Obama seeks $1.2 trillion debt limit rise (Reuters)

WASHINGTON (Reuters) – President Barack Obama formally notified Congress on Thursday that he plans a $1.2 trillion increase in the U.S. debt limit, prompting Republicans to level election-year charges that deficits are out of control.

Obama, in a one-sentence letter to House of Representatives Speaker John Boehner, the top Republican in Congress, said "further borrowing is required to meet existing commitments."

The proposed increase would push the debt ceiling to $16.394 trillion.

The move by the Democratic president, who is seeking re-election in November, gives Congress 15 days to vote on a resolution of disapproval under terms of budget control legislation passed last year.

Lawmakers are unlikely to muster the votes needed to block the boost in U.S. borrowing capacity, so a replay of last summer's debt limit drama that brought the federal government to the brink of default and cost the United States its top-tier credit rating is not expected.

But the increase notification does give Republicans an opportunity to paint Obama as a spendthrift during an election year in which taxes and spending are key issues. They quickly blamed him for a lack of progress in reducing deficits after congressional deficit reduction talks collapsed late last year.

"The President's runaway borrowing threatens the foundation of our economy and the financial future of every hardworking American," said Senator Jeff Sessions, the top Republican on the Senate Budget Committee.

"It brings our nation closer to what the chairs of his own fiscal commission called 'the most predictable economic crisis in its history.'"

Brendan Buck, a spokesman for Boehner, called Obama's request "another reminder that the President has consistently punted on the tough choices needed to rein in the deficit."

Obama originally intended to exercise his authority to raise the debt limit on December 30 but House and Senate leaders asked him to delay the move to allow lawmakers to consider it while they are back in session. House members reconvene in Washington next week.

To allow for the delay, the Treasury Department has had to turn to one of the measures it employed to keep the government afloat last summer - dipping into the Exchange Stabilization Fund, which has a dollar balance of about $22.7 billion.

A Treasury official said other measures, such as suspending the daily reinvestment of assets in a government pension fund, may also be needed until the debt-limit increase is secured.

Senator Orrin Hatch, the top Republican on the Senate Finance Committee, asked Treasury Secretary Timothy Geithner in a letter to give details of the extraordinary measures being taken to stay under the limit, which has already been increased by $900 billion since last summer's debt brawl to $15.194 trillion.

(Additional Reporting by Matt Spetalnick and Aruna Viswanatha; editing by Mohammad Zargham)

Conservatives torn over defending, opposing Romney (AP)

WASHINGTON – Torn between reality and their political dreams, leading conservatives are defending Mitt Romney's private sector success and acknowledging that his presidential nomination may be inevitable even as they search for a more palatable candidate.

Romney, meanwhile, is marching steadily through South Carolina, unveiling a prominent endorsement and sending a message to his party: It's time to stop bickering.

Not just yet, some conservative leaders say.

"Honestly, it looks like Gov. Romney's nomination is inevitable," said the Rev. Robert Jeffress, pastor of the First Baptist Church of Dallas and a supporter of Texas Gov. Rick Perry. "Evangelicals, come November, might have to hold their noses and vote for the lesser of two evils. But it's not November yet."

Just over a week before South Carolina's first-in-the-South vote, there are signs that conservatives are struggling with their goal of finding what some would call "the anti-Romney." They appear no more organized in their search for a credible challenger than they were before former Sen. Rick Santorum raised their hopes with his second-place finish in Iowa.

More than 100 conservative leaders, many of them evangelical in their faiths, were set to converge this weekend at the Texas ranch of former state appeals court Judge Paul Pressler to consider their options, if any. One subtext of the discussion could be the terms of any eventual endorsement of the former Massachusetts governor.

Surrogates for each campaign were expected to make presentations and answer questions.

In spite of their reluctance to embrace Romney as the GOP nominee, some conservatives have been drawn into defending him against charges of "vulture" capitalism from rivals Newt Gingrich and Perry. Both are potential recipients of conservative backing in the effort to oppose Romney.

Trying to tap into populist sentiment, Gingrich and Perry accused Romney of being a fat-cat venture capitalist during his days running the private equity firm Bain Capital, saying he laid off workers as he restructured companies and filled his own pockets.

That strategy boomeranged. A long list of conservative leaders who have not endorsed Romney are nonetheless sticking up for his success — former Bush adviser Karl Rove, former presidential candidate Mike Huckabee, the U.S. Chamber of Commerce, the Club for Growth, an array of conservative talk show hosts and even Santorum. Conservative leaders say the attack amounts to an assault on capitalism and the free market system at the heart of their movement.

"It's a sad day in South Carolina and across this country if Republicans are talking against the free market, let me tell you that," said South Carolina Gov. Nikki Haley, a tea party star who has endorsed Romney.

"It's just been foolish," said Thomas Donohue, president of the U.S. Chamber of Commerce, which does not endorse presidential candidates. "They're not doing anything other than setting up the ad base for their (Democratic) opponents."

On that point, the anti-Romney conservatives agree.

"I've not talked to many conservatives that support these attacks on Romney," said Family Research Council President Tony Perkins. Evangelicals, he pointed out, support a free market with moral restraints and generally wouldn't object to Romney's success at Bain. "I don't think they see that as the real issue. It sounds more like something the Democrats might bring up."

It's a stark turnabout from last week, when speculation crackled through conservative ranks over whether Santorum could capture support from the large chunk of Republicans who aren't behind Romney.

Post-Iowa, things went sour for this group. Romney's second-in-a-row win in New Hampshire on Tuesday solidified his standing atop the GOP field. He was followed in that race not by Santorum but by Texas Rep. Ron Paul and former Utah Gov. Jon Huntsman. Gingrich and Perry also drew only tepid support in the opening contests.

Now, everyone's looking to South Carolina's Jan. 21 primary as potentially the last stand for the anti-Romney crowd.

"He is not anything near conservative enough," said Rock Hill, S.C., resident Carlene Madison, 54, shaking her head and making an unpleasant face.

Polling shows Romney gaining ground in South Carolina. A poll conducted Jan. 4-5 by CNN/Time/ORC International showed Romney with the support of 37 percent of the state's likely Republican primary voters, up from 20 percent a month earlier. He won Iowa with only 25 percent of the vote and New Hampshire with a more robust 38 percent.

Romney also won the endorsement this week of former U.N. Ambassador John Bolton, a favorite of conservatives for his consistent criticism of President Barack Obama's foreign policy.

Romney has a difficult history with South Carolina's Republican voters, who are some of the nation's most conservative. In exit polling from the 2008 Republican presidential contest there, 60 percent of primary voters said they were born-again Christians. Romney, whose Mormon faith is not considered a Christian denomination by some, carried just 11 percent of their votes, fewer than his 15 percent tally overall. Mormons consider themselves Christians.

Conservatives looking to back someone else have a heavy workload in a compressed period of time. Romney's closest rival, Santorum, is 18 points behind in South Carolina, followed by Gingrich, Paul, Perry and Huntsman, according to the CNN/Time/ORC International poll. Six percent are undecided, the survey found.

Jeffress, the Baptist minister, who once called the Church of Jesus Christ of Latter-day Saints a cult and doesn't consider it a Christian faith, said he is skipping the Texas conference of conservatives but might eventually recommend voting for the former Massachusetts governor.

His rationale: "It's probably better to embrace a non-Christian like Romney, who embraces biblical values like the sanctity of life and the sanctity of marriage, rather than a professing Christian like President Obama, who embraces unbiblical positions."

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Associated Press writers Shannon McCaffrey and AP Religion Writer Rachel Zoll in South Carolina contributed to this report.

Tensions high, US warns Iran not to block shipping (AP)

WASHINGTON – Tensions rising by the day, the Obama administration said Friday it is warning Iran through public and private channels against any action that threatens the flow of oil from the Persian Gulf. The Navy revealed that two U.S. ships in and near the Gulf were harassed by Iranian speedboats last week.

Spokesmen were vague on what the United States would do about Iran's threat to block the strategic Strait of Hormuz, but military officials have been clear that the U.S. is readying for a possible naval clash.

That prospect is the latest flashpoint with Iran, and one of the most serious. Although it currently overshadows the threat of war over Iran's disputed nuclear program, perhaps beginning with an Israeli military strike on Iran's nuclear structure, both simmering crises raise the possibility of a shooting war this year.

"We have to make sure we are ready for any situation and have all options on the table," Defense Secretary Leon Panetta said, addressing a soldier's question Thursday about the overall risk of war with Iran.

Navy officials said that in separate incidents Jan. 6, three Iranian speedboats — each armed with a mounted gun — briefly chased after a U.S. Navy ship just outside the Gulf near the Strait of Hormuz and a U.S. Coast Guard cutter in the northern Gulf. No shots were fired and the speedboats backed off.

For several reasons, the risk of open conflict with Tehran appears higher in this election year than at any point since President Barack Obama took office with a pledge to try to bridge 30 years of enmity. A clash would represent a failure of U.S. policy on several fronts and vault now-dormant national security concerns into the presidential election contest.

The U.S. still hopes that international pressure will persuade Iran to back down on its disputed nuclear program, but the Islamic regime shows no sign it would willingly give up a project has become a point of national pride. A nuclear bomb, or the ability to quickly make one, could also be worth much more to Iran as a bargaining chip down the road.

Time is short, with Iran making several leaps toward the ability to manufacture a nuclear weapon if it chooses to do so. Iran claims its nuclear development is intended for the peaceful production of energy. Meanwhile, several longstanding assumptions about U.S. influence and the value of a targeted strike to stymie Iran's progress toward a nuclear weapon have changed. For one, the White House is no longer confident it could prevail on Israel not to launch such a strike.

An escalating covert campaign of sabotage and targeted assassinations highlighted by this week's killing of an Iranian nuclear scientist may not be enough to head off a larger shooting war and could prod Iran to strike first.

The brazen killing of a young scientist by motorcycle-riding bombers is seen as almost surely the work of Israel, according to U.S. and other officials speaking on condition of anonymity to discuss intelligence matters. The killing on a Tehran street followed the deaths of several other Iranians involved in the nuclear program, a mysterious explosion at an Iranian nuclear site that may have been sabotage and the apparent targeting of the program with an efficient computer virus.

Iranian officials accuse both Israel and the U.S. of carrying out the assassination as part of a secret operation to stop Iran's nuclear program. The killing came a day after Israeli military chief Lt. Gen. Benny Gantz was quoted as telling a parliamentary panel that 2012 would be a "critical year" for Iran — in part because of "things that happen to it unnaturally."

Secretary of State Hillary Rodham Clinton and Panetta made a point of publicly denying any U.S. involvement, but the administration tied itself in knots this week over how far to go in condemning an action that could further the U.S. goal of stalling Iranian nuclear progress.

The U.S. position remains that a military strike on Iran's known nuclear facilities is undesirable because it would have unintended consequences and would probably only stall, not end, the Iranian nuclear drive. That has been the consensus view among military leaders and policy makers for roughly five years, spanning a Republican and Democratic administration.

But during that time Iran has gotten ever closer to a potential bomb, Israel has gotten more brazen in its threats to stop an Iranian bomb by nearly any means, and the U.S. administration's influence over Israel has declined.

Israel considers Iran its mortal enemy and takes seriously the Iranian threat to wipe the Jewish state from the map. The United States is Israel's strongest ally and international defender, but the allies differ over how imminent the Iranian threat has become and how to stop it.

The strained relationship between Obama and Israeli Prime Minister Benjamin Netanyahu plays a role, as does the rise in influence of conservative political parties in Israel. U.S. officials have concluded that Israel will go its own way on Iran, despite U.S. objections, and may not give the U.S. much notice if it decides to launch a strike, U.S. and other officials said. The officials spoke on condition of anonymity to discuss sensitive diplomacy.

The Obama administration is concerned that Iran's claim this week that it is expanding nuclear operations with more advanced equipment may push Israel closer to a strike.

Obama last month approved new sanctions against Iran that would target its central bank and its ability to sell petroleum abroad. The U.S. has delayed implementing the sanctions for at least six months, worried about sending the price of oil higher at a time when the global economy is struggling.

A senior commander of the Revolutionary Guard force was recently quoted as saying Tehran's leadership has decided to order the closure of the Strait of Hormuz if the country's petroleum exports are blocked due to sanctions.

Panetta linked the two crises Thursday, saying an Iranian nuclear weapon is one "red line" the U.S. will not allow Iran to cross and a closure of the strait is another.

"We must keep all capabilities ready in the event those lines are crossed," Panetta told soldiers at Fort Bliss, Texas.

He did not elaborate, but the nation's top military officer, Joint Chiefs of Staff Chairman Martin Dempsey, has said the U.S. would take action to reopen the strategic waterway. That could only mean military action, and there are U.S. warships stationed nearby.

"The United States and the international community have a strong interest in the free flow of commerce and freedom of navigation in all national waterways," White House press secretary Jay Carney said Friday, adding that Iran is well aware of that position. "Our views are clear, we're expressing them publicly and privately, and I'll leave it at that."

International talks to barter Iran out of building a nuclear weapon are nearly collapsed, the United States and several partners are on the verge of applying the toughest sanctions yet on Iran's lifeblood oil sector, an increasingly cornered Iranian leadership is lashing out in unpredictable ways and faces additional internal pressures with a parliamentary election approaching.

All that adds up to a new equation, U.S. and Western diplomats said. A unilateral U.S. military strike on Iran's nuclear infrastructure remains unlikely but no longer unthinkable, while the likelihood of an Israeli military strike has increased.

Immediate consequences would probably include an unpredictable spike in oil prices, ripple effects in troubled European economies and a setback for the fragile U.S. economic recovery. Longer term, a strike or a full-on war would almost surely ignite anti-American sentiment in the Middle East and beyond and empower hardline political movements in newly democratic Egypt and elsewhere.

Although the Obama administration wants to avoid conflict, it is locked in a cycle of provocation and reaction that feeds Iranian fears and may make war more likely, said Suzanne Maloney, a former State Department Iran expert now at the Brookings Institution.

"The tactics the administration has been taking means conflict becomes more likely because of the potential for miscalculation and the level of tensions and frustrations on both sides," she said.

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AP National Security Writer Robert Burns contributed to this report.

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Christie, Oprah talk about weight, love, politics (AP)

Time to steal the doughnuts!

Apparently, that's also the way to steal New Jersey Gov. Chris Christie's heart.

In an interview with talk-show queen Oprah Winfrey, set to air this weekend, the hefty GOP governor said he knew that he had found a partner for life in wife Mary Pat when she suggested making an illicit late-night doughnut run.

The governor and Winfrey also dished about their struggle with weight and presidential politics. A full transcript of the interview was obtained in advance by The Associated Press. The hour-long interview, filmed at Christie's home in Mendham, is scheduled to air Sunday at 9 p.m. EST on the Oprah Winfrey Network.

Asked by Winfrey what drew him to Mary Pat, whom he met at the University of Delaware in the 1980s when they were both involved in student government, he said it was her independence, her faith, and because she was fun.

"She was fun in a different way than I'd ever experienced with anybody I'd ever dated. She was very spontaneous," Christie told Winfrey.

"Spontaneous like?" Winfrey asked.

"Let's go break into the kitchen in the dining hall at college because we smell that they are baking doughnuts for the next morning," he recalled Mary Pat saying. "So let's sneak in and steal some of the doughnuts now."

Christie and Winfrey spoke at length about controlling their weight and managing the criticism surrounding it; specifically what it feels like to be on the short end of a Dave Letterman fat joke.

"It didn't bother you?" Winfrey asked. "Because let me tell you, when David Letterman was making jokes about me, it bothered me."

"I think I was girded for it, Oprah, I really do," Christie responded, saying he had developed "a shell about it."

The conversation also hit more serious overtones as Winfrey asked him, Mary Pat and their four children — Andrew, 18, Sarah, 15, Patrick, 11, and Bridget, 8 — about the pressure of being asked to run for president.

Sarah lamented to Winfrey about being banned from having a Facebook page.

"By the way, who backed us up on you not having a Facebook account?" Christie pointed out.

"Mark Zuckerberg," co-creator of the social networking site, Sarah answered, reluctantly.

Christie, Zuckerberg and Newark Mayor Cory Booker, a Democrat, appeared on Winfrey's talk show in September 2010 to announce that Facebook was pledging a $100 million donation to the Newark public schools.

Christie said he wanted his daughter to wait until she was a little older, given his position, so that she can better handle the "opportunity for mischief" that Facebook provides — a position he said Zuckerberg supported.

While Booker, who has been rumored as a potential candidate to run against Christie in 2013, is close to Winfrey and her best friend, Gayle King, Christie met the daytime icon for the first time at the taping of the show about Facebook's donation.

Christie had been in office less than a year when he first met Winfrey. Elected in a Democratic-leaning New Jersey 2009, Christie quickly became YouTube sensation and darling of the Republican party for his blunt style, and pressure quickly mounted for him to run for the White House in 2012. He briefly considered changing his mind against running this fall, but didn't and instead endorsed Mitt Romney, whom he has been campaigning hard for ever since.

Winfrey, who openly endorsed Barack Obama during the 2008 presidential elections, asked Christie what advice Christie he had for the president and what he thought Obama's chances for re-election were.

Surprisingly, Christie warned that those who underestimate Obama as a campaigner do so at their own peril.

"He is as good a politician as I've ever seen ... he's really good at it. And I think he's very charismatic. And I think he's genuine. I think what he says he believes he believes. That's a very dangerous politician."

But Christie was quick to say that Obama was weak in governing, and needed to work on his relationships with adversaries — something Christie has credited with helping him pass major changes to New Jersey's pension and health benefits systems.

"If he had asked me a year ago, I would have said, "So, Mr. President, make John Boehner your best friend in the whole world. Have him over for dinner. Have him for golf regularly. Call him on the phone talk, to him, charm him, make him your pal."

So why didn't he run for the White House himself?

Christie said he wasn't sure that his "true compass" thought he was ready.

"Is that compass telling you that you may be ready four years from now?" Winfrey asked.

"Who knows? It depends on who wins. Is the president re-elected? Does a Republican win? I don't know," Christie said. "But in terms of me, I'll be much more ready four years from now than I am now."

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Online:

Interview clips: http://bit.ly/xvAr23