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Newly-installed California Gov. Jerry Brown declared a state of fiscal emergency on Thursday, underscoring the need for quick legislative action on the state's massive budget deficit. Without corrective action, he said, California's combined deficit for this year and the next will be $25.4 billion.

It took about 10 years of decisions for the federal budget to get more than a trillion dollars out of whack, and it's going to take at least five years to balance it again. The only way to do it is piece-by-piece, with equal sacrifices from both Republicans and Democrats.

Now that President Obama has signed a sweeping tax bill into law, many Americans want to know how they'll be affected. The compromise deal extends Bush-era tax reductions on income, capital gains and dividends through 2012. But there were also some changes.

While most people support extending at least some of the George W. Bush-era tax cuts due to expire this year, a new Gallup/USA Today survey finds that Americans are deeply divided on which cuts should continue -- and for how long.

House Republicans thwarted an expedited effort by Democrats to extend jobless benefits into next year. It cleared by 258-154 but failed to meet the two-thirds majority needed for "fast-track" passage. Two million Americans could soon lose their aid.

With the two houses divided, the parties will have to compromise. But will they? The challenge will become acute if the Fed's latest stimulus gambit falls short, leaving the economy gasping. The GOP's aversion to spending could be tested.

Tuesday's election results probably won't affect the stock market much, at least not in the short term since the outcome was largely anticipated. But even so, it's worth thinking about the effect divided government could have on the stock market over the next two years.

If history is any indicator, stocks tend to do best when the president is a Democrat and Congress is Republican. Other precedents offer conflicting signs. But it seems clear that stocks often outperform in the year after a midterm election.

House Democrats may help overrule President Barack Obama by voting to extend George W. Bush-era tax cuts on investment income beyond this year, the Associated Press reported.

Republicans in the House of Representatives promised to end "job-killing tax hikes" and repeal the health reform law as part of their campaign manifesto for the November election. In their "Pledge to America," House Republicans also say they will ban federal funding for abortion, cancel any...