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Iran promises ‘crushing’ response if U.S. designates Guards a terrorist group

Members of the Iranian revolutionary guard march during a parade to commemorate the anniversary of the Iran-Iraq war (1980-88), in Tehran September 22, 2011.

By Bozorgmehr Sharafedin

LONDON (Reuters) – Iran promised on Monday to give a “crushing” response if the United States designated its elite Revolutionary Guards as a terrorist group.

The pledge came a week before President Donald Trump announces final decision on how he wants to contain Tehran. He is expected on Oct 15 to “decertify” a landmark 2015 international deal to curb Iran’s nuclear program, a step that by itself stops short of pulling out of the agreement but gives Congress 60 days to decide whether to reimpose sanctions.

Trump is also expected to designate Iran’s most powerful security force, the Revolutionary Guards Corp (IRGC) as a terrorist organization, as he rolls out a broader U.S. strategy on Iran.

“We are hopeful that the United States does not make this strategic mistake,” foreign ministry spokesman Bahram Qasemi was quoted as saying by the state news agency IRNA at a news conference.

“If they do, Iran’s reaction would be firm, decisive and crushing and the United States should bear all its consequences,” he added.

Individuals and entities associated with the IRGC are already on the U.S. list of foreign terrorist organizations, but the organization as a whole is not.

IRGC commander Mohammad Ali Jafari said on Sunday “if the news is correct about the stupidity of the American government in considering the Revolutionary Guards a terrorist group, then the Revolutionary Guards will consider the American army to be like Islamic State all around the world.”

Jafari also said that additional sanctions would end the chances for future dialogue with the United States and that the Americans would have to move their regional bases outside the 2,000 km (1,250 mile) range of IRGC’s missiles.

“MALIGN ACTIVITIES”

The foreign ministry spokesman Qasemi also denied U.S. accusations that Iran had cooperated with North Korea.

In an interview that was aired on Saturday night, Trump accused Iran of “funding North Korea” and “doing things with North Korea that are totally inappropriate”.

Qasemi called the accusations “baseless”.

“Israel and some specific countries are raising these accusations to create Iranophobia.”

In his first speech to the U.N. General Assembly in September Trump called Iran “a corrupt dictatorship”, and the nuclear deal negotiated by his predecessor Barack Obama “an embarrassment”.

The deal, which was also supported by Britain, France, Germany, Russia and China, saw Iran agree to curbs on its nuclear program in return for the lifting of international sanctions that had damaged its economy.

The Kremlin said on Monday that any U.S. withdrawal from the nuclear deal would have “negative consequences.”

Gemran Foreign Minister Sigmar Gabriel said Germany was ready to increase pressure on Iran with diplomatic means, but that “we do not want to see this agreement damaged”.

British Prime Minister Theresa May, who supports the nuclear deal, and Israeli Prime Minister Benjamin Netanyahu, who opposes it, agreed in a phone call on Monday that they need to be “clear-eyed” about the threat Iran poses to the Middle East.

“They agreed that … the international community should continue working together to push back against Iran’s destabilizing regional activity,” May’s spokesman said in a statement.

Despite the nuclear deal, Washington still maintains its own more limited sanctions on Iran over its missile program and over accusations Tehran supports terrorism.

The Trump administration is seeking to put more pressure on the IRGC, especially over recent ballistic missile tests and what Washington has called its “malign activities” across the Middle East.

U.S. sanctions on the IRGC could affect conflicts in Iraq and Syria, where Tehran and Washington both support warring parties that oppose the Islamic State militant group (IS).

The U.S. government imposed sanctions in July on 18 entities and people for supporting the IRGC in developing drones and military equipment. In August, Congress overwhelmingly approved the “Countering America’s Adversaries Through Sanctions Act” which imposed new sanctions on Iran for its ballistic missile program, as well as sanctions on Russia and North Korea.

(Reporting by Bozorgmehr Sharafedin, additional reporting by Dmitry Solovyov in Moscow, Andrea Shalal and Michelle Martin in Berlin, William James in London; Editing by Jeremy Gaunt and Peter Graff)

Police, FBI seek public’s help in finding motive behind Las Vegas massacre

By Sharon Bernstein

LAS VEGAS (Reuters) – Police and FBI agents, chasing down more than 1,000 dead-end leads since a gunman killed 58 people in Las Vegas, are seeking more help from the public in solving the central mystery of their investigation – the shooter’s motive.

Clark County Undersheriff Kevin McMahill said investigators remain largely in the dark about what drove retired real estate investor and high-stakes gambler Stephen Paddock to carry out the deadliest mass shooting in modern U.S. history.

“We have looked at everything, literally, to include the suspect’s personal life, any political affiliation, his social behaviors, economic situation, any potential radicalization,” McMahill told reporters late on Friday.

“We have been down each and every single one of these paths, trying to determine why, to determine who else may have known of these plans.”

McMahill acknowledged that Islamic State had repeatedly claimed responsibility for the attack, but said investigators had uncovered “no nexus” between the Mideast-based militant group and Paddock.

In an unusual bid to cast a wider net for tips, the FBI and police have arranged with communications company Clear Channel to post billboards around Las Vegas urging citizens to come forward with any information they believe might help investigators.

The billboards will bear the slogan, “If you know something, say something,” and carry a toll-free number to an FBI hotline, said Aaron Rouse, special agent in charge of the Las Vegas FBI office.

The public appeal came a day before U.S. Vice President Mike Pence was slated to join Mayor Carolyn Goodman and other local leaders at a City Hall commemoration for victims of the shooting, following a prayer walk through the city. President Donald Trump paid a visit to Las Vegas earlier in the week.

Paddock, 64, unleashed a torrent of gunfire onto an outdoor music festival from the windows of his 32nd-floor hotel suite overlooking the concert on Sunday night, then shot himself to death before police stormed his room.

In addition to the 58 people who died, nearly 500 were injured, some by gunfire, some trampled or otherwise hurt while running for cover.

Unlike so many other perpetrators of deadly mass shootings before him, Paddock left behind no suicide note, no manifesto, no recordings and no messages on social media pointing to his intent, according to police.

McMahill said investigators remained certain Paddock acted alone in the shooting. But police have said they suspect he had help before the killings, based on the large number of guns, ammunition and explosives found in the hotel suite, his home, his car and a second home searched in Reno.

Authorities have said that 12 of the weapons recovered from Paddock’s hotel suite were equipped with so-called bump-stock devices that enable semi-automatic rifles to be operated as if they were fully automatic machine-guns.

Paddock’s ability to fire hundreds of rounds per minute over the course of his 10-minute shooting spree was a major factor in the high casualty count, police said.

The bloodshed might have lasted longer, with greater loss of life, but for a hotel security officer who was sent to check an open-door alarm on the 32nd floor, and discovered the gunman’s whereabouts after the shooting started, McMahill said.

The security officer, Jesus Campos, was struck in the leg as the gunman strafed the hallway with gunfire from behind his door, apparently having detected Campos via surveillance cameras Paddock set up outside his hotel suite.

Campos, though wounded, alerted the hotel’s dispatch, “which was absolutely critical to us knowing the location as well as advising the responding officers as they arrived on that 32nd floor,” McMahill said. “He’s an absolute hero.”

In a new disclosure, authorities said two bullets Paddock fired struck a large jet fuel storage tank at the edge of the city’s main airport, about a block from the concert grounds, indicating an apparent attempt by the gunman to create even greater havoc.

There was no explosion or fire from the two rounds, one of which penetrated the tank, as jet fuel in storage is almost impossible to ignite with gunshots, airport officials said on Friday.

Paddock’s girlfriend, Marilou Danley, 62, was questioned by the FBI on Wednesday and said in a statement she never had any inkling of Paddock’s plans.

Danley, who returned late on Tuesday from a family visit to the Philippines, is regarded by investigators as a “person of interest.” The Australian citizen of Filipino heritage is cooperating fully with authorities, her lawyer said.

(Reporting by Alexandria Sage and Sharon Bernstein in Las Vegas; additional reporting by Susan Heavey, Richard Cowan, Doina Chiacu, Amanda Becker and Jeff Mason in Washington, Chris Kenning in Chicago, Karen Freifeld and Jonathan Allen in New York, Keith Coffman in Denver and Brendan O’Brien in Milwaukee; Writing by Scott Malone and Steve Gorman; Editing by Andrew Hay/Jeremy Gaunt)

Hurricane Nate threatens U.S. central Gulf Coast after killing 25

Heavy machinery is used to remove mud from a highway that connects with the south of the country collapsed by Storm Nate in Casa Mata, Costa Rica October 6, 2017. REUTERS/Juan Carlos Ulate

By Oswaldo Rivas

MANAGUA (Reuters) – Hurricane Nate may strengthen on Saturday, threatening to hit the U.S. central Gulf Coast with strong winds and storm surges after it killed at least 25 people in Central America.

New Orleans evacuated some residents from areas outside its levee system as Nate, a Category 1 hurricane, the weakest on a five-category scale used by meteorologists, churned towards the central Gulf of Mexico.

“Nate is at our doorstep or will be soon,” New Orleans Mayor Mitch Landrieu said, adding that the winds could cause significant power outages, and storm surges are projected to be six to nine feet (1.8 to 2.7 meters) high.

“We have been through this many, many times. There is no need to panic,” Landrieu told a news conference.

The storm brushed by Mexico’s Yucatan peninsula, home to beach resorts such as Cancun and Playa del Carmen, as it headed north, the U.S. National Hurricane Center in Miami said.

With maximum sustained winds of 80 miles per hour (130 kmh), Nate was about 345 miles (550 km) south-southeast of the Mississippi river and expected to strengthen before it makes landfall, the NHC said.

A state of emergency was declared for 29 Florida counties and states – Alabama, Louisiana and Mississippi – as well as the New Orleans, which was devastated by Hurricane Katrina in 2005.

The NHC issued a hurricane watch from Grand Isle, Louisiana to the Alabama-Florida border.

“By Saturday noon you should be in your safe place,” Alabama Governor Kay Ivey told a news conference. “This is a fast-moving storm and we must begin preparing now.”

Nearly three-quarters of U.S. Gulf of Mexico oil production was offline ahead of the storm, and more oil companies halted operations on Friday.

On Saturday morning, Nate was moving north-northwest at 22 miles per hour (35 kmh), a fast pace which if maintained could mean the storm does less damage when it hits land.

CENTRAL AMERICA DEATHS

The storm doused Central America with heavy rains on Thursday, killing at least 12 people in Nicaragua, nine in Costa Rica, two in Honduras and two in El Salvador.

Thousands were forced to evacuate their homes and Costa Rica’s government declared a state of emergency.

Costa Rican President Luis Guillermo Solis urged residents to remain vigilant, noting rains would likely resume.

In Honduras, residents wondered whether they would have to flee. Norma Chavez and her two children anxiously watched a river rise outside their home in Tegucigalpa, the capital.

“We are worried that it will grow more and carry away the house,” said Chavez, 45.

Through Monday, Nate is expected to produce two to four inches (5 to 10 cm) more rain in eastern Yucatan and western Cuba and three to six inches (8 to 15 inches) in the U.S. central Gulf Coast.

About 71 percent of U.S. Gulf of Mexico oil production and 53 percent of natural gas output is offline ahead of Nate’s arrival, the U.S. Department of the Interior’s Bureau of Safety and Environmental Enforcement (BSEE) said on Friday.

Oil companies have evacuated staff from 66 platforms and five drilling rigs, it said. Oil production equaling 1.24 million barrels of crude per day is offline, according to BSEE.

(Reporting by Brendan O’Brien in Milwaukee; editing by Alexander Smith)

Top Puerto Rico bank says four months too long to wait for power

An America flag is seen after Hurricane Maria hit San Lorenzo, Morovis, Puerto Rico, October 4, 2017. REUTERS/Alvin Baez

By Hugh Bronstein

SAN JUAN (Reuters) – Puerto Rico needs to accelerate the timetable for restoring its power grid or else residents will flee for the mainland rather than live without electricity for months, the chairman of the territory’s largest bank said on Friday.

In an interview with Reuters on Friday, Banco Popular Chairman Richard Carrion said prolonged outages could shrink the U.S. territory’s economy and hurt its banking system. More than two weeks after Hurricane Maria hit the island, most of Puerto Rico is still without electricity.

With about $40 billion in assets, Banco Popular is Puerto Rico’s biggest financial institution. Carrion said 85 of the bank’s 169 branches were open, and that only about 40 percent of its cash machines were operating.

Puerto Rican authorities have estimated that it will take at least four months to restore the electrical grid, something Carrion says is “not acceptable.”

“The economy will suffer, and it may push people who are on the fence to say, ‘we’re leaving’,” he said, potentially pushing the bankrupt territory into even worse financial straits.

About 85 percent of the electricity that was used on the island before Maria is no longer being delivered to customers, according to the U.S. Army Corps of Engineers. Wide areas are marred by telephone poles snapped in two by the storm, leaving transmission lines in tangled roadside heaps.

Carrion said 90 percent of the island’s point of sale terminals, where people buy things with a swipe of their bank card, were still not running. The situation has increased the need for cash, a demand that the U.S. Federal Reserve has met by flying in money.

He said he also worries about the effect Maria will have on Puerto Rico’s ability to deliver a debt restructuring that would be acceptable to holders of the territory’s defaulted bonds.

Asked when a debt deal might be clinched, Carrion said: “If you would have asked that before Maria, we would have said it could be done before the end of the year.”

Now, he said, it’s anybody’s bet.

(Reporting by Hugh Bronstein; Editing by Sue Horton and David Gregorio)

Discord among Republicans already weighs on Trump’s tax plan

U.S. President Donald Trump meets with a bipartisan group of members of Congress, including U.S. Representative Josh Gottheimer (D-NJ) (L) and Representative Tom Reed (R-NY) (R), at the White House in Washington, U.S. September 13, 2017. REUTERS/Jonathan Ernst

By Amanda Becker and David Morgan

WASHINGTON (Reuters) – Disagreement among U.S. congressional Republicans is already swirling around a tax cut plan unveiled days ago by President Donald Trump, who has proposed repealing the tax on inheritances and eliminating a deduction for state and local tax payments.

The discord shows the difficulty of overhauling the complex U.S. tax code. This task has defied Washington since 1986, the last time a comprehensive rewrite was completed despite lobbyists who defend each tax break.

Trump has yet to score a major legislative win since taking office in January and is pushing hard for a tax code revamp. But his plan is meeting the same internal Republican tensions between moderates and conservatives that have sunk his efforts this year to repeal the Obamacare health law.

“There’s a lot of give and take,” Trump economic adviser Gary Cohn told Fox Business Network on Friday.

Members of the administration “have been meeting everyday with the tax writers trying to figure out where they need to end up to get the votes … we’re going to make sure the president gets what he asks for,” he added.

One obstacle is the projected fiscal impact of the plan, which would slash U.S. revenues and expand the federal deficit and the national debt, which now exceeds $20 trillion.

Republican lawmakers from high-tax states such as New York exited meetings this week with Kevin Brady, chairman of the House of Representatives’ tax-writing committee, saying there would be some sort of compromise on repealing the deduction for state and local tax payments.

Separately, some Republican senators were questioning the repeal of a 40 percent inheritance tax levied on estate assets worth more than $5.5 million, or $11 million for married couples. That tax affects only about 0.2 percent of estates, according to the Tax Policy Center, a Washington think tank.

“That is not a priority for me as we seek to craft this tax bill,” Senator Susan Collins, who has often been a key Republican vote, said in a statement on Thursday.

Republicans want to use a procedure known as budget reconciliation to pass eventual tax legislation, which allows passage with a simple majority in the 100-seat Senate. Republicans hold 52 Senate seats and can only afford to lose support from two senators, with Vice President Mike Pence able to cast a tie-breaking vote. Democrats will likely oppose the legislation.

One Republican fiscal hawk, Senator Bob Corker, has already said he cannot support tax legislation that adds to the annual federal deficit.

“We remain very bearish on any tax legislation passing this year – or next,” Cowen and Co analyst Chris Krueger said in a Friday research note.

The Trump plan, made public last week, calls for up to $6 trillion in tax cuts over 10 years. Without accompanying spending reductions, the budget would hugely expand the deficit, according to some estimates.

The administration contends tax cuts would spur so much economic growth that the resulting new revenues would help offset the cost.

In addition, Republicans are proposing “revenue raisers,” such as ending the deduction for payments of state and local tax, known as SALT. Doing that would raise about $1.3 trillion over a decade, the Tax Policy Center said.

Almost 30 percent of taxpayers currently deduct state and local taxes. In New Jersey, for example, 41 percent of tax filers, meaning individuals or married couples, claimed the deduction, which averaged $17,850, according to a Government Finance Officers Association analysis of Internal Revenue Service data.

Although the deduction disproportionately benefits people in high-tax states and localities, individuals in all states claim it. In Georgia, for example, 33 percent of tax filers claim an average deduction of $9,158, the report said.

Republican Representative Chris Collins of New York, a Trump ally, told reporters earlier this week that lawmakers from high-tax states, such as his own, were discussing “ways to level the playing field,” including capping the amount of the deduction or putting other limits on it.

“There are many districts with Republican members where state and local deduction is used by a large portion of the taxpayers,” said Frank Sammartino, a senior fellow at the Tax Policy Center. “So it’s not surprising that it’s not strictly a blue state/red state thing.”

Senate Democratic leader Chuck Schumer called the state and local tax deduction the “Achilles’ heel” of tax reform and said his party would oppose any move to repeal it. He dismissed compromise plans as unfeasible.

Brady said on Thursday that at this point there has been no change to the framework, but tax writers are “listening very carefully” to lawmakers’ concerns.

“It’s got to be frustrating when you’re in a state where local and state officials really put the screws to taxpayers,” Brady told reporters. “We are determined to provide tax relief to every American, regardless of where they live.”

(Additional reporting by Richard Cowan; Writing by Amanda Becker; Editing by Leslie Adler and Lisa Von Ahn)

North Korea preparing long-range missile test: RIA cites Russian lawmaker

By Jack Stubbs

MOSCOW (Reuters) – North Korea is preparing to test a long-range missile which it believes can reach the west coast of the United States, a Russian lawmaker just returned from a visit to Pyongyang was quoted as saying on Friday.

Anton Morozov, a member of the Russian lower house of parliament’s international affairs committee, and two other Russian lawmakers visited Pyongyang on Oct. 2-6, Russia’s RIA news agency reported.

“They are preparing for new tests of a long-range missile. They even gave us mathematical calculations that they believe prove that their missile can hit the west coast of the United States,” RIA quoted Morozov as saying.

“As far as we understand, they intend to launch one more long-range missile in the near future. And in general, their mood is rather belligerent.”

Tensions have risen in recent weeks over North Korea’s nuclear weapons and missile programs as Pyongyang has test-fired several missiles and conducted what it said was a test explosion of a hydrogen bomb as it advances toward its goal of developing a nuclear-tipped missile capable of hitting the U.S. mainland.

Morozov’s comments drove up the price of U.S. Treasury bonds, as investors, worried about the prospect of new North Korean missile tests, moved into assets the market views as a safe haven in times of uncertainty.

Reuters was not able to independently verify Morozov’s account, and he did not specify which North Korean officials had given him the information about the planned test.

In Washington, a U.S. official said that there had been indications that North Korea could be preparing for a missile test on or around Oct. 10, the anniversary of the founding of the ruling Korean Workers Party and a day after the Columbus Day holiday in the United States.

The official, speaking on condition of anonymity, did not disclose the type of missile that could be tested and cautioned that North Korea in the past has not staged launches despite indications that it would.

A senior CIA analyst, speaking at a conference in Washington this week, said the North Korean government likely would stage some kind of provocation on Oct. 10 but did not elaborate on what form it might take.

“There is a clarity of purpose in what (North Korean leader) Kim Jong Un is doing. I don’t think he’s done,” said Yong Suk Lee, the deputy assistant director of the CIA’s Korea Mission Center, which was set up this year. “In fact, I told my own staff (that) October 10th is the Korean Workers Party founding day. That’s Tuesday in North Korea, but Monday – the Columbus Day holiday – in the United States. So stand by your phones.”

Morozov’s delegation had “high-level” meetings in Pyongyang, RIA news agency said, citing the Russian embassy in the North Korean capital.

Tensions over North Korea’s nuclear program have been running high in recent weeks since Pyongyang staged a series of missile tests, and conducted a text explosion on Sept. 3 of what it said was a hydrogen bomb.

There has also been an exchange of tough rhetoric between Pyongyang and Washington.

U.S. President Donald Trump threatened to “totally destroy” North Korea if it threatens the United States. North Korean leader Kim Jong Un responded by calling Trump deranged and saying he would pay dearly for his threat.

China, North Korea’s main ally, has backed sanctions against Pyongyang and on Saturday in response to the Nobel Peace Prize being awarded to the International Campaign to Abolish Nuclear Weapons, said it backed a worldwide ban on nuclear weapons.

“China has always supported a complete and total ban on nuclear weapons, but also believes that the goal of achieving nuclear disarmament cannot be achieved overnight and must advance gradually within the existing disarmament mechanism. China is willing to work with all parties to achieve a nuclear-weapon-free world,” said China’s foreign ministry.

“BELLICOSE RHETORIC”

Morozov is a member of the LDPR, a right-wing populist party. It casts itself as an opposition party, but hews close to the Kremlin line on matters of international affairs.

Describing meetings with North Korean officials, Morozov said they “displayed serious determination and bellicose rhetoric,” RIA reported.

“The situation, of course, demands the swiftest intervention of all interested states, particularly those represented in the region, in order to prevent wide-scale military action,” the agency quoted him as saying.

Russia has closer relations with Pyongyang than many other world powers, linked in part to Kim Il Sung, the founder of North Korea and the current leader’s grand-father, having lived for a time in the Soviet Union.

Russian President Vladimir Putin has joined other world powers in condemning North Korea’s weapons program, but has taken a softer line than Western governments.

Putin has said that Pyongyang will not be cowed into giving up its weapons program. He has accused Washington of trying to effect regime change in North Korea, and predicted that would unleash chaos.

U.S. Treasury prices surged on the report of a possible new missile test, pulling yields lower, as investors cut risk out of their portfolios and sought the safety of Treasuries. Treasury prices move inversely to their yields.

Benchmark 10 year U.S. Treasury yields fell from the session high 2.40 percent mark <US10YT=TWEB> to 2.35 percent around midday (1600 GMT) in New York.

“It has just been risk-off buying into the long (Columbus Day) weekend … You look at the charts, it has really been a one-way trade of lower yields,” said Justin Lederer, Treasury analyst at Cantor Fitzgerald in New York.

(Reporting by Jack Stubbs; Additional reporting by Daniel Bases in New York and Idrees Ali and Jonathan Landay in Washington, Ben Blanchard in Beijing; Writing by Christian Lowe; Editing by Toby Chopra and James Dalgleish)

Old San Juan shows its resilience after Puerto Rico hurricane

Jesus Santos sings operatic love songs while repairing plaster to a Hurricane Maria damaged facade at Cathedral of San Juan Bautista in San Juan, Puerto Rico on October 4, 2017. Picture taken on October 4, 2017. REUTERS/Hugh Bronstein

By Hugh Bronstein and Gabriel Stargardter

SAN JUAN (Reuters) – High atop the Cathedral of San Juan Bautista, Jesus Santos applied plaster to the building’s damaged facade, all the while belting out operatic love songs that echoed through Old San Juan’s eerily empty streets.

The city’s colonial heart is usually noisy and bustling with life but on Wednesday Santos’ booming voice was the dominant sound. Since Hurricane Maria struck Puerto Rico, cutting off power and communications to much of the island, tourism has come to a near halt, and Old San Juan’s restaurants, bars and clubs have been hit hard.

The old city’s historic luxury hotel, El Convento, remains full, its staff said, thanks to dozens of U.S. federal employees sent in after the storm. But it is unclear how long they will stay and who will replace them once they leave.

Yadiel Martinez, 24, a supervisor at the hotel, said local tourism was just starting to recover from a difficult 2016 when the Zika virus outbreak led to thousands of cancellations.

Now, with Maria striking just before the high season begins in October, the tourism industry is taking another hit. Like many other hotels in the city, El Convento still does not have consistent water and electricity, Martinez said, and bookings are being canceled.

Compounding a bad situation, the bankrupt island is still struggling to get past a decade-long recession and a $72 billion debt crisis. It needs all the tourist revenue it can get.

“This is going to hit us very hard,” Martinez said, noting that El Convento would likely be affected for months but was not in as dire straits as many tourist-dependent businesses.

“Lots of hotels are going to close,” he predicted.

In Nono’s, a popular bar in Old San Juan, some Puerto Ricans were doing their bit to reactivate the local economy.

‘FORCED VACATION’

Nursing a Bud Light with a Fireball-and-horchata chaser, 37-year-old Brenda Ansa said she was on “forced vacation” from work in the wake of the hurricane.

With her dentist husband attending to an emergency, she said, she decided to come see how the old town had fared over a pre-lunch drink. She was surprised at the absence of people.

“This is like a ghost town,” she said.

Still, in some ways, Old San Juan is one of the city’s bright spots.

While the area sustained damage to roofs, windows and vegetation, most of the sturdy buildings in the historic neighborhood, a UNESCO World Heritage Site, came through the storm without major damage.

The old town’s fortified walls were built by the Spanish after the city was founded in 1508 by Ponce de Leon, and the cathedral where Santos, the singing plasterer, was working has survived 496 hurricane seasons.

Santos, 47, said his fellow workers in the old city appreciate his songs in the aftermath of the storm, especially one of the Cathedral’s priests.

“When I stop, he comes out and complains,” Santos said with a grin, before launching into another full-throated ballad.

Carlos Hernandez, 62, a refuse collector, was optimistic about the long-term future of the old city, even as he swept up debris from the storm.

“Tourism has gone to zero. Those who are here are residents and it’s up to us to do the cleanup,” he said with a wide, toothless smile.

But “I am a Boricua,” he said, employing a phrase islanders use to describe themselves. “And to keep a Boricua down, you have to hit him hard – and I mean hard!”

(Reporting by Hugh Bronstein and Gabriel Stargardter; Editing by Sue Horton and Bill Trott)

Discord among Republicans already weighs on Trump’s tax plan

By Amanda Becker and David Morgan

WASHINGTON (Reuters) – Disagreement among U.S. congressional Republicans is already swirling around a tax cut plan unveiled days ago by President Donald Trump, with disputes over proposals to repeal a deduction for state and local tax payments and repeal the tax on inheritances.

The discord showed the difficulty of overhauling the complex U.S. tax code, a task that has defied Washington since 1986, the last time a comprehensive rewrite was completed despite lobbyists who defend each tax break.

Another early obstacle is the projected fiscal impact of the plan, which would slash U.S. revenues and expand the federal deficit and the national debt, which now exceeds $20 trillion.

Republican lawmakers from high-tax states such as New York exited meetings this week with Kevin Brady, chairman of the tax-writing committee of the House of Representatives, saying there would be some sort of compromise on repealing the deduction for state and local tax payments.

Separately, some Republican senators were questioning the repeal of a 40 percent inheritance tax levied on estates worth more than $5.5 million, or $11 million for married couples — a tax paid only by the wealthiest American taxpayers, or about 0.2 percent of Americans, according to the Center on Budget and Policy Priorities, a research and policy institute.

“That is not a priority for me as we seek to craft this tax bill,” Republican Senator Susan Collins, who has often been a key Republican vote, told Reuters in a statement on Thursday.

Republicans want to use a procedure known as budget reconciliation to pass eventual tax legislation, which allows passage with a simple majority in the 100-seat Senate. With Republicans holding 52 Senate seats, and Democrats already lining up against the measure, they can lose the support of only two Republican senators and still pass a bill – with Vice President Mike Pence able to cast a tie-breaking vote.

One Republican fiscal hawk, Senator Bob Corker, has already said he cannot support tax legislation that adds to the annual federal deficit.

The Trump plan, made public last week, calls for as much as $6 trillion in tax cuts over 10 years. Without accompanying spending reductions, the tax cuts would hugely expand the deficit, according to some estimates. The administration contends tax cuts would spur so much economic growth that the resulting new revenues would help offset the cost of the cuts.

Though the deduction disproportionately benefits people in high-tax states and localities, individuals in all states claim it. In Georgia, for example, 33 percent of tax filers claim an average deduction of $9,158, the GFOA report said.

The high-tax states, however, tend to be Democratic-leaning, such as California and New York, and of the seven states with no income tax of their own, six are Republican-leaning.

“There are many districts with Republican members where state and local deduction is used by a large portion of the tax payers. So it’s not surprising that it’s not strictly a blue state/red state thing,” said Frank Sammartino, a senior fellow at the Tax Policy Center.

Senate Democratic leader Chuck Schumer called the state and local tax deduction the “Achilles’ heel” of tax reform and said Democrats would oppose any move to take it away. He dismissed compromise plans as unfeasible.

Brady said on Thursday that at this point there has been no change to the framework, but tax writers are “listening very carefully” to lawmakers’ concerns.

“It’s got to be frustrating when you’re in a state where local and state officials really put the screws to taxpayers. We are determined to provide tax relief to every American regardless of where they live,” Brady told reporters.

(Additional reporting by Richard Cowan; Writing by Amanda Becker; Editing by Kevin Drawbaugh and Leslie Adler)

Hurricanes Harvey, Irma sink U.S. payrolls in September

FILE PHOTO: Brochures are displayed for job seekers at the Construction Careers Now! hiring event in Denver, Colorado U.S. August 2, 2017. REUTERS/Rick Wilking

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. employment fell in September for the first time in seven years as Hurricanes Harvey and Irma left displaced workers temporarily unemployed and delayed hiring, the latest indication that the storms undercut economic activity in the third quarter.

The Labor Department said on Friday nonfarm payrolls decreased by 33,000 jobs last month amid a record drop in employment in the leisure and hospitality sector.

The decline in payrolls was the first since September 2010. The Department said its analysis suggested that the net effect of Harvey and Irma, which wreaked havoc in Texas and Florida in late August and early September, was to “reduce the estimate of total nonfarm payroll employment for September.”

Economists had forecast payrolls increasing by 90,000 jobs last month. Payrolls are calculated from a survey of employers, which treats any worker who was not paid for any part of the pay period that includes the 12th of the month as unemployed.

Many of the dislocated people will probably return to work. That, together with rebuilding and clean-up is expected to boost job growth in the coming months. Leisure and hospitality payrolls dived 111,000, the most since records started in 1939, after being unchanged in August.

There were also decreases in retail and manufacturing employment last month. Stripping out the effects of the hurricanes, the labor market remains strong. The government revised data for August to show 169,000 jobs created that month instead of the previously reported 156,000.

Harvey and Irma did not have an impact on the unemployment rate, which fell two-tenths of a percentage point to 4.2 percent, the lowest since February 2001. The smaller survey of households from which the jobless rate is derived treats a person as employed regardless of whether they missed work during the reference week and were unpaid as result.

The decrease in the unemployment rate reflected an increase in household employment. It also came despite more people entering the labor force.

The dollar rose against a basket of currencies after the data, while prices for U.S. Treasuries fell. U.S. stock index futures were trading lower.

DISRUPTIONS BOOST WAGES

Underscoring the disruptive impact of the hurricanes, the household survey showed 1.5 million people stayed at home in September because of the bad weather, the most since January 1996. About 2.9 million people worked part-time, the largest number since February 2014.

The length of the average workweek was unchanged at 34.4 hours. With the hurricane-driven temporary unemployment concentrated in low-paying industries like retail and leisure and hospitality, average hourly earnings increased 12 cents or 0.5 percent in September after rising 0.2 percent in August.

That pushed the annual increase in wages to 2.9 percent, the largest gain since December 2016, from 2.7 percent in August. Annual wage growth of at least 3.0 percent is need to raise inflation to the Fed’s 2 percent target, analysts say

The mixed employment report should not change views the Federal Reserve will raise interest rates in December. Fed Chair Janet Yellen cautioned last month that the hurricanes could “substantially” weigh on September job growth, but expected the effects would “unwind relatively quickly.”

The U.S. central bank said last month it expected “labor market conditions will strengthen somewhat further.” The Fed left interest rates unchanged in September, but signaled it expected one more hike by the end of the year. It has increased borrowing costs twice this year.

The employment report added to August consumer spending, industrial production, homebuilding and home sales data in suggesting that the hurricanes will dent economic growth in the third quarter.

Economists estimate that the back-to-back storms, including Hurricane Maria which destroyed infrastructure in Puerto Rico last month, could shave at least six-tenths of a percentage point from third-quarter gross domestic product.

Growth estimates for the July-September period are as low as a 1.8 percent annualized rate. The economy grew at a 3.1 percent rate in the second quarter.

Private payrolls fell by 40,000 jobs, the biggest drop since February 2010. Manufacturing employment slipped by 1,000 jobs pulled down by declines at motor vehicle assembly and chemical plants as well as textile mills.

Retail employment fell by 2,900 jobs as food stores payrolls tumbled 6,900. There were also declines in employment at department stores. Construction payrolls rose 8,000 in September as a 3,900 drop in jobs at homebuilding sites was offset by increases elsewhere.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Republicans seek to hasten tax reform with budget action

The U.S. flag flies in front of the Capitol Dome. REUTERS/Joshua Roberts

By David Morgan

WASHINGTON (Reuters) – The Republican-controlled U.S. Congress moved to hasten its overhaul of the U.S. tax code on Thursday by moving closer to agreement on a budget resolution, a procedural step that would help advance eventual tax legislation.

The House of Representatives voted 219-206 to adopt a fiscal 2018 spending blueprint containing a legislative tool that would let Republicans bypass Democrats and pass a tax bill by a simple majority vote in the Senate, where they hold 52 of 100 seats.

Separately, the Republican-led Senate Budget Committee was expected to approve its own budget resolution later on Thursday and send it to the full Senate for a vote, likely in two weeks.

President Donald Trump and top Republicans in Congress are determined to enact tax legislation before January. House Republicans could unveil tax legislation by the end of October.

“We are closer than ever to finishing what we have started for the American people,” said House tax committee Chairman Kevin Brady, whose panel is crafting an initial tax bill.

But the Republican plan to slash taxes by up to $6 trillion for corporations, small businesses and individuals has run into difficulties since it was announced last week.

It has been assailed by Democrats as a strategy for benefiting the wealthiest Americans while hiking taxes on some middle class Americans and cutting spending on social programs including the Medicare and Medicaid healthcare programs.

Republican lawmakers are also pushing back on a proposal to help pay for tax cuts by eliminating popular tax deductions. Some Republican fiscal hawks have also warned they will not back a tax reform package that adds to the federal deficit.

The Trump tax plan would add about $2.4 trillion to the deficit over the next decade, said the nonpartisan Tax Policy Center, a Washington tax think tank, at a time when the national debt already exceeds $20 trillion.

“Where is all that money coming from?” Representative John Yarmuth, the top Democrat on the House Budget Committee, asked on the House floor. “If you’re listening to this and you’re not a millionaire, probably from you.”

In the Senate, Democrats sought to hamstring the Republican budget resolution with amendments that would prevent tax legislation from benefiting the wealthy, raising taxes on the middle class and adding to the deficit. Democrats also called for an end to reconciliation, the legislative procedure that would sideline them in a Senate vote.

Republicans also faced the danger of the sort of internal infighting that torpedoed their repeated attempts to repeal the Affordable Care Act, known as Obamacare.

Eighteen House Republicans joined 188 Democrats to vote against the budget resolution, leaving the measure to pass by only one vote more than the minimum necessary.

The vote also set up a potential clash between House and Senate Republicans.

The House resolution requires tax reform to be revenue neutral, meaning that it would not lose revenues and add to the deficit. The Senate plan allows tax legislation to add $1.5 trillion to the deficit over a decade before raising enough revenues to cover the cost of tax cuts.

(Reporting by David Morgan; additional reporting by Amanda Becker; editing by Kevin Drawbaugh and Nick Zieminski)

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