Depardieu, in Tax Fight, Gets Russian Citizenship

MOSCOW (AP) — Gerard Depardieu, the French actor who has waged a battle against a proposed super-tax on millionaires in his native country, has been granted Russian citizenship.

A brief announcement on the Kremlin website on Thursday revealed that President Vladimir Putin signed the citizenship grant following an application from the actor.

The former Oscar nominee and star of the movie "Green Card" has been vocal in his opposition to French President Francois Hollande's plans to raise the tax on earned income above €1 million ($1.33 million) to 75 percent from the current high of 41 percent. Russia has a flat 13-percent tax rate.

"I have never killed anyone, I don't think I've been unworthy, I've paid €145 million in taxes over 45 years," Depardieu wrote in an open letter in mid-December to Prime Minister Jean-Marc Ayrault, who had called the actor "pathetic."

"I will neither complain nor brag, but I refuse to be called 'pathetic,'" the 64-year-old actor wrote in his response.

A representative for the former Oscar nominee declined to say whether he had accepted the Russian offer, and refused all comment. Thursday was a holiday in Russia and officials from the Federal Tax Service and Federal Migration Service could not be reached for comment on whether the decision would require Depardieu to have a residence in Russia.

Depardieu said in his letter to Ayrault that he would surrender his passport and French social security card. In October, the mayor of a small Belgian border town announced that Depardieu had bought a house and set up legal residence there, a move that was slammed by the newly-elected Socialist government.

Najat Vallaud-Belkacem, the French government spokeswoman, didn't comment directly on Depardieu's tax fight, but drew a clear distinction between people who have personal or professional reasons to live abroad, and "French citizens who proclaim loudly and clearly that they they're exiling themselves for fiscal reasons."

She said Putin's offer "is an exclusive prerogative of the Russian chief of state."

Depardieu has had increasingly high-profile ties with Russia. Last October he visited the capital of Chechnya, Grozny, to celebrate the birthday of Chechen President Ramzan Kadyrov. And in 2011, he was in Russia's Arkhangelsk region to play the lead role in the film "Rasputin."

"You have to understand that Depardieu is a star in Russia," Vladimir Fedorovski, a Russian writer living in France, told the network Europe 1 on Thursday. "There are crowds around Depardieu. He's a symbol of France. He's a huge ambassador of French culture."

Though France's highest court struck down the two-year tax on Dec. 29, the government has promised to resubmit the law in a slightly different form soon. On Wednesday it estimated that the court decision to overturn the tax would cost it €210 million in 2013.

In an interview published Sunday, Depardieu told the Sunday Parisien that the court decision made no difference.

France's debt burden is around 90 percent of national income — not far off levels that have caused problems elsewhere in the 17-country eurozone.

Depardieu has made more than 150 films, among them the 1991 comedy "Green Card" about a man who enters into a marriage of convenience in order to get U.S. residency. Most famously, Depardieu was nominated for an Academy Award for his role as Cyrano de Bergerac in the 1990 film by the same name.

The Kremlin statement gave no information on why Putin made the citizenship grant, but the Russian president expressed sympathy with the actor in December, days after Depardieu reportedly said he was considering Russian citizenship.

"As we say, artists are easily offended and therefore I understand the feelings of Mr. Depardieu," Putin said.

Although France and Russia disagree sharply about how to resolve the civil war in Syria, the two countries have strong commercial relations. In 2011, Russia signed a contract worth more than €1 billion ($1.33 billion) Friday to buy two French warships — the largest military deal between a NATO country and Moscow.

Depardieu is well known in Russia, where he appears in an ad for Sovietsky Bank's credit card and is prominently featured on the bank's home page.

Depardieu is not the only high-profile Frenchman to object to the super-tax. Bernard Arnault — chief of the luxury goods and fashion giant LVMH and worth an estimated $41 billion — has also said he would leave for Belgium.

France's Civil Code says one must have another nationality in order to give up French citizenship because it is forbidden to be stateless. Thursday's decision by the Kremlin appears to fulfill that requirement.

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Hinnant contributed from Paris. Silvie Corbet also contributed from Paris.

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Fake John le Carré Twitter Account Fakes J.K. Rowling’s Fake Twitter Death

We’ve seen “Cormac McCarthy” Tweet apocalyptic non sequiturs. “Philip Roth” promised us a bite-sized short story. Now a fake Twitter account for British spy novelist John le Carré is spreading bizarre death rumors about J.K. Rowling. After a few days of Tweeting harmless missives, the week-old handle @JLecarre dropped this would-be bombshell on its nearly 2,500 followers Wednesday morning: 

A terrible news. My publisher phones me announcing that J.K. Rowling dies by accident. Few minutes ago. No words!

— John le Carré (@JLecarre) January 2, 2013

OK, there are at least three dead-giveaways that this is a fake account. One: If J.K. Rowling had died, does anyone credibly think John le Carré would be the one breaking the news? Rowling and le Carré don’t even share a publisher—he’s with Penguin and she’s printed by Little, Brown and Company—making this story even more implausible. Two: As noted by le Carré’s literary agent Jonny Geller, the “L” in the author’s name shouldn’t be capitalized, as it is in the handle of this hoax account. Three: Phrases like “a terrible news” and “my publisher phones me” sound more like snippets from an ESL workbook than lines from an author praised for his chilly, controlled prose style. This could again be the work of Italian media troll Tommaso De Benedetti, who copped to creating a fake Philip Roth account recently. “Twitter works well for deaths,” he told The Guardian‘s Tom Kington, describing his M.O. for spreading misinformation about the deaths of public figures like Fidel Castro and Pedro Almodóvar. 

RELATED: Pippa’s Sales Figures Are Nothing to ‘Celebrate’; Salman Rushdie and John le Carré Call Truce

Too bad John le Carrè isn’t actually on Twitter, though. Imagine the flame wars he would get into with longtime adversary Salman Rushdie—who most certainly is on Twitter, and loves using it to throw literate shade. And too bad this isn’t the handiwork of someone with more imagination—someone like the unpublished Scottish novelist behind @cormaccmccarthy. Outed right here on The Atlantic Wire, Michael Crossan at least had the chops to fool Margaret Atwood and Twitter co-founder Jack Dorsey with dead-on spoofs of McCarthy’s writing: 

RELATED: Salman Rushdie’s Video Speech Gets Spiked; The World’s Priciest Books

Social Media News Headlines – Yahoo! News

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Brandy: My Proposal Was a 'Spontaneous Thing'

By Mark Gray

01/03/2013 at 07:30 AM EST

Ryan Press and Brandy

Al Powers/Powers Imagery/Invision/AP

Brandy had no idea that her fiancé Ryan Press had plans to ask for her hand in marriage last week.

Then again, she doesn't think her beau knew he was going to, either.

"It was a spontaneous thing for my fiancé," she said before ringing in the New Year at LAVO Las Vegas "He just felt it."

The R&B singer and former Dancing with the Stars contestant first went public with her romance with music executive Ryan Press on New Year's Eve 2011, cuddling at a Las Vegas party. On Monday, they were back in Vegas, but this time she was sporting a glimmering ring.

Although Brandy, 33, told PEOPLE in March that she let Press know she'd "marry him with a bubble gum ring," the sparkler she did receive has impressed her.

"He worked really hard on the ring. I'm not a big diamond girl, but I really love this diamond he did," she said. "It just represents how he feels about me, and I'm really blessed to have someone like him in my life. He's truly a gift." 

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Flu? Malaria? Disease forecasters look to the sky

NEW YORK (AP) — Only a 10 percent chance of showers today, but a 70 percent chance of flu next month.

That's the kind of forecasting health scientists are trying to move toward, as they increasingly include weather data in their attempts to predict disease outbreaks.

In one recent study, two scientists reported they could predict — more than seven weeks in advance — when flu season was going to peak in New York City. Theirs was just the latest in a growing wave of computer models that factor in rainfall, temperature or other weather conditions to forecast disease.

Health officials are excited by this kind of work and the idea that it could be used to fine-tune vaccination campaigns or other disease prevention efforts.

At the same time, experts note that outbreaks are influenced as much, or more, by human behavior and other factors as by the weather. Some argue weather-based outbreak predictions still have a long way to go. And when government health officials warned in early December that flu season seemed to be off to an early start, they said there was no evidence it was driven by the weather.

This disease-forecasting concept is not new: Scientists have been working on mathematical models to predict outbreaks for decades and have long factored in the weather. They have known, for example, that temperature and rainfall affect the breeding of mosquitoes that carry malaria, West Nile virus and other dangerous diseases.

Recent improvements in weather-tracking have helped, including satellite technology and more sophisticated computer data processing.

As a result, "in the last five years or so, there's been quite an improvement and acceleration" in weather-focused disease modeling, said Ira Longini, a University of Florida biostatistician who's worked on outbreak prediction projects.

Some models have been labeled successes.

In the United States, researchers at Johns Hopkins University and the University of New Mexico tried to predict outbreaks of hantavirus in the late 1990s. They used rain and snow data and other information to study patterns of plant growth that attract rodents. People catch the disease from the droppings of infected rodents.

"We predicted what would happen later that year," said Gregory Glass, a Johns Hopkins researcher who worked on the project.

More recently, in east Africa, satellites have been used to predict rainfall by measuring sea-surface temperatures and cloud density. That's been used to generate "risk maps" for Rift Valley fever — a virus that spreads from animals to people and in severe cases can cause blindness or death. Researchers have said the system in some cases has given two to six weeks advance warning.

Last year, other researchers using satellite data in east Africa said they found that a small change in average temperature was a warning sign cholera cases would double within four months.

"We are getting very close to developing a viable forecasting system" against cholera that can help health officials in African countries ramp up emergency vaccinations and other efforts, said a statement by one of the authors, Rita Reyburn of the International Vaccine Institute in Seoul, South Korea.

Some diseases are hard to forecast, such as West Nile virus. Last year, the U.S. suffered one of its worst years since the virus arrived in 1999. There were more than 2,600 serious illnesses and nearly 240 deaths.

Officials said the mild winter, early spring and very hot summer helped spur mosquito breeding and the spread of the virus. But the danger wasn't spread uniformly. In Texas, the Dallas area was particularly hard-hit, while other places, including some with similar weather patterns and the same type of mosquitoes, were not as affected.

"Why Dallas, and not areas with similar ecological conditions? We don't really know," said Roger Nasci of the Centers for Disease Control and Prevention. He is chief of the CDC branch that tracks insect-borne viruses.

Some think flu lends itself to outbreak forecasting — there's already a predictability to the annual winter flu season. But that's been tricky, too.

Seasonal flu reports come from doctors' offices, but those show the disease when it's already spreading. Some researchers have studied tweets on Twitter and searches on Google, but their work has offered a jump of only a week or two on traditional methods.

In the study of New York City flu cases published last month in the Proceedings of the National Academy of Sciences, the authors said they could forecast, by up to seven weeks, the peak of flu season.

They designed a model based on weather and flu data from past years, 2003-09. In part, their design was based on earlier studies that found flu virus spreads better when the air is dry and turns colder. They made calculations based on humidity readings and on Google Flu Trends, which tracks how many people are searching each day for information on flu-related topics (often because they're beginning to feel ill).

Using that model, they hope to try real-time predictions as early as next year, said Jeffrey Shaman of Columbia University, who led the work.

"It's certainly exciting," said Lyn Finelli, the CDC's flu surveillance chief. She said the CDC supports Shaman's work, but agency officials are eager to see follow-up studies showing the model can predict flu trends in places different from New York, like Miami.

Despite the optimism by some, Dr. Edward Ryan, a Harvard University professor of immunology and infectious diseases, is cautious about weather-based prediction models. "I'm not sure any of them are ready for prime time," he said.

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Wall Street set for rally in wake of fiscal pact

NEW YORK (Reuters) - Wall Street was set to rally on the first trading day of 2013, after lawmakers agreed a deal to avoid massive tax hikes and spending cuts that had threatened to hurt economic growth.

The gains would come after stocks ended 2012 with their strongest day in more than a month, which put the S&P 500 up 13.4 percent for the year, after a flat performance in 2011.

Late on Tuesday, the House of Representatives voted for a bill that will raise taxes on wealthy individuals and families and preserve certain benefits.

The vote averted immediate austerity measures, like tax hikes for almost all U.S. households, although it didn't resolve other political showdowns on the budget due in coming months. Spending cuts of $109 billion in military and domestic programs were only delayed for two months.

"We are looking at a sharply higher open on Wall Street," said Peter Cardillo, chief market analyst for Rockwell Global Capital in New York. "The deal certainly brightens the prospects for economic growth, and traditionally speaking, the first week of the year generally sets the stage for the rest of the year for equities - so this is positive."

"There is a lot of euphoria out there and I expect, for the next day or two, the market will continue on the upside. We will see money re-entering the market," Cardillo said.

S&P 500 futures rose 26.8 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 203 points, and Nasdaq 100 futures added 57.25 points.

The long-awaited U.S. fiscal deal lifted global shares at the start of the new year. The pan-European FTSEurofirst 300 <.fteu3> was up 1.6 percent and the MSCI world index <.miwd00000pus> rose 0.8 percent. The MSCI Asia Pacific ex-Japan index of stocks <.miapj0000pus> surged 2.1 percent. Japanese markets were closed Wednesday for a holiday.

On the macroeconomic front, the Institute for Supply Management's manufacturing sector survey will be released at 10:00 a.m. ET (1500 GMT). A Reuters survey forecasts the main index at 50.3 compared with 49.5 in November.

Also at 10:00 a.m., November construction spending data will be released. A Reuters survey forecasts a 0.6 percent rise in construction spending, versus 1.4 percent in the prior month.

On the last day of trading in 2012, the Dow Jones industrial average <.dji> gained 166.03 points, or 1.28 percent, to close at 13,104.14. The Standard & Poor's 500 Index <.spx> gained 23.76 points, or 1.69 percent, to finish at 1,426.19. The Nasdaq Composite Index <.ixic> gained 59.20 points, or 2.00 percent, to close at 3,019.51.

In 2012, the Dow advanced 7.3 percent, while the Nasdaq climbed 15.9 percent.

(Editing by Bernadette Baum)

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IHT Rendezvous: Hoping to End Decades-long Kurdish Conflict, Turkey Calls on Archenemy

LONDON — Turkish intelligence agents have been making the short hop from Istanbul across the Sea of Marmara to the prison Island of Imrali in recent weeks for talks with a jailed Kurdish separatist leader who was once Turkey’s most wanted man.

Abdullah Ocalan, founder of the Kurdistan Workers’ Party, the P.K.K., has been languishing on Imrali since he was captured in Nairobi, Kenya in 1999 while on the run. He is serving a life term after a death sentence was commuted.

Now the Turkish government wants his help to end a resurgent war with P.K.K. rebels that has claimed around 900 lives in the last year and a half.

Recep Tayyip Erdogan, the Turkish prime minister, revealed the dialog last week when he told state-run TRT television, “I cannot hold such meetings myself as a politician but the state has agents and they do.”

In an acknowledgement that the latest escalation in a three-decade battle against the Kurdish insurgents was probably unwinnable, Yalcin Akdogan, a senior adviser to Mr. Erdogan, said this week that the talks were aimed at persuading the P.K.K. to disarm.

“The government supports any dialog to this end that could result in a halt to violence,” Mr. Akdogan said in a television interview. “You cannot get results and abolish an organization only with armed struggle.”

The strategy of seeking a deal with the P.K.K. has implications for Turkey’s policy in neighboring Syria, where Kurdish militants linked to the organization have taken over territory vacated by retreating government forces.

Turkey “fears that an autonomous Kurdish region in Syria would become a haven for Kurdish militants to carry out cross-border attacks in the Kurdish areas in southeastern Turkey,” my colleague Tim Arango wrote recently in a report from the border region.

Tensions over Syria and the Kurdish issue have also led to a souring of Turkey’s relations with Iran and the Iraqi government in Baghdad, as Ankara struggled to cope with the aftermath of the so-called Arab Spring.

There is a question mark over how much authority the jailed Mr. Ocalan has over the P.K.K. leadership, which is based in the Qandil mountains in the Kurdish region of northern Iraq. “He remains a figure of symbolic importance,” Mr. Akdogan said of the P.K.K. founder. “But we still have to wait and see how Qandil will react.”

Mr. Ocalan’s capture in 1999 was a cause of national celebration among Turks after the worst years of a war that has cost 40,000 lives, including those of Turkish and Kurdish civilians. The P.K.K. is regarded as a terrorist organization by, among others, the United States and the European Union.

However, the Turkish authorities have not shrunk from dealing with Mr. Ocalan in the past to intervene in Kurdish matters.

In November, he saved the authorities from an escalating crisis that threatened to worsen tensions with the Kurds by calling on hundreds of his imprisoned supporters to halt a two-month hunger strike. The protesters had been demanding an end to Mr. Ocalan’s isolation and improved rights for Turkey’s Kurdish minority, which makes up 20 percent of its population.

Andrew Finkel wrote in the IHT’s Global Views opinion section that the intervention signaled the resumption of Mr. Ocalan’s career.

Mr. Ocalan is now reportedly demanding direct contact with the P.K.K.’s leadership and improved prison conditions as the price for his cooperation in persuading the militants to lay down their arms.

Some observers have cast doubt on the government’s strategy of dealing with Mr. Ocalan while failing to carry out reforms in favor of the country’s Kurdish minority.

David Rohde wrote in a Rendezvous article at the weekend that more than 10,000 Kurds were imprisoned in Turkey on various terrorism charges.

According to Hugh Pope, project director of the International Crisis Group in Turkey, the government of Mr. Erdogan is putting the cart before the horse. “They need to find a Kurdish settlement first before cutting a deal with the P.K.K.,” he told Rendezvous from Istanbul.

That would include instituting promised reforms that would give equality to Turkey’s Kurdish citizens, including the right to a Kurdish-language education.

“The P.K.K. wants to do a deal and obviously Ocalan is desperate to get out of jail,” Mr. Pope said. “He may be an essential ingredient but he’s not the magic key.”

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Your Snapchats aren’t safe: How to secretly save videos from Snapchat or Facebook’s ‘Poke’

Argue though its executives might, Snapchat is good for two things: sending photos and videos of yourself making stupid faces, and sending photos and videos of yourself naked. The latter, of course, is the more compelling function since that is exactly what the app was designed for. When users send pictures or videos, the recipient can only view them for a set amount of time before they “self-destruct.” Yes, a recipient can take a screenshot but the sender is automatically alerted when that occurs — then, as the saying goes, fool me once… As it turns out, however, Snapchat users (and users of “Poke,” Facebook’s (FB) Snapchat ripoff) can easily save photos and full-length videos received through the service without the sender ever knowing.

[More from BGR: Five tech resolutions for 2013]

As recently relayed by BuzzFeed’s Katie Notopoulos, saving photos and videos from Snapchat or Poke is as easy as connecting a phone to a computer and opening a file browser. The file browser is free and the “trick” requires no jailbreak or any other kind of hack.

[More from BGR: Can Samsung survive without Android?]

Start by leaving the photos and videos you receive in Snapchat or Poke unopened; as soon as a file is viewed, the countdown to its deletion begins.

Then simply connect to a computer and open a free iPhone file explorer like i-FunBox. Open the “User Applications” folder, navigate to the “Snapchat” entry and voilà, all of the photos and videos you have received and not yet opened are available to be copied to your computer’s hard drive.

Then go back and view them normally in the app and the sender will be none the wiser.

The file path is a bit different for Facebook’s Poke app but the end result is the same.

This article was originally published by BGR

Social Media News Headlines – Yahoo! News

Title Post: Your Snapchats aren’t safe: How to secretly save videos from Snapchat or Facebook’s ‘Poke’
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Betty White Wants to Share Kim Kardashian's Boyfriend - in New Clip

TV Watch
People Exclusive

By Maggie Coughlan

01/02/2013 at 08:50 AM EST

Kim Kardashian (left) and Betty White

Trae Patton/NBC

Talk about an odd couple.

Kim Kardashian joins Betty White for the veteran actress's NBC series Betty White's Off Their Rockers – premiering Jan. 8 at 8/7 C – for a hilarious comedy bit.

In the routine, while researching her family tree White, 90, discovers that she and Kardashian, 32, are actually related.

"You know what that means, I'm just one step away from your boyfriend," White declares. "You Kardashians share everything, right?"

But Kardashian is anything but amused. "Back off Betty," she replies, disapprovingly.

"Ooh, a family feud! I just love being a Kardashian," White says with a sly giggle.

For even more giggles, see the clip below.

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Brain image study: Fructose may spur overeating

This is your brain on sugar — for real. Scientists have used imaging tests to show for the first time that fructose, a sugar that saturates the American diet, can trigger brain changes that may lead to overeating.

After drinking a fructose beverage, the brain doesn't register the feeling of being full as it does when simple glucose is consumed, researchers found.

It's a small study and does not prove that fructose or its relative, high-fructose corn syrup, can cause obesity, but experts say it adds evidence they may play a role. These sugars often are added to processed foods and beverages, and consumption has risen dramatically since the 1970s along with obesity. A third of U.S. children and teens and more than two-thirds of adults are obese or overweight.

All sugars are not equal — even though they contain the same amount of calories — because they are metabolized differently in the body. Table sugar is sucrose, which is half fructose, half glucose. High-fructose corn syrup is 55 percent fructose and 45 percent glucose. Some nutrition experts say this sweetener may pose special risks, but others and the industry reject that claim. And doctors say we eat too much sugar in all forms.

For the study, scientists used magnetic resonance imaging, or MRI, scans to track blood flow in the brain in 20 young, normal-weight people before and after they had drinks containing glucose or fructose in two sessions several weeks apart.

Scans showed that drinking glucose "turns off or suppresses the activity of areas of the brain that are critical for reward and desire for food," said one study leader, Yale University endocrinologist Dr. Robert Sherwin. With fructose, "we don't see those changes," he said. "As a result, the desire to eat continues — it isn't turned off."

What's convincing, said Dr. Jonathan Purnell, an endocrinologist at Oregon Health & Science University, is that the imaging results mirrored how hungry the people said they felt, as well as what earlier studies found in animals.

"It implies that fructose, at least with regards to promoting food intake and weight gain, is a bad actor compared to glucose," said Purnell. He wrote a commentary that appears with the federally funded study in Wednesday's Journal of the American Medical Association.

Researchers now are testing obese people to see if they react the same way to fructose and glucose as the normal-weight people in this study did.

What to do? Cook more at home and limit processed foods containing fructose and high-fructose corn syrup, Purnell suggested. "Try to avoid the sugar-sweetened beverages. It doesn't mean you can't ever have them," but control their size and how often they are consumed, he said.

A second study in the journal suggests that only severe obesity carries a high death risk — and that a few extra pounds might even provide a survival advantage. However, independent experts say the methods are too flawed to make those claims.

The study comes from a federal researcher who drew controversy in 2005 with a report that found thin and normal-weight people had a slightly higher risk of death than those who were overweight. Many experts criticized that work, saying the researcher — Katherine Flegal of the Centers for Disease Control and Prevention — painted a misleading picture by including smokers and people with health problems ranging from cancer to heart disease. Those people tend to weigh less and therefore make pudgy people look healthy by comparison.

Flegal's new analysis bolsters her original one, by assessing nearly 100 other studies covering almost 2.9 million people around the world. She again concludes that very obese people had the highest risk of death but that overweight people had a 6 percent lower mortality rate than thinner people. She also concludes that mildly obese people had a death risk similar to that of normal-weight people.

Critics again have focused on her methods. This time, she included people too thin to fit what some consider to be normal weight, which could have taken in people emaciated by cancer or other diseases, as well as smokers with elevated risks of heart disease and cancer.

"Some portion of those thin people are actually sick, and sick people tend to die sooner," said Donald Berry, a biostatistician at the University of Texas MD Anderson Cancer Center in Houston.

The problems created by the study's inclusion of smokers and people with pre-existing illness "cannot be ignored," said Susan Gapstur, vice president of epidemiology for the American Cancer Society.

A third critic, Dr. Walter Willett of the Harvard School of Public Health, was blunter: "This is an even greater pile of rubbish" than the 2005 study, he said. Willett and others have done research since the 2005 study that found higher death risks from being overweight or obese.

Flegal defended her work. She noted that she used standard categories for weight classes. She said statistical adjustments were made for smokers, who were included to give a more real-world sample. She also said study participants were not in hospitals or hospices, making it unlikely that large numbers of sick people skewed the results.

"We still have to learn about obesity, including how best to measure it," Flegal's boss, CDC Director Dr. Thomas Frieden, said in a written statement. "However, it's clear that being obese is not healthy - it increases the risk of diabetes, heart disease, cancer, and many other health problems. Small, sustainable increases in physical activity and improvements in nutrition can lead to significant health improvements."

___

Online:

Obesity info: http://www.cdc.gov/obesity/data/trends.html

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Marilynn Marchione can be followed at http://twitter.com/MMarchioneAP

Mike Stobbe can be followed at http://twitter.com/MikeStobbe

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Senate approves "fiscal cliff" deal, crisis eased

WASHINGTON (Reuters) - The Senate moved the U.S. economy back from the edge of a "fiscal cliff" on Tuesday, voting to avoid imminent tax hikes and spending cuts in a bipartisan deal that could still face stiff challenges in the House of Representatives.

In a rare New Year's session at around 2 a.m. EST (0700 GMT), senators voted 89-8 to raise some taxes on the wealthy while making permanent low tax rates on the middle class that have been in place for a decade.

But the measure did little to rein in huge annual budget deficits that have helped push the U.S. debt to $16.4 trillion.

The agreement came too late for Congress to meet its own deadline of New Year's Eve for passing laws to halt $600 billion in tax hikes and spending cuts which strictly speaking came into force on Tuesday.

But with the New Year's Day holiday, there was no real world impact and Congress still had time to draw up legislation, approve it and backdate it to avoid the harsh fiscal measures.

That will need the backing of the House where many of the Republicans who control the chamber complain that President Barack Obama has shown little interest in cutting government spending and is too concerned with raising taxes.

All eyes are now on the House which is to hold a session on Tuesday starting at noon (1700 GMT).

Obama called for the House to act quickly and follow the Senate's lead.

"While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay," he said in a statement.

"There's more work to do to reduce our deficits, and I'm willing to do it. But tonight's agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans," Obama said.

Members were thankful that financial markets were closed, giving them a second chance to return to try to head off the fiscal cliff.

But if lawmakers cannot pass legislation in the coming days, markets are likely to turn sour. The U.S. economy, still recovering from the 2008/2009 downturn, could stall again if Congress fails to fix the budget mess.

"If we do nothing, the threat of a recession is very real. Passing this agreement does not mean negotiations halt, far from it. We can all agree there is more work to be done," Majority Leader Harry Reid, a Democrat, told the Senate floor.

A new, informal deadline for Congress to legislate is now Wednesday when the current body expires and it is replaced by a new Congress chosen at last November's election.

The Senate bill, worked out after long negotiations on New Year's Eve between Vice President Joe Biden and Senate Republican Minority Leader Mitch McConnell, also postpones for two months a $109 billion "sequester" of sweeping spending cuts on military and domestic programs.

It extends unemployment insurance to 2 million people for a year and makes permanent the alternative minimum tax "patch" that was set to expire, protecting middle-income Americans from being taxed as if they were rich.

'IMPERFECT SOLUTION'

The tax hikes do not sit easy with Republicans but conservative senators held their noses and voted to raise rates for the rich because not to do so would have meant increases for almost all working Americans.

"It took an imperfect solution to prevent our constituents from a very real financial pain, but in my view, it was worth the effort," McConnell said.

House Speaker John Boehner - the top Republican in Congress - said the House would consider the Senate deal. But he left open the possibility of the House amending the Senate bill, which would spark another round of legislating.

"The House will honor its commitment to consider the Senate agreement if it is passed. Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members ... have been able to review the legislation," Boehner and other House Republican leaders said in a statement.

Boehner has struggled for two years to get control over a group of several dozen Tea Party fiscal conservatives in his caucus who strongly oppose tax increases and demand that he force Obama to make savings in the Medicare and Social Security healthcare and retirement programs.

A campaign-style event held by Obama in the White House as negotiations with Senate leaders were taking place on Monday may have made it more difficult for Republicans to back the deal. In remarks to a group of supporters that resembled a victory lap, the president noted that his rivals were coming around to his way of seeing things.

"Keep in mind that just last month Republicans in Congress said they would never agree to raise tax rates on the wealthiest Americans. Obviously, the agreement that's currently being discussed would raise those rates and raise them permanently," he said to applause before the Senate deal was sealed.

Obama's words and tone annoyed Republican lawmakers who seemed to feel that the Democrat was gloating.

"That's not the way presidents should lead," said Republican Senator John McCain, Obama's rival in the 2008 election.

A deal with the House on Tuesday, while uncertain, would not mark the end of congressional budget fights. The "sequester" spending cuts will come up again in February as will the contentious "debt ceiling," which caps how much debt the federal government can hold.

Republicans may see those two issues as their best chance to try to rein in government spending and clip Obama's wings at the start of his second term.

(Additional reporting by Richard Cowan, Mark Felsenthal, Rachelle Younglai, Kim Dixon and Jeff Mason; Writing by Alistair Bell; Editing by Eric Walsh)

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