WASHINGTON – Partisan to the core, Congress careened toward a holiday-season standoff Monday on legislation to prevent a Social Security payroll tax increase for 160 million workers on Jan. 1.

“It’s time to stop the nonsense. We can resolve these differences and we can do it in a way that provides certainty for job creators and others,” said Speaker John Boehner, R-Ohio. He said the House would reject a bipartisan two-month extension that cleared the Senate over the weekend and seek negotiations on a bill to renew the cuts through 2012.

In an acid response, Senate Majority Leader Harry Reid accused Boehner of risking a tax increase for millions “just because a few angry tea partyers raised their voices.” The Nevada Democrat ruled out new negotiations until the two-month measure is enacted.

That left the two parties approaching Christmas-week gridlock over an effort to pass core elements of President Barack Obama’s jobs program — renewal of the tax cuts and long-term unemployment benefits — that Republican and Democratic leaders alike said they favored.

It was the latest and likely the last such partisan confrontation in a year of divided government that brought the Treasury to the brink of a first-ever default last summer, and more than once pushed the vast federal establishment to the edge of a partial shutdown.

This time, unlike the others, Republican divisions were prominently on display.

The two-month measure that cleared the Senate, 89-10, on Saturday had the full support of the GOP leader, Sen. Mitch McConnell, who also told reporters he was optimistic the House would sign on. Senate negotiators had tried to agree on a compromise to cover a full year, but were unable to come up with enough savings to offset the cost and prevent deficits from rising.

The two-month extension was a fallback, and officials say that when McConnell personally informed Boehner and House Majority Leader Eric Cantor of the deal at a private meeting, they said they would check with their rank and file.

But on Saturday, restive House conservatives made clear during a telephone conference call that they were unhappy with the measure.

Not surprisingly, the White House weighed in on the side of Obama’s Democratic allies.

Spokesman Jay Carney said Boehner was for the two-month stopgap bill “before he was against it” — a claim that the House speaker flatly denied.

Speaking to reporters at the White House, Carney added, `’It is not our job to negotiate between him and Senate Republicans.”

McConnell’s office did not immediately respond to a request for comment.

“We are witnessing the concluding convulsion of confrontation and obstruction in the most unproductive, tea party-dominated partisan session of the Congress in which I have participated,” said Rep. Steny Hoyer of Maryland, second-ranking member of the Democratic leadership.

Ironically, until the House rank and file revolted, it appeared that Republicans had outmaneuvered Obama on one point.

The two-month measure that cleared the Senate required him to decide within 60 days to allow construction on a proposed oil pipeline that promises thousands of construction jobs. Obama had threatened to veto legislation that included the requirement, then did an about face.

The president recently announced he was delaying a decision on the pipeline until after the 2012 elections, meaning that while seeking a new term, he would not have to choose between disappointing environmentalists who oppose the project and blue collar unions that support it.

The provision relating to the Keystone XL pipeline first surfaced in the House, where Boehner and the leaders had used it as an incentive to persuade conservatives to approve an extension of the payroll tax cut that many claimed had failed to create jobs.

The Senate-passed bill, as well as one that cleared the House last week, also would avert a threatened 27 percent cut in payments to doctors who treat Medicare patients.

There was no controversy on that provision, or much of one on anything but the duration of an extension.

Democrats gleefully distributed evidence of GOP disagreement, including comments from Sen. Scott Brown of Massachusetts, Richard Lugar of Indiana and others urging the House to approve the two-month measure.

But first-term House Republicans were unmoved.

“What they (the Senate) sent us over was an insult to the American people,” said Rep. Ann Marie Buerkle, R-N.Y.

“I don’t care about political implications” of letting taxes go up Jan. 1 for 160 million Americans, said Rep. Tom Reed, R-N.Y. “We will stay here as long as it takes in order to do what’s right for the American people. That means working on Christmas, New Year’s and other days. It’s time to get the job done.”

Professing a lack of concern about higher taxes was not a widely held position inside the party leadership, though. For both parties, the political implications seemed to matter hugely.

The Democratic Congressional Campaign Committee announced it was sending automated phone calls into households in 20 targeted GOP-held districts demanding that lawmakers support the two-month extension, lest taxes go up.

Not to be outdone, the National Republican Congressional Committee issued a statement headlined “Vacation, All House Dems Ever Wanted” and claiming that Democrats wanted to raise taxes on the middle class.

It was unclear how much attention the political maneuvering would draw in a nation where consumers were in the final shopping countdown toward Christmas and the next national election was nearly a year away.

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Associated Press writers Alan Fram and Laurie Kellman contributed to this report.

PYONGYANG, North Korea – North Koreans marched by the thousands Monday to their capital’s landmarks to mourn Kim Jong Il, many crying uncontrollably and flailing their arms in grief over the death of their “Dear Leader.”

North Korean state media proclaimed his youngest son, Kim Jong Un, a “Great Successor,” while a vigilant world watched for any signs of a turbulent transition to the untested leader in an unpredictable nation known to be pursuing nuclear weapons.

South Korea’s military went on high alert in the face of the North’s 1.2 million-strong armed forces following news of Kim’s death after 17 years in power. North Korea said Kim died of a heart attack on Saturday while carrying out official duties on a train trip. President Barack Obama agreed by phone with South Korean President Lee Myung-bak to closely monitor developments.

On the streets of the North Korean capital, Pyongyang, people wailed in grief, some kneeling on the ground or bowing repeatedly. Children and adults laid flowers at key memorials.

A tearful Kim Yong Ho said Kim Jong Il had made people’s lives happier. “That is what he was doing when he died: working, traveling on a train,” he said.

Other North Koreans walked past a giant painting of Kim Jong Il and his late father, national founder Kim Il Sung, standing together on Mount Paektu, Kim Jong Il’s official birthplace. Wreaths were neatly placed below the painting.

“How could the heavens be so cruel? Please come back, general. We cannot believe you’re gone,” Hong Son Ok shouted, her body shaking wildly during an interview with North Korea’s official television.

A foreigner who teaches at a university in Pyongyang told The Associated Press that students told about Kim’s death looked very serious but didn’t show any outward emotion.

“There was a blanket of silence,” said the teacher, who spoke on condition of anonymity because of worries about his security. “People were going about their business. Lots of people were lining up to lay flowers at official portraits. People looked a little stunned and very serious, but composed and respectful.”

“He passed away too suddenly to our profound regret,” said a statement carried by the North’s official Korean Central News Agency. “The heart of Kim Jong Il stopped beating, but his noble and august name and benevolent image will always be remembered by our army and people.”

He was 69, according to official records, though some reports indicate he was 70.

North Korean state media fell short of calling Kim Jong Un the country’s next leader, but gave clear indications that Kim Jong Il’s third son, who is believed to be in his late 20s, would succeed his father.

The North said in a dispatch that the people and the military “have pledged to uphold the leadership of comrade Kim Jong Un” and called him a “Great Successor” of the country’s revolutionary philosophy of juche, or self reliance.

The death could set back efforts by the United States and others to get Pyongyang to abandon its nuclear weapons ambitions, because the untested successor may seek to avoid any perceived weakness as he moves to consolidate control.

“The situation could become extremely volatile. What the North Korean military does in the next 24-48 hours will be decisive,” said Bill Richardson, a former U.S. ambassador to the United Nations who has made several high-profile visits to North Korea.

The death comes at a sensitive time for North Korea as it prepares for next year’s 100th anniversary of the birth of Kim Il Sung. The preparations include massive construction projects throughout the city as part of Kim Jong Il’s unfulfilled promise to bring prosperity to his people.

Seoul and Washington will worry that Kim Jong Un “may feel it necessary in the future to precipitate a crisis to prove his mettle to other senior leaders,” said Bruce Klingner, an Asia analyst at The Heritage Foundation think tank in Washington.

North Korea conducted at least one short-range missile test Monday, a South Korean official said. South Korea’s military sees the firing as part of a scheduled routine drill, instead of a provocation, said the official, speaking on condition of anonymity because of a policy that bans commenting on intelligence matters.

However, Konstantin Makienko of the Moscow-based Center for Analysis of Strategies and Technologies said the test “undoubtedly is connected to the death of North Korean leader Kim Jong Il.”

“Its goal is to show the world that … the armed forces of this country now are completely battle-ready and will react to any development,” he told the Russian news agency RIA-Novosti.

North Korea conducted two nuclear tests in 2006 and 2009 and is thought to have enough plutonium for at least a half-dozen weapons. But experts doubt the North has mastered the technology needed to mount a nuclear warhead on a missile.

In Seoul, residents worried about instability in the North. A parliamentary official, Lee Kyu-yun. said he was thinking of stocking up food in case of soaring military tensions.

Lee Byung-joon, 27, feared South Korea might have to fight a war against the North if high-ranking officials challenge the inexperienced Kim Jong Un.

“I definitely think the chance of war breaking out between the South and the North is higher now than before,” Lee said.

Some analysts, however, said Kim’s death was unlikely to plunge the country into chaos because it already was preparing for a transition. Kim Jong Il indicated a year ago that Kim Jong Un would be his successor, putting him in high-ranking posts.

“There won’t be any emergencies in the North, at least in the next few months,” said Baek Seung-joo of the state-run Korea Institute for Defense Analyses in South Korea.

Another analyst said an internal power struggle could break out between Kim Jong Un and his uncle, Jang Song Thaek, who was elevated in the government last year and likely will be given a caretaker role in the new administration

“Tension will arise between Jang and Kim Jong Un, because Kim will have no choice but to share some power with Jang,” said Ryoo Kihl-jae, a professor at the University of North Korean Studies, which is in South Korea.

The North said it would place Kim’s body in the Kumsusan memorial palace in Pyongyang and that his funeral would be Dec. 28. No entertainment will be allowed during an 11-day mourning period, and the country will accept no “foreign delegations hoping to express condolences,” it said.

South Korea’s President Lee urged his people to remain calm while his Cabinet and the parliament convened emergency meetings. The Defense Ministry said the South Korean military and the 28,500 U.S. troops stationed in South Korea bolstered reconnaissance and were sharing intelligence on North Korea. Lee also talked with the leaders of Japan and Russia.

The Obama administration called Monday for a peaceful and stable leadership transition in North Korea.

The United States is still looking for better relations with the North Korean people despite the “evolving situation” there, said U.S. Secretary of State Hillary Rodham Clinton. “We both share a common interest in a peaceful and stable transition in North Korea as well as ensuring regional peace and stability,” she said.

However, U.S. officials said Kim’s passing and assumption of power of his son, Kim Jong Un, will likely delay anticipated developments on resuming nuclear disarmament talks with the North and supplying the nation with food aid.

The administration had been expected to decide on both issues this week. The officials said the U.S. was particularly concerned about any changes that Kim’s death might spark in the military postures of North and South Korea, but were hopeful that calm would prevail.

In a special broadcast Monday from the North Korean capital, state media said Kim died on a train due to a “great mental and physical strain” during a “high intensity field inspection.” It said an autopsy was done Sunday and “fully confirmed” the diagnosis. Kim suffered a stroke in 2008.

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Associated Press writers Jean H. Lee in Pyongyang, Foster Klug, Hyung-jin Kim, Sam Kim and Jiyoung Won in Seoul and Matthew Lee in Washington contributed to this report.

19 December 2011
Last updated at 16:18 ET

North Koreans are in mourning after the death of their leader, Kim Jong-il.

People wept openly on the streets of the capital, Pyongyang. State media said he had suffered a heart attack on Saturday, aged 69. He had been unwell.

The official news agency KCNA described one of his sons, Kim Jong-un, as the “great successor” whom North Koreans should unite behind.

Pyongyang’s neighbours are on alert fearing instability in the poor and isolated nuclear-armed nation.

Following news of Mr Kim’s death, South Korea put its armed forces on high alert and said the country was on a crisis footing. Japan’s government convened a special security meeting.

China – North Korea’s closest ally and biggest trading partner – expressed shock at the news of his death and pledged to continue making “active contributions to peace and stability on the Korean peninsula and in this region”.

After meeting her Japanese counterpart Koichiro Gemba, US Secretary of State Hillary Clinton said she hoped for a stable and peaceful transition in North Korea.

“We reiterate our hope for improved relations with the people of North Korea and remain deeply concerned about their well-being,” she said.

North and South Korea are still technically at war, and the US has thousands of troops stationed in South Korea and Japan.

BBC diplomatic correspondent James Robbins says Kim Jong-il’s sudden death – before the regime had completed a power transfer to his young son – has led to new uncertainties in an already jittery and heavily armed corner of the world.

Governments around the world share the nervousness of ordinary people who live within missile and artillery range of North Korea’s vast arsenal of weapons, both conventional and nuclear, our correspondent says.

Meanwhile, the UN General Assembly has overwhelmingly backed a resolution condemning human rights violations in North Korea.

The vote, scheduled before Mr Kim’s death was announced, called for an end to “systematic, widespread and grave violations”. North Korea rejected the resolution.

Asian stock markets fell after news of Mr Kim’s death was announced.

Crying aloud

Mr Kim’s death was announced in an emotional statement on national television.

The announcer, wearing black, struggled to keep back the tears as she said he had died of physical and mental over-work.

KCNA later reported that he had died of a “severe myocardial infarction along with a heart attack” at 08:30 local time on Saturday (23:30 GMT Friday).

He had been on a train at the time, for one of his “field guidance” tours, KCNA said.

The state news agency said a funeral would be held in Pyongyang on 28 December and Kim Jong-un would head the funeral committee. A period of national mourning has been declared from 17 to 29 December.

Images from inside the secretive state showed people in the streets of Pyongyang weeping at the news of his death.

Ruling party members in one North Korean county were shown by state TV banging tables and crying out loud, the AFP news agency reports.

“I can’t believe it,” a party member named as Kang Tae-Ho was quoted as saying. “How can he go like this? What are we supposed to do?”

Another, Hong Sun-Ok, said: “He tried so hard to make our lives much better and he just left like this.”

KCNA said millions of North Koreans were “engulfed in indescribable sadness”.

It said people were “convulsing with pain and despair” at their loss, but would unite behind his successor Kim Jong-un.

“All party members, military men and the public should faithfully follow the leadership of comrade Kim Jong-un and protect and further strengthen the unified front of the party, military and the public,” the news agency said.

Little is known about Kim Jong-un. He was educated in Switzerland, is aged in his late 20s and is believed to be Kim Jong-il’s third son – born to Mr Kim’s reportedly favourite wife, the late Ko Yong-hui.

Kim Jong-un was unveiled as his father’s likely successor just over a year ago. Many had expected to see this process further consolidated in 2012.

‘Turning point’

Kim Jong-il inherited the leadership of North Korea from his father Kim Il-sung.

Shortly after he came to power in 1994, a severe famine caused by ill-judged economic reforms and poor harvests left an estimated two million people dead.

His regime has been harshly criticised for human rights abuses and is internationally isolated because of its pursuit of nuclear weapons.

Under Mr Kim’s leadership, funds have been channelled to the military and in 2006 North Korea conducted its first nuclear test.

It followed that up with a second one three years later. Multinational talks aimed at disarming North Korea have been deadlocked for months.

He had reportedly been in poor health since suffering a stroke in August 2008.

16 December 2011
Last updated at 20:31 ET

The UN Security Council has lifted sanctions on Libya’s central bank and its foreign investment bank, to help the country deal with a cash crisis.

The move clears the way for the new government to unlock billions of dollars of assets held abroad.

The US and the UK followed suit shortly afterwards.

The Libyan banks’ foreign assets were frozen earlier this year as part of sanctions against former Libyan leader Col Muammar Gaddafi.

On Friday, the UN Security Council decided to lift the sanctions on the Central Bank of Libya and its investments subsidiary – the Libyan Foreign Bank.

Last Friday, the council agreed to unfreeze the assets – unless there were objections – by 17:00 local time (22:00 GMT) on 16 December. As that deadline passed, no objections had been received, the diplomats in New York said.

The UK Foreign Secretary, William Hague, said that the move “marks another significant moment in Libya’s transition”.

“It means that Libya’s government will now have full access to the significant funds needed to help rebuild the country, to underpin stability and to ensure that Libyans can make the transactions that are essential to everyday life,” Mr Hague said in a statement.

He added that London would now free some £6.5bn ($10bn) held in Britain.

US Defence Secretary Leon Panetta is due to make a visit to Libya on Saturday.

Libyan ‘responsibility’

Following the UN decision, the White House said in a statement that “the United States rolled back most US sanctions on the government of Libya to keep our commitment to the Libyan people”.

The US Treasury said that it would “allow for the release of more than $30bn in blocked central bank and LAFB (Libyan Arab Foreign Bank) assets.

“The Libyan government now has the ability and responsibility to manage these funds,” the Treasury said.

The interim government in Tripoli has recently stepped up calls for the release of some $150bn (£96bn) held abroad to pay employee salaries and keep the country’s basis services running.

Some sanctions were eased after the fall Col Gaddafi’s regime, but the process of releasing the bulk of the money has been very slow for legal and technical reasons, the BBC’s Barbara Plett in New York reports.

Diplomats say that is because of uncertainty in the countries holding the assets as to who legally owns the funds, and whether the Libyan leadership is united enough to be trusted with the cash, our correspondent adds.

The UN Security Council imposed sanctions on Col Gaddafi’s regime in February. They included an arms embargo and asset freeze.

In August – following the fall of the regime – the UN agreed to unfreeze Libyan dinars worth about $1.5bn (£950m) being held in UK banks.

At about the same time the UN agreed to a US request to unblock $1.5bn in frozen Libyan assets.

The uprising virtually shut Libya’s oil industry, and exports only resumed in September.

Officials say they expect crude oil output to return to normal levels of around 1.6m barrels per day by the end of 2012.

WASHINGTON – Racing for the exits after a year of bitter battling, senators are voting on compromise legislation to extend a Social Security payroll tax cut and jobless benefits for just two months, setting the table for more fighting in February.

Top Democratic and GOP leaders opted for just a short extension after failing to agree on spending reductions large enough to cover a full year renewal of the 2 percentage point tax cut for 160,000 workers and weekly jobless payments averaging about $300 for millions of people who have been out of work for six months or more.

The legislation is a partial victory at best for President Barack Obama, who’s being forced to accept Republican demands for a swift decision on the fate of a Canada-to-Texas oil pipeline that promises thousands of jobs.

Votes were slated for Saturday morning on the measure, along with a final tally to send a $1 trillion-plus catchall spending measure setting the day-to-day budgets of 10 Cabinet agencies. The House cleared the spending bill Friday and will return early next week to vote on the payroll tax measure.

In a statement, White House communications director Dan Pfeiffer indicated Obama would sign the measure, saying it had met his test of “preventing a tax increase on 160 million hardworking Americans” and avoiding damage to the economy recovery.

The statement made no mention of the pipeline. One senior administration official said the president would almost certainly refuse to grant a permit. The official was not authorized to speak publicly.

The developments came a few hours after the White House publicly backed away from Obama’s threat to veto any bill that linked the payroll tax cut extension with a Republican demand for a speedy decision on the 1,700-mile Keystone XL oil pipeline proposed from Canada to Texas Gulf Coast refineries.

Obama said on Dec. 7 that “any effort to try to tie Keystone to the payroll tax cut I will reject. So everybody should be on notice.”

Obama recently announced he was postponing a decision until after the 2012 elections on the much-studied proposal. Environmentalists oppose the project, but several unions support it, and the legislation puts the president in the uncomfortable position of having to choose between customary political allies.

Republican senators leaving a closed-door meeting put the price tag of the two-month package at between $30 billion and $40 billion said the cost would be covered by raising fees on new mortgages backed by Fannie Mae and Freddie Mac.

The fees, drawn from a Treasury Department housing finance market reform plan, could add several thousand dollars to the 30-year cost of Fannie- and Freddie-backed mortgages. A worker making a $100,000 salary would reap a tax cut of about $330 through the short-term payroll tax extension.

Just hours before the vote, the legislation had not been made public.

The measure would also provide a 60-day reprieve from a scheduled 27 percent cut in the fees paid to doctors who treat Medicare patients.

Several officials said it would require a decision within 60 days on the pipeline, with the president required to authorize construction unless he determined that would not be in the national interest.

Officials said that in private talks, the two sides had hoped to reach agreement on the full one-year extension of the payroll tax cut and unemployment benefits that Obama had made the centerpiece of the jobs program he submitted to Congress last fall.

Those efforts failed when the two sides could not agree on enough offsetting cuts to blunt the measure’s impact on the debt.

The failure tees up the issue again for early next year, but it won’t get any easier to agree on spending cuts.

“We’ll be back discussing the same issues in a couple of months, but from our point of view, we think the keystone pipeline is a very important job-creating measure in the private sector that doesn’t cost the government a penny,” said Sen. Mitch McConnell of Kentucky, the Republican leader.

There was no immediate reaction from House Speaker John Boehner, R-Ohio. Neither he nor his aides participated in the negotiations, although McConnell said he was optimistic about the measure’s chances for final approval. The payroll tax cut is unpopular in GOP ranks and another vote in two month could present a headache for GOP leaders.

The State Department, in an analysis released this summer, said the project would create up to 6,000 jobs during construction, while developer TransCanada put the total at 20,000 in direct employment.

The 1,700-mile pipeline would carry oil from western Canada to Texas Gulf Coast refineries, passing through Montana, South Dakota, Nebraska, Kansas and Oklahoma.

The spending bill would lock in cuts that conservative Republicans won from the White House and Democrats earlier in the year.

Republicans also won their fight to block new federal regulations for light bulb energy efficiency, coal dust in mines and clean water permits for construction of timber roads.

The White House turned back GOP attempts to block limits on greenhouse gases, mountaintop removal mining and hazardous emissions from utility plants, industrial boilers and cement kilns.

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Associated Press writers David Espo, Alan Fram, Donna Cassata and Jim Kuhnhenn contributed to this report.