Bargains disappearing for distressed properties, Zillow says

Bargains on bank-owned homes are quickly vanishing in the country's most competitive markets.

Since the start of the mortgage meltdown, repossessed homes have been considered the discount aisles of real estate. Now competition among investors and first-time home buyers for affordable digs is making those distressed properties less affordable, a new analysis by Zillow.com shows.

"They will get somewhat of a deal, depending on the market," Zillow chief economist Stan Humphries said. "But, just generally, you are going to get less of a deal today than you would have gotten in late 2009 or early 2010."

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The shrinking discounts underscore how real estate has recovered this year as low interest rates and high affordability have sucked buyers back into the market. The number of for-sale homes has also fallen to levels not seen since the housing boom as foreclosures ease and homeowners — many who still owe more on their properties than they are worth — hold off on listing their houses for sale.

Zillow looked at sale prices of bank-owned homes and used a model to determine what that property would have brought if it had not been sold by a bank. In Las Vegas and Phoenix, for instance, a foreclosed home in September sold for the same price as a regular property.

Discounts were also marginal on bank-owned homes in the Inland Empire and the Sacramento region, 1.8% and 0.7%, respectively, according to the analysis. Both of these areas have grown increasingly competitive after being savaged by the housing bust. In the Los Angeles area, the foreclosure discount was 4.2% in September, Zillow said.

Certain Midwest and East Coast cities appeared to have the biggest foreclosure discounts. The Pittsburgh area had a discount of 27.4%, with Cleveland at 25.8%, Cincinnati 20.2% and Baltimore 20%.

Analysts figured the national foreclosure discount at just 7.7%. That's a big difference from the dog days of the housing bust, when people snapping up foreclosures could expect a discount of 23.7%, Zillow said.

Home shoppers looking for dime-store values now face a frustrating hunt. Gary K. Kruger, a real estate agent in Hemet, has seen buyers consistently bid on homes above the asking price and still struggle to make deals. One of his clients, a first-time buyer looking for a home in Vista, has bid on three properties — one a regular sale, one a bank-owned home and one a short sale — and lost each time.

Properties that are good for rentals or first-time buyers, along with properties priced in the lower-end of the move-up market, are "very, very hot," Kruger said.

"I have not had a successful person purchase a foreclosed home that was not an investor for months," he said. "Things are selling so quickly."

The story is similar in the Las Vegas region, said Keith Lynam, a real estate agent and chairman of the Nevada Assn. of Realtors' legislative committee. The number of foreclosed homes on the market in the Las Vegas area has dwindled to less than 300, compared with about 7,000 at its peak, Lynam said.

One of his clients, a potential buyer with a sizable down payment, has made half a dozen unsuccessful offers in the last six months.

"There is just zero inventory," Lynam said.

Experts are also revisiting the notion that foreclosed homes really drag down property values. A working paper by the Federal Reserve Bank of Atlanta published in August found that although the homes of troubled borrowers did drag down values of surrounding homes, the effects were small.

That paper also found that the worst declines occurred before the home was repossessed, indicating that the declines stemmed from people abandoning their homes or letting them fall into disrepair.

Sean O'Toole, a real estate investor and founder of the website ForeclosureRadar.com, agreed with the Zillow analysis. Previous studies failed to take into account the nature of most foreclosures and their geography, he said. Typically, and particularly during the last five years, foreclosures have been concentrated in more traditionally affordable areas. So comparing the median home price of all foreclosed homes during the bust with the median home price of non-foreclosed homes results in an apple-to-oranges comparison, he said.

"The results that Zillow got make perfect sense to me, because there is actually more demand for REO and foreclosures, because people believe they are a deal," O'Toole said, using shorthand for the term "real estate owned," which is how banks refer to the properties on their books. "There is more demand for those."

Michael Novak-Smith, a real estate agent in the Riverside area who specializes in listing foreclosures for banks, said the market has reached a frenzy few would have expected so soon after the bust. One bank-owned home he listed about two weeks ago in Fontana for $145,000 attracted 157 offers. The seller took an all-cash offer.

"That is really telling, because a lot of these buyers think they'll just go out and get a repo," Novak-Smith said. "But buyers need to come in strong with their best offers, because you will get beat right out. An entry-level house with 157 offers? That's just mind-boggling to me."

alejandro.lazo@latimes.com

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Expert Witness Dinged $300,000 for Making Fake Child Porn

An Ohio lawyer who serves as an expert witness in child pornography cases is on the hook for $300,000 in civil damages for Photoshopping courtroom exhibits of children having sex, a federal appeals court ruled Friday.

Attorney Dean Boland purchased innocent pictures of two juvenile girls from a Canadian stock-image website, then digitally modified them to make it appear as if the children were engaged in sexual conduct.

Boland was an expert witness for the defense in a half-dozen child porn cases and made the mock-ups to punctuate his argument that child pornography laws are unconstitutionally overbroad because they could apply to faked photos.

As a result, in 2007 he found himself the defendant in a deferred federal child-porn prosecution in Ohio, even though his exhibits helped clear at least one client of child-porn-related allegations. Now, a federal appeals court is upholding a $300,000 verdict in a lawsuit brought by the parents of two of the girls whose images Boland doctored.

“This $300,000 award undoubtedly amounts to tough medicine for Boland,” the 6th U.S. Circuit Court of Appeals ruled (.pdf) Friday. “When he created morphed images, he intended to help criminal defendants, not harm innocent children. Yet his actions did harm children, and Congress has shown that it ‘means business’ in addressing this problem by creating sizeable damages awards for victims of this conduct.”

Boland, a former state prosecutor, transformed a picture of a 5-year-old girl eating a doughnut into one of her having oral sex. Another photo was of a 6-year-old girl’s face placed on the body of an adult woman having sex with two men. He purchased the pictures from iStockPhoto, according to court records, and morphed them to help child porn defendants make a nuanced legal defense.

The parents of the children, who were not named in the case, lodged the complaint (.pdf) against him in 2007 after learning of the photo morphing from the FBI. Under the 1986 Child Abuse Victims Rights Act, each victim is entitled to a minimum $150,000 in damages.

Boland argued that he was immune from such a lawsuit because, among other reasons, he’d created the images for use in court, never distributed them, and that the First Amendment protected him.

But the court ruled that it was immaterial that Boland never displayed the images outside of court and never transmitted them electronically.

“The creation and initial publication of the images itself harmed Jane Doe and Jane Roe, and that is enough to remove Boland’s actions from the protections of the First Amendment,” the appeals court ruled.

The law under which the parents sued demands proof that the girls suffered “personal injury.” But Boland argued that the children didn’t know about the pictures, a point the appeals court said was immaterial.

“Even if Doe and Roe never see the images, the specter of pornographic images will cause them ‘continuing harm by haunting [them] in years to come,” the appeals court said.

Boland’s morphing was to help those caught possessing child pornography make a nuanced legal defense. Child-porn laws prohibit “knowingly” accessing child pornography. The morphed images were a bid to demonstrate that the law violated the First Amendment on “vagueness and over-breadth grounds,” because a defendant could not know whether what he was viewing was an actual or virtual image of a child having sex.

Boland did not immediately respond for comment.

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“Lincoln” Reviews: Is Steven Spielberg’s biopic Oscar-worthy?

LOS ANGELES (TheWrap.com) – “Lincoln,” with a cast of acting titans like Daniel Day-Lewis and Tommy Lee Jones, arrives in theaters Friday with many predicting big things come Oscar night. But does Steven Spielberg‘s biopic of the Great Emancipator live up to the early hype?

Based on initial reviews, it seems like Spielberg and company have delivered. Critics are raving about Day-Lewis’ performance and crediting the film with taking a historical figure who is cloaked in myth and making him relatable and sympathetically human. Instead of uncoiling a birth-through-death chronology of Father Abraham, “Lincoln” narrows its gaze to a few key months in 1865 when the president was trying to simultaneously end the Civil War and pass an amendment abolishing slavery.

The film, which will expand nationally next week after opening in limited release this weekend, scored a bullish 92 percent “fresh” rating on critics aggregator Rotten Tomatoes.

In TheWrap, Alonso Duralde lavished praise on the film and its literate script from Pulitzer Prize winner Tony Kushner for finding the man behind the monument. His one bone of contention was not with the film itself but with its gauzy ad campaign.

“The dreadful trailer makes ‘Lincoln‘ look like an awful collection of Spielbergian excesses, including swelling John Williams moments (admittedly, there are one or two) and Janusz Kaminski’s honey-baked lighting (OK, granted, it appears, but not too often), not to mention Tommy Lee Jones‘ terrible wig (which actually winds up being organic in his memorable turn as Thaddeus Stevens),” Duralde writes. “Don’t let the marketing campaign keep you from seeing one of the best American movies this year, and Spielberg’s finest work in decades.”

Perhaps no critical enthusiasm could match that of A.O. Scott. In a glowing review in The New York Times, Scott sounds the trumpets for Spielberg’s epic, urging parents to bundle their children into the local multiplex to see history unfurl across the screen.

“Some of the ambition of ‘Lincoln‘ seems to be to answer the omissions and distortions of the cinematic past, represented by great films like D. W. Griffith‘s ‘Birth of a Nation,’ which glorified the violent disenfranchisement of African-Americans as a heroic second founding, and ‘Gone With the Wind,’ with its romantic view of the old South,” Scott writes. “To paraphrase what Woodrow Wilson said of Griffith, Mr. Spielberg writes history with lightning.”

For Kenneth Turan, the greatness of the film lies in its understatedness. Writing in the Los Angeles Times, he lauded Spielberg for abandoning his more bombastic impulses to focus on the interior life of an American president.

“There is nothing bravura or overly emotional about Spielberg’s direction here, but the impeccable filmmaking is no less impressive for being quiet and to the point,” Turan writes. “The director delivers selfless, pulled-back satisfactions: he’s there in service of the script and the acting, to enhance the spoken word rather than burnish his reputation.”

It’s an “A,” declares Entertainment Weekly’s Owen Gleiberman, who hails the film for getting its hands dirty while depicting the sausage-making of politics.

“The Lincoln we see here is that rare movie creature, a heroic thinker,” he writes. “He has the serpentine intellect of a master lawyer, infused with a poet’s passion. ‘Lincoln’ brilliantly dramatizes the delicacy of politics, along with the raw brutality of it.”

In New York magazine, David Edelstein savored the film, but admitted that a few moments could have gone down more smoothly. In particular, he said the film’s initial scenes suffered from musty dialogue and some of the political wrangling it depicted was difficult to follow. Ultimately, however, he credited the picture with finding a fresh take on a president whose legacy has been dissected and debated for generations.

“By the time the movie ends, you don’t feel as if you know Lincoln – few, in his own time, claimed to know him,” Edelstein writes. “But you feel as if you know what it was like to be in his presence. And so an icon (it’s a measure of how promiscuously that word is thrown around that it seems inadequate for one of history’s truly iconic figures) has become a man – and, startlingly, within reach.”

There were a few critics, of course, who were not ready to endorse “Lincoln.” In the Newark Star-Ledger, Stephen Whitty slammed the movie for choking on its own self-serious and mocked it for too many scenes of intense debates held by men with copious facial hair.

“So if you’ve been sitting around wondering, ‘Gee, when is Spielberg ever going to make another ‘Amistad?’ ’ here’s your answer,” Whitty writes.

Apparently, Whitty would prefer another “Jaws.”

Movies News Headlines – Yahoo! News

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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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Prop. 30 win gives Jerry Brown major boost

SACRAMENTO — Just a few weeks ago, as support for Gov. Jerry Brown's tax initiative appeared to falter, some of his fellow Democrats were saying privately that he might be serving his last term.

None of them are saying that now.

Brown has emerged from his successful tax fight with replenished political capital, his experience and instinct trumping conventional wisdom.

"His standing in the Capitol is probably higher than it has ever been," said Tony Quinn, co-editor of the California Target Book, which monitors political races. "Now we have a strong governor.... He is going to be able to get his way a lot more."

A loss at the ballot box would have been catastrophic for Brown politically. It also would have devastated education budgets throughout the state. The passage of Proposition 30 addressed both scenarios.

Now, the Democrats who won record-high numbers in the Legislature on Tuesday will owe him for the billions of dollars they'll have to balance the budget. The business interests who fear what a supermajority of Democrats might do with new, unilateral power will be eager to work with the moderate governor. They may see the pragmatic Brown as a check on a hostile Legislature.

Brown himself is already talking about the next steps in the state's bullet-train program and about moving on a multibillion-dollar system to send more water from the Sacramento-San Joaquin River Delta to Southern California — projects that could reshape his image into one of a builder like his father, who was governor when the state built new freeways and universities.

He wants to focus on enduring changes to the state's spending policies that he hopes will enhance California's standing with Wall Street and put it on more stable financial footing.

He is vowing to steer the Capitol toward moderation in the coming years, working with business leaders to streamline state regulations that they complain hamper economic growth. He wants to lift some of the policies Sacramento has inflicted on local schools — often at the behest of the Democrats' labor allies — so they have more flexibility in deciding how to operate.

"The work is never done," Brown said at a Capitol news conference after the election, stressing that he would not lose sight of the nuts and bolts of government just because the financial books would be in order for now.

He joked at the Capitol on Wednesday that he never understood why there were so many doubters of his ability to pull off a Proposition 30 victory.

"Some people began to read tea leaves incorrectly," Brown told reporters. "And then you all go off like a herd of buffalo down the road. Hopefully you're all now back on the plane of common sense."

Brown's internal polls had shown steady support for his measure despite public surveys suggesting steep drops. He was watching a surge in Democrats signing up to vote, spurred by the new online voter registration system he signed into law. Unions were mobilizing to get voters to the polls.

The governor also knew he could ride the coattails of President Obama, who appealed to the same demographic group as Proposition 30 and has been consistently popular in California.

Still, the path to victory had looked rocky as election day loomed. As in his 2010 gubernatorial campaign, he had resisted pressure from old Capitol hands to mobilize all his forces quickly. He ignored advice to hit the stump early and hard, to hammer away at this theme or that, to blitz the airwaves from the beginning.

Unfavorable reviews of Brown's encore as governor began to mount. Brown had vastly more campaign money than his opponents, but No-on-30 ads blanketed the airwaves, helped by $11 million that secret donors gave a group devoted partly to defeating Brown's measure.

He tweaked his strategy after questioning employees at a San Diego coffee shop. When one young woman told him she hadn't seen his commercials because she doesn't watch TV, he called his chief advisor, his wife, Anne Gust Brown, to say they needed to reach the "non-TV voter."

Only days away from the election, he had not settled on whether he should be featured prominently in campaign advertisements. On a plane, in the air between Bakersfield and Fresno, he drilled a Central Valley state senator about how voters viewed him there and whether his face should appear on their television sets.

"If this had gone the other way, he would be perceived as a lame duck," said Sherry Bebitch Jeffe, a professor in the USC Price School of Public Policy. "You would have seen a lot more visible activity on the part of … possible opponents in the 2014 governor's race."

Lt. Gov. Gavin Newsom, a fellow Democrat, appeared to be positioning himself that way when he openly contradicted some of what Brown said on the campaign trail. As it became clear in the wee hours Wednesday that Proposition 30 would pass, Brown's press secretary had a message for Newsom in the form of a tweet.

It was a link to Elvis Presley performing "Are You Lonesome Tonight?"

evan.halper@latimes.com

anthony.york@latimes.com

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A Google-a-Day Puzzle for Nov. 9

Our good friends at Google run a daily puzzle challenge and asked us to help get them out to the geeky masses. Each day’s puzzle will task your googling skills a little more, leading you to Google mastery. Each morning at 12:01 a.m. Eastern time you’ll see a new puzzle posted here.

SPOILER WARNING:
We leave the comments on so people can work together to find the answer. As such, if you want to figure it out all by yourself, DON’T READ THE COMMENTS!

Also, with the knowledge that because others may publish their answers before you do, if you want to be able to search for information without accidentally seeing the answer somewhere, you can use the Google-a-Day site’s search tool, which will automatically filter out published answers, to give you a spoiler-free experience.

And now, without further ado, we give you…

TODAY’S PUZZLE:

Note: Ad-blocking software may prevent display of the puzzle widget.

Ken is a husband and father from the San Francisco Bay Area, where he works as a civil engineer. He also wrote the NYT bestselling book "Geek Dad: Awesomely Geeky Projects for Dads and Kids to Share."

Read more by Ken Denmead

Follow @fitzwillie and @wiredgeekdad on Twitter.

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“Twilight” fans camp out days ahead of “Breaking Dawn-Part 2″

LOS ANGELES (Reuters) – Dozens of excited “Twilight” fans set up tents in Los Angeles on Thursday ahead of next week’s world premiere of the last film in the vampire romance franchise.

Some 2,200 people from all over the world have registered to camp on a concrete plaza outside a downtown Los Angeles movie theater, movie studio Summit Entertainment said.

The fans – most of them young women – will get guaranteed spots to see stars Kristen Stewart, Robert Pattinson and Taylor Lautner walk the red carpet for the November 12 premiere of “The Twilight Saga: Breaking Dawn – Part 2.”

Summit has laid on special activities during the five day wait, including a marathon screening of the four other films in the blockbuster franchise, surprise appearances from some cast members, and a “Twilight”-themed workout.

“We figured it was a once in a lifetime opportunity for some of us. This is the last movie. We’re never going to get to do it again and we wanted to hang out with some of our friends for the last one,” Bri-Anne Glover told Reuters Television as she settled in at the camp on Thursday.

“I love ‘Breaking Dawn’ because that’s kind of where I am in my life. I’ve got the husband, I’ve got my children, and we’re getting on with our lives and having a happy life and the same with Edward and Jacob and Bella,” said fan Eryka Bradford.

The “Twilight” books by author Stephenie Meyer have been a publishing sensation and the four movies have made more than $ 2.5 billion combined at box offices worldwide.

The final film sees the bliss of newlyweds Bella (Stewart) and Edward (Pattinson) and their daughter threatened by an ancient vampire coven.

“The Twilight Saga: Breaking Dawn – Part 2″ opens in several European countries on November 14 and arrives in U.S. movie theaters on November 16.

(Reporting by Lindsay Claiborn, editing by Jill Serjeant)

Movies News Headlines – Yahoo! News

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States Rush to Meet Tight Health Care Deadlines

Jim Lo Scalzo/European Pressphoto Agency

Supporters of President Obama’s Affordable Care Act celebrated at the Supreme Court in June after the justices upheld the law.

After nearly three years of legal and political threats that kept President Obama’s health care law in a constant state of uncertainty, his re-election on Tuesday all but guarantees that the historic legislation will survive.

Now comes another big hurdle: making it work.

The election came just 10 days before a critical deadline for states in carrying out the law, and many that were waiting for the outcome must now hustle to comply. Such efforts will coincide with epic negotiations between Mr. Obama and Congress over federal spending and taxes, where the administration will inevitably face pressure to scale back some of the costliest provisions of the law.

Mr. Obama faces crucial choices about strategy that could determine the success of the health care overhaul: Will the administration, for example, try to address the concerns of insurers, employers and some consumer groups who worry that the law’s requirements could increase premiums? Or will it insist on the stringent standards favored by liberal policy advocates inside and outside the government?

But for now — with Democrats retaining control of the Senate and Mitt Romney’s vow to “repeal and replace” the law no longer a threat — supporters are exulting.

“For our district and for our country, the debate on Obamacare is over,” declared Bill Foster, a Democrat elected Tuesday to the House from a suburban Chicago district.

Many supporters feel one of Mr. Obama’s most important tasks will be to step up efforts to promote and explain the law to a public that remains sharply divided and confused about it. In exit polls on Tuesday, nearly half of voters said the law should be either partly or fully repealed.

“There is still a tremendous amount of disinformation out there,” said Jeff Goldsmith, a health industry analyst based in Virginia. “If you actually are going to implement this law, people need to know what’s in it — not just the puppies-and-ice-cream parts, but ‘Here are the broader social changes intended and how they can help you.’ ”

Already, advocacy groups eager for the law to succeed have shifted into a higher gear. One such group, Families USA, held a conference call on Thursday with about 300 advocates around the country to strategize about next steps, said Ronald F. Pollack, the group’s executive director. Enroll America, a sister organization, will hold focus groups next week in Ohio, Pennsylvania and Texas to collect ideas for a public education campaign.

Much depends on the states as they decide in the coming weeks and months whether to build online marketplaces known as insurance exchanges, where individuals and small businesses can shop for health plans, and whether to expand their Medicaid programs to reach many more low-income people.

The clock is ticking on the exchange question in particular: states have until next Friday to decide whether they will build their own exchange or let the federal government run one for them. Some states have asked the administration for more time.

So far, only about 15 states and the District of Columbia have created the framework for exchanges through legislation or executive orders; three others have committed to running exchanges in partnership with the federal government. A number of Republican governors, including those in Arizona, Idaho, New Jersey, Virginia and Tennessee, had said they would decide after the election, giving themselves only a 10-day window before the deadline.

“I would expect that starting today there are a significant number of fascinating conversations going on behind closed doors in state capitols all over America,” said John McDonough, a professor of public health at Harvard who helped draft the law.

With deficit-reduction talks beginning in Washington next week, some observers believe that the law’s most expensive provisions — like federal subsidies to help families with incomes up to 400 percent of the poverty level pay their insurance premiums — could be scaled back in the name of deficit reduction.

“We know folks on the Hill are talking about this already,” said David Smith, an analyst at Leavitt Partners, a consulting firm that advises states on the law. “There are a lot of competing factors, but they have to find the savings and we believe health care will be one of the places where they will go.”

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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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Blue reign in Sacramento: Democrats dominate California voting

SACRAMENTO — Gov. Jerry Brown and his fellow Democrats are on the cusp of a coveted supermajority in both the Assembly and Senate, giving them the rare power to raise taxes without any Republican support.

No single party has held such a supermajority in Sacramento since 1933.

To cement the dual two-thirds majorities when the Legislature gets down to business next year, Democrats must hold onto one of two Senate seats to be vacated and a few Assembly seats won in tight races. The Senate seats will be filled in special elections expected in March.

The supermajorities would mark a dramatic shift in Sacramento's balance of power, where GOP legislators have aggressively used their ability to block state budget plans and prevent revenue increases to scale back the scope of state government.

Coupled with the approval of Brown's tax plan, Proposition 30, the Democrats now have not only the power but also the money to break free of the deficit that has paralyzed state government for years.

The pressure on Democrats to restore funding for the many services slashed to balance the budget in recent years will be intense.

Already, activists are pressing lawmakers to pump new money into such programs as college scholarships, dental care for the needy and, of course, public schools.

But the first move Brown and legislative leaders made Wednesday was to reassure voters that they would show restraint.

They promised there would be no frenzy of tax hikes.

"Voters have trusted the elected representatives, maybe even trusted me to some extent, and now we've got to meet that trust," Brown said at a Wednesday news conference in the Capitol. "We've got to make sure over the next few years that we pay our bills, we invest in the right programs, but we don't go on any spending binges."

Still, lawmakers can appear to hold the line on revenue generation without actually doing so.

Supermajorities allow lawmakers to impose new fees to pay for infrastructure and other programs that are not technically defined as taxes.

And the same Democrats who are talking tough about fiscal responsibility this week have for years been touting the programs they want to restore or start once the opportunity is there. In addition to raising revenue, they would also be empowered to bring constitutional changes and other measures to voters without any GOP signoff — and to override gubernatorial vetoes.

Given a supermajority, "We're going to use it," Senate President Darrell Steinberg (D-Sacramento) said Wednesday.

"It will be an awesome responsibility," Steinberg said. "But it's very exciting.''

Steinberg briefed the media on his desire to overhaul the tax code.

The result, he acknowledged, could be more money for the state budget.

Assembly Speaker John A. Pérez (D-Los Angeles), who vowed there would be no additional tax increases next year, laid out goals that could trigger more government spending, such as helping students pay for college.

The success Tuesday of Brown's Proposition 30, which raises billions of dollars through temporary income-tax increases on high earners and a quarter-cent surcharge on sales, gives lawmakers breathing room they have not had in years.

With one election, a deficit that has rendered Sacramento dysfunctional and threatened to ravage public schools has been largely wiped out.

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