Budget Issues a Concern for Williams in Second Term

As he begins his second term in office, Philadelphia District Attorney Seth Williams says he plans to continue the initiatives of his previous term while coping with the severe budgetary deficiencies in his office.

Budget Issues a Concern for Williams in Second Term

As he begins his second term in office, Philadelphia District Attorney Seth Williams says he plans to continue the initiatives of his previous term while coping with the severe budgetary deficiencies in his office.

Budget Issues a Concern for Williams in Second Term

As he begins his second term in office, Philadelphia District Attorney Seth Williams says he plans to continue the initiatives of his previous term while coping with the severe budgetary deficiencies in his office.

Europe Puts Pressure on Greece to Meet Budget Targets

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Spanish Budget Avoids Austerity Measures

MADRID — Confident that Spain is emerging from a prolonged recession, the government on Friday presented a budget for 2014 that was largely free of the unpopular austerity measures of recent years.

The budget is based on a forecast that the Spanish economy will grow 0.7 percent next year, up from the government’s previous forecast of 0.5 percent. Gross domestic product is expected to contract 1.3 percent this year.

Calling it a “budget of economic recovery,” Cristóbal Montoro, the budget minister, forecast that the proposal would “open the door to job creation in our country” since it lacked the tax increases and heavy spending cuts of recent years.

The government also forecast that the unemployment rate would fall to 25.9 percent in 2014, down from the record 27 percent that it reached in the first quarter of this year.

As part of its belt-tightening, the government has extended a salary freeze for civil servants for a fourth consecutive year. And on Friday, it approved changes to the pension system intended to save about 800 million euros ($1.08 billion) next year.

Having requested a bailout for its suffering banks in June of last year, the Spanish government has been under pressure to stick to its budgetary commitments, even as it faced frequent street protests against a series of spending cuts and tax increases.

Given the depth of Spain’s recession, the European Commission agreed last May to give Madrid more time to reach its budgetary targets. The Spanish deficit is expected to fall to 6.5 percent of gross domestic product this year. That would be down from a revised deficit of 6.8 percent of G.D.P. last year, which was 0.2 percentage points less than what Madrid had initially estimated. For 2014, the target is for a deficit of 5.8 percent of G.D.P.

One of the most significant turnarounds for Spain has been the recent fall in its borrowing costs as investors shifted the spotlight to Italy’s political fragility and the perceived risk that Italy poses for the euro zone. The interest rate premium demanded by investors for buying Spanish government bonds rather than Germany’s benchmark bonds fell this month below that of Italy for the first time since March of last year.

Thanks to that improvement, Mr. Montoro said, the cost of financing the country’s debt should fall 5.2 percent next year, to 36.6 billion euros.

While Spain is emerging from a two-year recession, Prime Minister Mariano Rajoy and his ministers have recently cautioned that the country still faced a significant economic challenge, with continued weakness in consumer spending and a reluctance by banks to provide credit.

The 2014 budget and the proposed changes to the way pension payments are calculated will now need to go to Parliament for a vote, but that is expected to be a formality as Mr. Rajoy’s Popular Party holds an absolute majority.

Spain on Track to Meet Budget, an Official Says

The minister, Luis de Guindos, also said the government would not require additional one-time austerity measures as part of the 2014 budget that it will present this month. The budget will be based on an improved forecast for 2014, both in terms of overall growth and unemployment, which hit a record 27 percent earlier this year, Mr. de Guindos said.

After the financial crisis burst Spain’s construction bubble in 2008, “no doubt 2014 will be the first year when Spain will have some recovery,” the minister said.

Given the depth of Spain’s recession, the European Commission agreed in May to give Madrid more time to reach its budgetary targets. Mr. de Guindos said he expected Spain’s deficit to fall to the new target of 6.5 percent of gross domestic product — rather than the initial target of 4.5 percent — from 7 percent last year.

While Spain negotiated a banking bailout worth up to 100 billion euros ($133 billion), it ended up requesting only 41 billion euros to keep afloat institutions accounting for about 30 percent of its banking sector, including Bankia, a giant lender that Madrid nationalized in May 2012.

At the time of Bankia’s near collapse, the center-right government of Prime Minister Mariano Rajoy initially resisted any outside intervention in the banking sector. In hindsight, however, Mr. de Guindos described the bailout on Monday as “a model of what should happen” when a financial sector finds itself in such a precarious situation. “The bailout of the Spanish banks prevented a bailout of the whole of Spain,” he said.

Although officials from the International Monetary Fund and other creditors started another review of Spain’s banking progress on Monday, Mr. de Guindos suggested that “Spanish banks don’t have an important capital need,” implying that Spain would not require an extension of its bank bailout.

For banks that sought to raise capital, he added, “the capacity to access the markets is completely different to a year ago.” Last week, Banco Sabadell announced that it was raising up to 1.4 billion euros to bolster its balance sheet and meet regulatory demands.

Furthermore, the interest rate premium demanded by investors for buying Spanish bonds compared with Germany’s benchmark bonds fell this month below the comparable premium on Italian bonds for the first time since March of last year.

The Madrid government has forecast that Spain’s economy will grow 0.5 percent in 2014 after contracting by 1.3 percent this year. Mr. de Guindos would not say what the improved 2014 forecast would be. And while unemployment is expected to continue falling, he warned that Spain still faced significant challenges in terms of creating jobs and reviving consumer spending.

“We believe the economy of Spain is leaving behind the recession, but not by any means the crisis,” he said.

Mr. de Guindos was speaking after hundreds of thousands of pro-secession citizens of the northeastern region of Catalonia demanded last week that Catalonia be allowed to hold a referendum on independence. From the economic perspective, Mr. de Guindos said Monday that “a secessionist plan by a Spanish region is a lose-lose situation” for the region and for the country.

Budget Battles Keep Agencies Guessing

“I don’t want to throw darts or rocks at anybody,” said Gov. Neil Abercrombie, Democrat of Hawaii, at the National Governors Association convention last month in Milwaukee, venting his frustration over the budget uncertainty. “I just want to know what the hell the numbers are.”

The budget woes are afflicting, among others, state governments, American Indian tribes, military contractors and cancer research laboratories. Budget experts said that the short-term concerns over next year’s dollar figures were already hampering long-term planning and making government officials hesitant to commit to big projects or to hire needed employees.

“You’re eating away little by little at the infrastructure and effectiveness of government,” said Philip Joyce, a professor at the University of Maryland.

In an interview, Dr. Francis Collins, the director of the National Institutes of Health, called 2013 the “darkest ever” year for the agency, whose budget is at its lowest inflation-adjusted appropriations level in more than a decade. The agency has been awarding grants to an increasingly smaller sliver of applicants as well.

The stopgap measures that have kept the government running have further hobbled the agency, he added. “Continuing resolutions discourage you from trying something new and bold,” he said. “You’re supposed to tread water. And science is very badly served by that tread-water message.”

One researcher who said he had felt the impact of the budget wars is Steven Salzberg, the director of the Center for Computational Biology at Johns Hopkins University in Baltimore and a lauded biomedical researcher. Mr. Salzberg said that he had received about 20 percent less in federal funding than his peers had recommended for his work on the biological underpinnings of cancer and other diseases.

“Less science is getting done,” he said. “That means cures won’t emerge. Five years from now, when your aunt gets cancer and you can’t do anything for her, people won’t stop and think, ‘Jesus, if we only hadn’t had the sequester!’ ”

Shorter grant cycles have forced scientists to rush to get results, he said. Increasing competition for funding has left him and his peers spending more and more time on paperwork, and less and less time on laboratory work. Worst of all, he said, promising young scientists are becoming discouraged and leaving the field.

“The current budget wars are a more extreme or egregious version of what has been going on for a number of years,” Mr. Salzberg said. “They’re wreaking havoc on people’s research plans.”

A broad range of budget officials described similar headaches emanating from Washington. Sequestration has forced programs that normally expect flat or increasing financing to make sudden cuts. Many programs delayed those cuts, and are scrambling to make them now — in some cases with reduced staffs because of furloughs or hiring freezes.

A number of budget issues lingered unresolved during Congress’s long summer recess. Earlier this year, the House and the Senate passed spending bills for the 2014 fiscal year, which begins on Oct. 1, that were about $90 billion apart, but never settled on a final figure.

With lawmakers returning to Washington next week, Congress is expected to pass another stopgap bill, known as a continuing resolution, financing the government for a few more months, but it is unclear whether such funding will stay at current levels or shrink. And if the Republicans who control the House and the Democrats who hold sway in the Senate fail to come to a deal before October, many parts of the federal government could shut down.

The breakdown of the Congressional budgeting process this summer has compounded the problems. Officials said that they had received no word about budget figures from Congressional appropriators — because such numbers do not yet exist.

City Council Adds Funds to Patch Hole in DA's Budget

The Philadelphia District Attorney's Office saw a $450,000 hole in its budget patched in the spending plan passed by City Council on Thursday. But the funding may not be enough to keep in place two programs that divert defendants from the justice system.

Budget Office Says Obama Plan Would Cut Deficit by $1 Trillion

But the proposal, which was released just last month, has already been mostly forgotten in Washington. Senate Democrats and House Republicans have not agreed to come to the table to split the difference between their budgets, either. After two years of knock-down, drag-out fights over taxes and spending, the budget has been put on the back burner, at least for now.

In part that is because the gap between spending and revenue has started to shrink substantially, in response to earlier tax increases, spending cuts and a strengthening economy. Earlier this week, the budget office sharply cut its estimate of the current fiscal-year deficit by more than $200 billion, on higher-than-anticipated tax receipts and big payments to the Treasury from Fannie Mae and Freddie Mac, the mortgage financiers. Were Congress to do nothing and the economy avoid running into a ditch, the deficit would fall to just over 2 percent of economic output in 2015.

It is also because the series of automatic cuts, ceilings and self-imposed crises have for the most part ended. The so-called fiscal cliff was avoided when at the beginning of the year Congress managed to pass a more-moderate package of tax increases and cuts. The $85 billion in cuts to domestic and military programs known as sequestration has already hit, with lawmakers doing little to change them.

That has left nothing on the horizon to force Congress’s hand until it needs to raise the debt ceiling, a statutory borrowing limit. But because of strong tax receipts and the sequestration spending cuts, it might not need to tackle that issue until October or even later.

Separately, lawmakers and the White House have focused their attention on other priorities, particularly gun laws, immigration reform and a series of scandals. This week, for instance, it was a fracas over the revelation that Internal Revenue Service employees targeted conservative groups seeking tax-exempt status.

But some members of Congress, along with President Obama, are still vowing to tackle the country’s long-term deficits even though there is no imminent threat. Without Congressional action, the deficit, as measured as a proportion of economic output, could start rising again in the latter half of the decade, the Congressional Budget Office warned again this week. If health care spending starts rising again sharply and debt payments soar as interest rates rise, many experts fear that those costs will eventually crowd out financing for the government’s other priorities.

“It is encouraging to see that the president’s proposals would indeed begin to reduce the debt, and to lower levels than originally thought,” said Maya MacGuineas of the Committee for a Responsible Federal Budget, a budget watchdog, in a statement responding to the new budget office estimate. “Regardless, additional reforms will be needed over the long-term, especially to slow the growth of health care programs and shore up Social Security,” she said.

On some issues, Republicans and Democrats are closer than their heated rhetoric might let on. For instance, Mr. Obama included in his budget proposal cuts to Social Security and Medicare that are anathema for many Democrats, showing a willingness to spread the political pain as part of a larger budget deal in a bid to encourage Republicans to bargain. One major change would alter the calculation used to ensure that Social Security payments kept up with the pace of inflation, providing less money to seniors over time.

His proposal also includes almost $1 trillion in tax increases, by further limiting the deductions and exclusions high-income families can claim, increasing taxes on tobacco and introducing the so-called Buffett Rule, a new minimum tax on income over $1 million. Republicans have refused to consider changes to increase revenue, arguing that money raised from closing loopholes should be used to bring down overall tax rates.

Mr. Obama’s proposal would widen deficits slightly in the fiscal years 2013 through 2015, the budget office said, but trim them later on. Starting in 2014, his tax increases would lift revenue gradually from about $27 billion to $155 billion a year. Spending would increase by as much as $142 billion a year until 2018, when it would decline beneath the levels indicated by current law.

The two parties are principally at odds over priorities like infrastructure, science, agriculture and education, and on Medicaid, the health care program for the poor and disabled.

In 2023, the House Republicans plan would put the level of Social Security and Medicare spending very close to where the White House would — about 8.7 or 8.8 percent of economic output, according to an analysis by Douglas W. Elmendorf, the director of the budget office. Mr. Obama is calling for modestly smaller military spending, at 2.4 percent of economic output, compared with the House Republicans’ 2.7 percent.

The White House would spend 7.7 percent on everything else, including housing programs, unemployment insurance, Medicaid, health insurance subsidies and education. The House would spend just 5.2 percent.

The Congressional Budget Office does not analyze Congressional budget resolutions. The House and Senate budget committees put forward revenue and spending estimates of their own plans based on Congressional Budget Office data, but both plans lack a lot of detail.

When it released its plan, the Obama White House claimed that it saved $1.8 trillion over 10 years. The divergence between its estimate and the budget office’s stems from the fact that the White House assumed the $85 billion in automatic budget cuts would be repealed or replaced with a new policy. The budget office did not.

Other than that, the independent office’s assessment of how the budget proposal would affect spending and revenue differs only marginally from the White House’s own.

Budget Cuts’ Impact May Be Difficult to See Right Away

Late Friday night, Mr. Obama formally triggered spending cuts that will reach across the breadth of the federal government after he failed to persuade Congressional Republicans to replace them with a mix of cuts and tax increases.

In a 70-page report to Congress accompanying the order and detailing the reductions — agency by agency and program by program — Jeffrey D. Zients, Mr. Obama’s budget director, called them “deeply destructive to national security, domestic investments and core government functions.”

But even as the cuts become official, some of the immediate impact is difficult to see.

The process of trimming government budgets is slow and cumbersome, involving lengthy notifications to unions about temporary furloughs, reductions in overtime pay and cuts in grant financing to state and local programs. Less federal money will, over time, mean fewer government contracts with private companies. Reduced overtime for airport security checkpoint officers will make lines longer, eventually.

And so as the first weekend began for the new, slimmer government, little of that is evident yet.

Letters to governors, informing them of the smaller grants are beginning to go out, officials said. Shaun Donovan, the secretary of housing and urban development, wrote to Gov. John R. Kasich of Ohio: “You can expect reductions totaling approximately $35 million,” helpfully putting the amount in a bold type.

The Air Force Thunderbirds — the elite team of F-16 pilots who perform tricks at air shows — announced on its Web site that all of its shows have been canceled starting April 1. The last show will be in Titusville, Fla., on March 23.

Still, it will take some time, officials acknowledged, before the cuts begin to make life more difficult for teachers, defense contractors, Head Start students, border patrol agents or others who rely on the largess of the federal government.

Emerging from an Oval Office meeting on Friday with the lawmakers, the president called the cuts “just dumb.” He said they would slow the economic recovery and spoke emotionally about their impact on people who would feel the consequences of government layoffs and disruptions in public services.

“I don’t anticipate a huge financial crisis, but people are going to be hurt,” Mr. Obama said during a 35-minute news conference at the White House, in which he acknowledged that his campaign of highlighting fallout from the cuts had failed to persuade Republicans to consider tax increases as part of a package to avert the $85 billion in reductions over the next seven months.

But the president and his Republican adversaries said they would not carry the fight over the cuts into a coming legislative effort to finance the government through Sept. 30, essentially declaring a cease-fire in the budget wars that have dominated Washington since 2011.

The showdown in December over the so-called fiscal cliff yielded $620 billion in tax increases over 10 years. The across-the-board spending cuts now going into force will cut deficits an additional $1.2 trillion.

Both sides indicated that for now, that may be enough — a fiscal peace through political exhaustion. The two parties are now expected to move to a broader argument over the right level of taxes and spending as they seek to develop a new budget for the coming year and beyond. Republicans said they welcomed a return to a more orderly budget process but warned they would not give in on their basic principles.

“I will not be part of any back-room deal, and I will absolutely not agree to increase taxes,” said Senator Mitch McConnell of Kentucky, the Republican leader.

After a public relations blitz lasting weeks that was aimed at stopping the cuts, Mr. Obama said he was prepared to extend a stopgap law that finances the government to March 27 if Republicans stuck to an agreement worked out in 2011 about the level of federal spending. The decision will most likely allow the across-the-board spending reductions to remain in place for months if not years.

White House officials and Senate Democrats had considered making one last stand around the March 27 deadline, declaring the Senate would not pass another government spending plan unless it undid the across-the-board cuts. But Senate Democrats were leery. The first furloughs are likely to hit in April, and the Democrats feared that little political pressure would have built on Republicans before the current stopgap spending law expired.

In his weekly address on Saturday morning, the president acknowledged that the reductions would not affect everyone equally.

“While not everyone will feel the pain of these cuts right away, the pain will be real,” Mr. Obama said. “Many middle-class families will have their lives disrupted in a significant way.”

And heading into the weekend, some officials seemed eager to offer reassurance that government would continue to function despite the deep cuts.

While Leon E. Panetta, who just left the job of defense secretary, had thundered about the critical risk to national security — and lamented what he viewed as a shift of Washington’s political class away from good governance — his successor, Chuck Hagel, spoke in more conciliatory terms.

Hard Budget Realities as Agencies Prepare to Detail Reductions

“Sequestration,” that arcane budget term consuming Washington in recent weeks, is about to move from political abstraction to objective reality for tens of millions of Americans. Barring an extremely unlikely last-minute deal, about $85 billion is set to be cut from military, domestic and certain health care programs beginning Friday.

Much of the government will be immune, only magnifying the cuts for the rest. If they are not reversed, federal spending at the discretion of Congress will eventually fall to a new five-decade low. Cuts of even larger size are scheduled to take effect every year over the next 10, signaling an era of government austerity.

By the end of this week, federal agencies will notify governors, private contractors, grant recipients and other stakeholders of the dollars they would be about to lose. As of March 1, the Treasury Department will immediately trim subsidies for clean energy projects, school construction, state and local infrastructure projects and some small-business health insurance subsidies.

Nearly two million people who have been out of work for more than six months could see unemployment payments drop by 11 percent in checks that arrive in late March or the first days of April, according to the White House budget office, an average of $132 a month. Doctors who treat Medicare patients will see cuts to their reimbursements.

If the stalemate in Washington continues, furloughs and layoffs will probably begin in April, starting largely in the 800,000-member civilian work force of the Defense Department and then rippling across the country, from meat inspectors in Iowa to teachers in rural New Mexico.

“If they hit me with a $3 million cut in March, I’m not sure what I’m going to do,” said Raymond R. Arsenault, the superintendent of the Gallup-McKinley County Schools, a district that serves primarily Navajo students on the Arizona-New Mexico border.

Mr. Arsenault’s school system would be hit much harder than most because 35 percent of his $100 million annual budget comes from federal education “impact aid” to offset the large tracts of land that are owned by Washington and therefore not subject to taxation. Of that, $3 million may be about to disappear.

The sequester involves trimming $85 billion from a $3.6 trillion annual federal budget, or about 2.4 percent. But the cuts will not affect Social Security or Medicaid, and the Medicare cuts total only about $11 billion in the 2013 fiscal year, which ends Sept. 30, according to calculations by the Bipartisan Policy Center.

Thus, entitlement spending, which poses the biggest long-term challenge to the federal budget, accounts for only a sliver of the cuts. That leaves more than $70 billion in cuts to be applied over the next seven months to the roughly two-fifths of the budget that is devoted to discretionary spending, including the military, education and dozens of other categories.

In a matter of weeks the cuts would cascade through the government, delaying snow removal on the Tioga Pass in Yosemite National Park, for example, and keeping an aircraft carrier battle group docked in Norfolk, Va., rather than steaming through the Persian Gulf.

“The cut is so big and over such a short period of time that there’s no way to avoid all the operational and program harms,” said Daniel I. Werfel, controller of the White House budget office.

These cuts would probably not be confined to 2013. Even if President Obama manages to persuade Congress to raise new revenue, he has said he would replace only half of the spending cuts with tax increases, in essence accepting a half-trillion dollars in cuts over 10 years. That would be on top of more than $1 trillion in cuts already enacted by the Budget Control Act, which created the sequester in 2011 as part of a deal to raise the country’s statutory borrowing limit.

A comprehensive deficit-reduction deal, which is currently moribund but is still both Congress and the White House’s stated goal, might mitigate the impact by including fast-growing programs like Medicare and Medicaid in the cuts. But belt-tightening, for now, appears to be the new normal.

Seven New Judges Confirmed Amid Budget Battle

Amid the flurry of activity over the state budget last weekend, the state Senate confirmed seven new judges.

Today's Economist: Casey B. Mulligan: A Budget for Regulation

Casey B. Mulligan is an economics professor at the University of Chicago. He is the author of “The Redistribution Recession: How Labor Market Distortions Contracted the Economy.”

As Democrats and Republicans haggle over federal taxes and spending, another important policy tool gets less attention: regulation.

Perspectives from expert contributors.

Government has a variety of ways it can achieve its objectives, including subsidies, taxes and regulation. For example, the government might attempt to help disabled people by subsidizing handicapped-accessible buildings. Or it could levy an extra tax on buildings that are not handicapped-accessible. Or it could simply refuse to permit structures to be built, or used in various situations, without being handicapped-accessible.

All three strategies are likely to affect building activity, increase the prevalence of handicapped-accessible buildings and in so doing help people with disabilities, as intended. The first strategy is ordinarily called government spending; the second, taxation; and the third, regulation.

Private-sector activities to comply with regulation do not appear in the government budget, whereas private-sector interactions with tax and spending programs do, in terms of the amount of money they pay or receive. (Regulation does need a government budget for enforcement, but so do taxes and spending, and enforcement is distinct from the private sector’s compliance activities.)

Politicians have devised various budgetary gimmicks to help disguise what they tax and spend, and the sunset provision that led to next month’s fiscal cliff is one of them. Nevertheless, experts and even the voting public get an idea of the importance of taxes and spending in the economy by looking at budget totals and perhaps a few of the largest line items.

The same cannot be said for regulation, which lacks any official budget. Attempts have been made to quantify regulation by the number of pages of law or pages of agency rules: President Ronald Reagan once bragged that his administration reduced one area of regulation to 31 pages from 905.

However, pages can be misleading, because some words, sentences and paragraphs have more impact than others. For example, some laws, like those requiring children to attend school, have little impact because a vast majority of American families would send their children to school even if the law did not require it. Other laws, like many curfews, take up space on the books but are not enforced.

Because regulations have so far been poorly quantified, it is interesting to see a recent study of workplace regulation by complianceandsafety.com. It attempts to measure the aggregate of importance of workplace regulation by the dollar amount of fines collected by the Occupational Safety and Health Administration. Its chart, reproduced below, looks at the fines in reverse chronological order, and colors years according to the political party of the president in power.

complianceandsafety.com

OSHA fines have increased sharply since 2009. Perhaps more surprising is that the largest fine increases previously were under a Republican president (the first President George Bush) and the largest reductions were under President Bill Clinton.

As with taxes and spending, we cannot necessarily conclude that more regulation is “bad” or “good,” but it would be helpful for experts and voters alike to see a rigorous accounting for government regulation.

Shares Continue to Slide, Awaiting a Budget Accord

Stocks fell on Friday as another decline in Apple took a toll and investors unloaded some shares because of the uncertainty surrounding the budget negotiations in Washington.

All three major stock indexes ended the week slightly lower, the Nasdaq for the second consecutive week.

Apple’s stock slid 3.76 percent, to $509.79, after the iPhone 5 received a tepid reception in China.

UBS maintained its buy rating on Apple, but cut its price target to $700 from $780 and expressed concerns that iPhone production may be dropping.

Shares of Apple have fallen 27.4 percent since their closing high of $702.10 on Sept. 19.

The S.& P. Information Technology Index lost 1 percent as Apple fell and Jabil Circuit fell 5.5 percent, to $17.51, after UBS cut its price target.

Stocks have been treading water as the possibility of not reaching a deal to settle the budget impasse until early next year is rising.

“We’re faced with uncertainty,” said Larry Peruzzi, senior equity trader at Cabrera Capital Markets in Boston. “And that’s going to continue now into January. It basically puts everybody on hold and just have the markets kind of thrash around.”

President Obama and the House speaker, John A. Boehner, held a “frank” meeting on Thursday at the White House to discuss how to avoid the tax increases and spending cuts set to kick in early in 2013.

The Dow Jones industrial average slipped 35.71 points, or 0.27 percent, to 13,135.01. The Standard & Poor’s 500-stock index fell 5.87 points, or 0.41 percent, to 1,413.58. The Nasdaq composite index lost 20.83 points, or 0.70 percent, to 2,971.33.

For the week, the Dow slipped 0.15 percent, while the S.& P. 500 fell 0.3 percent and the Nasdaq declined 0.2 percent.

Among other Nasdaq decliners, shares of the chip maker Qualcomm slid 4.7 percent, to $59.83.

Best Buy slid 14.7 percent, to $12.05, after the electronics retailer agreed to extend the deadline for the company’s founder to make a bid.

Among the day’s economic data, consumer prices fell in November for the first time in six months, indicating inflation pressures were muted.

A separate report showed manufacturing grew at its swiftest rate in eight months in December.

Chinese data was encouraging, as Chinese manufacturing grew at its fastest rate in 14 months in December. The news was deemed as helpful for materials companies in the United States, including United States Steel, which rose 6.8 percent, to $23.85.

Interest rates were lower. The Treasury’s benchmark 10-year note rose 8/32, to 99 9/32, and the yield fell to 1.70 percent from 1.73 percent late Thursday.

Shares Continue to Slide, Awaiting a Budget Accord

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Seven New Judges Confirmed Amid Budget Battle

Amid the flurry of activity over the state budget last weekend, the state Senate confirmed seven new judges.

At White House Budget Meeting, Old Hurdles and New Attitude

Both sides indicated after the 70-minute White House meeting that their goal is a two-step compromise, since they have little time to work before the end of the year. That is when more than $500 billion in automatic tax increases and across-the-board spending cuts hit all Americans, and potentially shake the economy, unless Congress enacts an alternative deficit reduction agreement.

As tentatively envisioned, a compromise would provide an immediate down payment of at least $50 billion to reduce this year’s projected deficit, in lieu of the automatic measures that would hurt the economy by their size and suddenness, economists say. Second, it would define a framework for negotiating a long-term “grand bargain” in 2013 to shave annual deficits by perhaps $4 trillion over the first decade.

The framework would have separate goals for raising revenues and cutting the two types of federal spending: so-called discretionary financing that Congress sets annually for most programs, domestic and military; and entitlement spending, chiefly for Medicare and Medicaid, which by their growth in an aging population are driving projections of mounting debt.

The agreement to aim for a framework only in the initial talks is a quick step forward. Some lawmakers, including the Senate Republican leader, Mitch McConnell of Kentucky, had wanted a larger deal before Jan. 1 as the price for shutting off the automatic deficit reduction that would hit then. Representative Nancy Pelosi of California, the House Democratic leader, went so far as to predict that a deal to head off that so-called fiscal cliff would be at hand “well before Christmas.”

While such a two-pronged deal would put off the hardest and most far-reaching policy decisions until next year, no deal is possible unless the negotiators first decide on the deficit down payment. That installment, it is widely believed, must be large enough to satisfy financial markets, which oppose the automatic measures as too large and threatening but still want Washington to show some resolve toward getting the nation’s fiscal house in order.

Mr. Obama, Vice President Joseph R. Biden Jr. and the Democrats — Harry Reid of Nevada, the Senate majority leader, and Ms. Pelosi — made it clear around the negotiating table that the down payment is easily made by letting the Bush tax cuts expire, as scheduled on Dec. 31, for annual income of $250,000 and above for couples and $200,000 for individuals. The Bush rates would be extended for lower incomes, preserving them for 98 percent of taxpayers.

The Republicans — House Speaker John A. Boehner and Mr. McConnell — were just as plain that, while they support raising additional revenues by curbing deductions and through economic growth, they would oppose an increase in marginal tax rates. They want the down payment in spending cuts.

Yet after an election campaign in which Mr. Obama made this a top issue, Republicans have reduced leverage, many acknowledge. That shift in the Washington fiscal dynamic since Mr. Obama’s re-election also explains the rapidity with which the Republican leaders have agreed that higher revenues will be part of the deficit-reduction solution — if not through higher rates.

If the president has his way, the top rates, now 33 percent and 35 percent, would rise to 36 percent and 39.6 percent, the Clinton-era levels, on Jan. 1. But Mr. Obama has suggested he is open to a compromise that would set the rates somewhere in between, in combination with limits on deductions.

With Mr. Obama leaving on Saturday for a four-day diplomatic trip to Asia and Thanksgiving looming, the negotiators directed their staffs to flush out the Republican bottom line on the size and type of savings to get from Medicare and Medicaid in preparation for the leaders’ next meeting in the week after the holiday.

Republicans were heartened that Mr. Obama designated his soon-to-retire Treasury secretary, Timothy F. Geithner, as his lead negotiator, instead of the White House chief of staff, Jacob J. Lew. Mr. Boehner’s relations with Mr. Lew soured during the prolonged and bitter budget talks in 2011.

Seven New Judges Confirmed Amid Budget Battle

Amid the flurry of activity over the state budget last weekend, the state Senate confirmed seven new judges.

Seven New Judges Confirmed Amid Budget Battle

Amid the flurry of activity over the state budget last weekend, the state Senate confirmed seven new judges.