Obama and GOP in Deal on Tax Cuts

WASHINGTON — President Obama announced a tentative deal with Congressional Republicans on Monday to extend the Bush-era tax cuts at all income levels for two years as part of a package that would also keep benefits flowing to the long-term unemployed, cut payroll taxes for all workers for a year and take other steps to bolster the economy.

The deal appeared to resolve the first major standoff since the midterm elections between the White House and newly empowered Republicans on Capitol Hill. But it also highlighted the strains Mr. Obama faces in his own party as he navigates between a desire to get things done and a retreat from his own positions and the principles of many liberals.

Congressional Democrats pointedly noted that they had yet to agree to any deal, even as many Republicans signaled that they would go along.

Mr. Obama said that he did not like some elements of the framework, but that he had agreed to it to avoid having taxes increase for middle class Americans at the end of the year. He said that in return for agreeing to Republican demands that income tax rates not go up on upper-income brackets, he had secured substantial assistance to lower- and middle-income workers as well as the unemployed.

“It’s not perfect, but this compromise is an essential step on the road to recovery,” Mr. Obama said. “It will stop middle-class taxes from going up. It will spur our private sector to create millions of new jobs, and add momentum that our economy badly needs.”

Pentagon study: Gays could serve without harm

WASHINGTON — A Pentagon study on gays in the military has determined that overturning the law known as "don't ask, don't tell" might cause some disruption at first but would not create any widespread or long-lasting problems.

The study provided ammunition to congressional Democrats struggling to overturn the law. Even with the release of Tuesday's study, however, there was no indication they could overcome fierce Republican objections with just a few weeks left in the year-ending session of Congress. Democrats will be in the minority when Congress reconvenes in early January.

"We are both convinced that our military can do this, even during this time of war," wrote the study co-chairs Pentagon General Counsel Jeh Johnson and Army Gen. Carter Ham.

Defence Secretary Robert Gates and the chairman of the Joint Chiefs of Staff, Adm. Mike Mullen, said Congress should act quickly because of a recent effort by a federal judge to overturn the law.

Gates said the military needs time to prepare for such a change, even though he said he did not envision any changes to personnel policy that would be needed. He said a sudden court-issued mandate would significantly increase the risk of causing disruption to the force.

"Given the present circumstances, those that choose not to act legislatively are rolling the dice that this policy will not be abruptly overturned by the courts," Gates told reporters.

Obama touts Chrysler return

A week after General Motors made a showy return to Wall Street, President Obama highlighted the revival of the other bailed-out auto company during a trip to an Indiana transmission factory.

The campaign-style visit to a Chrysler plant here, a city battered by plant closures, was meant to underscore the message that the stimulus, the auto-company bailouts and other federal measures had prevented even worse economic devastation.

The unemployment rate in Kokomo has dropped from 20 percent last year to 12 percent, thanks in part to $400 million in stimulus money and the rescue of General Motors and Chrysler, administration officials said.

"No, we aren't out of the woods yet," Obama said at the plant. "It took a lot of years to get us into this mess. It will take longer than anybody would like to get us out. But I want everybody to be absolutely clear, we are moving in the right direction."

The appearance highlighted the administration's efforts to revive Chrysler, which has four plants in the city, employing nearly 4,500. The smaller of the two bailed-out automakers, Chrysler faced far graver challenges than did General Motors during the downturn.

Although both companies had been staggered by financial burdens, Chrysler also suffered from a nearly empty pipeline of products. Many analysts and some within the administration argued that the company should not be saved.

Bush Recollection Puts Spotlight on Miscarriage

But the scene, described by former President George W. Bush in his interview with Matt Lauer of NBC News on Monday night, has started a national conversation — both about his mother, Barbara Bush, and about the complex psychological fallout from miscarriage.

Mr. Bush called his mother’s action “straightforward,” and added that it illustrated “how my mom and I developed a relationship.” Some opponents of abortion reacted approvingly. Other commentators called Mrs. Bush’s behavior the action of a depressed and angry person.

But experts say the incident is hard to interpret half a century after the fact. Indeed, it was extraordinary in at least one respect, they add: Mrs. Bush made a point of directly confronting the loss at a time when the subject was largely taboo.

When a middle-class woman miscarried in postwar America, doctors often whisked the fetus away as if there were no loss of life at all, only embarrassment; women whispered about it between themselves but hardly ever discussed it openly.

“It wasn’t thought of as losing a life; it was more like a medical mishap,” said Dr. Randi Hutter Epstein, a physician and the author of “Get Me Out: A History of Childbirth” (Norton, 2010). “And although women felt it privately, they didn’t feel it was worthy of going to see someone, or seeking help.”

Five ways the election will change Washington

WASHINGTON — Voters say they want change.Again.

Two years after President Obama was swept into office on a message of hope, he faces what may be a historic rebuke from midterm voters, including millions of independents who supported him last time. Four years after California liberal Nancy Pelosi triumphantly claimed the House speaker's gavel for the Democrats, Ohio conservative John Boehner is poised to take it away for the Republicans.

Those reversals reflect continuing dissatisfaction with the country's course and its politics, especially as the nation struggles to recover from a deep recession. In this election, as in the past two, voters have moved toward whichever party promised to shake things up: Democrats in 2006 and 2008, Republicans in 2010.

This time, if Republicans win control of the House and shave the Democratic majority in the Senate, Obama will be forced to forge new working relationships with the GOP.

MIDTERMS: Jobs, economic security top issues

In Congress, a freshman class of Tea Party members is likely to clash not only with Democrats but also with the establishment Republicans who tried to defeat them in GOP primaries. And the capital's agenda increasingly will focus on what political scientist John Pitney calls "the politics of subtraction" — reducing federal spending.

Chicago is Clinton's latest stop to rally Dems

CHICAGO -- Former President Bill Clinton rallied voters Tuesday to keep Democrats in control of Illinois, especially in the races for governor and President Barack Obama's old U.S. Senate seat as Republicans gain razor-thin leads.

To rally goers, his swing through a state where every statewide office is held by a Democrat - and Obama's planned visit later this week - were signs the party believes Illinois is still winnable. Chicago was Clinton's latest stop as he crisscrosses the country urging Democrats to turn out in force on Nov. 2.

"If they had said we'll go someplace else, skip Illinois ... that would have been a very bad sign," said Chicago Alderman Danny Solis, who was among the few hundred party faithful who turned out for Clinton's rally at a downtown Chicago hotel.

Calif. gov debate overshadowed by personal jabs

Coming into their final debate of the California governor's race, Democrat Jerry Brown and Republican Meg Whitman had a chance to persuade a statewide audience they could turn around the economically troubled state.

Instead, their third face-to-face exchange resorted to many of the personal attacks that have dominated the last few weeks of the campaign.

Neither candidate presented any new ideas in a contest that is virtually tied just three weeks before Election Day and in which a fifth of voters remain undecided. A poll released two weeks ago found about half the respondents were dissatisfied with both candidates.

Before Brown and Whitman walked on stage, moderator and former NBC anchor Tom Brokaw told the audience at Dominican University that he planned to address not just the critical economic woes facing the nation's most populous state but the tone of the campaign.

The debate followed several weeks of personal attacks that had both candidates on the defensive — Whitman over revelations that her housekeeper was an illegal immigrant and Brown over an audio tape in which a female campaign aide called Whitman a "whore" for pandering to a Los Angeles police union.

While the first few minutes of the debate were civil, with Brown and Whitman touting California's potential and the tough decisions ahead, much of the hour-long face-off was dominated with rehashed verbal jousting on nearly every issue.

It left 66-year-old independent voter Tom Callinam of Mill Valley with little insight into the candidates' plans if elected governor.

"I have a hard choice. I haven't decided yet. I don't think that debate helped because of all the canned answers," said Callinam, who attended the debate. "I would have liked them to answer the questions."

Brown, 72, sought to describe Whitman as a billionaire corporate executive who wants to buy herself the state's top job to benefit herself and wealthy friends. Whitman, 54, repeatedly called her rival a career politician beholden to public employee unions who would continue the "same old, same old" failed policies in Sacramento.

Nasdaq drops, S&P dips on worries about tech demand

Tech shares slumped on Wednesday, hit by worries about demand for semiconductors and data storage.

The Nasdaq bore the brunt of the day's selling, led by data system services provider Citrix Systems (CTXS.O). The stock was down in sympathy with small-cap Equinix Inc (EQIX.O), which plunged 33.1 percent to $70.34 after it issued a revenue warning late Tuesday. Citrix slid 14.1 percent to $60.15.

"You are starting to see a natural rotation and some profit taking in the cloud computing sector that has been red hot in the last few months," said TD Ameritrade chief options strategist Joe Kinahan in Chicago.

"So those investors that currently own Citrix are reconsidering the valuation at these levels."

Obama promotes family-friendly hours at businesses

WASHINGTON -- President Barack Obama promoted flexible hours and other family-friendly workplace policies Tuesday, telling a conference of female business leaders that such arrangements are more than a women's issue.

While addressing Fortune magazine's 2010 "Most Powerful Women Summit," Obama said companies with flexible arrangements can have lower turnover and absenteeism and higher productivity.

Obama said he wants federal agencies to be models with policies like mobile workplaces and flexible schedules. He urged that employees be judged "by the results they get, not the facetime they log."

Obama also supports paid leave programs and child tax credits.

The Fortune event, in its 12th year, brought together hundreds of women who have succeeded in fields from business to education to philanthropy. Obama said their achievements show how much progress women have made in the workplace since his grandmother hit a "glass ceiling" after becoming a bank vice president in Hawaii.

But, the president said in a dinner speech the Carnegie Mellon Auditorium, "we still have a ways to go."

Obama holds 1st summit on community colleges at WH

WASHINGTON — President Barack Obama is turning the education spotlight on community colleges, enlisting career teacher Jill Biden to preside over the first White House summit on the system of schools he's counting on to help produce an additional 8 million graduates by 2020.

While providing millions of students with skills training and a less expensive path to a college degree, these schools are challenged by climbing enrollments, high dropout rates and large numbers of students who come from high school needing significant remedial education before they can tackle college level work, officials say.

What works — and does not work — at community colleges will be topics of discussion at Tuesday's summit.

Obama is scheduled to deliver opening remarks.

The daylong exercise will involve representatives from community colleges, business, philanthropy and government in discussions about how these schools can meet the increased demand for job training and also help fulfill Obama's wish for the U.S. to become the world's top producer of college graduates by 2020.