Why U.S. lives under the shadow of 'W'

Julian Zelizer says former President George W. Bush's key tax and homeland security policies survive in the age of Obama

STORY HIGHLIGHTS

• Julian Zelizer: For all the criticism Bush got, two key policies have survived


• He says fiscal cliff pact perpetuates nearly all of Bush's tax cuts


• Obama administration has largely followed Bush's homeland security policy, he says


• Zelizer: By squeezing revenues, Bush tax cuts will put pressure on spending

Editor's note: Julian Zelizer is a professor of history and public affairs at Princeton University. He is the author of "Jimmy Carter" and of "Governing America."

Princeton, New Jersey (CNN) -- Somewhere in Texas, former President George W. Bush is smiling.

Although some Democrats are pleased that taxes will now go up on the wealthiest Americans, the recent deal to avert the fiscal cliff entrenches, rather than dismantles, one of Bush's signature legacies -- income tax cuts. Ninety-nine percent of American households were protected from tax increases, aside from the expiration of the reduced rate for the payroll tax.

Julian Zelizer

In the final deal, Congress and President Barack Obama agreed to preserve most of the Bush tax cuts, including exemptions on the estate tax.

When Bush started his term in 2001, many of his critics dismissed him as a lightweight, the son of a former president who won office as result of his family's political fortune and a controversial decision by the Supreme Court on the 2000 election.

But what has become clear in hindsight, regardless of what one thinks of Bush and his politics, is that his administration left behind a record that has had a huge impact on American politics, a record that will not easily be dismantled by future presidents.

The twin pillars of Bush's record were counterterrorism policies and tax cuts. During his first term, it became clear that Obama would not dismantle most of the homeland security apparatus put into place by his predecessor. Despite a campaign in 2008 that focused on flaws with the nation's response to 9/11, Obama has kept most of the counterterrorism program intact.

Opinion: The real issue is runaway spending

In some cases, the administration continues to aggressively use tactics his supporters once decried, such as relying on renditions to detain terrorist suspects who are overseas, as The Washington Post reported this week. In other areas, the administration has expanded the war on terrorism, including the broader use of drone strikes to kill terrorists.

Now come taxes and spending.

With regard to the Bush tax cuts, Obama had promised to overturn a policy that he saw as regressive. Although he always said that he would protect the middle class from tax increases, Obama criticized Bush for pushing through Congress policies that bled the federal government of needed revenue and benefited the wealthy.

In 2010, Obama agreed to temporarily extend all the tax cuts. Though many Democrats were furious, Obama concluded that he had little political chance to overturn them and he seemed to agree with Republicans that reversing them would hurt an economy limping along after a terrible recession.

Opinion: Time to toot horn for George H.W. Bush

With the fiscal cliff deal, Obama could certainly claim more victories than in 2010. Taxes for the wealthiest Americans will go up. Congress also agreed to extend unemployment compensation and continue higher payments to Medicare providers.

But beneath all the sound and fury is the fact that the 2001 and 2003 tax cuts, for most Americans, are now a permanent part of the legislative landscape. (In addition, middle class Americans will breathe a sigh of relief that Congress has permanently fixed the Alternative Minimum Tax, which would have hit many of them with a provision once designed to make sure that the wealthy paid their fair share.)

As Michigan Republican Rep. Dave Camp remarked, "After more than a decade of criticizing these tax cuts, Democrats are finally joining Republicans in making them permanent." Indeed, the Congressional Budget Office estimates that the new legislation will increase the deficit by $4 trillion over the next 10 years.

The tax cuts have significant consequences on all of American policy.

Opinion: Christie drops bomb on GOP leaders

Most important, the fact that a Democratic president has now legitimated the moves of a Republican administration gives a bipartisan imprimatur to the legitimacy of the current tax rates.

Although some Republicans signed on to raising taxes for the first time in two decades, the fact is that Democrats have agreed to tax rates which, compared to much of the 20th century, are extraordinarily low. Public perception of a new status quo makes it harder for presidents to ever raise taxes on most Americans to satisfy the revenue needs for the federal government.

At the same time, the continuation of reduced taxes keeps the federal government in a fiscal straitjacket. As a result, politicians are left to focus on finding the money to pay for existing programs or making cuts wherever possible.

New innovations in federal policy that require substantial revenue are just about impossible. To be sure, there have been significant exceptions, such as the Affordable Care Act. But overall, bold policy departures that require significant amounts of general revenue are harder to come by than in the 1930s or 1960s.

Republicans thus succeed with what some have called the "starve the beast" strategy of cutting government by taking away its resources. Since the long-term deficit only becomes worse, Republicans will continue to have ample opportunity to pressure Democrats into accepting spending cuts and keep them on the defense with regards to new government programs.

Politics: Are the days of Congress 'going big' over?

With his income tax cuts enshrined, Bush can rest comfortably that much of the policy world he designed will remain intact and continue to define American politics. Obama has struggled to work within the world that Bush created, and with this legislation, even with his victories, he has demonstrated that the possibilities for change have been much more limited than he imagined when he ran in 2008 or even in 2012.

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The opinions expressed in this commentary are solely those of Julian Zelizer.

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Gay marriage, assault weapons ban votes delayed in Senate

SPRINGFIELD—

The Illinois Senate left the State Capitol later today without voting on measures to legalize gay marriage and outlaw assault weapons, leaving the fate of those controversial issues in doubt.

A committee advanced the same-sex marriage bill late this afternoon, but the sponsor acknowledged she did not have enough votes to win approval on the Senate floor.

Sen. Heather Steans, D-Chicago, dismissed a question on whether she ever had a solid 30 votes lined up to pass the legislation. "Oh, no, no, no," Steans said. "We really did have the votes. We were just missing members today."

Such are the political dynamics of a lame-duck session in Springfield: some lawmakers who are in their final days of service don't show up to work, making it difficult to pass tough legislation.

The Senate’s failure to take a final vote also came after a furious lobbying pushback by the Catholic Conference of Illinois and Cardinal Francis George.

The Senate Executive Committee advanced the measure on an 8-5 vote following a lengthy debate that featured testimony from both sides of the issue.

"It's not often that we really have a chance in this chamber to be taking a look at something providing a basic civil right and advancing fairness," said sponsoring Sen. Steans. "Same-sex couples want to marry for the same reasons we all do--for commitment, family, mutual responsibility.

Steans said gay couples have suffered from the 2nd-class status. Underscoring Steans' point was emotional testimony from Mercedes Santos and Theresa Volpe, a lesbian couple from Rogers Park who got a civil union in Illinois.

"Right now, we are in a civil union, but it is not enough," testified Theresa Volpe.

Springfield Catholic Bishop Thomas John Paprocki testified against the proposal, saying, "It would radically redefine what marriage is for everybody." He maintained the "natural family" is undermined by the legislation.

"Neither two men nor two women can possibly form a marriage," Paprocki said. "Our law would be wrong if it said that they could.

"The basic structure of marriage as the exclusive and lasting relationship of a man and a woman, committed to a life with the potential of having children, is given to us in human nature, and thus by nature's God," Paprocki said.

At the same time, an effort to ban semi-automatic assault weapons and large-capacity ammunition magazines --- backed by Chicago Mayor Rahm Emanuel --- also lacked the votes needed for passage. Opponents argued the measure was too broad and unworkable.

With no action on those two controversial issues, senators were preparing to return home. A final day of the Senate’s lame-duck session remains an option for Tuesday, the day before the next General Assembly is inaugurated. But that could depend on whether the House takes any action. House members are scheduled to be in Springfield from Sunday through Tuesday.

rlong@tribune.com

rap30@aol.com

Twitter @RayLong

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Eleven dead in Damascus gas station blast

AZAZ, Syria (Reuters) - At least 11 people were killed and 40 wounded when a car bomb exploded at a crowded petrol station in the Syrian capital Damascus on Thursday, opposition activists said.

The station was packed with people queuing for fuel that has become increasingly scarce during the country's 21-month-long insurgency aimed at overthrowing President Bashar al-Assad.

The semi-official al-Ikhbariya television station showed footage of 10 burnt bodies and Red Crescent workers searching for victims at the site.

The opposition Revolution Leadership Council in Damascus said the explosion was caused by a booby-trapped car.

There was no immediate indication of who was responsible for the bombing in the Barzeh al-Balad district, whose residents include members of the Sunni Muslim majority and other religious and ethnic minorities.

"The station is usually packed even when it has no fuel," said an opposition activist who did not want to be named. "There are lots of people who sleep there overnight, waiting for early morning fuel consignments."

It was the second time that a petrol station has been hit in Damascus this week. Dozens of people were incinerated in an air strike as they waited for fuel on Wednesday, according to opposition sources.

In northern Syria, rebels were battling to seize an air base in their campaign against the air power that Assad has used to bomb rebel-held towns.

More than 60,000 people have been killed in the uprising and civil war, the United Nations said this week, a much higher death toll than previously thought.

DRAMATIC ADVANCES

After dramatic advances over the second half of 2012, the rebels now hold wide swathes of territory in the north and east, but they cannot protect towns and villages from Assad's helicopters and jets.

Hundreds of rebel fighters were attempting to storm the Taftanaz air base, near the highway that links Syria's two main cities, Aleppo and Damascus.

A rebel fighter speaking from near the Taftanaz base overnight said much of the base was still in loyalist hands but insurgents had managed to destroy a helicopter and a fighter jet on the ground.

The northern rebel Idlib Coordination Committee said the rebels had detonated a car bomb inside the base.

The government's SANA news agency said the base had not fallen and that the military had "strongly confronted an attempt by the terrorists to attack the airport from several axes, inflicting heavy losses among them and destroying their weapons and munitions".

Rami Abdulrahman, head of the opposition-aligned Syrian Observatory for Human Rights which monitors the conflict from Britain, said as many as 800 fighters were involved in the assault, including Islamists from Jabhat al-Nusra, a powerful group that Washington considers terrorists.

Taftanaz is mainly a helicopter base, used for missions to resupply army positions cut off by the rebels, as well as for dropping crude "barrel bombs" on rebel-controlled areas.

Near Minakh, another northern air base that rebels have surrounded, government forces have retaliated by shelling and bombing nearby towns.

NIGHTLY BOMBARDMENTS

In the town of Azaz, where the bombardment has become a near nightly occurrence, shells hit a family house overnight. Zeinab Hammadi said her two wounded daughters, aged 10 and 12, had been rushed across the border to Turkey, one with her brain exposed.

"We were sleeping and it just landed on us in the blink of an eye," she said, weeping as she surveyed the damage.

Family members tried to salvage possessions from the wreckage, men lifting out furniture and children carrying out their belongings in tubs.

"He (Assad) wants revenge against the people," said Abu Hassan, 33, working at a garage near the destroyed house. "What is the fault of the children? Are they the ones fighting?"

Opposition activists said warplanes struck a residential building in another rebel-held northern town, Hayyan, killing at least eight civilians.

Video footage showed men carrying dismembered bodies of children and dozens of people searching for victims in the rubble. The provenance of the video could not be independently confirmed.

In addition to their tenuous grip on the north, the rebels also hold a crescent of suburbs on the edge of Damascus, which have come under bombardment by government forces that control the center of the capital.

On Wednesday, according to opposition activists, dozens of people died in an inferno caused by an air strike on a petrol station in a Damascus suburb where residents were lining up for fuel.

The civil war in Syria has become the longest and bloodiest of the conflicts that rose out of uprisings across the Arab world in the past two years.

Assad's family has ruled for 42 years since his father seized power in a coup. The war pits rebels, mainly from the Sunni Muslim majority, against a government supported by members of Assad's Shi'ite-derived Alawite minority sect and some members of other minorities who fear revenge if he falls.

The West, most Sunni-ruled Arab states and Turkey have called for Assad to step down. He is supported by Russia and Shi'ite Iran.

(Additional reporting by Khaled Yacoub Oweis in Amman and Dominic Evans in Beirut; Writing by Peter Graff; Editing by Ruth Pitchford and Giles Elgood)

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Wall Street starts new year with a bang after "cliff" deal

NEW YORK (Reuters) - Stocks kicked off the new year with their best day in over a year on Wednesday, sparked by relief over a last-minute deal in Washington to avert the "fiscal cliff" of tax hikes and spending cuts that threatened to derail the economy's growth.

In 2013's first trading session, the S&P 500 achieved its biggest one-day gain since December 20, 2011, pushing the benchmark index to its highest close since September 14.

Concerns over Washington's ability to sidestep the cliff had driven the S&P 500 down for five straight sessions, before signs that a resolution was near sent the benchmark index higher on the final trading session of 2012.

The CBOE Volatility Index or the VIX <.vix>, Wall Street's favorite gauge of investor anxiety, dropped 18.5 percent to 14.68 at the close. The VIX has fallen 35.4 percent over the past two sessions, the biggest 2-day percentage drop in the history of the index.

The Dow Jones industrial average <.dji> jumped 308.41 points, or 2.35 percent, to 13,412.55 at the close. The Standard & Poor's 500 Index <.spx> gained 36.23 points, or 2.54 percent, to finish at 1,462.42. The Nasdaq Composite Index <.ixic> climbed 92.75 points, or 3.07 percent, to end at 3,112.26.

U.S. markets were closed on Tuesday for New Year's Day.

Market breadth reflected the strong rally, with 10 stocks rising for every one that fell on the New York Stock Exchange. All 10 of the S&P 500 industry sector indexes gained at least 1 percent. The S&P financial index <.gspf> shot up 2.9 percent.

The S&P Information Technology index <.gspt> gained 3.2 percent, including Hewlett-Packard , which climbed 5.4 percent to $15.02. HP's gain followed a miserable 2012 when the stock fell nearly 45 percent as one of the S&P 500's worst performers for 2012.

On Tuesday, Congress passed a bill to prevent huge tax hikes and delay spending cuts that would have pushed the world's largest economy off a "fiscal cliff" and possibly into recession.

The vote avoided steep income-tax increases for a majority of Americans, but failed to resolve a major showdown over cutting the budget deficit, leaving investors and businesses with only limited clarity about the outlook for the economy. Spending cuts of $109 billion in military and domestic programs were temporarily delayed, and another fight over raising the U.S. debt limit also looms.

"We got through the fiscal cliff. The next big thing, and probably more contentious thing, is negotiating the debt ceiling and possibly entitlement reform in early 2013," said Jim Russell, senior equity strategist for U.S. Bank Wealth Management in Cincinnati.

Hard choices about budget cuts and the critical need to raise the debt ceiling will confront Congress about the same time in two months "so the fur will be flying," Russell said.

U.S. stocks ended 2012 with the S&P 500 up 13.4 percent for the year, as investors largely shrugged off worries about the fiscal cliff. For the year, the Dow gained 7.3 percent and the Nasdaq jumped 15.9 percent.

Bank shares rose following news that U.S. regulators are close to securing another multibillion-dollar settlement with the largest banks to resolve allegations that they unlawfully cut corners when foreclosing on delinquent borrowers.

Bank of America Corp rose 3.7 percent to $12.03 and Citigroup Inc gained 4.3 percent to $41.25. The KBW bank index <.bkx> rose 3.2 percent.

Shares of Zipcar Inc surged 47.8 percent to $12.18 after Avis Budget Group Inc said it would buy Zipcar for about $500 million in cash to compete with larger rivals Hertz and Enterprise Holdings Inc. Avis advanced 4.8 percent to $20.77.

Shares of Apple rose 3.2 percent to $549.03, helping to lift the S&P information technology index <.gspt> up 3.2 percent following a report that the most valuable tech company has started testing a new iPhone and a new version of its iOS software.

Economic data from the Institute for Supply Management showed U.S. manufacturing ended 2012 on an upswing despite fears about the fiscal cliff, but the Commerce Department reported that construction spending fell in November for the first time in eight months.

Volume was heavy, with about 7.8 billion shares traded on the New York Stock Exchange, the NYSE MKT and the Nasdaq, well above the 2012 daily average of 6.42 billion.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)

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No. 22 Louisville leads No. 4 Florida early

NEW ORLEANS (AP) — Terell Floyd returned an interception 38 yards for a score on the first play, Jeremy Wright added short touchdown run and No. 22 Louisville jumped to a 14-0 lead over No. 4 Florida in the first quarter of the Sugar Bowl on Wednesday night.

Teddy Bridgewater completed four of his first five passes for 66 yards, leading the underdog Cardinals 83 yards on 12 plays for their second score.

The Gators went into the game as two-touchdown favorites. But Floyd, one of nearly three dozen Louisville players from the state of Florida, provided a surprise start.

Florida quarterback Jeff Driskel's interception was only his fourth all year. He was looking for seldom-targeted receiver Andre Debose, who had only two catches all season coming in. The throw was a bit behind Debose and the receiver tipped it, making for an easy catch and score for Floyd.

Oddly, Louisville had only 10 defenders on the field until only moments before the snap, when safety Jermaine Reve darted out from the sideline and immediately found a Florida receiver to cover.

When Louisville's offense got the ball later in the quarter, the Florida defense, ranked among the best in the nation this season, sought to intimidate the Cardinals with one heavy hit after another. Then again, Cardinals coach Charlie Strong was plenty familiar with many of these Gators — he was their defensive coordinator before moving to Louisville after the 2009 season.

One blow by Jon Bostic knocked Bridgewater's helmet off moments after he'd floated an incomplete pass down the right sideline. Bostic was called for a personal foul, however, which seemed to get the Cardinals drive rolling. Later, Wright lost his helmet during a 3-yard gain and took another heavy hit before he went down.

Louisville kept coming, though.

B.J. Butler turned a short catch into a 23-yard gain down to the Florida 1. Then Wright punched it in to give the Cardinals an early two-TD lead over a Southeastern Conference opponent that lost only one this season.

Louisville won the Big East berth to this game. They beat Rutgers in late November to virtually lock up the conference title, sealing that win on a late interception by Floyd.

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Tax break extension breathes new life into U.S. wind power

LOS ANGELES (Reuters) – The U.S. wind industry is powering up once again after Congress extended a critical tax credit that wind companies say will save tens of thousands of domestic jobs and allow more clean energy projects to ramp up this year.

About half of the sector’s 75,000 jobs in the United States had been expected to disappear if the wind production tax credit had been allowed to expire at the end of last year, according to trade group the American Wind Energy Association.

“There will be a lot of activity that wouldn’t have otherwise occurred,” said David Burton, an attorney with Akin Gump Strauss Hauer & Feld who works on the tax aspects of financing renewable energy projects.

The extension and several other clean energy tax breaks came out of a Senate Finance Committee “tax extenders” bill in August and was included, along with a host of other business tax incentives that industries had been pushing for all year, in the deal to avert the “fiscal cliff.”

The tax break provides an income tax credit of 2.2 cents per kilowatt hour for electricity produced by utility-scale wind turbines, helping it compete with power generated from cheap fossil fuels like coal and natural gas.

Importantly, the credit was changed to allow project developers to claim it when they begin construction, rather than only once turbines are up and running. It addresses the stop-start nature of the tax credit and takes into consideration the two years it can take to develop a wind farm.

“That’s a huge difference,” said Lance Markowitz, a senior vice president in the leasing and asset finance division of Union Bank, a unit of Mitsubishi UFJ Financial Group.

Markowitz added that he knows of several wind projects that will go forward that likely would not have without an extension of the tax credit. However, he cautioned that the industry still faces challenges such as weak power prices and an environment in which many utilities are close to fulfilling their state mandates for renewable energy generation and therefore are no longer required to buy more clean power.

The last-minute extension has already taken a toll on the industry, according to AWEA’s interim chief executive, Rob Gramlich, who said some of the industry’s jobs would not be saved.

“Some of the damage was certainly done,” he said.

Manufacturers like Denmark’s Vestas Wind Systems A/S, for instance, decreased their U.S. workforce in 2012 in anticipation of the tax credit expiring.

“Our order intake, like everyone else in the industry, saw a decrease in 2012,” said Andrew Longeteig, a spokesman for Vestas’ North American operations.

BIG HELP FOR SMALL GREEN INDUSTRIES

Allowing projects to claim the tax credit when they begin construction will be a big boon to less developed technologies like geothermal and biomass.

“They are less developed so tend to be looked at by investors as being riskier,” said Michael Bernier, a senior manager at Ernst & Young who specializes in renewable energy tax credits. “Providing that certainty of ‘OK, we’re going to get this tax credit,’ that helps you mitigate your risk.”

The change could spur about $ 4 billion of new investment in geothermal projects, said Karl Gawell, executive director of the Geothermal Energy Association.

It remains to be seen how the federal government will define projects “under construction” and able to qualify for the tax credit. A popular solar power incentive, before it expired, allowed developers to qualify if they incurred five percent of the total project costs even if actual construction had not started.

“The Obama administration was very supportive of those guidelines and will push hard for those same guidelines,” said Burton.

The bill to avert the fiscal cliff also included extensions of tax credits for electric vehicle chargers for individuals and businesses and electric motorcycles.

(Additional reporting by Valerie Volcovici in Washington; Editing by Phil Berlowitz)

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Look beyond the fiscal cliff

STORY HIGHLIGHTS

• Dean Baker: Budget deficit is not the only top issue in our national economic policy


• Baker: Fiscal cliff debate has been a distraction of the bigger problem of a downturn


• He says fears of big deficits are preventing us from boosting the economy more


• Baker: Given the economy's weakness, the government has to run big deficits

Editor's note: Dean Baker, an economist, is co-director of the Center for Economic and Policy Research, a progressive economic policy organization. He is author of "The End of Loser Liberalism: Making Markets Progressive."

(CNN) -- We have just passed into the new year, and the distractions created by the debate over the fiscal cliff appear to be behind us. Maybe.

That debate has been part of a larger distraction -- the concern over budget deficits at a time when by far the country's most important problem remains the economic downturn caused by the collapse of the housing bubble. The obsession with budget deficits is especially absurd because the enormous deficits of recent years are entirely the result of the economic downturn.

In spite of this, the leadership of both parties has elevated the budget deficit to be the top and virtually only issue in national economic policy. This means ignoring the downturn that continues to cause enormous amount of unnecessary suffering for tens of millions of people.

Dean Baker

But fears of big deficits are preventing us from giving the same sort of boost to the economy that got us out of the Great Depression. The explanation is simple: profits have returned to prerecession levels.

Opinion: Cliff deal hollow victory for American people

This means that from the standpoint of the people who own and run American businesses, everything is pretty much fine. Moreover, they see the deficits created by the downturn as providing an opportunity to go after Social Security and Medicare.

The Campaign to Fix the Debt, a nonpartisan organization involving many of the country's richest and most powerful CEOs, sets out to do just that. It has become standard practice in Washington for Wall Street types and other wealthy interests to finance groups to push their agenda.

The Campaign to Fix the Debt involves the CEOs themselves directly stepping up to the plate and pushing the case for cutting Social Security and Medicare as well as lowering the corporate income tax rate.

It's clear what's going on here. We don't need any conspiracy theories.

iReport: What's your message for Washington?

CEOs from both political parties have openly come together to demand cuts in Social Security and Medicare, two programs that enjoy massive political support across the political spectrum. The wealthy are joining hands without regard to political affiliation to cut benefits that enjoy broad bipartisan support among everyone who is not rich.

President Barack Obama has an opportunity to show real leadership. He should explain to the public the basic facts that all budget experts know: We do not have a chronic deficit problem. The big deficits are the result of collapsed economy. The priority of the president and Congress must be to put people back to work and bring the economy back up to speed.

Fiscal cliff deal: 5 things to know

When the housing bubble burst, annual spending on residential construction fell back by more than 4% of GDP, which is $600 billion in today's economy. Similarly, consumption plunged as people drastically curtailed their spending in response to the loss of $8 trillion in housing bubble generated equity.

There is no easy way for the private sector to replace this demand. Businesses don't invest unless they see demand for their products, regardless of how much love we might shower on the "job creators." In fact, if anything, investment is surprisingly strong give the large amount of excess capacity in the economy. Measured as a share of GDP, investment in equipment and software is almost back to its prerecession level. It is hard to envision investment getting much higher, absent a major boost in demand from some other sector.

This is why it is necessary for the government to run large deficits. Ideally, the money would be spent in areas that will make us richer in the future: Education, infrastructure, research and development in clean energy, etc. There is just no way around a large role for the government given the economy's current weakness.

Big issues still pending

Obama needs to explain this simple story to the country. The rich of both parties will hate him for going down this route. They will use their powers to denounce him. But the American people support Social Security and Medicare, and they support an economy that creates jobs for ordinary workers.

Obama needs the courage to tell the truth.

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The opinions expressed in this commentary are solely those of Dean Baker.

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Gay marriage law hiccup shows bill in for a fight

SPRINGFIELD — If anyone thought gay marriage legislation would pass easily in Illinois, the initial hiccup Wednesday in the state Senate illustrated how hard-fought the issue is likely to be every step of the way.

A bill to allow same-sex marriage didn’t attract enough support to get a first hearing as Senate Republicans blocked an effort to allow the measure to be considered by a committee.

Sponsoring Sen. Heather Steans, D-Chicago, fell two votes short of overcoming what may end up as no more than a minor procedural setback. She vowed to have enough support Thursday to push the gay marriage bill forward through the full Senate.

The Springfield skirmish unfolded as religious leaders in Chicago ratcheted up philosophical opposition and political pressure. and gay marriage supporters continued a planned media blitz complete with a TV sitcom star. And while Illinois Republicans continue to largely oppose same-sex marriage, state GOP Chairman Pat Brady publicly supported the bill.

Gay marriage is but one issue on a crowded agenda of the final days of the outgoing General Assembly.

Lawmakers also are looking at pension reform, drivers licenses for illegal immigrants, gambling expansion and gun control before the reset button is hit when the new legislature is sworn in next Wednesday.

Given the political complexities, it will be a tall order for lawmakers to complete a comprehensive pension overhaul by the time the clock runs out. Same goes for chances of passing a major gambling expansion to meet Mayor Rahm Emanuel's desire to have a Chicago casino.

"I'm doubting it," said Sen. Terry Link, a Waukegan Democrat and sponsor of the gambling measure. "But I've been around long enough to know things can happen in the wee hours."

While gambling expansion may wait yet again, gay marriage supporters still hope to pass a bill during the final days of a lame-duck legislature.

The same-sex marriage push is being backed by a coordinated campaign championed by Fred Eychaner, the Chicago media mogul, and Laura Ricketts, a co-owner of the Chicago Cubs. Gov. Pat Quinn has indicated he’ll sign the bill into law if it passes, and Steans said the measure has a chance to be in place by Valentine's Day.

Both sides of the issue grabbed the megaphone Wednesday in an attempt to be heard.

Jesse Tyler Ferguson, a star of ABC’s "Modern Family," joined Democratic Lt. Gov. Sheila Simon Wednesday in Chicago to speak in favor of the legislation. The two and other supporters plan to go to the Capitol Thursday for "Bow Tie Lobby Day," where they’ll encourage legislators to wear bow ties in support of the bill.

Ferguson said his role as part of a gay couple on the popular TV show has helped him use "wit and humor" to tackle a serious issue. The nation’s forward movement on marriage equality has been encouraging, he said, and Illinois is a chance to continue the momentum. Ferguson’s fiancé, Justin Mikita, accompanied him to the news conference.

"I’m looking forward to raising a family with Justin and having our kids grow up in an equal America. I had a hard time coming out and certainly had struggles with my parents. … If the 12-year-old me had been able to turn on the TV and see a sitting president say he supports marriage equality, it would have made all the difference for me and certainly given me a lot of hope," Ferguson said.

Simon sought to counter the argument put forth in a letter from Cardinal Francis George and Catholic bishops on Tuesday that same-sex marriage laws create a "legal fiction."

"The state has no power to create something that nature itself tells us is impossible," the church leaders wrote to priests.

Simon argued that adoption is similarly a "legal fiction" that helps citizens form a family unit — and one that she also supports.

In opposition, a coalition of Catholics, Muslims, Mormons, Missouri Synod Lutherans and conservative Anglicans on Wednesday said they wrote to Illinois lawmakers and urged them not to extend marriage to same-sex couples.

The bishops and ministers from about 1,700 Illinois congregations and ministries said the attempt to alter the state’s definition of marriage threatens an institution that society counts on as the ideal environment for raising children and teaching men and women to depend on each other.

Gay marriage, the letter said, degrades "the cultural understanding of marriage to an emotional bond between any two adults."

The religious leaders further warned that, while the law exempts religious institutions from having to consecrate same-sex marriages, the proposed legislation doesn’t protect their rights to freely exercise their religious beliefs because they would have to treat same-sex unions as the equivalent of marriage in their business practices. For example, they might be forced to provide health insurance to an employee’s same-sex spouse.

The Rev. Timothy Scharr, president of the Lutheran Church Missouri Synod’s Southern Illinois District, said, he’s optimistic that lawmakers will pay attention to the what he said is a consensus against gay marriage.

"Our real concern is for the family especially the traditional family of father mother and children that’s been rooted so much in our culture," said Scharr, whose district covers 95 congregations south and southeast of Springfield. "We thought it important to preserve that as much as possible. Many things unforeseen to us could take place. We’re fearful."

Also Wednesday, a group of prominent African-American leaders released a letter in support of gay marriage.

Cook County Board President Toni Preckwinkle and former Illinois Senate President Emil Jones Jr. were among dozen people who signed it.

"We in Illinois have a chance to help lead the country in the right direction," the letter reads. "The General Assembly should act now and give same-sex couples the freedom to marry. It is the right thing to do."

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Central African Republic rebels halt advance, agree to peace talks

DAMARA, Central African Republic (Reuters) - Rebels in Central African Republic said they had halted their advance on the capital on Wednesday and agreed to start peace talks, averting a clash with regionally backed troops.

The Seleka rebels had pushed to within striking distance of Bangui after a three-week onslaught and threatened to oust President Francois Bozize, accusing him of reneging on a previous peace deal and cracking down on dissidents.

Their announcement on Wednesday gave the leader only a limited reprieve as the fighters told Reuters they might insist on his removal in the negotiations.

"I have asked our forces not to move their positions starting today because we want to enter talks in (Gabon's capital) Libreville for a political solution," said Seleka spokesman Eric Massi, speaking by telephone from Paris.

"I am in discussion with our partners to come up with proposals to end the crisis, but one solution could be a political transition that excludes Bozize," he said.

Bozize on Wednesday sacked his Army Chief of Staff and took over the defense minister's role from his son, Jean Francis Bozize, according to a decree read on national radio, a day after publicly criticizing the military for failing to repel the rebels.

The advance by Seleka, an alliance of mostly northeastern rebel groups, was the latest in a series of revolts in a country at the heart of one of Africa's most turbulent regions - and the most serious since the Chad-backed insurgency that swept Bozize to power in 2003.

Diplomatic sources have said talks organized by central African regional bloc ECCAS could start on January 10. The United States, the European Union and France have called on both sides to negotiate and spare civilians.

Central African Republic is one of the least developed countries in the world despite its deposits of gold, diamonds and other minerals. French nuclear energy group Areva mines the country's Bakouma uranium deposit - France's biggest commercial interest in its former colony.

RELIEF IN BANGUI

News of the rebel halt eased tension in Bangui, where residents had been stockpiling food and water and staying indoors after dark.

"They say they are no longer going to attack Bangui, and that's great news for us," said Jaqueline Loza in the crumbling riverside city.

ECCAS members Chad, Congo Republic, Gabon and Cameroon have sent hundreds of soldiers to reinforce CAR's army after a string of rebel victories since early December.

Gabonese General Jean Felix Akaga, commander of the regional force, said his troops were defending the town of Damara, 75 km (45 miles) north of Bangui and close to the rebel front.

"Damara is a red line not to be crossed ... Damara is in our control and Bangui is secure," he told Reuters. "If the rebellion decides to approach Damara, they know they will encounter a force that will react."

Soldiers armed with Kalashnikovs, rocket propelled grenade launchers and truck-mounted machineguns had taken up positions across the town, which was otherwise nearly-abandoned.

Some of the fighters wore turbans that covered their faces and had charms strung around their necks and arms meant to protect them against enemy bullets.

Chad's President Idriss Deby, one of Bozize's closest allies, had warned the rebels the regional force would confront them if they approached the town.

Chad provided training and equipment to the rebellion that brought Bozize to power by ousting then-president Ange Felix Patasse, who Chad accused of supporting Chadian dissidents.

Chad is also keen to keep a lid on instability in the territory close to its main oil export pipeline and has stepped in to defend Bozize against insurgents in the past.

A CAR government minister told Reuters the foreign troop presence strengthened Bozize's bargaining position ahead of the Libreville peace talks.

"The rebels are now in a position of weakness," the minister said, asking not to be named. "They should therefore stop imposing conditions like the departure of the president."

Central African Republic is one of a number of countries in the region where U.S. Special Forces are helping local soldiers track down the Lord's Resistance Army, a rebel group which has killed thousands of civilians across four nations.

France has a 600-strong force in CAR to defend about 1,200 of its citizens who live there.

Paris used air strikes to defend Bozize against a rebellion in 2006. But French President Francois Hollande turned down a request for more help, saying the days of intervening in other countries' affairs were over.

(Additional reporting by Paul-Marin Ngoupana in Bangui and Jon Herskovitz in Johannesburg; Writing by Richard Valdmanis; Editing by Andrew Heavens and Janet Lawrence)

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Asia holds breath as U.S. fiscal talks go to wire

SYDNEY/HONG KONG (Reuters) - Asian stocks started new year trading with tentative gains as investors anxiously wait to see if the U.S. Congress can strike a last-minute compromise and avert the harsh "fiscal cliff" tax rises and spending cuts that are technically already in force.

The U.S. Senate early on Tuesday passed a bill that aims to avoid the cliff's automatic implementation of $600 billion in spending cuts and tax increases.

But the bill's fate was uncertain in the House of Representatives, where a number of Republicans complained it did not tackle spending cuts adequately.

"Frankly, we don't know what to make of it all. It's like a circus there," said one exasperated forex dealer at an Australian bank in Sydney.

"The markets have always assumed they would eventually strike a deal that would avoid the worst affects of the fiscal cliff, but it's getting harder and harder to stay optimistic."

The MSCI Asia Pacific ex-Japan index of stocks <.miapj0000pus> was up 0.3 percent largely on the back of gains in Australian markets where mining giants Rio Tinto and BHP Billiton helped the local benchmark <.axjo> rise 0.6 percent in early trading.

Asian stocks outside Japan rose nearly 20 percent last year as a combination of improving economic data from China, receding worries about the euro zone, and global central bank easing that encouraged investors back into equity markets.

Sakthi Siva, Asia strategist for Credit Suisse, said 2013 could see similar returns for Asian equities as the pace of earnings downgrades slows.

Improved earnings could prompt a long-awaited switch out of safe haven assets such as gold and bonds, she said, noting such a view assumes "a minimalist compromise deal is reached on the fiscal cliff."

With the last-minute Senate deal on the fiscal cliff already hitting stumbling blocks in the House of Representatives, and the prospects of more wrangling as the U.S. nears its debt ceiling in February, there is little comfort for investors as political events continue to trump market fundamentals.

YEN SLIPS

The Japanese yen continued its slide as investors wagered the Bank of Japan would have to take ever-more aggressive easing steps to support the economy and satisfy the new government.

The dollar held firm on the yen at 86.60 yen, having touched its highest level since August 2010. The Japanese currency also dropped to depths not seen in over four years against the Australian and New Zealand dollars.

Japanese stock markets <.n225> will reopen on Friday.

The euro was a shade weaker against the U.S. dollar at $1.3195, but turnover was extremely thin.

Spot gold was little changed at $1,671 an ounce, while oil futures dipped 11 cents to $91.71.

(Reporting by Wayne Cole in SYDNEY and Vikram Subhedar in HONG KONG; Editing by Eric Meijer)

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