North American leagues urge vigilance after Manchester attack

A man looks at flowers for the victims of the Manchester Arena attack in central Manchester, Britain May 23, 2017. REUTERS/Stefan Wermuth

By Rory Carroll

(Reuters) – North America’s major sports leagues have strict safety procedures at their arenas but have urged fans attending games to be vigilant following Monday’s suicide bombing at a pop concert in Manchester, England, officials said on Tuesday.

The attack, which killed 22 people, has raised concerns in the U.S. ahead of the Memorial Day holiday weekend, when fans flock to baseball stadiums to kick off the summer.

It also comes during the playoffs for the National Hockey League (NHL) and National Basketball Association (NBA), high-profile games that typically take place before sold-out crowds.

“We already have a very thorough and detailed security plan in place at all of our arenas to ensure the safety of our fans,” said Bill Daly, deputy commissioner of the NHL.

“Obviously, with yesterday’s events, arenas have been reminded to re-double their efforts and to maximize their vigilance”

The league requests that anyone attending a game report anything that they observe as suspicious or out of the ordinary to law enforcement, security or arena personnel, he said.

An NBA official echoed that sentiment.

“We are in communication with the appropriate authorities and taking all necessary precautions to ensure the safety of our fans, teams and staff,” said Mike Bass, an NBA spokesman.

League officials typically do not share the specifics of their security measures for safety reasons.

The attacker in Manchester targeted Europe’s largest indoor arena, which was full to its 21,000 capacity, about the size of most NHL and NBA arenas.

Major League Baseball, which recently began its season and mostly plays its games in outdoor stadiums that are larger than NHL and NBA arenas, has a similar approach to fellow leagues.

“Fan safety and ballpark security are always our top priorities, and we will continue to do everything possible to provide a safe environment for our fans,” the league said in a statement to Reuters.

The National Football League, which has some stadiums that hold more than 80,000 people, is currently in its off-season.

(Editing by Ken Ferris)

Wall Street rises on investor relief after Trump budget

A trader works inside a booth on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 3, 2017. REUTERS/Brendan McDermid

By Sinead Carew

(Reuters) – Wall Street ended higher on Tuesday after the release of President Donald Trump’s budget plan but gains were tempered by declines in consumer discretionary stocks amid weakness in auto-parts companies.

While Tuesday’s economic data was weak, investors were relieved Trump’s first full budget plan was largely as expected, even if it is not expected to be approved in Congress.

“There were no large surprises. The market is pleased with that,” said Wade Balliet, Chief Investment Strategist at Bank of the West.

Trump’s budget called for a hike in infrastructure and military spending, along with a raft of politically sensitive cuts, in areas such as healthcare and food assistance programs, with the aim of chopping government spending by $3.6 trillion and balancing the budget over the next decade.

The S&P 500 ended below its session high. It topped 2,400 points a few times during the session for the first time since the markets’ plunge last Wednesday on concerns about the future of Trump’s presidency.

While the President is on an overseas trip, stocks were helped by a lack of major news updates related to the government probe on possible ties between his election campaign and Russia.

“With the President being away, with the news cycle slowing a little bit, investors have nibbled their way back in,” said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

“This market has had tremendous strength on the idea that the new administration is going to be able to push through a pro-business platform. To the extent it loses political credibility the market has had trouble holding these gains.”

The Dow Jones Industrial Average <.DJI> rose 43.08 points, or 0.21 percent, to 20,937.91, the S&P 500 <.SPX> gained 4.4 points, or 0.18 percent, to 2,398.42 and the Nasdaq Composite <.IXIC> added 5.09 points, or 0.08 percent, to 6,138.71.

In the morning, U.S. economic data showed new single-family home sales in April tumbled from near a nine-and-a-half-year high, while manufacturing activity for May fell to the lowest level since September.

Ten of the 11 major S&P 500 sectors ended higher. Financials <.SPSY> rose 0.8 percent, helped by a 1.2 percent gain in the bank subsector <.SPXBK>.

Consumer discretionary <.SPLRCD> was the biggest laggard with a 0.4 percent drop.

The biggest drag on the consumer sector was Autozone Inc <AZO.N>, down 11.8 percent to $581.4. The auto part retailer’s quarterly results missed expectations. Advance Auto Parts <AAP.N> fell 4.6 percent while O’Reilly Automotive <ORLY.O> fell 3.3 percent and Genuine Parts <GPC.N> shares fell almost 2 percent.

Advancing issues outnumbered declining ones on the NYSE by a 1.48-to-1 ratio; on Nasdaq, a 1.11-to-1 ratio favored advancers.

The S&P 500 posted 49 new 52-week highs and 8 new lows; the Nasdaq Composite recorded 81 new highs and 59 new lows.

About 5.95 billion shares changed hands on U.S. exchanges, below the 6.9 billion average for the last 20 sessions.

(Additional reporting by Tanya Agrawal, Gayathree Ganesan in Bengaluru; Editing by Savio D’Souza and Nick Zieminski)

North Korea, if left unchecked, on ‘inevitable’ path to nuclear ICBM: U.S.

U.S. Director of National Intelligence Dan Coats (L) and Director of the Defense Intelligence Agency Lieutenant General Vincent Stewart testify before the Senate Armed Services Committee on worldwide threats, on Capitol Hill in Washington, U.S., May 23, 2017. REUTERS/Yuri Gripas

By Phil Stewart and Idrees Ali

WASHINGTON (Reuters) – North Korea, if left unchecked, is on an “inevitable” path to obtaining a nuclear-armed missile capable of striking the United States, Defense Intelligence Agency Director Lieutenant General Vincent Stewart told a Senate hearing on Tuesday.

The remarks are the latest indication of mounting U.S. concern about Pyongyang’s advancing missile and nuclear weapons programs, which the North says are needed for self-defense.

U.S. lawmakers pressed Stewart and the Director of National Intelligence Dan Coats to estimate how far away North Korea was from obtaining an intercontinental ballistic missile(ICBM) that could reach the United States.

They repeatedly declined to offer an estimate, saying that doing so would reveal U.S. knowledge about North Korea’s capabilities, but Stewart warned the panel the risk was growing.

“If left on its current trajectory the regime will ultimately succeed in fielding a nuclear-armed missile capable of threatening the United States homeland,” Stewart said.

“While nearly impossible to predict when this capability will be operational, the North Korean regime is committed and is on a pathway where this capability is inevitable.”

The U.N. Security Council is due to meet on Tuesday behind closed doors to discuss Sunday’s test of a solid-fuel Pukguksong-2 missile, which defies Security Council resolutions and sanctions. The meeting was called at the request of the United States, Japan and South Korea.

INTELLIGENCE GAPS

John Schilling, a missile expert contributing to Washington’s 38 North think tank, estimated it would take until at least 2020 for North Korea to be able to develop an ICBM capable of reaching the U.S. mainland and until 2025 for one powered by solid fuel.

But Coats acknowledged gaps in U.S. intelligence about North Korea and the thinking of its leader Kim Jong Un.

He cited technological factors complicating U.S. intelligence gathering, including gaps in U.S. intelligence, surveillance and reconnaissance (ISR), which rely on assets like spy satellites and drone aircraft.

“We do not have constant, consistent ISR capabilities and so there are gaps, and the North Koreans know about these,” Coats said.

Washington has been trying to persuade China to agree to new sanctions on North Korea, which has conducted dozens of missile firings and tested two nuclear bombs since the start of last year.

New data on Tuesday showed China raised its imports of iron ore from North Korea in April to the highest since August 2014 but bought no coal for a second month after Beijing halted coal shipments from its increasingly isolated neighbor.

U.S. President Donald Trump has warned that a “major, major conflict” with North Korea is possible over its weapons programs, although U.S. officials say tougher sanctions, not military force, are the preferred option.

Trump’s defense secretary, Jim Mattis, said on Friday any military solution to the North Korea crisis would be “tragic on an unbelievable scale.”

(Reporting by Phil Stewart and Idrees Ali; Additional reporting by David Brunnstrom; Editing by James Dalgleish)

Bond market braces for impact of New York’s free tuition plan

Graduates celebrate receiving a Masters in Business Administration from Columbia University during the year's commencement ceremony in New York in this May 18, 2005 file photo. REUTERS/Chip East/Files

By David Randall

NEW YORK (Reuters) – Little known private colleges that are already struggling to grow their revenues are facing a new threat that could further weaken their finances and make borrowing harder: free tuition at public universities.

The State of New York passed in April a bill that will by 2019 offer free tuition at community colleges and public universities in the state to residents whose families make less than $125,000 per year. At least six other states are considering similar laws, to ease the burden of student debt that has doubled since 2008 to over $1.3 trillion, according to the Federal Reserve Bank of New York.

Fund managers expect that such initiatives, combined with other pressures that have long been building up, will cause bonds issued by smaller private colleges to fare far worse than the broader market if interest rates continue to rise.

So far the bond market has largely ignored such a threat as historically low rates encourage many investors to take on greater risks in search for better yields.

“There are many schools that are going to be losers in this game,” said R.J. Gallo, a portfolio manager at Federated Investors in New York.

Gallo, who owns debt issued by well-known institutions such as Northeastern University in Boston and Northwestern University in suburban Chicago, said that bonds of lower-rated schools yield only about 1.3 percentage points more than AAA-rated ones. That, for him, is not enough to compensate for the additional risk.

Nearly 80 percent of college-age students in New York qualify for the scholarship, according to state estimates. While the state has yet to say how many new students it expects to take advantage of the plan, analysts say that they expect a significant number forgoing private colleges located in the Northeast and opting for public options instead.

RECORD HIGH ‘DISCOUNT RATES’

The prospect of competition from free public programs comes at a time when many private colleges are already forced to offer incoming students discounts because of stagnant personal incomes and years of above-inflation tuition hikes.

The proportion of gross tuition revenue that is covered by grant-based financial aid averaged a record 49.1 percent for full-time freshmen in the current school year, according to a May 15 report by the National Association of College and University Business Officers.

The average U.S. private non-profit four year institution charges $45,370 per year in tuition, room and board, a 12 percent increase over the last five years, according to the College Board. Graphic: http://tmsnrt.rs/2qHVUBj

Moody’s forecasts that financial pressures will triple the number of schools that close their doors nationwide from today’s rate of two to three schools per year. Free public education will add to those pressures, said Christopher Collins, an analyst at Moody’s.

“It’s a highly competitive sector and there’s also now the fact that these really small schools are competing with public colleges and universities with a much lower price,” he said.

Given that there are more than 1,000 private colleges and universities nationwide, closures are rare.

Earlier this year, Connecticut’s Sacred Heart University and St. Vincent’s College announced plans for a potential consolidation. Last November, Dowling College in Long Island, New York, filed for bankruptcy after defaulting on $54 million in debt issued through local government agencies.

New York’s scholarship plan alone is unlikely to cause any private school to go under, said college financial aid expert Mark Kantrowitz, the president of consulting service Cerebly Inc. Instead, regional private schools that tout their small class sizes may lose their appeal if the competition from free programs forces them to lower tuition and they try to offset that by increasing enrollment.

“These colleges justify their costs by saying that you will get a more personal education, but will increasingly start to fail,” he said, adding that he expects to see more private colleges closing their doors over the next decade.

Nicholos Venditti, a bond fund manager at Thornburg Investment Management in Santa Fe, New Mexico, said he has been cutting his funds’ exposure to private college debt in part because other states could soon emulate New York’s model.

“If free tuition becomes a widespread phenomenon, it puts pressure on every higher education model throughout the country,” he said.

(Reporting by David Randall; Editing by Jennifer Ablan and Tomasz Janowski)

Exclusive: U.S. starts ‘extreme vetting’ at Australia’s offshore detention centers

An undated handout image from Amnesty International claiming to show the view of inside the living quarters at the country's Australian-run detention centre on the Pacific island nation of Nauru. Amnesty International/Handout via REUTERS

By Colin Packham

SYDNEY (Reuters) – U.S. Homeland Security officials have begun “extreme vetting” interviews at Australia’s offshore detention centers, two sources at the camps told Reuters on Tuesday, as Washington honors a refugee swap that U.S. President Donald Trump had called “a dumb deal”.

The Trump administration said last month the agreement to offer refuge to up to 1,250 asylum seekers in the centers would progress on condition that refugees satisfied strict checks.

In exchange, Australia has pledged to take Central American refugees from a center in Costa Rica, where the United States has expanded intake in recent years, under the deal struck with former President Barack Obama.

The first security interviews finished last week at Papua New Guinea’s Manus Island detention center, two refugees who went through the process told Reuters.

The refugees told Reuters that interviews began with an oath to God to tell the truth and then proceeded for as long as six hours, with in-depth questions on associates, family, friends and any interactions with the Islamic State militant group.

“They asked about why I fled my home, why I sought asylum in Australia,” said one refugee who declined to be named, fearing it could jeopardize his application for U.S. resettlement.

The security interviews are the last stage of U.S. consideration of applicants.

Manus Island is one of two Australian-operated detention centers, which hold nearly 1,300 people who were intercepted trying to reach Australia by boat.

Human rights groups have condemned the intercept policy and the harsh conditions of the camps. Australia says offshore processing is needed as a deterrent after thousands of people drowned at sea before the policy was introduced in 2013.

A decision on the fate of the first 70 people interviewed is expected to be reached within the next month, a different source who works with refugees said.

A spokesman for Australia’s immigration minister refused to comment on the resettlement process.

The U.S. State Department and White House did not immediately respond to questions.

U.S. President Donald Trump’s plans for extreme vetting have extended to those traveling to the United States from Muslim countries.

Australia’s relationship with the new administration in Washington got off to a rocky start when Trump lambasted Australian Prime Minister Malcolm Turnbull over the resettlement arrangement, which Trump labeled a “dumb deal”.

Details of an acrimonious phone call between the pair soon after Trump took office made headlines around the world. Australia is one of Washington’s staunchest allies and has sent troops to fight alongside the U.S. military in conflicts in Iraq and Afghanistan.

The relocation of asylum seekers to the United States is designed to help Papua New Guinea and Australia proceed with the planned closure of the Manus detention center on Oct. 31.

But the fate of approximately 200 men deemed non-refugees is uncertain.

Those not offered resettlement in the United States will be offered the chance to settle in Papua New Guinea or return home.

Australia has already offered detainees up to $25,000 to voluntarily return home; an offer very few have taken up.

(Reporting by Colin Packham; Editing by Bill Tarrant)

North Korea says missile ready for mass production, U.S. questions progress

The scene of the intermediate-range ballistic missile Pukguksong-2's launch test. KCNA/via REUTERS

By Ju-min Park and Phil Stewart

SEOUL/WASHINGTON (Reuters) – North Korea said on Monday it successfully tested what it called an intermediate-range ballistic missile, which met all technical requirements and could now be mass-produced, although U.S. officials and experts questioned the extent of its progress.

The United States, which has condemned repeated North Korean missile launches, said Sunday’s launch of what North Korea dubbed the Pukguksong-2 was of a “medium-range” missile, and U.S.-based experts doubted the reliability of the relatively new solid-fuel type after so few tests.

U.S. officials, who spoke on condition of anonymity, said the test did not demonstrate a new capability, or one that could threaten the United States directly. But the test was North Korea’s second in a week and South Korea’s new liberal government said it dashed its hopes for peace.

U.S. officials have been far less sanguine about the test of a long-range KN-17, or Hwasong-12, missile just over a week ago, which U.S. officials believe survived re-entry to some degree.

North Korea said that launch tested the capability to carry a “large-size heavy nuclear warhead” and put the U.S. mainland within “sighting range.”

Western experts say the Hwasong-12 test did appear to have advanced North Korea’s aim of developing an intercontinental ballistic missile capable of reaching the U.S. mainland, even if it is still some way off from achieving that capability.

The U.N. Security Council is due to meet on Tuesday behind closed doors to discuss Sunday’s test, which defies Security Council resolutions and sanctions. The meeting was called at the request of the United States, Japan and South Korea.

Washington has been trying to persuade China to agree to new sanctions on North Korea, which has conducted dozens of missile firings and tested two nuclear bombs since the start of last year.

U.S. President Donald Trump has warned that a “major, major conflict” with North Korea is possible over its weapons programs, although U.S. officials say tougher sanctions, not military force, are the preferred option.

North Korea’s state news agency, KCNA, said the latest missile test was supervised by leader Kim Jong Un and verified the reliability of Pukguksong-2’s solid-fuel engine, stage separation and late-stage guidance for a nuclear warhead. It said data was recorded by a device mounted on the warhead.

‘PRIDE’

“Saying with pride that the missile’s rate of hits is very accurate and Pukguksong-2 is a successful strategic weapon, he (Kim) approved the deployment of this weapon system for action,” KCNA said.

“Now that its tactical and technical data met the requirements of the Party, this type of missile should be rapidly mass-produced in a serial way …, he said.”

KCNA said Kim was able to view the Earth from a camera mounted on the missile. “Supreme leader Kim Jong Un said it feels grand to look at the Earth from the rocket we launched and the entire world looks so beautiful,” KCNA said.

South Korea’s military said the missile flew about 500 km (310 miles), reaching an altitude of 560 km (350 miles).

It said the test would have provided more “meaningful data” for North Korea’s missile program, but further analysis was necessary to determine whether Pyongyang had mastered the technology needed to stop the warhead burning up on re-entering the Earth’s atmosphere.

U.S.-based experts said the Pukguksong-2 would have a maximum range of about 1,500 km (930 miles) and questioned North Korea’s assertion that the reliability of the solid-fuel missile had been proven, given limited testing.

“Entering mass production this early in the development phase is risky, but perhaps a risk North Korea feels comfortable managing,” said Michael Elleman of the International Institute for Strategic Studies.

Jeffrey Lewis, of the California-based Middlebury Institute of International Studies, said North Korea would probably continue to test the missile after deployment, fixing flaws as they emerged.

The use of solid fuel presents advantages for weapons because it is more stable and can be transported easily allowing for a launch at very short notice from mobile launchers.

Developing longer-range solid fuel missiles, however, was highly complicated and would “take time, lots of it,” Elleman said.

John Schilling, a missile expert contributing to Washington’s 38 North think tank, estimated it would take until at least 2020 for North Korea to be able to develop an ICBM capable of reaching the U.S. mainland and until 2025 for one powered by solid fuel.

North Korea’s current missiles already pose a threat to South Korea and Japan and the tens of thousands of U.S. troops based in both countries.

Daniel Russel, Washington’s former top diplomat for Asia, said Pyongyang’s aim appeared to be to convince the United States and the rest of the world of the need to accept North Korea as a nuclear-armed state.

“The intended message to the United States is that your pressure campaign won’t work and we’ll see your sanctions and raise you yet another advance in our ballistic missile program,” Russel, now diplomat in residence at the Asia Society Policy Institute, told Reuters.

On Sunday U.S. Secretary of State Rex Tillerson termed North Korea’s missile testing “disappointing, disturbing” and said economic and diplomatic pressure would continue.

Japan’s chief Cabinet secretary, Yoshihide Suga, said on Monday it was important to cut North Korea’s foreign currency earnings and to block shipments and technology transfers that aid North Korea’s nuclear missile development.

China repeated its call for all parties to exercise restraint and not let tension mount further.

(Additional reporting by Kaori Kaneko in Tokyo, Ben Blanchard in Beijing and David Brunnstrom and Matt Spetalnick in Washington; Editing by Peter Cooney and James Dalgleish)

U.S. extends ‘temporary protected status’ to Haitians until January

FILE PHOTO: A Flag from Haiti is pictured in a local store as a woman walks under rain at the neighborhood of Brooklyn in New York, U.S. May 13, 2017. REUTERS/Eduardo Munoz/File Photo

By Julia Edwards Ainsley

WASHINGTON (Reuters) – The U.S. Department of Homeland Security will allow more than 50,000 victims of Haiti’s 2010 earthquake to remain in the United States with work authorizations until January 2018, department officials told reporters on Monday.

The Obama administration first granted protections to Haitians who arrived in the United States within a year of the devastating earthquake and the group’s status has since been extended.

Three DHS officials, who agreed to speak to reporters only on the condition of anonymity, said Homeland Security Secretary John Kelly has assessed the situation in Haiti and believes conditions there are improving but still necessitate protected status for Haitians living in the United States.

The officials said, however, that Haitians in the United States under what is known as temporary protected status should begin acquiring travel documents to return to Haiti, noting that DHS has not committed to extending protections past January.

U.S. law allows DHS to grant temporary protected status to citizens of countries ravaged by violence, disease and natural disasters.

Other countries designated for temporary protected status include Sudan, Somalia, Syria, El Salvador, Nepal and Yemen.

The Department of Homeland Security will issue a notice to the Federal Register to extend temporary protected status within the coming days. After a 60-day period, Haitians under the status will be given new work authorizations valid until January.

(Editing by Bernadette Baum and Dan Grebler)

Mexico growth outlook brightens on exports, tone on NAFTA: official

FILE PHOTO - Trucks wait in a long queue for border customs control to cross into the U.S. at the Otay border crossing in Tijuana, Mexico, February 2, 2017. REUTERS/Jorge Duenes/File photo

MEXICO CITY (Reuters) – The outlook for Mexico’s economy is improving after stronger factory exports in the first quarter and a more optimistic tone on trade talks with the United States, a top finance ministry official said on Monday.

Finance Ministry Chief Economist Luis Madrazo said Mexico’s exports, excluding oil which has been hit by lower production by state-run oil company Pemex, grew 9.2 percent in the first quarter from a year earlier, the strongest pace in more than two years.

“(Factory) exports are now firing on all cylinders, and that is very good for Mexico,” Madrazo told Reuters in a telephone interview.

Mexico exports mostly manufacturing goods, compared to other Latin American economies that produce more raw materials, and it sends nearly 80 percent of its exports to the United States.

The finance ministry revised its official 2017 growth estimate upward on Monday to a range of 1.5 percent to 2.5 percent after data showed the economy was so far shrugging off fears U.S. President Donald Trump’s policies would hit exports and investment.

“The strength and resilience shown by the Mexican economy in the first trimester sharply reduces the likelihood of a slowdown in the second and third trimester,” Madrazo said.

Private sector economists have been revising up their outlook for Mexican growth since the Trump administration began to take a more constructive tone on talks to renegotiate the North American Free Trade Agreement.

Credit rating agency Moody’s late last month affirmed its A3 rating on Mexico’s government debt, but maintained a negative outlook due to lingering risks to Mexico’s economy from new U.S. tariffs under NAFTA revisions.

But Madrazo said the outlook for trade talks had improved since then, following last week’s letter from the Trump administration to the U.S. Congress that puts the countries on track to start talks on NAFTA around mid-August.

“Last week’s notification to Congress gives us a clear, credible signal that we are on the right track with trade negotiations and that should diminish risks from U.S. policy and should be credit positive,” Madrazo said.

(Reporting by Michael O’Boyle; Editing by Jacqueline Wong)

Trump seeks to slash government spending in budget plan

FILE PHOTO - President Donald Trump's FY2018 budget is seen printed at the Government Publishing Office in Washington, U.S. on May 19, 2017. REUTERS/Yuri Gripas/File Photo

By Roberta Rampton

WASHINGTON (Reuters) – The White House on Tuesday will ask Republicans who control the U.S. Congress – and federal purse strings – to slash spending on healthcare and food assistance programs for the poor as they push ahead on plans to cut taxes and trim the deficit.

President Donald Trump is set to propose a raft of politically sensitive cuts in his first full budget, for the fiscal year that starts in October, a proposal that some analysts expected would be put aside by lawmakers as they craft their own budget and spending plans.

Trump, who is traveling overseas and will miss the unveiling of his plan, wants lawmakers to cut $3.6 trillion in government spending over 10 years, balancing the budget by the end of the decade, according to a preview given to reporters on Monday.

More than $800 billion would be cut from the Medicaid program for the poor and more than $192 billion from food stamps.

Republicans are under pressure to deliver on promised tax cuts, the cornerstone of the Trump administration’s pro-business economic agenda, which would cut the business tax rate to 15 percent from 35 percent, and reduce the number of personal tax brackets to three from seven.

But their policy agenda has stalled as the White House grapples with the political fallout from Trump’s firing of former FBI Director James Comey.

Comey had been leading a probe of alleged Russian meddling in the 2016 U.S. election.

Trump’s biggest savings would come from cuts to the Medicaid program made as part of a Republican healthcare bill passed by the House of Representatives.

The bill aims to gut the Obama administration’s signature 2010 Affordable Care Act, known as Obamacare, that expanded insurance coverage and the government-run Medicaid program for the poor. But it faces an uncertain future in the Senate, which is writing its own law.

The White House proposed changes that would require more childless people receiving help from the Supplemental Nutrition Assistance Program, better known as food stamps, to work.

STEEP CUTS

The plan would slash supports for farmers, impose user fees for meat inspection and sell off half the nation’s emergency oil stockpile. Another politically fraught item is a proposal for cuts to the U.S. Postal Service, a goal that has long eluded lawmakers and administrations from both political parties.

The first look at the plan came in a “skinny budget” released in March – a document that received a tepid response from Congress.

Most departments would see steep cuts, particularly the State Department and the Environmental Protection Agency.

There is some new spending. The Pentagon would get a boost, and there would be a down payment to begin building a wall on the southern border with Mexico, which was a central promise of Trump’s presidential campaign.

The budget includes $25 billion for a plan to give parents six weeks of paid leave after the birth or adoption of a child, and $200 billion to encourage state and local governments to boost spending on roads, bridges, airports and other infrastructure programs.

The plan drew immediate fire from lobby groups, including from the Committee for a Responsible Federal Budget, which said it relied on “rosy assumptions,” gimmicks and unrealistic cuts.

“While we appreciate the administration’s focus on reducing the debt, when using more realistic assumptions, the president’s budget does not add up,” Maya MacGuineas, the group’s president, said in a statement.

Trump’s plan relies on forecasts for economic growth of 3 percent a year by the end of his first term – well beyond Congressional Budget Office assumptions of 1.9 percent growth.

“That assumes a pessimism about America, about the economy, about its people, about its culture, that we’re simply refusing to accept,” White House budget director Mick Mulvaney told reporters on Monday.

(Additional reporting by Yasmeen Abutaleb, David Shepardson, Timothy Gardner, Ginger Gibson, Jason Lange and Julia Edwards Ainsley in Washington, and PJ Huffstutter in Chicago; Editing by Peter Cooney)

Trump says concerns about Iran driving Israel, Arab states closer

U.S. President Donald Trump (2nd L) and first lady Melania Trump (3rd L) stand with Israeli Prime Minister Benjamin Netanyahu (2nd R), his wife Sara (R) and Israel's President Reuven Rivlin (L) upon their arrival at Ben Gurion International Airport in Lod near Tel Aviv, Israel May 22, 2017. REUTERS/Amir Cohen

By Steve Holland and Jeff Mason

JERUSALEM (Reuters) – U.S. President Donald Trump said on Monday that shared concern about Iran was driving Israel and many Arab states closer and demanded that Tehran immediately cease military and financial backing of “terrorists and militias”.

In stressing threats from Iran, Trump echoed a theme laid out during weekend meetings in Saudi Arabia with Muslim leaders from around the world, many wary of the Islamic Republic’s growing regional influence and financial muscle.

Trump has vowed to do whatever necessary to broker peace between Israel and the Palestinians, dubbing a peace accord “the ultimate deal”. But ahead of his Holy Land visit, he gave little indication of how he could revive talks that collapsed in 2014.

Trump will meet Palestinian President Mahmoud Abbas in the West Bank town of Bethlehem on Tuesday and the Palestinian leader said he hoped the meeting could be “useful and fruitful … (and) will bring results”.

But in the Gaza Strip, dozens of Palestinians rallied against Trump and burned his picture and an effigy of him.

Trump received a warm welcome in Riyadh from Arab leaders, especially over his tough line on Tehran, which many Sunni Muslim Arab states regard as seeking regional control.

In Jerusalem, in public remarks after talks with Israeli leaders on the first day of his two-day visit, he again focused on Iran, pledging he would never let Tehran acquire nuclear arms.

“What’s happened with Iran has brought many of the parts of the Middle East toward Israel,” Trump said at a meeting with President Reuven Rivlin.

In his comments to Netanyahu, Trump mentioned a growing Iranian influence in conflicts in Syria, Yemen and Iraq, where it either backs Shi’ite fighters or has sent its own forces.

Trump said there were opportunities for cooperation across the Middle East: “That includes advancing prosperity, defeating the evils of terrorism and facing the threat of an Iranian regime that is threatening the region and causing so much violence and suffering.”

He also welcomed what he said was Netanyahu’s commitment to pursuing peace and renewed his pledge to achieve a deal.

Netanyahu, in his remarks, did not mention the word “Palestinians”, but spoke of advancing “peace in our region” with Arab partners helping to deliver it.

Israel shares the antipathy many Arab states have toward Iran, seeing the Islamic Republic as a threat to its existence.

“I want you to know how much we appreciate the change in American policy on Iran which you enunciated so clearly,” Netanyahu, who had an acrimonious relationship with former U.S. President Barack Obama, told Trump at his official residence.

Trump, who is on his maiden foreign trip since taking office in January, urged Iran to cease “its deadly funding, training and equipping of terrorists and militias”.

REGIONAL STABILITY

Iran’s newly re-elected, pragmatist president, Hassan Rouhani, said regional stability could not be achieved without Iranian help, and accused Washington of supporting terrorism with its backing for rebels in Syria.

He said the summit in Saudi Arabia “had no political value, and will bear no results”.

“Who can say the region will experience total stability without Iran? Who fought against the terrorists? It was Iran, Syria, Hezbollah and Syria. But who funded the terrorists?”

Rouhani noted the contrast between young Iranians dancing in the streets to mark the re-election of a leader seeking detente with the West, and images of Trump meeting with a galaxy of Arab autocrats, some of whose countries have spawned the Sunni militants hostile to Washington and Tehran alike.

He also said Iran would continue a ballistic missile program that has already triggered U.S. sanctions, saying it was for defensive purposes only.

Trump’s foreign tour comes in the shadow of difficulties at home, where he is struggling to contain a scandal after firing James Comey as FBI director nearly two weeks ago. The trip ends on Saturday after visits to the Vatican, Brussels and Sicily.

In Jerusalem’s walled Old City, Trump toured the Church of the Holy Sepulchre and became the first sitting president to visit the Western Wall, Judaism’s holiest place where Israel allows Jews to pray in a city sacred to three religions.

Trump will have visited significant centers of Islam, Judaism and Christianity by the end of his trip, a point that his aides say bolsters his argument that the fight against Islamist militancy is a battle between “good and evil”.

(Writing by Jeffrey Heller; Editing by Richard Lough and Alison Williams)