Wednesday, January 28, 2009

Nobody learns.. Innocents pay the price

GAZA (Reuters) – Israeli warplanes bombed a weapons production facility in Gaza on Thursday after militants fired a rocket at Israel, in violence that defied the efforts of a visiting U.S. peace envoy to reinforce a ceasefire.

There were no reports of injuries from the predawn Israeli strike in the town of Rafah, along Gaza's border with Egypt. Witnesses and Hamas Islamists said a metal foundry was damaged.

Moments earlier, a militant group with links to Palestinian President Mahmoud Abbas's Fatah movement claimed responsibility for firing a rocket at southern Israel late on Wednesday.

The rocket was the first fired from Gaza since Israel and Hamas called separate ceasefires ending a 22-day Israeli offensive on January 18.

It caused no casualties, but Israeli leaders facing a February 10 election in a campaign focused on security concerns, have vowed to respond to rocket salvoes its offensive in Gaza had aimed to curtail.

Israel has said it will hold Gaza's Hamas rulers responsible for all attacks launched from the coastal territory, and had warned of a stronger response to the killing of a soldier on Tuesday in an explosion by a Gaza border fence.

"Israel will respond very severely," an Israeli security source said on Wednesday, and added, "we haven't seen it all," referring to the Israeli air strikes carried out earlier in the day on tunnels under the Gaza-Egypt border.

"We will remain ready, with our finger on the trigger around the clock," Benjamin Ben-Eliezer of Israel's decision-making security cabinet said in remarks televised on Wednesday.

Hamas defended Tuesday's bombing, citing the killing of two Palestinians by Israel last week. Israeli forces killed one Palestinian, identified by Gaza medical workers as a farmer after the bombing and later wounded a militant on a motorcycle.

VIOLENCE CLOUDS U.S. ENVOY VISIT

The violence clouded a visit by U.S. President Barack Obama's Middle East envoy, former U.S. Senator George Mitchell, who said in Jerusalem on Wednesday it was "of critical importance that the ceasefire be extended and consolidated" with respect to Israel and Gaza.

Mitchell met Israeli Prime Minister Ehud Olmert and Defense Minister Ehud Barak on Wednesday and will meet Abbas on Thursday.

Western diplomats said Mitchell would not meet Hamas, a group shunned by the U.S. and Europe for it refusal to recognize Israel.

Mitchell said on Wednesday any durable truce between Israel and Hamas must end smuggling into Gaza and reopen border crossings controlled by Israel to relieve its economic blockade of the enclave where half the 1.5 million people depend on food aid.

He cited a U.S.-brokered 2005 agreement calling for forces loyal to Abbas to be deployed in Gaza. Hamas seized Gaza from Abbas's forces in 2007, a year after the Islamists won a parliamentary election.

"President Obama has said the United States is committed to Israel's security and to its right to defend itself against legitimate threats," Mitchell said.

"The president has also said the United States will sustain an active commitment toward reaching the goal of two states living side by side in peace and security," he added.

Olmert told Mitchell Israel would object to reopening any crossings with Gaza save to permit the flow of vital aid to the territory, until an Israeli soldier captured in 2006 was freed, an Israeli official said, speaking on condition of anonymity.

"We don't intend to open the crossings before Gilad Shalit returns home," Ben-Eliezer, the Israeli cabinet minister said, referring to the soldier seized by Gaza militants in a cross-border raid.

Israeli leaders fear Hamas could rebuild tunnels under the Gaza-Egypt border to replenish an arsenal of rockets used in attacks on its southern communities that disrupt life for tens of thousands of citizens.

Some 1,300 Palestinians, including at least 700 civilians, were killed in the offensive, the Hamas-run Health Ministry in the Gaza Strip said. Israel put its death toll in the war at 10 soldiers and three civilians.

AP Army orders recall of body armor

WASHINGTON – Army Secretary Pete Geren has ordered the recall of more than 16,000 sets of body armor following an audit that concluded the bullet-blocking plates in the vests failed testing and may not provide soldiers with adequate protection.

The audit by the office of the Defense Department inspector general, not yet made public but obtained by The Associated Press, faults the Army for flawed testing procedures before awarding a contract for the armor.

In a letter date Jan. 27 to Acting Inspector General Gordon Heddell, Geren said he did not agree that the plates failed the testing or that soldiers were issued deficient gear. He said his opinion was backed by the Pentagon's top testing director.

Despite his insistence that the armor was not deficient, Geren said he was recalling the sets as a precaution.

"To ensure there can be no question regarding the effectiveness of every soldier's body armor, I have today ordered that the plates at issue be identified and collected until such a time as the matter has been adjudicated by the deputy secretary of defense," Geren wrote.

Geren also said he's asked for a senior Pentagon official to resolve the disagreement between the Army and the inspector general's office.

Hundreds of thousands of body armor sets have been manufactured over the past seven years. The vests are now standard gear for troops in Iraq and Afghanistan.

The audit by the inspector general's office was the second requested by Rep. Louise Slaughter, D-N.Y. She first asked the watchdog agency to look into the acquisition of the ballistic vests in 2006 after she read newspaper reports saying inadequate body armor was causing U.S. casualties.

The first audit was completed last year, but Slaughter said it wasn't thorough enough.

Slaughter said Wednesday she's satisfied with the latest report but remains concerned the Army has not changed its contracting methods to ensure the troops are getting the best gear.

"I'm not through," she said. "I really want to know which contracts are bad."

Heddell is scheduled to give Slaughter a briefing Thursday on the audit's findings.

Auditors focused on a step called first article testing. These tests are to confirm the product meets the Army's specifications. But the audit says the Army didn't perform or score the tests consistently.

"Consequently, we believe that three of the eight ballistic insert designs that passed first article testing actually failed," the audit says.

The contract examined by the inspector general's office is listed in the audit only as W91CRB-04-D-0040. An Aug, 20, 2004, an announcement on the Defense Department's Web site states a contract under that designation was awarded to Armor Works of Chandler, Ariz.

The Army bought 51,334 sets of the protective inserts under the contract for just over $57 million, according to the inspector general.

A call to Armor Works was not immediately returned.


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I think Obama can take body armors from Sri Lanaka... Think.!!!!!!!!!!!!!!!

Obama gives chilly reception to canceled school

WASHINGTON – You call this bad weather? President Barack Obama, steeled by many snowy Chicago winters, expressed disbelief Wednesday when his daughters woke up to find that their classes had been canceled for the day.

Schools in Washington and the surrounding suburbs either opened late or scrapped all their classes because of icy conditions.

"Can I make a comment that is unrelated to the economy very quickly?" the new president told reporters at a gathering with business leaders. "And it has to do with Washington. My children's school was canceled today. Because of, what? Some ice?"

The president said he wasn't the only one who was incredulous.

"As my children pointed out, in Chicago, school is never canceled," Obama said to laughter. "In fact, my 7-year-old pointed out that you'd go outside for recess. You wouldn't even stay indoors. So, I don't know. We're going to have to try to apply some flinty Chicago toughness."

Asked if he meant the people of the national's capital are wimps, Obama said: "I'm saying, when it comes to the weather, folks in Washington don't seem to be able to handle things."

Obama's daughters attend the private Sidwell Friends School.

Malia, 10, is a fifth-grader at the middle school campus in the District of Columbia, while younger sister Sasha is in second grade at the elementary school in Bethesda, Md., just outside Washington

House OKs $819B stimulus bill with GOP opposition

WASHINGTON – In a swift victory for President Barack Obama, the Democratic-controlled House approved a historically huge $819 billion stimulus bill Wednesday night with spending increases and tax cuts at the heart of the young administration's plan to revive a badly ailing economy. The vote was 244-188, with Republicans unanimous in opposition despite Obama's frequent pleas for bipartisan support.

"This recovery plan will save or create more than three million new jobs over the next few years," the president said in a written statement released moments after the House voted. Still later, he welcomed congressional leaders of both parties to the White House for drinks as he continued to lobby for the legislation.

Earlier, Obama declared, "We don't have a moment to spare" as congressional allies hastened to do his bidding in the face of the worst economic crisis since the Great Depression.

The vote sent the bill to the Senate, where debate could begin as early as Monday on a companion measure already taking shape. Democratic leaders have pledged to have legislation ready for Obama's signature by mid-February.

A mere eight days after Inauguration Day, Speaker Nancy Pelosi said the events heralded a new era. "The ship of state is difficult to turn," said the California Democrat. "But that is what we must do. That is what President Obama called us to do in his inaugural address."

With unemployment at its highest level in a quarter-century, the banking industry wobbling despite the infusion of staggering sums of bailout money and states struggling with budget crises, Democrats said the legislation was desperately needed.

"Another week that we delay is another 100,000 or more people unemployed. I don't think we want that on our consciences," said Rep. David Obey, D-Wis., chairman of the House Appropriations Committee and one of the leading architects of the legislation.

Republicans said the bill was short on tax cuts and contained too much spending, much of it wasteful, and would fall far short of administration's predictions of job creation.

The party's leader, Rep. John Boehner of Ohio, said the measure "won't create many jobs, but it will create plenty of programs and projects through slow-moving government spending." A GOP alternative, comprised almost entirely of tax cuts, was defeated, 266-170.

On the final vote, the legislation drew the support of all but 11 Democrats, while all Republicans opposed it.

The White House-backed legislation includes an estimated $544 billion in federal spending and $275 billion in tax cuts for individuals and businesses. The totals remained in flux nearly until the final vote, due to official re-estimates and a last-minute addition of $3 billion for mass transit.

Included is money for traditional job-creating programs such as highway construction and mass transit projects. But the measure tickets far more for unemployment benefits, health care and food stamp increases designed to aid victims of the worst economic downturn since the Great Depression of the 1930s.

Tens of billions of additional dollars would go to the states, which confront the prospect of deep budget cuts of their own. That money marks an attempt to ease the recession's impact on schools and law enforcement. With funding for housing weatherization and other provisions, the bill also makes a down payment on Obama's campaign promise of creating jobs that can reduce the nation's dependence on foreign oil.

The centerpiece tax cut calls for a $500 break for single workers and $1,000 for couples, including those who don't earn enough to owe federal income taxes.

The House vote marked merely the first of several major milestones a for the legislation, which Democratic leaders have pledged to deliver to the White House for Obama's signature by mid-February.

Already a more bipartisan — and costlier — measure is taking shape in the Senate, and Obama personally pledged to House and Senate Republicans in closed-door meetings on Tuesday that he is ready to accept modifications as the legislation advances.

Rahm Emanuel, a former Illinois congressman who is Obama's chief of staff, invited nearly a dozen House Republicans to the White House late Tuesday for what one participant said was a soft sales job.

This lawmaker quoted Emanuel as telling the group that polling shows roughly 80 percent support for the legislation, and that Republicans oppose it at their political peril. The lawmaker spoke on condition of anonymity, saying there was no agreement to speak publicly about the session.

In fact, though, many Republicans in the House are virtually immune from Democratic challenges because of the makeup of their districts, and have more to fear from GOP primary challenges in 2010. As a result, they have relatively little political incentive to break with conservative orthodoxy and support hundreds of billions in new federal spending.

Also, some Republican lawmakers have said in recent days they know they will have a second chance to support a bill when the final House-Senate compromise emerges in a few weeks.

Rep. Randy Neugebauer, R-Texas, sought to strip out all the spending from the legislation before final passage, arguing that the entire cost of the bill would merely add to soaring federal deficits. "Where are we going to get the money," he asked, but his attempt failed overwhelmingly, 302-134.

Obey had a ready retort. "They don't look like Herbert Hoover, I guess, but there are an awful lot of people in this chamber who think like Herbert Hoover," he said, referring to the president whose term is forever linked in history with the Great Depression.

American Indians could reap almost $3B in stimulus

WASHINGTON – American Indians stand to gain almost $3 billion as part of the economic stimulus moving through Congress, money that could help some of the nation's poorest communities rebuild roads, improve health care and boost employment that has lagged behind the rest of the country for decades.

The Senate Appropriations Committee on Tuesday included $2.8 billion for Indian tribes in its portion of the nearly $900 billion economic stimulus bill, and a House version to be voted on Wednesday includes a similar amount. That includes hundreds of millions of dollars for schools, health clinics, roads, law enforcement and water projects.

Dante Desiderio, an economic development policy specialist at the National Congress of American Indians, which has lobbied for the money for the past year, calls the bill a "once in a lifetime opportunity" for tribes.

"It really has the potential to lift our communities out of poverty," Desiderio said.

Indian Country has a long way to go in terms of reviving tribal economies. According to the National Congress of American Indians, real per-capita income of Indians living on reservations is still less than half the national average, unemployment is twice that of the rest of the country, and eight of the 10 poorest counties in the United States are on reservations.

That group originally asked for $6.1 billion in the stimulus, an amount that they said would generate more than 50,000 jobs.

"It's not going to allow them to catch up, but its a significant boost," said North Dakota Sen. Byron Dorgan, the Democratic chairman of the Senate Indian Affairs Committee who inserted the money into the stimulus. "This is a group of Americans who have been left behind in many of the basic needs of life."

Julie Kitka, president of the Alaska Federation of Natives, asked Congress for stimulus dollars at a Senate Indian Affairs hearing earlier this month. She describes chronically underfunded Indian and Native Alaskan communities as "emerging economies" similar to developing countries around the world that can be hardest hit by an economic downturn. She says this is a chance for tribes to boost their economies for years to come

"It's an opportunity to do things right," she said.


Tuesday, January 27, 2009

Obama open to compromise on $825B stimulus bill

WASHINGTON – On the eve of a key vote, President Barack Obama privately promised Republicans he stands ready to accept changes in the $825 billion economic stimulus legislation, invoked Ronald Reagan to rebut conservative critics and urged lawmakers to "put politics aside" in the interest of creating jobs.

"The American people expect action," Obama said Tuesday as he shuttled between closed-door meetings with House and Senate Republicans on a trip to the Capitol that blended substance with political symbolism.

Republicans who attended the sessions said the president did not agree to any specific changes but did pledge to have his aides consider some that GOP lawmakers raised dealing with additional tax relief for businesses.

Prodded to budge on another point, Obama said that despite opposition, he will insist on giving relief to wage-earners who pay Social Security taxes but do not earn enough to owe income tax. His spokesman said the president reminded his critics that former President Reagan — conservative hero to many contemporary Republicans — supported the same concept while in the White House.

In a measure of the complex political dynamic in Congress, House Republican leaders urged their rank and file to oppose the stimulus measure hours before Obama arrived.

One Republican later quoted the president as saying any changes would have to come after the House gives what is expected to be largely party-line approval Wednesday to the Democratic-backed bill. Debate began late in the day on the measure, which includes about $550 billion in spending and roughly $275 billion in tax cuts. Democrats made one small change, voting to delete $20 million intended for renovating the National Mall. Republicans had criticized the expenditure as wasteful.

In the Senate, traditionally more bipartisan than the House, a companion bill grew to roughly $900 billion. That included a new tax break for upper middle-income taxpayers, at a one-year cost of $70 billion. It was advanced by Sen. Chuck Grassley of Iowa, senior Republican on the Finance Committee.

Democratic leaders in both houses have promised to have legislation ready for Obama's signature by mid-February, and Tuesday's developments coincided with fresh evidence of deterioration in a national economy seemingly growing weaker by the day.

Housing prices tumbled by the sharpest annual rate on record in November, according to a closely watched private report released during the day, and a measure of consumer confidence dropped to a historic low.

Separately, the Treasury Department announced distribution of $386 million to 23 troubled banks, the first awards from the federal bailout fund since Obama took office a week ago.

Obama traveled to and from the Capitol in a snowy motorcade on Tuesday, far different from the inaugural parade seven days earlier. This was a business trip, marking his second reach across party lines in as many days in keeping with a pledge to seek bipartisan solutions to major problems.

On Monday, he leaned on House Democrats to jettison an item that would make it easier for states to provide family planning funds for the poor under Medicaid, a provision in the legislation that had become a target of ridicule for Republicans. Press Secretary Robert Gibbs said Obama supports the concept but wants it included in a different bill.

Ironically, Democrats said deleting the provision would wind up increasing federal spending, since it probably would mean more money spent on higher pregnancy and postnatal care.

House Republican leaders welcomed the president a few hours after urging their rank-and-file to oppose the stimulus bill, and it was far from clear that Obama had managed to pick up any GOP support during the day.

Gibbs said the White House expects some GOP lawmakers will vote for the measure on Wednesday in the House, and indicated he hopes there will be more in the Senate and even more later when a final compromise is reached.

One Republican senator, speaking on condition of anonymity, said the president pledged to Sen. John Ensign, R-Nev., to have aides review two specific proposals. One would affect businesses that pay down their debt. The other would provide a temporary tax holiday for companies that have money overseas and bring it back to the United States to invest.

Obama ventured into an uncertain political environment when he stepped into the Capitol, a president with high approval ratings pitching a plan that also has been favorably received in the polls.

Republicans, on the other hand, are trying to regroup after last fall's elections, in which they lost the White House as well as seats in both houses of Congress. While some conservatives seem eager to mount a frontal attack on Obama and his plans, others are pursuing a strategy of criticizing congressional Democrats rather than the president.

Hours earlier, according to officials who were present at a GOP meeting, none of the Republicans in attendance spoke up in disagreement when urged to oppose the legislation by their leaders. Rep. John Boehner of Ohio, the party's leader, and Eric Cantor of Virginia, the second in command, said they wanted "100 percent" opposition to the measure, which they argue includes billions in wasteful spending, these officials said.

Across the Capitol, Senate Republican leader Mitch McConnell suggested that Democrats in Congress were the problem, not the president.

"We think the country needs a stimulus," McConnell said on NBC's "Today" show. But he also said that he believes most people do not believe recovery can be accomplished through projects like "fixing up the Mall," a reference to funding to repair the National Mall in Washington.

He said Republicans want a bill that devotes 40 percent of its total to tax cuts.

Some conservatives were far more blunt.

"While the president was genial, his proposal remains rooted in a liberal, big-government ideology that ignores history," said Rep. Tom Price of Georgia, head of the conservative Republican Study Committee in the House.

Complicating the Republican position was evidence of support among the nation's governors for the legislation taking shape.

The measure includes more than $120 billion in aid to schools, some of it to protect them from the effects of state budget cuts in a time of recession. It also provides more than $80 billion additional funding for Medicaid, the state-federal program that provides health care for low-income people, and $40 billion more to help people who have recently lost their jobs hold onto employer-provided health care. Another $32 billion is ticketed for transportation projects, and $30 billion more for water projects and rail and mass transit.

Obama's centerpiece tax cut would provide $500 per worker and $1,000 per couple for low and middle-income wage earners, including those who do not earn enough to owe income taxes.

Monday, January 26, 2009

Geithner pledges quick action as US Treasury Secretary


WASHINGTON (AFP) – Timothy Geithner was sworn in as US Treasury Secretary on Monday and pledged quick action to help restore the crumbing US economy that was left reeling from a fresh wave of job losses.

Geithner, 47, took his oath shortly after the Senate voted to confirm him as treasury secretary, despite misgivings over his personal tax problems and ongoing government efforts to rescue the battered US economy.

Speaking ahead of Geithner's swearing-in, President Barack Obama highlighted the urgency of the work at hand, noting that 2.5 million jobs were lost last year and seven major corporations have just announced thousands more cuts.

"We cannot lose a day because every day the economic picture is darkening, here and across the globe," Obama said at the Treasury Department, located next door to the White House.

"It will take a secretary of the treasury who understands this challenge and all its complexities to help lead us forward," added Obama, who is eager to confront the worst US downturn since the Great Depression of the 1930s.

"You have got your work cut out for you as I think everybody knows. But you also have my full confidence, my deepest trust, my unyielding belief that we can rise to achieve what is required of us at this moment."

Geithner, a senior Treasury official in the 1990s, brings inside knowledge of how the crisis has unfolded from his most recent job as president of the New York Federal Reserve.

"Our agenda, Mr. President, is to move quickly to help you do what the country asked you to do ... to restore confidence in America's economic leadership around the world," he said at the ceremony.

Among his immediate objectives were "to make our economy more productive ... to restore trust in our financial system with fundamental reform (and) to make our tax system better at rewarding work and investment," he said.

Senators voted 60-34 to confirm Geithner after debate in which foes cited his failure to pay certain taxes earlier this decade and his support for government intervention in the economy while his backers stressed his expertise and the urgent need to pull the US economy out of a paralyzing recession.

"The approval of Secretary Geithner is an important step in tackling the economic crisis head-on," Senate Finance Committee Chairman Max Baucus, a Democrat, said after the vote. "But there's no honeymoon. Now the work begins."

Opposition came mostly from Republicans, joined by three Democratic Senators -- Robert Byrd of West Virginia, Tom Harkin of Iowa, and Russell Feingold of Wisconsin -- as well as independent Senator Bernie Sanders of Vermont who usually votes with the Democrats.

During the debate, lawmakers zeroed in on Geithner's past failure to pay certain US payroll taxes during his 2001-2004 employment at the International Monetary Fund (IMF), and some warned that a vote for him was a vote for unwarranted government intervention in the US economy.

"I don't believe Mr Geithner has been remotely candid," about his tax trouble, said Republican Senator James Inhofe, who warned a "yes" vote amounted to "ratifying aggressive federal government intervention in the economy."

Republican Senator Orrin Hatch, who backed the nomination, expressed misgivings about the tax imbroglio but said Geithner was "not incompetent, nor corrupt, and he's certainly not unethical."

Hatch said Geithner was "uniquely qualified" to help revive the US economy and warned fellow conservatives that they would regret forcing Obama to pick someone else because "you are not going to get a better person for this job."

At his confirmation hearing last week, Geithner, who replaces secretary Henry Paulson, apologized for his "completely unintentional" tax errors, insisting he had paid back 34,000 dollars to the Internal Revenue Service -- which he is now in line to supervise.

Geithner promised a "comprehensive plan" for the economy, starting with the housing market, and vowed to reopen frozen lines of credit by exerting greater pressure on banks that have benefited from a 700-billion-dollar bailout.

Reiterating the cardinal tenet of past administrations, he said "a strong dollar is in America's national interest" as he promised to make wise use of a planned stimulus package worth a whopping 825 billion dollars.

On the international front, he wrote that Obama believes China is manipulating its currency, the yuan, and plans aggressive diplomacy to ensure US trading partners play fair.

Caterpillar says to cut 20,000 jobs


CHICAGO (Reuters) – Caterpillar Inc said on Monday that quarterly earnings fell more than 32 percent and warned of a tough year ahead as the downturn that began in the United States metastasized into a full-blown global recession that hit sales of its earth-moving equipment.

The company also warned that profit in 2009 would be under severe pressure and said that it would cut about 17,000 workers and buy out 2,500 others, to reduce costs in the face of what it predicted would be the weakest year for business since the end of World War Two.

The news sent the company's shares skidding more than 10 percent in premarket trading.

The company reported a fourth-quarter profit of $661 million, or $1.08 a share, compared with $975 million, or $1.50 a share, last year.

Sales rose 6 percent to $12.92 billion.

Analysts, on average, expected the Peoria, Illinois-based company to report a profit of $1.28 a share on sales of $11.97 billion.

After shrugging off the downturn in U.S. housing that sparked the worldwide crisis, Caterpillar and other makers of bulldozers, dump trucks and excavators have suddenly faced a world of challenges, including a drop in spending by their well-heeled energy and mining customers.

Results last week from rival CNH Global NV and a profit forecast cut from Komatsu Ltd starkly confirmed that global demand for construction and mining equipment took a sharp turn down in the fourth quarter.

"We knew Caterpillar was going to be a disaster." said Eli Lustgarten, an analyst at Longbow Research. "We just didn't know the magnitude of it. And it's ugly."

Democrats: Stimulus plan no quick fix for economy


WASHINGTON – The White House warned Sunday that the country could face a long and painful financial recovery, even with major government intervention to stimulate the economy and save financial institutions.

"We're off and running, but it's going to get worse before it gets better," said Vice President Joe Biden, taking the lead on a theme echoed by other Democratic officials on the Sunday talk shows.

At the end of the Obama administration's first week, the party in power at both ends of Pennsylvania Avenue sought to lower expectations for a quick fix despite legislation expected to pass by next month that would pump billions of dollars into the economy. Democrats also opened the door for even more government aid to struggling banks beyond the $700 billion bailout already in the pipeline.

Congress has given President Barack Obama permission to spend the second $350 billion of a Wall Street bailout package even though lawmakers have criticized the Bush administration for the way it spent the first half. House Speaker Nancy Pelosi, D-Calif., said she is open to additional government rescue money for banks and financial institutions. But she said taxpayers must get an ownership stake in return.

Biden said Obama's choice for Treasury secretary, Timothy Geithner, will recommend whether more money is needed for the banks. Geithner could be confirmed by the Senate as early as Monday.

Congress is working on an $825 billion economic recovery package that dedicates about two-thirds to new government spending and the rest to tax cuts. Separate proposals making their way through the House and Senate would combine tax cuts for individuals and businesses, help for cash-strapped state governments, aid for the poor and unemployed, and direct spending by the federal government.

The goal is to infuse money directly into the economy in the hope of bringing the nation out of recession, while creating 3 million to 4 million jobs. It would be largest economic recovery package ever enacted; the White House says the scope rivals the construction of the interstate highway system after World War II.

Its success or failure could define the first years of Obama's term. On Sunday, Democrats sought to temper expectations, at least in the short term.

"These problems weren't made in a day or a week or a month or even a year, and they're not going to get solved that fast," said Lawrence Summers, a top economic adviser to Obama. "So even as we move to be as rapid as we can in jolting the economy and giving it the push forward it needs, we also have to be mindful of having the right kind of plan that will carry us forward over time."

Republicans want the recovery package tilted more toward tax cuts and have questioned whether government spending programs will revive the economy in the short-term.

"I just think there's a lot of slow-moving government spending in this program that won't work," House Republican leader John Boehner of Ohio said. "We can't borrow and spend our way back to prosperity."

The administration has pledged to spend three-quarters of the proposed money in the first 18 months after it is approved.

Obama met with Republican and Democratic congressional leaders at the White House last week to listen to Republican concerns about the package. Obama plans to meet with more Republican lawmakers this week, though Boehner said there is little support among House Republicans for the package in its current form.

A House vote is expected Wednesday. Democrats, if united, have a large enough majority to pass it without GOP backing. But Obama is seeking bipartisan support on this critical early test of his presidency. Senate Republicans could block the package but they would have to be united to do so.

Summers said Obama has inherited the worst economy since World War II, coupled with a federal budget deficit of more than a $1 trillion and soaring costs for entitlement programs such as Social Security, Medicare and Medicaid. The nation lost a total 2.6 million jobs last year as the housing market contracted and financial markets collapsed.

The government he said, can afford to spend more than $1 trillion to boost the economy and save financial institutions. But he warned that fiscal discipline will be necessary once the economy recovers.

Summers said Obama would end President George W. Bush's tax cuts on those who make more than $250,000. Pelosi has said she wants to repeal the tax cuts well before they expire at the end of 2010.

Obama might be willing to simply let them expire, Summers said, though he was noncommittal. He did say Obama will fight any effort to extend the tax cuts beyond their expiration date.

"The president has made clear that the question of timing is one we're going to have to reach as we see how the economy unfolds," Summers said. "But they're not going to be with us for long."

Republicans argue that the government shouldn't raise taxes on anyone during tough economic times.

Biden appeared on CBS' "Face the Nation," Pelosi was on ABC's "This Week," and Summers and Boehner spoke on NBC's "Meet the Press."

Sunday, January 25, 2009

New Miss America crowned

Katie Stam of Indiana was crowned Miss America on Saturday night, fighting off a throat infection, laryngitis and 51 other contestants to win the 88-year-old pageant.

The 22-year-old University of Indianapolis student became the first Miss America winner from the Hoosier State. She drew loud applause for her rendition of "Via Dolorosa" during the talent portion of the beauty pageant at Planet Hollywood Resort & Casino on the Las Vegas Strip.

Stam said she had trouble sleeping one night this week while she took prescription medicine to fight the infection, but got her voice back by Thursday.

"I was feeling like myself again -- I will never take my health for granted," she said.

The Seymour native also strutted onstage in a black bikini and an off-the-shoulder, white lace evening gown. During the interview portion of the competition she decried the use of performance-enhancing drugs among professional athletes and discussed the definition of glamour.

"That beauty that you feel on the inside, it's that confidence, that radiance inside of you, that's what glamour is," Stam said.

Stam won a $50,000 scholarship and hopes to obtain a bachelor's degree in communications and become a television news anchor. She began competing in pageants at age 15.

Stam was crowned by reigning Miss America Kirsten Haglund of Michigan and will soon embark on a year of travel and public appearances.

She said she had one semester left in school -- but didn't know when she would finish -- and already was graduating debt-free without the $50,000 prize. Stam said she might use the money for graduate school.

The first runner-up was Miss Georgia Chasity Hardman, who took home a $25,000 scholarship.

The 52 young women took to the stage in blue jeans, bikinis and ballgowns following a mini-reality series on pageant prep work and a week of preliminary competition.

After an opening dance number and the traditional parade of states, judges and fans immediately trimmed the field to 15 finalists. Five more were trimmed based on swimsuit and evening gown competitions, while the remaining 10 went on to showcase their dancing, singing and other skills during the talent portion.

"This gown nearly blinds people," Miss Arkansas Ashlen Batson said in a video clip played as she walked onstage in a silver dress with beading. Batson was eliminated before she could play her flute in the talent competition.

Miss Hawaii Nicole Fox drew cheers as she performed a traditional Tahitian dance, wearing a huge white feathered headdress and skirt to match. After she exited, part of her skirt remained on the stage.

In a new twist, viewers of a lead-in reality show, "Miss America: Countdown to the Crown" voted in four of the 15 finalists, while the judges announced the other 11 during a live TLC television broadcast.

The four finalists chosen by viewers were Stam, the eventual winner, and Hardman, the first runner-up, as well as Miss South Dakota Alexandra Hoffman and Miss Alabama Amanda Tapley.

The other 11 women remaining after the opening number were: Batson, Fox, Miss Michigan Ashlee Baracy, Miss Delaware Galen Giaccone, Miss District of Columbia Kate Marie Grinold, Miss Iowa Olivia Myers, Miss New York Leigh-Taylor Smith, Miss California Jackie Geist, Miss Florida Sierra Minott, Miss Kentucky Emily Cox and Miss Tennessee Ellen Carrington.

The viewer interaction to name four contestants as "America's choice" was Discovery-owned TLC's attempt to stoke interest in this year's contestants. Once an American icon, the shine on Miss America's crown has been dimmed by slipping ratings and the popularity of more salacious reality shows.

The pageant was dropped from network television after the 2004 pageant drew a record low viewership. It found a home in Las Vegas after moving from its longtime location in Atlantic City, N.J., but it has struggled to get its footing on cable.

In its second year on TLC, Mario Lopez, of "Extra," hosted with an assist from Clinton Kelly of TLC's "What Not to Wear." Judges include actress Laura Bell Bundy, Miss America 1999 Nicole Johnson, hairstylist Ken Paves and Olympic swimmer Cullen Jones.

As always, the women competed in swimsuit, evening gown and talent competitions, as well as a short "interview," in which they were asked their thoughts on a current event or hot topic. TLC has tried to dash the days of answers that declared that "children are the future." Questions came from average people and were intended to put the contestants on the spot.

TLC also had some fun with the cliches of pageants past. For example, in its scorecard for home viewers posted online, it asked viewers to count the number of mentions of world peace and to name the contestant with best spray tan.

Friday, January 23, 2009

Forbes - what will happen in comiming days

While industry executives and shoppers will remember 2008 as the year the party ended, figure 2009 to be the year of the hangover. Already, Circuit City, Linens 'N Things and Mervyn's stores are going away. Sharper Image is too, though the company will continue to sell some of its high-end gadgets through license agreements with other retailers.

More pain is on the way. One-third of U.S. women recently surveyed by America's Research Group said they plan no clothing purchases--none--in 2009. Normally, it's just 4%. That means the market is still far too saturated with stores.

Expect closings and bankruptcies to rattle the likes of Lane Bryant, Gap, and Starbucks. It's the inevitable counterpunch to the days of retailers fighting hand over fist for market share during an era of loose credit and minuscule interest rates.

Those days are over, probably for a long time. While accelerating unemployment will only last so long, consumers' debt loads and credit access don't figure to recover to pre-party levels for quite awhile.

"I don't think we will live the same way for 10 years," says Howard Davidowitz, chairman of New York-based retail consultant and investment bank Davidowitz & Associates. "People are so scared they're starting to save."

Retailers at risk in 2009, he thinks, include outerwear specialist Eddie Bauer and teen-apparel-seller Pacific Sunwear, along with Zales, the big jewelry chain. All three shuttered at least 8% of their U.S. stores last year, with many more closings expected. The same is largely true of Charming Shoppes, the owner of Lane Bryant, which closed 150 stores last year. With a mountain of debt and losses totaling over $260 million over the most recent 12-month reporting period, the company will close another 100 locations this year.

Another possible casualty: Sears Holdings, operator of Sears and Kmart stores. A key to hedge fund manager Eddie Lampert's 2005 merger of the two chains was in the underlying real estate. But with those values down 30% or so since then, slumping sales hit even worse.

"I'd be surprised if Sears-Kmart makes it through the year," says Britt Beemer, who runs retail market-research firm America's Research Group.

Non-apparel specialists like Starbucks and Sprint Nextel won't be going away, but they will close hundreds more stores during the coming year, Davidowitz predicts. Narrow specialties (Sprint's cellphones) and high prices (Starbucks' coffee) are tough sells as the consumer mood turns thrifty. What plagues Starbucks will also affect other upscale goody chains like Mrs. Fields' Cookies, and causal dining outlets like Applebee's and Cheesecake Factory. Any of the neighborhood outlets for those restaurant chains could be a casualty this year. For too many customers now, it's McDonald's or bust.

Davidowitz doesn't think a huge government stimulus will help. Better to let things bottom out naturally before regrouping. "Obama's plan will make it worse," he says. "We got into this by borrowing and stimulating, now he wants to borrow and stimulate more."

In Pictures: Where You Won't Shop in 2009

Charming Shoppes (owner of Lane Bryant, Fashion Bug, Catherines)

Lane.2gif.gif
© AP Photo / Chris O'Connor

Specialty: Women's plus-size

2008 closings: 150 (6% of total)

Outlook: Lots of debt, performance is terrible (losses of over $260 million for the 12 months ended in November 2008). The company already said it will close at least 100 more stores this year. Who knows if it can survive?

Eddie Bauer

Eddie1.gif
© AP Photo/Charles Bennett

Specialty: Outerwear

2008 closings: 29 (8% of total)

Outlook: The specialty retailer catering to 30- to 54-year-olds is on the critical list as losses mount and shares trade at 50 cents.

Ultimately unlikely to make it.

Timberland

Timb1.gif
© JIN LEE/Bloomberg News /Landov

Specialty: Outdoor Apparel

2008 closings: 40 (16% of total)

Outlook: Not on the critical list, but expect significantly more closings.

The footwear company is still sponsoring this year's Sundance Film Festival.

Ann Taylor

Ann1.gif
© AP Photo/Paul Sakuma

Specialty: Women's apparel

2008 closings: 60 (6% of total)

Outlook: After 180 layoffs, the women's clothing chain announced an additional 57 store closings over the next two years.

Relatively healthier than other struggling retailers, but figures to shrink further.

Zales/Piercing Pagoda

zales.jpg
© AP Photo/Paul Sakuma

Specialty: Jewelry

2008 closings: 105 (12% of total)

Outlook: Absolutely in free fall, more closings for sure.

Zales may not make it.

Click here for the full list of Who's Set to Shutter Stores?

Thursday, January 22, 2009

Kennedy's withdrawal creates a political mystery


ALBANY, N.Y. – Caroline Kennedy's mysteriously abrupt decision to abandon her Senate bid gave rise to an ugly swirl of accusations Thursday and feverish speculation over whether she jumped or was pushed. The 51-year-old daughter of President John F. Kennedy was widely considered a front-runner for the Senate seat until she sent a midnight e-mail to reporters and Gov. David Paterson saying she was withdrawing for what she described only as personal reasons.

Even though many Democrats had thought Paterson was going to appoint Kennedy any day now, a person close to the governor said Thursday that Paterson had no intention of picking her because he believed she handled herself poorly in introducing herself as a candidate.

The person also said there were concerns about possible tax problems for Kennedy, a potential "nanny problem" involving a housekeeper, and media rumors that her marriage was on the rocks. The person, who spoke on condition of anonymity because he said he wasn't authorized to speak for the governor, would not elaborate.

Kennedy spokesman Stefan Friedman would not detail her reasons for withdrawing, but complained: "This kind of mudslinging demeans that process and all those involved."

The state tax department said it could not find any problems with Kennedy's tax records. In a December interview, she denied she had any "nannygate" problem and said that her husband, Edwin Schlossberg, was very supportive and that they lived together with their children.

In recent weeks, the media gossip Web site Gawker and Vanity Fair have published rumors that Kennedy's marriage was in trouble.

On Thursday, Paterson issued a statement in which he said Kennedy's decision "was hers alone" and that he hadn't ruled out any candidate before she withdrew. He is expected to announce his choice Friday.

Kennedy's withdrawal unfolded in almost comically chaotic fashion.

She called the governor around midday Wednesday and told him she was having second thoughts about the job, the person close to Paterson said. After several hours in which the governor's staff could not find her to discuss the matter, she told the governor she would remain in contention, the person said. Then, an hour later, came the midnight e-mail.

People close to the governor were clearly angry at Kennedy over the confusion.

"The question is, did she jump or was she pushed?" said Maurice Carroll of the Quinnipiac University poll.

A person close to Kennedy denied her "personal reasons" were concerns about the health of her uncle, Sen. Ted Kennedy, who is suffering from a cancerous brain tumor discovered last summer. The person wasn't authorized to disclose the conversation between Kennedy and the governor and spoke on condition of anonymity.

It has been known for months that the prognosis was grave.

"I don't think it was Sen. Kennedy's health, because that doesn't seem to be anything that's changed dramatically," said Lee Miringoff, director of the Marist College poll that tracks New York politics. "I think that it may have been that she found out that she was going to be rejected and was given the option to avoid. She may have found the process increasingly dissatisfying. And given that she has been a private person, the last few weeks weren't pleasant."

"My guess," Miringoff said, "is it was a combination of all of the above. But we don't know."

Kennedy, an author, lawyer and fundraiser for New York City schools, was bitterly criticized in the past few weeks for holding reporters at bay during her early public forays, then was ridiculed for interviews in which she gave halting, rambling answers littered with "you know" and "um."

Doug Muzzio, a political science professor at Baruch College, called Kennedy's withdrawal "bizarre and ultimately embarrassing" to her and Paterson.

Among those who are still said to be in the running for the Senate seat left vacant by Hillary Rodham Clinton's appointment as secretary of state are New York Attorney General Andrew Cuomo, Reps. Kirsten Gillibrand, Carolyn Maloney and Brian Higgins, and Nassau County Executive Tom Suozzi.

Political scientist Gerald Benjamin of the State University of New York at New Paltz said Paterson may have simply been pressured by the party to go with a more experienced figure than Kennedy, who has never held office.

"I think that Democrats in public life were resistant — and rightly so — to the pre-emption of a major prize by a person not `bloodied in the arena' without an election," Benjamin said, borrowing a line from Theodore Roosevelt.

The seat was once held by Kennedy's slain uncle, Bobby Kennedy. Her initial announcement that she wanted the seat was met with both excitement from supporters and skepticism from those who maintained that she was simply trading on her famous name.

"I believe she's made a prudent and wise decision," said Robert McClure, a political science professor at Syracuse University. "This is a person, from all accounts, of talent, dedication and character. But I saw no evidence that she was prepared for the public life that the high office of U.S. senator requires."

But don't count her out of politics.

"She's got an aura that, it seems to me, can be polished up better than most of us," he said. "She could still be a formidable political opponent."

Obama breaks from Bush and orders Gitmo to close

WASHINGTON – Breaking forcefully with Bush anti-terror policies, President Barack Obama ordered major changes Thursday that he said would halt the torture of suspects, close down the Guantanamo detention center, ban secret CIA prisons overseas and fight terrorism "in a manner that is consistent with our values and our ideals."

"We intend to win this fight. We're going to win it on our terms," Obama declared, turning U.S. policy abruptly on just his second full day in office. He also put a fresh emphasis on diplomacy, naming veteran troubleshooters for Middle East hotspots.

The policies and practices that Obama said he was reversing have been widely reviled overseas, by U.S. allies as well as in less-friendly Arab countries. President George W. Bush said the policies were necessary to protect the nation after the Sept. 11, 2001, terror attacks — though he, too, had said he wanted Guantanamo closed at some point.

"A new era of American leadership is at hand," Obama said.

Executive orders signed by the new president would order the prison camp at Guantanamo Bay, Cuba, shut within a year, require the closure of any remaining secret CIA "black site" prisons abroad and bar CIA interrogators of detainees from using harsh techniques already banned for military questioners.

That includes physical abuse such as waterboarding, a technique that creates the sensation of drowning and has been termed torture by critics at home and abroad.

For the signing ceremony, Obama was flanked in the Oval Office by retired senior U.S. military leaders who had pressed for the changes.

Underscoring the new administration's point, the admirals and generals said in a statement: "President Obama's actions today will restore the moral authority and strengthen the national security of the United States."

Not everyone felt that way.

Criticism surfaced immediately from Republicans and others who said Obama's policy changes would jeopardize U.S. ability to get intelligence about terrorist plans or to prevent attacks.

House Minority Leader John Boehner was among a group of GOP lawmakers who quickly introduced legislation seeking to bar federal courts from ordering Guantanamo detainees to be released into the United States.

Boehner, R-Ohio, said it "would be irresponsible to close this terrorist detainee facility" before answering such important questions as where the detainees would be sent.

Obama said he was certain that the nation's security is strengthened — not weakened — when the U.S. adheres to "core standards of conduct."

"We think that it is precisely our ideals that give us the strength and the moral high ground to be able to effectively deal with the unthinking violence that we see emanating from terrorist organizations around the world," he said.

"We don't torture," Obama said, but Bush had said the same. The question has always been defining the word.

Later in the day, Obama visited the State Department to welcome newly confirmed Secretary of State Hillary Rodham Clinton, emphasizing the importance his administration intends to give diplomacy in his foreign policy. He told Foreign Service officers and other department employees they "are going to be critical to our success."

The president and Clinton jointly announced the appointment of former Senate Majority Leader George Mitchell, who helped broker peace in Northern Ireland, as special envoy to the Middle East. Former U.N. Ambassador Richard Holbrooke, who helped write the peace deal that ended Bosnia's 1992-95 war, was named special envoy for Pakistan and Afghanistan.

But for all the talk of a new era, it remained unclear how much of a shift Obama plans for the Middle East.

Though he named high-profile envoys to regions where critics say American attention lagged under Bush, the Mideast policy Obama outlined was no different.

He said he would aggressively seek a lasting peace between Israel and the Palestinians while also defending Israel's "right to defend itself." He called on Israel and Hamas to take steps to ensure the cease-fire that is in place in Gaza will endure. And he called on Arab states to show more support for the beleaguered Palestinian government of President Mahmoud Abbas.

On the surface, those views mirror the Bush administration's.

As for the treatment of terror suspects, Obama's policy overhaul was an implicit though not directly stated criticism of what he, other Democrats, nations around the globe and human rights groups have called Bush's overreach in the battle against terrorism.

In his presidential campaign, Obama had pledged to close Guantanamo, where many suspects have been detained for years without trial or charge.

Bush, too, had said he wanted to shut down Guantanamo. It never happened on his watch, amid the questions that must be answered to do so: Can other countries be persuaded to take some of the 245 men still be held there? Under what authority should remaining detainees be prosecuted? And, most difficult, what happens to the handful of detainees who are considered both too dangerous to be released to other nations and for whom evidence is deemed either too tainted or insufficient for a trial?

Obama has to answer those same questions.

As to that tough, third category of detainees, a senior administration official said "everything's on the table" as a possibility, including the use of military tribunals that were much criticized by Obama. The official would brief reporters only on condition of anonymity, contending that was necessary in order to speak candidly about details.

The administration already has suspended trials for terrorist suspects at Guantanamo for 120 days pending a review of the military tribunals.

A task force must report in 30 days on where the Guantanamo detainees should go, as well as a destination for future terror suspects.

The national commander of the Veterans of Foreign Wars of the U.S. criticized Obama's action.

"The detention facility is a valuable tool in the fight against terrorism because it provides useful intelligence information and it keeps our enemies off the battlefield," said Glen Gardner.

Said Obama's GOP rival for the White House, Sen. John McCain: "Numerous difficult issues remain."

Recent polls show the nation essentially split on the topic. An Associated Press-GfK poll last week found about half wanted the prison shut on a priority basis, and 42 percent did not.

On interrogations, another review panel will have 180 days to study whether interrogation techniques allowed under the U.S. Army Field Manual would be acceptably effective in extracting lifesaving intelligence from hardened terrorists.

But the order opens the door to divergences from the Army manual, as it allows the panel to recommend "additional or different guidance" for use by intelligence agencies. That would not, however, allow "enhanced interrogation techniques" to be reintroduced, the official said.

Obama left room for the practice of "extraordinary renditions" of detainees to other nations to continue, though the White House said none would be sent to countries where they might be tortured.

The executive orders also throw out every opinion or memo that the Bush administration used to justify its interrogation programs. And the Obama administration said all terrorism suspects will be covered by standards set by the Geneva Conventions, something the Bush administration opposed.

Obama also ordered the Justice Department to review the case of Qatar native Ali al-Marri, who is the only enemy combatant currently being held in the U.S.

Obama turns to Guantanamo, foreign policy Thurs.

WASHINGTON – President Barack Obama is ready to trumpet Hillary Rodham Clinton's installation as secretary of state while turning to veteran politician and dealmaker George Mitchell to guide the new administration through the Mideast thicket.

It amounts to a new-look U.S. foreign policy by four senators — Obama and Clinton and Vice President Joe Biden, who served together until after this year's election, and Mitchell, who served much earlier as Senate majority leader. Obama was going to the State Department Thursday to join Clinton in addressing diplomats there and — very likely — setting forth major elements of the administration's emerging national security strategy.

One key aspect of that policy would move forward Thursday, with Obama planning to sign an order to shutter the much-maligned Guantanamo prison within a year, according to a senior administration official. This would redeem a promise that Obama frequently made on the campaign trail.

The U.S. naval facility has been a major sore point for critics around the world who say it violates domestic and international detainee rights. The aide spoke on condition of anonymity because the order has not yet been issued.

The executive order on Guantanamo was one of three expected on how to interrogate and prosecute al-Qaida, Taliban or other foreign fighters believed to threaten the United States. The administration already has suspended trials for terrorist suspects at Guantanamo for 120 days pending a review of the military tribunals.

Obama also had in hand executive orders to review military trials of terror suspects and end harsh interrogations, a key part of plans that had been assembled even before Obama won the election on Nov. 4.

"In view of the significant concerns raised by these detentions, both within the United States and internationally, prompt and appropriate disposition of the individuals currently detained at Guantanamo and closure of the facility would further the national security and foreign policy interests of the United States and the interests of justice," said the draft executive order that would close Guantanamo. The draft was obtained by The Associated Press.

White House aides announced that the president would meet with retired military officers to discuss the executive orders in the morning, but would not confirm that Obama planned to sign them immediately.

The Obama-Clinton meeting at the State Department later Thursday was to include Biden and national security adviser Jim Jones and his deputy.

Obama's Foggy Bottom address could provide an opening for him to plunge into the Middle East conflict.

He has been reluctant to get ahead of the process, saying frequently during the post-Election Day transition period that the country should be speaking with a single voice on foreign affairs and there could only be one president at a time.

For that reason, Obama stood down from much substantive talk on the terrorist attack on Mumbai, India, and the surge of new violence on the Gaza Strip, although he voiced concern about the loss of life in both situations.

The State Department visit also could be the setting for Obama to announces the appointment of Mitchell, the former Senate Democratic leader, as his special envoy to the region.

Mitchell, credited with arranging a peace accord in Northern Ireland, played the special envoy role for former President Bill Clinton and has handled other delicate diplomatic assignments since leaving the Senate in 1995. The White House has been preparing an announcement of the new mission for Mitchell, said diplomatic officials, speaking on condition of anonymity because they were not authorized to discuss the plans publicly.

Meanwhile, Obama started his new life in the White House by keeping other campaign promises.

On Wednesday, he signed executive orders to limit his staff's ability to leave the administration to lobby their former colleagues. He also limited pay raises for his senior aides making more than $100,000 a year — a nod to a flailing economy and voters' frustrations.

He also opened the doors to the White House to visitors on Wednesday, meeting with guests in the White House's Blue Room.

"Enjoy yourself, roam around," a smiling Obama told one guest as he shuffled through the room. "Don't break anything."

Tuesday, January 20, 2009

Obama takes power, urges unity vs. 'raging storms'

WASHINGTON – Before a jubilant crowd of more than a million, Barack Hussein Obama claimed his place in history as America's first black president, summoning a dispirited nation to unite in hope against the "gathering clouds and raging storms" of war and economic woe.


On an extraordinary day in the life of America, people of all colors and ages waited for hours Tuesday in frigid temperatures to witness a young black man with a foreign-sounding name take command of a nation founded by slaveholders. It was a scene watched in fascination by many millions — perhaps billions — around the world.

"We gather because we have chosen hope over fear, unity of purpose over conflict and discord," the nation's 44th president said.

The presidency passed to Democrat Obama from Republican George W. Bush at the stroke of noon, marking one of democracy's greatest gifts: the peaceful transfer of power.

But a stark transfer all the same. In one of the new administration's first acts, Obama ordered federal agencies to halt all pending regulations until further review — this after Bush's final weeks raised heated debate over rushing new rules into effect on the way out the door.

And even though new White House aides struggled to find offices and work intercoms, an overhauled http://www.whitehouse.gov Web site was running under Obama's banner within minutes of his swearing-in. "Change has come to America," it declared.

Obama plunges into his new job in earnest on Wednesday after capping inaugural festivities at a national prayer service in the morning, meeting with his economic team and Iraq advisers and welcoming a stream of public visitors into the White House while Congress gives his economic revival plan a going-over and takes up the nomination of Hillary Rodham Clinton to be secretary of state. Her confirmation has been held up for now by Republican concern over the foundation fundraising of her husband, the former president.

The new president had been buoyant and relaxed through the three days of preinaugural festivities. But he seemed somber as he stood on the Capitol steps, placed his left hand on the Bible used by Abraham Lincoln and repeated the inaugural oath "to preserve, protect and defend" a Constitution that originally defined blacks as three-fifths of a person. A deafening cheer went up.

"What is required of us now is a new era of responsibility — a recognition, on the part of every American, that we have duties to ourselves, our nation, and the world, duties that we do not grudgingly accept but rather seize gladly," Obama said. "This is the price and the promise of citizenship."

The day's high spirits were jarred by sudden concern about the health of Sen. Edward M. Kennedy. The legendary Democrat, suffering from brain cancer, and was rushed from a Capitol luncheon in Obama's honor to a hospital. "My prayers are with him and his family," Obama said. Later, fellow Sen. John Kerry of Massachusetts said Kennedy was laughing and joking at the hospital and itching to get back to work.

On the inaugural parade route, Obama and his wife, Michelle, climbed out of the heavily armored presidential limousine and walked a few blocks along famed Pennsylvania Avenue, waving to adoring crowds under the watchful eyes of security agents.

Hours later, they put the day's formality behind them to swirl through 10 inaugural balls. With the president in white tie and the first lady in a white one-shouldered gown by 26-year-old New York designer Jason Wu, their first dance was to Beyonce singing the Etta James classic "At Last." "Tonight, we celebrate. Tomorrow, the work begins," Obama said at the Commander in Chief Ball.

Throughout his inaugural address, an 18-minute sermon on civic duty, Obama wove a thread of personal responsibility and accountability. A liberal Democrat proposing billions of dollars in new spending, Obama nonetheless spoke of the limits of government.

"It is the kindness to take in a stranger when the levees break, the selflessness of workers who would rather cut their hours than see a friend lose their job which sees us through our darkest hours," he said. "It is the firefighter's courage to storm a stairway filled with smoke, but also a parent's willingness to nurture a child, that finally decides our fate."

Obama's 10-year-old daughter, Malia, aimed a camera at her father as he spoke. Michelle leaned onto the edge of her seat, body tensed and brow knitted.

"Starting today, we must pick ourselves up, dust ourselves off and begin again the work of remaking America," Obama said.

He placed blame for the recent economic collapse not just on greed and irresponsibility "on the part of some" but also on the inability or unwillingness of everyone to move the country beyond an industrial-based economy — what he called "our collective failure to make hard choices and prepare the nation for a new age." With that, the 47-year-old former Illinois senator transformed himself — from a candidate claiming his campaign is about the voters to a president promising to put the nation in the people's hands.

Unlike most predecessors, Obama takes office with his agenda in many ways set for him.

An economy that seems more foreboding than at any inauguration since Franklin D. Roosevelt took office in 1933, with some 11 million people now out of work, and trillions of dollars of stock market investments lost. Two wars, one in Iraq that most of the country has long wanted over and another in Afghanistan that is spiraling downward and needs an overhaul. The continuing fear that another calamitous terrorist attack is not out of the question.

More inspirational than prescriptive, Obama's inaugural address only glancingly mentioned a series of promises from his campaign: to get the U.S. out of Iraq, stabilize Afghanistan, create jobs, "restore science to its rightful place," boost the use of alternative energy, address climate change, transform schools, manage government spending wisely and oversee a more bipartisan, less-divisive approach to policy-making.

To allies overseas eager for his leadership to replace Bush's, Obama had welcome words: "We are ready to lead once more."

His ascension to the White House was cheered around the world as a sign that America will be more embracing, more open to change. "To the Muslim world," Obama said, "we seek a new way forward, based on mutual interest and mutual respect."

Still, he bluntly warned, "To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West, know that your people will judge you on what you can build, not what you destroy."

The day began well before dawn as people made their way downtown to secure spots from which to witness history, and it was extending well past midnight through the official balls and many more unofficial galas.

The drama exceeded even the breathless buildup of recent days' nearly nonstop discussion on TV, blogs, podcasts and text messages. Not only heavily policed and barricaded Washington but much of the country virtually halted in its tracks — even, albeit briefly, inside the casinos of Las Vegas.

The nation had celebrated 55 inaugurations before, but none like the one that made a president out of the son of Kenya and Kansas, a man who rose to America's highest office largely untested at executive leadership, his political experience encompassing only four years in the U.S. Senate and eight in the state legislature of his home state of Illinois.

Blacks especially powered the jubilation that was thick in the chilly air. Even though Obama didn't give the topic of race, his or others, much treatment in either his campaign nor his inaugural, blacks poured into Washington from all over to watch firsthand as one of their own at last shattered a painful racial barrier.

"It almost leaves me speechless," said 69-year-old Tony Avelino, who traveled from Brea, Calif. "This situation is so emotional it's basically an unreal experience," added 56-year-old Cleveland Wesley, on the Mall from Houston with his wife as the sun rose.

Many others also see in Obama fresh reason for optimism at a time of great national insecurity. Or a chance for rest from the eight acrimonious years of the Bush presidency. Or even a turn toward modernity, as a country hurtling into new ways of communicating, connecting and conducting business chose a man more comfortable in that world than any leader before him.

Excitement over Obama's young, camera-ready family and the thought of Malia Obama and her sister, 7-year-old Sasha, turning the stately White House into a children's playroom also figured prominently in the day.

Among the feverishly discussed questions: What would fashion-forward Michelle Obama wear, information kept as a closely held secret? The shimmering gold brocade sheath dress and matching coat that she chose for the daytime sparked immediate water-cooler discussion, especially when she paired the outfit with green gloves against the cold.

In a country nearly evenly divided between Democrats and Republicans, it was notable that protests were nearly unseen, a remarkable shift from the two Bush inaugurations that were marked by boisterous demonstrations. One group of about 20 people from a Baptist church in Kansas demonstrated with anti-gay slogans.

With his White House campaign and landslide November victory built in part on his rhetorical gifts, Obama sought to provide reassurance for the future while compelling listeners to sacrifice.

He articulated eloquently the deeper effect on the American psyche of the problems of war and recession: "a nagging fear that America's decline is inevitable, and that the next generation must lower its sights."

Not so, said Obama. But he cautioned that the effort will require all citizens, no matter party, age, skin color, or status, to get to work.

"The time has come to set aside childish things," he said, invoking the Bible. "Greatness is never a given. It must be earned."

Bush, the man who has led the nation the past eight years, hosted the Obamas for coffee in the morning, accompanied them to the Capitol and sat tightlipped in the front row for Obama's swearing-in and speech.

Obama thanked Bush for his service as president and never directly criticized him. But he also repeatedly talked of the need to abandon current practices, whether "the petty grievances and false promises, the recriminations and worn out dogmas, that for far too long have strangled our politics," the lack of a watchful enough eye on financial markets, or what he called a false choice between safety and ideals — a reference to brutal interrogation practices and other actions taken by the Bush administration in the wake of the Sept. 11, 2001, terrorist attacks.

"With hope and virtue, let us brave once more the icy currents, and endure what storms may come," Obama said.

Afterward, he escorted his predecessor to a helicopter and Bush flew with his family first to Andrews Air Force Base for a private departure ceremony, then on to a welcome rally in Midland, Texas and finally, by nightfall, his ranch near Crawford, Texas. As the architect of two unfinished wars and the man in charge at a time of economic calamity, the now ex-president left Washington under the cloud of approval ratings hovering at historic lows. People in the crowd booed when Bush's image was flashed on jumbotrons and one contingent near the Capitol sang "Na-na-na-na, hey, hey, goodbye" in a jeering farewell.

For all the new president's call to joint effort, it is political reality that it will largely be up to Obama himself to meet soaring expectations — both those he has created for himself and those others have placed on him unbidden.

In the Oval Office awaits the workaday, hard-nosed business of the daily governance of a nation of 304 million. And while Washington celebrated, events kept moving: Wall Street slid, news surfaced that U.S. carmaker Chrysler could be purchased in part by Italian auto giant Fiat, and prosecutors at the U.S. detention center at Guantanamo Bay, Cuba, sought to suspend all war-crimes trials pending Obama's guidance.

Congress already has given Obama $350 billion in new financial-industry bailout money and is fast-tracking a massive economic stimulus bill to be worth $825 billion or more. And Bush has ordered 30,000 more U.S. troops to go to Afghanistan this year, adding to 32,000 already there. But these moves are hardly the last word on the big issues of the day.

And some of Obama's attention to even those things will undoubtedly be deferred to crises — a natural disaster, an overseas conflagration — that can pop onto the scene unexpectedly and consume enormous amounts of White House energy.

His transition also produced some missteps that raised questions about whether Obama's highly disciplined, perfectionist organization that proved brilliant at winning an election will be equally brilliant at governing.

Obama's team overlooked known problems in the backgrounds of two Cabinet nominees — Bill Richardson for Commerce and Timothy Geithner for Treasury. They also flubbed the introduction to Congress of Leon Panetta as CIA director. Obama also was tripped up by controversy surrounding the appointment of his successor in the Senate.