U.S. President Barack Obama shakes hands with Louisiana Governor Bobby Jindal after arriving at Louis Armstrong International Airport in New Orleans September 3, 2012.

NEW ORLEANS | Thu Jan 10, 2013 8:51pm EST

NEW ORLEANS (Reuters) - Republican Governor Bobby Jindal said on Thursday he wants to eliminate all Louisiana personal and corporate income taxes to simplify the state's tax code and make it more friendly to business.

The governor did not release details of his proposal, but his office released a statement confirming that the taxes are targets of a broader tax reform plan.

"Our goal is to eliminate all personal income tax and all corporate income tax in a revenue neutral manner," Jindal said in the statement.

He did not confirm reports that he will seek an increase in sales taxes in order to offset lost income tax revenue, but said: "We want to keep the sales tax as low and flat as possible."

Political analyst John Maginnis, who on Thursday reported in his email newsletter LaPolitics Weekly that Jindal will propose balancing the tax loss by raising the sales tax, now at 4 percent, said the strategy fits with the governor's interest in keeping a high national profile.

"Just proposing a plan on the scale being discussed would win Jindal acclaim among fiscal conservatives here and nationwide," Maginnis told Reuters.

Jindal is often mentioned for national office including the U.S. Senate and as a possible presidential candidate.

Louisiana's neighbor Texas has had no income tax for years, relying on a windfall from its rich energy resources and other forms of taxation. Other states in the region governed by Republicans are trying to copy Texas, including Oklahoma and Kansas, which have both considered lowering taxes.

But political analyst Maginnis questioned whether the Republican-majority Louisiana legislature would endorse Jindal's ambitious plan.

"Any tax increase (such as sales tax) or elimination of exemptions would require a two-thirds vote, a form of legislative approval that would require (Republican) solidarity and significant Democratic support," Maginnis said.

Jindal said his team will meet with lawmakers soon to discuss details of his tax reform plan.

"Eliminating personal income taxes will put more money back into the pockets of Louisiana families and will change a complex tax code into a more simple system that will make Louisiana more attractive to companies who want to invest here and create jobs," he said.

(Reporting by Greg McCune; Editing by Lisa Shumaker)

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1 of 4. U.S. Secretary of State Hillary Clinton answers questions from the audience at the 2012 Saban Forum on U.S.-Israel relations gala dinner in Washington, in this file photo from November 30, 2012. Clinton was sent to the hospital December 30, 2012 with a blood clot stemming from a concussion she suffered earlier this month and was being assessed by doctors, a State Department spokesman said.

WASHINGTON | Sun Dec 30, 2012 11:04pm EST

WASHINGTON (Reuters) - U.S. Secretary of State Hillary Clinton was admitted to a New York hospital on Sunday with a blood clot linked to a concussion she suffered earlier this month, the State Department said in an announcement that looked sure to fuel speculation over the health of one of America's best-known political figures.

Clinton, 65, has been out of the public spotlight since mid-December, when officials said she suffered a concussion after fainting due to a stomach virus contracted during a trip to Europe.

"In the course of a follow-up exam today, Secretary Clinton's doctors discovered a blood clot had formed, stemming from the concussion she sustained several weeks ago," State Department spokesman Philippe Reines said in a statement.

"She is being treated with anti-coagulants and is at New York-Presbyterian Hospital so that they can monitor the medication over the next 48 hours," Reines said. "They will determine if any further action is required."

U.S. officials said on December 15 that Clinton, who canceled an overseas trip because of the stomach virus, suffered a concussion after fainting due to dehydration.

They have since described her condition as improving and played down suggestions that it was more serious. She had been expected to return to work this week.

Clinton's illness, already the subject of widespread political speculation, forced her to cancel planned testimony to Congress on December 20 in connection with a report on the deadly attack on the U.S. diplomatic post in Benghazi, Libya.

The attack became the subject of heated political debate in the run-up to the U.S. presidential election in November, and Republican lawmakers have repeatedly demanded that Clinton appear to answer questions directly.

Clinton's two top deputies testified in her place on the September 11 attack in Benghazi, which killed the U.S. ambassador and three other Americans and raised questions about security at far-flung diplomatic posts.

Some Republican commentators have implied that Clinton was seeking to avoid questioning on the subject, suggestions that have been strongly rebutted by State Department officials.

Clinton has stressed that she remains ready to testify and was expected to appear before lawmakers this month before she steps down, as planned, around the time of Obama's inauguration for his second term in late January.

After narrowly losing the Democratic presidential nomination to Obama in 2008, Clinton has been consistently rated as the most popular member of his Cabinet and is often mentioned as a potential presidential candidate in 2016.

Any serious medical concern could throw a fresh question mark over her future plans, although she has frequently alluded to her general good health.

BLOOD THINNERS

Dr. Edward Ellerbeck, a professor at the University of Kansas School of Medicine, said clots are more common in people who are sedentary, genetically predisposed, or on certain types of medicines such as the contraceptive pill or Estrogen replacements.

Ellerbeck, who is not treating Clinton, said clots are usually treated with blood thinners, typically for three to six months, and generally carry a low risk of further complications

Clinton is not known to have any of the risk factors that increase the risk of abnormal clotting, such as atherosclerosis or autoimmune disorders.

Head injuries such as the one she sustained earlier this month are associated more with bleeding than with clotting.

In one well-known case of bleeding following a head injury, actress Natasha Richardson hit her head skiing in 2009 and seemed fine, but died two days later of a hematoma, or bleeding between the outer membrane of the brain and the skull.

Clinton has said she wants to take a break from public life and has laughed off suggestions that she may mount another bid to become the first woman president of the United States - a goal she came close to reaching in 2008.

Her stint as secretary of state has further burnished the credentials she earned as a political partner to her husband, former President Bill Clinton, and later as a Democratic senator from New York.

In the four years since she became Obama's surprise choice as the top U.S. diplomat, Clinton has broken travel records as she dealt with immediate crises, including Libya and Syria, and sought to manage longer-term challenges, including U.S. relations with China and Russia.

She has maintained a punishing travel schedule, and was diagnosed with the virus after a December trip that took her to the Czech Republic, NATO headquarters in Brussels, Dublin and Belfast - where she had her last public appearance on December 7.

Officials announced on December 9 that she was ill with the stomach virus, forcing her to cancel a trip to North Africa and the Gulf that was to include a stop in Morocco for a meeting on the Syria crisis.

READY TO STEP DOWN

Clinton has repeatedly said that she only intended to serve one term, and aides said she was on track to leave office within the next few weeks, once a successor is confirmed by the Senate.

Her last months in office have been overshadowed by the Benghazi attack, the first to kill a U.S. ambassador in the line of duty since 1979, which brought sharp criticism of the State Department.

An independent inquiry this month found widespread failures in both security planning and internal management in the department.

It did not find Clinton personally responsible for any security failures, although she publicly took overall responsibility for Benghazi and the safety and security of U.S. diplomats overseas.

The State Department's top security officer resigned from his post under pressure and three other mid-level employees were relieved of their duties after the inquiry released its report.

The controversy also cost U.S. Ambassador to the United Nations Susan Rice her chance to succeed Clinton as secretary of state.

Rice drew heavy Republican criticism for comments on several television talk shows in which she said the attack appeared to be the result of a spontaneous demonstration rather than a planned assault. She ultimately withdrew her name for consideration for the top diplomatic job.

Obama on December 21 nominated Senator John Kerry, the Massachusetts Democrat who heads the Senate Foreign Relations Committee, to fill the position of secretary of state.

(Additional reporting by Jilian Mincer and Sharon Begley.; Editing by Eric Walsh and Christopher Wilson)

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Wed Dec 26, 2012 2:51pm EST

n">(Reuters) - Falling off the "fiscal cliff" is a bad thing, right?

Not necessarily for some state governments that could begin collecting more in estate taxes on wealth left to heirs if the United States goes over the "cliff," allowing sharp tax increases and federal spending cuts to take effect in January.

In an example of federal and state tax law interaction that gets little notice on Capitol Hill, 30 states next year could collect $3 billion more in estate taxes if Congress and President Barack Obama do not act soon, estimated the Urban-Brookings Tax Policy Center, a Washington think tank.

The reason? The federal estate tax would return with a vengeance and so would a federal credit system that shares a portion of it with the 30 states. They had been getting their cut of this tax revenue stream until the early 2000s. That was when the credit system for payment of state estate tax went away due to tax cuts enacted under former President George W. Bush.

With the return of the credit system next year as part of the "cliff," states such as Florida, Colorado and Texas - which have not collected estate tax since 2004 - could resume doing so. California Governor Jerry Brown has already begun to add the anticipated estate tax revenue into his plans, including $45 million of it in his 2012-2013 revised budget.

Brown may or may not be jumping the gun.

CLOUDY CLIFF AHEAD

The outlook on the "fiscal cliff" coming up at year-end is uncertain. Democratic President Barack Obama has said he hopes for a last-minute deal to avert it. That would need to get done soon, with Congress just now coming back from its holiday break.

Chances of an agreement became more remote last week after Republicans in the U.S. House of Representatives fumbled their own legislative attempt to prevent the fiscal jolt that economists say could trigger a recession.

House Speaker John Boehner abruptly adjourned the chamber for the holidays after failing to gather the votes from within his own party to pass legislation he and other Republicans had drafted, after walking out of negotiations with Obama.

Weeks of inconclusive political drama over the "cliff" have focused largely on individual income tax rates and spending on federal programs such Medicare and Social Security, but many tax issues are also involved, including the estate tax.

At the moment, under laws signed a decade ago by Bush, the estate tax is applied to inherited assets at a rate of 35 percent after a $5 million exemption. That means a deceased person can pass on an inheritance of up to $5 million before any tax applies. Inherited wealth passed to a spouse or a federally recognized charity is generally not taxed.

Obama wants to raise the rate to 45 percent after a $3.5 million exemption. Republicans have called for complete repeal of the estate tax, which they call the "death tax," though Boehner earlier this month called for freezing the estate tax at its present level. It was difficult to determine what the Republicans want after last week's events in the House.

STATES STAND TO GAIN

If Congress and Obama do not act by December 31, numerous Bush-era tax laws will expire, including the one on estate taxes. That would mean the estate tax rate will shoot up next year to the pre-Bush levels of 55 percent after a $1 million exemption.

It would also mean that for the first time in years, a portion of that estate tax would go to the states, through the return of the credit system.

Under that old law, estates paying the tax could get a credit against their federal tax bill for state estate tax payments of up to 16 percent of the estate's value.

If the fiscal cliff were allowed to take hold unaltered by Washington, 30 states would again automatically begin getting their share of federal estate taxes. The state laws are generally written so the state estate tax amounts are calculated under a formula based on the amount of the federal credit.

This would help states that have struggled with lower tax revenues since the 2007-2009 financial crisis and resulting recession, according to research by the Pew Center on the States, though painful federal spending cut backs would also hurt the states.

(Editing by Kevin Drawbaugh and Cynthia Osterman)

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WASHINGTON | Fri Dec 21, 2012 12:41pm EST

WASHINGTON (Reuters) - State and local government spending grew at a 0.3 percent annual rate in the third quarter, after 11 straight quarters of contraction, the U.S. Commerce Department said on Thursday.

The last time state and local spending expanded was in the third quarter of 2009, at a much more robust rate of 2.2 percent. Then, for nearly three years, spending contracted sharply, with the biggest drop in the first quarter of 2010 at 5.5 percent.

States are pinching pennies, keeping spending growth slow as the economy recovers from the 2007-09 recession and the federal government sends them fewer funds.

"The recent improvement in the national economy has not translated to strong growth in total state expenditures," said the National Association of State Budget Officers (NASBO) in a report also released on Thursday.

Total state spending likely grew only 0.1 percent in fiscal 2012, the lowest level since the group began tracking state spending in 1987, NASBO said. Most states' fiscal years end in June, which means that many have already started fiscal 2013.

The 2007-09 recession caused states' revenues to plunge and, because all states except Vermont must end their fiscal years with balanced budgets, many slashed spending, calling special legislative sessions to make emergency mid-year cuts.

The federal government stepped in to help with the 2009 economic stimulus plan known as the American Recovery and Reinvestment Act (ARRA), which included the largest transfer of federal funds to states in U.S. history.

NASBO said state expenditures grew 3.8 percent in fiscal 2010 and 2.8 percent in fiscal 2011, mostly due to the assistance. By fiscal 2010 federal money made up nearly 35 percent of state spending, compared with 26.3 percent in fiscal 2008.

Now that the burst of stimulus money is over, states must once again shoulder the costs of public programs, even though their revenues are only beginning to return to pre-recession levels. Federal funds likely only represented 31.2 percent of state spending in fiscal 2012 and will continue to shrink, NASBO said.

"State revenues have not increased as fast as ARRA funds have declined, leading to a unique situation in which total state expenditure growth has slowed during the same time that the national economy has been improving," it reported.

Meanwhile, spending demands continue to grow, particularly for the Medicaid healthcare program for the poor that states operate with partial reimbursement from the federal government.

Over the last three years, the portion of state spending going to Medicaid has risen to 23.9 percent from 22.2 percent. Many states worry that Medicaid will eat up their budgets, and leave fewer dollars for other areas.

Spending on education dipped to 19.8 percent in fiscal 2012, the first time on record that the portion has been less than 20 percent, NASBO said.

(Reporting by Lisa Lambert; Editing by Nick Zieminski)

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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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1 of 2. The U.S. Consulate in Benghazi is seen in flames during a protest by an armed group said to have been protesting a film being produced in the United States in this September 11, 2012 file photo. U.S. Secretary of State Hillary Clinton said December 19, 2012, she accepted the findings of an independent panel that faulted the State Department over the deadly September attack and had ordered widespread changes to bolster US. Diplomatic security overseas.

WASHINGTON | Thu Dec 20, 2012 5:06pm EST

WASHINGTON (Reuters) - The U.S. State Department will seek billions of dollars in new funds and revamp security procedures around the globe in response to criticism by an independent investigation of the September 11 attack on the U.S. mission in Benghazi, Libya, senior officials said on Thursday.

U.S. Secretary of State Hillary Clinton's two top deputies appeared at a Senate hearing and conceded that U.S. officials had failed to "connect the dots" ahead of the attack, which killed U.S. Ambassador to Libya Christopher Stevens and three other Americans.

"We learned some very hard and painful lessons in Benghazi," said Deputy Secretary of State William Burns. "We are already acting on them. We have to do better."

The State Department said on Wednesday its security chief had resigned and three other officials were relieved of their posts following the report, which cited leadership and management deficiencies, poor coordination and confusion over who had the authority to make decisions.

Senate Foreign Relations Committee Chairman John Kerry, tipped to be President Barack Obama's pick to replace Clinton when she steps down next month, chaired the session and led the call for increased funding.

"We need to make certain that we are not penny wise and pound foolish when it comes to supporting America's vital interest overseas," Kerry, a Massachusetts Democrat, said.

SECURITY SPENDING EYED

Clinton, unable to appear at the hearing due to illness, has already asked for $1.4 billion in funds for the 2013 fiscal year to be re-allocated to improve security at U.S. diplomatic missions, a State Department fact sheet said.

The State Department is also expected to request $2.3 billion per year for the next 10 years to further this work.

Some Republican lawmakers challenged the call for more money.

"If the State Department intends to blame its long string of failures on inadequate funding, then perhaps it should take a closer look at the money that is being lavished on global climate change, culinary diplomacy programs and other favored projects," House Foreign Affairs Committee chairwoman Ileana Ros-Lehtinen, said at an afternoon hearing.

But the panel's top Democrat, Representative Howard Berman, said the diplomatic security budget was cut so often it "created a culture at the State Department that is more preoccupied with saving money than with achieving its security goals."

Deputy Secretary of State Thomas Nides said the department had formed a task force to implement 29 specific recommendations in the panel's report and sent security assessment teams to 19 U.S. missions in 13 countries.

The department, in cooperation with the Pentagon, intends to send 35 additional Marine detachments, or about 225 uniformed personnel, to beef up security at medium- and high-threat posts and to boost staffing of its own Bureau of Diplomatic Security by about 5 percent, or 150 additional agents, Nides said.

"Implementation of each and every recommendation will be under way by the time the next secretary of state takes office," Nides said.

The State Department said Bill Miller, a diplomatic security special agent since 1987 who has served in Egypt and Iraq, was appointed deputy assistant secretary of state for high-threat posts - a new position in the Bureau of Diplomatic Security.

The job will focus on U.S. posts in Afghanistan, Azerbaijan, Egypt, Indonesia, Iraq, Jordan, Kenya, Libya, Mauritania, Nigeria, Pakistan, Somalia, South Sudan, Sudan, Syria, Tunisia and Yemen, the State Department said.

The Benghazi incident could tarnish Clinton's four-year tenure as secretary of state but the report does not fault her specifically.

Burns said to his knowledge the security requests from diplomats in Libya "did not get as far as Secretary Clinton."

White House spokesman Jay Carney said Obama endorsed the recommendations of the Benghazi report and expects them to be fully implemented.

"Immediately, accountability has been brought to bear with regard to four individuals who are very senior," he said.

'SCLEROTIC' DEPARTMENT

Republican Senator Bob Corker, an outspoken critic of the Obama administration's response to Benghazi, said the panel report revealed a "sclerotic" State Department that has failed to make good use of the resources already at its disposal.

"We have no idea whether the State Department is using its money wisely or not," he said.

Nides said the department still was coming to terms with widespread changes across the Middle East and defended the department's overall track record.

"We get this right about 99 percent of the time. We would like to be at 100 percent without question," he said.

Republicans have focused much of their firepower on U.S. Ambassador to the United Nations Susan Rice, who appeared on TV talk shows after the attack and suggested it was the result of a spontaneous protest rather than a planned attack.

The report concluded there was no such protest and Rice, who had been widely seen as Obama's top pick to succeed Clinton, withdrew her name from consideration last week.

U.S. officials say the assault, which occurred on the anniversary of the September 11, 2001, attacks on New York and Washington, was the work of Islamist extremists and have pledged to bring those responsible to justice.

Burns said the attack highlighted the need to take a broader look at security rather than focus on "specific and credible" threats, which officials insist were absent in Benghazi.

"What happened in Benghazi was clearly a terrorist attack," Burns said. "We did not do a good enough job, as the report highlights, in trying to connect the dots."

(Additional reporting by Tabassum Zakaria and Mark Felsenthal; Editing by Bill Trott and Todd Eastham)

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1 of 13. A military honor guard carries the casket of Senator Daniel Inouye (D-HI) as it arrives on Capitol Hill in Washington December 20, 2012.

WASHINGTON | Thu Dec 20, 2012 3:54pm EST

WASHINGTON (Reuters) - Scores of members of the U.S. Congress put aside partisan fights on Thursday to gather in solemn tribute to Senator Daniel Inouye, who represented Hawaii in Congress since its statehood and received the rare honor of lying in state in the Capitol Rotunda.

A highly decorated World War Two veteran who lost an arm in battle, the Democrat who led the powerful Appropriations Committee was remembered as quiet, unassuming and genuine.

"Lord, we're grateful for the excellence that distinguished his significant career, the quiet grace and dignity with which he represented the Aloha State," Senate Chaplain Barry Black prayed as nearly every member of the U.S. Senate and many U.S. representatives gathered around the flag-draped casket.

Inouye died on Monday at the age of 88. He was chairman of the Appropriations Committee, the second-longest serving senator ever and third in the line of presidential succession as the Senate's senior member.

Inouye became Hawaii's first full-fledged member of the U.S. House of Representatives on August 21, 1959, when Hawaii became the 50th state. He was elected to the U.S. Senate in 1962.

After nine consecutive Senate terms, he was the only member of Hawaii's original congressional delegation still serving on Capitol Hill. He was the highest-ranking elected Asian-American official in U.S. politics.

"He leaves behind a legacy of public leadership and private kindness that will not be forgotten as long as these walls stand," Senate Majority Leader Harry Reid, a Democrat, said.

In what Republican House Speaker John Boehner called "a quiet ceremony for a quiet man," members of the U.S. armed services carried in and saluted Inouye's casket as many of his friends and colleagues placed their hands on their hearts.

Congressional leaders and Vice President Joe Biden, who served in the Senate with Inouye, later placed three wreaths around the casket.

The last U.S. dignitary to lie in state in the Rotunda was former U.S. President Gerald Ford, in 2006.

BIPARTISAN SHOW

In a rare show of bipartsanship, Reid, Boehner and Biden recounted stories from Inouye's career in the military and in Congress, echoing each other in recalling his loyalty to the United States, genuineness and quiet presence that inspired respect.

"No one, no one, in the 40 years I served with him, ever, ever, ever, ever, ever once doubted he would do what he said," Biden said. "No one ever doubted his motive."

Inouye enlisted in the U.S. Army at age 17, shortly after the 1941 Japanese attack at Pearl Harbor. A son of a Japanese immigrant, Inouye had to petition the government for the right to serve in the U.S. military because he was declared an "enemy alien" for his Japanese heritage.

Inouye lost his right arm in battle in Italy in 1945, earning a Purple Heart. He also received the Medal of Honor, the highest award for military valor.

"Danny had the most fulsome embrace of life with one arm as any man could have with two," Biden said.

"He was, in every sense, the quintessential American."

Under Hawaii law, Democratic Governor Neil Abercrombie will name a successor to fill Inouye's seat until a new senator is chosen in the 2014 general election.

Inouye will lie in state at the National Cathedral in Washington on Friday, and at Hawaii's state capitol in Honolulu on Saturday before a final memorial service at the National Memorial Cemetery of the Pacific on Sunday.

(Reporting by Alina Selyukh; Editing by Vicki Allen)

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n">(Reuters) - A tanker carrying light crude oil down the Hudson River briefly ran aground south of Albany, New York, but showed no evidence of a spill, the Coast Guard said on Thursday.

The Stena Primorsk, a 600-foot (182-metre) motor tanker, lost control of its steering on Thursday morning and hit land near Stuyvesant, New York, about 20 miles downriver from Albany, the Coast Guard said. The vessel was later at anchor.

There was no evidence of pollution from the crash, though emergency responders were sent to the site to investigate, the Coast Guard said.

Oil market sources said the vessel was carrying light shale crude from the Bakken prospect in North Dakota destined for a Canadian refinery.

(Reporting by Peter Rudegeair and Selam Gebrekidan; Editing by Nick Zieminski)

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WELLINGTON | Sun Oct 14, 2012 11:20pm EDT

WELLINGTON (Reuters) - New Zealand will go ahead with its first partial sale of a state power company early next year after rejecting the idea of special concessions for indigenous people, the prime minister said on Monday, raising the prospect of a legal fight.

Maori groups have threatened legal action over the decision, which could stall a three to five-year program worth up to NZ$7 billion ($5.6 billion) to sell minority stakes in three power companies, a coal miner, and the national airline, to help to cut debt and return the budget to surplus by 2015.

Prime Minister John Key said his center-right government would proceed with the sale of a minority stake in Mighty River Power MRIPW.UL between March and June next year, regardless of the threat of legal action.

"That's entirely a matter for them. From the government's perspective, it would not be unexpected," he said in a statement.

The government is aiming to sell a stake in a second power company, either Genesis Energy or Meridian Energy, by the end of next year. The two sales could be worth more than NZ$3 billion.

The government put the planned Mighty River stake sale on hold last month to consult with indigenous Maori tribes on options to recognize their interests in water resources.

Key said the government had rejected a suggestion from an advisory tribunal that Maori should get special rights over the management of water resources and should be given rights ahead of other shareholders in state power companies using water for generation.

It held the view that no one group owns water, and that Maori rights in particular regions could be satisfied through other measures.

In order to sweeten public opinion about the controversial sales, the government has said it will ensure New Zealanders get a preference in share sales, limit the size of individual holdings, and offer bonus shares to locals who hold shares for at least three years.

($1 = 1.23 New Zealand dollars)

(Reporting by Gyles Beckford; Editing by Richard Pullin)

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