1 of 7. U.S. House Speaker John Boehner (R-OH) arrives to speak to the media on the ''fiscal cliff'' on Capitol Hill in Washington, December 21, 2012. Boehner said on Friday that congressional leaders and President Barack Obama must try to move on from House Republicans' failed tax plan and work together to resolve the looming U.S. ''fiscal cliff.''

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U.S. House Speaker John Boehner (R-OH) (R) and House Majority Leader Eric Cantor (R-VA) speak to the media on the ''fiscal cliff'' on Capitol Hill in Washington, December 21, 2012.

WASHINGTON | Sat Dec 22, 2012 1:04am EST

WASHINGTON (Reuters) - Had there been a vote on Republican House Speaker John Boehner's "Plan B" to avert the so-called U.S. fiscal cliff on Thursday night, it would not have been close. He was probably 40 to 50 votes short of the number he needed to avoid a humiliating defeat at the hands of his own party, according to rough estimates from Republican members of Congress and staff members.

It was not for lack of effort. Boehner and his two top deputies, Eric Cantor and Kevin McCarthy, along with other House Republican leaders, tried for three days to muster support for the measure, which would have cut government spending and raised taxes on millionaires to head off across-the-board tax hikes and spending cuts set for January.

They failed for a variety of reasons, according to interviews. But chief among them was this: They were asking anti-tax conservatives to take a big risk for no discernable reward. Plan B, as Boehner named his alternative to President Barack Obama's proposal to raise taxes on earnings of $400,000 a year and above, would never become law because the Democratic-controlled Senate would not pass it. Nor was it likely to put pressure on Obama to reach a deal, as Boehner intended.

Indeed, based on interviews with Republican members of Congress and some of their staffers, the wonder is not that Plan B crashed and burned, but that Boehner apparently thought - and announced in advance - that it would fly.

For Republican members of Congress like John Fleming, it was kind of mystifying.

Fleming, of Louisiana, said he was getting emails from people who raise money for campaigns saying, "'If you support tax increases without significant cuts ... don't even bother to call me.' The conservatives and donor class have laid the gauntlet down. They get that their taxes may go up, but they don't think that there is any reason to make that kind of sacrifice as government spending goes up."

With Senate Democrats and Obama making clear that they would not go along with Boehner's Plan B, said Fleming: "Why would we put ourselves on record" in favor of "raising taxes for a bill that's not going to become law?"

A staff member to a Republican congressman expressed the sentiments of some members more colorfully.

"You don't come out and announce you have the votes when you do not have the votes," she said. "It's like saying 'Here's the flaming bag of poo. We're going to leave it on your doorstep and run.' That doesn't look like you're a leader."

LEADERSHIP LOBBYING

Boehner had talked with members one-on-one in his Capitol office, on the telephone and on the floor of the House.

"He told them, 'This is important ... This will empower our position ... this will put Democrats in a difficult position,'" said Representative Tom Cole of Oklahoma, a member of the Republican leadership whose job it was to argue Boehner's case.

"Some of the freshmen members said they had been contacted frequently and had long conversations," said Fleming. "As far as anyone complaining about being threatened or berated, I never heard anything like this," he said.

Fleming, a supporter of the fiscally conservative Tea Party movement, said that McCarthy, the third-ranking Republican in the House, contacted him to find out why he was opposing the leadership.

"He asked me why I was voting (no)," Fleming said. "I gave him my interpretation. He listened very patiently. He came back with a couple of responses. At the end he had to admit some of my points were good points, that this bill would not do some of the things that needed to be done."

But, Cole said, dozens of members convinced themselves that Boehner's bill amounted to a tax hike despite evidence to the contrary.

"Some people really really really really talked themselves into believing it was a tax increase even though Grover Norquist, of all people, said it wasn't," said Cole, referring to the anti-tax activist responsible for "the pledge" not to raise taxes that most Republicans sign.

"That is like me talking myself into believing something is a sin even though the Pope tells me it is not," Cole said.

Representative Patrick Tiberi, a 12-year veteran of the House who serves on the tax-writing Ways and Means Committee, said the opposition was not just from conservatives. "It was a very mixed bag of people," he said.

"Some members determined that it was politically easier to vote on this in January when people realize that their taxes have gone up, rather than now. For others, it wasn't the right policy."

"I think we're going to go over the cliff," Tiberi said, adding, "I don't see something getting done."

CONFIDENCE IN PUBLIC

Boehner and Cantor publicly voiced confidence on Thursday that they could gather enough votes to pass the bill. "I never saw a football coach who went into a game saying 'We are going to lose,'" Cole said.

But behind the scenes the leadership team was uncertain.

The staffer sensed the bill was doomed before it was actually pulled from the floor Thursday night from a sudden slowdown in her email traffic. "It went dead silent."

With the start of the vote set for 7:30 p.m. Thursday, Boehner made the decision at about 7 p.m. after it was clear that they would fall 40 to 50 votes short of the needed 217 for passage.

If the gap had only been four or five votes, Boehner and his team would have kept pushing, pressing, making their case.

"The natural thing would have been to rally around the leader," Cole said. "But there was too much difference between where we were at - and what we needed."

Boehner decided to make the announcement at a closed-door meeting of House Republicans in a room in the basement of the Capitol.

Before he did, he led his troops in a recitation of the Pledge of Allegiance and then the Serenity Prayer, which includes the passage:

"God grant me the serenity to accept the things I cannot change, the courage to change things that I can and the wisdom to know the difference."

"It was a very emotional meeting," Cole said.

With Cantor at his side Boehner delivered a short statement.

"He said something that I thought was profound," Fleming said. "Basically, he said the collective wisdom of two people locked in a room can never be as high or as great as the collective wisdom of 535 individuals," the combined membership of the House and Senate.

Then, Fleming said, Boehner declared: "'We don't have votes,'" and "we are adjourning and would return right after Christmas or right after New Year's, depending on the circumstances."

"There were gasps. People were stunned," Cole said, adding that many members had expected instead a final pep talk before a vote on the bill.

"I think he was just resolved to the fact that it wasn't going to go anyplace. He was not angry at all. I thought he was very magnanimous about it," Fleming said.

Cole sent a message to Boehner on Friday.

"I basically said, 'It was a tough day yesterday. I just want you to know that I will be with you in the tough days ahead. You still have my full support and confidence.'"

A day after a Republican revolt killed his tax plan, Boehner was asked if he was worried about losing his job as speaker.

"No, I am not," Boehner told reporters. "If you do the right things every day for the right reasons, the right things will happen," he said.

"While we may have not been able to get the votes last night to avert 99.81 percent of the tax increases, I don't think - they were taking that out on me," Boehner said.

"They were dealing with the perception that somebody might accuse them of raising taxes."

(Additional reporting by Rachelle Younglai and Patrick Temple-West; Editing by Fred Barbash and Eric Beech)

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1 of 9. U.S. President Barack Obama (L) announces the nomination of Senator John Kerry (D-MA) as Secretary of State to succeed Hillary Clinton, at the White House in Washington December 21, 2012.

WASHINGTON | Fri Dec 21, 2012 9:25pm EST

WASHINGTON (Reuters) - President Barack Obama on Friday nominated John Kerry to replace Hillary Clinton as secretary of state, calling the veteran U.S. senator the "perfect choice" for America's top diplomat as he began reshaping his national security team for a second term.

Obama settled on Kerry, chairman of the Senate Foreign Relations Committee and the 2004 Democratic presidential candidate, after the front-runner, U.N. Ambassador Susan Rice, withdrew from consideration last week.

Even as Obama put one important piece of his revamped Cabinet in place, he held off on naming a new defense secretary. The delay came in the face of a growing backlash from critics of former Republican Senator Chuck Hagel, who is considered a leading candidate to replace Leon Panetta at the Pentagon.

With Kerry standing at his side, Obama expressed confidence that the senator - a stalwart supporter who has long coveted the State Department job - would win swift confirmation from his Senate colleagues.

"As we turn the page on a decade of war, he understands that we've got to harness all elements of American power and ensure that they're working together," Obama said. "John's earned the respect and confidence of leaders around the world. He is not going to need a lot of on-the-job training."

The announcement fell short of the White House's earlier hopes of rolling out national security appointments, including a new CIA director, all at once before Christmas. That ambition was thwarted not only by the Hagel controversy but other matters that have occupied Obama's attention - the standoff over the "fiscal cliff" and last week's Newtown gun massacre.

Kerry, 69, will take over from Clinton, who has been consistently rated as the most popular member of the president's Cabinet.

But he will also have to pick up the pieces after a scathing official inquiry found serious security lapses by the State Department in the deadly September 11 attack on the U.S. diplomatic mission in Benghazi, Libya - a report that has tarnished the final days of Clinton's tenure.

Kerry's nomination follows a political firestorm that engulfed Rice, seen as the early favorite for the State job, spearheaded by Republicans fiercely critical of her role in the administration's early explanations for the Benghazi assault.

Rice was defended by Obama, but she said on December 13 she was pulling her name from consideration to avoid a potentially lengthy and disruptive confirmation process.

Kerry, known for his role as a Democratic power broker in the Senate, offers no such challenges.

His selection sets a pragmatic tone as Obama begins overhauling his national security team.

Kerry will be the leading Cabinet member charged with tackling pressing global challenges, ranging from upheaval in the Middle East to Iran's nuclear standoff with the West and winding down the war in Afghanistan - all at a time of fiscal austerity at home.

SUBDUED NOMINATION ANNOUNCEMENT

Obama appeared subdued as he announced the nomination. He and Kerry had just returned from a funeral service for Hawaii Senator Daniel Inouye at the National Cathedral.

Kerry looked on intently as Obama spoke, nodding occasionally. But the lawmaker known for sometimes long-winded speeches was not given a chance to address reporters at the White House. Clinton was absent due to illness but issued a statement saying Kerry would offer the "highest caliber leadership" at the State Department.

Kerry, a decorated Vietnam War veteran, has forged a close working relationship with Obama and gave him the keynote speech assignment at the 2004 Democratic convention that boosted a then little-known Illinois state legislator onto the national stage, opening the way for his meteoric rise.

After losing narrowly to Republican George W. Bush in the 2004 presidential election, Kerry forged a new identity as a congressional leader on foreign policy. He often served as a low-profile emissary and diplomatic troubleshooter for the Obama White House in places like Afghanistan, Pakistan and Syria.

Kerry played the role of Mitt Romney in Obama's debate practice during the 2012 campaign, and afterwards Kerry joked that he would need an "exorcism" to get the Republican out of his system. "Nothing brings two people closer together than weeks of debate prep," Obama quipped to reporters on Friday.

White House aides acknowledge, however, that Kerry does not have as close of a personal bond with Obama as Rice has. She said, in a message on Twitter, that she looked forward to "working with him on the president's national security team."

Kerry's departure from the Senate forces Democrats to defend his seat, where the party has only a slim majority. Just-defeated Massachusetts Republican Senator Scott Brown, who took office in early 2010 after winning the last special election for a Massachusetts seat, is widely expected to run.

The drumbeat of criticism against Hagel, a moderate Republican who has often broken with his party's views, could prompt Obama to reconsider whether it would be worth the likely confirmation fight if he were to chose him for the defense post.

The administration has given no sign of dropping Hagel from the short list. On Thursday it joined allies rallying to support him against an onslaught over his record on Israel and Iran led by some pro-Israel groups and neo-conservatives, but the attacks have also come from some former colleagues on Capitol Hill.

He has also come under fire from gay rights groups for remarks questioning whether an "openly aggressively gay" nominee could be an effective U.S. ambassador. Hagel issued an apology on Friday for the 1998 comment, saying it was "insensitive."

It is the second time since Obama's re-election that the White House has had to defend a Cabinet candidate who has yet to be nominated, a source of frustration for his advisers.

Also in the mix for the Pentagon job are Michele Flournoy, a former undersecretary of defense for policy, and Ashton Carter, the current deputy defense secretary.

The top candidates for CIA director, to replace David Petraeus who stepped down over an extramarital affair, are thought to be Michael Morell, currently acting CIA director, and John Brennan, a top counterterrorism adviser to Obama and a former CIA official.

(This story is corrected to fix year in paragraph 23 to 1998 from 1988)

(Additional reporting by Tabassum Zakaria; Editing by Vicki Allen and Eric Beech)

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Wayne LaPierre, Executive Vice President of the National Rifle Association (NRA), speaks during a news conference in Washington December 21, 2012.

WASHINGTON | Fri Dec 21, 2012 7:30pm EST

WASHINGTON (Reuters) - Any chance for national unity on U.S. gun violence appeared to wane a week after the Connecticut school massacre, as the powerful NRA gun rights lobby called on Friday for armed guards in every school and gun-control advocates vehemently rejected the proposal.

The solution offered by the National Rifle Association defied a push by President Barack Obama for new gun laws, such as bans on high-capacity magazines and certain semiautomatic rifles.

At a hotel near the White House, NRA Chief Executive Wayne LaPierre said a debate among lawmakers would be long and ineffective, and that school children were better served by immediate action to send officers with firearms into schools.

LaPierre delivered an impassioned defense of the firearms that millions of Americans own, in a rare NRA news briefing after the Newtown, Connecticut, shooting in which a gunman killed his mother, and then 20 children and six adults at an elementary school.

"Why is the idea of a gun good when it's used to protect our president or our country or our police, but bad when it's used to protect our children in their schools?" LaPierre asked in comments twice interrupted by anti-NRA protesters whom guards forced from the room.

Speaking to about 200 reporters and editors but taking no questions, LaPierre dared politicians to oppose armed guards.

"Is the press and political class here in Washington so consumed by fear and hatred of the NRA and America's gun owners," he asked, "that you're willing to accept a world where real resistance to evil monsters is a lone, unarmed school principal?"

Proponents of gun control immediately rejected the idea, hardening battle lines in a social debate that divides Americans as much as abortion or same-sex marriage.

A brief NRA statement three days earlier in which the group said it wanted to contribute meaningfully to ways to prevent school massacres led to speculation that compromise might be possible, or that the NRA was too weak to defeat new legislation.

"The NRA's leadership had an opportunity to help unite the nation behind efforts to reduce gun violence and avert massacres like the one at Sandy Hook Elementary School," said Democratic Representative Carolyn McCarthy of New York. She supports new limits on ammunition and firearms, and universal background checks for gun buyers.

WAITING FOR A COMPROMISE

Adam Winkler, author of "Gunfight," a history of U.S. gun rights, said he expected the NRA might yield on background checks. About 40 percent of gun purchasers are not checked, according to some estimates.

"The NRA missed a huge opportunity to move in the direction of compromise. Instead of offering a major contribution to the gun debate, which is what they promised, we got the same old tired clichés," said Winkler, a law professor at the University of California at Los Angeles.

A Reuters/Ipsos poll on Monday showed the percentage of Americans favoring tough gun regulations rising 8 points after the Newtown shooting, to 50 percent.

Inside the NRA, though, attitudes might not change much.

"The anti-gun forces which are motivated by hysteria and a refusal to deal with the facts are going to be facing a counter-attack here that is going to be very, very effective," said Robert Brown, an NRA board member and the publisher of Soldier of Fortune, a military-focused magazine.

During the news conference, LaPierre laid out a plan for a "National School Shield" and said former U.S. congressman Asa Hutchinson from Arkansas would head up the NRA's effort to develop a model security program for schools.

The NRA is far and away America's most powerful gun organization and dwarves other groups with its lobbying efforts. In 2011, it spent $3.1 million lobbying lawmakers and federal agencies, while all gun-control groups combined spent $280,000, according to records the groups filed with Congress.

ECHOES OF COLUMBINE

Ken Blackwell, another NRA board member, said NRA leaders were discussing how to react to the Newtown shooting on the day it happened, helping LaPierre formulate a position.

"He and the team of lawyers around him are very bright and they understand the Constitution," said Blackwell, a Republican former state official in Ohio.

The Second Amendment to the U.S. Constitution as interpreted by the Supreme Court in 2008 guarantees an individual right to own firearms, though it allows for some limits.

While LaPierre's proposal to arm schools came as a surprise to those who hoped for compromise, it is not new.

Former NRA president, the late actor Charlton Heston, made a similar proposal after the 1999 Columbine High School massacre near Denver that killed 12 students and one teacher.

"If there had been even one armed guard in the school, he could have saved a lot of lives and perhaps ended the whole thing instantly," Heston said in April 1999, according to The New York Times.

Columbine had an armed sheriff's deputy who exchanged gunfire outside the school with one of the two teenage killers, according to a Jefferson County, Colorado, sheriff's office report. The deputy was unable to hit or stop the student, who was armed with a semiautomatic rifle, from entering the school, and the deputy stayed in a parking lot with police, the report said.

Protesters at the news briefing on Friday accused the NRA of being complicit in gun deaths.

"If teachers can stand up to gunmen, Congress can stand up to the NRA," said Medea Benjamin, co-director of the peace group Code Pink, who was escorted from the news conference.

(Additional reporting by Susan Heavey, Patrick Rucker and Alina Selyukh in Washington, and Stephanie Simon and Keith Coffman in Denver, Colorado; Editing by Karey Wutkowski, Mary Milliken and Eric Beech)

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1 of 3. U.S. President Barack Obama speaks about the fiscal cliff at the White House in Washington December 21, 2012.

WASHINGTON | Fri Dec 21, 2012 11:43pm EST

WASHINGTON (Reuters) - The White House on Friday tried to rescue stalled talks on a fiscal crisis after a Republican plan imploded in Congress, but there was little headway as lawmakers and President Barack Obama abandoned Washington for Christmas.

In remarks before flying to Hawaii for a break, Obama suggested reaching a short-term deal on taxes and extending unemployment insurance to avoid the worst effects of the "fiscal cliff" on ordinary Americans at the start of the New Year.

"We've only got 10 days to do it. So I hope that every member of Congress is thinking about that. Nobody can get 100 percent of what they want," said Obama.

Obama said he wanted to sign legislation extending Bush-era tax cuts for 98 percent of Americans in the coming days.

The Democrat appeared to be offering bickering lawmakers a way to fix the most pressing challenge - tax cuts that expire soon - while leaving thorny topics such as automatic spending cuts or extending the debt ceiling for later.

Obama called on lawmakers to use the holiday break to cool off frayed nerves, "drink some eggnog, have some Christmas cookies, sing some Christmas carols," and come back next week ready to make a deal.

Negotiations were thrown into disarray on Thursday when House of Representatives Speaker John Boehner failed to convince his fellow Republicans to accept tax cuts for even the wealthiest of Americans as part of a possible agreement with Obama.

"How we get there, God only knows," Boehner told reporters on Friday when asked about a possible comprehensive fiscal cliff solution.

If there is no agreement, taxes would go up on all Americans and hundreds of billions of dollars in automatic government spending cuts would kick in next month - actions that could plunge the U.S. economy back into recession.

Obama spoke to Boehner on Friday and held a face-to-face White House meeting with the top Democrat in Congress, Senate Majority Leader Harry Reid.

Before his defeat in Congress, Boehner had extracted a compromise from Obama to raise taxes on Americans making more than $400,000 a year, instead of the president's preference of those with income of $250,000 a year.

But with talks stalled on the level of spending cuts to which Obama would agree, Boehner attempted a backup plan to raise taxes only on those making more than $1 million a year - amounting to just 0.18 percent of Americans.

BAD DEFEAT FOR BOEHNER

Boehner's reverse in the House was worse than first thought. A key Republican lawmaker said Boehner scrapped the vote when he realized that between 40 and 50 of the 241 Republicans in the House would not back him.

Obama and his fellow Democrats in Congress are insisting that the wealthiest Americans pay more in taxes in order to help reduce federal budget deficits and avoid deep spending cuts. Republicans control the House and Democrats control the Senate.

Stocks dropped sharply early Friday on fears that the United States could go fall back into recession if politicians do not prevent it.

But major indexes lost less than 1 percent, suggesting investors still held out hope that an agreement will be brokered in Washington.

"I think if you get into mid-January and (the talks) keep going like this, you get worried, but I don't think we're going to get there," said Mark Lehmann, president of JMP Securities, in San Francisco.

Boehner, joined by his No. 2, Eric Cantor, at a Capitol Hill news conference, said the ultimate fault rests with Obama for refusing to agree to more spending reductions that would bring down America's $1 trillion annual deficit and rising $16 trillion debt.

"What the president has proposed so far simply won't do anything to solve our spending problem. He wants more spending and more tax hikes that will hurt our economy," Boehner said.

Democrats responded with incredulity.

House members, heading to their home states for the holidays, were instructed to be available on 48 hours notice if necessary.

"They went from 'Plan B' to 'plan see-you-later,'" Obama adviser David Axelrod said on MSNBC on Friday morning.

The crumbling of Boehner's plan highlights his struggle to lead some House Republicans who flatly reject any deal that would increase taxes on anyone.

Republican Representative Tim Huelskamp criticized Boehner's handling of the negotiations, saying the speaker had "caved" to Obama opening the door to tax hikes. Huelskamp, a dissident first-term congressman from Kansas, said he was not willing to compromise on taxes even if they are coupled with cuts to government spending sought by conservatives.

Fiscal conservatives "are so frustrated that the leader in the House right now, the speaker, has been talking about tax increases. That's all he's been talking about," Huelskamp said on MSNBC on Friday morning.

(Additional reporting by Roberta Rampton, Richard Cowan, Rachelle Younglai, Thomas Ferraro and Matt Spetalnick; Writing by Steve Holland; Editing by Alistair Bell and Lisa Shumaker)

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Fri Dec 21, 2012 2:32pm EST

n">(Reuters) - Wells Fargo & Co customers on Friday had trouble accessing the bank's Web site for a fourth day, as a federal regulator reiterated the need for banks to have systems in place to ward off cyber attacks.

A spokeswoman for the No. 4 U.S. bank by assets said some customers may have intermittent access to their online banking, although the high volume of traffic that has flooded the site has declined.

"Our technical teams have been working around the clock to ensure our Web site is accessible to our customers," bank spokeswoman Bridget Braxton said. The bank has been posting apologies on its Twitter account.

Since September, a hacker activist group called the Izz ad-Din al-Qassam Cyber Fighters has said it was targeting major banks with so-called denial of service cyber attacks. These attacks can disrupt service by deluging Web sites with high traffic.

On Tuesday, the group said in an Internet posting that it would target the "5 major US banks." In a similar posting last week, it forecast attacks against banks that included PNC Financial Services Group Inc and U.S. Bancorp, which reported some disruptions.

A PNC spokesman on Friday said the bank's systems were operating normally. Spokespersons for Bank of America Corp, JPMorgan Chase & Co and U.S. Bancorp declined to comment. Citigroup Inc could not be immediately reached.

In its alert on Friday, the U.S. Office of the Comptroller of the Currency, which regulates national banks and thrifts, said groups launching denial of service attacks had varying motives, from gaining public attention to diverting the attention of banks while launching simultaneous attacks to commit fraud or steal proprietary information.

"Banks need to have a heightened sense of awareness regarding these attacks and employ appropriate resources to identify and mitigate the associated risks," the alert said.

Banks should have sufficient staffing during attacks, work with third-party providers and share information with other banks, the OCC said.

Of five major banks, Wells Fargo on Friday had spurred the most complaints from users about access problems, according to the Web site SiteDown.co, which tracks customer reports. It listed 576 "downtime reports" in the past 24 hours.

Wells Fargo says it has 21 million active online banking customers.

(Reporting By Rick Rothacker in Charlotte, N.C.; Editing by Gerald E. McCormick)

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