Internet sales tax bill faces tough sell in House

WASHINGTON (AP) — Traditional retailers and cash-strapped states face a tough sell in the House as they lobby Congress to limit tax-free shopping on the Internet.

The Senate voted 69 to 27 Monday to pass a bill that empowers states to collect sales taxes from Internet purchases. Under the bill, states could require out-of-state retailers to collect sales taxes when they sell products over the Internet, in catalogs, and through radio and TV ads. The sales taxes would be sent to the states where a shopper lives.

Current law says states can only require retailers to collect sales taxes if the merchant has a physical presence in the state.

That means big retailers with stores all over the country like Wal-Mart, Best Buy and Target collect sales taxes when they sell goods over the Internet. But online retailers like eBay and Amazon don't have to collect sales taxes, except in states where they have offices or distribution centers.

"This bill is about fairness," said Sen. Mike Enzi, R-Wyo., the bill's main sponsor in the Senate. "It's about leveling the playing field between the brick and mortar and online companies and it's about collecting a tax that's already due. It's not about raising taxes."

The bill got bipartisan support in the Senate but faces opposition in the House, where some lawmakers regard it as a tax increase. Grover Norquist, the anti-tax advocate, and the conservative Heritage Foundation oppose the bill, and many Republicans have been wary of crossing them.

Supporters say the bill is not a tax increase. In many states, shoppers are required to pay unpaid sales tax when they file their state tax returns. However, states complain that few taxpayers comply.

"Obviously there's a lot of consumers out there that have been accustomed to not having to pay any taxes, believing that they don't have to pay any taxes," said Rep. Steve Womack, R-Ark., the bill's main sponsor in the House. "I totally understand that, and I think a lot of our members understand that. There's a lot of political difficulty getting through the fog of it looking like a tax increase."

On Tuesday, House Speaker John Boehner, R-Ohio, declined to say whether the House would take up the bill, deferring to the House Judiciary Committee, which has jurisdiction over the legislation. Committee Chairman Bob Goodlatte, R-Va., said there are problems with the bill but he did not reject it outright.

"While it attempts to make tax collection simpler, it still has a long way to go," Goodlatte said in a statement. Without more uniformity in the bill, he said, "businesses would still be forced to wade through potentially hundreds of tax rates and a host of different tax codes and definitions."

Goodlatte said he's "open to considering legislation concerning this topic but these issues, along with others, would certainly have to be addressed."

Internet giant eBay led the fight against the bill in the Senate, along with lawmakers from states with no sales tax and several prominent anti-tax groups. The bill's opponents say it would put an expensive obligation on small businesses because they are not as equipped as national merchandisers to collect and remit sales taxes at the multitude of state rates.

Businesses with less than $1 million in online sales would be exempt. EBay wants to exempt businesses with up to $10 million in sales or fewer than 50 employees.

"The contentious debate in the Senate shows that a lot more work needs to be done to get the Internet sales tax issue right, including ensuring that small businesses using the Internet are protected from new burdens that harm their ability to compete and grow," said Brian Bieron, eBay's senior director of global public policy.

Some states have sales taxes as high as 7 percent, plus city and county taxes that can push the combined rate even higher.

Many governors — Republicans and Democrats — have been lobbying the federal government for years for the authority to collect sales taxes from online sales.

The issue is getting bigger for states as more people make purchases online. Last year, Internet sales in the U.S. totaled $226 billion, up nearly 16 percent from the previous year, according to government estimates.

States lost a total of $23 billion last year because they couldn't collect taxes on out-of-state sales, according to a study done for the National Conference of State Legislatures, which has lobbied for the bill. About half of that was lost from Internet sales; half from purchases made through catalogs, mail orders and telephone orders, the study said.

Supporters say the bill makes it relatively easy for Internet retailers to comply. States must provide free computer software to help retailers calculate sales taxes, based on where shoppers live. States must also establish a single entity to receive Internet sales tax revenue, so retailers don't have to send it to individual counties or cities.

Opponents worry the bill would give states too much power to reach across state lines to enforce their tax laws. States could audit out-of-state businesses, impose liens on their property and, ultimately, sue them in state court.

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Associated Press reporter Andrew Miga contributed to this report.

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New San Francisco sheriff faces domestic violence charges

SAN FRANCISCO (Reuters) - New San Francisco Sheriff Ross Mirkarimi faces domestic abuse charges less than a week after taking office, officials said.

Mirkarimi is charged with misdemeanor counts of domestic violence battery, child endangerment and dissuading a witness, according to the San Francisco District Attorney's Office.

The charges stem from an alleged incident on New Year's Eve with his wife, Eliana Lopez, a former Venezuelan TV actress. She

told reporters last week that she was not pressing charges and objected to the cases against her husband. The couple have a 2-year-old son.

"Regardless of whether the victim supports a prosecution, it is the state's and my office's obligation to ensure the safety of the victim," District Attorney George Gascon said in a written statement.

Mirkarimi, 50, was sworn in on January 8 as the first new sheriff San Francisco has seen in three decades. He narrowly won an open race in November after incumbent Sheriff Michael Hennessey announced his retirement.

The investigation had already begun when he took office. Charges were filed on Friday.

In remarks to reporters outside City Hall on Friday, Mirkarimi said the charges were "very unfounded." Lopez called the case "unbelievable."

Mirkarimi is a Chicago native who has lived in San Francisco for 27 years, according to his campaign website. He was elected to the county's board of supervisors in 2004 and was a district attorney investigator in San Francisco for nine years.

(With reporting by Emmett Berg in San Francisco and Karen Brooks in Austin. Writing by Karen Brooks.)

(Reporting By Ian Simpson)

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New Zealand's wayward penguin faces long swim home (AP)

WELLINGTON, New Zealand – A young emperor penguin that turned up on a New Zealand beach won't be getting a free ride all the way back to its Antarctic home — but the bird's human friends will at least help it get a little closer.

The penguin — affectionately dubbed Happy Feet — drew intense interest after being spotted on North Island's Peka Peka Beach, about 2,000 miles (3,200 kilometers) from its natural habitat in Antarctica. The creature's health quickly declined when it began eating sand and sticks, but the bird is beginning to recover.

Wildlife officials have been trying to figure out how the 3-foot (80 centimeter) -tall bird will return home. They initially dismissed the idea of transporting it to Antarctica because of logistical difficulties and the fear that it could transmit infections picked up during its New Zealand vacation to other penguins.

On Wednesday, an advisory group headed by the Department of Conservation decided officials will help the penguin get part of the way home by releasing it into the Southern Ocean, southeast of New Zealand — and letting it swim the rest of the way.

"The reason for not returning the penguin directly to Antarctica is that emperor penguins of this age are usually found north of Antarctica on pack ice and in the open ocean," the department's biodiversity spokesman Peter Simpson said.

The area where it will be released is on the northern edge of the region where young emperor penguins are known to live. Simpson said he was unsure how far the penguin would have to swim before reaching its final destination.

Happy Feet, nicknamed after the 2006 animated movie, was discovered on Peka Peka Beach last week — the first time an emperor penguin has been seen in the wild in New Zealand in 44 years. Experts aren't sure if it's male or female.

The penguin is recovering well at Wellington Zoo, where it underwent a medical procedure on Monday to help flush out the sand it swallowed after apparently mistaking it for snow. Doctors managed to remove about half the sand from its digestive system, and zoo spokeswoman Kate Baker said X-rays showed the penguin was passing the rest of the sand naturally.

The creature appears to be doing well and is being kept in isolation in an air-conditioned room filled with large blocks of ice, Baker said.

"The plan from now on is to let him rest, feed him and X-ray him again on Friday or Saturday to see how much sand has passed," Baker said.

Officials are still hammering out logistics for the penguin's return trip home, and said it won't be released until its health has recovered. Until then, it will remain at the zoo.

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Pakistan's Army Chief Faces Criticisms from All Fronts (Time.com)

It has been a grim seven weeks for Pakistan's powerful generals. The unilateral raid on Osama bin Laden's compound opened them up to charges of complicity abroad and a sense of deep embarrassment at home. The criticism sharpened after a major terrorist attack on a naval base in the southern port city of Karachi, with many critics unfavorably contrasting the privileges the military enjoys against its recent failures to provide security. And then long-standing suspicions of the security establishment's darkest side were heightened by the murder of journalist Syed Saleem Shahzad, who had warned of threats to his life from the military's leading spy agency. All that foreboding seemed to be affirmed by a chilling video showing paramilitary rangers shooting dead a youth in Karachi in broad daylight.

"It's amazing the level of criticism that the military leadership is facing," says Talat Masood, a retired lieutenant general turned analyst. "It's clearly the worst in its history," he adds, reflecting on the decades since he joined the Pakistani army in the 1950s. For General Ashfaq Kayani, the Pakistani army chief, the current mood is particularly galling. Since being elevated to the most powerful office in Pakistan, Kayani has carefully worked to rebuild his institution's image after the ruinous final years of President cum General Pervez Musharraf's military rule. At home and abroad, he won plaudits for renewing a commitment to fighting Islamist militancy, with successful military operations in the Swat Valley and much of South Waziristan. While he has made a series of interventions backstage, Kayani has shunned an overtly political role. (See "Dr. al-Zawahiri, I Presume: The Hunt Begins for al-Qaeda's New Boss.")

Now, Kayani's stock is in free fall as he finds himself embattled on at least three fronts. Washington has seized on the bin Laden raid as a moment to apply fresh pressure. Leveraging Pakistan's humiliation, it has issued more aggressive demands to help capture al-Qaeda's remaining leaders and move decisively against the pro–Afghan Taliban militants Pakistan has obstinately refused to touch in the past. Tensions have risen again in recent days as the CIA complained that intelligence passed on to the Directorate for Inter-Services Intelligence (ISI) was used to tip off the very militants it was supposed to be targeting. At the same time, the CIA has raised concerns about the ISI's arrests of five Pakistani informants it used to gather intelligence on bin Laden's compound in Abbottabad, the garrison town where he was hiding. U.S.-Pakistani relations are now said to have plummeted to a fresh nadir.

The U.S.'s unilateral raid has also left Kayani vulnerable to competing pressure from within his own ranks. The indignity of being invaded by an ally crowns a narrative of accumulating grievances. The army's middle ranks have long been angered by a sense that the U.S. has not been sensitive enough to their sovereignty or loss of nearly 3,000 lives; a perceived refusal to address concerns about Kashmir; Washington's proximity to New Delhi; and even conspiracy theories suggesting U.S. support for the Pakistani Taliban. "In the top ranks there are real concerns about whether soldiers will obey orders in some circumstances," says a senior Western diplomat. (See "Why Has Pakistan Targeted Informants Who Helped Track Bin Laden?")

Kayani is also faced with fears of extremist infiltration of his ranks. On Tuesday, the Pakistani army announced that it was holding Brigadier Ali Khan, a senior officer working at the General Headquarters, on suspicion of links to the banned extremist group Hizb ut-Tahrir (HT). For the past 15 years, the group has tried to surreptitiously recruit army officers in an attempt to effect a military coup that would pave the way for the establishment of an Islamic caliphate. After the bin Laden raid, HT had been distributing leaflets exhorting army officers to rise up in revolt against their leadership, the Wall Street Journal reported. "It is a slap in the respected officers' faces that on May 2 American helicopters intruded in the dark of night and barged into a house like thieves," the pamphlet read. "It could not have been possible without the acquiescence of your high officials." Khan's arrest comes just weeks after widely voiced suspicions that the May 22 naval-base attack had support from inside.

See TIME's complete coverage of Osama bin Laden.

See TIME's top 10 notorious fugitives.

Keen observers of the Pakistani army are highly skeptical of claims of divisions in the top ranks or suggestions that Kayani's own position is imperiled. "My understanding is that there is a debate on different issues within the corps commanders and senior officers from the General Headquarters," says Shuja Nawaz, director of the South Asia Center at the Atlantic Council in Washington. "It is not in the form of pressure on General Kayani as such, but on what to do in response to the criticism." Masood, the retired general, dismisses outright the prospect of the corps commanders easing Kayani out. "All of them are his protEgEs," he says, noting that Kayani has been responsible for each appointment in his over three years as chief. "What is happening is that there's a collective failure of the military, not the failure of an individual. They all have the same thinking."

Similarly, there are well-founded doubts about a "colonels' coup." Unlike the armies of the Arab world or Latin America, the Pakistani army's chain of command has never been broken. Army chiefs have only been gently eased into retirement by fellow generals after their positions, as military dictators, were deemed too damaging for the institution. Nawaz, a historian of the Pakistani army, recalls that the only junior officers' coup attempt, in 1973, was thwarted in its early stages by military intelligence. But there is one scenario, though perhaps remote, that could provoke unforeseeable consequences. The most worrisome reaction, says the Western diplomat, may come if "there's a further U.S. incursion and soldiers are ordered not to fire on it." (See photos of the aftermath of the twin suicide bombers in Pakistan.)

Attempting to placate the lower ranks, the corps commanders recently issued a strongly worded statement pushing back against perceived U.S. pressure. They offered to divert U.S. military aid into the government coffers, ordered that the U.S.'s military presence in Pakistan be diminished to a minimum and lashed out against the CIA's use of drones in the tribal areas. "They have to show their middle ranks that they can be tough," says the Western diplomat. The rhetoric is also reflective of fiercer anti-American sentiment in Pakistan. "The more anti-American you are, the more patriotic you are regarded," laments retired general Masood.

But the rhetoric is not sustainable. It exaggerates the extent to which the top generals are prepared to confront the U.S. Behind closed doors, top U.S. and Pakistani officials have agreed to form a joint-counterterrorism task force that will oversee CIA and ISI intelligence operations in Pakistan; drones will no longer take off from the Shamsi air base in Baluchistan but will continue from Afghanistan, the presence of U.S. Special Forces will discreetly continue, and Pakistan will be included in discussions on an endgame settlement in Afghanistan. "General Kayani does not believe that a worse confrontation with the U.S. will be in his interests," says the Western diplomat.

The rhetoric is also an ill-advised attempt to mask the military's own shortcomings, says retired general Masood. "Their thinking is, 'If the current criticism continues the way it is, then our institution will be completely destroyed.'" But the prickly attitude, revealing little patience with the sort of criticism civilian politicians have endured for decades, risks ignoring important challenges. "The leadership seems to be more worried about image than performance," adds Masood. "They are trying to protect themselves and don't want the light thrown on their weaknesses." What seems missing from the top generals' thinking is that by continuing to meddle in politics, through the control of defense and foreign policies, and not subordinating itself to civilian authority, it will continue to attract hostile attention. (See photos of the Taliban's war in Pakistan.)

After the U.S. and his own military, the third source of criticism is the Pakistani public, led by opposition politicians, civil-society campaigners and journalists. A major test of Kayani's leadership will come with how the military will respond to two high-profile commissions that have been established to investigate bin Laden's presence in Abbottabad and the murder of journalist Shahzad. With the intense scrutiny, there are hopes of greater transparency and accountability. "Historically, it has never happened," notes analyst Nawaz. But, he adds, "The military is very conscious of trying to meet these statements head-on."

The coming weeks will tell whether Kayani can restore his institution's standing, maintain the alliance with the U.S., win back the support of his junior officers and at the same time demonstrate a commitment to Pakistan's fledgling democracy. Urged in different directions, will the general successfully forge a path out of the labyrinth he now finds himself in?

See TIME's list of al-Qaeda's most infamous faces.

See photos of a jihadist's journey.

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Papua New Guinea leader's son faces murder charge (AP)

CANBERRA, Australia – Police on Thursday were preparing to charge the son of Papua New Guinea's acting prime minister with murder after the body of a 29-year-old waitress was found at the family home.

Theo Abal, 21, will likely make his first court appearance Friday once he is charged in the killing of the woman, police spokesman Dominic Kakas said. He could face the death penalty if convicted.

A guard at the house told police he saw Abal and the woman arrive home in the early hours of Monday and head for a garden on the premises. Police said that the guard later heard the woman scream and that Abal confessed to killing her.

Kakas said her throat had been cut. A kitchen knife found near her body was the suspected weapon, he said.

Acting Prime Minister Sam Abal said he personally reported the "alleged murder" to Police Commissioner Tony Wagambie on Monday after the woman's body was found at his home in the capital, Port Moresby.

He made no comment on his son's alleged confession but pledged to cooperate fully. He said in a statement Tuesday that if any of his relatives are involved, "they will face the full brunt of the law and will not be treated differently from anyone else."

Theo Abal was arrested at a Port Moresby hotel Tuesday night and was still in police custody Thursday.

Kakas said police expected to charge Theo Abal with willful murder but were waiting for relatives to identify the woman's body before filing, and Kakas said that could delay the process. Abal still had not been charged Thursday afternoon.

Kakas said the island nation has had the death penalty for only a few years and has yet to carry out an execution, though a handful of defendants have been sentenced to death.

Theo Abal, the younger of Sam Abal's two children, is unemployed and lives at his father's house.

Kakas said the dead woman worked as a waitress at a Port Moresby hotel. Her name has not been made public.

Wagambie said Tuesday that the acting prime minister was away from the house and was alerted to the death by the security guard, who found the woman's body in a banana garden.

The guard alleged that he opened a gate for Theo Abal and the woman shortly before dawn Monday and that the pair walked hand in hand into the garden, Wagambie said.

"The guard claims that some 20 minutes later, he heard the woman scream, and further claims that some time after, Theo comes out and tells him that he had killed the woman and left her body in the banana garden," Wagambie wrote in his statement.

Sam Abal is standing in for Prime Minister Michael Somare, who stepped down in December because of ill health and to clear his name before a tribunal that is investigating allegations that he failed to disclose his full income.

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Obama faces lawsuit over Libya mission

President Barack Obama plans to defend U.S. military involvement in Libya to Congress, the White House says.NEW: Kucinich to the Obama administration: "Tell it to the judge"U.S. officials say the limited U.S. role in Libya falls short of the law's scopeHouse Speaker Boehner warns of a possible War Powers Resolution violation10 House members challenge the Libya mission in court

Washington (CNN) -- A bipartisan group of House members filed a lawsuit Wednesday that challenges U.S. participation in the Libya military mission.

Meanwhile, the White House is sending a report on the mission to Congress on Wednesday in order to answer questions raised by legislators, Press Secretary Jay Carney said.

The administration's report will include a legal analysis for the mission and address a June 3 House resolution that raised questions about the president's goal in Libya, how he hopes to achieve that goal, why he has not sought congressional authorization for involving U.S. troops abroad and how much the conflict will ultimately cost, Carney said.

House Speaker John Boehner, R-Ohio, said in a letter to Obama on Tuesday that the administration could be in violation of the War Powers Resolution if it fails to get congressional authorization by Sunday, which he notes will be the 90th day since the mission began.

The lawsuit announced at a Washington news conference addresses a longstanding dispute between the executive and legislative branches -- meaning the White House and Congress -- over the powers of the president to send forces to war.

"We are intending through our presence and through this lawsuit to correct an imbalance which exists today, to correct a deficiency in the separation of powers, to correct ... and to firmly establish that Congress is a co-equal branch of government and that the founders made it unmistakably clear they did not intend for the war power to be placed in the hands of an executive," said Rep. Dennis Kucinich, D-Ohio, an anti-war liberal and one of the 10 legislators filing the lawsuit.

Rep. Tim Johnson, R-Illinois, said the legal issue was whether Obama exceeded his authority in committing U.S. forces to the Libya mission.

"Did he act illegally? The answer is yes," Johnson said.

Carney, however, said Obama acted within his authority as chief executive and noted that the president had limited the U.S. role in the mission from the start.

"We have acted in a manner consistent with the War Powers Resolution," Carney said, adding that the report to Congress would include a legal analysis that would address questions raised by legislators.

In a briefing with journalists on the White House report, senior administration officials said the limited U.S. role in the Libya mission fell short of the definition of engaging in hostilities that is contained in the statute. The officials, who spoke on condition of not being identified, noted that no U.S. troops were on the ground in Libya or involved in sustained fighting there such as exchanging fire with hostile forces.

Kucinich later said the Obama administration now has to make its case in court.

"They can tell it to the judge now," Kucinich said. "They can't claim this isn't a war."

The lawsuit is asking the court to "declare that the war in Libya is illegal and order the White House to stop."

The goal of the administration and legislators who support the Libya mission is approval of a new resolution that backs U.S. participation, which would serve as an equivalent to congressional authorization.

In his letter to Obama, Boehner complained that the administration has failed to address questions about the mission that were in the June 3 House resolution, which set a two-week deadline for a response.

Boehner's letter reiterated the Friday deadline and took the additional step of warning that a failure to respond could violate the War Powers Resolution.

According to Boehner, a 90-day deadline for congressional authorization of the Libya mission expires Sunday.

"It would appear that, in five days, the administration will be in violation of the War Powers Resolution unless it asks for and receives authorization from Congress or withdraws all U.S. troops and resources from the mission," Boehner's letter said.

The White House has previously said it was complying with the War Powers Resolution through frequent briefings on the Libya mission.

Boehner's letter contested that assertion.

"Since the mission began, the administration has provided tactical operational briefings to the House of Representatives, but the White House has systematically avoided requesting a formal authorization for its action," Boehner's letter said. "It has simultaneously sought, however, to portray that its actions are consistent with the War Powers Resolution. The combination of these actions has left many members of Congress, as well as the American people, frustrated by the lack of clarity over the administration's strategic policies, by a refusal to acknowledge and respect the role of the Congress, and by a refusal to comply with the basic tenets of the War Powers Resolution."

Such political wrangling over war powers is common in Washington, with presidents frequently seeking to expand their freedom to commit U.S. forces and Congress battling to exert influence on the process.

Boehner's letter said that, in this case, "the ongoing, deeply divisive debate originated with a lack of genuine consultation prior to commencement of operations and has been further exacerbated by the lack of visibility and leadership from you and your administration."

With his letter, Boehner raised the stakes on an issue that could prove politically embarrassing to Obama, with increasing numbers of Republicans and Democrats opposing the Libya mission.

In announcing the mission in March, Obama said U.S. forces would take the early lead in establishing a no-fly zone over the country in order to enforce a U.N. resolution calling for the protection of Libyan civilians from forces loyal to leader Moammar Gadhafi.

The U.S. forces eventually assumed a supporting role as NATO took over the mission.

Congressional opponents of the mission say that its objective of civilian protection fails to match the stated U.S. goal of Gadhafi's resignation or ouster and that the Libya situation could become a stalemate.

The White House says incremental progress is occurring through increasing diplomatic, political and military pressure on Gadhafi to step down.

In a coincidence of scheduling, Obama and Boehner are set to play golf together for the first time Saturday, a day after Boehner's deadline for information from the administration and the day before he says it could be in violation of the War Powers Resolution.

CNN's Tom Cohen contributed to this report.

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Mladic faces Hague court on Bosnia genocide charges (Reuters)

THE HAGUE (Reuters) – Ratko Mladic will face his judges at the United Nations war crimes tribunal in The Hague on Friday to answer charges of genocide in the Bosnia war.

The former Bosnian Serb Army commander, once a burly and intimidating figure on the battlefield, is now in frail health, looking much older than his 69 years.

Mladic faces the special court's gravest charge, that of genocide for the 1995 Srebrenica massacre of 8,000 Muslim males and for the 43-month siege of Sarajevo from 1992 to 1995 in which some 12,000 were killed.

He was arrested last week in a Serbian village and extradited by Serbia Tuesday, to become the tribunal's biggest case. His capture came nearly 16 years after The Hague court issued its indictment against him.

A career soldier, Mladic was branded "the butcher of the Balkans" in the late 1990s for a ruthless campaign to seize and "ethnically cleanse" territory for Serbs following the breakup of the Serb-dominated Yugoslav federation of six republics.

Serb nationalists believe Mladic defended the nation and did no worse than Croat or Bosnian Muslim army commanders, as the federation was torn apart in five years of conflict that claimed some 130,000 lives, destroying towns and villages.

Hague chief prosecutor Serge Brammertz said Mladic had used his power to commit brutal atrocities and must answer for it.

The International Tribunal for former Yugoslavia, set up in 1993, expects to wind up its work by 2014. It has issued 161 indictments and has now accounted for all but one fugitive.

Serbs say the fact that two-thirds of them were Serbian is proof of the court's bias. Hague prosecutors say it is a reflection of which side carried out the biggest war crimes.

HOSPITAL BED

Mladic was spending the night in a prison hospital bed under medical supervision, his lawyer in The Hague said.

"He has not had proper health care for years and his condition is not good," said Aleksandar Aleksic, a prominent Belgrade lawyer appointed by the tribunal Thursday to represent Mladic, whom he met the same day.

The tribunal said medical supervision for a newly arrived detainee was normal routine and in no way implied that Mladic might not make his scheduled appearance in court.

As reported in Serbian media following his capture, Mladic has partially lost the use of one hand due to a stroke suffered years ago.

But Alexsic confirmed the description given by tribunal officials and diplomats who met the general on his arrival, of a man who appears frail but mentally capable and responsive, and was cooperative and talkative.

He has a room to himself with a small outdoor yard where he can walk and has been making phone calls to his family, he said.

"I am going to ask tomorrow that he be given additional medical tests," Aleksic told Reuters.

Mladic will have an opportunity at his initial hearing to talk in public about his health and about conditions in detention, the lawyer added.

Serbian media reports say Mladic is unlikely to enter a plea Friday. Under the rules of the war crimes tribunal, he can defer that step for 30 days, a court spokeswoman confirmed.

For most of his years at large, Mladic managed to live discreetly but safely in Belgrade, relying on loyal supporters who consider him a war hero, not a war criminal.

But as pressure mounted on Serbia to arrest and extradite him, or watch its bid for European Union membership wither, Mladic's network of support apparently dwindled and he was forced to go every deeper underground to avoid capture.

A Belgrade-based lawyer who failed to prevent the general's extradition on grounds of ill health said Thursday that Mladic was treated for cancer in 2009.

Serb Justice Minister Snezana Malovic and Serbian deputy war crimes prosecutor Bruno Vekaric dismissed the claim. A tribunal spokeswoman said the court does not comment on the health of defendants, unless they expressly raise the issue.

(Editing by Michael Roddy)

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Berlusconi faces high-stakes local election in Milan (Reuters)

ROME (Reuters) – Italy's Prime Minister Silvio Berlusconi risks losing his northern power base of Milan to the left for the first time in two decades after local elections that have shown just how fragile his center-right coalition is.

Around 6 million Italians are eligible to vote in mayoral contests in 90 towns and six provinces on Monday, but the focus is squarely on the main battlegrounds in the financial capital Milan and the southern port of Naples.

Voting began at 7 a.m. (0500 GMT) on Monday with results expected in the evening after the polls close at 1300 GMT.

With the government preparing to bring forward plans to slash the budget deficit by some 40 billion euros ($57 billion) after ratings agency Standard and Poor's cut its outlook for Italy's A+ rating to "negative" from "stable," the stakes are high.

Defeat in his hometown of Milan would be a serious blow for a premier already weakened by a series of sex scandals, corruption trials and a sluggish economy and could call into question his government's ability to push through painful cuts.

Despite mountainous public debt of about 120 percent of gross domestic product, Italy has largely avoided the financial market turmoil seen in Greece and Portugal but the S&P warning earlier this month was a reminder of the price of inaction.

"This is the real dilemma. Will the current government be able to manage it?" business daily Il Sole 24 Ore asked in an editorial on Monday.

Berlusconi suffered a drubbing in the first round of voting on May 15 and 16, when an uninspired center left easily held on to power in Turin and Bologna and forced the center right into run-offs in Naples and Milan, its longtime stronghold.

A loss would almost certainly deepen a rift with his main ally, the Northern League, and could provoke challenges to his otherwise unquestioned leadership of the center right, although senior ministers have ruled out any change of course before the next national elections in 2013.

"I don't see any possibility of an alternative government. And I don't think anyone wants early elections," Defense Minister Ignazio La Russa, one of Berlusconi's most faithful lieutenants, told daily newspaper La Stampa.

"ISLAMIC GYPSYLAND"

In Milan, where Berlusconi made his business fortune and launched his political career, outgoing center-right mayor Letizia Moratti trailed with 41.6 percent of the first-round vote against leftist Giuliano Pisapia's 48 percent.

"I have seen the climate is changing, Milan is really changing," Milan resident Cinzia Zarotti said after she cast her vote on Monday.

Regional issues including transport and the chronic garbage crisis in Naples have weighed on voters' choices but the flailing national economy has overshadowed the polls.

Italy has been one of the euro zone's most sluggish economies for over a decade, with more than a quarter of its youth unemployed and the average Italian poorer than he or she was 10 years ago.

Berlusconi's government last month was forced to trim its growth forecast for the year to 1.1 percent from 1.3 percent and cut next year's outlook to 1.3 percent from 2.0 percent.

S&P's lowered its outlook on Italy for failing to cut its debt and boost growth, although worries of an immediate impact on the markets eased after the Treasury sold long-term bonds near the top of its target range on Monday.

After being punished for initially characterizing the vote as a referendum on his popularity and policies, Berlusconi has since blanketed the airwaves with trademark tirades against his longtime enemies: the left and "communist" magistrates.

Milan will become an "Islamic gypsyland" if the left wins, he predicted. Leftist voters lacked a brain anyway, he said, prompting Internet spoofs and a lawsuit from an offended voter.

A rant against Italian magistrates to a surprised U.S. President Barack Obama at the Group of Eight summit in Deauville, France prompted Economy Undersecretary Daniela Melchiorre, a former magistrate, to resign in protest.

(Additional reporting by Roberto Rossi in Milan; Editing by Louise Ireland and Philippa Fletcher)

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IMF chief faces pressure to resign after sex charge

NEW: Ruling French party: A replacement for Strauss-Kahn should be named U.S. treasury secretary: "He's obviously not in a position to run the IMF"Poll: 57% of French respondents believe Strauss-Kahn is a victim of conspiracyStrauss-Kahn is accused of sexually assaulting a maid at a posh New York hotel

New York (CNN) -- As one of the most powerful men in global economics, Dominique Strauss-Kahn was supposed to give the keynote speech at the Brussels Economic Forum in Belgium on Wednesday.

Instead, the head of the International Monetary Fund sits in a New York jail cell with his career and political future in limbo.

"I do not see how he can perform his duties as director of the IMF. So by definition, this issue should be resolved in the coming days," Jean-Francois Cope, secretary-general of France's ruling UMP party, told reporters Wednesday.

Celebrity lawyer deemed 'perfect' for case

The comments came a day after U.S. Treasury Secretary Timothy Geithner said Strauss-Kahn was "obviously not in a position to run the IMF."

In addition to his IMF leadership, Strauss-Kahn was widely viewed as a front-runner to unseat French President Nicolas Sarkozy before authorities said he chased the maid naked down the hallway of his suite and sexually assaulted her.

But some French citizens say they think Strauss-Kahn is actually the victim of a conspiracy.

According to a poll released Wednesday by the Conseil Sondage Analyses (Council of Polling Analysis), 57% of French people think Strauss-Kahn was victimized.

Still, 54% said they think Strauss-Kahn's Socialist Party could win in the 2012 presidential race without him.

Strauss-Kahn, 62, was denied bail by a Manhattan Criminal Court judge and remanded Monday to an 11-by-13-foot cell at New York's Rikers Island jail complex. There, the man whom many refer to as DSK was placed on suicide watch -- a common procedure in high-profile cases, two sources with direct knowledge of the case told CNN.

Until his next court appearance Friday, Strauss-Kahn will be largely left alone -- denied contact with other inmates because of his high-profile status, said a New York Department of Correction spokesman who declined to be named.

The case has shaken the IMF, an organization of 187 countries working to improve world economies by providing loans and guidance.

Austria's finance minister said Tuesday that Strauss-Kahn should consider stepping down for the good of the institution.

Take a look inside Rikers Island

"Given the circumstances that his bail was not granted, he should think about whether he is damaging the institution," Maria Fekter told reporters in Brussels, Belgium, during a meeting of European finance ministers.

British Foreign Secretary William Hague told reporters he hopes the incident does not affect the "many important decisions ... before the IMF."

"At the moment it is important that it functions well," Hague said. "So we look to all concerned to make sure that it does."

On Tuesday, IMF spokesman William Murray said in a written statement that the IMF had had no contact with its leader since his arrest.

In Strauss-Kahn's absence, First Deputy Managing Director John Lipsky has been named acting managing director, "and the fund continues its normal work," Murray said.

Murray also said Strauss-Kahn's diplomatic immunity does not apply in the sexual assault case.

"The MD's (managing director's) immunities are limited and are not applicable to this case," he said.

He added, however, that any IMF-related documents Strauss-Kahn may have had with him or left in the hotel room would be governed by diplomatic immunity and should be returned to the Washington-based organization.

A former French finance minister, national legislator and economics professor in Paris, Strauss-Kahn became the IMF's 10th managing director in November 2007. He is also chairman of the IMF executive board.

The alleged victim is a 32-year-old single mother living in the New York borough of the Bronx who moved to the United States from the West African country of Guinea. She had been working at the hotel for at least two years, according to her attorney, Jeffrey Shapiro.

"Her world has been turned upside down," he said. "She is very scared about her future."

Shapiro said his client is cooperating with police and prosecutors, and would be willing to testify against Strauss-Kahn.

Strauss-Kahn's accuser picked the IMF chief out of a lineup Sunday at a New York police station, saying he was the man who had sexually assaulted her, according to a law enforcement source with direct knowledge of the investigation.

"She's recovering -- slowly," said Blake Diallo, the general manager of a Harlem restaurant she frequents, who described himself to reporters as her friend.

The alleged attack began Saturday around noon, when the housekeeper entered Strauss-Kahn's suite on the 28th floor of the New York's Sofitel hotel to clean.

New York Police Deputy Commissioner Paul Browne said the economist emerged naked from a room, ran down a hallway after the woman, and attacked her.

He shut the door, preventing the woman from leaving, according to a criminal complaint released by prosecutors.

"He grabbed the victim's chest without consent, attempted to remove her pantyhose" and forcibly grabbed her between her legs, the complaint said. He also forced her to perform oral sex on him, Assistant District Attorney John McConnell said at Monday's arraignment.

The criminal complaint alleges that Strauss-Kahn forced the woman to engage "in oral sexual conduct and anal sexual conduct" and tried to force her to engage in sexual intercourse.

Scandals: When lust and politics collide

Afterward, the employee went to the front desk, and staffers alerted police, Browne said.

By the time officers arrived, Strauss-Kahn had left in the hotel limousine, according to the law enforcement source.

He called the hotel around the same time police got to the hotel to say he had left his phone behind and asked if it could be delivered to him at the airport. Investigators told the hotel staff member to agree to do so, and police went to the airport.

Two plain-clothed Port Authority police detectives led him off a plane bound for France, the source said.

Charges against Strauss-Kahn include two counts of first-degree criminal sexual act, one count of first-degree attempted rape, one count of first-degree sexual abuse, one count of second-degree unlawful imprisonment, one count of forcible touching and one count of third-degree sexual abuse.

The most serious charge, criminal sexual act in the first degree, carries a maximum sentence of 25 years in prison.

Defense attorney Benjamin Brafman called the case "very defensible."

But some observers said Tuesday that his political future appears bleak.

"If the accusations are true, Strauss-Kahn will not be able to run for president," said Jacques Attali, a political analyst and a former top aide to late Socialist President Francois Mitterrand.

In Washington, U.S. Sen. John Kerry told reporters the situation involving the IMF chief was "very troubling, if not damning."

"You've got to give it a few days to let that develop," he said. "But if the evidence is what it appears to be, I think it would be very difficult for him to manage."

CNN's Susan Candiotti, Ivan Watson, Adam Reiss, Richard Roth, Saskya Vandoorne, Caroline Paterson, David Ariosto, Raelyn Johnson and Jim Bittermann contributed to this report.

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IMF's Dominique Strauss-Kahn faces sex charges (Reuters)

NEW YORK/PARIS (Reuters) – IMF chief Dominique Strauss-Kahn was arrested and charged on Sunday with sexually assaulting a New York hotel maid, in a scandal that appeared to wreck his hopes of running for president of France.

The charges threatened to create a leadership vacuum at the IMF, overseer of the global economic system, and threw wide open the French presidential election next April, for which opinion polls had made Strauss-Kahn the front-runner.

One of his lawyers, Benjamin Brafman, told Reuters his client "will plead not guilty."

The 62-year-old Socialist, a key player in the response to the 2007-9 global financial meltdown and in Europe's debt crisis, was taken off an Air France plane about to leave for Paris from John F Kennedy International Airport on Saturday.

New York police spokesman Paul Browne said he was charged with a criminal sexual act, unlawful imprisonment and attempted rape. He is expected to go before a state court later on Sunday.

The arrest caused shock and disbelief in France, where a government spokesman called for caution and respect for the presumption of innocence.

"The news we received from New York last night struck like a thunderbolt," said Socialist leader Martine Aubry, appealing for party unity.

Francois Bayrou, a centrist opponent of Strauss-Kahn, said: "All this is completely astounding, immensely troubling and distressing. If the facts prove true ... it's something degrading for all women. It's terrible for the image of France."

Far-right leader Marine Le Pen said her rival's presidential hopes had been crushed. Strauss-Kahn and Le Pen have led recent opinion polls ahead of conservative President Nicolas Sarkozy, even though the chief of the International Monetary Fund had yet to declare his candidacy.

In a statement on its website, the Fund declined to comment on the case, saying only that it "remains fully functioning and operational."

But a Greek official told Reuters the arrest could cause some short-term delays in discussions over a European Union/IMF bailout for Athens, in which Strauss-Kahn was closely involved, by forcing the cancellation of key meetings.

MAID'S ACCOUNT

Strauss-Kahn's wife Anne Sinclair said in a statement: "I do not believe for a single second the accusations leveled against my husband."

She added: "I do not doubt his innocence will be established. I appeal for restraint and decency."

One of the IMF chief's French-based lawyers, Leon Lef Forster, said: "We must wait until things settle and see if it's true or a provocation. We must be especially careful not to get into a media circus."

A 32-year-old maid filed a sexual assault complaint after fleeing the $3,000-a-night hotel suite at the Sofitel in Times Square where the alleged incident occurred around 1 p.m. (1700 GMT) on Saturday, Browne said.

Strauss-Kahn appeared to have fled the hotel after the incident, the police spokesman said.

Browne told Reuters: "She told detectives he came out of the bathroom naked, ran down a hallway to the foyer where she was, pulled her into a bedroom and began to sexually assault her, according to her account.

"She pulled away from him and he dragged her down a hallway into the bathroom where he engaged in a criminal sexual act, according to her account to detectives. He tried to lock her into the hotel room."

Strauss-Kahn does not have diplomatic immunity, Browne said.

According to New York state law, a criminal sexual act carries a potential sentence of 15-20 years, the same as attempted rape. Unlawful imprisonment carries a potential sentence of three to five years.

The allegation is a major embarrassment to the IMF, which has authorized billions of dollars of lending to troubled countries and played a major role in the euro zone debt crisis.

FRANCE IN SHOCK

Popularly known by his initials DSK, the IMF managing director had been expected to declare by late June if he would run for president of France. The latest opinion polls ranked him as a clear winner over conservative incumbent Sarkozy.

"The case and the charges ... mark the end of his campaign and pre-campaign for the presidency and will most likely prompt the IMF to ask him to leave his post," National Front leader Le Pen told i-Tele television.

Conservative Trade Minister Pierre Lellouche said: "I think we have to grant DSK the presumption of innocence. If all this were true it would be damning."

Even Strauss-Kahn's political allies were pessimistic.

"The most likely outcome is that this case will stick and even if he pleads not guilty, which he may be, he won't be able to be candidate for the Socialist primary for the presidency and he won't be able to stay at the IMF," said prominent Socialist Jacques Attali.

If Strauss-Kahn were out of the race, leading candidates for the Socialist presidential ticket include party leader Aubry, left-wing veteran Francois Hollande and Segolene Royal, the candidate beaten by Sarkozy in 2007.

PLANE HELD AT JFK

In New York, police spokesman Browne said: "The NYPD realized he had fled, he had left his cell phone behind. We learned he was on an Air France plane. They held the plane and he was taken off and is now being held in police custody for questioning."

The woman, who has not been named, was treated in hospital for minor injuries, Browne said.

The French consul general met Strauss-Kahn overnight under the normal rules of protection for French citizens detained abroad, a spokeswoman for the consulate in New York said.

Strauss-Kahn took over the IMF in November 2007 for a five-year term scheduled to end next year. Before that, he was a French finance minister, member of the French National Assembly and a professor of economics.

He has faced controversy before. In 2008, he apologized for "an error of judgment" after an affair with a female IMF economist who was his subordinate. An inquiry cleared him of harassment and abuse of power, but he was warned by the fund's board of member countries against further improper conduct.

Strauss-Kahn apologized to the woman, Piroska Nagy, and his wife, French television personality Anne Sinclair, as well as to IMF employees for the trouble he had caused.

His arrest follows a Thursday's statement that the IMF's No. 2, John Lipsky, plans to step down in August when his term ends.

A crisis of leadership at the Fund would especially worry European nations, given Strauss-Kahn's pivotal role in brokering bailouts for Iceland, Hungary, Greece, Ireland and Portugal.

"The chances are the successor won't be a European, and will want to rebalance the IMF's priorities away from its massive commitment in Europe," said Jean Pisani-Ferry, director of the Bruegel economic think-tank.

Strauss-Kahn had been due to meet German Chancellor Angela Merkel on Sunday and join euro zone finance ministers in Brussels on Monday to discuss the bloc's debt crisis and how to handle Greece, whose economy is struggling despite being bailed out last year.

"This might definitely cause some delays in the short term," a Greek official told Reuters on condition of anonymity. "Strauss-Kahn had a very good knowledge of Greece's situation."

Since taking over the IMF, the Frenchman has won praise for putting it at the center of efforts to tackle the global financial meltdown. He introduced sweeping changes to ensure countries swamped by the crisis had access to emergency loans.

He has overseen changes that have given emerging market countries, such as China, India and Brazil, greater voting power in the IMF, and weighed into thornier issues by urging China to let its currency rise in a dispute with the United States.

(Additional reporting by Lesley Wroughton, Noeleen Walder, Catherine Bremer and John Irish; Writing by Mark Trevelyan; Editing by Peter Millership)

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Radical Indonesian cleric faces life in jail

Abu Bakar Bashir, center, faces charges ranging from his alleged links to militant training camps to inciting a terrorist act.Authorities accuse Abu Bakar Bashir of a series of terror-related chargesHis lawyers say prosecutors haven't proven their caseBashir denies the chargesIt's the third terror-related trial of the fiery cleric

Jakarta, Indonesia (CNN) -- Prosecutors in Indonesia demanded a life sentence Monday for radical cleric Abu Bakar Bashir for a series of terror-related charges, including planning, attempting, funding and inciting terrorism. Some of the charges carry a maximum penalty of death.

It's the third trial of the fiery Bashir, who was most recently detained in August for suspected links to a militant training camp that was raided by authorities in Aceh in early 2010.

Police have said Bashir and his organization, the Jamaat Tawhid Anshoru or JAT, were involved in setting up the camp, and authorities have said militants were preparing to launch assassination attempts on Indonesian government officials.

Authorities also accuse Bashir of plotting attacks like the 2008 Mumbai, India, assault on hotels and a train station that left hundreds dead in a siege lasting several days.

He denies the charges, and has often said there is a U.S.-led conspiracy to put him behind bars.

One of Bashir's lawyers, Adnan Wirawan, said Monday the call for life in prison is "too harsh for something that the prosecution failed to prove in court. They're aiming too high and I think it's unreasonable and I think the court will be of the same opinion."

In the past, authorities have tried but failed to directly link Bashir to major terror attacks in Indonesia.

In the first two trials, prosecutors tried to directly link him to the 2002 bombings in Bali and the 2003 J.W. Marriott bomb attack in Jakarta. The courts found him guilty of relatively minor charges. He was released in June 2006, after serving 25 months in jail.

Known for his inflammatory rhetoric, Bashir was accused of being the spiritual leader of Indonesia's homegrown terror network, Jemaah Islamiyah, who inspired many of those involved in the bombings.

Bashir's lawyers will begin their closing statement May 25. A ruling is expected within weeks of the conclusion of arguments.

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Ousted Tunisia dictator faces more charges

TUNIS, Tunisia (AP) — Tunisia's toppled dictator and his wife are facing charges of inciting violence in connection with a bloody crackdown following his January ouster, the official TAP news agency reported Wednesday.

The report cited a Justice Ministry statement as saying Zine El Abidine Ben Ali and former first lady Leila Trabelsi are wanted on charges including "plotting against the interior security of the state" and "inciting disorder, murder or pillaging on Tunisian soil.

The latest charges come on top of 18 others already filed against Ben Ali, who fled along with much of his family to Saudi Arabia on Jan. 14 amid a popular uprising.

The charges stem from an incident in the central town of Ouardanin the day after the ouster, when four youths were killed as a crowd tried to prevent Ben Ali's nephew, Kais Ben Ali, from fleeing the country. The victims' families allege the former strongman ordered the security forces to open fire on the youths.

A United Nations mission has said at least 219 people were killed in the unrest that rocked the North African nation for weeks. A women's group has also alleged that security forces raped, tortured and robbed people during the upheaval.

The Ben Ali and Trabelsi extended families were notoriously corrupt -- with business interests in nearly every sector of the Tunisian economy -- and the target of much public outrage after the regime fell.

Tunisia has asked Saudi Arabia to extradite Ben Ali, but the request has gone unanswered. Tunisian authorities also asked the Saudis for details on the ousted president's health after rumors surfaced he'd been ill or possibly died.

The country's tourism-dependent economy has struggled in the wake of the upheaval. The revolution in Egypt and continued fighting in neighboring Libya -- which has occasionally spilled over onto Tunisian soil -- have only made matters worse.

World Bank president Robert Zoellick on Wednesday announced the bank had granted the North African nation $500 million in "urgent budgetary aid." Speaking at a news conference Wednesday that capped a two-day visit to Tunis, he said the African Development Bank has agreed to provide marching funds.

The money is aimed at supporting "reforms to improve governance, transparency, laws on freedom of association, and on efforts to create jobs and promote poor regions," Zoellick said. He added that he considered the country's transitional period a "really historical moment for Tunisia and for the entire region."

Tunisia's revolution -- the first of many revolts that have spread throughout the Arab world this year -- began in late December in a poor region of the country.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Yemen presidential deal faces protests

Sanaa, Yemen (CNN) -- A mass of protesters took to the streets of Sanaa on Sunday to protest against a deal brokered by Persian Gulf nations that grants Yemen's president immunity from prosecution, witnesses said.

The protests spread across 14 provinces Sunday, according to witnesses and journalists on the ground. Witnesses reported hundreds of thousands of protesters in Sanaa alone.

On Saturday, Yemeni officials said the country's president, Ali Abdullah Saleh, had accepted a deal brokered by the Gulf Cooperation Council under which he would step down.

Both Saleh and the Yemeni opposition have agreed to the deal in principle. But Saleh has yet to sign the agreement, which stipulates he leave office within 30 days and provides complete immunity for him and those who served in his regime, said a senior foreign ministry official, who requested anonymity because he is not authorized to speak to the media.

The agreement also calls for a unity government to be formed within seven days.

Yaseen Noman, president of Yemen's largest opposition group, the Joint Meeting Parties (JMP) bloc, told journalists Saturday that members accepted the GCC proposal but had two comments -- they did not want to participate in a unified government, and they cannot force protesters to go home.

The Organizing Committee of the Youth Revolution denounced the proposal in a written statement Sunday.

"We the youth of revolution reject any proposal that does not hold Saleh accountable for the killing over 140 revolution protesters," the committee said.

The group also said it rejected the GCC proposal because it did not call for an immediate ouster of Saleh. The committee also said the GCC effort came to save the regime -- not to help the people.

Mohammed Albasha, spokesman for the Yemeni Embassy in Washington, said the opposition has to accept the final deal before Saleh will sign.

According to Yemeni government spokesman Abdu Ganadi, the ruling party said the opposition must accept the proposal completely or reject it -- partial agreements will not be accepted.

The GCC -- a bloc of six oil-producing Gulf nations -- has been working to ease tensions between Saleh and an increasingly restive opposition.

Previously, the opposition JMP bloc had objected to the Gulf initiative for failing to state clearly that Saleh must step down.

Even after agreeing to the deal, Saleh lashed out at the opposition, accusing them of "receiving dirty money to topple the government."

"We are very interested in preventing bloodshed because the Yemeni blood is very precious and the opposition can't drag us to killing each other," Saleh said. "Civil war will not only affect Yemen, but also the whole region and the international security.

He said the JMP was trying to grab power outside the framework of democracy.

"I am ready to quit, but according to the constitution, which stipulated change through the ballot boxes and free elections," he said.

Violent anti-government demonstrations have erupted for many weeks across Yemen and the chorus calling for Saleh's ouster has grown louder.

Saleh has been in power since 1978 and served as a staunch U.S. ally in the fight against al Qaeda in the Arabian Peninsula. He has argued he should stay in power because he is best equipped to fight Islamic militants.

He has also said he accepts opposition demands for constitutional reforms and holding parliamentary elections by the end of the year. He promised not to run for president in the next round of elections.

But earlier this month, Saleh said he would not offer any more concessions to those demanding reforms.

CNN's Christine Theodorou and journalist Hakim Almasmari contributed to this report.

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Lindsay Lohan faces 4 months jail time for probation violation

Lindsay Lohan was bailed out of jail Friday after she was sentenced for violating her probation.NEW: Lohan leaves jail after 5 hours in custody Friday eveningShe posted a $75,000 bond while she appeals the jail sentenceThe judge sentences Lohan to 120 days in jail for a probation violationLohan's theft charge is reduced from a felony to a misdemeanor

Los Angeles (CNN) -- Lindsay Lohan, accused of stealing a necklace, spent five hours in custody before posting a $75,000 bond Friday evening after a judge sentenced her to 120 days in jail for violating her drunk driving probation.

Her release from Los Angeles County's Lynwood Correctional Facility capped a long day that included a victory for the actress when a judge reduced the felony grand theft charge to a misdemeanor.

Lohan will remain free on bond while her lawyer appeals the jail sentence for the probation violation, but she must immediately start serving 480 hours of community service, Los Angeles County Superior Court Judge Stephanie Sautner said.

The community service, includes 360 hours at a downtown Los Angeles women's center, which Judge Sautner suggested might cause Lohan to behave better after seeing "how truly needy women and women who have fallen on real hard times have to live."

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She must complete another 120 hours of community service at the Los Angeles County morgue.

The judge ruled Friday that the necklace theft case against Lohan will go forward to trial, but the felony charge was reduced to a misdemeanor.

"I'm going to give her an opportunity," Sautner said.

Sautner did not buy the defense argument that Lohan accidentally walked out of a Venice, California, jewelry store wearing a necklace that later appeared around her neck in photographs taken five days later.

"If in fact it was an accident, she could have called the store back," Sautner said.

People.com: Judge scolds Lohan

Defense attorney Shawn Holley argued that Lohan was busy and scattered when she was at the store and absent-mindedly walked out with the necklace.

"It's undisputed that Ms. Lohan walked out of the store with the necklace on," Holley said. The prosecution must show she had "specific intent to permanently deprive the store of that necklace."

While Holley conceded that Lohan "did not rush to return the necklace," but it just "makes her not a very considerate or courteous person."

"The fact that she may not have been a courteous or considerate person doesn't make her a thief," Holley said.

"I see the intent here and the level of brazenness to say 'Let me see what I can get away with here,' " Sautner said.

A police detective testified that Lohan's assistant handed the necklace to a police officer after learning through a website posting that police had obtained a search warrant hours earlier to search for it in her home.

Prosecutor Danette Meyers argued that "it doesn't take a rocket scientist" to realize Lohan returned the necklace to police because she knew her home was about to be searched.

Lohan's trial date was set for June 3, but she must return to court for a hearing May 11, the judge said.

A misdemeanor could still result in up to a year in prison for Lohan.

Before delivering the good news to Lohan about the reduction of the charge, the judge addressed her much-publicized misbehavior.

"She thumbs her nose at the court," Sautner said, referring to an incident with another judge last year. "She walks into court with 'F U' on her fingernails. I don't know what that means unless it has 'I am' before it."

The jeweler who accused Lohan of stealing the gold and diamond necklace testified Friday that she had not gotten any money from selling the security camera video of the actress in her store.

Kamofie and Company owner Sofia Kamen was the second witness called by the prosecution in the preliminary hearing.

Holley used the the store's licensing of the video, for a reported $40,000, to question Kamen's motives in accusing Lohan of theft.

All of the money from the video licensing went to publicist Christopher Spencer, who Kamen said she fired last month because he was negotiating deals for the store that she was not interested in, she testified.

Kamen said that she realized the necklace was missing 10 minutes after the actress left the store last January.

She wasn't closely watching Lohan, even though there was another incident four days earlier in which the actress almost walked out wearing a diamond earring.

"We thought it was an accident," Kamen said. "We weren't thinking that she would take it."

The first prosecution witness was Tinelli Comsooksri, a store employee who was working the day of the earring incident.

"She was covering the earring that she still left on with her hair," Comsooksri said. She stopped Lohan as she was walking out, Comsooksri said.

As prosecutor Meyers held the infamous necklace, now known as "People's Exhibit 2," Kamen testified that it was priced at $2,500 although it cost the store only $850. She explained that retail jewelers routinely triple the wholesale price.

The value of the necklace was a crucial issue for Lohan for the felony grand theft charge to be reduced to a misdemeanor. Shoplifting offenses are charged as petty theft if the property taken is valued at less than $950.

Lohan has been in court nine times in the past year, mostly for hearings related to probation violations for her 2007 drunk driving case.

She did a short stint in jail last year, but she also checked into substance abuse rehab twice under court order.

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Obama Faces Heavy Lift in Downplaying U.S. Credit Warning

In this April 14 photo, President Obama speaks to media in the Oval Office of the White House.

President Obama is once again hitting the road, or perhaps the trail, to sell his financial prescription for the country. But a day after a leading agency put the U.S. government on notice that it was at risk of losing its sterling credit rating, the president faces a heavy lift in convincing voters that Washington is on track toward fixing its debt problem. 

Standard & Poor's Ratings Service sent shock waves through economic and political circles Monday when it lowered its outlook for U.S. debt from "stable" to "negative." Though it kept U.S. credit ratings steady, the agency warned that political deadlock could compel it to downgrade Washington's rating in just a couple years. 

Anyone who has dealt with a less-than-stellar credit rating knows how that complicates their ability to obtain anything from a car loan to a mortgage. And while the White House downplays the S&P outlook, others say it should serve as a wake-up call for the country to get out of debt. 

"No one can portray this as good news when a rating agency decides to go public with its reservations," said Douglas Holtz-Eakin, former director of the Congressional Budget Office during the George W. Bush administration. He said not only does this pose a credit problem for the country, but it jeopardizes the ability of the United States to attract investment from job-creators. 

"That's not hard for people to understand," he told FoxNews.com. 

Obama and his team are working hard to play down the announcement and keep spirits high about the possibility of a meaningful deficit-reduction agreement. The president gave a talk about his budget vision Tuesday morning at a community college in northern Virginia, where he expressed confidence in the possibility of a deal. 

"I believe that Democrats and Republicans can come together to get this done," Obama said. He agreed that failing to address the crisis could do "serious damage' to the economy, but said he's "optimistic."

The president, repeating the backstory he gave during last week's budget address, blamed the deficit problem in large part on Bush-era tax cuts for top earners, the wars in Iraq and Afghanistan, and the Medicare prescription drug benefit, while defending the deficit-financed stimulus programs under his watch. He expressed the problem in everyday terms, saying, "Just like you, America has to start living within its means." 

The president also tried to rally support for his proposals, telling the audience: "I want everybody to be in the game." 

After Virginia, Obama plans to speak at the Facebook headquarters in California Wednesday and head next to Reno, Nev., on Thursday. 

The S&P announcement was in large part a political judgment -- the ratings agency based its assessment on the sentiment that a budget agreement addressing the country's long-term deficit and debt problem might not be reached until after the 2012 election. The Obama administration claims the atmosphere for consensus is better than S&P predicts. 

"We think that the political process will outperform S&P expectations," White House Press Secretary Jay Carney said Monday. He said both parties agree on a long-term deficit-reduction target of about $4 trillion -- Obama is looking to achieve that in 12 years, while Republicans are shooting for a little bit more than that in 10 years -- and that they can find common ground on how to reach it. 

"A statement that observes the fact that there is often gridlock in Washington and that the contentiousness between the two parties sometimes prevents us from getting things done is not one we would disagree with," Carney said. "But the fact is ... when the issues are important, history shows that both sides can come together and get things done. President Ronald Reagan did that with Tip O'Neill, Democratic speaker of the House. President Bill Clinton did it with Newt Gingrich, Republican speaker of the House. President Obama did it 10 days ago with John Boehner, Republican speaker of the House. We can do it again." 

Treasury Secretary Tim Geithner, in an interview with Fox Business Network Tuesday morning, said there is no risk the country will lose its AAA credit rating. 

Republicans, though, do not appear to share that optimism, absent an agreement that ties big spending cuts to a looming vote on whether to raise the country's $14.3 trillion debt ceiling. The White House does not want the debt-ceiling vote contingent on a spending agreement, but Republicans are pushing to link the two. 

House Republican Leader Eric Cantor, R-Va., in a pre-buttal to Obama's deficit talk in northern Virginia, wrote in the Culpeper Star-Exponent newspaper Tuesday that the country is "at a crossroads." He championed the GOP budget proposal, which would make major changes to Medicare and Medicaid. 

"Today, President Obama will come to Virginia to deliver the latest in a series of speeches high on partisan attacks, low on solutions," Cantor wrote. "Mr. President, during your historic bid for the White House, you promised to change the way Washington works. But there's no greater manifestation of the business-as-usual mentality than punting tough decisions and attacking those offering serious solutions."

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Woman faces charges for alleged threats to kill Wisconsin lawmakers

Budget battles in the 'Bust Belt'STORY HIGHLIGHTSShe is accused of sending threatening e-mails to 16 Wisconsin state senatorsSome of the e-mails have threats to kill the senators and their families, authorities sayThe suspect was upset over the law to limit collective bargaining, authorities saySenator: "It's hard to know how serious some of this stuff is"Read more about this story from CNN affiliate WKOW.

(CNN) -- A Wisconsin woman, apparently enraged over the new state law that limits collective bargaining for government workers, is being accused of sending e-mails to 16 Republican state senators threatening to kill them.

Katherine Windels, 26, faces four counts of using a computer to threaten, injure, or harm and creating a bomb scare, authorities said.

A criminal complaint released by the Dane County District Attorney's Office alleges that the woman from Cross Plains, Wisconsin, admitted to the threats. She said she sent the e-mails because she was angry at lawmakers who voted to limit collective bargaining for about 300,000 state workers.

Windels, according to the complaint, used two separate e-mail accounts to send e-mails to the Republican state senators including one to Sen. Robert Cowles on March 9.

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