Deal Reached on Tax Rebates for Stimulus

Democrats running Congress and the Bush administration reached a tentative deal Thursday on $300-$1,200 tax rebates and business tax cuts to jolt the slumping economy.
House Speaker Nancy Pelosi agreed to drop increases in food stamp and unemployment benefits during the Wednesday meeting in exchange for gaining rebates of at least $300 for almost everyone earning a paycheck, including low-income earners who make too little to pay income taxes.

Families with children would receive an additional $300 per child, subject to an overall cap of perhaps $1,200, according to a senior House aide who outlined the deal on condition of anonymity in advance of formal adoption of the whole package. Rebates would go to people earning below a certain income cap, likely individuals earning $75,000 or less and couples with incomes of $150,000 or less.

The emerging package was already drawing fire from liberal activists and labor unions upset that proposals to extend unemployment insurance and boost food stamps had been dropped. They said those ideas could pump money into the economy more quickly than tax rebate checks that won't be delivered until June.

Conservative Republicans were likely to be restless over tax rebates going to those without income tax liability. Democratic aides said greater GOP flexibility over giving relief to poor families with children -- who would not have been eligible under President Bush's original tax rebate proposal -- was the catalyst that moved the talks forward.
Source: Google News

Britney Again Skips Custody Case Hearing

For the second time in a row, Britney Spears made it to the courthouse for a hearing in her ongoing child custody dispute -- only to again bolt at the last minute.
The pop star got to the court on time Wednesday but fled before a hearing that could have helped her restore visitation rights with her two young boys.
Wearing bright pink lipstick, sunglasses, shiny gold platform shoes and a very short black dress with a ruffled hem, Spears was driven into an underground garage and then entered the downtown civil court building. A court spokesman said she got through a security metal detector, then announced, "I want to leave," and returned to her car. Spears, 26, had not been ordered to be at the hearing.

On Jan. 14, the pop star also never made it inside the courthouse, leaving abruptly amid a swarm of paparazzi. A lawyer for Spears' ex-husband Kevin Federline said Wednesday such behavior may have played a role in a Superior Court commissioner's decision that she would remain barred from seeing sons Sean Preston, 2, and Jayden James, 1. "When you're trying to convince a judge that previous orders are not necessary, the court has to have the opportunity to observe, to hear from and to assess the demeanor of the person," attorney Mark Vincent Kaplan said outside court.

When Commissioner Scott Gordon called the Spears case on Wednesday, her attorney, Anne Kiley, went out of the courtroom to try to find her. Kiley returned 20 minutes later and conceded she didn't know if Spears would attend. Gordon went ahead with the hearing after reporters were ordered to leave the courtroom. Spears' lawyer argued that she be allowed visits and Federline, 29, was asked a few questions, said court spokesman Allan Parachini.

"I can't provide any more details, except at the end of the day there was no change in the court order and Miss Spears has no visitation and no custody of the children," Parachini said.
Spears' attorney left without commenting to reporters. She did not return a call seeking comment.

Kaplan said the biggest questions in the custody case now have to do with the events of Jan. 3, when Spears refused to relinquish one of the children to a Federline bodyguard. Police were called and she wound up being hauled off to a hospital by paramedics.
The day after that incident, Gordon suspended Spears' visitation rights and gave full custody to Federline, who at that time had temporary custody. "We know what happened that evening," Kaplan said. "But no one knows why it happened."

Late Wednesday, Spears' attorneys withdrew a pending motion that had asked the court to allow them to no longer represent her in the case.
Raquel Maria Dillon contributed to this report
Source: Associated Press

Police investigating Winehouse glass pipe video

British authorities told CNN Wednesday they are examining a home video that shows singer Amy Winehouse smoking something in a glass pipe minutes after she is heard saying she had just taken six tablets of the anti-anxiety drug Valium.

Scotland Yard said it had received the video from The Sun newspaper, which made it public Tuesday. A Grammy-nominated singer, Winehouse's alleged battle with drugs have garnered constant headlines.

Her hit song "Rehab" describes her reluctance to enter a rehabilitation center, which she did last summer. Read full article »
Source: CNN News

Obama backer accuses Bill Clinton of suppressing vote

A prominent supporter of Sen. Barack Obama on Wednesday compared Bill Clinton's appeals for his wife, Sen. Hillary Clinton, in South Carolina to the tactics used by a former Republican strategist that are infamous within Democratic circles.

When asked about the comparison, the former president reacted with disapproval, saying it was a distraction from what voters really cared about.

In an interview with CNN, Dick Harpootlian, a former chairman of the South Carolina Democratic Party and an Obama backer, said some of Clinton's recent remarks on the campaign trail were appeals based on race and gender, meant to "suppress the vote, demoralize voters and distort the record." Read full article »
Source: CNN News

Bill Clinton gets upset with CNN reporter

Bill Clinton became visibly upset Wednesday over comments by a prominent South Carolina Democrat that compared the former president's actions on the trail to those of infamous Republican strategist Lee Atwater.

In an interview with CNN's Jessica Yellin, Dick Harpootlian, a former chairman of the South Carolina Democratic Party and a supporter of Barack Obama, said some of Bill Clinton's recent remarks on the campaign trail were appeals based on race and gender. He said the comments were meant to "suppresses the vote, demoralize voters, and distort the record," and said they were "reminiscent of Lee Atwater."

Clinton sharply disputed the charge, and lashed out at Yellin for raising the question.
"You live for this. This hurts the people of South Carolina," he said. "Because the people of South Carolina come to these meetings and ask questions about what they care about. And what they care about is not what's going to be in the news coverage tonight, because you don't care about it.

"What you care about is this. And the Obama people know that. So they just spin you up on this and you happily go along. I mean, the people don't care about this," he added. "They never ask about it. And you are determined to take this election away from them. And that's not right. That is not right. This election ought to belong to those people who are out here asking questions about their lives."
Source: CNN News

Polls: Giuliani slipping in "crucial" state

Two new polls appear to show Republican Rudy Giuliani slipping in Florida, a state he once called "crucial" to his presidential chances.

In a survey conducted for the Miami Herald and the St. Petersburg Times, the former New York mayor only registers 15 percent among Republican primary voters. That puts him in a tie with former Arkansas Gov. Mike Huckabee, who has spent little time in the state and has only a fraction of the organization Giuliani has there.

John McCain and Mitt Romney are statistically tied for the top spot in the poll — McCain's at 25 percent and Romney's at 23 percent.
Giuliani also finds himself in third place spot in a new American Research Group poll with 16 percent, a statistical tie with Mike Huckabee's 17 percent. John McCain is on top with 29 percent and Mitt Romney is second with 22 percent.

Speaking on CNN's The Situation Room Wednesday, Giuliani maintained he would win the state next Tuesday, and said his strategy of focusing exclusively on Florida over the last month will prove to be the right one.

"We are going to win in Florida, then we will be talking about exactly who made the right decisions," he said. "That's really, I am an optimist about the way you govern and an optimist about the way you run a campaign. That's the way I look at it."

In an interview Tuesday, Giuliani had appeared to downplay his focus on the state, telling an interviewer that the state would be an “important win,” but that “I don’t think any candidate ever puts himself in a corner and says, must win, have to win, must win.’’
The Miami Herald/St. Petersburg Times poll carries a margin of error of plus or minus 5.1 percent, while the ARG poll's margin of error is plus or minus four percentage points. Both were conducted January 20-22.
Source: CNN News

Wall Street powers back

Stocks rallied Wednesday, with the Dow bouncing back from a more than 300-point loss earlier in the session as investors jumped back into a variety of sectors after the recent battering.
The Dow Jones industrial added almost 300 points, after having fallen more around 326 points earlier in the session.

The Standard & Poor's 500 (SPX) index rose 2.1 percent and the Nasdaq composite gained 1 percent. Both indexes had slumped during the session.
Stocks have been hit hard in 2008, amid fears that the credit and housing market crises will send the U.S. economy into recession.

Global stocks slipped too, prompting the Federal Reserve to step in Tuesday and announce an emergency intermeeting interest rate cut, a decision that initially had a mixed impact on stocks, but helped pave the way for Wednesday's bounce back.

Also helping: reports that New York regulators and banks met to discuss a means of raising money for struggling bond insurers, Briefing.com reported. That sent shares of Ambac Financial and MBIA surging.

The rally was also sparked by short-covering, the process by which traders who have sold shares short to take advantage of a falling market need to buy them back.
"Although stock prices might fall tomorrow and beyond, the market did just contract more than 2,000 points in three months, and so people are going to be willing to jump in to certain areas," said Gary Webb, CEO at Webb Financial Group.

By early afternoon, the Dow had fallen over 2500 points from its all-time high of 14,164.53 hit on Oct. 9. the S&P 500 had lost over 18 percent from its all-time high in October.
The Nasdaq had tanked more than 22 percent from its cyclical high in October.

After the close Wednesday, eBay (EBAY, Fortune 500) warned that first-quarter and 2008 results won't meet estimates. The online auctioneer also reported fourth-quarter results that topped estimates, but investors focused on the warning, sending shares lower in extended-hours trading.

eBay also said that CEO Meg Whitman will be stepping down in March, around the time of her 10-year anniversary, as had been expected.

Financial sector: Big banks jumped, with JP Morgan Chase (JPM, Fortune 500) gaining nearly 12 percent. Citigroup (C, Fortune 500), Merrill Lynch (MER, Fortune 500), Morgan Stanley (MS, Fortune 500) and Lehman Brothers (LEH, Fortune 500) all rallied as well.
The banks also benefited after Bear Stearns upgraded the sector, citing the potential for upside as a result of the Fed's interest rate cut.

On Tuesday, the federal reserve cut the fed funds rate, a key overnight bank lending rate that impacts consumer loans, by three-quarters of a percentage point to 3.5 percent. Some investors are expecting the Fed to cut rates further when the central bank policy makers meet next week, suggesting that Fed still sees risks to growth.

Elsewhere in the financial sector, Bank of America (BAC, Fortune 500) shares surged after the company said its planning a stock sale to raise $6 billion in capital. The company also reported quarterly earnings that were short of forecasts.

The Fed rate cut: The turmoil in global markets prompted the Federal Reserve to abruptly cut interest rates three-quarters of a percentage point, to 3.5 percent, on Tuesday. The Dow initially dropped 450 points on the news, but recovered to finish down 128.
Harry Clark, founder and CEO of Clark Capital Management, said the markets are still digesting the Fed's action, which he called an "historic event."

Earnings reports: After the market closed Tuesday, iPod and iPhone maker Apple (AAPL, Fortune 500) reported strong earnings for the fourth quarter but warned that the current quarter could be pressured by slowing consumer spending. Apple shares fell nearly 11 percent, cutting bigger morning losses.

On Wednesday morning, Motorola (MOT, Fortune 500) warned that it will fall to a loss in the first-quarter as it struggles to turnaround its beleaguered handset division. The company also reported and 84 percent drop in fourth-quarter profits. Shares plummeted 18.8 percent.

Dow component Pfizer (PFE, Fortune 500) reported sales and earnings that beat Wall Street estimates and raised its full-year sales projections. Shares gained 2.8 percent.
In other news, the Congressional Budget Office expects the U.S. budget deficit to grow to $250 billion this year, though that number may need to be revised once an economic stimulus package being debated in Washington is released.

The Bush administration proposed a $145 billion plan to boost the nation's economic activity last week, but details have not been finalized.
Market breadth was positive. On the New York Stock Exchange, winners beat losers almost three to one on volume of 2.83 billion shares. On the Nasdaq, advancers beat decliners by roughly three to two on a volume of 3.64 billion shares.

Treasury prices tanked as investors took profits after the recent advance. The decline sent the 10-year note yield up to 3.60 percent from 3.44 percent late Tuesday. The yield on the 2-year note briefly reached a four-year low of 1.86 percent during Wednesday's session before recovering.

In currency trading, the dollar rose versus the yen and eased versus the euro.
U.S. light crude oil for March delivery fell $2.86 to settle at $86.99 a barrel on the New York Mercantile Exchange.
COMEX gold fell $7.20 to settle at $883.10 an ounce.
Source: CNN News