Fiscal cliff deal won't help labor market, economists say

Lawmakers may have avoided another recession by coming to a last-minute deal on the so-called fiscal cliff, but they did little to boost the lackluster labor market, indicating job seekers may have a tough time finding work in the first half of 2013, economists say.

Congress did not postpone a scheduled increase in payroll taxes, which means that employed Americans will see less take home pay than they did last year. That means they'll spend less initially while they readjust their budgets to the new reality. Slowing consumer spending will create less demand for goods and services, so "businesses will see less of a need to hire,” said Michael Feroli, chief U.S. economist for JPMorgan Chase.

The Bureau of Labor Statistics will release job numbers for December on Friday, and economists expect those numbers to be decent, with businesses and government adding about 150,000 jobs. But that report may be the best for months as businesses pull back in January and in the first quarter of the year because of that reduced demand.

Mark Zandi of Moody’s estimates that the deal will result in about 600,000 fewer jobs created this year than would have been created had last year’s tax policies remained in place.

The cuts will slow consumption by about 1% for the year, said Michael Gapen, senior U.S. economist at Barclays in New York. But the biggest hits to the labor market may be in the first few months of the year, when businesses purge payrolls after the holiday season. They won't hire much in the first quarter because businesses will remain cautious, waiting for Congress to make more decisions about the budget and sequestration in March, he said. 

“The cautiousness on the part of businesses will persist,” he said.

On the other hand,  Congress did extend unemployment insurance benefits through 2013, which will keep some spending in the economy, as unemployed workers generally spend their benefits on essentials such as food and clothing. About 2 million workers would have lost jobless benefits this week had the program not been extended.

Some economists, such as Peter Morici, an economist at the University of Maryland, warn that higher taxes on small businesses, coupled with increasing costs from Obamacare, will drag down hiring significantly.

“Small businesses now have more certainty – the assurance of more burdensome regulations, healthcare costs and taxes, and this will burden growth,” he wrote.

But more economists are slightly more optimistic. They expect a slowdown in the labor market to last about three to six months, unless, of course, more uncertainty is created by negotiations in March. One thing is for sure, said Gapen -- the recession illuminated some big problems in American governance, and until those are resolved, the economy will likely limp along.

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Playboy Hugh Hefner marries his 'runaway bride'

LOS ANGELES (AP) — Hugh Hefner is celebrating the new year as a married man once again.

The 86-year-old Playboy magazine founder exchanged vows with his "runaway bride," Crystal Harris, at a private Playboy Mansion ceremony on New Year's Eve. Harris, a 26-year-old "Playmate of the Month" in 2009, broke off a previous engagement to Hefner just before they were to be married in 2011.

Playboy said on Tuesday that the couple celebrated at a New Year's Eve party at the mansion with guests that included comic Jon Lovitz, Gene Simmons of KISS and baseball star Evan Longoria.

The bride wore a strapless gown in soft pink, Hefner a black tux. Hefner's been married twice before but lived the single life between 1959 and 1989.

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Hispanic Pregnancies Fall in U.S. as Women Choose Smaller Families

ORLANDO, Fla. — Hispanic women in the United States, who have generally had the highest fertility rates in the country, are choosing to have fewer children. Both immigrant and native-born Latinas had steeper birthrate declines from 2007 to 2010 than other groups, including non-Hispanic whites, blacks and Asians, a drop some demographers and sociologists attribute to changes in the views of many Hispanic women about motherhood.

As a result, in 2011, the American birthrate hit a record low, with 63 births per 1,000 women ages 15 to 44, led by the decline in births to immigrant women. The national birthrate is now about half what it was during the baby boom years, when it peaked in 1957 at 122.7 births per 1,000 women of childbearing age.

The decline in birthrates was steepest among Mexican-American women and women who immigrated from Mexico, at 25.7 percent. This has reversed a trend in which immigrant mothers accounted for a rising share of births in the United States, according to a recent report by the Pew Research Center. In 2010, birthrates among all Hispanics reached their lowest level in 20 years, the center found.

The sudden drop-off, which coincided with the onset of the recession, suggests that attitudes have changed since the days when older generations of Latinos prized large families and more closely followed Roman Catholic teachings, which forbid artificial contraception.

Interviews with young Latinas, as well as reproductive health experts, show that the reasons for deciding to have fewer children are many, involving greater access to information about contraceptives and women’s health, as well as higher education.

When Marucci Guzman decided to marry Tom Beard here seven years ago, the idea of having a large family — a Guzman tradition back in Puerto Rico — was out of the question.

“We thought one, maybe two,” said Ms. Guzman Beard, who gave birth to a daughter, Attalai, four years ago.

Asked whether Attalai might ever get her wish for a little brother or sister, Ms. Guzman Beard, 29, a vice president at a public service organization, said: “I want to go to law school. I’m married. I work. When do I have time?”

The decisions were not made in a vacuum but amid a sputtering economy, which, interviewees said, weighed heavily on their minds.

Latinos suffered larger percentage declines in household wealth than white, black or Asian households from 2005 to 2009, and, according to the Pew report, their rates of poverty and unemployment also grew more sharply after the recession began.

Prolonged recessions do produce dips in the birthrate, but a drop as large as Latinos have experienced is atypical, said William H. Frey, a sociologist and demographer at the Brookings Institution. “It is surprising,” Mr. Frey said. “When you hear about a decrease in the birthrate, you don’t expect Latinos to be at the forefront of the trend.”

D’Vera Cohn, a senior writer at the Pew Research Center and an author of the report, said that in past recessions, when overall fertility dipped, “it bounced back over time when the economy got better.”

“If history repeats itself, that will happen again,” she said.

But to Mr. Frey, the decrease has signaled much about the aspirations of young Latinos to become full and permanent members of the upwardly mobile middle class, despite the challenges posed by the struggling economy.

Jersey Garcia, a 37-year-old public health worker in Miami, is in the first generation of her family to live permanently outside of the Dominican Republic, where her maternal and paternal grandmothers had a total of 27 children.

“I have two right now,” Ms. Garcia said. “It’s just a good number that I can handle.”

“Before, I probably would have been pressured to have more,” she added. “I think living in the United States, I don’t have family members close by to help me, and it takes a village to raise a child. So the feeling is, keep what you have right now.”

But that has not been easy. Even with health insurance, Ms. Garcia’s preferred method of long-term birth control, an IUD, has been unaffordable. Birth control pills, too, with a $50 co-payment a month, were too costly for her budget. “I couldn’t afford it,” she said. “So what I’ve been doing is condoms.”

According to research by the National Latina Institute for Reproductive Health, the overwhelming majority of Latinas have used contraception at some point in their lives, but they face economic barriers to consistent use. As a consequence, Latinas still experience unintended pregnancy at a rate higher than non-Hispanic whites, according to the institute.

And while the share of births to teenage mothers has dropped over the past two decades for all women, the highest share of births to teenage mothers is among native-born Hispanics.

“There are still a lot of barriers to information and access to contraception that exist,” said Jessica Gonzáles-Rojas, 36, the executive director of the institute, who has one son. “We still need to do a lot of work.”

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Optimistic stock investors reaped rewards worldwide in 2012

Wall Street closed out the year with a surge in the final trading session, betting on a last-minute resolution of the so-called fiscal cliff.

The market may have jumped the gun, but investors' hopefulness fit the pattern of 2012: It was a year of solid stock price gains worldwide, as various predictions of Armageddon fell flat.

That has reinforced many market pros' conventional cautious optimism as the new year begins. Bears can still find plenty to be dour about, but the bulls have called it right in three of the last four years since the 2008 financial-system crash.

On Monday, the Dow Jones industrial average jumped 166 points, or 1.3%, to end the year at 13,104. Stocks rallied late in the session as rumors spread that Congress would approve a deal to limit the tax increases and spending cuts otherwise set to kick in Tuesday.

But after the closing bell, a deal to avert the fiscal cliff appeared uncertain — raising fears of a blistering market sell-off Wednesday.

Still, investors who had expected a sustained slump in stocks in 2012 found themselves left behind as most world markets posted double-digit percentage gains, underpinned by a resilient U.S. economy and by central banks' efforts to keep interest rates at rock bottom.

Wall Street optimism about 2013 remains rooted in expectations that the U.S. economy will continue to expand, albeit slowly, and with it corporate earnings.

"Absent a complete failure from Washington, growth should remain positive," said Russ Koesterich, global chief investment strategist at money management giant BlackRock Inc. in New York.

That bet paid off in 2012: The Standard & Poor's 500 index, a popular benchmark for many Americans' retirement accounts, rose 1.7% to 1,426 on Monday and was up 13.4% for the year.

That was the biggest advance since the index rose 23.4% in 2009. Stocks' gains last year also beat returns on most kinds of bonds and on low-yielding short-term cash accounts.

The S&P index now has rebounded 111% from its decade low in March 2009, restoring most of the wealth lost by investors in the Great Recession — if they held on.

In Europe, the Stoxx index of 600 big-name shares rose 14.4% for the year, also the biggest rally since 2009. Japan's main market index soared 22.9%. Most so-called emerging markets also were up sharply, including those in India, Mexico and Turkey.

The 30-stock Dow index was a relative laggard, rising 7.3% for the year. It was hurt by weakness in major energy stocks as crude oil prices fell and by a collapse of shares of troubled tech giant Hewlett-Packard Co.

Markets worldwide had rallied in the first few months of 2012, then dived in spring as doubts multiplied about the global economy.

Europe, gripped for a third year by its government-debt crisis, was the epicenter of those fears: Many investors expected the Eurozone to finally break up under its debt strains, consigning Greece, Spain, Portugal and perhaps other nations to economic death spirals.

But the doomsday predictions were thwarted by the European Central Bank. In late July, ECB President Mario Draghi shocked markets by declaring that the central bank would do whatever was necessary to preserve the Eurozone. "And believe me, it will be enough," Draghi said.

The ECB followed that pledge with a commitment to buy unlimited sums of Eurozone governments' bonds, if necessary, to pull down countries' borrowing costs — similar to the U.S. Federal Reserve's ongoing program of buying Treasury debt.

The ECB's move sparked a sharp rally in the euro that buoyed confidence in European stocks as well, despite deep recessions in the Continent's hardest-hit economies.

The U.S. economy, meanwhile, confounded expectations that it would slide back into recession. The economy grew at a 3.1% annualized rate in the third quarter after slowing to a 1.3% rate in the second quarter. Growth was supported in part by the housing market's continuing rebound.

"Housing got us into this mess. Now it's one of the sectors to get us out," said Sam Stovall, chief investment strategist at S&P Capital IQ in New York.

Housing-related stocks were some of the year's biggest winners, with builder PulteGroup Inc. up 188%, appliance maker Whirlpool Corp. rising 114% and paint producer Sherwin-Williams Co. up 72%.

Worldwide, investors' confidence also benefited as worries dissipated about a war between Israel and Iran. And late in the year, hopes rose that China's slowing economy would avoid a so-called hard landing — which could have put it in a recession — and instead would help drive global growth in the new year. The Shanghai stock market rocketed nearly 15% in December alone.

Emerging markets such as China could be a big lure for global investors in 2013, some experts said. Many governments in those markets have more leeway than developed economies to bolster growth with fiscal stimulus measures and with lower interest rates, said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

By contrast, Ablin worries that U.S. economic growth and corporate earnings growth will be much slower than many investors are anticipating in the new year.

Whatever the ultimate workout of the fiscal cliff, Ablin said, "We are going to see taxes go up incrementally and spending go down incrementally," weighing on the economy.

Market pessimists believe that stock markets since 2009 have been driven largely by cheap credit supplied by central banks, particularly the Federal Reserve. Critics say the Fed's latest decision to ramp up purchases of Treasury bonds, aimed at pumping more money into the economy, smacks of desperation.

Fed Chairman Ben S. Bernanke, however, has insisted that the Fed still has plenty of tools left to help the U.S. recovery gain speed. Wall Street, by and large, believes Bernanke.

"If they can print money," Stovall said, "are the central banks ever really out of bullets?"

business@latimes.com

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With clock ticking, still no deal to avert 'fiscal cliff'

Efforts to save the nation from going over a year-end "fiscal cliff" are still in disarray as lawmakers continue negotiations to confront the tax-and-spend crisis.

WASHINGTON – Senate leaders remain shy of a deal to avert the automatic tax increases due to take effect at midnight on New Year’s Eve, despite conversations that continued overnight between Vice President Joe Biden and Senate Republican Leader Mitch McConnell (R-Ky.).

Majority Leader Harry Reid (D-Nev.) said on the Senate floor Monday morning that “there are a number of issues in which the two sides are still apart” but that negotiations “are continuing as I speak.”

“We really are running out of time,” he added, about 13 hours before the nation would go over the so-called “fiscal cliff.”

Biden and McConnell, after trading phone calls Sunday afternoon, spoke again at 12:45 a.m. and again at 6:30 a.m. Monday. Biden’s role in the negotiations emerged on Sunday as McConnell, his former colleague of two decades in the Senate, appealed for a “dance partner” in his effort to find a workable solution on tax rates.

QUIZ: How much do you know about the fiscal cliff?

Republicans have said they are willing to raise taxes on wealthier households while stopping the tax increases for most Americans. But one of the sticking points remains the threshold at which current tax rates would be maintained. On Sunday, Republicans suggested taxing income of more than $550,000 for couples, while Democrats set their latest offer at $450,000.

Despite Biden’s lead role, there’s no guarantee any solution would meet with Democratic’ support. Sen. Tom Harkin of Iowa said Monday that he was concerned about the reported details of the deal, indicating that he believed it was preferable to see all tax rates revert to Clinton-era levels.

“I ask, what’s so bad about that?” he said on the Senate floor, noting the economic boom of the 1990s at those tax rates. “As I see this thing developing … no deal is better than a bad deal. And this looks like a very bad deal.”

Sen. Barbara Boxer (D-Calif.), who has supported a higher tax threshold, was more cautious. “One party doesn’t control everything. So we are going to have to meet somewhere in the middle,” she said.

The House was set to hold unrelated votes Monday afternoon but would be ready to vote if the Senate acts. The House Rules Committee waived the Republicans’ 72-hour rule, allowing the chamber to vote on legislation introduced the same day.

PHOTOS: Notable moments of the 2012 presidential election

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Angry Birds, YouTube among top apps of 2012

TORONTO (Reuters) – Angry Birds, Instagram and Facebook continued to be among the most downloaded apps of the year but rising stars also earned coveted spots on smartphones and tablets.

This year consumers spent on average two hours each day using mobile applications, an increase of 35 percent over last year, according to analytics firm Flurry. The number is expected to continue growing in 2013.

“2012 was a transformative tipping point in the way consumers use apps,” said Craig Palli, a vice president at mobile marketing company Fiksu, adding that the biggest shift is in consumers’ eagerness to turn to apps for a broad range of day-to-day tasks.

Categories such as social networking, media and entertainment, photo editing, and games, continued to captivate consumer interest, with YouTube and Angry Birds being the top free and paid apps respectively at Apple’s App Store.

Meanwhile, several apps released this year quickly joined the ranks of the top downloaded and revenue grossing apps of the year.

The game Draw Something for iPhone and Android quickly gained widespread popularity when it was released in February, and despite dropping off, is still the second most downloaded paid app of the year Android and Apple devices.

“It had a big run and other multi-player puzzle-oriented games like newcomers LetterPress and ScrambleWithFriends proved popular, too,” Palli said. “But in many respects these titles were inspired by the more revolutionary Words With Friends.”

Songza, a music-discovery app for iPhone, Android and Kindle Fire, saw significant growth in both the United States and Canada, where it is now one of the top free apps on the App Store.

Paper, a sketchbook app for the iPad, is estimated to be one of the top grossing apps released this year according to Distimo, an app analytics company. It was named by Apple as the iPad app of the year.

But the real revolution, according to Palli, is among consumers who are eager to turn to apps for their day-to-day tasks, such as finding a taxi or hotel, following current events or increasingly, making payments.

“It is really consumers who are turning to apps first and traditional methods second,” said Palli.

Uber and Hailo, which allow users to book limos and taxis, and AirBnB and HotelTonight, for finding accommodations, began to move mainstream in 2012, Palli said.

Payment apps such as Square, and Apple’s introduction of the Passbook has further positioned the smartphone as a digital wallet.

This year, during major events such as the Olympics, Hurricane Sandy and the U.S. presidential election, the top apps on the App Store reflected those events, said Palli, showing the demand for keeping up with current events through apps.

(Editing by Patricia Reaney and Bill Trott)

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Armstrong better, Green Day to resume tour in 2013

LOS ANGELES (AP) — Green Day is going back out on the road.

The Grammy-winning punk band announced new tour dates Monday.

The band canceled the rest of its 2012 club schedule and postponed the start of a 2013 arena tour after singer-guitarist Billie Joe Armstrong's substance abuse problems emerged publicly in September when he had a profane meltdown on the stage of the iHeartRadio Music Festival in Las Vegas.

Armstrong told fans in a statement Monday that he's "getting better every day" and "the show must go on."

The tour is scheduled to begin March 28 at the Allstate Arena in the Chicago area.

The band released its most recent album, "Tre," on Dec. 11, more than a month ahead of schedule.

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Memphis Aims to Be a Friendlier Place for Cyclists

Lance Murphey for The New York Times

The Shelby Farms Greenline, which replaced a Memphis rail line.

MEMPHIS — John Jordan, a 64-year-old condo appraiser here, has been pedaling his cruiser bicycle around town nearly every day, tooling about at lunchtime or zipping to downtown appointments.

“It’s my cholesterol-lowering device,” said Mr. Jordan, clad in a leather vest and wearing a bright white beard. “The problem is, the city needs to educate motorists to not run over” the bicyclists.

Bike-friendly behavior has never come naturally to Memphis, which has long been among the country’s most perilous places for cyclists. In recent years, though, riders have taken to the streets like never before, spurred by a mayor who has worked to change the way residents think about commuting.

Mayor A. C. Wharton Jr., elected in 2009, assumed office a year after Bicycling magazine named Memphis one of the worst cities in America for cyclists, not the first time the city had received such a biking dishonor. But Mr. Wharton spied an opportunity.

In 2008, Memphis had a mile and a half of bike lanes. There are now about 50 miles of dedicated lanes, and about 160 miles when trails and shared roads are included. The bulk of the nearly $1 million investment came from stimulus money and other federal sources, and Shelby County, which includes Memphis, was recently awarded an additional $4.7 million for bike projects.

In June, federal officials awarded Memphis $15 million to turn part of the steel truss Harahan Bridge, which spans the Mississippi River, into a bike and pedestrian crossing. Scheduled to open in about two years, the $30 million project will link downtown Memphis with West Memphis, Ark.

“We need to make biking part of our DNA,” Mr. Wharton said. “I’m trying to build a city for the people who will be running it 5, 10, 15 years from now. And in a region known to some for rigid thinking, the receptivity has been remarkable.”

City planners are using bike lanes as an economic development tool, setting the stage for new stores and enhanced urban vibrancy, said Kyle Wagenschutz, the city’s bike-pedestrian coordinator, a position the mayor created.

“The cycling advocates have been vocal the past 10 years, but nothing ever happened,” Mr. Wagenschutz said. “It took a change of political will to catalyze the movement.”

Memphis, with a population of 650,000, is often cited among the unhealthiest, most crime-ridden and most auto-centric cities in the country. Investments in bicycling are being viewed here as a way to promote healthy habits, community bonds and greater environmental stewardship.

But as city leaders struggle with a sprawling landscape — Memphis covers about the same amount of land as Dallas, yet has half the population — their persistence has run up against another bedeviling factor: merchants and others who are disgruntled about the lanes.

A clash between merchants and bike advocates flared last year after the mayor announced new bike lanes on Madison Avenue, a commercial artery, that would remove two traffic lanes. Many merchants, like Eric Vernon, who runs the Bar-B-Q Shop, feared that removing car lanes would hurt businesses and cause parking confusion. Mr. Vernon said that sales had not fallen significantly since the bike lanes were installed, but that he thought merchants were left out of the process.

On McLean Boulevard, a narrow residential strip where roadside parking was replaced by bike paths, homeowners cried foul. The city reached a compromise with residents in which parking was outlawed during the day but permitted at night, when fewer cyclists were out. Mr. Wagenschutz called the nocturnal arrangement a “Cinderella lane.”

Some residents, however, were not mollified. “I’m not against bike lanes, but we’re isolated because there’s no place to park,” said Carey Potter, 53, a longtime resident who started a petition to reinstate full-time parking.

The changes have been panned by some members of the City Council. Councilman Jim Strickland went as far as to say that the bike signs that dot the streets add “to the blight of our city.”

Tensions aside, the mayor’s office says that the potential economic ripple effect of bike lanes is proof that they are a sound investment.

A study in 2011 by the University of Massachusetts found that building bike lanes created more jobs — about 11 per $1 million spent — than any other type of road project. Several bike shops here have expanded to accommodate new cyclists, including Midtown Bike Company, which recently moved to a location three times the size of its former one. “The new lanes have been great for business,” said the manager, Daniel Duckworth.

Wanda Rushing, a professor at the University of Memphis and an expert on urban change in the South, said bike improvements were of a piece with a development model sweeping the region: bolstering transportation infrastructure and population density in the inner city.

“Memphis is not alone in acknowledging that sprawl is not sustainable,” Dr. Rushing said. “Economic necessity is a pretty good melding substance.”

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Facebook narrowly avoids New Year's Day privacy flap

Facebook was able to avoid what could have been an embarrassing privacy ordeal with a messaging feature it built for New Year's Day.

The Menlo Park, Calif.-based social network recently introduced a new feature for its desktop site that allows users to pre-write messages for their friends that get sent out as soon as 2013 arrives at the stroke of midnight.

Nice concept, but the feature had a fatal flaw: The messages weren't private.

The top 10 embarrassing tech flops of 2012

British blogger Jack Jenkins discovered and reported the problem with the "New Year's Midnight Delivery" feature on Sunday. Jenkins wrote that users could alter the feature's URL ID with random letters and numbers to stumble on other users' messages, some of which contained photos.

"It shouldn’t be possible to do this, as these are not generic and are people’s personal images," Jenkins wrote. 

Jenkins said it wasn't possible to see who sent the messages, but he was able to see who the recipients were. What's worse, he said that it appeared that he could randomly delete users' messages if he wished.

After the flaw was revealed, Facebook took down the feature, according to Jenkins' time stamps.

“We are working on a fix for this issue now, and in the interim we have disabled this app on the Facebook Stories site to ensure that no messages can be accessed,” Facebook told the Next Web. 

The service was fixed and put back online early Monday morning, but unfortunately for users in some parts of the world, including New Zealand, New Year's arrived before the feature was back online.

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Obama blames GOP for 'fiscal cliff' brinksmanship

WASHINGTON -- President Obama blamed Republican leaders for the latest round of brinkmanship in Washington and said it was now up to lawmakers to find a way back from the so-called fiscal cliff.

In an interview with NBC’s “Meet the Press” aired Sunday, Obama said he had reached out to Republicans for weeks, but their refusal to raise taxes had blocked progress.

“They have had trouble saying yes to a number of repeated offers,” Obama said. In Friday’s meeting with congressional leaders at the White House, “I suggested to them if they can't do a comprehensive package of smart deficit reductions, let's at minimum make sure that people's taxes don't go up and that 2 million people don't lose their unemployment insurance.

“And I was modestly optimistic yesterday,” he added in the interview taped Saturday, referring to the aftermath of that meeting, “but we don't yet see an agreement. And now the pressure's on Congress to produce.”

PHOTOS: Notable moments of the 2012 presidential election

Senate leaders and their aides spent Saturday working on a deal that would protect most taxpayers from seeing their incomes taxes rise Jan. 1. The deal may also set new estate tax rates, prevent an expansion of the alternative minimum tax and extend unemployment insurance.

If the effort is successful, a final proposal is expected later Sunday, when senators are set to meet in party caucuses.

A spokesman for Senate Minority Leader Mitch McConnell responded to the president's criticism:

"While the president was taping those discordant remarks yesterday, Sen. McConnell was in the office working to bring Republicans and Democrats together on a solution," Don Stewart said. "Discussions continue today."

In the interview, Obama said he expected an “adverse reaction in the markets” and depressed consumer spending if lawmakers allow the tax increase to take effect as scheduled -- and he tried to lay the blame on Republicans. Economists have suggested the combination of the tax increases, along with nearly $65 billion in spending cuts, could knock the economy back into a recession.

Obama did not offer a clear strategy for avoiding those spending cuts, which Congress and the president agreed to in 2011 as a way to force themselves to act on a larger deficit reduction deal. That deal has remained elusive, and Obama said in the interview that Republicans have had trouble saying yes to his offers.

QUIZ: How much do you know about the fiscal cliff?

Pressed by host David Gregory on why that is, Obama answered:

“That's something you're probably going to have to ask them, because, David, you follow this stuff pretty carefully. The offers that I’ve made to them have been so fair that a lot of Democrats get mad at me. I mean, I offered to make some significant changes to our entitlement programs in order to reduce the deficit,” he said, referring specifically to a change in the way Social Security cost of living increases are calculated, which many liberal groups opposed.

“They say that their biggest priority is making sure that we deal with the deficit in a serious way, but the way they're behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected. That seems to be their only overriding, unifying theme.”

Obama has tried to frame the debate as a battle over taxes. One Republican acknowledged Sunday that the president appears poised to win the political battle on that front. If lawmakers agree on allowing taxes to rise on top earners, “it will accomplish a political victory for the president,” said Sen. Lindsey Graham of South Carolina

“Hats off to the president. He stood his ground; he’s going to get tax rate increases … on upper income Americans. And the sad news for the country is we’ve accomplished very little in terms of not becoming Greece or getting out of debt.… Hats off to the president -- he won.”

[For the Record, 8:05 a.m. PST  Dec. 30: This post has been updated to include reactions to Obama's comments from McConnell's office.]

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