leaders have billed the package as a huge benefit for the middle class. The agreement reached Wednesday by House and Senate GOP leaders also calls for scrapping a major tax requirement of the “Obamacare” health law, a step toward the ultimate GOP goal of unraveling the law.
The agreement combines key elements of separate tax bills recently passed by the House and Senate, striking compromises on some of them. The Republicans are pushing to deliver final legislation to Trump before Christmas as the first major legislative accomplishment of his presidency.
At the White House, Trump was eager to receive it. “The cynical voices that opposed tax cuts grow smaller and weaker, and the American people grow stronger, he said. “This is for people of middle income, this is for companies that are going to create jobs. This is for very, very special people, the great people of America.”
The business tax cuts would be permanent, but reductions for individuals would expire after a decade — saving money to comply with Senate budget rules. In all, the bill would cut taxes by about $1.5 trillion over the next 10 years, adding billions to the nation’s mounting debt.
The legislation, still being finalized, would cut the top tax rate for the wealthiest earners — Trump among them — from 39.6 percent to 37 percent, slash the corporate income tax rate from 35 percent to 21 percent and allow homeowners to deduct interest only on the first $750,000 of a new mortgage.
The top tax rate currently applies to income above $470,000 for married couples, though lawmakers are reworking the tax brackets.
The standard deduction would be nearly doubled, to $24,000 for married couples.
Details of the agreement were described by Republican senators and congressional aides. They spoke on condition of anonymity because they weren’t authorized to publicly discuss private negotiations.
“It’s not my vision of the perfect, but again, this is definitely going to be a strong pro-growth tax package,” said Sen. Ron Johnson, R-Wis.
Republicans view passage of the legislation as a political imperative, proving to voters they can govern as the GOP fights to hold onto its majorities in the House and Senate in next year’s elections. Republicans say they expect the package to increase economic growth, generating additional tax revenue and lessening the hit to the $20 trillion budget deficit. Independent economists aren’t as optimistic.
Federal Reserve Chair Janet Yellen said Wednesday that she and her Fed colleagues, who set interest rate policy, expect a “modest lift” to economic growth from the tax package.
Negotiators have removed several controversial provisions from the tax bill, including one that would have eliminated the deduction for interest on student loans and another deduction for medical expenses, said two congressional aides. Also, the bill would no longer start taxing graduate-school tuition waivers, the aides said.
The tax bill would scale back the deduction for state and local taxes, allowing families to deduct only up to a total of $10,000 in property and income taxes. The deduction is especially important to residents of high-tax states like New York, New Jersey and California.
Business owners who report business income on their personal tax returns would be able to deduct 20 percent of that income.
The bill would repeal the mandate that most Americans get health insurance, a provision of the 2010 health care law. Republicans suffered a humiliating defeat this past summer when they were unable to dismantle the health care law after seven years of promises. Scrapping the individual mandate would provide them with more than $300 billion for deeper tax cuts while also undermining the Obama law.
Senate leaders plan to vote on the package next Tuesday. If it passes, the House would vote next.
“Let’s not waver now — let’s not give in to the Washington status quo — not when tax reform is so close,” Rep. Kevin Brady, R-Texas, chairman of the tax-writing House Ways and Means Committee, said at the start of the joint House-Senate conference committee’s first public meeting. The committee is charged with blending the tax bills passed by the House and Senate, though Republicans have done all their negotiations behind closed doors.
Full details will be unveiled by the end of the week, Brady said.
Democrats, who haven’t been included in any substantive talks on the bill, have assailed it as unfairly tilted in favor of business and the wealthy.
“This is the ultimate betrayal of the middle class,” Sen. Ron Wyden of Oregon, one of the Democratic conferees, charged at the meeting.
Once the plan is signed into law, workers could start seeing changes in the amount of taxes withheld from their paychecks early next year, lawmakers said — though taxpayers won’t file their 2018 returns until the following year.
The IRS said in a statement Wednesday that taxpayers could begin seeing less money withheld from their paychecks “as early as February.” The agency said it was taking initial steps to prepare withholding guidance for employers, which it expects to issue in January.
Corporate tax cuts would take effect in January, allowing businesses to immediately write off the full cost of capital investments.
Associated Press writers Kevin Freking and Ken Thomas contributed to this report.
Follow Stephen Ohlemacher on Twitter at http://twitter.com/stephenatap
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NEW YORK (AP) — As the federal government prepares to unravel sweeping net-neutrality rules that guaranteed equal access to the internet, advocates of the regulations are bracing for a long fight.
The Thursday vote scheduled at the Federal Communications Commission could usher in big changes in how Americans use the internet, a radical departure from more than a decade of federal oversight. The proposal would not only roll back restrictions that keep broadband providers like Comcast, Verizon and AT&T from blocking or collecting tolls from services they don’t like, it would bar states from imposing their own rules.
The broadband industry promises that the internet experience isn’t going to change, but its companies have lobbied hard to overturn these rules. Protests have erupted online and in the streets as everyday Americans worry that cable and phone companies will be able to control what they see and do online.
That growing public movement suggests that the FCC vote won’t be the end of the issue. Opponents of the move plan legal challenges, and some net-neutrality supporters hope to ride that wave of public opinion into the 2018 elections.
CONCERN ABOUT THE FCC PLAN
FCC Chairman Ajit Pai says his plan eliminates unnecessary regulation that stood in the way of connecting more Americans to the internet. Under his proposal, the Comcasts and AT&Ts of the world will be free to block rival apps, slow down competing service or offer faster speeds to companies who pay up. They just have to post their policies online or tell the FCC.
The change also axes consumer protections, bars state laws that contradict the FCC’s approach, and largely transfers oversight of internet service to another agency, the Federal Trade Commission.
After the FCC released its plan in late November, well-known telecom and media analysts Craig Moffett and Michael Nathanson wrote in a note to investors that the FCC plan dismantles “virtually all of the important tenets of net neutrality itself.”
That could result in phone and cable companies forcing people to pay more to do what they want online. The technology community, meanwhile, fears that additional online tolls could hurt startups who can’t afford to pay them — and, over the long term, diminish innovation.
“We’re a small company. We’re about 40 people. We don’t have the deep pockets of Google, Netflix, Amazon to just pay off ISPs to make sure consumers can access our service,” said Andrew McCollum, CEO of streaming-TV service Philo.
TRUST YOUR INTERNET SERVICE PROVIDER
Broadband providers pooh-pooh what they characterize as misinformation and irrational fears. “I genuinely look forward to the weeks, months, years ahead when none of the fire and brimstone predictions comes to pass,” said Jonathan Spalter, head of the trade group USTelecom, on a call with reporters Wednesday.
But some of these companies have suggested they could charge some internet services more to reach customers, saying it could allow for better delivery of new services like telemedicine. Comcast said Wednesday it has no plans for such agreements.
Cable and mobile providers have also been less scrupulous in the past. In 2007, for example, the Associated Press found Comcast was blocking or throttling some file-sharing. AT&T blocked Skype and other internet calling services on the iPhone until 2009. They also aren’t backing away from subtler forms of discrimination that favor their own services.
There’s also a problem with the FCC’s plan to leave most complaints about deceptive behavior and privacy to the FTC. A pending court case could leave the FTC without the legal authority to oversee most big broadband providers. That could leave both agencies hamstrung if broadband companies hurt their customers or competitors.
Critics like Democratic FTC commissioner Terrell McSweeny argue that the FTC won’t be as effective in policing broadband companies as the FCC, which has expertise in the issue and has the ability to lay down hard-and-fast rules against certain practices.
Moffett and Nathanson, the analysts, said that they suspect the latest FCC rules to be short-lived. “These changes will likely be so immensely unpopular that it would be shocking if they are allowed to stand for long,” they wrote.
There have been hundreds of public protests against Pai’s plan and more than 1 million calls to Congress through a pro-net neutrality coalition’s site. Smaller tech websites such as Reddit, Kickstarter and Mozilla put dramatic overlays on their sites Tuesday in support of net neutrality. Twitter on Wednesday was promoting #NetNeutrality as a trending topic. Other big tech companies were more muted in their support.
Public-interest groups Free Press and Public Knowledge are already promising to go after Pai’s rules in the courts. There may also be attempts to legislate net neutrality rules, which the telecom industry supports. Sen. John Thune, a South Dakota Republican, on Tuesday called for “bipartisan legislation” on net neutrality that would “enshrine protections for consumers with the backing of law.”
But that will be tough going. Democrats criticized previous Republican attempts at legislation during the Obama administration for gutting the FCC’s enforcement abilities. Republicans would likely be interested in proposing even weaker legislation now, and Democrats are unlikely to support it if so.
Some Democrats prefer litigation and want to use Republican opposition to net neutrality as a campaign issue in 2018. “Down the road Congress could act to put in place new rules, but with Republicans in charge of the House, Senate, and White House the likelihood of strong enforceable rules are small,” Rep. Mike Doyle, a Pennsylvania Democrat, wrote on Reddit last week. “Maybe after the 2018 elections, we will be in a stronger position to get that done.”
A future FCC could also rewrite net-neutrality regulation to be tougher on the phone and cable industry. That could bring a whole new cycle of litigation by broadband companies.
NEW YORK (AP) — Former White House strategist Steve Bannon is catching blame from fellow Republicans for coughing up a safe Senate seat in deep-red Alabama and foisting damaging political advice on President Donald Trump. But in the aftermath of this week’s stinging Alabama defeat, Bannon is showing no signs of abandoning his guerrilla war against the GOP establishment.
Bannon wholeheartedly backed Roy Moore, the insurgent conservative who faltered in Tuesday’s special election amid allegations that he had preyed on underage girls decades ago. The accusations prompted the national party to withdraw support for its nominee for a while, but Bannon stuck with Moore, headlining rallies for the candidate and convincing Trump to extend a full-throated endorsement.
But when Moore lost on Tuesday, handing the Democrats control of their first Senate seat in Alabama in a generation, Republicans turned on Bannon. The Breitbart News head already had made scores of enemies for declaring a siege on his own party.
“This is a brutal reminder that candidate quality matters regardless of where you are running,” said Steven Law, head of the Senate Leadership Fund, a super PAC for Republicans aligned with GOP leadership. “Not only did Steve Bannon cost us a critical Senate seat in one of the most Republican states in the country, but he also dragged the president of the United States into his fiasco.”
Bannon’s team vowed that its revolution would continue, insisting that Senate Majority Leader Mitch McConnell should be the one to take the blame.
Bannon’s allies dismissed the Alabama loss as little more than a temporary setback that would soon be forgotten. They expect that the Republicans cheering Moore’s loss will simply enrage Trump’s most loyal supporters nationwide, who already suspected some Republican leaders were trying to undermine the president’s agenda.
“They’re stomping on the very base they need to turn out for their candidates in the general election in 2018,” said Andy Surabian, a senior adviser to the Bannon-backed Great America PAC. He contended that “the average Republican voter across the country is pointing their finger at Mitch McConnell and the Republican establishment.”
Bannon’s team blamed McConnell for abandoning Moore, though it was a somewhat incongruous argument after Bannon warned McConnell to stay out of Alabama when Moore won the GOP primary. On his Sirius XM radio show Wednesday, Bannon credited Democrats with “out-hustling” the GOP on the ground in Alabama — praise that doubled as a swipe at the lack of Senate Republican campaign committee field staff on the ground in the state.
The fate of Bannon’s insurgency may depend on whether he can keep Trump’s ear.
In the hours after Moore’s loss, Trump was restrained, according to a White House official and an outside adviser not authorized to speak publicly about private conversations. Some in the West Wing had hoped the loss would prompt Trump to sever ties with Bannon but the president did not seem inclined to take that step, according to the two people.
Since Bannon’s exit from the White House in August, he has remained close to the president, speaking to him frequently by phone, offering political advice and reminding Trump of his populist campaign promises. Though he had grown weary of the infighting Bannon initiated in the West Wing, Trump still valued his former strategist, telling allies that he felt that Bannon had a better feel for the president’s base than most of his advisers. He also praised Bannon’s pugnacious spirit, seeing in his former aide a brawler similar to himself.
Bannon tried to steer Trump toward Moore in the primary but the president, confronted with conflicting advice from his staff, supported incumbent Sen. Luther Strange, who had been appointed to the seat vacated by Jeff Sessions when he became attorney general. But the president was never truly sold on Strange, and publicly worried he had backed the wrong candidate.
After Moore’s primary win, an exultant Bannon believed it was the first victory of a GOP civil war and, later, urged the president to endorse Moore even after the sexual harassment allegations surfaced. Trump initially hesitated but then fully embraced Moore over objections from aides and Republican leadership.
Publicly, Trump on Wednesday addressed Moore’s loss by acknowledging he “would have liked to have had the seat” in the Senate as he and GOP lawmakers scratch for legislative victories. But Trump also said, in what could be interpreted as a dig at those in the GOP who did not back Moore, that “a lot of Republicans feel differently. They feel very happy about the way it turned out.”
Bannon’s group indicated they would forge forward with plans to challenge the GOP establishment in Senate races in as many as 10 states, including Arizona, Nevada and Tennessee, though one adviser suggested that a greater effort may be made on recruiting and screening candidates.
But in the hours after the stunning defeat, many Republicans reveled in Bannon’s failure.
Sen. Lindsey Graham of South Carolina argued that Bannon should have called off his guns and simply backed Trump’s first choice.
“When it comes to Alabama politics Steve Bannon should have followed President @realDonaldTrump lead in supporting Luther Strange,” Graham tweeted. “Trump’s instincts on the Alabama race proved to be correct.”
And Rep. Peter King, R-NY, declared that Bannon looked “like some disheveled drunk who wandered onto the political stage.”
“This is not the type of person we need in politics,” said King said. “(Bannon) sort of parades himself out there with his weird alt-right views that he has, and to me it’s demeaning the whole government and political process. And last night’s election was a manifestation of the revulsion by the American people.”
Associated Press writer Steve Peoples contributed reporting from Washington.
Follow Lemire on Twitter at http://twitter.com/@JonLemire
BRUSSELS (AP) — The European Union’s leaders are due to say Friday that the Brexit talks with Britain can move on to the next phase to include the key topic of trade, according to a draft statement seen by The Associated Press.
The progress comes after the sides reached a deal on the preliminary divorce issues, such as the status of Britain’s physical border with EU member Ireland. The EU had long said it wanted a deal on Britain’s exit terms before broadening the talks to include the subject of future relations.
British Prime Minister Theresa May will address EU leaders at a two-day summit on Thursday evening and welcome progress in the Brexit talks. But she is not expected to remain in Brussels on Friday when the leaders give the green light to broaden the negotiations.
The draft statement says that progress made in Brexit talks “is sufficient to move to the second phase” to discuss future relations and trade.
In the statement, which could be modified before Friday, the leaders emphasize the importance of organizing a transition period, probably of around two years, to ease Britain out of the EU from 2019.
That would buy time for all sides. Britain will leave the EU on March 29, 2019 but the Brexit negotiations must be wrapped up by the fall of 2018 to leave time for individual EU parliaments to endorse any agreement.
During a transition period, Britain will have no seat at the EU’s table, no lawmakers in the European Parliament, and no judges in the bloc’s courts. But it will still be bound by European law, without having any say in decision-making, and the European Court of Justice will remain the final arbiter of any disputes.
Britain during this period “will no longer participate in or nominate or elect members of the EU institutions, nor participate in the decision-making of the Union bodies, offices and agencies,” the draft statement says.
Ahead of the summit, Britain’s chief Brexit negotiator said Thursday that a situation in which the U.K. crashes out of the EU without a deal has become “massively less probable” because of a preliminary agreement reached last week.
Brexit Secretary David Davis told lawmakers that a “no-deal” Brexit was now extremely unlikely, although “we continue to prepare for all outcomes.”
The British government is hailing progress in Brussels, but faces trouble at home over Brexit. Late on Wednesday, lawmakers won a House of Commons vote giving Parliament the final say on any deal with the EU.
— European Union leaders are gathering in Brussels set to move Brexit talks into a new phase as pressure mounts on Prime Minister Theresa May over her plans to take Britain out of the 28-nation bloc.
Heated debate is also likely as the leaders thrash out whether mandatory refugee quotas should remain a part of the EU’s response to the arrival of thousands of migrants in Greece and Italy.
They are also due to officially endorse a new system of defense cooperation, bringing order to the way nations cooperate on security matters.
A draft of their summit statement, seen Thursday by The Associated Press, says that progress made in Brexit talks “is sufficient to move to the second phase” to discuss future relations and trade.
HONG KONG (AP) — European and Asian stocks slid Thursday following the interest rate hike by the U.S. Federal Reserve. Investor sentiment faltered after China and Hong Kong carried out modest hikes in tandem with the Fed, as British and European central bank decisions loomed.
KEEPING SCORE: Germany’s DAX edged 0.1 percent lower to 13,104.44 and France’s CAC 40 dipped 0.1 percent to 5,395.44. Britain’s FTSE 100 shed 0.2 percent to 7,482.37. Wall Street was poised to open higher. Dow futures rose 0.2 percent to 24,688.00 and broader S&P 500 futures inched up 0.1 percent to 2,672.60.
FED RAISES: The Federal Reserve raised its benchmark rate for the third time this year as anticipated, increasing its short-term rate by a quarter point. Policymakers at the U.S. central bank said they plan to continue tightening, indicating three more rate hikes are in store for 2018. The Fed also raised its growth forecast for the U.S. economy, the world’s biggest, and predicted that the job market will continue improving.
EU: The European and British central banks are also set to hold their final policy meetings of the year. The Bank of England is forecast to keep its main interest rate unchanged a month after raising it for the first time in a decade to keep inflation in check. Surprises aren’t expected either from the European Central Bank. Analysts are focusing instead on its latest growth forecast and any hints about the future of its multibillion euro bond purchase stimulus program.
THE QUOTE: “While no significant changes are expected in terms of interest rates or asset purchases, markets could still move with the publishing of ECB’s new economic forecast,” said Hussein Sayed, Chief Market Strategist at FXTM. Meanwhile, the Bank of England “will continue to be overshadowed or influenced by Brexit talks,” but economic improvement and rising inflation could add pressure for a rate rise next year, he said.
CHINA RATE HIKE: China’s central bank reacted to the Fed’s interest rate increase by nudging up its own rate for lending to commercial banks. It left rates for borrowing by companies and the public unchanged. The People’s Bank of China said it was responding to market forces by raising the rate charged on its one-year lending facility by a relatively small margin of 0.05 percentage points. Hong Kong’s de facto central bank likewise raised its base rate by a quarter point. Because the Chinese financial hub’s currency is pegged to the U.S. dollar, it has no choice but to track U.S. monetary policy.
ASIA’S DAY: Japan’s benchmark Nikkei 225 index dipped 0.3 percent to 22,694.45 while South Korea’s Kospi gave up earlier gains to end 0.5 percent lower at 2,469.48. Hong Kong’s Hang Seng slipped 0.2 percent to 29,166.38 and the Shanghai Composite lost 0.3 percent to 3,292.44. Australia’s S&P/ASX 200 shed 0.2 percent to 6,011.30. Taiwan’s benchmark rose and Southeast Asian indexes were mostly higher.
CURRENCIES: The dollar rose to 112.84 Japanese yen from 112.54 yen late Tuesday. The euro slipped to $1.1822 from $1.1826.
ENERGY: Oil futures rebounded. Benchmark U.S. crude rose 11 cents to $56.71 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 54 cents to settle at $56.60 per barrel on Wednesday. Brent crude, used to price international oils, added 38 cents to $62.82 per barrel in London.
FCC SET TO UNRAVEL NET NEUTRALITY
The Federal Communications Commission is expected to vote to unravel sweeping net-neutrality rules that guaranteed equal access to the internet. The proposal scheduled for a vote Thursday would not only roll back restrictions that keep broadband providers like Comcast, Verizon and AT&T from blocking or collecting tolls from services they don’t like, it would bar states from imposing their own rules.
DECADE SINCE RECESSION: THRIVING CITIES LEAVE OTHERS BEHIND
In the decade since the recession began, the nation as a whole has staged a heartening comeback. Yet the rebound has been uneven and has failed to narrow the country’s deep regional economic disparities and in fact has worsened them, according to data analyzed exclusively for The Associated Press.
AS BITCOIN, OTHER CURRENCIES SOAR, REGULATORS URGE CAUTION
The public’s intense interest in all things bitcoin, and efforts by entrepreneurs to fund their businesses with digital currencies, has begun to draw attention from regulators. The head of the Securities and Exchange Commission has spoken about the risks of investing in bitcoin and digital currencies. The SEC has also halted two initial coin offerings this month.
GLOBAL SHARES LOWER AS INVESTORS WATCH CENTRAL BANKS
European and Asian stocks slid Thursday following the interest rate hike by the U.S. Federal Reserve. Germany’s DAX edged 0.1 percent lower to 13,104.44, Wall Street was poised to open higher, Japan’s benchmark Nikkei 225 index dipped 0.3 percent to 22,694.45 and the Shanghai Composite lost 0.3 percent to 3,292.44.
AMPLE TAX CUTS FOR BUSINESS, WEALTHY IN NEW GOP TAX ACCORD
Generous tax cuts for corporations and the wealthiest Americans would be delivered in a sweeping overhaul of the tax laws, under a new agreement crafted by Republicans in Congress. Middle- and low-income families would receive smaller tax cuts, though President Donald Trump and Republican leaders have billed the package as a huge benefit for the middle class.
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WASHINGTON (AP) — Rarely has a sitting president rallied behind such a scandal-plagued candidate the way Donald Trump did with Alabama Senate candidate Roy Moore. And rarely has that bet failed so spectacularly.
Moore’s defeat Tuesday in Alabama — as stalwart a Republican state as they come — left Trump unusually conciliatory and his political allies shell-shocked. Trump had dug in on his support for Moore after a wave of allegations about the former judge’s alleged sexual misconduct with teenagers when he was in his 30s, becoming one of the candidate’s most ardent national supporters in the race’s closing days.
Now, out of the wreckage of Moore’s defeat to Democrat Doug Jones, Trump faces mounting questions about the limits of his own political capital. He’ll head into his second year in office with one less Republican senator, narrowing a margin already so slim that it has so far left him unable to push major legislation through Congress. Democrats, who started the year as a deeply wounded minority party, press toward the midterm elections with a burst of momentum from the most unlikely of states.
To be sure, the Alabama race was highly unusual, and as with all special elections, there’s no guarantee it will prove to be a barometer for contests a year from now. A perfect storm of controversies helped Jones overcome Alabama’s strong Republican bent, most notably the sexual misconduct allegations that surfaced against Moore. The matter left the Republican Party deeply divided over whether holding a Senate seat was worth the potential long-term risks of supporting Moore.
Some Republicans did pull their support from Moore after the allegations surfaced, including Senate Majority Leader Mitch McConnell and the National Republican Senatorial Committee. Many more GOP officials in Washington privately preferred the prospect of a Moore defeat over having to deal with daily questions about his actions and the possible cloud of a Senate ethics investigation hanging over the party.
But Trump is the Republican Party leader, and he jumped in with both feet. In a moment of national reckoning over sexual misconduct, where hardly a day passes without a prominent man being ousted from a powerful position, the president made it impossible for the GOP to disassociate itself from Moore and the accusations swirling around him.
Trump’s immediate response to Jones’ victory was surprisingly magnanimous for a president who lashes out at the smallest perceived slight and often seems to prioritize winning above all else.
“A win is a win,” Trump wrote on Twitter, despite the fact that Moore would not officially concede the closely contested race. The president offered no immediate insight into whether he viewed the results as a referendum on himself, personally or politically.
But there’s no doubt that Trump’s track record of late has indeed been worrisome for Republicans weighing how closely to align themselves with the president in the midterms, where control of Congress will be at stake.
Last month, the Trump-backed Republican gubernatorial candidate in Virginia lost in a race that wasn’t close. The president now has the dubious distinction of picking wrong twice in Alabama, a state he won by 28 points just over a year ago. His first blemish came during the state’s Senate primary, when he backed Moore’s opponent, Sen. Luther Strange, a decision he openly questioned while on stage at a rally for the incumbent days before the vote.
Moore’s victory over Strange pushed Trump back to the roots of his presidential campaign. He realigned himself with Steve Bannon, his chief strategist during the 2016 race and in the White House until he was ousted in a staff shakeup earlier this year. Bannon was one of Moore’s most prominent supporters from the start and viewed the contest as a ripe opportunity to press forward in his goal of disrupting the Republican Party.
More traditional Republicans have long warned that Bannon’s chosen candidates signal disaster for the party and will struggle to defeat Democrats in competitive states. The fact that one of those candidates couldn’t succeed in reliably red — or conservative — Alabama was quickly wielded as all the more reason for party leaders to marginalize Bannon.
“Not only did Steve Bannon cost us a critical Senate seat in one of the most Republican states in the country, but he also dragged the president of the United States into his fiasco,” said Steven Law, the head of the McConnell-linked Senate Leadership Fund super PAC.
It’s far from certain if Trump feels the same way after the Alabama race. The president seems more naturally attuned to other political outsiders and is well-aware that his command over a sizeable swath of the GOP primary electorate makes him a powerful player in determining the party’s direction in upcoming elections. Whether he can transfer his own political good fortunes to those candidates remains the unanswered question.
Editor’s Note: Julie Pace has covered the White House and politics for the AP since 2007. Follow her on Twitter at http://twitter.com/jpaceDC
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MONTGOMERY, Ala. (AP) — In a stunning victory aided by scandal, Democrat Doug Jones won Alabama’s special Senate election, beating back history, an embattled Republican opponent and President Donald Trump, who urgently endorsed GOP rebel Roy Moore despite a litany of sexual misconduct allegations.
It was the first Democratic Senate victory in a quarter-century in Alabama, one of the reddest of red states, and proved anew that party loyalty is anything but certain in the age of Trump. Tuesday’s Republican loss was a major embarrassment for the president and a fresh wound for the nation’s already divided GOP.
“We have shown not just around the state of Alabama, but we have shown the country the way — that we can be unified,” Jones declared as supporters in a Birmingham ballroom cheered, danced and cried tears of joy. Still in shock, the Democrat struggled for words: “I think that I have been waiting all my life, and now I just don’t know what the hell to say.”
Moore, meanwhile, refused to concede and raised the possibility of a recount during a brief appearance at a somber campaign party in Montgomery.
“It’s not over,” Moore said. He added, “We know that God is still in control.”
From the White House, Trump tweeted his congratulations to Jones “on a hard-fought victory” — but added pointedly that “the Republicans will have another shot at this seat in a very short period of time. It never ends!”
Jones takes over the seat previously held by Attorney General Jeff Sessions. The term expires in January of 2021.
The victory by Jones, a former U.S. attorney best known for prosecuting two Ku Klux Klansmen responsible for Birmingham’s infamous 1963 church bombing, narrows the GOP advantage in the U.S. Senate to 51-49. That imperils already-uncertain Republican tax, budget and health proposals and injects tremendous energy into the Democratic Party’s early push to reclaim House and Senate majorities in 2018.
Still, many Washington Republicans viewed the defeat of Moore as perhaps the best outcome for the party nationally despite the short-term sting. The fiery Christian conservative’s positions have alienated women, racial minorities, gays and Muslims — in addition to the multiple allegations that he was guilty of sexual misconduct with teens, one only 14, when he was in his 30s.
“Short-term pain, long-term gain,” former Minnesota Sen. Norm Coleman, a Republican, tweeted. “Roy Moore and Steve Bannon losing tonight is big win for the GOP. … Moore would have buried GOP in 2018.”
A number of Republicans declined to support Moore, including Alabama’s long-serving Sen. Richard Shelby. But Trump lent his name and the national GOP’s resources to Moore’s campaign in recent days.
Had Moore won, the GOP would have been saddled with a colleague accused of sordid conduct as Republicans nationwide struggle with Trump’s historically low popularity. Senate leaders had promised that Moore would have faced an immediate ethics investigation.
Republicans on Capitol Hill have expressed hopes of scheduling a vote on their tax legislation before Jones is sworn in, but lawmakers are still struggling to devise a compromise bill to bridge the divide between the House and Senate legislation that can win majority support in both chambers.
The Republican loss also gives Democrats a clearer path to a Senate majority in 2018 — albeit a narrow one — in an election cycle where Democrats are far more optimistic about seizing control of the House of Representatives.
Ultimately, Tuesday’s contest came down to which side better motivated its supporters to vote. Alabama Secretary of State John Merrill said turnout likely would not exceed 25 percent of registered voters.
Jones successfully fought to cobble together an unlikely coalition of African-Americans, liberal whites and moderate Republicans.
He had his strongest support across Alabama’s “black belt,” named for the color of its soil, and in the larger urban areas, including Montgomery, Birmingham, Mobile, Tuscaloosa and Huntsville. Turnout in those areas, which features a large African-American population, also ran higher than in some of the more heavily Republican parts of the state.
At his election night headquarters, stunned supporters erupted in celebration as news of his victory was announced. Many danced to the song “Happy.” Some cried.
“I honestly did not know that this was even an option. I didn’t think that we could elect a Democrat,” said 26-year-old campaign volunteer Jess Eddington, her eyes red from tears of joy. “I am so proud we did.”
Moore, who largely avoided public events in the final weeks of the race and spent far less money on advertising than his opponent, bet big — and lost — on the state’s traditional Republican leanings and the strength of his passionate evangelical Christian supporters.
He sidestepped questions about sexual misconduct as he arrived at his polling place on horseback earlier in the day.
Alabama state law calls for a recount if the margin of victory is less than one-half of one percentage point. With all precincts reporting, Jones led by 1.5 points — three times that margin.
If the secretary of state determines there were more write-in votes than the difference between Jones and Moore, the state’s counties would be required to tally those votes. It’s not clear how that would help Moore, who ended the night trailing Jones by more than 20,000 votes.
Democrats were not supposed to have a chance in Alabama, one of the most Republican-leaning states in the nation. Trump defeated Democrat Hillary Clinton here by nearly 28 points just 13 months ago. Yet Moore had political baggage that repelled some moderate Republicans even before allegations of sexual misconduct surfaced.
Virtually the entire Republican establishment, Trump included, supported Moore’s primary opponent, Sen. Luther Strange in September. Trump’s former chief strategist, Steve Bannon, was one of the only early high-profile Moore backers.
Moore was once removed from his position as state Supreme Court chief justice after he refused to remove a boulder-sized Ten Commandments monument at the state court building. A second time, he was permanently suspended for urging state probate judges to refuse marriage licenses to same-sex couples.
Said Democratic National Committee Chairman Tom Perez: “The people of Alabama sent a loud and clear message to Donald Trump and the Republican Party: You can’t call yourself the party of family values as long as you’re willing to accept vile men like Roy Moore as members.”
Peoples reported from Washington. Associated Press writers Jay Reeves and Emily Wagster Pettus in Birmingham, Alabama, Bill Barrow in Montgomery and Emily Swanson in Washington contributed to this report.
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NEW YORK (AP) — In less than 24 hours, authorities say a would-be suicide bomber’s botched attack on a Manhattan transportation hub underneath Times Square became an open-and-shut case after a search of his apartment and hearing the suspect’s own words.
Akayed Ullah, who’s expected to make his first court appearance on Wednesday, made it clear from a hospital bed where he was being treated for burns from a pipe bomb he strapped to his body that he was on a mission to punish the United States for attacking the Islamic State group, said Acting U.S. Attorney Joon Kim. A search of the Bangladeshi immigrant’s apartment turned up bomb-making materials, including screws matching those found at the scene intended as carnage-creating shrapnel.
“His motivation,” the prosecutor said, “was not a mystery.”
Kim said Ullah picked the morning rush on Monday to maximize casualties in his quest “to kill, to maim and to destroy.”
Ullah, 27, with a hate-filled heart and an evil purpose,” carried out the attack after researching how to build a bomb a year ago and planned his mission for several weeks, Kim said.
The bomb was assembled in the past week using fragments of a metal pipe, a battery and a Christmas tree light bulb, along with the metal screws, authorities said.
The defendant “had apparently hoped to die in his own misguided rage, taking as many innocent people as he could with him, but through incredible good fortune, his bomb did not seriously injure anyone other than himself,” Kim said.
Ullah was influenced by the sermons and writings of a radical Muslim preacher, but appeared to have no known links to local radical groups, Bangladeshi officials said Wednesday.
He was charged with providing material support to a terrorist group, use of a weapon of mass destruction and three bomb-related counts. He could get up to life in prison.
With a tragedy averted and a growing certainty that he acted alone, attention turned to how best secure New York City’s vast public transportation system and the daunting task of identifying those eager to do it harm.
The security “requires every single member of the public’s help,” said New York Police Commissioner James O’Neill. “It requires their vigilance.”
There also was political fallout, heightened by news that Ullah had taunted President Donald Trump on Facebook with a post that read, “Trump you failed to protect your nation.”
In reaction to the bombing, the president demanded a tightening of immigration rules that allowed Ullah to enter the country in 2011 on a visa available to certain relatives of U.S. citizens. Less than two months ago, an Uzbek immigrant who came to the U.S. through a visa lottery was accused of killing eight people in New York by mowing them down with a truck along a bike path.
“We’re going to end both of them — the lottery system and chain migration. We’re going to end them fast,” Trump said at the White House.
Republican Senate Judiciary Committee Chairman Chuck Grassley requested background information on Ullah’s visa history and whether he’d ever been on a terrorism watch list.
Ullah lived with his father, mother and brother in a Brooklyn neighborhood with a large Bangladeshi community, residents said. He was licensed to drive a livery cab from 2012 to 2015, but the license was allowed to lapse, officials said.
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WASHINGTON (AP) — Sen. Kirsten Gillibrand got a fight she wants after President Donald Trump lashed out at the New York Democrat in a provocative tweet that claimed she’d begged him for campaign contributions and would “do anything” for them.
Gillibrand, who’s up for re-election next year and is considered a possible presidential contender in 2020, has been an outspoken voice in the national debate over how to confront sexual assault and harassment. She’s argued that the rules in institutions from Congress to Hollywood to the U.S. military are set to benefit the powerful and the favored at the expense of the vulnerable.
A fiery exchange with Trump on Tuesday could brighten the spotlight on Gillibrand’s campaign to upend the dynamics and put power in the hands of the victims while simultaneously pushing the 51-year-old mother of two boys to the forefront of an unformed Democratic presidential field.
She’s scathed icons in her own party along the way. Gillibrand was appointed to Hillary Clinton’s Senate seat, but she recently said Bill Clinton should have resigned the presidency for his improprieties. That led Clinton loyalists to criticize her as an ungrateful opportunist.
The back-and-forth between Trump and Gillibrand came as a wave of sexual misconduct allegations roils Capitol Hill, forcing several lawmakers out of office in just the last week alone. Sen. Al Franken, D-Minn., announced he would resign amid an ethics probe into accusations that he sexually harassed several women. Reps. John Conyers, D-Mich., and Trent Franks, R-Ariz., also quit after misconduct accusations surfaced.
“I do think this is a reckoning. This is a watershed moment,” Gillibrand said of the resignations in speaking to The Associated Press late last week. “Politicians should be held to the highest standards, not the lowest standards.”
And she rejected the notion that she and other Democrats, by demanding Franken and Conyers step aside, are making a calculation they hope will pay off politically as Trump continues to fend off allegations of sexual misconduct lodged over the last year by more than a dozen women.
“That couldn’t be more cynical and backward,” said Gillibrand, who was one of the first Democrats to call for Franken to step down. “It has nothing to do with politics. This whole debate is, ‘Do we care about women.’”
Gillibrand served notice several years ago that combating sexual assault would be her issue. A member of the Senate Armed Services Committee, she and other female lawmakers dressed down senior military leaders at a headline-making hearing, insisting sexual assault in the ranks has cost the services the trust and respect of the American people as well as the nation’s men and women in uniform.
“Not every single commander necessarily wants women in the force. Not every single commander believes what a sexual assault is. Not every single commander can distinguish between a slap on the ass and a rape because they merge all of these crimes together,” Gillibrand told the uniformed men in 2013.
Four years later, Gillibrand added her voice to the growing number of male senators calling for Trump to resign in the face of multiple accusations of inappropriate sexual behavior. A day after her broadside, Trump singled her out.
The president tweeted: “Lightweight Senator Kirsten Gillibrand, a total flunky for Chuck Schumer and someone who would come to my office “begging” for campaign contributions not so long ago (and would do anything for them), is now in the ring fighting against Trump. Very disloyal to Bill & Crooked-USED!”
Gillibrand was at a bipartisan Bible study in the office of Sen. Steve Daines, R-Mont., when she stepped out to take a call alerting her to Trump’s tweet. She fired back, calling the president’s tweet a “sexist smear” aimed at silencing her voice. She also renewed her call for a congressional inquiry into the accusations against Trump.
Gillibrand silently shook her head at the idea that she had “begged” Trump for campaign contributions.
Democrats rushed to Gillibrand’s defense.
“Are you really trying to bully, intimidate and slut-shame @SenGillibrand?” Sen. Elizabeth Warren of Massachusetts tweeted back at Trump. “Do you know who you’re picking a fight with? Good luck with that.”
Senate Republicans steered clear of the latest uproar involving Trump’s Twitter account. Sen. Jeff Flake of Arizona, a frequent Trump critic, was an exception, telling reporters he “didn’t think it was appropriate at all.”
At the White House, however, Trump’s spokeswoman Sarah Huckabee Sanders said “there’s no way” the president’s tweet was “sexist at all.” She said Trump was talking about a rigged political system and the fact that lawmakers repeatedly plead for money. Federal Election Commission records show Trump and his daughter Ivanka Trump donated nearly $8,000 to Gillibrand’s congressional campaigns.
Gillibrand, of Dartmouth and UCLA law, has fought since 2013 to overhaul the way the U.S. armed forces deals with allegations of sexual misconduct. A bill she crafted aims to stop sexual assaults by stripping senior U.S. military officers of their responsibilities to decide whether to prosecute sexual assault cases and giving that authority to seasoned military trial lawyers.
But the Pentagon has stridently opposed the change and the bill has remained stalled.
Contact Richard Lardner on Twitter at http://twitter.com/rplardner
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MOSCOW (AP) — When Russia launched a military campaign in Syria two years ago, President Vladimir Putin sought to save his ally from imminent collapse and break Russia’s international isolation over a crisis in Ukraine.
He achieved that and more, emerging as a key stakeholder in the Middle East who has brokered deals with many of its key players — from Iran to Saudi Arabia to Turkey and Israel. It’s a regional footprint that comes with a degree of clout that even the Soviet Union, which depended on a handful of Arab allies, couldn’t dream of during the Cold War era.
And it was accomplished with limited resources and a lot of audacity.
“Vladimir Putin is determined to restore a greater role for Russia as a global power … and the Middle East is really the main area where Russia has that potential, in part because the Soviet Union played that role in the Soviet period,” said William Courtney, an adjunct senior fellow at RAND Corporation.
With just a few dozen jets and several thousand troops, Russia waded into Syria’s war and stubbornly pressed its campaign despite international scorn and an outcry over resulting civilian casualties.
Russia’s bold intervention in Syria came as the United States under President Barack Obama steered clear of military engagement and found itself in a series of acrimonious disputes with key allies, including Israel and Saudi Arabia. Under the vastly inconsistent policies of Donald Trump, and in an era of an inward looking, America-first U.S. policy, Russia’s maneuvers became all the more poignant on the global stage.
Putin’s success in the region was on full display Monday, with the confident and upbeat leader moving between Syria, Egypt and Turkey in a whirlwind tour a week after announcing he will seek re-election for another six-year term in March.
Speaking to Russian troops on the tarmac at Hemeimeem air base in Syria, Putin declared victory over the Islamic State group and Syrian rebels and announced he had ordered a scaling down of the Russian contingent in Syria. In Egypt, he signed a deal for the construction of a nuclear reactor on the country’s Mediterranean coast and sought to strengthen his relationship with a key regional power that has in the past three years bought billions of dollars in Russian weapons. And in Turkey, a NATO member, the Russian leader appeared to be on the same page with strongman Recep Tayyip Erdogan on key issues.
The Russian president was frequently derided for his penchant for a 19th century-style Realpolitik characterized by cynical political calculus. But Putin’s approach paid off in Syria, where he managed to play on the conflicting interests of regional powers and strike deals with various players.
When Putin decided to intervene in Syria, President Bashar Assad was on the verge of collapse, his forces losing on all fronts. Within weeks, the Russian military had airlifted supplies needed to set up a base in Assad’s heartland and launched an air campaign at the end of September 2015.
At first, observers were skeptical about Putin’s Syria adventure given Russia’s economic troubles and the overwhelming negative odds on the chaotic Syrian battlefield, where the Islamic State group, al-Qaida militants and a motley collection of rebels backed by Saudi Arabia, Qatar, Turkey and others were routing Assad’s shrinking military.
Many in the West and in Russia predicted Syria would turn into another Afghanistan — a botched Soviet intervention that led to massive losses and ended in a humiliating 1989 withdrawal after nearly a decade of fighting. Putin argued that Russia needed to intervene in Syria to fight a terror threat, but made it clear that he wasn’t going to walk into a trap like the Soviet war in Afghanistan.
Another reason for skepticism was the Russian military meltdown that followed the Soviet collapse. The army’s vulnerabilities were highlighted by separatist wars in Chechnya and a brief 2008 war with Georgia, where the lack of modern communications and weapons, lack of coordination between various military branches and poor discipline were woefully apparent.
But the Syrian campaign suddenly saw a different Russian military — one armed with sophisticated precision weapons, well-trained, neatly-dressed and proud of its mission.
“Putin managed to explain to the Russian people why Syria was important and not only did he explain it, he also showed them Syria wasn’t going to be Afghanistan,” Dmitry Trenin, director of the Moscow Carnegie Center, told The Associated Press.
The war saw the combat debut of an array of Russian weapons, including long-range cruise missiles that were fired from surface navy ships, submarines and bombers.
The display of Moscow’s revamped arsenals also served another key goal — to show the U.S. and its NATO allies that Russia no longer exclusively relies on nuclear weapons. The new cruise missiles gave Putin a long-sought long-range precision cruise capability that only the U.S. had before.
Early in the campaign, Moscow found itself on the verge of a military conflict with Ankara after a Turkish fighter jet downed a Russian warplane on the Syrian border in November 2015. But just a few months later, Putin mended ties with Turkey, offering President Recep Tayyip Erdogan strong support after a failed coup attempt. They struck a deal on Syria, setting up de-escalation zones that helped reduce fighting.
Russia also reached out to other key players — from Iran, which staunchly backed Assad, to the Saudis, the Qataris and others who supported the opposition. It also communicated with Israel to make sure the conflict didn’t hurt their friendly relationship.
Russian military successes in Syria and its rapprochement with Turkey paved the way for another Putin diplomatic coup — a warming of ties with Saudi Arabia, Moscow’s opponent since Cold War times when it armed Afghan fighters battling the Soviet invasion. In a first-ever visit by a Saudi monarch, King Salman visited Russia in October.
While declaring victory in Syria, Putin made it clear Russia is there to stay. He plans to expand the air base and turn a crumbling Soviet-era naval supply facility in Syria’s port of Tartus into a full-fledged navy base capable of hosting big ships.
Russia has also drafted a deal with Egypt to allow its warplanes to use bases there — a deployment unseen since the times when Egypt was a key Soviet ally in the Mideast before going to the U.S. side in the mid-1970s.
Courtney, the RAND analyst, said despite Putin’s successes in the region, Russia will remain a limited great power that serves mainly as a military supplier because it lacks the resources and capability that the West has for nation building or reconstruction.
“The challenge for Putin is to turn the use of his military force and military weapons supplies in the Middle East to something that is a lasting success, and we don’t yet see how Russia is going to get there,” he said.
Karam reported from Beirut.
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ISTANBUL (AP) — The Palestinian president said Wednesday his people will not accept any role for the United States in the Mideast peace process “from now on,” following President Donald Trump’s recognition of Jerusalem as the capital of Israel.
Mahmoud Abbas spoke at a gathering of heads of state and top officials from Islamic nations at a summit in Turkey that is expected to forge a unified Muslim world’s stance against Trump’s move.
Abbas called Trump’s decision a “crime” that threatened world peace. He called on the United Nations to take charge of the peace process and create a new mechanism, arguing that Washington is no longer “fit” for the task.
The Palestinians are committed to a peaceful resolution of the Israeli-Palestinian conflict, Abbas said, but after Trump’s seismic shift on Jerusalem, Washington is not accepted as a fair negotiator.
The speech marked a significant shift in Abbas’ approach toward the United States, after years of focusing on courting U.S. goodwill because of Washington’s role as sole mediator in the Israeli-Palestinian conflict.
Immediately after Trump’s announcement last week, Abbas had said the U.S. effectively disqualified itself as a broker, but Wednesday’s speech was more sharply worded and delivered to a global audience.
Last week, Abbas aides said the Palestinian leader would not meet with Mike Pence during the U.S. vice president’s planned visit to Israel and the West Bank next week. Abbas had initially planned to meet with Pence in the biblical West Bank town of Bethlehem, but two senior aides have said the meeting would not take place because of Trump’s pivot on Jerusalem.
The Istanbul gathering of heads of state and top officials from the 57-member Organization of Islamic Cooperation is also an opportunity for the Muslim world to offer its strongest response yet to Washington’s move.
Turkish President Recep Tayyip Erdogan— the current president of the OIC — called on countries to urgently recognize the Palestinian state and Jerusalem as its capital.
Erdogan has been among the most vocal critics of Trump’s announcement. In remarks to the summit, he said Israel is an “occupying state” and a “terror state.”
Jerusalem’s status is at the core of the decades-long Israeli-Palestinian conflict and Trump’s Dec. 6 announcement was widely perceived as siding with Israel. It also raised fears of more bloodshed as past crises over Jerusalem had triggered violent outbreaks.
Earlier, in opening remarks to a pre-summit meeting, Turkey’s foreign minister, Mevlut Cavusoglu, told OIC foreign ministers that the U.S. decision aims to “legitimize Israel’s attempt to occupy Jerusalem.”
“They expect the Islamic nation to remain silent,” he said. “But we will never be silent. This bullying eliminates the possibility of peace and the grounds for shared life. The U.S.′ decision is null for us.”
Most countries around the world have not recognized Israel’s 1967 annexation of east Jerusalem. Under a long-standing international consensus, the fate of the city is to be determined in negotiations.
Iranian President Hassan Rouhani, Lebanon’s President Michel Aoun, Jordanian King Abdullah II and top ministers of numerous nations were also attending the gathering in Istanbul.
The secretary general of OIC called on countries that have not recognized Palestine as a state to do so. Yousef bin Ahmad Al-Othaimeen told the summit the U.S. decision on Jerusalem is “an exceptional challenge” facing Muslim nations and that it will fan violence in the region, giving extremists an excuse to sow chaos.
In an emergency meeting in Cairo last weekend, Arab League foreign ministers demanded that the U.S. rescind Trump’s decision. In a resolution long on rhetoric but short on concrete actions, the ministers also called for the U.N. Security Council to adopt a resolution condemning Trump’s decision, but acknowledged that Washington would most likely veto it.
Israel has considered Jerusalem its capital since the state’s establishment in 1948 and sees the city as the ancient capital of the Jewish people. In the 1967 Mideast war, Israel captured the city’s eastern sector and later annexed it in a move that is not recognized internationally.
The Palestinians equally lay claim to Jerusalem and want the eastern part of the city as capital of their future state. Some 320,000 Palestinians live in that part of the city and Palestinians claim a deep cultural, historical and religious connection to the city.
The Old City, located in east Jerusalem, is home to sites holy to Jews, Christians and Muslims. These include the Western Wall, the holiest site where Jews can pray, and the Al-Aqsa Mosque, Islam’s third holiest site.
El Deeb reported from Beirut. Associated Press writer Karin Laub in Amman, Jordan, contributed to this report.
BEIJING (AP) — Global stocks were mixed Wednesday after Wall Street gained ahead of a likely U.S. interest rate hike.
KEEPING SCORE: In early trading, Germany’s DAX was off 8 points at 13,183.33 points and France’s CAC-40 shed 4 points to 5,424.53. London’s FTSE 100 was unchanged at 7,500.28. On Tuesday, the CAC-40 rose 0.8 percent, the FTSE 100 gained 0.6 percent and the DAX added 0.8 percent. Futures for the Dow Jones industrial average and Standard & Poor’s 500 index were unchanged.
ASIA’S DAY: The Shanghai Composite Index gained 0.7 percent to 3,303.04 and Hong Kong’s Hang Seng rose 1.5 percent to 29,222.10. Tokyo’s Nikkei 225 shed 0.5 percent to 22,758.07 and Seoul’s Kospi added 0.8 percent to 2,480.55. Sydney’s S&P-ASX 200 advanced 0.1 percent and India’s Sensex added 0.4 percent to 33,345.06. Singapore declined while Taiwan, New Zealand and other Southeast Asia markets rose.
WALL STREET: Big-name companies gained, delivering records for two of the major stock indexes. Banks and other financial stocks led the gainers as the Fed met to discuss interest rates. Technology stocks declined the most. Energy stocks also fell as crude oil prices closed lower. Bitcoin futures fell on their second day of trading. The Standard & Poor’s 500 index rose 0.2 percent to 2,664.11. The Dow Jones industrial average gained 0.5 percent to 24,504.80. The Nasdaq composite lost 0.2 percent to 6,862.32.
FED WATCH: The U.S. central bank is expected to raise rates Wednesday for the third time this year, which allows banks to charge more to lend money. Even though inflation is low, the Fed has seen a path to gradually raise rates as the economy and labor market have strengthened. An increase of 0.25 percent “is as good as a done deal” based on options markets pricing, Mizuho Bank said in a report. Investors will be listening for any hints the Fed could pick up its pace on rate hikes next year.
ANALYST’S TAKE: “The Fed looks set to hike the Fed funds rate, so it is really down to how quickly we can react to any changes in the ‘dots plot,’ as well as to the general tone of the statement,” Chris Weston of IG said in a report. He noted that outgoing Fed chair Janet Yellen will be holding her final new conference. “One questions how much the market will react to her views, although she does speak on behalf of the collective,” said Weston. “Either way, it promises to be a big night for markets even if implied volatility is still quite subdued and options markets are not pricing in fireworks.”
EUROPE: The European Central Bank and the Bank of England will have policy announcements on Thursday. Neither is expected to change rates, leaving the focus on their economic forecasts.
CURRENCY: The dollar declined to 113.34 yen from Tuesday’s 113.54. The euro strengthened to $1.1745 from $1.1739.
ENERGY: Benchmark U.S. crude rose 53 cents to $57.67 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 85 cents on Tuesday to $57.14. Brent crude, used to price international oils, advanced 76 cents to $64.10 in London. It plunged $1.35 the previous session.
— On the day when Janet Yellen will hold her final news conference as Federal Reserve chair, the Fed has left little doubt what it plans to do Wednesday: Raise its benchmark interest rate for the third time this year.
The increase would be in line with the series of incremental rate hikes the Fed has been making to keep up with a steadily rising U.S. economy. Over time, the rate increases could mean somewhat more expensive business and consumer loans, including mortgages.
But investors have barely blinked at the prospect of higher rates. The financial markets appear confident that the economy remains vigorous enough to withstand slightly higher borrowing costs.
It’s a testament to how far the economy has come: In the midst of the 2008 financial crisis, the Fed slashed its key rate to a record low near zero — and then kept it there for seven years to support a fragile economy that had endured the Great Recession. The central bank finally raised rates modestly in December 2015 and then again in December 2016 and in March and June this year. Even so, the benchmark rate remains in a still-low range of 1 percent to 1.25 percent.
Investors seeking clues about what the Fed may do in the coming months will scrutinize its updated economic outlook Wednesday and assess Yellen’s remarks in her last meeting with reporters before Jerome Powell succeeds her in February.
Here are three things to watch for after the Fed’s meeting ends:
STATE OF THE ECONOMY
The Fed will update its economic outlook, which it does four times a year. The outlook includes its projections for inflation, unemployment, economic growth and the path of rate increases. Since the Fed’s last update in September, Congress has moved to the edge of passing a tax bill that could have far-reaching consequences. Some analysts say the tax cuts could slightly raise economic growth but also swell federal deficits, which might eventually compel government spending cuts.
Analysts will be watching to see whether the prospect of an economic stimulus, in the form of $1.5 trillion in tax reductions over a decade, leads the Fed to cast a brighter outlook for the economy. If so, that, in turn, could make it likelier that the Fed would decide at some point to accelerate its rate increases.
In September, the Fed projected economic growth, as measured by the gross domestic product, at 2.4 percent this year but then slowing over the next three years until reaching 1.8 percent growth in 2020. That’s far below the expectations of Trump, who has boasted that his economic program would double the lackluster 2 percent average growth during the Obama years to 4 percent annual GDP growth or better.
The Fed’s forecast in September had estimated that unemployment would be 4.3 percent at year’s end. The rate has already reached a 17-year low of 4.1 percent. The Fed also put its long-term unemployment rate — the level it sees as achieving its goal of maximum employment — at 4.6 percent. If the Fed lowers that figure, it could suggest that the policymakers are willing to accept lower unemployment without worrying about inflation.
Likewise, the Fed target for average annual inflation is 2 percent. Yet inflation has remained below that level for more than five years. Fed officials have blamed temporary factors for the slowdown. But analysts will watch to see whether the Fed reduces its inflation forecast or still projects that it can achieve its 2 percent target.
The Fed will issue a diagram showing where each official expects to see the path of interest rates in coming years. These forecasts appear as dots representing the anonymous projections of each Fed policymaker. Analysts study any shifts in the so-called dot plot for signals about the Fed’s likely rate plans.
Powell stressed during his confirmation hearing that he planned to continue Yellen’s gradual approach to raising rates. Many economists expect the Powell Fed to raise rates three more times in 2018. But some predict four hikes next year on the belief that the Fed will feel compelled to accelerate its rate increases to prevent the economy, fueled by Republican tax cuts, from triggering high inflation.
The Fed will hold one more policy meeting before Yellen’s four-year term ends Feb. 3, but Wednesday will mark her final quarterly news conference as chair. Yellen has also said that she will give up her board seat once Powell is confirmed by the Senate as the next chairman.
Still, she will likely face a flurry of questions from reporters trying to determine how the Fed might respond to chronically slow inflation in 2018. Fed officials have spent much of 2017 debating what the puzzling slowdown in inflation might be signifying about the economy. Yellen is certain to be asked about that debate.
Yellen, the first woman to lead the nation’s central bank, will likely face questions about Trump’s decision to break with a long tradition of offering a sitting Fed chairman a second four-year term. Trump chose Powell rather than renominate Yellen — as a way, he acknowledged, to put his own stamp on the Fed.
At her final news conference, many Fed watchers say it’s unlikely that Yellen will deviate from her typically cautious demeanor, in part out of concern that in speaking her mind, she might jeopardize what she is hoping will be a smooth handover to Powell.
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SAN FRANCISCO (AP) — San Francisco Board of Supervisors President London Breed says that Mayor Edwin Lee has died. He was 65.
Breed said early Tuesday that Lee passed away just after 1 a.m. at Zuckerberg San Francisco General Hospital.
A statement from the mayor’s office said: “It is with profound sadness and terrible grief that we confirm that Mayor Edwin M. Lee passed away on Tuesday … .”
The statement says family, friends and colleagues were at Lee’s side.
Lee was not known to be ill. No other details have been released.
Lee was appointed as mayor in 2011, replacing Mayor Gavin Newsom, who was elected the state’s lieutenant governor. He went on to win the 2011 election and was re-elected in 2015.
He was known for his work against homelessness.
Breed assumes the role of acting San Francisco mayor.
SAN FRANCISCO (AP) — Mayor Ed Lee, who oversaw a technology-driven economic boom in the city that brought with it sky-high housing prices, died suddenly early Tuesday at age 65.
A statement from the Lee’s office said the city’s first Asian-American mayor died at 1:11 a.m. at Zuckerberg San Francisco General Hospital.
“It is with profound sadness and terrible grief that we confirm that Mayor Edwin M. Lee passed away,” the statement said. Lee was surrounded by family, friends and colleagues. No cause of death of reported.
San Francisco Board of Supervisors President London Breed became acting mayor and planned a late morning news conference.
Lee was appointed mayor by the Board of Supervisors in 2011, replacing Gavin Newsom, who was elected the state’s lieutenant governor. Lee went on to win a four-year term in 2011 and was re-elected in 2015.
Lee, who was married and had two daughters, was a civil rights lawyer who became the San Francisco city administrator before taking over as mayor. He was a staunch supporter of San Francisco’s sanctuary city policy toward immigrants, a stance he reiterated last month when a Mexican man who had been repeatedly deported was acquitted of murder in the 2015 killing of Kate Steinle.
The case became a flashpoint in the nation’s immigration debate, with then-candidate Donald Trump repeatedly referencing it as an example of the need for stricter immigration policies and a wall along the Mexican border.
Lee was an advocate for the poor but detractors claimed he catered too much to Silicon Valley, citing his brokering of a tax break in 2011 to benefit Twitter as part of a remake of the city’s downtown. Housing prices have surged in San Francisco with modest homes now topping $1.5 million, and Lee faced criticism for not doing more to provide affordable housing for the working class.
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(PhatzNewsRoom / AP) — A would-be suicide attacker detonated a pipe bomb strapped to his body in the heart of Manhattan’s busiest subway corridor on Monday, sending thousands of terrified commuters fleeing the smoke-choked passageways, and bringing the heart of Midtown to a standstill as hundreds of police officers converged on Times Square and the surrounding streets.
But the makeshift weapon failed to fully detonate, and the attacker himself was the only one seriously injured in the blast, which unfolded just before 7:20 a.m.
Law enforcement officials said the attacker, identified by the police as Akayed Ullah, 27, chose the location because of its Christmas-themed posters, a motive that recalled strikes in Europe, and he told investigators that he set off his bomb in retaliation for United States airstrikes on ISIS targets in Syria and elsewhere.
It was the third attack in New York City since September 2016, and the second in two months, coming only weeks after eight people were killed in a truck attack along a Hudson River bike path. Like the earlier two, the attack on Monday appears to have been carried out by a so-called “lone-wolf” terrorist.
The explosion on Monday morning echoed through the subway tunnels just off Times Square and filled parts of the Port Authority Bus Terminal with smoke as commuters fled. Even as smoke still filled the chamber, Mr. Ullah was subdued by Port Authority police officers
After he was subdued, Mr. Ullah was taken to Bellevue Hospital Center, where he was in serious condition with burns to his hands and abdomen, according to Daniel A. Nigro, the commissioner of the New York Fire Department. Three other people had minor injuries, he said.
An immigrant from Bangladesh, Mr. Ullah came to live in Brooklyn through a visa program available to people who have relatives who are United States citizens.
On Monday afternoon, in his first remarks on the attack, President Trump assailed the visa program, known as extended-family chain migration. “The terrible harm that this flawed system inflicts on America’s security and economy has long been clear,” Mr. Trump said in a statement. “I am determined to improve our immigration system to put our country and our people first.”
The attack occurred in a long pedestrian walkway connecting the Eighth Avenue, Seventh Avenue and Broadway subway lines. Among the commuters traveling beneath Times Square was a man in a hooded sweatshirt. Then came a deafening boom — from him — and then smoke.
Mr. Ullah had attached the pipe bomb to himself with a “combination of Velcro and zip ties,” said James P. O’Neill, the commissioner of the New York Police Department. It was crudely composed of a length of pipe stuffed with match heads, its ends stopped up. A broken Christmas tree light was the detonator: When lit, the filament ignited the match heads, the device powered by a nine-volt battery.
The explosion, captured on surveillance video, burned and cut Mr. Ullah, but because it did not detonate properly, it did not produce shrapnel, often the deadliest element of a pipe bomb.
“I think he was prepared to die, and we see him connect the wires on the video,” said a law enforcement official who spoke on the condition of anonymity because the assessment of the suspect’s actions was still preliminary.
As people streamed through the station, Officer Anthony Manfredini of the Port Authority Police Department rushed toward the smoke, said Robert Egbert, a spokesman for the main police union that represents Port Authority officers. A former marine, Officer Manfredini, 28, found the suspect on the ground with “visible wires coming from his jacket into his pants,” Mr. Egbert said.
Three other Port Authority officers followed: Jack Collins, Sean Gallagher and Drew Preston. They arrived just as Mr. Ullah was “reaching for a cellphone,” which the responding officers thought might be used to trigger another device, Mr. Egbert said. They dove and wrestled it from him.
“These officers went into this situation blind, only becoming aware of the danger involved once they confronted the suspect,” Mr. Egbert said.
Police released a photo of Mr. Ullah that appeared to have been taken inside the subway walkway after the blast. In it, he is curled in a fetal position; his exposed stomach is blackened.
Mayor Bill de Blasio found himself for the second time in two months calming the city after a terrorist attack, in this case, on the system that moves millions of people across the city every day.
“Our lives revolve around the subway,” he said at a news conference on Eighth Avenue a few hours after the incident. “The choice of New York is always for a reason, because we are a beacon to the world. And we actually show that a society of many faiths and many backgrounds can work.”
“The terrorists want to undermine that,” the mayor added. “They yearn to attack New York City.”
Investigators, led by the Joint Terrorism Task Force, believe Mr. Ullah acted alone, but they only have just begun to review materials from the searches and other leads.
Christina Bethea was in the underground walkway, headed to her job as a security guard, when the explosion nearly knocked her over, sending a haze of smoke into the corridor packed with commuters. She did not see where it came from, she said. “As soon as we heard ‘boom!’ we began to run,” she said. An hour after the attack, she stood outside the bus terminal, calling her mother and father in North Carolina to tell them she was O.K. “I feel good,” Ms. Bethea said. “I am alive!”
All morning, thwarted travelers spilled into the streets of Times Square, towing suitcases in bewildered silence. They gathered at police cordons stretched across the city’s most trafficked thoroughfares, boulevards vacant at the height of the holiday season, and filmed the red lights of scores of emergency vehicles.
On Monday morning, police searched a six-story apartment building where Mr. Ullah may have lived with his parents on Ocean Parkway, as well as two other residences. At around 11 a.m. officers led a woman in a dark coat from the Ocean Parkway home, a gray hijab covering her hair, into a patrol car, and sped off. The area is home to a few thousand Bangladeshi-born residents, and it represents the heart of their Brooklyn community, with stores and mosques centered around Church Avenue.
Mr. Ullah is a permanent United States resident, according to Tyler Q. Houlton, a spokesman for the Department of Homeland Security, having arrived in 2011.
The method of attack — self-detonation, or the attempt at least — introduces something of a new element to a long history of the city as target, a place that has yet somehow avoided the bomb-wearing attackers that are the hallmark of terrorism in places like Israel and Nigeria.
Since the attacks on the World Trade Center in 2001, there have been about 26 terrorist plots against the city that officials have identified as being thwarted “through intelligence, investigation and interdiction,” John J. Miller, the Police Department’s commissioner of intelligence and counterterrorism, said at a news conference on Monday.
But more recently, the string of foiled plots gave way to closer calls.
In 2009, law enforcement authorities prevented a cell of people with ties to operatives of Al Qaeda from carrying out plans to bomb subway trains. A year later, in May 2010, Faisal Shahzad, a Pakistani immigrant, tried to detonate a truck with explosives in Times Square — but his devices did not go off.
In September 2016, a crude homemade explosive crafted from a pressure cooker packed with shrapnel was left on 27th Street in Chelsea, exploding but killing no one. Before Monday, the last attack was on Halloween, when a man spurred by Islamic State propaganda drove a rental truck down a bicycle path on Manhattan’s West Side, killing eight people and injuring 12 others. The many, Sayfullo Saipov, was arrested and charged by federal prosecutors; he has pleaded not guilty.
While no formal announcement had been made, both federal and local law enforcement officials indicated that Mr. Ullah would be prosecuted in federal court in Manhattan by the office of the acting United States attorney for the Southern District of New York, Joon H. Kim.
But by Monday afternoon, the city was busy forgetting. On 42nd Street, tourists strolled unperturbed, or hurried into the reopened bus depot to catch their rides.
Just hours before, John Frank had stood on that street by the Port Authority exit when he felt tremors through the pavement. “That’s how strong it was,” said Mr. Frank, 54. Shaken, he fled a flew blocks away, and stood for a few long minutes, leaning against a garbage can for support.
“In New York City, we are vulnerable to a lot of things,” Mr. Frank said. “These incidents are happening too frequently.”
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PARIS (AP) — More than 50 world leaders are joining bankers, energy magnates and others Tuesday in Paris for a summit that President Emmanuel Macron hopes will give new momentum to the fight against global warming — despite U.S. President Donald Trump’s rejection of the Paris climate accord.
Sean Penn, Arnold Schwarzenegger, Bill Gates and Elon Musk are among prominent figures joining the world leaders at the summit, where participants are expected to announce billions of dollars’ worth of projects to help poor countries and industries reduce emissions.
Activists kept up pressure with a protest in the shadow of the domed Pantheon monument calling for an end to all investment in oil, gas and resource mining.
That wasn’t far from the message from top officials opening the summit: They agreed that the global financial system isn’t shifting fast enough away from carbon emissions and toward energy and business projects that don’t aggravate climate change.
“Financial pledges need to flow faster through more streamlined system and make a difference on the ground,” said Fiji’s Prime Minister Frank Bainimarama, whose island nation is among those on the front lines of the rising sea levels and extreme storms worsened by human-made emissions.
“We are all in the same canoe,” rich countries and poor, he said.
Japanese Foreign Minister Taro Kono described ways Japan is investing in climate monitoring technology and hydrogen energy, but said “we have to do more and better.”
Some 3,100 security personnel are fanned out around Paris for Tuesday’s event, including extra patrol boats along the Seine River. Macron will accompany the visiting leaders to the summit site on a river island by boat.
Macron, who’s also using the event to raise his international profile, did not invite Trump.
On Monday, Macron awarded 18 climate scientists — most of them based in the U.S. — multimillion-euro grants to relocate to France for the rest of Trump’s term. Trump has expressed skepticism about global warming and said the Paris accord would hurt U.S. business.
The “Make Our Planet Great Again” grants — a nod to Trump’s “Make America Great Again” campaign slogan — are part of Macron’s efforts to counter Trump on the climate change front. Macron announced a contest for the projects in June, hours after Trump declared he would withdraw the U.S. from the Paris climate accord.
The summit, co-hosted by the U.N., World Bank and Macron, is being held on the second anniversary of the Paris climate accord, ratified by 170 countries.
Germany’s Angela Merkel, who was once labeled the ‘climate chancellor’ for her efforts to curb global warming, has faced domestic criticism for failing to attend the summit.
Annalena Baerbock, a spokeswoman on climate issues for the opposition Green party, said Tuesday that Macron appeared to be overtaking Merkel as Europe’s leading lobbyist on climate issues.
“I think that’s not a good sign,” Baerbock told public broadcaster Deutschlandfunk. She said Germany had lost international credibility on the issue by allowing its carbon emissions to stagnate over the past decade and refusing to join a recent international declaration on ending the use of coal, one of the most polluting fossil fuels.
Baerbock said Europe’s biggest economy also could have sent a signal on climate financing — a major topic in Paris — by declaring that civil servants’ pensions wouldn’t be invested in fossil fuels companies anymore, as some countries have already done.
Macron hosted leading world philanthropists Tuesday morning to encourage more climate-related investment.
Frank Jordans in Berlin and Masha Macpherson in Paris contributed.
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LOS ANGELES (AP) — The winds aren’t changing for Southern California’s wildfires yet.
The fifth largest blaze in state history was threatening thousands of homes as it churned through coastal mountains amid persistently dangerous weather conditions.
Red Flag warnings for fire danger due to Santa Ana winds and a critical lack of moisture were extended into the week instead of expiring Monday afternoon as was initially forecast.
“It doesn’t get much drier than this folks,” the National Weather Service Service tweeted, adding that more than 80 observation sites in the region reported afternoon relative humidity levels between just 1 and 9 percent.
On Monday, ash fell like snow and heavy smoke had residents gasping for air in foothill towns near Santa Barbara, the latest flare-up after a week of wind-fanned wildfires throughout the region.
With acrid smoke thick in the air, even residents not under evacuation orders were leaving, fearing another shutdown of a key coastal highway that was closed intermittently last week.
Officials handed out masks to those who stayed behind in Montecito, an exclusive community about 75 miles (120 kilometers) northwest of Los Angeles that’s home to stars such as Oprah Winfrey, Jeff Bridges and Drew Barrymore.
Actor Rob Lowe wore a mask as he live-streamed his family evacuating Sunday from their smoke-shrouded home.
“Praying for the people in my area,” he said to his Instagram followers. “Hope everybody’s getting out safe like we are, and thanks for the prayers and thoughts. And good luck to the firefighters, we need you!”
Talk show host Ellen DeGeneres tweeted that neighbors were helping each other and their animals get to safety.
“I’m sending lots of love and gratitude to the fire department and sheriffs. Thank you all,” she wrote.
The blaze — known as the Thomas fire — has destroyed 683 homes, officials said. It was partially contained after burning 362 square miles (937 square kilometers) of dry brush and timber.
Customers coming into Jeannine’s American Bakery in Montecito brushed ash from their clothes and marveled at smoke so heavy that visibility was down to just a few feet.
“There’s so much ash it’s unbelievable,” manager Richard Sanchez said. “Everything is white. The streets are covered, cars are covered, our parking lot is covered.”
Dr. Helene Gardner, an expert in air quality at University of California, Santa Barbara, watched ash fall “like a fine snow” from her home after the school postponed final exams until January. She said her environmental sciences students got a kick from the fact that the delay was directly related to their field of study.
Gardner warned that the air alerts should be taken seriously because of airborne particulates — “nasty buggers” — that can lodge in lungs and cause respiratory problems.
She said the levels of particulates from a wildfire can approach those seen near coal-burning plants in pollution-heavy China and are especially problematic for people exerting themselves.
“When I look out my window and see someone bicycling I think, ‘No, no, no, get off your bike and walk!’” she said.
Santa Ana winds have long contributed to some of the region’s most disastrous wildfires. They blow from the inland toward the Pacific Ocean, speeding up as they squeeze through mountain passes and canyons.
The National Weather Service said that if the long-term forecast holds, there will have been 13 consecutive days of dry offshore flow before it ends Friday afternoon. There have only been 17 longer streaks since 1948, including the record of 24 days set between December 1953 and January 1954.
High fire risk is expected to last into January.
John Antczak in Los Angeles contributed to this report.
Follow Weber at https://twitter.com/WeberCM .
For complete coverage of the California wildfires, click here: https://apnews.com/tag/Wildfires.
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BIRMINGHAM, Ala. (AP) — Depending on who is making the case, Alabama’s special Senate election Tuesday is about either continuing the “Trump miracle” in Washington or allowing “decency” to prevail back home.
At the center is Roy Moore — “Judge Moore,” to his supporters. The 70-year-old Republican was twice ousted as state Supreme Court chief justice after flouting federal law, and now he’s attempting a political resurrection amid accusations of sexual misconduct with teenage girls when he was in his 30s.
In Moore’s path is Democrat Doug Jones, 63, a former U.S. attorney best known for prosecuting two Ku Klux Klansmen who killed four black girls in a 1963 church bombing.
The winner will take the seat previously held by Attorney General Jeff Sessions. Republicans hold a narrow 52-48 Senate majority. A routine election in Republican-dominated Alabama wouldn’t be expected to alter that balance, because Alabamians haven’t sent a Democrat to the upper chamber of Congress since 1992. President Donald Trump notched a 28-point win here in 2016 and remains popular in the state.
But Moore’s baggage leaves the outcome enough in doubt that both Trump and his Democratic predecessor, Barack Obama, have weighed in with last-minute robocalls trying to sway voters.
The intensity also has spawned a steady stream of fake news stories that fill social media feeds of interested people in Alabama and beyond. An Associated Press analysis, in cooperation with Facebook, counted as many as 200 false or misleading reports heading into the weekend. One website claimed one of the women who have accused Moore of sexual misconduct had recanted. She did not. Meanwhile, Moore’s detractors took to social media to claim he had written in a 2011 textbook that women shouldn’t hold elected office. He didn’t.
In his final pitch before polls open, Jones called the choice a “crossroads” and asked that “decency” prevail.
“We’ve had this history in the past, going down the road that … has not been productive,” Jones said. “We’ve lagged behind in industry. We’ve lagged behind in education. We’ve lagged behind in health care. It’s time we take the road that’s going to get us on the path to progress.”
At his own election eve rally, Moore again denied all the allegations, calling them “disgusting” and offering voters a clear measure: “If you don’t believe in my character, don’t vote for me.” Earlier in the day, Moore cast himself as the victim. “It’s just been hard, a hard campaign,” he said.
For Alabama, the outcome could be defining.
Democrats and moderate Republicans see an opportunity to reject a politician who is already regular fodder for late-night television and enough of a curiosity that Chinese leader Xi Jinping paused a presidential meeting in Beijing recently to ask Trump through an interpreter, “Who is Roy Moore?”
Alabama’s senior senator, Richard Shelby, confirmed publicly that he wrote in a “distinguished Alabama Republican” rather than vote for Moore.
Many Republicans, however, see an opportunity to defend the state’s conservative, evangelical bent in the face of unfair liberal criticism while delivering another victory for Trump and sending an anti-establishment senator into a federal government that has been reflexively unpopular among Alabama majorities for generations.
Trump’s campaign architect and former White House adviser Steve Bannon told Moore supporters Monday evening that the race is a “national election” that will determine whether the “Trump miracle” continues. Moore says he is aligned with the president and he makes similar arguments to Trump, blasting “the elite” in the “swamp” of Washington, D.C.
For Jones to win, he must build an atypical coalition, maximizing turnout among African-American voters and white liberals who often don’t combine for more than 40 percent of the electorate, while coaxing votes from enough white Republicans who can’t pull the lever for Moore.
One of Jones’ celebrity backers framed the choice as being much less complicated.
“I love Alabama,” said Leeds native and former NBA basketball star Charles Barkley, “but at some point we’ve got to draw a line in the sand and say, ‘We’re not a bunch of damn idiots.’”
Polls will close at 7 p.m. CST.
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WASHINGTON (AP) — For Illinois Rep. Luis Gutierrez, a passionate, liberal Democrat of Puerto Rican descent, there is no more important issue in the year-end budget showdown than protecting from deportation hundreds of thousands of immigrants who came to the U.S. illegally as children — and who have only known America as their home.
The fate of these “Dreamers,” as they are commonly known, is one of the trickiest issues to resolve as the White House and Congress seek to avert a Christmas government shutdown that nobody says they want. House Democrats, and their leader, Nancy Pelosi, insist that the Dreamers be dealt with as part of a broader package that combines unfinished legislative business, including military spending, disaster aid and low-cost health care for children.
“You want a bipartisan budget and you want my vote? Then make it an American budget, one that includes a pathway to freedom for our Dreamers,” Gutierrez said. “It’s the right thing to do.”
Top Senate Democrat Chuck Schumer cares about Dreamers, too, but he isn’t playing hardball over immigration. At the top of his list of political concerns are the re-election bids next year of 10 Senate Democrats running in states that President Donald Trump won in 2016. Many of them want nothing to do with shutting down the government over immigration.
“I understand the passion on that. I’m not in favor of voting to shut down the government,” said Democratic Sen. Joe Manchin of West Virginia, where Trump won almost 70 percent of the vote. “There are a lot of things I feel passionate about. But I’m not going to make 300 million people suffer because I can’t get the process working the way it should.”
House and Senate Democrats stand divided as leaders look to wrap up a sweeping spending deal by Dec. 22 and avoid a debilitating shutdown.
At issue is Trump’s decision to rescind Barack Obama’s executive order creating the Deferred Action for Childhood Arrivals program, which gave protected status to about 800,000 young immigrants in the country illegally. In scrapping the DACA order, Trump gave Congress until March to come up with a legislative solution.
In September, the president told Pelosi and Schumer he would support the DREAM Act — Development, Relief and Education for Alien Minors — which offers childhood immigrants a pathway to citizenship, as part of a broader immigration agreement.
But this fall, progress stalled. That led liberals such as Gutierrez to pressure leadership to use Democratic leverage — their votes are needed to pass legislation such as the budget or next year’s increase in the government borrowing — to ensure that Trump lives up to his promise.
Republicans want to separate immigration from the year-end agenda, in part to avoid the appearance of getting muscled by Democrats like Pelosi and in part to try to get a better deal.
“We are certainly willing to enter into those good-faith negotiations, but they do not belong in an end-of-the-year spending appropriations debate,” said Texas Sen. John Cornyn, the No. 2 Republican in the Senate. “We do want to resolve this, but it’s not going to be before the end of this year.”
For her part, Pelosi won’t commit to helping Republicans keep the government open unless the DACA issue is dealt with.
“We will not leave here without a DACA fix,” she told reporters last week.
Indeed, just 14 Democrats joined House Republicans in voting for a two-week stopgap spending bill last week.
But in the Senate, the dynamic among Democrats was wholly different, with Democrats voting for the stopgap measure by a 5-to-1 margin.
Aides to lawmakers in both parties say the DACA issue was discussed only briefly at a White House meeting between Trump and top congressional leaders.
“There was no disagreement that it should be done. The question was when, where, how and why, and those discussions are continuing,” Schumer told reporters Friday. “We hope to get it done before the end of the year.”
Schumer spokesman Matt House says Schumer is genuinely optimistic that Senate negotiations over a hybrid package blending the DREAM Act with additional border security measures are going well. House talks, meanwhile, appear stalled.
The differing perspectives, at their core, seem rooted in the different dynamics facing House and Senate Democrats.
Schumer’s red-state Democrats must win re-election by appealing to independents, and they hope to win at least some crossover support from Republicans.
But many House Democrats represent congressional districts with large populations of minorities. Others represent solidly Democratic suburbs with constituencies that are sympathetic to immigrants. Their re-election bids are dependent on cementing the Democratic nomination from a primary electorate rather than winning independents or GOP crossovers.
Pelosi faces her own constituency, too. With 31 members, the Congressional Hispanic Caucus represents 16 percent of the House Democratic Caucus — a base that Pelosi is loath to cross.
“It’s her belief, of course, but it’s the caucus she represents as well,” said Nadeam Elshami, Pelosi’s former chief of staff. “The caucus wants this.”
TOKYO (AP) — Shares were mostly lower in Europe and Asia on Tuesday as investors retreated ahead of the Federal Reserve’s decision on interest rates.
KEEPING SCORE: Germany’s DAX fell 0.2 percent to 13,099.40 and the CAC 40 of France lost 0.5 percent to 5,362.83. Britain’s FTSE 100 was flat at 7,455.76. Wall Street looked set for a steady start, with S&P 500 futures flat at 2,665.10 and Dow futures up less than 0.1 percent at 24,434.00.
FEDERAL RESERVE: The Fed is expected to lift short-term interest rates by 0.25 percent on Wednesday, the third interest rate hike by the central bank this year. While inflation has remained low, the central bank has seen a path to gradually raise rates as the economy and labor market have strengthened.
ANALYST VIEWPOINT: Mizuho Bank writes in a commentary that “2018 might be a year that interest rates normalization can finally proceed apace, not only in the U.S., but also the rest of the world,” adding, “The risk is that further policy normalization in the U.S. or Eurozone could either draw capital away from economies that cannot follow the normalization cycle, or prompt some correction in housing prices for those that do follow.”
CHINA: Investors are watching for details from an annual economic planning conference in Beijing that will set the pace for reforms and growth in the world’s second-largest economy. The state-run Xinhua News Agency reported Friday that President Xi Jinping told fellow leaders that the focus should shift to quality of life and improve innovation and competitiveness. Worries over possible moves to curb property market speculation were overshadowing trading on Tuesday.
THE DAY IN ASIA: Japan’s Nikkei 225 index lost 0.3 percent to 22,866.17 while South Korea’s Kospi dropped 0.4 percent to 2,461.00. The Hang Seng index in Hong Kong shed 0.6 percent to 28,793.88. The Shanghai Composite index shed 1.3 percent to 3,280.81. The S&P ASX 200 added 0.3 percent to 6,013.20, but India’s Sensex dropped 0.7 percent to 33,222.91. Other regional markets were mostly lower.
BITCOIN: Bitcoin futures rose on their first day of trading on a major U.S. exchange, with the first-ever futures contract gaining 20 percent to close at $18,545, according to data from Cboe Global Markets. The price of an actual bitcoin has soared since it began the year below $1,000 and was at $16,895.58 as of 09:10 GMT Tuesday, according to Coindesk.
ENERGY: Benchmark U.S. crude gained 53 cents to $58.52 per barrel in electronic trading on the New York Mercantile Exchange. It advanced 63 cents, or 1.1 percent, to settle at $57.99 per barrel on Monday. Brent crude, the international standard, climbed 90 cents to $65.59 per barrel. It added $1.29, or 2 percent, to close at $64.69 per barrel in London.
CURRENCIES: The dollar edged down to 113.44 Japanese yen from 113.55 yen late Monday. The euro rose to $1.1784 from $1.1770.
LITTLE HOLIDAY CHEER FOR MATTEL
Mattel is pointing to an unhappy holiday season. The toymaker said its holiday sales are being hurt by the struggles of some of its key brands and by retailers tightening their inventories. The maker of Barbie, Hot Wheels and Fisher-Price says it expects its gross sales for the full year to decline in the at least mid-to-high single percentage range compared to last year.
UK INFLATION RISES TO HIGHEST LEVEL SINCE MARCH 2012
Bank of England Governor Mark Carney will have to write a letter to Britain’s Treasury chief explaining why inflation in the country is running by more than a percentage point above target after official figures showed it unexpectedly rising to 3.1 percent.
ADMINISTRATION SAYS BIG REVENUE FROM GOP TAX PLAN; ANALYSTS LESS ROSY
The Trump administration is asserting in a new analysis that the Republican tax plan will deliver a swift adrenaline shot to the economy that will send hundreds of billions pouring into federal tax coffers. But nonpartisan analysts make a less rosy projection of new revenue from the tax legislation now before Congress.
WORLD SHARES RETREAT AHEAD OF FED INTEREST RATE DECISION
Shares were mostly lower in Europe and Asia on Tuesday as investors retreated ahead of the Federal Reserve’s decision on interest rates. Germany’s DAX fell 0.2 percent to 13,099.40, Wall Street looked set for a steady start, Japan’s Nikkei 225 index lost 0.3 percent to 22,866.17 and the Hang Seng index in Hong Kong shed 0.6 percent to 28,793.88.
WORKERS TO DISCUSS HARASSMENT SUIT AGAINST RESTAURANT CHAIN
Five female kitchen workers in Boston are detailing a sexual harassment lawsuit they’re filing against a national restaurant chain. The Lawyers’ Committee for Civil Rights and Economic Justice, which is representing the women, says the lawsuit being discussed Tuesday highlights the plight of women in low-wage positions like dishwashers, cleaners and cooks.