Citing Affair, Petraeus Resigns as C.I.A. Director

WASHINGTON — David H. Petraeus, the director of the Central Intelligence Agency and one of America’s most decorated four-star generals, resigned on Friday after an F.B.I. investigation uncovered evidence that he had been involved in an extramarital affair.

Mr. Petraeus issued a statement acknowledging the affair after President Obama accepted his resignation and it was announced by the C.I.A. The disclosure ended a triumphant re-election week for the president with an unfolding scandal.

Government officials said that the F.B.I. began an investigation into a “potential criminal matter” several months ago that was not focused on Mr. Petraeus. In the course of their inquiry into whether a computer used by Mr. Petraeus had been compromised, agents discovered evidence of the relationship as well as other security concerns. About two weeks ago, F.B.I. agents met with Mr. Petraeus to discuss the investigation.

Administration and Congressional officials identified the woman as Paula Broadwell, the co-author of a biography of Mr. Petraeus. Her book, “All In: The Education of General David Petraeus,” was published this year. Ms. Broadwell could not be reached for comment.

Ms. Broadwell, a graduate of the United States Military Academy at West Point, spent 15 years in the military, according to a biography that had appeared on her Web site. She spent extended periods of time with Mr. Petraeus in Afghanistan, interviewing him for her book, which grew out of a two-year research project for her doctoral dissertation and which she promoted on a high-profile tour that included an appearance on “The Daily Show With Jon Stewart.”

Married with two children, she has described Mr. Petraeus as her mentor.

Senior members of Congress were alerted to Mr. Petraeus’s impending resignation by intelligence officials about six hours before the C.I.A. announced it. One Congressional official who was briefed on the matter said that Mr. Petraeus had been encouraged “to get out in front of the issue” and resign, and that he agreed.

As for how the affair came to light, the Congressional official said that “it was portrayed to us that the F.B.I. was investigating something else and came upon him. My impression is that the F.B.I. stumbled across this.”

The Federal Bureau of Investigation did not inform the Senate and House Intelligence Committees about the inquiry until this week, according to Congressional officials, who noted that by law the panels — and especially their chairmen and ranking members — are supposed to be told about significant developments in the intelligence arena. The Senate committee plans to pursue the question of why it was not told, one official said.

The revelation of a secret inquiry into the head of the nation’s premier spy agency raised urgent questions about Mr. Petraeus’s 14-month tenure at the C.I.A. and the decision by Mr. Obama to elevate him to head the agency after leading the country’s war effort in Afghanistan. White House officials said they did not know about the affair until this week, when Mr. Petraeus informed them.

“After being married for over 37 years, I showed extremely poor judgment by engaging in an extramarital affair,” Mr. Petraeus said in his statement, expressing regret for his abrupt departure. “Such behavior is unacceptable, both as a husband and as the leader of an organization such as ours. This afternoon, the president graciously accepted my resignation.”

Mr. Petraeus’s admission and resignation represent a remarkable fall from grace for one of the most prominent figures in America’s modern military and intelligence community, a commander who helped lead the nation’s wartime activities in the decade after the Sept. 11 attacks and was credited with turning around the failing war effort in Iraq.

Mr. Petraeus almost single-handedly forced a profound evolution in the country’s military thinking and doctrine with his philosophy of counterinsurgency, focused more on protecting the civilian population than on killing enemies. More than most of his flag officer peers, he understood how to navigate Washington politics and news media, helping him rise through the ranks and obtain resources he needed, although fellow Army leaders often resented what they saw as a grasping careerism.

 Reporting was contributed by Peter Baker, Helene Cooper, Michael S. Schmidt, Eric Schmitt and Scott Shane.

This article has been revised to reflect the following correction:

Correction: November 9, 2012

An earlier version of this article incorrectly stated that David H. Petraeus was expected to remain in President Obama’s cabinet. The C.I.A. director is not a cabinet member in the Obama administration.

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Madonna fan guilty in NYC resisting arrest trial

NEW YORK (AP) — A former firefighter with a crush on Madonna has been convicted of resisting arrest outside her former New York City apartment building as he spray-painted poster boards with love notes.

A jury delivered its verdict Friday in Robert Linhart's trial. He could face up to a year in jail.

Defense lawyer Lawrence LaBrew tells the New York Post (http://bit.ly/ZgI4jl) that Linhart will appeal.

Linhart was arrested in September 2010. Police say he parked his SUV outside the singer's Manhattan apartment, laid out a tarp and wrote out such messages as "Madonna, I need you."

Jurors told the Post they felt it was fine for Linhart to express himself to the Material Girl. But they said they believed police testimony that he resisted arrest by flailing his arms.

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FEMA Chief Tours Damaged NYU Langone Medical Center

The federal government’s emergency management chief trudged through darkened subterranean hallways covered with silt and muddy water Friday, as he toured one of New York City’s top academic medical centers in the aftermath of Hurricane Sandy. The basement of the complex, NYU Langone Medical Center in Manhattan, smelled like the hold of a ship — a mixture of diesel oil and water.

“You’re going to deal with the FUD — fear, uncertainty and doubt,” W. Craig Fugate, administrator of the Federal Emergency Management Agency, told NYU Langone officials afterward, as they retreated to a conference room to catalog the losses. “Don’t look at this. Think about what’s next.”

NYU Langone, with its combination of clinical, research and academic facilities, may have been the New York City hospital that was most devastated by Hurricane Sandy. What’s next is a spectacularly expensive cleanup.

Dr. Robert I. Grossman, dean and chief executive of NYU Langone, looking pale and weary — as if he were, indeed, struggling to hold back the FUD — estimated that the storm could cost the hospital $700 million to $1 billion. His estimate included cleanup, rebuilding, lost revenue, interrupted research projects and the cost of paying employees not to work.

As the hurricane raged, the East River filled the basement of the medical center, at 32nd Street and First Avenue, knocked out emergency power and necessitated the evacuation of more than 300 patients over 13 hours in raging wind, rain and darkness. It disrupted medical school classes and shut down high-level research projects operating with federal grants.

Mr. Fugate arrived to inspect the damage and help plot the institution’s recovery, the advance guard of what aides said would be a hospital task force. He was brought in by Senator Charles E. Schumer of New York, who kept saying that there was nothing like seeing the damage firsthand to understand how profound it really was.

“What was that movie — ‘Contagion?’ ” Mr. Schumer said, marveling at the hellish scene.

NYU Langone’s patients, a major source of revenue, have been scattered to other hospitals, creating a risk that they may never return. Dr. Grossman said he was counting on those patients’ loyalty.

John Sexton, president of New York University, which includes NYU Langone, and who also met with Mr. Fugate, raised fears that researchers might be lured away to other institutions because their grants were ticking away on deadline or because they must publish or perish. Outside the hospital, tanks of liquid nitrogen testified to the efforts to keep research materials from spoiling.

In inky blackness, the group stood at the brink of the animal section of the Smilow Research Center, where rodents for experiments had been kept, but they did not go inside. On Nov. 3, a memo sent to NYU Langone researchers said the animal section, or vivarium, was “completely unrecoverable.”

Dr. Grossman said that scientists had managed to save some rodents by raising their cages to higher ground.

A modernized lecture hall with raked seats used by medical students had been filled “like a bathtub,” he said, though it was dry on Friday. The library, he said, “is basically gone.”

Four magnetic resonance scanners, a linear accelerator and gamma knife surgery equipment, kept in the basement, were now worthless. Dr. Grossman said that in the future, he wanted to move such equipment, which is very heavy, to higher floors.

Electronic medical records were protected by a server in New Jersey, he said.

Richard Cohen, vice president for facilities operations, took the group past piles of sandbags and a welded steel door that had been blown out by the force of the flood. “That door was put in around 1959 to 1960, when doors were really doors,” Mr. Cohen said. “And this thing is completely torsionally twisted. I’ve never seen anything like that.”

Walking to the back of the hospital, Mr. Cohen used a loading dock as a measuring stick to estimate that the surge had risen to 14 ½ feet. “We were prepared for 12 feet, no problem,” Dr. Grossman said.

Dr. Grossman said it would take a couple of more weeks of assessing the damage to determine when the hospital could reopen. Outpatient business is already returning. Research and some inpatient services will come next.

Mr. Fugate said his agency would help cover the uninsured losses, and urged NYU Langone officials to move ahead.

At this point, Dr. Grossman said, he could only theorize as to why the generators had shut down. All but one generator is on a high floor, but the fuel tanks are in the basement. The flood, he said, was registered by the liquid sensors on the tanks, which then did what they were supposed to do in the event, for instance, of an oil leak. They shut down the fuel to the generators.

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Black Friday Deals Will Start Earlier This Year

There was an outcry last year when some retailers opened at midnight on Thanksgiving, with workers and shoppers saying the holiday should be reserved for family, not spent lining up for the start of the Christmas shopping season.

This year, retailers are responding to the criticism by opening even earlier on Thanksgiving evening — and a handful are even planning to be open all day.

The lesson of 2011 was clear: earlier shopping hours were good for the top line. Retailers said their midnight openings drew a younger crowd who wanted to party — and shop — late rather than get up early. At Macy’s Herald Square store in Manhattan, for instance, about 9,000 people were in line as it opened, compared with 7,000 for an early Friday opening the previous year.

“We got customer feedback that says, ‘I like to shop earlier so I can go to bed earlier,’ so as we looked at the balance of being competitive in the marketplace and being customer-centric,” said Duncan Mac Naughton, chief merchandising and marketing officer for Wal-Mart, which will put its first doorbuster items on sale at 8 p.m. on Thanksgiving.

Just a few years ago, most major stores opened about 5 a.m. on the Friday after Thanksgiving, usually the busiest shopping day of the year. This year, not only are the openings scattered across two days, but several retailers are offering staggered deals — some items at a certain time, other items a few hours later, still others over the weekend.

“We had Black Friday pretty cleanly teed up, with, here are the ads, here are the stores opening Friday morning, pick a retailer and go,” said Brad Wilson, who lists Black Friday ads at BradsDeals. “Now you have this multiday affair, and you can go at different times.”

Kmart has perhaps the most confusing hours. Like last year, it will open at 6 a.m. on Thanksgiving. It will then stay open until 4 p.m., close from 4 to 8 p.m., reopen at 8, stay open until 3 a.m. on Friday, close from 3 to 5 a.m., reopen at 5, and then stay open until 11 p.m. on Friday.

Sears, which was closed on Thanksgiving last year, will open at 8 p.m. on Thursday night.

Sears Holdings, which owns both Sears and Kmart, said in a news release that customers wanted “more flexible Black Friday in-store shopping times.”

Lord & Taylor was closed last year on Thanksgiving, but this year it will be open from 10 a.m. to 7 p.m.

Walmart, which is generally open 24 hours anyway, is offering the first deals on Thanksgiving two hours earlier than last year. Mr. Mac Naughton said customer feedback and competitiveness with other retailers were factors.

Target, which last year got angry feedback from employees when it opened at midnight on Thanksgiving, this year moved it up three hours to 9 p.m., according to a holiday circular posted online on Friday.

Some workers object to Thanksgiving Day holiday openings, saying it cuts into family time. It shows “disregard for all of our families,” said Mary Pat Tifft, a Walmart employee in Kenosha, Wis., who is part of the union-backed OUR Walmart group, in a statement. But in many cases, it can also mean a higher hourly pay rate for holiday duty.

Now, the handful of retailers who are holding off until midnight on Thanksgiving suddenly look like the respectful ones.

“We believe that Thanksgiving Day is a time to spend and celebrate with family, and we want our associates to do so,” said Jim Sluzewski, a spokesman for Macy’s, which will open at midnight. Kohl’s will also open at midnight Thanksgiving, as will Best Buy, according to a circular posted online Friday.

Companies are also sprinkling sales throughout the weekend in an effort to keep traffic coming.

After its initial 8 p.m. sale, Walmart will put another set of items on sale at 10, and a third group at 5 a.m. Friday. “Whether they like to start early, stay up late, or go to bed early and get up early, we’re going to have three different events that will meet their needs,” Mr. Mac Naughton said. Then, Walmart will “kick off a weekend full of savings with more specialty offers” on items like jewelry, sewing machines and tools.

Target, after its 9 p.m. doorbuster special, will offer a free gift card for purchases made between 4 a.m. and noon on Friday, according to the circular posted on Mr. Wilson’s site and elsewhere. (Target declined to confirm the authenticity of the circular, saying it had not yet publicly announced holiday details.)

Sears will do a second wave of promotions at 4 a.m. on Friday, eight hours after it opens. Sports Authority will do some doorbusters at its midnight opening, then put numerous others on sale over the weekend. And Ace Hardware is offering different percentages or dollars off, on Friday, Saturday and Sunday.

Mr. Wilson of BradsDeals says the retailers may be intentionally trying to confuse shoppers. “They’re trying to introduce more variables,” he said, to make it harder to figure out exactly which is the best deal.

All of the twists and turns, though, may just end up frustrating consumers.

Only 6 percent of shoppers plan to hit stores on Thanksgiving night, and just under one-fifth will go to stores on Black Friday, according to a new survey from Ipsos and Offers.com, accurate within three percentage points.

At least one major retailer is going against the grain. Sam’s Club, which last year opened at 5 a.m. on Black Friday, this year is opening two hours later, at 7 a.m., and offering coffee and pastries to shoppers.

“If they want to chill out on Thanksgiving day and not go out and get into the rat race of everything, they can do that,” said Todd Harbaugh, executive vice president for operations at Sam’s Club. “Our members said they want hassle-free shopping.”

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Congress Sees Rising Urgency on Fiscal Deal

Jonathan Ernst for The New York Times

Some House Republicans said leaders like Speaker John A. Boehner, center, needed breathing room on budget talks, aides said.

WASHINGTON — Senior lawmakers said Thursday that they were moving quickly to take advantage of the postelection political atmosphere to try to strike an agreement that would avert a fiscal crisis early next year when trillions of dollars in tax increases and automatic spending cuts begin to go into force.

Senator Bob Corker, Republican of Tennessee, said he had begun circulating a draft plan to overhaul the tax code and entitlements, had met with 25 senators from both parties and “been on the phone nonstop since the election.”

Senator Olympia J. Snowe, the Maine Republican who will retire at the end of the year, made it clear that she intended to press for a deal to avert the so-called fiscal cliff and get serious on the deficit, lame duck or not.

“The message and signals we send in the coming days could bear serious consequences for this country,” she said. “It could trigger another downgrade. It could trigger a global financial crisis. This is a very consequential moment.”

Senator Charles E. Schumer of New York, the No. 3 Senate Democrat, extended an olive branch to Republicans, suggesting Thursday that he could accept a tax plan that leaves the top tax rate at 35 percent, provided that loophole closings would hit the rich, not the middle class. He previously had said that he would accept nothing short of a return to the top tax rate of Bill Clinton’s presidency, 39.6 percent.

“If you kept them at 35, it’s still much harder to do,” Mr. Schumer said, “but obviously there is push and pull, and there are going to be compromises.”

The nonpartisan Congressional Budget Office underscored the stakes in a report Thursday that framed Washington’s dilemma. It said that if automatic spending cuts go into force and all the Bush-era tax cuts expire, the nation would slip into recession next year and unemployment would rise to 9.1 percent, from October’s rate of 7.9 percent. But simply canceling those deficit-reduction measures would risk a financial crisis that would make matters worse, the report said.

The accelerated activity in Washington showed that members of Congress believed the election had amplified the imperative to strike a deal. Still, signs that the two sides are open to some compromise are no guarantee that they can reach an agreement after warring for two years. Many Republicans will continue to resist any proposal that can be read as increasing taxes, and many Democrats will balk at changes in entitlement programs and spending cuts.

Lawmakers also have a wary eye on the electoral landscape. Senator Mitch McConnell of Kentucky, the Republican leader and a crucial player in budget talks, is up for re-election in 2014 and may resist any deal that could foster opposition back home.

But members of Congress clearly see recent events creating an opening in the postelection session of Congress, when some retiring and defeated lawmakers could have a freer hand on voting for legislation, absent political consequences. Republicans were weakened by losing seats in both the House and the Senate, while Democrats are eager to move to issues like immigration, which animated Latino voters and helped deliver victory on Tuesday. “The conditions are there to act,” Mr. Corker said. “I think the environment is different now.”

Even conservative Republicans are signaling newfound flexibility. Aides said that on a conference call of House Republicans, a number of lawmakers spoke up to say they needed to give their leaders breathing room and avoid brinkmanship.

The budget office report suggested that allowing the Bush-era tax cuts to expire for households earning more than $250,000 a year — a position strenuously opposed by Congressional Republicans — would have relatively modest economic impacts, versus many of the other components of the fiscal cliff.

“House Republicans must end their intransigence on tax cuts for the very wealthy and sit down on a bipartisan basis to finish the work of this Congress,” said Representative Sander M. Levin of Michigan, the ranking Democrat on the House Ways and Means Committee.

A separate C.B.O. report released Thursday threw cold water on Republican beliefs that a simplified tax code that lowered income and payroll taxes and closed loopholes to make up for lost revenue would substantially close the deficit by boosting economic growth. Such a plan would raise about $100 billion a year by 2020, far less than Democrats say is necessary, the report said.

The forces arrayed against a budget deal remain powerful, and the gap between the parties — at least in their public postures — is wide. Liberals, backed by Senator Harry Reid of Nevada, the majority leader, say Social Security should not be part of any deal. Senator Bernie Sanders, independent of Vermont and a standard-bearer for the left, said Thursday that virtually all deficit reduction should come from tax increases on the rich, closing loopholes that have allowed profitable corporations to avoid paying any corporate income taxes and cutting military spending.

Mr. Corker said many Senate Republicans were willing to agree to a deal that raises more revenue through an overhaul of the tax code, and that additional revenue must be generated by taxation, not just economic growth. In a speech Thursday in his home state of South Carolina, Senator Lindsey Graham said that fellow Republicans should hold the line on tax rates, but that they had to accept that a reformed tax code would raise more revenues. Only then, he said, can they expect Democrats to negotiate changes to entitlement spending.

Speaker John A. Boehner, Republican of Ohio, has said he will agree only to a deal that lowers the top income tax rate from the current 35 percent, not from the top rate that is scheduled to kick in on Jan. 1, 39.6 percent. He said that additional revenue would be generated by economic growth spurred by a simpler tax code, not by higher taxes.

Spinning revenue from tax cuts like that, Mr. Schumer said, is a “Rumpelstiltskin fairy tale.”

Conservatives are not giving in.

“We will certainly face many battles in Congress in the coming months that will give us the opportunity to clearly articulate the failures of liberalism and the common sense of conservative alternatives,” Senator Jim DeMint, Republican of South Carolina, said Thursday on Facebook. “We must not shrink from the fight on Capitol Hill.”

Andrew Siddons contributed reporting.

This article has been revised to reflect the following correction:

Correction: November 9, 2012

An earlier version of this article misspelled the given name of a contributing reporter. He is Andrew Siddons, not Andrews.

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US video game sales drop 25 percent in October

NEW YORK (AP) — A research firm says U.S. retail sales of new video game hardware, software and accessories fell 25 percent in October.

The drop marks the 11th straight month of declining sales for physical game products. Many gamers are waiting for big holiday releases such as Activision Blizzard Inc.‘s “Call of Duty: Black Ops II.”

The NPD Group said Thursday that sales fell to $ 755.5 million from $ 1 billion a year earlier.

Sales of video games themselves, excluding PC titles, fell 25 percent to $ 432.6 million. Sales of hardware such as Microsoft’s Xbox 360 fell 37 percent to $ 187.3 million. Sales of accessories, meanwhile, grew 5 percent to $ 135.6 million.

NPD estimates that retail sales account for about half of all video game spending. The rest is downloads, apps and the like.

Gaming News Headlines – Yahoo! News

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Roger Waters plays with band of wounded veterans

NEW YORK (AP) — Roger Waters honored wounded veterans in New York by performing with them at the annual Stand Up for Heroes benefit, Thursday night.

The founding member of Pink Floyd took to the stage of the Beacon Theater with 14 wounded soldiers he met recently at the Walter Reed Army Medical Center in Washington, D.C. He rehearsed with them at the hospital, and for the past few days in New York.

The event benefited the Bob Woodruff Foundation, which helps returning veterans and their families, and featured Waters, Bruce Springsteen, Ricky Gervais, Robin Williams, and others.

Before the show, Waters chatted with veterans and called the experience "fantastic." He says he's "looking forward to pulling for the rest of these guys with their comrades" during the healing process.

He says that he shares "enormous empathy with the men."

"I lost my grandfather in 1916 and my father in 1944, so I've been around the sense of loss and what loss from war can do to people," Waters said.

"I never talk about the politics because it's not relevant to me. I'm not interested in it," he said. "What I am interested in is the burdens these guys bear and would never question motive or even dream of talking about any of the politics."

He added: "If any of us have a responsibility in our lives it is to tear down the walls of indifference and miscommunication between ourselves and our fellow men."

Waters said he rehearsed with many of the soldiers at the hospital in between their medical procedures. Before the show, he walked the red carpet with Staff Sgt. Robert Henline, who was not in the band. In 2007, Henline was the sole survivor of a roadside bombing north of Baghdad. As a result, he suffered burns over 38 percent of his body and his head was burned to the skull.

Henline, who fought for his life after the attack, has endured more than 40 surgeries.

Still, he maintains a sense of humor. On the open red carpet on a chilly night, Waters pushed closer to Henline for warmth.

"Get next to the burn guy. I'm good. I'm heated up," Henline joked.

No surprise. The retired soldier says he's been doing stand-up comedy for the past year and a half.

Waters performed three songs with the veterans, including the Pink Floyd classic, "Wish You Were Here."

Waters said he didn't think there would be a reunion with his former band.

"I think David (Gilmour) is retired by and large. I shouldn't speak for him. But that's the impression I get."

Waters then added: "Hey whatever. All good things come to an end."

While his mammoth tour of "The Wall" ended this summer, Waters promised the theatrical version would hit the Broadway stage in the near future.

The Bob Woodruff Foundation has supported more than 1 million veterans, service members, and their families since it began in 2008.

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John Carucci covers entertainment for The Associated Press. Follow him at —http://www.twitter.com/jcarucci_ap

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Recipes for Health: Sweet Potato and Apple Kugel — Recipes for Health

Andrew Scrivani for The New York Times

I’ve looked at a number of sweet potato kugel recipes, and experimented with this one a few times until I was satisfied with it. The trick is to bake the kugel long enough so that the sweet potato softens properly without the top drying out and browning too much. I cover the kugel during the first 45 minutes of baking to prevent this. After you uncover it, it’s important to baste the top every 5 to 10 minutes with melted butter.

 

4 eggs

Salt to taste

2 large sweet potatoes (1 3/4 to 2 pounds total), peeled and grated

2 slightly tart apples, like Gala or Braeburn, peeled, cored and grated

1 tablespoon fresh lime juice

1 tablespoon mild honey or agave nectar

3 to 4 tablespoons melted unsalted butter, as needed

 

1. Heat the oven to 375 degrees. Butter a 2-quart baking dish.

2. In a large mixing bowl, beat the eggs with salt to taste (I suggest about 1/2 teaspoon). Add the grated sweet potatoes and the apples. Pour the lime juice over the grated apples and sweet potatoes, then stir everything together. Combine the honey and 2 tablespoons of the melted butter and stir together, then toss with the sweet potato mixture and combine well.

3. Transfer the mixture to the prepared baking dish. Cover the dish tightly with foil and place in the oven. Bake 45 minutes. Remove the foil and brush the top of the kugel with melted butter. Return to the oven and bake for another 15 to 20 minutes or longer, brushing every 5 minutes with butter. The kugel is ready when the edges are browned, the top is browned in spots and the mixture is set. Remove from the heat and allow to cool for 10 to 15 minutes before serving.

Yield: 8 servings.

Advance preparation: You can make this a day ahead and reheat in a medium oven.

Nutritional information per serving (6 servings): 187 calories; 7 grams fat; 4 grams saturated fat; 1 gram polyunsaturated fat; 2 grams monounsaturated fat; 104 milligrams cholesterol; 28 grams carbohydrates; 4 grams dietary fiber; 91 milligrams sodium (does not include salt to taste); 5 grams protein

Martha Rose Shulman is the author of “The Very Best of Recipes for Health.”

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Debt Ceiling Complicates a Tax Shift

WASHINGTON — Come January, should Congress fail to act, the United States will face more than immense tax increases and spending cuts. It will also run out of room to finance its large running deficits.

The Treasury Department expects the country to hit its debt ceiling, a legal limit on the amount the government is allowed to borrow, close to the end of the year. That would give Congress only a matter of weeks to raise the ceiling, now about $16.4 trillion, before sending financial markets into a panic.

Congressional leaders have made clear that the debt ceiling will be part of the intense negotiations over the so-called fiscal cliff, with many members unwilling to raise the ceiling without a broader deal. That has raised financial analysts’ worries of a financial market panic over the ceiling in addition to the slow bleed of the tax increases and spending cuts.

Congressional action is required to raise the debt limit. The Treasury can jostle payments for a few months. But expenses will eventually overwhelm revenue, putting the administration in the position of choosing which bills to pay. It might stop paying soldiers, for instance, or sending Social Security payments.

In 2011, Congressional Republicans would not raise the debt ceiling without a broader agreement to cut the country’s deficit and set it on a better fiscal path. The impasse over finding spending cuts and tax increases to do that led to the creation of the spending cuts on Jan. 1, the same time the Bush-era tax cuts were set to expire.

The threat that the country might not pay all its bills caused a slump in financial markets and led in August 2011 to the first downgrade of the nation’s credit rating. It left broader economic scars, too. Many economists contend it hurt economic growth and jobs.

A July report by the Government Accountability Office found that the delay in raising the debt limit increased the country’s borrowing costs by about $1.3 billion in the 2011 fiscal year. “However, this does not account for the multiyear effects on increased costs for Treasury securities that will remain outstanding after fiscal year 2011,” the report noted, adding that the debt-limit fight diverted Treasury’s time and resources from other priorities.

This year, Congress will have time to negotiate a broader debt deal before needing to raise the ceiling, even if negotiations spill into January. But the ceiling will be a card in the complex political game that the White House, Senate Democrats and Congressional Republicans are playing.

Much as Democrats see President Obama’s veto threat over an extension of the Bush-era tax cuts for the highest earners as leverage over Republicans, some Republicans see the need to raise the debt ceiling as leverage over the White House, Republican aides said.

Even if the stakes do not get that high, both parties view lifting the debt ceiling as part of the fiscal-cliff negotiations, and they do not expect Congress to raise it outside of a broader deal.

“Resolving the issues surrounding the fiscal cliff, especially the replacement of the sequester, and the next debt limit increase (likely necessary in February) will require that the president get serious about real entitlement reform,” Representative Eric Cantor of Virginia, the House majority leader, said in a letter to conservatives this week, as printed on The Hill Web site.

That has Democrats warning Republicans not to risk the country’s credit rating and broader financial stability again.

“They tried it before: ‘We’re going to shut down the government. We’re not going to raise the debt limit,’ ” Senator Harry Reid of Nevada, the majority leader, told reporters this week. “They want to go through that again? Fine, but we’re not going to be held subject to something that was done as a matter of fact in all previous administrations.”

Economists have warned that the political posturing over the debt ceiling has enormously dangerous economic consequences — even more so than last year, given the threat of huge tax increases and spending cuts hitting households at the same time.

On Wall Street, analysts have tended to use terms like “apocalypse” and “global catastrophe” to describe what might happen should Congress not lift the ceiling.

This week, Fitch, the credit rating agency, threatened a downgrade to the nation’s credit rating if Congress cannot find a timely resolution.

“Failure to reach even a temporary arrangement to prevent the full range of tax increases and spending cuts implied by the fiscal cliff and a repeat of the August 2011 debt ceiling episode would mean that the general election had not resolved the political gridlock in Washington and likely result in a sovereign rating downgrade by Fitch,” analysts at the agency said in a statement on Wednesday.

HSBC analysts this week warned clients of “echoes of 2011” in the uncertainty and market volatility the ceiling might cause.

And economists at the International Monetary Fund cautioned that the unstable situation in the United States might have international ripple effects.

“For now, a lack of political agreement keeps uncertainty about the fiscal road map unresolved,” the fund said in a global risk assessment. “Although bond yields remain low, when contentious political decisions — such as raising the debt ceiling — have come due in the past, uncertainty about the outcome led to unfavorable market reactions.”

But other analysts said they would be surprised if the debate over the ceiling became the debacle it did last year. Many Congressional aides said neither side had any interest in causing market panic for political gain.

“Markets are now starting to become the disciplinarians,” said Diane Swonk, chief economist at Mesirow Financial in Chicago. “C.E.O.’s are finally stepping up to the plate and saying, ‘Excuse me, we can’t do this.’ And that puts political donations and jobs on the line.”

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President Obama Begins Work on Second Term

Newly re-elected, President Obama moved quickly on Wednesday to open negotiations with Congressional Republican leaders over the main unfinished business of his term — a major deficit-reduction deal to avert a looming fiscal crisis — as he began preparing for a second term that will include significant cabinet changes.

Jewel Samad/Agence France-Presse — Getty Images

The Obamas landed at Andrews Air Force Base in Maryland. More Photos »

Mr. Obama, while still at home in Chicago at midday, called Speaker John A. Boehner in what was described as a brief and cordial exchange on the need to reach some budget compromise in the lame-duck session of Congress starting next week. Later at the Capitol, Mr. Boehner publicly responded before assembled reporters with his most explicit and conciliatory offer to date on Republicans’ willingness to raise tax revenues, but not top rates, together with a spending cut package.

“Mr. President, this is your moment,” said Mr. Boehner, a day after Congressional Republicans suffered election losses but kept their House majority. “We’re ready to be led — not as Democrats or Republicans, but as Americans. We want you to lead, not as a liberal or a conservative, but as president of the United States of America.”

His statement came a few hours after Senator Harry Reid, leader of a Democratic Senate majority that made unexpected gains, extended his own olive branch to the opposition. While saying that Democrats would not be pushed around, Mr. Reid, a former boxer, added, “It’s better to dance than to fight.”

Both men’s remarks followed Mr. Obama’s own overture in his victory speech after midnight on Wednesday. “In the coming weeks and months,” he said, “I am looking forward to reaching out and working with leaders of both parties to meet the challenges we can only solve together: reducing our deficit, reforming our tax code, fixing our immigration system, freeing ourselves from foreign oil.”

After his speech, Mr. Obama tried to call both Mr. Boehner and the Senate Republican leader, Mitch McConnell, but was told they were asleep. The efforts from both sides, after a long and exhausting campaign, suggested the urgency of acting in the few weeks before roughly $700 billion in automatic tax increases and across-the-board spending cuts take effect at year’s end — the “fiscal cliff.” A failure to reach agreement could arrest the economic recovery.

Corporate America and financial markets for months have been dreading the prospect of a partisan impasse. Stocks fell on Wednesday, with the Standard & Poor’s 500 Index closing down 2.4 percent. The reasons for the drop were unclear, given that stock futures did not drop significantly on Tuesday night as the election results became clear. Analysts cited fears about the economic impact of such big federal spending cuts and tax increases, but also about new economic troubles in Europe.

While Mr. Obama enters the next fray with heightened leverage, both sides agree, the coming negotiations hold big risks for both parties and for the president’s ability to pursue other priorities in a new term, like investments in education and research, and an overhaul of immigration law.

The president flew back to Washington from Chicago late on Wednesday, his post-election relief reflected in a playful race up the steps of Air Force One with his younger daughter, Sasha. At the White House, he prepared to shake up his staff to help him tackle daunting economic and international challenges. He will study lists of candidates for various positions that a senior adviser, Pete Rouse, assembled in recent weeks as Mr. Obama crisscrossed the country campaigning.

The most prominent members of his cabinet will leave soon. Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy F. Geithner long ago said they would depart after the first term, and Defense Secretary Leon E. Panetta, previously the head of the Central Intelligence Agency, has signaled that he wants to return to California in the coming year. Also expected to depart is David Plouffe, one of the president’s closest confidants.

Mr. Obama is expected to reshuffle both his inner circle and his economic team as he accommodates the changes. For example, Jacob J. Lew, Mr. Obama’s current White House chief of staff and former budget director, is said to be a prime candidate to become Treasury secretary. For the foreseeable future, the holder of that job is likely to be at the center of budget negotiations, and Mr. Lew has experience in such bargaining dating to his work as a senior adviser to Congressional Democrats 30 years ago in bipartisan talks with President Ronald Reagan.

“They’ve been thinking about this for some time and they’re going to have a lot of positions to fill at the highest levels,” said former Senator Tom Daschle, who has close ties to the White House.

Jonathan Weisman contributed reporting.

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