NRA Ad Calls Obama 'Elitist Hypocrite'

Pablo Martinez Monsivais/AP Photo

As the White House prepares to unveil a sweeping plan aimed at curbing gun violence, the National Rifle Association has launched a preemptive, personal attack on President Obama, calling him an “elitist hypocrite” who, the group claims, is putting American children at risk.

In 35-second video posted online Tuesday night, the NRA criticizes Obama for accepting armed Secret Service protection for his daughters, Sasha and Malia, at their private Washington, D.C., school while questioning the placement of similar security at other schools.

“Are the president’s kids more important than yours? Then why is he skeptical about putting armed security in our schools, when his kids are protected by armed guards at their school?” the narrator says.

“Mr. Obama demands the wealthy pay their fair share of taxes, but he’s just another elitist hypocrite when it comes to a fair share of security,” it continues. “Protection for their kids and gun-free zones for ours.”

The immediate family members of U.S. presidents – generally considered potential targets – have long received Secret Service protection.

The ad appeared on a new website for a NRA advocacy campaign – “NRA Stand and Fight” — that the gun-rights group appears poised to launch in response to Obama’s package of gun control proposals that will be announced today.

An NRA spokesman said the video is airing on the Sportsman Channel and on the web for now but may appear in other broadcast markets at a later date.

The White House had no comment on the NRA ad.

In the wake of last month’s mass shooting at Sandy Hook Elementary School, the Obama administration has met with a cross-section of advocacy groups on all sides of the gun debate to formulate new policy proposals.

The NRA, which met with Vice President Joe Biden last week, has opposed any new legislative gun restrictions, including expanded background checks and limits on the sale of assault-style weapons, instead calling for armed guards at all American schools.

Obama publicly questioned that approach in an interview with “Meet the Press” earlier this month, saying, “I am skeptical that the only answer is putting more guns in schools. And I think the vast majority of the American people are skeptical that that somehow is going to solve our problem.”

Still, the White House has been considering a call for increased funding for police officers at public schools and the proposal could be part of a broader Obama gun policy package.

Fifty-five percent of Americans in the latest ABC News/Washington Post poll say they support adding armed guards at schools across the country.

“The issue is, are there some sensible steps that we can take to make sure that somebody like the individual in Newtown can’t walk into a school and gun down a bunch of children in a shockingly rapid fashion.  And surely, we can do something about that,” Obama said at a news conference on Monday.

“Responsible gun owners, people who have a gun for protection, for hunting, for sportsmanship, they don’t have anything to worry about,” he said.

ABC News’ Arlette Saenz, Mary Bruce and Jay Shaylor contributed reporting. 

This post was updated at 9:32 am on Jan. 16 to reflect include comment from an NRA spokesman.

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Are gun curbs just symbolism?

STORY HIGHLIGHTS

• Gun violence recommendations are expected from Vice President Biden on Tuesday


• The proposals are expected to contain substantive and symbolic ideas to curb gun violence


• Presidents use symbolism to shift public opinion or affect larger political or social change

Washington (CNN) -- The pictures told the story: Vice President Joe Biden looked solemn, patrician and in control as he sat at a long table in the White House, flanked by people on both sides of the gun control issue.

The images conveyed a sense that the White House was in command on this issue.

And that's the point. Historically, presidential administrations have used symbolic imagery—at times coupled with marginal actions—to shift public opinion or affect larger political or social change.

"Politics is a risk taking project," said Julian Zelizer, a Princeton University historian and CNN contributor. "They put together these commissions in response to some crisis. You try a hundred things and hope something works."

On the eve of the Biden-led gun control task force recommendations to President Barack Obama, political experts say it is important that his administration sends a clear signal that it has things in hand.

Obama says gun lobby stokes fear of federal action

That is especially critical in what will likely be an uphill battle to push specific changes, like an assault weapons ban, as part of a broader effort on gun control.

The first move in the image battle will be to appear to move quickly and decisively.

"You have to give the Obama administration credit for one thing: They've learned from history to do things quickly," Larry Sabato, director of the University of Virginia's Center for Politics, said of previous task force initiatives that fizzled.

In 2010, Obama appointed a bipartisan commission headed by former Republican Sen. Alan Simpson of Wyoming and Erskine Bowles, a former Democratic White House chief of staff, to come up with a proposal to balance the budget and cut the debt.

Like the gun task force, Simpson-Bowles reviewed current regulations, gathered input from the public and engaged in tense internal conversations. But after months of working on a proposal—a blend of steep revenue increases and spending cuts—the group struggled to agree to a solution. The president did not take up the recommendations.

Obama largely avoided the issue of gun control during his first term.

He wrote an opinion piece two months after the 2011 assassination attempt on Rep. Gabrielle Giffords of Arizona, acknowledging the importance of the Second Amendment right to bear arms. In the piece he also called for a focus on "effective steps that will actually keep those irresponsible, law-breaking few from getting their hands on a gun in the first place."

Newtown searches for answers a month later

But in the aftermath of that shooting and as the election season loomed, the Justice Department backed off from a list of recommendations that included a measure designed to help keep mentally ill people from getting guns.

For now, at least, there is a sense in Washington that the Newtown, Connecticut, school shooting where 26 people -- 20 of them young children -- were slaughtered could lead to meaningful legislative reform.

Public opinion would seem to suggest that the White House efforts are well timed.

In the month since the massacre, a new poll showed the percentage of Americans who said they were dissatisfied with America's gun laws has spiked.

The Gallup survey released on Monday showed 38% of Americans were dissatisfied with current gun regulations, and wanted stricter laws. That represented 13-point jump from one year ago, when 25% expressed that view. "You want to strike while the iron is hot," Sabato said. "We Americans have short attention spans and, as horrible as the Newtown shooting was, will anyone be surprised if we moved along by spring?"

The White House has since worked overtime to show it considers gun control an urgent matter.

The vice president has spent the last week meeting with what the White House calls "stakeholders" in the gun control debate.

On Monday, Biden was to meet with members of a House Democratic task force on guns, along with Attorney General Eric Holder, Homeland Security Secretary Janet Napolitano, and Kathleen Sebelius, the secretary of Health and Human Services.

Universal background check: What does it mean?

In a series of face to face discussions on Thursday, Biden sat down with the National Rifle Association and other gun owners groups before conferring with representatives from the film and television industry.

In a sign the White House is prepared to move aggressively on its proposals, Biden made public comments just before meeting with the National Rifle Association, the country's most powerful gun lobby.

"Putting the vice president in charge of (the task force) and having him meeting with these groups is intended to show seriousness and an effort to reach out and respond to concerns and wishes of various groups," said Alan Abramowitz, a political science professor at Emory University.

Still, the NRA expressed disappointment in its discussion with Biden and later released a statement that accused the administration of mounting "an agenda to attack the Second Amendment."

Organizations seeking tougher gun control laws insist an assault weapons ban is critical to addressing the nation's recent rash of mass shootings. However, such a ban could be difficult in a Congress mired in gridlock.

"The bully pulpit is limited. It's hard for the president to sustain that momentum," Zelizer said of the White House's gun control efforts after the Newtown shootings. "The thing about symbolism is, like the shock over Newtown, they fade quickly."

Newtown opens eyes to other gun violence against young people

CNN's Jim Acosta and Kevin Liptak contributed to this report

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Bidding showdown over F&N expected on Jan 21

SINGAPORE: A corporate shoot out over Fraser & Neave is expected on January 21.

The Securities Industry Council (SIC) has said the final time by which TCC Assets or OUE Baytown can revise its offer is 5.30pm on January 21. Each party will either announce any revision to their current takeover bids or walkaway from the deal.

In a statement issued on Tuesday, SIC said that "given that neither TCC nor OUE Baytown has declared its offer final, the council considers that the company's shareholders should be provided with certainty to make their investment decisions in respect of the competing offers."

If either TCC or OUE makes a revised offer on January 21, then an "auction procedure" will kick-in.

TCC Assets on Tuesday extended its S$8.88 per share offer for F&N for the seventh time to January 21, the very same day that rival bidder OUE's offer expires. A consortium led by OUE made a S$9.08 per share bid for F&N in November 2012.

This, after a first bid by Thai tycoon Charoen Sirivadhanabhakdi through his investment assets, TCC and Thai Beverage, in September.

But given that the tug-of-war has been ongoing for several months, some experts said that the Securities Industry Council will not allow for an indefinite period of market uncertainty.

Shares of F&N have been trading above the offers made by TCC Assets and OUE, indicating that shareholders are expecting higher bids.

Fraser & Neave shares ended Tuesday up 0.1 per cent at S$9.70.

-CNA/ac

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Gordon Brown: Youth demand rights

Supporters of child activist Malala Yousafzai mark "Malala Day" in Karachi, Pakistan, on November 10, 2012.

STORY HIGHLIGHTS

• Gordon Brown says 2013 already being defined by young people prepared to demonstrate for rights


• Arab Spring was a role model for activism around diverse causes, says U.N. special envoy for global education


• Following attack on Malala Yousafzai, petitions supporting education for girls signed by about three million people


• Many girls saying elders can no longer trample on their rights, says former UK prime minister

Editor's note: Gordon Brown is the former UK prime minister and currently U.N. Special Envoy for Global Education. You can sign the petition against child labor on www.educationenvoy.org

(CNN) -- CNN's Freedom Project has broken new ground by exposing the horrors of child labor, the shame of forced marriages, the brutality of child militias and the injustice of the routine everyday discrimination practised against millions of girls, denied even the most basic of education -- most blatantly revealed in the shooting by the Taliban of Malala Yousafzai.

This year I foresee the Freedom Project gaining new momentum as young people take to the streets and airwaves, grow more vociferous in championing their rights and prove that they are more assertive in seeking change than the adults tasked with their care.

This week a global petition calling for justice for young women in India has attracted more than one million signatures, principally from young people, as a result of the campaigning energies of Avaaz, the global online petitioning movement. Young men and women dominate this month's countrywide anti-rape demonstrations, but all across Asia young people have hit the streets in record numbers at the start of the year.

Gordon Brown

In Bangladesh, young people are leading a movement to demand "child marriage-free zones" to end the practice of girls aged 10, 11 and 12 being forced into loveless marriages against their will. I have met some of these brave girls who are proving more determined in standing up against child marriage than their parents.

In Nepal, days before India's anti-rape protests, young people were already marching, demanding an end to men's violence against women and last week demonstrators voiced their outrage at a tense meeting with the prime minister.

In India, another set of street demonstrations is also gaining ground. Young people who have escaped, often when just eight or nine, from bonded labor, have been leading a march to end this form of child slavery, a march that the chief justice of India joined and endorsed.

And in Burma (also known as Myanmar), where Aung San Suu Kyi led demonstrations for democratic rights 25 years ago, 200,000 young people demonstrated against child trafficking.

Already in response to worldwide revulsion at violence against women, major demonstrations are being organized in Africa and Asia in February.

These demonstrations build on the role played by young people in the Arab Spring, the growth of an "indignant" youth movement in Spain and the student demonstrations about tuition fees and rights to study that have characterized countries as diverse as Canada and China, all of which have focused on the dearth of opportunities for young people.

By the end of January, three million people will have signed the Malala petitions, calling for girls to be given their rightful opportunities to go to school. But what is most noteworthy is that one million of these signatures are being assembled by young Pakistani children who are denied a place in school. When I visited Pakistan recently, I was struck by the determination of schoolgirls Kainat and Shazia, friends of Malala who were also injured in the Taliban attack. Both girls determined, in spite of the dangers, to stand up to the intimidation, return to school and study to be doctors.

Dictating daughters' destinies

The same determination is displayed by Imran, a young Indian from Bihar who wishes to return to school and train to become a teacher. Promised a chance to send home money to his family, he was forced to work unpaid in a sweatshop for 14 hours a day. Thankfully Imran was rescued by the Global March Against Child Labour. Now his cause, and that of thousands of others like him, will lead to the presentation of a petition to the Indian parliament calling for the abolition of child labor. Indeed it is expected that in advance of the Indian parliament's vote on the issues, one million more mainly young people will add their names.

The act of creating "child marriage-free zones" reminds us that even in 2013 patriarchs still attempt to dictate their daughters' destinies. The zones also demonstrate patriarchy will not hold back girls' aspirations forever. Protests against male violence against women remind us that too many men still treat women as their chattels, to be exploited and brutalized, but the scale of protests illustrates that the men who are violating rights are being challenged.

The demand from girls to go to school is also a reminder that for most of history, adult generations have been able to dictate whether the next generation is free to dream of better futures or not. Now, girls are saying that their elders can no longer trample upon their rights.

You don't need to fall for a technological determinism to understand that the Internet is helping to radicalize a new generation of young people thanks to our new-found capacity to communicate instantaneously across continents. Just as opinions during the Arab Spring spread rapidly via new technologies, so young people in Asia are today communicating, exchanging views and learning more about other young people. They are making connections across old borders, breaking down traditional barriers, crossing ancient divides and smashing long-established walls of prejudice.

In the 1960s John Kennedy talked of crossing a new frontier. In 2013, because of the advances of technology, young people are finding that there is no frontier.

Indeed the sheer scale of the anti-child slavery demonstration of 200,000 young people in Rangoon shows that regimes can repress for a time but they cannot maintain their repression indefinitely. The marches against child trafficking show that the truth will eventually come out and the victims' cries for help will not be silenced forever.

It is not technology however that is driving young people's concerns, it is the yawning gap between the promise of globalization and its reality that brings young people out on to the streets. The promise is that every young person has the chance to rise as far as their talents can take them. Young people are, however, coming to understand the reality of globalization -- that their opportunities and rights depend more on where they were born and who they were born to than on their merit, their effort or their talent.

It is this growing awareness of the gap between what you have in yourself to become -- and yet what you are -- that is fueling the demand for change. Our task is to offer a pathway out of exploitation and into freedom, out of exclusion and into education. When as much as 80% of global inequality is explained by birth and background, education should be the counterweight, the driver of equal opportunity.

The case for global investment in basic education (we need at least two million more teachers and four million classrooms) is not just that individuals will benefit from educational opportunity but that countries will too. Indeed, mobilizing the talent of young people is the only sure way of unlocking the potential of the poorest countries in the world.

We spend 250 times more in the West schooling a child up to the age of 16 than we do on the average African child. Our pattern of educational spending compounds rather than corrects or compensates for these glaring inequalities. Annual educational aid is only $14 per African child.

An April summit, led by U.N. Secretary-General Ban Ki-moon and World Bank President Jim Kim, will demand concrete action from off-track countries to move children from the violation of their basic rights to the guarantee of their right to education. In the coming year I hope the U.N. will hold a debate in its General Assembly on systematic violations of children's rights, demanding that, instead of the exploitation these young people suffer today, we open the doors to opportunity in education.

My aim for 2013 and beyond is to move millions of children from the abyss of exploitation today into the opportunity of education tomorrow. This is the one way we can not only release children from abuse but break the cycle of poverty which is at risk of being transmitted from generation to generation.

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Long Island high school on lockdown

Police guard the entrance of Elmont Memorial High School, after reports of a suspicious person prompted a lockdown Tuesday, Jan. 15, 2013. / WCBS

ELMONT, N.Y. Elmont Memorial High School has been placed on lockdown after a report of a suspicious person, possibly with a weapon, in the area, CBS Station WCBS reports.

The lockdown was put into effect shortly after 8 a.m.

No injuries have been reported.

Nassau County Police are guarding the entrance of school.

A search of the school and the area is ongoing.

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Oprah Describes Intense Armstrong Interview

Oprah Winfrey said today that disgraced cyclist Lance Armstrong came well prepared for their highly anticipated interview, although he "did not come clean in the manner [she] expected."

Winfrey, who discussed the interview on "CBS This Morning" today, said, "We were mesmerized and riveted by some of his answers. I feel that he answered the questions in a way that he was ready. … He certainly had prepared himself for this moment. … He brought it. He really did."

Armstrong had apologized to staffers at the Livestrong Foundation before the Monday interview with Winfrey at a hotel in Austin, Texas, and reportedly admitted to them that he used performance-enhancing drugs throughout his storied career.

Armstrong also confessed to Winfrey to using the drugs, sources have told ABC News. Winfrey said this morning that the entire interview, for which she had prepared 112 questions, was difficult.

"I would say there were a couple of times where he was emotional," she said. "But that doesn't describe the intensity at times."

As for the cyclist's sense of remorse, Winfrey said that will be for viewers to decide.
"I would rather people make their own decisions about whether he was contrite or not," she said.

The interview will air on the OWN network for two nights, starting at 9 p.m. ET Thursday and continuing Friday.

Meanwhile, the federal government is likely to join a whistle-blower lawsuit against Armstrong, originally filed by his former cycling teammate Floyd Landis, sources told ABC News.

The government is seeking to recoup millions of dollars from Armstrong after years of his denying that he used performance-enhancing drugs, the sources said. The U.S. Postal Service, which is an independent agency of the federal government, was a longtime sponsor of Armstrong's racing career.

Joel Saget/AFP/Getty Images

Lance Armstrong Doping Confession: Why Now? Watch Video

Cyclist Lance Armstrong Apologizes to Livestrong Staff for Doping Scandal Watch Video

Lance Armstrong Stripped of Tour de France Titles Watch Video

The deadline for the government's potentially joining in the matter was a likely motivation for Armstrong's interview with Winfrey, sources told ABC News.

The lawsuit remains sealed in federal court.

Armstrong is now talking with authorities about possibly paying back some of the Postal Service sponsorship money, a government source told ABC News Monday.

The deadline for the department to join the case is Thursday, the same day Armstrong's much-anticipated interview with Winfrey is set to air.

Armstrong is also talking to authorities about confessing and naming names, giving up others involved in illegal doping. This could result in a reduction of his lifetime ban, according to a source, if Armstrong provides substantial and meaningful information.

As for the Winfrey interview, it was Armstrong's first since officials stripped him of his world cycling titles in response to doping allegations.

Word of Armstrong's admission comes after a Livestrong official said that Armstrong apologized Monday to the foundation's staff ahead of his interview.

The disgraced cyclist gathered with about 100 Livestrong Foundation staffers at their Austin headquarters for a meeting that included social workers who deal directly with patients as part of the group's mission to support cancer victims.

Armstrong's "sincere and heartfelt apology" generated lots of tears, spokeswoman Katherine McLane said, adding that he "took responsibility" for the trouble he has caused the foundation.

McLane declined to say whether Armstrong's comments included an admission of doping, just that the cyclist wanted the staff to hear from him in person rather than rely on second-hand accounts.

Armstrong then took questions from the staff.

Armstrong's story has never changed. In front of cameras, microphones, fans, sponsors, cancer survivors -- even under oath -- Lance Armstrong hasn't just denied ever using performance enhancing drugs, he has done so in an indignant, even threatening way.

Armstrong, 41, was stripped of his seven Tour de France titles and banned from the sport for life by the U.S. Anti-Doping Agency in October 2012, after allegations that he benefited from years of systematic doping, using banned substances and receiving illicit blood transfusions.

"Lance Armstrong has no place in cycling and he deserves to be forgotten in cycling," Pat McQuaid, the president of the International Cycling Union, said at a news conference in Switzerland announcing the decision. "This is a landmark day for cycling."

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Is China easing up on local media?

A protester calls for greater media freedom outside the headquarters of Nanfang Media Group in Guangzhou on Jan. 9.

STORY HIGHLIGHTS

• Young: Handling of Southern Weekly row demonstrated tolerant side of new leadership


• Traditional, newer media can serve as tools for achieving goals in China's modernization


• The fight against corruption in China is at the top of the list for incoming leader, Xi Jinping


• Young: Media has also emerged as an important tool for combating other social problems

Editor's note: Doug Young teaches financial journalism at Fudan University in Shanghai and is the author of The Party Line: How the Media Dictates Public Opinion in Modern China published by John Wiley & Sons. He also writes daily on his blog, Young's China Business Blog, commenting on the latest developments in China's fast-moving corporate scene.

Shanghai, China (CNN) -- China's traditional iron-handed approach to the media has taken a surprise turn of tolerance with Beijing's soft handling of a recent dispute with local reporters, in what could well become a more open attitude toward the media under the incoming administration of presumed new President Xi Jinping.

The new openness is being driven in large part by pragmatism, as the government realizes that both traditional and newer media can serve as powerful tools for achieving many of its goals in the country's modernization.

The recent conflict between reporters at the progressive Southern Weekly and local propaganda officials over a censorship incident left many guessing how the government would respond to the first clash of its kind in China for more than 20 years. The result was a surprisingly mild approach, including mediation by a high-level government official and a vague promise for less censorship in the future.

Read: Censorship protest a test for China

The unusually tolerant tack could well reflect a new attitude by Xi and other incoming leaders set to take control of China for the next decade, all of whom have come to realize the media can serve many important functions beyond its traditional role as a propaganda machine.

At the top of Xi's list is the fight against corruption, a problem he has mentioned frequently since taking the helm of the Communist Party last year. The party has tried to tackle the problem for years using its own internal investigations, but progress was slow until recently due to protection many officials received through their own sprawling networks of internal relationships, known locally as guanxi.

Read: Corruption as China's top priority

All that began to change in the last two years with the rapid rise of social media, most notably the Twitter-like microblogs known as Weibo that are now a pervasive part of the Chinese Internet landscape and count hundreds of millions of ordinary Chinese among their users. Those social media have become an important weapon for exposing corruption, allowing thousands of ordinary citizens to pool their resources and build cases against officials they suspect of using their influence for personal gain.

This increasingly sophisticated machine was on prominent display last year in a case involving Yang Dacai, a local official in northwestern Shaanxi province who infuriated the online community by smiling at the site of a horrific accident scene. Netizens quickly turned their outrage into an online investigation, and uncovered photos of him wearing several luxury watches he could hardly afford on his government salary. As a result, the government ultimately opened an investigation into the matter and Yang was sacked from his posts.

In addition to its role in battling corruption, the media has also emerged as an important tool for combating and addressing many of the other social problems that China is facing in its rapid modernization. Barely a week goes by without a report on the latest national food safety scandal or case of illegal pollution in both traditional and social media, with such reports often followed by government investigations.

Beijing leaders have also discovered that the media can also be an important vehicle for improving communication between the government and general public -- something that was a low priority in previous eras when officials only cared about pleasing their higher-up party bosses.

Following a Beijing directive in late 2011, most local government agencies and other organizations have all established microblog accounts, which they use to keep the public informed about their latest activities and seek feedback on upcoming plans. Such input has become a valuable way to temper traditional public mistrust toward the government, which historically didn't make much effort to include the public in any of its internal discussions.

Lastly, the government has also discovered that media, especially social media, can be an effective tool in gauging public opinion on everything from broader national topics like inflation down to very local issues like land redevelopment. Such feedback was difficult to get in the past due to interference by local officials, who tried to filter out or downplay anything with negative overtones and play things up to their own advantage. As a result, central government officials often received incomplete pictures of what was happening in their own country.

With all of these valuable roles to play, the media has become an increasingly important part of Beijing's strategy in executing many of its top priorities.

The government also realizes that a certain degree of openness is critical to letting the media perform many of those roles, which may explain its relatively tolerant approach in the recent Southern Weekly conflict. Such tolerance is likely to continue under Xi's administration, helping to shift more power towards a field of increasingly emboldened reporters at both traditional and new media and away from their traditional propaganda masters.

Follow @CNNOpinion on Twitter.

Join us at Facebook/CNNOpinion.

The opinions expressed in this commentary are solely those of Doug Young.

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Fast food linked to child asthma: study

PARIS: Children who frequently eat fast food are far more likely to have severe asthma compared to counterparts who tuck into fruit, a large international study published on Monday said.

Researchers asked nearly half a million teenagers aged 13-14 and children aged six and seven about their eating habits and whether in the previous year they had experienced wheezing, eczema or an itchy, blocked nose when they did not have cold or flu.

The questionnaires -- completed by a parent or guardian for the younger children -- were distributed in scores of countries.

It marks the latest phase in a long-running collaborative programme, the International Study of Asthma and Allergies in Childhood (ISAAC), which was launched in 1991.

The investigators filtered out factors that could skew results, such as maternal smoking during pregnancy, sedentary lifestyle and body-mass index, in order to focus purely on diet.

They found that fast food was the only food type that could be clearly linked to asthma severity.

Three or more weekly servings of fast food were associated with a 39-per cent increase in the risk of severe asthma among teens and a 27-per cent increase among younger children.

It also added to the risk of eczema and severe rhinitis.

In contrast, eating three or more weekly portions of fruit led to a reduction in symptom severity of between 11 and 14 per cent, respectively.

The study, which appears in the British Medical Association journal Thorax, noted that to prove an association is not to prove a cause -- but argued that a further inquiry was clearly needed.

"If the associations (are) causal, then the findings have major public health significance, owing to the rising consumption of fast foods globally," the authors said.

Previous research has found that the saturated and "trans" fatty acids trigger an inflammatory response from the immune system, the paper noted.

- AFP/xq

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NFL serves up barn burners

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United Airlines scheme saves millions on fuel taxes: lawsuit

CHICAGO A transportation agency plans to file a lawsuit Monday alleging that United Airlines is falsely claiming to buy huge amounts of jet fuel out of a small, rural Illinois office that doesn't even have a computer to avoid paying tens of millions of dollars in taxes in Chicago, where the purchases are allegedly being made.

The Regional Transportation Authority alleges United Aviation Fuels Corp., a subsidy of United Airlines, has operated a "sham" office in the DeKalb County community of Sycamore since 2001 after reaching an agreement to pay the town more than $300,000 a year -- a fraction of what it would have owed in sales taxes in Chicago and Cook County.

"The only reason that United Fuels has an office in Sycamore is to attempt to create a sham tax situs (location) for fuel sales in a lower taxing jurisdiction," reads a draft of the lawsuit obtained by The Associated Press.

United officials say they have not seen the lawsuit, but that the Sycamore operation is legal.

The RTA, which contends the office has no computer and is staffed by one person who only works part time, said consultants visited the site on a recent weekday and found it locked with nobody inside. The agency said judging from the few chairs and empty desks seen through a window, there is little, if any, business occurring in the office.

"Whoever is out there is not negotiating hundreds of millions of dollars worth of jet fuel," said Jordan Matyas, the RTA's chief of staff. He said any negotiations for fuel, as well as delivery scheduling, accounting, credit approval and administrative decisions, are being done in the Willis Tower in downtown Chicago, where United is headquartered.

The RTA alleges that American Airlines is engaged in a similar "sham" business out of an office it rents in Sycamore's City Hall. But Matyas said American was not included in the lawsuit because the airline remains in bankruptcy, and that suing American would require litigating the case both in federal bankruptcy court in New York and in Cook County Circuit Court, where the RTA plans to file its suit against United. He added that the RTA does plan to pursue legal action against American at some point.

The two airlines are spending a staggering amount of money on fuel. Based on sales taxes that were paid in Sycamore, the RTA estimates that in 2012 alone, the two airlines spent "approximately $1.2 billion on jet fuel the airlines" for jets at O'Hare, Matyas said in an email, adding that it is unclear how much of that was later sold to other airlines.

United officials said they have not received a copy of the complaint, but "believe that any such suit would be without merit."

"In fact, the operation of our fuel subsidiary in Sycamore has been examined by tax authorities in the past and has been determined to comply with all applicable laws," spokeswoman Megan McCarthy said in an email.

American spokeswoman Mary Frances Fagan said in an email that the airline does not comment on pending litigation but added, "What American is doing is permitted under Illinois law."

Sycamore's city manager, Brian Gregory, declined comment.

The RTA said in a prepared statement that "sales tax dodges" have cost the city of Chicago $133 million in lost sales tax revenue since 2005. They have cost Cook County an additional $60 million and Metra, Pace and the Chicago Transit Authority another $96 million, according to the RTA, which oversees the three agencies and relies on sales tax revenue for much of its funding.

"CTA, Metra and Pace have had to work with constrained budgets and have needed to raise fares and reduce service because the money's just not there," RTA executive director Joe Costello said in the news release. "Now we know why."

The lawsuit is potentially embarrassing for Chicago Mayor Rahm Emanuel, who earlier this year called United's decision to move its corporate headquarters to Chicago "great news for all Chicagoans."

When told of the lawsuit, Emanuel spokeswoman Sarah Hamilton said, "The City has been supportive of efforts in Springfield to ensure corporations pay their fair share, but we have not seen this specific lawsuit and therefore cannot comment on it."

According to the RTA, the total sales tax rate in Sycamore is 9.5 percent, compared to 8 percent in Chicago. But the RTA contends the airlines are getting an even better deal: The two companies have entered 25-year agreements that call for Sycamore to "kick back" most of its share of the sales tax on jet fuel, as much as $14 million a year, in exchange for payments of at least $300,000 a year from each airline.

A document provided by the RTA contends that the agreement with United calls for Sycamore to receive $360,000 to $556,000 between 2003 and 2026.

The lawsuit is part of a larger effort by the RTA to combat similar deals between various communities and companies.

The RTA, the city of Chicago and Cook County in 2011 filed lawsuits against Kankakee and the village of Channahon. They alleged that those communities' tax incentive programs are costing other government agencies millions of dollars, because they enable companies to avoid paying higher sales taxes by moving purchases through satellite offices in areas where the sales tax rates are lower.

According to the RTA's lawsuit against Kankakee and Channahon, the agency is owed at least $100 million in lost revenue. The communities contend their programs are legal.

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