Republicans see opportunity in U.S. debt-ceiling standoff

By David Morgan

WASHINGTON (Reuters) – In a high-stakes standoff over the U.S. debt ceiling, congressional Republicans believe they see a chance to scale back President Joe Biden’s sweeping domestic agenda while boosting their odds of retaking Congress in 2022.

The Republican gambit passed an initial political test on Tuesday, when the House of Representatives voted 220-211 along party lines to approve a measure to suspend the $28.4 trillion debt ceiling and fund the federal government beyond Sept. 30, when the current fiscal year ends.

Republican Senate Leader Mitch McConnell has made it clear that his caucus, which holds half the chamber’s 100 seats, will block it, seeking to frame the vote as a referendum on a $3.5 trillion Biden domestic spending package the House and Senate will take up in coming weeks.

The stakes are high. Failing to fund federal agencies past Sept. 30 could trigger the third partial government shutdown in a decade and a failure to suspend the debt ceiling by mid-October brings the risk of a historic default that could shake financial markets and even spark a recession.

Both McConnell and Senate Majority Leader Chuck Schumer have used the word “catastrophic” to describe the fallout from a default.

“America must never default. We never have and we never will,” McConnell told reporters on Tuesday. “The debt ceiling will be raised, as it always should be. But it will be raised by the Democrats.”

Republicans, while insisting they want to avoid a crisis, could be relatively insulated from any threat of default.

“The American people will say, ‘I’m mad at everybody’,” Senator James Lankford told Reuters. “But I don’t know that it becomes the fault of the group that’s in the minority in the House, in the minority in the Senate and not in the White House.”

A Sept. 18-20 Morning Consult poll showed that 42% of registered voters would blame both parties equally for any default, with another 33% blaming Democrats but only 16% blaming Republicans.

McConnell and his fellow Republicans want Democrats to suspend the debt ceiling on their own through a parliamentary maneuver called reconciliation, which Democrats have already used to pass a $1.9 trillion COVID-19 relief bill and intend to use again for Biden’s domestic spending plan.

Schumer denies that the debt-ceiling debate has anything to do with Biden’s agenda and has accused McConnell of “engaging in fantastical feats of sophistry.”

The Treasury Department will exhaust its borrowing authority sometime in October unless the debt limit is suspended. The Democratic bill would suspend the limit on government borrowing through December 2022.

DEMOCRATS DIVIDED

Moderate Democratic Senators Joe Manchin and Kyrsten Sinema are objecting to the size of Biden’s proposed $3.5 trillion package, while House progressives insist they will reject anything smaller. Republicans contend that forcing Democrats to own the debt-ceiling suspension could further undermine their unity and lead to a smaller package.

“There are a lot of moderate Democrats here in the Senate, and for that matter, in the House, who have concerns about the level of spending. It’s a stratospheric amount,” said Senator John Thune, the chamber’s No. 2 Republican.

Republicans also see the debate as a way to draw a bright ideological line between themselves and Democrats, who they claim are being led by self-declared socialists including Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez.

“What’s at stake is not simply a temporary hitting of the debt ceiling or defaulting temporarily or anything like that. It’s really whether we’re going to sit back and let them embed socialism into the institutions of our government,” Senator Kevin Cramer told Reuters.

Some Republicans, who worry about being blamed for a failed vote, have suggested that they could give Democrats consent to pass the debt ceiling and funding measure on a simple majority. But Republican Senator Ted Cruz vowed to block that route.

Others said that their high-profile stand against the Biden agenda could help Republicans turn out the vote in the November 2022 election that will determine control of Congress.

“Anytime you’re having a fight over taxes and spending, it’s good for Republicans,” Thune, who is seeking reelection in South Dakota, told reporters when asked if the showdown could aid Republican candidates.

(Reporting by David Morgan; Editing by Scott Malone and Mark Porter)

‘Every step of the way’: McConnell pledges battle over Biden infrastructure plan

WASHINGTON (Reuters) -U.S. Senate Minority Leader Mitch McConnell on Thursday said he will fight President Joe Biden’s $2 trillion infrastructure plan “every step of the way” and predicted the sweeping package would not see support from Republican lawmakers in Congress.

At a news conference in Owensboro, Kentucky, McConnell said the Biden proposal underscores deep philosophical differences between Republicans and Democrats over taxes and the national debt. He told reporters that he does not believe the White House has a public mandate to pursue the plan.

“I’m going to fight them every step of the way, because I think this is the wrong prescription for America,” he said.

Biden’s infrastructure plan, unveiled on Wednesday, charts a course for dramatic change in the direction of the U.S. economy and includes investments in traditional projects like roads and bridges along with climate change initiatives and human services like elder care.

“There’s more money in that plan that the president laid out in Pittsburgh for electric cars than for roads and bridges. Let me say that again: more money for electric cars than roads and bridges,” McConnell said.

Biden has proposed funding the package by raising the tax rate on U.S. corporations to 28% from 21% and making it harder for companies to use offshore tax shelters and other methods to reduce their tax burdens.

McConnell warned that “massive tax increases” would harm the economy and said the package’s spending level could run up the debt. The White House says the infrastructure proposal would more than pay for itself.

“My view about infrastructure is, we ought to build that which we can afford and not either whack the economy with major tax increases or run up the national debt,” he said.

(Reporting by David Morgan and Doina Chiacu, Editing by Franklin Paul and Sonya Hepinstall)

Anxious Americans to pay debt, taxes with COVID-19 stimulus checks

By Tim Reid

(Reuters) – Michael Johnson, a construction worker in Washington, D.C., is waiting for the $1,400 check from the government promised after U.S. President Joe Biden signed the $1.9 trillion COVID-19 relief bill last week.

He’s not planning a spending spree. He’s nervous. “I’ll try and get ahead on my mortgage a little bit. You know, we are still in this pandemic,” Johnson, 45, said.

Almost 900 miles away in Baraboo, Wisconsin, Aric Nowicki runs a heating and air conditioning business that takes in about $150,000 annually but has expenses of about $100,000. He has clients who are late on their bills, and he plans to use his money to pay his own overdue bills.

“I’m very apprehensive,” Nowicki said. “I’m not sure the vaccines will bring us back to normality. Too many people say they don’t want to take it, and there are these mutations.”

In interviews with a dozen Americans, including a nurse, a man made homeless by the pandemic, a plumber, a teacher, and a bar owner, nearly all say they are so worried about the future that they will use their stimulus checks to pay debt and taxes accumulated in the past year.

Those spending priorities are not what massive stimulus bills are traditionally meant to achieve. They are designed to encourage people to buy goods and services, to help U.S. businesses and create jobs.

Labor economist Diane Swonk sees a divide between those who can work from home and those who cannot – highlighted by the ways Americans have spent their stimulus checks from the government during the year-long coronavirus pandemic.

Consumer spending on goods was quite robust in January, Swonk said. But that was mostly by people who did not necessarily need the three checks sent out by the U.S. Treasury in the past year. Most who desperately needed the money have used it for food, shelter, and to pay debt. “This gets to the issue that a rising tide does not lift all boats,” Swonk said.

White House spokeswoman Jen Psaki was asked on Monday how Biden expected people to spend their stimulus checks.

“They will use it for different means,” Psaki said. “Some Americans will use it to ensure they can put food on the table, that’s a form of stimulus. Some will use it to ensure that they can pay their rent. That’s a form of stimulus. It’s up to family to family.”

Reverend Lee May, the pastor of Transforming Faith Church, an ecumenical Christian church in suburban Atlanta, said members of his congregation “really need this boost.”

“This is intended to help and we feel blessed to have it sent our way, but it isn’t enough to make us whole,” May said. “We know there are prohibitions on evictions and shut offs of utilities for now, but those rent and light bills don’t go away.”

“More needs to be done,” he said.

Reginald Smith, 36, a cook who was laid off in the crisis as many restaurants closed, was waiting in line at the food pantry outside the First Presbyterian Church of Atlanta on Monday.

He lost his place to stay and he has been “couch surfing” at the homes of friends.

“I need a job and hope to get one once this all opens back up,” he said. “But first I need my own place to stay. I’m hoping that this (the stimulus check) will help me make a deposit, get a place and get back on my feet. I wish it was more though. I don’t know if this is enough to dig me out.”

Others are more optimistic. Steve Pitts, the general manager of Manuel’s Tavern in Midtown Atlanta, hopes the stimulus checks will give people more cash to go out.

“We’re hoping it loosens things up a bit,” Pitts said. “To say it’s been a tough year isn’t the half of it. We all need a break. We’ve had to let people go and it hurt. This, of course, isn’t the cure. We’re all waiting for this crisis to be over, but maybe this is a little light, a little bump.”

Thadd Ernstmeyer, who runs a family plumbing business in Reedsburg, Wisconsin, grosses about $150,000 a year, with overheads about one third of that, and is taxed roughly 25%. His stimulus check would go toward his tax bill, Ernstmeyer said.

“It’s going straight back to the government.”

(Reporting by Tim Reid in Washington and Rich McKay in Atlanta; Editing by Donna Bryson and Grant McCool)

New Jersey, Arizona approve recreational marijuana, Florida raises minimum wage

By Peter Szekely and Sharon Bernstein

(Reuters) – Voters in New Jersey and Arizona legalized marijuana for recreational use on Tuesday, and in Oregon approved the country’s first therapeutic use for psilocybin, the hallucinogenic drug known as magic mushrooms.

The measures were among at least 124 statutory and constitutional questions put to voters this year in 32 U.S. states and the District of Columbia, according to the National Conference of State Legislatures (NCSL).

Here are some of the key results and projections from the ballots, which covered topics such as elections, abortion rights and taxes:

MARIJUANA

While voters in New Jersey and Arizona approved measures to legalize marijuana for recreational use, South Dakota was poised to allow the drug for both medical and recreational use: Its ballot measure that appeared headed to victory with 90 percent of precincts counted. A proposition legalizing medical marijuana also appeared headed for victory in Mississippi.

Since 1996, 33 other states and the District of Columbia have allowed medical marijuana, 11 had previously approved its recreational use and 16, including some medical marijuana states, have decriminalized simple possession, according to the National Organization for the Reform of Marijuana Laws.

PSILOCYBIN, AKA MAGIC MUSHROOMSPsilocybin, a hallucinogen also known in its raw form as magic mushrooms, was approved by Oregon voters for therapeutic use for adults. Backers of the Psilocybin Services Act cited research showing benefits of the drug as a treatment for anxiety disorders and other mental health conditions. The measure will set a schedule to further consider the matter and create a regulatory structure for it.

In a related measure, Washington, D.C., voters approved Initiative 81, which directs police to rank “entheogenic plants and fungi,” including psilocybin and mescaline, among its lowest enforcement priorities.

MINIMUM WAGE Voters in Florida approved a measure to amend the state constitution to gradually increase its $8.56 per hour minimum wage to $15 by Sept. 30, 2026.

CALIFORNIA GIG WORKERS California voters approved a measure that would exempt ride-share and delivery drivers from a state law that makes them employees, not contractors, according to Edison Research. The measure, Proposition 22, is the first gig-economy question to go before statewide voters in a campaign. Backers, including Uber Technologies Inc and Lyft Inc, spent more than $190 million on their campaign, making the year’s costliest ballot measure, according to Ballotpedia.

ABORTION

Colorado voters rejected a measure to ban abortions, except those needed to save the life of the mother, after 22 weeks of pregnancy.

ELECTIONS

California approved a measure to restore the right to vote to parolees convicted of felonies.

TAXES

In California, a proposal to roll back a portion of the state’s landmark Proposition 13 law limiting property taxes was too close to call Tuesday night. The measure, Proposition 15 on the state’s 2020 ballot, would leave in place protections for residential properties, but raise taxes on commercial properties worth more than $3 million. With about 80% of precincts partially reporting at 12:30 a.m. Pacific Time, the measure was slightly behind, with 51.5% of voters opposed to it and 48.5% in favor.

(Reporting by Peter Szekely in New York and Sharon Bernstein in Sacramento; Editing by Lincoln Feast and Philippa Fletcher)

GM CEO Barra, Ivanka Trump talk jobs in a 2020 battleground

By Joseph White

WARREN, Mich. (Reuters) – General Motors Co Chief Executive Mary Barra hosted Ivanka Trump, daughter and adviser to U.S. President Donald Trump, for a tour on Wednesday of a GM worker training center in one of the hottest battlegrounds of the U.S. presidential race.

GM and White House officials said the meeting at GM’s technical center in Warren, Michigan, was scheduled long ago, and was not a political event.

Still, the campaign context behind the location, the subject – manufacturing jobs – and the timing of the visit was inescapable.

Warren is in Macomb County, north of Detroit, which will be pivotal to winning Michigan’s electoral votes in November. Preserving U.S. manufacturing jobs has been a focus of President Trump’s administration since its first day.

Big U.S. corporations face a challenge during a charged campaign season. Barra and GM have not endorsed a candidate in the presidential contest, and will not, company officials said. Still, GM has much at stake in policy decisions Trump – or his successor – will make on issues such as tailpipe emissions, autonomous vehicle safety rules, trade and taxes.

GM is among several corporations supporting White House programs to promote investments in worker training. Ivanka Trump is leading those efforts, including an advertising campaign called “Find Something New.”

Among the students in the GM program who met with Barra and Trump was Zephirin Hunt, who started with GM as a temporary worker at the automaker’s Flint truck assembly plant. Now, Hunt said, he is a skilled trades worker at an assembly plant near Lansing, Michigan, pursuing a course of training in electronic machine and robot controls. “Every 890 hours,” of training, “we get a raise,” Hunt said.

GM and Barra have had an up and down relationship with the president, who attacked Barra and the automaker for a November 2018 decision to close an assembly plant in Lordstown, Ohio. That shutdown was part of a broader retrenchment at GM in 2019 that resulted in the closure of a transmission plant in Warren, and thousands of layoffs at the GM technical center.

Trump has also blasted GM for investing in China, and criticized the company earlier this year during a negotiation that led to GM building ventilators in response to the COVID-19 pandemic.

GM has sided with Trump in a legal fight with the state of California over its authority to set stiffer vehicle emissions standards than those established by the U.S. government, however.

(Reporting by Joe White in Warren, Additional reporting by David Shepardson in Washington; Editing by Tom Brown)

U.S. spending deal would raise tobacco age, deny some of Trump border wall funding

By Richard Cowan and Susan Cornwell

WASHINGTON (Reuters) – Congress would raise the U.S. tobacco purchasing age to 21 and permanently repeal several of the Affordable Care Act’s (ACA) taxes under a massive government spending bill due to be released later on Monday, congressional sources said.

Republican and Democratic lawmakers hope to pass the $1.4 trillion spending bill before current government funding runs out on Saturday, to avoid a partial government shutdown and head off the kind of messy budget battle that resulted in a record 35-day interruption of government services late last year and early this year.

The legislation, worked out during weeks of negotiations between leading lawmakers and the Trump administration, denies President Donald Trump the spending increase he has sought to build his signature wall along the U.S.-Mexico border.

Most Democrats and some Republicans support a mix of improved physical barriers at the border, along with a combination of high-tech surveillance equipment and patrols by all-terrain vehicles and even horses.

They have mostly rejected Trump’s calls for at least $24 billion over the long run to build his much-touted wall, which he originally said Mexico would finance. Mexico rejected that idea. The wall’s price tag could escalate as the federal government is forced to acquire private lands for construction.

The crackdown on youth smoking, by changing the minimum age for cigarette and other tobacco purchases to 21 from the current 18, would give the Food and Drug Administration six months to develop regulations. The agency would then have three years to work with states on implementing the change.

The largest expenditures in the bill is for the Department of Defense, which would get a total of $738 billion for this year, $22 billion more than last year. It does not include “mandatory” programs, such as Social Security and Medicare, which are funded separately.

The legislation also includes $425 million in additional federal grants to help local governments prepare for the November 2020 presidential and congressional elections.

Some of the money would be used to harden infrastructure against cyber attacks following election meddling by Russia in 2016.

Negotiators settled on $7.6 billion for conducting next year’s census, which is done once every 10 years. That would be $1.4 billion more than Trump proposed.

The bill also allocates $25 million for federal gun violence research, following a decades-long suspension of such funding.

All of the money would fund government programs through Sept. 30, 2020.

The legislation would repeal several taxes originally created to help fund the ACA, popularly known as Obamacare, that had been delayed or were only intermittently in effect.

It calls for a permanent repeal of the so-called “Cadillac tax,” a 40% tax on generous health insurance plans.

It had been intended to encourage corporations to buy lower cost plans for employees but was opposed by many unions that had negotiated their health insurance plans and by businesses who said it was a benefit workers valued. The tax was delayed and never went into effect.

The spending bill would also repeal the 2.3% tax on the sale of medical devices such as catheters and pacemakers. This drew opposition from bipartisan lawmakers who said it hurt innovation at medical device companies.

Another tax to be repealed is an industry-wide health insurance fee of about 2.5% to 3% of premiums collected.

(This version of the story has been refiled to add dropped word “not” in seventh paragraph)

(Reporting by Susan Cornwell and Richard Cowan; Editing by Andy Sullivan, Chizu Nomiyama and Bill Berkrot)

To quell unrest, France’s Macron speeds up tax cuts but vows no U-turn

French President Emmanuel Macron speaks during a special address to the nation, his first public comments after four weeks of nationwide 'yellow vest' (gilet jaune) protests, at the Elysee Palace, in Paris, France December 10, 2018. Ludovic Marin/Pool via REUTERS

By Michel Rose and John Irish

PARIS (Reuters) – President Emmanuel Macron on Monday announced wage rises for the poorest workers and tax cuts for pensioners in further concessions meant to defuse weeks of often violent protests that have challenged his authority.

In his first national address following two weekends of France’s worst unrest for years, Macron sought to restore calm and struck a humble tone after accusations that his governing style and economic policies were fracturing the country.

But he refused to reinstate a wealth tax and to back down on his reform agenda, which he said would proceed in 2019 with overhauls of pensions, unemployment benefits and public expenditures.

“We will respond to the economic and social urgency with strong measures, by cutting taxes more rapidly, by keeping our spending under control, but not with U-turns,” Macron said in the 13-minute TV address from the Elysee Palace.

Protesters wearing yellow vests watch French President Emmanuel Macron on a computer screen in Sainte-Eulalie, France, December 10, 2018. REUTERS/Regis Duvignau

Protesters wearing yellow vests watch French President Emmanuel Macron on a computer screen in Sainte-Eulalie, France, December 10, 2018. REUTERS/Regis Duvignau

His response came 48 hours after protesters fought street battles with riot police, torching cars and looting shops – the fourth weekend of protests for the so-called “yellow vest” movement which started as a revolt against high fuel costs.

In measures that are likely to cost billions to state coffers, Macron said people on the minimum wage would see their salaries rise by 100 euros a month in 2019 without extra costs to employers.

His labor minister said this would be achieved by the government topping up small salaries.

Pensioners earning less than 2,000 euros will see this year’s increase in social security taxes scrapped, Macron said, going back on a measure that had particularly hurt his popularity with older voters.

“The effort we asked for was too big and was not fair.”

Asked whether the budget deficit would be kept below the EU limit of 3 percent, an Elysee official said France had some wiggle room on spending if a one-off tax rebate, which inflates its deficit by 20 billion euros in 2019, was not taken into account.

Macron faced a delicate task: he needed to persuade the middle class and blue-collar workers that he heard their anger over a squeeze on household spending, without being exposed to charges of caving in to street politics.

The 40-year old former investment banker was also under pressure to make amends about cutting remarks he made in the past year and a half that critics said made him look aloof and arrogant.

“No doubt over the past year and a half we have not provided answers that were strong and quick enough. I take my share of responsibility,” he said.

“I may have given the impression that I did not care about that, that I had other priorities. I also know that I have hurt some of you with my words.”

Political opponents, who have largely failed so far to tap into the discontent from the leaderless “yellow vest”, criticized Macron’s response as insufficient.

“Emmanuel Macron thought he could hand out some cash to calm the citizen’s insurrection that has erupted,” Jean-Luc Melenchon, leader of the far-left La France Insoumise, said.

“I believe that Act V (of the protests) will play out on Saturday,” he said referring to a new round of protests planned this weekend.

One of the faces of the “yellow vest” movement appeared unconvinced as well.

“In terms of substance, these are half measures. We can feel that Macron has got a lot more to give,” Benjamin Cauchy, who met the French leader last week, told France 2 television.

 

(Additional reporting by Geert de Clercq, Caroline Pailliez, Richard Lough, Leigh Thomas, Pascale Denis, Jean-Baptiste Vey, Marine Pennetier in Paris and Dhara Ranasinghe in London, Editing by Mark Heinrich)

Macron makes U-turn on fuel-tax increases in face of ‘yellow vest’ protests

French Prime Minister Edouard Philippe attends the questions to the government session at the National Assembly in Paris, France, December 4, 2018. REUTERS/Gonzalo Fuentes

By Simon Carraud and Michel Rose

PARIS (Reuters) – France’s prime minister on Tuesday suspended planned increases to fuel taxes for at least six months in response to weeks of sometimes violent protests, the first major U-turn by President Emmanuel Macron’s administration after 18 months in office.

In announcing the decision, Prime Minister Edouard Philippe said anyone would have “to be deaf or blind” not to see or hear the roiling anger on the streets over a policy that Macron has defended as critical to combating climate change.

“The French who have donned yellow vests want taxes to drop, and work to pay. That’s also what we want. If I didn’t manage to explain it, if the ruling majority didn’t manage to convince the French, then something must change,” said Philippe.

“No tax is worth jeopardizing the unity of the nation.”

Along with the delay to the tax increases that were set for January, Philippe said the time would be used to discuss other measures to help the working poor and squeezed middle-class who rely on vehicles to get to work and go shopping.

Earlier officials had hinted at a possible increase to the minimum wage, but Philippe made no such commitment.

He warned citizens, however, that they could not expect better public services and lower taxes.

“If the events of recent days have shown us one thing, it’s that the French want neither an increase in taxes or new taxes. If the tax-take falls then spending must fall because we don’t want to pass our debts on to our children. And those debts are already sizeable,” he said.

The so-called “yellow vest” movement, which started on Nov. 17 as a social-media protest group named for the high-visibility jackets all motorists in France carry in their cars, began with the aim of highlighting the squeeze on household spending brought about by Macron’s taxes on fuel.

However, over the past three weeks, the movement has evolved into a wider, broadbrush anti-Macron uprising, with many criticizing the president for pursuing policies they say favor the rich and do nothing to help the poor.

Despite having no leader and sometimes unclear goals, the movement has drawn people of all ages and backgrounds and tapped into a growing malaise over the direction Macron is trying to take the country in. Over the past two days, ambulance drivers and students have joined in and launched their own protests.

After three weeks of rising frustration, there was scant indication Philippe’s measures would placate the “yellow vests”, who themselves are struggling to find a unified position.

“The French don’t want crumbs, they want a baguette,” ‘yellow vest’ spokesman Benjamin Cauchy told BFM, adding that the movement wanted a cancellation of the taxes.

Another one, Christophe Chalencon, was blunter: “We’re being taken for idiots,” he told Reuters, using a stronger expletive.

GREEN GOALS

The timing of the tax U-turn is uncomfortable for Macron. It comes as governments meet in Poland to try to agree measures to avert the most damaging consequences of global warming, an issue Macron has made a central part of his agenda. His carbon taxes were designed to address the issue.

But the scale of the protests against his policies made it almost impossible to plow ahead as he had hoped.

While the “yellow vest” movement was mostly peaceful to begin with, the past two weekends have seen outpourings of violence and rioting in Paris, with extreme far-right and far-left factions joining the demos and spurring chaos.

On Saturday, the Arc de Triomphe national monument was defaced and avenues off the Champs Elysees were damaged. Cars, buildings and some cafes were torched.

The unrest is estimated to have cost the economy millions, with large-scale disruption to retailers, wholesalers, the restaurant and hotel trades. In some areas, manufacturing has been hit in the run up to Christmas.

CHANGE FRANCE?

Macron, a 40-year-old former investment banker and economy minister, came to office in mid-2017 promising to overhaul the French economy, revitalize growth and draw foreign investment by making the nation a more attractive place to do business.

In the process he earned the tag “president of the rich” for seeming to do more to court big business and ease the tax burden on the wealthy. Discontent has steadily risen among blue-collar workers and others who feel he represents an urban “elite”.

For Macron, who is sharply down in the polls and struggling to regain the initiative, a further risk is how opposition parties leverage the anger and the decision to shift course.

Ahead of European Parliament elections next May, support for the far-right under Marine Le Pen and the far-left of Jean-Luc Melenchon has been rising. Macron has cast those elections as a battle between his “progressive” ideas and what he sees as their promotion of nationalist or anti-EU agendas.

Le Pen was quick to point out that the six-month postponement of the fuel-tax increases took the decision beyond the European elections.

(Additional reporting by Marine Pennetier, Elizabeth Pineau and Richard Lough, John Irish; Writing by Luke Baker; Editing by Richard Balmforth)

IRS gives taxpayers one-day extension after computer glitch

A general view of the U.S. Internal Revenue Service (IRS) building in Washington May 27, 2015. REUTERS/Jonathan Ernst

WASHINGTON (Reuters) – The U.S. Internal Revenue Service said it would give taxpayers an additional day to file their 2017 returns after computer problems prevented some people from filing or paying their taxes ahead of Tuesday’s midnight deadline.

“Taxpayers do not need to do anything to receive this extra time,” the IRS said in a statement announcing the extension.

The agency said its processing systems were now back online.

Earlier, the agency said several systems were hit with the computer glitch, including one that handles some returns filed electronically and another that accepts online tax payments using a bank account.

The IRS said it believed the problem was a hardware issue and “not other factors.”

It was not clear how many taxpayers might have been affected, but the agency said it received 5 million tax returns on the final day of filing season last year.

“This is the busiest tax day of the year, and the IRS apologizes for the inconvenience this system issue caused for taxpayers,” acting IRS Commissioner David Kautter said in a statement.

The agency said taxpayers should continue to file their taxes as normal on Tuesday evening – whether electronically or on paper.

Taxpayers could also ask for six-month extensions, as President Donald Trump did. The White House said on Tuesday that Trump, because of the complexity of his tax returns, would file his by Oct. 15.

(Reporting by Eric Beech; Editing by Diane Craft and Chris Reese)

Jerusalem’s Church of Holy Sepulchre to reopen after protest

A general view of the entrance and the closed doors of the Church of the Holy Sepulchre in Jerusalem's Old City, February 25, 2018. REUTERS/Amir Cohen

JERUSALEM (Reuters) – Jerusalem’s Church of the Holy Sepulchre, revered as the site of Jesus’s crucifixion and burial, will reopen its doors after Israel backtracked on Tuesday from a tax plan and draft property legislation that triggered a three-day protest.

The rare decision on Sunday by church leaders to close the ancient holy site, a favorite among tourists and pilgrims, with the busy Easter holiday approaching put extra pressure on Israel to re-evaluate and suspend the moves.

After receiving a statement from the office of Israeli Prime Minister Benjamin Netanyahu, Roman Catholic, Greek Orthodox and Armenian clergy said the church would reopen Wednesday morning.

An Israeli committee led by cabinet minister Tzachi Hanegbi will negotiate with church representatives to try to resolve the dispute over plans to tax commercial properties owned by the church in Jerusalem, Netanyahu’s statement said.

Church leaders, in a joint statement, welcomed the dialogue.

“After the constructive intervention of the prime minister, the churches look forward to engage with Minister Hanegbi, and with all those who love Jerusalem to ensure that our holy city, where our Christian presence continues to face challenges, remains a place where the three monotheistic faiths (Judaism, Islam and Christianity) may live and thrive together.”

The Jerusalem Municipality, Netanyahu said, would suspend the tax collection actions it had taken in recent weeks.Mayor Nir Barkat has said the churches owed the city more than $180 million in property tax from their commercial holdings, adding that “houses of worship” would remain exempt.

Church leaders, in closing the Church of the Holy Sepulchre, said church-owned businesses, which include a hotel and office space in Jerusalem, had enjoyed a tax exemption.

While the review is under way, work on legislation that would allow Israel to expropriate land in Jerusalem that churches have sold to private real estate firms in recent years will also be suspended, Netanyahu said.

The declared aim of the bill, deemed “abhorrent” in a prior statement issued by church leaders, is to protect homeowners against the possibility that private companies will not extend their leases of land on which their houses or apartments stand.

The churches are major landowners in Jerusalem. They say such a law would make it harder for them to find buyers for church-owned land – sales that help to cover operating costs of their religious institutions.

A spokesman for Palestinian President Mahmoud Abbas called on Israel to permanently cancel the proposed measures, which he said would “lead to escalating tension and to instability”.

A small minority of Palestinians are Christians, many of them in Bethlehem, the town in the Israeli-occupied West Bank – near Jerusalem – where Jesus is believed to have been born.

(Reporting by Ori Lewis, Mustafa Abu Ghaneyeh and Nidal al-Mughrabi; writing by Jeffrey Heller; editing by Mark Heinrich)