Congress Daily Options

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CongressDaily AM for Monday, Dec. 14, 2009

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CONTENTS

OUTLOOK: WHILE HEALTHCARE DEBATE CONTINUES, CR IS SET TO EXPIRE
By Anna Edney and Humberto Sanchez, with Megan Scully, Bill Swindell,
George E. Condon Jr., Chris Strohm, David Hatch and Peter Cohn
contributing


Deadlines to adjourn or pass healthcare reform have continually been
pushed back this year, but there is at least one iron-clad deadline come
Friday: expiration of the continuing resolution funding the government.

Democratic leaders this week intend to pass a final FY10 spending package
that will include the Defense Appropriations bill, a debt limit increase of
up to $1.9 trillion, a likely six-month extension of unemployment insurance
and COBRA benefits, and possibly a provision designed to create jobs.

House and Senate Democrats continued to negotiate on the Defense package
as Democratic leaders work to get enough votes to pass the package in the
House and Senate before the end of the week. If Congress fails to act by
then, another CR will be needed.

The prospect of passing the Defense package became less clear Friday when
House Majority Leader Hoyer announced that House Democrats would send a
package to the Senate that includes the House-passed statutory pay/go bill,
a move opposed by Senate Budget Chairman Kent Conrad because the measure
exempts four policy items: cutting middle-class taxes, reducing the estate
tax, patching the alternative minimum tax and providing higher Medicare
payments to physicians.

"I am hopeful we will see in the coming week a resolution of the
differences," Hoyer said, who indicated negotiations are expected to
intensify in the coming days as Friday's deadline approaches.

Pay/go requires offsets for any new tax and mandatory spending bills that
would add to the deficit and is currently a rule in the House and Senate.
Many House Democrats, particularly Blue Dog Coalition members, want to make
it a law. They contend pay/go played a major role in producing budget
surpluses in the 1990s.

The push for a pay/go law also stems from a promise made by House
Democratic leaders to the Blue Dogs in exchange for their support for the
FY10 budget resolution and the $787 billion stimulus package.

Many of the 52 Blue Dogs are threatening to vote against the package,
particularly due to the debt limit increase, unless the pay/go provision is
included.

"The Blue Dogs are prepared to make some tough decisions in the coming
days to make sure we take this necessary first step to putting our country
back on a path to fiscal responsibility," Rep. Jim Matheson, D-Utah, Blue
Dog Co-Chairman for Communications, said Friday.

Hoyer added that it would be difficult to pass the Defense measure without
Blue Dog support, as Republicans have pledged to oppose it over the
extraneous provisions.

But getting it through the Senate with pay/go will be difficult at best.

Both Conrad and Senate Majority Whip Durbin said Friday that unless an
agreement is reached, the Senate would likely reject the package if it
includes the pay/go provision.

Also part of the negotiations will be a push by Conrad and about 11 other
Democrats, who have said they will not support a debt limit increase unless
they can vote on legislation establishing a commission that would make
recommendations Congress must consider on reducing the deficit.

Their support will be crucial to pass the package, given that Senate
Republicans have said they will not support a debt limit increase as part
of broader legislation.

Adding a wrinkle to the 11th-hour drama is House Speaker Pelosi's
opposition to the commission idea.

Hoyer said Friday that while her position is clear, "she understands in
the legislative process there has to be give and take."

The Defense package will likely include a six-month extension of
unemployment insurance and COBRA benefits that would not be paid for
because it would be deemed an emergency, Hoyer said. He added that there
will also likely be a "jobs part," that will be paid for and is expected to
include infrastructure and other items, but the provision "is still being
worked on."

Also tied up with the fate of the Defense spending bill is what happens
with the estate tax, which Democratic leaders want to extend for one or two
years and prevent it from expiring on Dec. 31.

The negotiations are sensitive because to gain the votes of one senator,
Democratic leaders could lose another. For example, both Conrad and Finance
Chairman Max Baucus would prefer a longer estate tax extension. But they
differ on the entitlement commission that Conrad wants established, as
Baucus prefers those decisions on tax policies and benefit programs be left
to the committee of jurisdiction, which happens to be the one he chairs.

And with the Pentagon funding bill already expected to carry a nearly $2
trillion debt-limit increase, deficit hawks want to see statutory pay/go
rules attached -- especially if an estate tax measure is attached that
increases the deficit. That would be the case with a two-year fix, which
costs about $18 billion. A one-year estate tax fix has the advantage of
actually raising revenues, about $2.5 billion under a revised estimate.

House Ways and Means Chairman Charles Rangel said the mix of items in the
bill, including the estate tax, would depend on what could get 60 votes in
the Senate. "Every day, we're trying to get agreement with the Senate. ...
There's no sense sending anything over there if they're not going to take
it," said Rangel.

"Then once we get agreement on something, here comes the commission,"
Rangel said. "There's all these other things that could happen, how long do
we have the estate tax extension ... so when an agreement is reached, you
will know it, because you can just look at the faces of the members."

Like Baucus, Rangel opposes the creation of an outside panel to make the
tough tax and spending decisions that are within his jurisdiction. But he
acknowledged it could be tough to oppose when tied to a massive package
like the emerging Defense bill. "You got to weigh it, that's what the
politics is of the whole thing, its terrible choices," he said. "It is bad
for the country and the Congress."

The Defense spending bill was queued up for action after the Senate moved
over the weekend on a nearly $450 billion FY10 spending package that
included all of the remaining FY10 appropriations bills Congress has not
yet passed, minus the Defense bill.

After voting to cut off debate Saturday on a 60-34 vote, the chamber was
heading toward final passage at presstime. The House passed the package
Thursday.

Regarding health care, the Senate is once again holding its breath for
CBO, this time so Democrats can resolve a sticky problem over the public
health insurance option they have battled over for months.

While they wait, Senate Democratic Conference Vice Chairman Charles
Schumer of New York said they intend to resolve an impasse over a drug
reimportation amendment early this week.

Sen. Byron Dorgan, D-N.D., offered the amendment to permit U.S. residents
to reimport drugs from other countries. While Democrats typically support
the proposal, leadership is attempting to kill the amendment to save an $80
billion cost-cutting deal the White House made with the Pharmaceutical
Research and Manufacturers of America this year to help fund the overhaul.

A few Senate Democrats objected to voting on the amendment seemingly until
Sen. Frank Lautenberg, D-N.J., offered an accompanying amendment that would
basically require reimported drugs to meet impossible safety standards.

Democratic leadership expects to hear from CBO as early as today on
options they sent scorekeepers to replace their initial proposal: a public
option that allows states to opt out.

Those options include offering a Medicare buy-in to people aged 55 to 64
and creating a national plan with rates negotiated by the federal
government with private insurers. A public option would kick in if the
national plan is unsuccessful.

Democratic leaders are working out some kinks on the Medicare buy-in with
rural-state members who are concerned about geographic differences in
Medicare reimbursement rates that set their provider payments too low.

Baucus said they are working on alleviating those concerns but did not
specify how. Conrad mentioned a potential fix that would put buy-in
customers in a separate pool where rates would be negotiated with providers
at a higher level than those paid for regular Medicare enrollees.

Sens. Ben Nelson, D-Neb., Joseph Lieberman, D-Conn., and Olympia Snowe,
R-Maine, are concerned over low reimbursement levels, and all three are
votes Democratic leaders hope to pick up.

If the public option is worked out this week, Democrats still must address
the issue of federal abortion funding.

Nelson has indicated his vote to end debate is in jeopardy if abortion
language is not strengthened. Leaders said they are interested in working
out a compromise with Nelson after his amendment modeled after more
restrictive House language failed last week.

* The Senate schedule was not available at presstime.

* The House meets today at 12:30 p.m. for morning hour and 2 p.m. noon for
legislative business. Votes will be postponed until 6:30 p.m. The House
meets at 9 a.m. for morning hour and 10 a.m. for legislative business on
Tuesday. On Wednesday and Thursday, the House meets at 10 a.m. and on
Friday it meets at 9 a.m. for legislative business.

DEFENSE

House appropriators will hold a hearing Tuesday morning with Defense
Secretary Gates and Secretary of State Clinton to review the
administration's plans to deploy 30,000 additional troops to Afghanistan by
summer and begin gradually withdrawing troops from the country in July
2011.

The joint hearing of the Defense and State-Foreign Operations
subcommittees will focus at least in part on the billions of dollars in
funding the administration will need to send the additional forces and
civilian personnel.

Gates already has told Congress he expects the bill for the additional
troops to come to $30 billion to $35 billion this fiscal year. The State
Department will require another, smaller amount to expand its operations in
Afghanistan, officials have said.

House Defense Appropriations Subcommittee Chairman John Murtha, D-Pa., has
said lawmakers will likely need until late spring to review any request for
additional war spending and pass a supplemental funding bill.

Also this week, the House Armed Services Committee will mark up a
Republican-backed resolution of inquiry directing the Pentagon to provide
Congress with all information that refers or relates to the trial or
detention of the people suspected of being behind the Sept. 11, 2001
terrorist attacks.

Republicans have raised concerns about bringing Khalid Sheikh Mohammed and
four others to the United States for trial and have criticized the
administration for not providing adequate information.

"On Tuesday, members of the House Armed Services Committee have an
opportunity to force the administration to begin communicating with the
American people," Armed Services ranking member Howard (Buck) McKeon said
in a statement. "My hope is that the information garnered through this
Resolution of Inquiry will begin to shed some light on the threat posed by
these terrorists and the administration's plan for prosecuting them in New
York City."

FINANCE

The Senate Banking Committee is slated on Thursday to approve the
nomination of Federal Reserve Chairman Bernanke for a second term,
endorsing the role the former Princeton economics professor played in
stabilizing the economy during last year's banking crisis. During his Dec.
3 confirmation hearing, Bernanke was questioned by members of both sides of
the aisle on his handling of the central bank. Republicans voiced
skepticism of his decision to ramp up the Fed's balance sheet to more than
$2 trillion to bring liquidity to credit markets.

Senate Banking Chairman Christopher Dodd pressed Bernanke on the Fed's
lack of oversight over bank holding companies that were in trouble during
the credit crunch. Even with such criticisms, Bernanke's nomination is
expected to easily clear the panel, though Sen. Jim Bunning, R-Ky., will
oppose him. Bunning voted against confirming Bernanke for his first term
after former President George W. Bush nominated him. Sen. Bernie Sanders,
I-Vt., has placed a hold on the nomination, which will delay a floor vote
but does not pose a serious threat to his confirmation.

The House Financial Services Committee will hold a Tuesday hearing on
covered bonds, which are an alternative debt instrument that could be used
instead of securitization, loan packages that encountered problems in the
mortgage market meltdown.

Rep. Scott Garrett, R-N.J., the ranking member on the Capital Markets
Subcommittee, has sponsored legislation that would make the use of covered
bonds more equitable to other debt mechanisms, noting that they have some
advantages in covering a pool of mortgages because they can be replenished
with new loans and assets to preserve their value. Financial Services
Chairman Barney Frank has expressed interest in the issue.

And the president meets today at the White House with a group of leading
bankers. Among those invited are John Stumpf, CEO of Wells Fargo; Jamie
Dimon, CEO of J.P. Morgan Chase & Co.; John Mack of Morgan Stanley; Lloyd
Blankfein of Goldman Sachs Group; Vikram Pandit of Citigroup, as well as
the heads of Wells Fargo, Capital One, American Express, Bank of America,
Bank of New York Mellon, PNC and State Street.

HOMELAND SECURITY

House and Senate lawmakers will turn a critical eye this week toward the
financial and organizational management of the Homeland Security
Department.

The House Homeland Security Management Subcommittee plans a hearing
Thursday to examine DHS travel policies.

"The purpose of the hearing is to examine the DHS [inspector general]
audit of the amount of taxpayer dollars the department spent on
conferences, retreats and other offsite activities, in addition to the lack
of internal controls governing policies, oversight and reporting of
conference planning and spending practices," according to an announcement.

The Senate Homeland Security and Governmental Affairs Oversight of
Government Management Subcommittee plans a hearing Tuesday to review
efforts to improve the management and integration of the department. The
panel's hearing coincides with a GAO report on the department's progress on
the issue. GAO has put the department on its high-risk list since 2003.

IMMIGRATION

Members of the Congressional Hispanic Caucus plan to introduce landmark
legislation Tuesday that would overhaul the nation's immigration laws and
give an estimated 12 million illegal immigrants in the country a path to
legal status.

The fate of the legislation remains uncertain, as a companion bill being
drafted by Schumer, who is chairman of the Senate Judiciary Immigration
Subcommittee, is not expected to be introduced until the spring.

House Democratic leaders have said they want to wait for the Senate to act
first to gauge what 60 senators are willing to support.

Rep. Luis Gutierrez, D-Ill., chairman of the CHC's immigration task force,
has previously described principles that he expects will be in the caucus'
bill.

Gutierrez indicated the bill will require that illegal immigrants applying
for citizenship go through a background check and take English proficiency
classes before they are granted legal status.

He said it will also include border security measures along with "smart
and humane" enforcement of immigration laws inside the United States.

He also expressed support for a system that would verify workers are
eligible to be employed but said such a system must not make errors. And he
said a commission should be created that would align immigrant visa levels
with needs of the labor market.

TELECOMMUNICATIONS

The telecommunications policy circuit is chock-full this week, with
subjects such as network neutrality, the national broadband plan and the
looming spectrum crisis the focus of events at the FCC and on Capitol Hill.

On Tuesday, the FCC holds the first in a series of workshops on its effort
to expand and strengthen net neutrality rules designed to preserve an open
Internet. Industry and think-tank critics of the agency's approach will
hold a teleconference today on "the case against net neutrality."

Also Tuesday, the House Energy and Commerce Communications Subcommittee
plans a hearing on the shortage of wireless spectrum and the efficacy of
reallocating over-the-air television airwaves for mobile broadband service.

The dearth of mobile frequencies is a potential impediment to the FCC's
creation of a national strategy for achieving universal broadband access. A
status report on that plan, to be presented to Congress Feb. 17, will be
the focus of the agency's monthly meeting Wednesday.

Back on Capitol Hill, lawmakers are seeking to reach agreement on a
consensus satellite television bill that could be attached to
appropriations legislation this week in both chambers.

TRADE

The House will take up a one-year extension of duty-free benefits for
around 130 developing countries as well as a separate import program for
South America's Andean region as early as today.

Republicans led by Ways and Means ranking member Dave Camp are not
expected to stand in the way. Although unhappy that provisions singling out
Ecuador's Andean trade benefits for further review were left out, a Camp
spokesman said Friday he will vote for the bill.

That will likely clear a path for the Senate to approve the measure by
unanimous consent before leaving town for Christmas. Final action would
prevent a shutdown of the trade programs on Jan. 1 and save U.S. importers
$785 million in duties next year, according to a final cost estimate of the
bill released Friday.

Lawmakers used the time-honored budget maneuver of extending customs user
fees by a few months to make up for the lost tariff revenues.

Although the bill would not single out Ecuador, it does call for a faster
review of the overall Andean trade program, which covers that country as
well as Colombia and Peru. Bolivia's benefits have already been suspended,
and the bill would continue that policy. Ecuador has come under fire from
Republicans because of its treatment of U.S. firms operating there and a
perceived lack of cooperation on counter-drug efforts, combined with ties
to left-leaning regional leaders like Venezuela's Hugo Chavez.

Under the Generalized System of Preferences, which covers about 4,800
products from 132 countries, U.S. importers brought in about $32 billion
worth of goods last year. The Andean program, originally designed to help
wean the region away from the drug trade, saw about $17 billion in exports
to the United States in 2008. Petroleum-based products were the single
biggest source of imports under both GSP and Andean preferences, accounting
for about one-third of all GSP imports and three-quarters of imports from
Andean countries -- mainly Ecuador and Colombia.


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FINANCE: ADMINISTRATION PUSHES FOR DIRECT LOANS
By Kasie Hunt


The Obama administration is pushing colleges and universities to abandon
private student lenders in favor of the government's direct loan program,
prompting bipartisan backlash on Capitol Hill and illustrating how the
financial crisis has made one of President Obama's top education priorities
almost inevitable.

Obama wants to end the Federal Family Education Loan Program, replace it
with the Education Department's Direct Lending program and use the
estimated $79.6 billion in savings to boost aid to low-income students --
seriously threatening private student lenders and limiting their role to
loan servicing. A bill to do it passed the House in September, but it has
stalled in the Senate.

In October, Education Secretary Duncan sent a letter to college and
university presidents advising them to abandon the FFEL program and switch
to Direct Lending. "The most prudent course of action is for you to ensure
that your institution is Direct Loan-ready for the 2010-2011 academic year.
That way, loan access for your students will be assured," Duncan wrote.

Several banks, including Bank of America, have announced they will no
longer offer FFEL loans. And at least 575 colleges and universities --
including top names such as Yale -- are planning to switch to direct
lending in 2010 regardless of the legislation's fate, industry sources
said.

"The main reason we made the switch was based on what we were seeing
happening in Washington politically -- the strong sense that eventually the
legislation would be passed that would require schools to convert and our
desire not to wait until the last minute," said Caesar Storlazzi, Yale's
director of financial aid. "It's been a very interesting political year in
that in many ways. We've had to make this decision to convert well before
any legislation will be passed. I've never seen anything quite like that
before," he said.

Some in Obama's party have criticized the aggressive push. "We write to
you today to express concern with the department's aggressive outreach to
institutions of higher education regarding the Direct Loan program despite
the lack of congressional direction on this issue," Democratic Reps. Allen
Boyd of Florida, Stephanie Herseth Sandlin of South Dakota, and Michael
McMahon of New York wrote in a Dec. 2 letter to Duncan.

Still, the financial crisis has created a rare case where congressional
inaction will advance the administration's policy goals.

The FFEL program was designed to allow private lenders to raise capital to
finance and make loans. Banks were able to offer lower interest rates to
students because the government guaranteed the loan in the event of
default. But the financial crisis fundamentally altered the model because
the capital markets dried up.

In May 2008, then-President George W. Bush signed the Ensuring Continued
Access to Student Loans Act, known as ECASLA, to restructure FFEL and keep
money flowing to college students. Under the bill, the government buys
student loans from lenders, who are then required to use the capital to
make new ones.

ECASLA expires in July of 2010, and colleges and universities are already
starting to consider funding for the 2010-2011 school year. Students are
required to file student aid forms for government help starting early in
the year -- and the House-passed bill would require universities to make
the switch before students begin paying tuition bills for the fall 2010
semester.

The next step for the bill is a markup in the Senate Health, Education,
Labor and Pensions Committee, where Sen. Robert Casey Jr., D-Pa., is
expected to back an alternative that resembles ECASLA. Casey's proposal
would preserve an additional role for lenders, allowing them to make loans
and sell them back to the government for a $55 fee. According to CBO, the
additional payments to lenders would cost the government about $3.6 billion
over 10 years.

Sallie Mae, the nation's largest student lender, backs Casey's plan. "The
new Senate proposal is the only proposal that can guarantee historic
savings, be implemented with no risk for students or schools, and preserve
vital services for students that lower defaults," Sallie Mae Vice Chairman
Jack Remondi said on a Dec. 7 call with schools that contract with the
company.

The political environment for the bill is likely to get more complicated
in the new year. If the Senate doesn't act on the legislation before new
budget baselines are released in March, the bill will likely need a new CBO
score.

Lenders point out that the savings rely on the assumption that only 30
percent of federally backed loan dollars went through the Direct Lending
program during the fiscal year that ended on Sept. 30, 2008. In FY09, 42
percent of federal loan money went through Direct Lending -- a potential
loss of savings under a new CBO score.

In the meantime, Republicans want to reauthorize ECASLA so that schools
that use FFEL will be able to continue offering aid regardless of whether
the Senate passes the Obama-backed bill. House and Senate Republicans
introduced an ECASLA extension in November.

"Democrats are trying to make an end run around the legislative process by
strong-arming colleges into the Direct Loan program whether it's the right
fit for their students or not. Schools are being misled to believe the end
of the FFEL program is a fait accompli, leaving them no choice but the
one-size-fits-all Direct Loan program," House Education and Labor ranking
member John Kline said Friday.

House Democrats pushed back. "Recent decisions by lenders to stop offering
federal student loans only further underscore the need to safeguard
students' loan access from future ebbs and flows in the economy," House
Education and Labor Chairman George Miller said. Miller called the
House-passed bill "the best way to guarantee families access to federal
loans, in any economy, and the fiscally responsible course of action for
taxpayers."

In a letter sent Friday, Kline asked Miller to immediately subpoena
documents he requested from Duncan in November to see if the department was
misusing public money to push Direct Lending.


http://www.nationaljournal.com/congressdai...091214_1652.php

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ENVIRONMENT: PRESSURE ON TO COMPLETE DEAL THIS WEEK
By Darren Goode


COPENHAGEN, Denmark -- As top ministers rolled into town over the weekend,
international negotiators are trying to complete a nonbinding political
deal on major climate change issues by the time President Obama and more
than 100 heads of state are expected to arrive by Friday.

There were several drafts floating around the halls of the Bella Center
that attempt to inch toward a grand compromise. There is growing sense that
heads of state, including Obama, need to see at least the draft form text
of major agreements by tonight.

As many as two dozen House members and a handful of senators are looking
to make the trip as well.

House Speaker Pelosi is attempting to be here for the last days of the
conference but might be at the mercy of the House schedule. Senators'
chances of attending are more dicey, given the state of their chamber's
healthcare talks.

Senate Foreign Relations Chairman John Kerry has said he will certainly
attend, even if it is just for a day. Senate Environment and Public Works
ranking member James Inhofe wants to be here to raise questions about
climate science and criticize any binding agreements or treaty. Environment
and Public Works Chairwoman Barbara Boxer wants to make the trip as well.

Other high-profile U.S. officials are expected to make appearances this
week. Energy Secretary Chu is here, and Agriculture Secretary Vilsack,
Council on Environmental Quality Chairwoman Nancy Sutley and top White
House climate adviser Carol Browner are scheduled to arrive before Obama.
And former Vice President Al Gore is scheduled to give a speech Tuesday.


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PEOPLE: PEOPLE
By Mike Magner


At a time when many moderate Republicans are back on their heels, the new
president and CEO of the Ripon Society is seeing resurgence in the
47-year-old, centrist GOP organization.

"People are looking for something," said Jim Conzelman, who took the helm
this fall. "People are looking for a centrist type of group, one with
common sense solutions to our nation's problems."

Conzelman, a top aide to former Rep. Michael Oxley, R-Ohio, for nearly all
of his 26 years in Congress, said he plans to promote the Society's mission
through "policy get-togethers" and "bully pulpits," as well as in the
group's quarterly magazine, The Ripon Forum.

The Ripon Society was formed in 1962 by young professionals seeking "to
revive the Grand Old Party's commitment to inclusion and reform," according
to the group's Web site. They borrowed the name from Ripon, Wis., which
calls itself the birthplace of the Republican Party.

Conzelman said Ripon's history, including early support for the civil
rights movement and promotion of trade with China before President Richard
Nixon went there in 1972, can be a guide for Republicans struggling to
regain the majority today.

The Society has more than 1,000 active members nationwide, including many
of the leading moderates on Capitol Hill, such as House Ways and Means
ranking member Dave Camp and Maine's GOP Sens. Susan Collins and Olympia
Snowe. The chairman of the group's congressional advisory board is Rep.
Thomas Petri, R-Wis., one of the Society's founders.

Conzelman is a Washington veteran, arriving in 1974 to work for his House
member, Rep. Dick Shoup, R-Mont. After Shoup lost to Democrat and now-Sen.
Max Baucus later that year, he joined President Gerald Ford's White House
as a speechwriter. When Ford left office, Conzelman worked for the select
committee reinvestigating the assassination of President John Kennedy and
then for one-term Rep. Jim Dunn, R-Mich., before joining Oxley's staff.

Conzelman joined Ripon in 1986 with Oxley, an active member. His first
assignment was representing the Society at the rededication of the Statue
of Liberty at a transatlantic ceremony in Paris.

When Oxley retired from the House in 2006, Conzelman joined him at the
Baker Hostetler law firm, then went to the Stanford Financial Group and
later to the National Field Resource Network before moving to Ripon full
time.

At Ripon, Conzelman replaced two people: Rick Kessler, who went from
president to president emeritus, and George McNeill, who had been chief
administrative officer.


http://www.nationaljournal.com/congressdai...091214_4006.php

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CHINA WATCH: TRADE RESTRAINT?
By Art Pine


Those who follow U.S.-Chinese trade frictions must be working overtime
these days. The number of high-profile trade complaints between the two
countries -- from anti-dumping investigations and the imposition of
tariffs, to legal arbitration -- is at an elevated threat level and growing
rapidly. It may be time to ask whether enough is enough.

The list seems to expand almost daily. Over the past few months, the
United States has taken actions on cases involving Chinese-made tires,
nylon, steel pipe, coated paper, phosphate salt, strategic raw materials
and computer software. It also has investigated complaints that Chinese
drywall was causing health problems here, but the probe ended up rebutting
them.

China's trade officials also have been burning the midnight oil.
Retaliating against the U.S. tire tariffs, Beijing has begun anti-dumping
procedures against American chicken and autos. It also has imposed extra
duties on U.S.-made nylon and, last week, on some kinds of specialty steel.
Meanwhile, it has denounced America's tariffs as "abusive protectionism."

Douglas A. Irwin, a Dartmouth College trade expert, argues that the
step-up in such enforcement actions is "a natural outcome," given the huge
volume of trade between the two countries, the enormity of America's trade
deficit and the impact of the global recession on economic growth and jobs
here at home. China's economy hasn't suffered nearly as much.

"This is Japan redux," Irwin said, recalling the similar level of trade
frictions between the United States and Japan that piled up during the
recession of the early 1980s. Like China today, Japan had amassed a large
trade surplus with the United States. It balked at letting its currency's
value rise. And it blocked the importation of a long list of U.S.-made
goods.

"This kind of situation is a breeding ground for trade disputes," he said.

Critics also blame the Obama administration, whose imposition of tariffs
on low-end Chinese-made tires in September was widely interpreted as a
political sop to organized labor -- and a green light to other U.S.
industries that the current government would be far more sympathetic to
such cases than President George W. Bush's administration was.

The tire case was filed by the United Steelworkers union, which isn't
directly involved in manufacturing tires in this country. The workers who
do make tires here didn't want the tariffs. Trade experts said China's tire
exporters weren't violating any trade laws. Indeed, America doesn't even
make low-end tires.

Gary Clyde Hufbauer, a trade specialist at the Peterson Institute for
International Economics in Washington, says bolstering ties to labor might
not have been Obama's only motivation; the president also might have wanted
to use the trade cases as a distraction so the administration wouldn't be
under as much pressure to prod China to revalue its currency.

"I think there's been a decision by the Obama administration to allow a
certain amount of bloodletting this way on the theory that it will provide
an outlet for American workers without actually hurting the strategic
relationship that the U.S. wants to continue with China," Hufbauer says,
particularly on climate change and dealings with North Korea.

Indeed, China itself seems to have learned how to game the system. While
Beijing has responded in kind each time the United States has announced a
trade enforcement action, it hasn't allowed such spats to spoil modest
Chinese-U.S. cooperation on larger issues, such as climate change. And it
has held down its complaints about America's massive debt burden.

Just the same, prosecuting alleged trade violations is only half the
strategy U.S. presidents have followed over the past few decades. The other
half is pushing other countries to ease their own trade barriers to let in
more U.S. exports. And on that, Hufbauer says, the administration has
hardly begun.

Obama has all but ignored the Doha Round of trade negotiations, which
bogged down during the Bush administration. And he has failed to push for
congressional ratification of free-trade agreements with South Korea,
Colombia and Panama, losing ground to Europe and Canada, which have signed
similar deals.

How long the United States and China can permit their trade frictions to
escalate isn't clear. Hufbauer concedes the trade spats aren't affecting
the broader U.S.-Chinese relationship but warns that Obama is "playing with
fire" in allowing such cases to proliferate. If it continues to spread, it
could pose a problem, he said.

Meanwhile, the administration has yet to unveil a clear trade policy,
either on China or for its dealings with other major U.S. trading partners,
and time is running out. If the U.S. economy remains sluggish and other
countries try to prop up their exports, "that's not going to sit well with
anyone in Washington," Irwin said.

Obama might want to have a broader trade strategy in mind rather than a
bunch of enforcement cases, Irwin said. The current spate of enforcement
actions "gives the Chinese an excuse to retaliate in other sectors," he
said, but it's "not likely to create jobs" here in the United States.


http://www.nationaljournal.com/congressdai...091214_8009.php

-----
BEYOND THE BELTWAY: OHIO HOUSE PASSES LEGISLATION MANDATING AUTISM
COVERAGE

The Ohio House last week passed legislation to prohibit most health
insurance plans from excluding coverage for autism, the Columbus Dispatch
reported.

It was passed, 57-39, mostly along party lines.

Under current law, insurance companies are allowed to exclude coverage for
children and adults with autism.

"Today, we have the opportunity to improve the lives of thousands of
families and children who are affected by autism," Democratic state Rep.
Ted Celeste, told colleagues. "Parents are simply asking us to level the
playing field."

It is estimated that 36,000 to 57,000 state residents have autism, and
according to the Journal of Pediatrics, one in 98 children are born with
the disorder.

"What this bill really does is bring autism parity. It makes it the same
as other diseases such as [multiple sclerosis] and cystic fibrosis," said
Democratic state Rep. Nancy Garland, a co-sponsor of the bill.

The measure would limit autism-related insurance coverage to $36,000 a
year. Insurers would be able to opt out if the mandate increases costs or
premiums by more than 1 percent.

While supporters say other states have reported cost increases of no more
than 0.8 percent, small businesses say that could mean a $120 million
increase on them.

The measure now moves to the Republican-controlled Senate for
consideration.


http://www.nationaljournal.com/congressdai...091214_4182.php

-----
BEYOND THE BELTWAY: N.J. SENATE APPROVES MENU LABELING MEASURE

New Jersey's Senate last week approved a measure on a 22-16 vote to
require restaurant franchise owners with 20 or more locations nationwide to
display calorie information on food and drinks, the Newark Star-Ledger
reported.

Proponents say it will help consumers make healthier choices.

The measure would "provide consumers with information that can assist them
with their food choices if they care to use it, not unlike most product
labeling in our grocery stores,'' said Democratic state Sen. Joseph Vitale,
one of the bill's sponsors.

A registered dietitian would have to vouch for the accuracy of the calorie
counts.

Critics of the measure, including owners of chain restaurants and some
Republican lawmakers, say the measure will be costly for franchise owners.

"We don't believe that menus should be used for public-service
announcements," Deborah Dowdell, president of the New Jersey Restaurant
Association, told the Philadelphia Inquirer. "They are marketing tools and
should be maintained as such."

They say it's unnecessary because the U.S. House and Senate versions of
the healthcare bills include similar menu disclosure language.

Vitale disagreed with waiting for congressional action because he said
that any labeling requirements that might pass as part of the healthcare
legislation would take two to three years to implement.

The bill now goes to the General Assembly.

If it's enacted, New Jersey would become the fifth state with a
menu-labeling law.


http://www.nationaljournal.com/congressdai...091214_9759.php

-----
BEYOND THE BELTWAY: MICH. SENATE PANEL ADVANCES MEASURE TO RAISE DIESEL
TAX

A Michigan Senate committee approved last week a measure that would raise
the state's tax on diesel fuel by 4 cents per gallon, the Detroit Free
Press reported.

Supporters say the legislation, which passed 4-1, would generate $38
million to maintain roads and bridges.

If it becomes law, the tax would be raised to 19 cents per gallon, the
same rate as the gasoline tax.

Its prospects in the full Senate and Democratic-controlled House are
unclear.

It is opposed by state Senate Majority Leader Mike Bishop, a Republican,
who was surprised by the vote.

Bishop said that "the timing isn't right" for a fuel tax increase.

Bishop said any changes in fuel taxes should be part of an overhaul of
state taxes. He said while fixing roads is important, "I don't like the
idea of doing it piecemeal; $38 million is not going to solve the state's
problems."

He added, "I'm very sympathetic to the fact the people of this state do
not want a tax increase. I think we've got to be mindful of that."

Democratic Gov. Jennifer Granholm said she supports the legislation.


http://www.nationaljournal.com/congressdai...091214_6355.php

-----
BEYOND THE BELTWAY: GROUPS SEEK TO ALTER STATE LEGISLATIVE REDISTRICTING IN
ILL.

A coalition of good government groups has begun a petition drive to
overhaul the legislative redistricting process in Illinois, the Northwest
Herald reported.

They are seeking to amend the state Constitution so legislative districts
are redrawn by an independent nine-member commission. The remaps would need
two-thirds approval by the state House and Senate.

"The Illinois Fair Map Amendment will take unfair politics out of the
redistricting process and put the power in the hands of the people," said
Jan Czarnik, executive director of the Illinois League of Women Voters.

Under current law, the districts are redrawn and voted on every decade by
the General Assembly.

The coalition's goal is to get 500,000 signatures by the end of April so
it can go before the voters next year.

The proposed amendment would only apply to General Assembly districts, not
the congressional districts, which are also drawn by state legislators.

Advocates wanted congressional redistricting included in the amendment,
but feared that it would increase the likelihood of a challenge of the
amendment's constitutionality.


http://www.nationaljournal.com/congressdai...091214_2686.php

-----
OUTLOOK: HOT TICKET
By Jason Mann


IN THE ARMEY NOW

The Republican Party is experiencing an identity crisis and former House
Majority Leader Richard Armey, R-Texas, has a few ideas on how to restore
the GOP's majority next year. Armey, who helped the Republicans gain
control of the House in 1994, will be at the National Press Club Tuesday to
discuss healthcare reform and the anti-tax "tea party" movement. The
chairman of FreedomWorks thinks the GOP needs to return to its roots in
fiscal conservatism. The luncheon begins at 12:30 p.m. Tickets cost $17 for
members, $28 for their guests and $35 for general admission. Call
202-662-7587 for tickets.

COMING TO AMERICA

This week two members of President Obama's Cabinet are sharing personal
stories of their families' struggles of coming to the United States. Labor
Secretary Solis, whose parents hail from Nicaragua and Mexico, and Commerce
Secretary Locke, who has roots in China and didn't learn to speak English
until he was 5 years old, will talk about immigration, economic growth at
home and abroad, and next year's census Wednesday at the Center for
American Progress' discussion of "American Stories." The think tank's
president, CEO and former White House Chief of Staff John Podesta, will
moderate the luncheon, which begins at 11:30 a.m. RSVP by calling (202)
682-1611.

HOLIDAZE

There are dozens of holiday parties happening this week. The White House
kicks things off tonight and Tuesday with receptions for the White House
Press Corps, but chances are, you're not on the list, so don't even try to
get in. Not even all the members of the press corps were invited. Instead,
head over to the Jewish Federation of Greater Washington's Hanukkah happy
hour at the Pour House at 319 Pennsylvania Ave., SE, at 6 p.m. There is a
$5 cover. On Tuesday the American Farm Bureau is hosting its Taste of the
States holiday reception at 4:30 p.m. at the Holiday Inn Capitol at 550 C
Street, SW. On Wednesday, the group Generation Obama is having a party for
charity at 6 p.m. at Skye Lounge at 1919 Pennsylvania Ave., NW. Unwrapped
toys and donations will be collected for the Children's National Medical
Center. On Thursday, the Social Action and Leadership School for Activists
- SALSA - is spicing up the season with its holiday party at Tabaq Bistro
at 1336 U Street, NW. Also on Thursday, the Center for a New American
Security is celebrating the festive season at its office at 1301
Pennsylvania Ave., NW, at 5 p.m.


http://www.nationaljournal.com/congressdai...091214_4289.php

-----
DRAWING BOARD: DRAWING BOARD
By Mark Armstrong



http://www.nationaljournal.com/congressdai...091214_4336.php

[Snuffysmith]

> CongressDaily AM for Tuesday, Dec. 15, 2009
>
> --------------------
> CONTENTS
>
> HEALTH: SENATE DEMS LIKELY TO DROP MEDICARE BUY-IN FROM BILL
> By Anna Edney and Dan Friedman
>
>
> Senate Democrats said Monday evening it was looking likely that the
> Medicare buy-in would be dropped as part of a public option > compromise as
> leaders committed to closing a gap in Medicare prescription drug > coverage
> known as the doughnut hole once the overhaul reaches a conference > with the
> House.
>
> Senate Finance Chairman Max Baucus and Senate Health, Education, > Labor and
> Pensions Chairman Tom Harkin said the buy-in appeared close to being
> abandoned after Sen. Joseph Lieberman, D-Conn., said he would not > vote for
> cloture on the bill if it included the buy-in.
>
> "It's just a matter of getting support from 60 senators, and that > seems to
> be a condition that's necessary to get 60," Baucus said as he left a
> special Senate Democratic Caucus meeting Monday evening on health > care.
>
> Baucus said they discussed using the fast-track reconciliation process
> that only requires 51 votes, "but there's no way we're going to do > that."
>
> Lieberman said he believed those between 55 and 64 years old are > better
> off receiving subsidies and buying insurance on the exchange.
>
> "I think [the buy-in] would have been more expensive then the > subsidies
> would have been. And that's the key," Lieberman said.
>
> Leaders were waiting for a CBO score on the buy-in senators and > aides said
> they expect today, as well as a score on a proposal to have the > federal
> government negotiate insurance rates with providers on behalf of a > national
> plan.
>
> Sen. Arlen Specter, D-Pa., made a plea to senators in the Caucus to > not
> let "obstructionists" win and received a standing ovation, according > to a
> Senate aide. He said he joined the Caucus to be the 60th vote, > referencing
> his switch from the Republican Party.
>
> Two of the party's more liberal members came to the defense of a
> stripped-down bill.
>
> Harkin argued the bill still accomplishes a great deal without the > buy-in
> or even a public option.
>
> "There's enough good in this bill even without those two; we've got > all
> those insurance reforms, all the stuff we've worked so hard for > prevention
> and wellness in there, the workforce development we have in there,
> reimbursement based on quality not on quantity," Harkin said. > "There's good
> stuff in this bill. It's a giant step forward."
>
> Sen. John (Jay) Rockefeller, D-W.Va., argued the bill can be improved
> after passage. "People feel, 'Well, you can only do this once in a > while.
> That's not true. I think health care is now permanently on our agenda.
> Which is great."
>
> "I think it's gonna be an every-year subject. An-every-session-of-> Congress
> subject from now on," Rockefeller said.
>
> He added that Reid told the group a vote on a final passage could > come as
> soon as Saturday. But a Reid spokesman said that timeline requires > "a level
> of cooperation from [Republicans] that we haven't seen yet."
>
> Democratic leaders have estimated the Senate, in the face of an > expected
> GOP filibuster, would need to six to nine days for three cloture > votes and
> a vote on final passage. That means Reid must file cloture this week > to set
> up passage before Christmas. Senators and aides said they expect a > cloture
> filing this week if CBO returns a score today.
>
> The Senate Democratic Caucus will meet this afternoon with President
> Obama. Rockefeller said Reid told the Caucus the meeting will be
> substantive and "not a pep talk."
>
> The Senate will also take its first votes in a week on health care > today,
> taking up four amendments that have been pending the entire time, > including
> one that would allow the reimportation of prescription drugs.
>
> Democratic leaders also pledged Monday to close the doughnut hole, > not in
> the Senate bill, but as the overhaul moves to conference with the > House.
> Leadership sources did not say how they would close the gap that > leaves
> seniors paying full price for their prescriptions.
>
> The move evoked gratitude from AARP but did not win their support > for the
> bill just yet. "Obviously, much work remains to send the president a > final
> healthcare reform package that works for all Americans," AARP CEO > Barry
> Rand said. "We will continue to work with leaders in both chambers to
> address key priorities of our members, including strictly limiting age
> discrimination by health insurance companies and strengthening our > system
> of long-term services and supports."
>
> The move also might let the Pharmaceutical Research and > Manufacturers of
> America off the hook for the moment from coughing up more than the $80
> billion they have pledged to help fund the overhaul. Some senators > have
> called on them to increase their contribution to help close the > doughnut
> hole.
>
> The issue of federal abortion funding is also causing Democrats > heartburn.
> Sen. Robert Casey Jr., D-Pa., met with Obama Monday to talk > abortion, among
> other healthcare topics.
>
> "We've been working a number of days now," Casey said. "I think > we've made
> good progress."
>
> Part of the talks have covered including Casey's amendment to give > what he
> called "unprecedented support" for pregnant women. Casey said he is > talking
> to Sen. Ben Nelson, D-Neb., about the compromise as well. Nelson's
> amendment restricting federal abortion funding further than the > Senate bill
> was shot down last week.
>
>
> http://www.nationaljournal.com/congressdai...091215_8856.php
>
> -----
> POLITICS: RULES MIGHT CLOUD TEA PARTY EFFORTS
> By Erin McPike
>
>
> The Tea Party movement's desire to dent the slate of
> Republican-establishment candidates faces one huge hurdle next year: > closed
> primaries.
>
> Tea Party groups are attempting to attract independents and > disaffected
> Democrats to their cause, which turns, in part, on overthrowing
> establishment Republicans who voted for the Troubled Asset Relief > Program
> and other spending initiatives. But if the Tea Party groups can't > mobilize
> to register voters before registration deadlines in the 25 states that
> close their primaries to those not registered as Republicans, the > movement
> might have little or no impact in those states.
>
> Challengers will "have to go register a bunch of independents, but the
> difficulty of that varies from state to state," said Ross Baker, a
> political science professor at Rutgers University. "Getting people to
> register in the best of circumstances is tough, but this isn't > campaign
> season. This is Christmas. People aren't focused on politics. Unless
> something is really going on, it's very difficult to get people to > change
> their registrations."
>
> Trying to make inroads against incumbents in open primaries, Baker > said,
> is "not that tough," but a closed primary "clearly works in favor of > the
> incumbent," even in this anti-incumbent environment.
>
> At least seven states with closed primaries could feature Senate races
> with competitive GOP primaries: Connecticut, Florida, Kansas, > Kentucky,
> Louisiana, Nevada and Utah. Many House races might also be affected.
>
> Senate races attracting a lot of attention in Kentucky and Nevada > require
> voters to pick sides for next year's primaries by the end of this > year.
>
> In Kentucky, Secretary of State Trey Grayson faces eye surgeon Rand > Paul
> for the GOP nomination in next year's election to succeed retiring > GOP Sen.
> Jim Bunning. Paul, an outsider looking to drum up Tea Party support, > has
> been encouraged by the registration efforts of supporters, said his
> campaign manager, David Adams. But he added that a registration push > is not
> a "major initiative" of the campaign.
>
> According to voter registration in Kentucky, the number of registered
> Republicans increased by just 7,500 new voters between mid-July, when
> Paul's candidacy started getting buzz, and mid-November.
>
> Paul said in an interview last month that he will not run as anything
> other than a Republican, but if he loses the May contest and changes > his
> mind, he could still file to run as an Independent in August.
>
> Nevada's race features 11 Republicans looking to take on Senate > Majority
> Leader Reid next November. Former state GOP Chairwoman Sue Lowden is > seen
> as the front-runner.
>
> The state party saw its registration fall by 2,600 voters this year, > to
> about 469,000, while independent registration increased. But even > though
> the state has a Libertarian bent, the closed primary might hamper > Tea Party
> activists or other outside groups from making much of an impact.
>
> Libertarian Party Executive Director Wes Benedict, whose party aligns
> closely with most issues important to Tea Party backers, said the > party is
> trying to recruit Libertarian candidates who could appeal to those
> activists next year. When asked what Libertarians have done to > capitalize
> on the movement, he could only cite a blog post at the top of the > party's
> Web site that featured some Libertarians speaking to a Tea Party > event in
> Texas.
>
> Mark Meckler, a national coordinator for the Tea Party Patriots, > said he
> expects to see "some fluctuation in the primaries," with some > activists
> registering as Republicans to vote in primaries, then dropping the > party
> label later.
>
> Mike Connolly, a spokesman for the Club For Growth, another group
> agitating for change, said whether primaries are closed or open > definitely
> factors into decisions. Ironically, though, the Club For Growth so > far has
> been most active in Florida and Pennsylvania, which both have closed
> primaries.
>
> In the long run, closed GOP primaries that undercut the efforts of Tea
> Party candidates might hamper Democrats, who see Tea Party-inspired
> candidates as having less campaign experience that would make them > less
> effective against Democratic incumbents in November.
>
> But Republican operatives say Tea Party activists are mostly concerned
> with beating Democrats, and at the end of the day, the GOP will > attract the
> activists.
>
> "I'll take too much of a good thing rather than not enough," said > one top
> official at the National Republican Congressional Committee. "People > want
> to run for Congress again as Republicans. That's not bad. We'll win > more
> seats because of it than we'll lose."
>
>
> http://www.nationaljournal.com/congressdai...091215_1095.php
>
> -----
> APPROPRIATIONS: DEFENSE BILL BREATHES NEW LIFE INTO CANCELED PROGRAMS
> By Megan Scully and Humberto Sanchez, with Billy House and Dan > Friedman
> contributing
>
>
> House and Senate negotiators on the FY10 Defense Appropriations bill > have
> rejected some of President Obama's biggest military spending cuts, > agreeing
> to a $636.3 billion measure that continues an unwanted second engine
> program for the F-35 Joint Strike Fighter and buys 10 unrequested C-17
> cargo planes, an appropriations aide said Monday.
>
> The bill also includes $130 million for the troubled VH-71 > presidential
> helicopter program, most of which would pay to continue some work on > the
> aircraft at Lockheed Martin Corp.'s facility in Owego, N.Y., despite > the
> Obama administration's decision to cancel the contract.
>
> The spending was added in defiance of a White House that sought to > slash
> defense expenditures it deemed wasteful or unnecessary to pay for
> priorities within the Defense Department and elsewhere in government.
>
> Appropriators reached an agreement on the Defense bill on Friday, > with a
> week to spare before the continuing resolution expires on Friday. But
> Democrats said Monday that Congress would likely pass another short-> term
> funding extension as negotiations continued over what other items to > attach
> to the Defense bill.
>
> House Majority Leader Hoyer said another CR is "a possibility, but > not a
> long one." House Democratic leaders are considering a Saturday > session to
> finish the package.
>
> Senate Appropriations Chairman Daniel Inouye said another CR could be
> needed "maybe until Christmas Eve," adding that he wanted to "have > [the
> appropriations bill] on the president's desk before Christmas."
>
> Inouye said he expects Democrats to come up with an agreement "in > about 48
> hours."
>
> To resolve defense spending issues, appropriators agreed to include > $465
> million for the program to devise an alternate F-35 engine despite > repeated
> administration threats to veto the bill if officials determine that > keeping
> the engine development alive jeopardizes the overall F-35 program.
>
> But the final bill provides funding to buy all 30 F-35s requested by > the
> Pentagon, a move that could ease White House concerns. To pay for the
> General Electric-Rolls Royce alternate engine, the House bill had > included
> money to buy only 28 F-35s. The Senate bill bought all 30 F-35s and > allowed
> funding only for the aircraft's primary Pratt & Whitney engine.
>
> Meanwhile, the administration had requested $85 million for the VH-71
> program, whose cost overruns and schedule delays had made it > symbolic for
> problems plaguing the Pentagon acquisition system. But all of that > funding
> would have paid for termination fees owed the contractor.
>
> In its Statement of Administration Policy, the White House > threatened to
> veto the spending bill if it "includes funds that continue the > existing
> VH-71 program, or would prejudge the plan to recompete the > presidential
> helicopter program."
>
> But it is unlikely that the $130 million in VH-71 funding would > trigger a
> veto, particularly if it is part of a sweeping legislative package the
> administration largely favors.
>
> In addition to the add-ons, the Defense bill includes $6.3 billion > to buy
> more than 6,600 mine-resistant all-terrain vehicles for Afghanistan.
>
> Appropriators also agreed to $2.2 billion for the Army's restructured
> modernization effort in the wake of the administration's > cancellation of
> its Future Combat Systems program, the aide said. That amount is $330
> million below the request, because lawmakers believed the Army asked > for
> too much in termination liability fees.
>
> For unmanned aerial vehicles, the bill includes $554 million for
> high-altitude Global Hawks and $489 million for Reaper hunter-killer > UAVs,
> the requested amounts. Appropriators approved just $80 million for the
> Predator drone, $170 million below the request, the aide said.
>
> Meanwhile, the bill includes about $15 billion to buy seven ships: a
> DDG-51 Arleigh-Burke class destroyer, a Virginia-class submarine, two
> Littoral Combat Ships, an Intra-theater Connector Ship, and two T-AKE
> auxiliary dry cargo carriers.
>
> On nondefense issues, Democratic leaders are considering including an
> increase of up to $1.9 trillion in the $12.1 trillion debt limit, a
> six-month extension of unemployment insurance and COBRA benefits, and
> possibly funding infrastructure projects to help create jobs, among > other
> possibilities.
>
> Democrats are also trying to find a compromise between Blue Dog > Coalition
> members who said they will not support the package unless it includes
> pay/go legislation to require offsets for new mandatory spending and > tax
> cuts and Senate Democrats who have pledged not to vote for a debt-> limit
> increase unless they can have a vote on creating a commission that > would
> make recommendations to reduce the deficit.
>
> One of those Democrats, Senate Budget Chairman Kent Conrad, opposes > the
> House pay/go bill because it exempts four policy items, including the
> estate tax.
>
> The House also might consider a short-term debt extension. "We're > working
> toward a short-term debt extension," Hoyer said Monday night. The > extension
> likely would not go beyond February, he said, calling that the > longest time
> frame "the Senate can get votes for."
>
> The short-term debt-limit scenario could push back the need to make a
> decision on whether to include the House pay/go bill.
>
> Conrad declined to say if he would support a short-term debt limit
> extension so as not to jeopardize negotiations.
>
> On the commission issue, one Democratic aide said Conrad was offered > the
> creation of a commission by executive order. He did not say if he > would
> support it, but it would not have the force of law that he has said he
> wants for the panel.
>
> A Senate Democratic leadership aide said Monday that "we will await > action
> by the House and hope to pass the [bill] before the 18th. We will > need 60
> votes to do so."
>
> House Rules Chairwoman Louise Slaughter said late Monday she expects > the
> Defense bill to go to Rules today and to the floor on Wednesday.
>
> House and Senate Democratic leaders were also grappling with how to > handle
> an estate tax extension. According to Slaughter, there was some > question
> whether it should be part of the Defense bill, given concerns about > loading
> up the package.
>
> Nevertheless, the Defense bill is the most likely vehicle. "Looks like
> it," said Senate Finance Chairman Max Baucus, although he quickly > added:
> "Or maybe somewhere else." He said the extension could be for one or > two
> years. An extension lasting only a few months has been discussed, > according
> to lawmakers and aides. "We're working on it," Rep. Chris Van Hollen,
> D-Md., said Monday.
>
> Slaughter added that "Jobs [legislation] might be separate. We are not
> going to leave here without one."
>
>
> http://www.nationaljournal.com/congressdai...091215_9886.php
>
> -----
> WHITE HOUSE: CBC INSISTS CRITICISMS OF OBAMA ARE NOT PERSONAL
> By Billy House and George E. Condon Jr.
>
>
> Members of the Congressional Black Caucus insist there is nothing > personal
> in what one of them drily calls their "crackage" with former colleague
> President Obama.
>
> But the disagreement, ostensibly over economic aid, is not the first > time
> Obama has been at odds with the CBC, raising fresh questions about the
> relationship between the nation's first black president and the
> organization that has led the fight for black political empowerment on
> Capitol Hill for four decades.
>
> At stake is the fate of some of the president's key congressional
> initiatives, as the 42-member Congressional Black Caucus seeks to > counter
> the influence of the 52-member Blue Dog Caucus and flex enough > legislative
> muscle to deter the White House from making too many concessions to > the
> party's conservatives.
>
> But also on public display is the personal dynamic between a young
> president who strives to keep race off the public agenda and the > mostly
> older members who fight every day to keep race and the impact of > racism in
> the minds of policymakers.
>
> Members of the caucus were bursting with pride and a poignant sense of
> history when Obama was sworn in as president. Almost from the start,
> though, that pride mingled with unease about White House priorities > in the
> stimulus bill. The CBC chafed when forced to accept $60 billion in > cuts in
> stimulus spending they wanted for urban communities particularly > hard hit
> by the recession.
>
> There were also private complaints when they had to watch the > president
> meet with House and Senate Republicans and the Blue Dogs before they > were
> invited to the White House for the first time, five weeks into his
> administration.
>
> But the friction did not surface publicly until Rep. Maxine Waters,
> D-Calif., led a revolt by 10 CBC members on the Financial Services
> Committee that helped delay a financial regulatory overhaul bill. In
> discussing that effort late last month, she repeatedly suggested it > was
> important to "educate" people advising Obama on these issues, "so he > can
> understand."
>
> That got the president's attention. But it didn't shake his insistence
> that he can't tailor his policies to the black community. "I will > tell you
> that I think the most important thing I can do for the African-> American
> community is the same thing I can do for the American community, > period.
> And that is get the economy going again and get people hiring > again," he
> told interviewers from USA Today and the Detroit Free Press.
>
> For many members of the CBC, half of whom had initially opposed > Obama's
> presidential candidacy, this was not what they wanted to hear. Nor > were
> they pleased with his escalation in Afghanistan of a war they see as
> siphoning funds from jobs programs and urban areas. But, with no one > in the
> CBC wanting to worsen their relationship with the White House, > members are
> going to great lengths to put the best face on the back-and-forth.
>
> There was also some surprise that Obama would react as he did to > criticism
> from Rep. John Conyers, D-Mich. After Conyers criticized Obama for > watering
> down healthcare reform and taking war advice from "clowns," the > president
> called him and pointedly asked why he was "demeaning" him.
>
> Despite the angry tone of some of their rhetoric, black lawmakers > insist
> their calls for Obama to do more for economically hard-hit minority
> communities is neither a sign of growing frustration with Obama, nor
> residue of previous differences.
>
> Their concern, they said, is more with his advisers and congressional
> leaders than with the president.
>
> Yet, the pressure keeps coming, even if sometimes couched. As > recently as
> last week, Rep. Barbara Lee, D-Calif., the chairwoman of the caucus,
> responded to Obama's jobs speech by noting in a statement, "As a > candidate,
> President Obama said in his speech on race during the Democratic > primary,
> 'race is an issue that I believe this nation cannot afford to ignore > right
> now.'''
>
> Waters, at an event last week to discuss the latest CBC letter to > Obama
> laying out proposals for targeting help to hard-hit communities, > said, "We
> finally are waking up to the fact that despite the fact we are loyal,
> consistent members of this Congress, and of this caucus ... that we > are not
> paying enough attention to the misery in our community."
>
> Rep. Sheila Jackson Lee, D-Texas, acknowledged in an interview that > there
> is much talk about what she sarcastically refers to as "evidence of
> crackage" between Obama and blacks in Congress.
>
> "I believe that whenever the former caucus of the president begins to
> assert distinctive differences between the administration and that > caucus,
> outside analysis would lean toward there's a breach, that there's a
> separation, that there is no longer an opportunity to work > together," she
> said. "That is completely untrue."
>
> Indeed, she called the caucus "an ally of this administration and > proud of
> the administration. It is not personal. We are as proud of him today > as we
> were when he got elected."
>
> But Obama's race will not get him different treatment from the CBC, > said
> Rep. Emanuel Cleaver, D-Mo., a member of the House Financial Services
> Committee. "I think the president understands that we are going to > have
> policy differences. It's not personal," he said. "We had policy > differences
> with every other president.
>
> Supporting this contention is one of the founders of the caucus, > former
> Rep. Louis Stokes of Ohio. "I refused to endorse Jimmy Carter when > he was
> president ... because he had not done the kinds of things I felt he > should
> do for my constituents," recalled Stokes. "And I had differences > with Bill
> Clinton, who is in my opinion one of our greatest presidents. ... > Almost
> all of us in the Black Caucus differed with him on welfare reform."
>
> Paul Brathwaite, executive director of the CBC until 2007, said > members
> view themselves as "the conscience of the Congress" and in this > instance,
> "they are sounding the alarm bell on the crisis that is gripping > many of
> their communities."
>
> Brathwaite and several caucus members insisted there are no > lingering hard
> feelings from the campaign when so many of them opposed Obama > initially.
>
> "Our allegiance has to be to our constituency," said Cleaver, > dismissing a
> reminder of his endorsement of then-Sen. Hillary Rodham Clinton over > Obama
> last year, saying, "I've known the Clintons for 25 years. I believe in
> loyalty."
>
>
> http://www.nationaljournal.com/congressdai...091215_3243.php
>
> -----
> TRADE: HOUSE PASSES PACKAGE EXTENDING PREFERENCES ONE YEAR
> By Peter Cohn
>
>
> The House Monday approved a one-year extension of expiring duty > breaks for
> imports from the Andean region and about 130 countries around the > world
> without a recorded vote.
>
> The package goes to the Senate for a final vote, where aides said it
> should pass before the chamber adjourns, averting expiration of the
> programs Jan. 1. That outcome would immediately erect tariff > barriers to
> thousands of imported products from poor and developing countries.
>
> Republicans and business groups expressed concern about Ecuador's
> continued preferences under the Andean program, citing that > government's
> treatment of U.S. companies. They also complained that bilateral trade
> deals with countries like Colombia and Panama -- which enjoy duty-free
> access to the U.S. market -- that could eliminate tariffs on U.S. > exports
> were languishing.
>
> Critics put aside their differences in the interest of renewing the
> programs, however.
>
> "Let me be blunt: We should be and can be doing much more to advance > our
> trade agenda and create much-needed jobs for American workers," > House Ways
> and Means ranking member Dave Camp said on the floor. "The legislation
> before us is far from perfect, but it is a chance to ensure the trade
> agenda does not slide further backward."
>
> Extending the Andean program as well as the Generalized System of
> Preferences for a year, saving U.S. retailers and manufacturers some > $785
> million in tariffs, is considered so important by the business > community
> that some issued "key vote" alerts to lawmakers. They include the U.S.
> Chamber of Commerce, and American Apparel and Footwear Association.
>
> AAFA President Kevin Burke wrote that the Andean program was > particularly
> important for the domestic textile and apparel industry, because T-> shirts,
> socks and other clothing imports under the program are required to > use U.S.
> cotton, yarns and fabrics.
>
> Andean countries used more than $300 million worth of U.S. exports to
> assemble products that are shipped to the United States under the
> preferences program, Burke said. The extension is also backed by the
> American Manufacturing Trade Action Coalition and National Council of
> Textile Organizations, which represent domestic textile interests.
>
> The Chamber and other business groups remain wary of Ecuador's > eligibility
> for duty-free benefits under the Andean program. House Republicans > were
> able to convince Democrats to move up the due date of the program's > next
> formal review by the White House by more than a year, to June 30. > But they
> were unsuccessful in retaining language negotiated by the > administration of
> George W. Bush and Congress requiring a separate review of Ecuador's
> benefits by that date.
>
> In his "key vote" letter to members, the Chamber's chief lobbyist, > Bruce
> Josten, cited Ecuador's "pattern of failure to respect the rule of > law,
> private property, and the sanctity of contracts," but, nonetheless, > "we
> believe that in other regards, U.S. foreign policy and trade policy
> interests would benefit from an extension of these programs."
>
> In a statement, Ecuador's ambassador to the United States, Luis > Gallegos,
> said his government was pleased the bill "treats all of the > participating
> countries equally."
>
> Chevron Corp., one of the chief critics of the Ecuador government, > said in
> a statement it supported the bill and that the mid-2010 review would
> provide an opportunity to monitor that country's performance. Other > Ecuador
> critics, such as the National Association of Manufacturers and > Emergency
> Committee for American Trade, also threw their weight behind the bill
> before passage.
>
> A separate letter to lawmakers from 18 trade associations including > the
> Chamber, Business Roundtable and retail and apparel groups urged swift
> passage of the bill.
>
> Lawmakers want to use next year to push comprehensive changes to the
> Andean program, GSP and other preference laws, Ways and Means Trade
> Subcommittee Chairman Sander Levin, D-Mich., said. Many want to > simplify
> the programs and pass long-term extensions, while making them more
> responsive to more of the world's poorest countries without eroding > the
> market share of existing beneficiaries.
>
> Protecting the interests of African nations will be a major issue, for
> example, as Congress contemplates extending benefits to countries like
> Cambodia, which have been hammered by the recession but are still > outpacing
> Africa in terms of apparel exports to the United States.
>
> One advocate of extending benefits to Cambodia and other poor > countries is
> Rep. Jim McDermott, D-Wash., who has tried -- without success -- to > bridge
> the divide. He noted that it costs as much in tariffs to import $1.5
> billion in products from Cambodia as it does to import $50 billion > from
> Great Britain.
>
> "Now if you want to help Cambodia, you ought to think about those > kinds of
> numbers," McDermott said. "We can strengthen our current programs > while
> also helping other desperately poor countries."
>
> Business lobbyists are also pushing enactment of a miscellaneous > tariff
> bill reducing or suspending hundreds of duties on manufacturing > inputs that
> are no longer made domestically, although time is short.
>
> The House has been readying such a bill for more than a year, but new
> lobbying disclosure requirements demanded by the Senate and the Obama
> administration's vetting process has delayed consideration. Even if > the
> House can take up a package this week, it is unclear if the Senate > will be
> able to act in time to head off expiration of existing duty breaks > on Dec.
> 31.
>
>
> http://www.nationaljournal.com/congressdai...091215_8753.php
>
> -----
> DEFENSE: FIGHT OVER TANKER PACT PUTS TWO NOMINATIONS IN LIMBO
> By Megan Scully
>
>
> Frustrated with the Air Force's handling of the latest competition > for a
> lucrative contract to build a fleet of aerial refueling tankers, > Sen. Jeff
> Sessions, R-Ala., is blocking the confirmation of Erin Conaton to be > the
> service's No. 2 civilian leader.
>
> The Senate Armed Services Committee voted unanimously to support the
> confirmation of Conaton, who serves as the staff director of the House
> Armed Services Committee, this month. But a spokesman for Sessions
> confirmed Monday that the senator, who sits on the Armed Services > panel,
> has placed a hold on her nomination amid concerns about the tanker
> competition.
>
> In addition to Conaton, Sessions is also blocking the nomination of > Frank
> Kendall, whom President Obama tapped to be deputy undersecretary of > Defense
> for acquisition and technology, the spokesman said.
>
> The spokesman would not elaborate about the senator's concerns.
>
> Northrop Grumman Corp. and EADS, the European consortium behind > Airbus,
> plan to build their tanker offering at a plant in Mobile, Ala. But > they
> want the Pentagon to make significant changes to the current draft > Request
> For Proposals to make it worthwhile to stay in the competition for the
> contract, worth at least $35 billion.
>
> The final RFP is expected next month in anticipation of a contract > award
> in the summer.
>
> Northrop won the competition last year, but GAO ultimately upheld a
> protest filed by Boeing Co., the losing bidder, and the Pentagon > canceled
> its contract for the planes.
>
> At her confirmation hearing Nov. 19, Conaton said she would be fair > and
> objective when dealing with the competition.
>
> "My sense and my commitment [are] to ask questions upon confirmation > that
> would lead to this competition being concluded to the best interests > of the
> war fighter," Conaton said at the hearing. "I think it's very > important
> that this be a fair and open competition and that it be clear to > those who
> see the results how the decision was made."
>
> Sessions and Sen. Richard Shelby, R-Ala., also placed a hold on Ashton
> Carter's nomination to be the Pentagon's top weapons buyer this > year. They
> ultimately lifted the hold after receiving assurances that Carter was
> committed to an open and transparent competition.
>
>
> http://www.nationaljournal.com/congressdai...091215_1985.php
>
> -----
> TRADE: OBAMA NOTIFIES CONGRESS OF INTENT TO ENTER TPP TALKS
> By Peter Cohn
>
>
> The White House Monday notified Congress of its formal intent to enter
> into trade negotiations with Asia-Pacific countries as part of a pact
> initially conceived during the administration of former President > George W.
> Bush.
>
> President Obama announced his plan to join the Trans-Pacific > Partnership
> talks during his November swing through Asia. Since then, Trade
> Representative Kirk and his staff have been laying the groundwork > with key
> lawmakers and stakeholders.
>
> Kirk made it official in letters to congressional leaders on Monday, > and
> his office will publish a notice in the Federal Register Wednesday > seeking
> public comment. Formal negotiations are to begin in March.
>
> "This agreement will create a potential platform for economic > integration
> across the Asia-Pacific region, a means to advance U.S. economic > interests
> with the fastest-growing economies in the world, and a tool to > expand U.S.
> exports, which are critical to our economic recovery and the > creation and
> retention of high-paying, high-quality jobs in the United States," > Kirk
> wrote to House Speaker Pelosi.
>
> The process appears to follow the same notification guidelines as when
> "fast-track" trade negotiating authority was in place, before it > lapsed on
> July 1, 2007. There are no current plans to seek a reinstatement of
> fast-track, although Kirk has said the administration will request > it at
> the appropriate time.
>
> Without fast-track in place, a new trade agreement would be subject to
> amendment in the House and Senate, although Kirk says he will consult
> closely on any new trade pacts with Congress to avoid dust-ups later > in the
> process.
>
> The Trans-Pacific Partnership as currently structured would > encompass the
> United States, Australia, Brunei, Chile, New Zealand, Peru, > Singapore and
> Vietnam. Obama announced the U.S. involvement on Nov. 14 in Japan -- > a much
> larger economy that could eventually join the talks, trade sources > said,
> although issues such as automobile market access in that country could
> dwarf difficulties in passing the already-inked South Korea trade > accord.
>
> "We will consult with Congress as we consider additional members and > as we
> work to further expand the economic significance of the TPP > Agreement and
> to ensure that it remains high standard," states Monday's letter > from Kirk.
>
> Total goods and services exports to the Asia-Pacific region last year
> amounted to $934 billion, about an 8 percent increase over 2007. In
> percentage terms, agricultural exports were the fastest-growing, > rising at
> a 30 percent clip last year. Kirk wrote that such growth could be
> endangered if the United States continues to be left out of regional > trade
> agreements, which total some 175 already among the Asia-Pacific > countries.
>
> Last year, total U.S. merchandise exports to potential TPP partner
> countries were $73.5 billion, according to U.S. trade figures. The > United
> States already has bilateral deals in place with Australia, Chile, > Peru and
> Singapore, which make up the lion's share of that trade. Goods > exports to
> the remaining three countries -- Brunei, New Zealand and Vietnam -- > were
> only 7 percent of that figure, or $5.4 billion. By contrast, goods > exports
> to just one country that the United States has a pending bilateral > deal
> with -- Panama -- were $4.9 billion last year.
>
> That makes bigger markets such as Japan or even Malaysia and Thailand
> attractive for manufacturers and other exporters. To bring the > agricultural
> community on board, Vietnam at a minimum would likely have to be > involved
> -- but Vietnam potentially poses major complications with Congress > due to
> its communist leadership and nonmarket economy.
>
> Finally there are the usual labor, environment and domestic job-loss > fears
> the administration will have to deal with. "The TPP Agreement > provides an
> opportunity to develop a new model for U.S. trade negotiations and a > new
> regional approach that focuses more on jobs, enhances U.S. > competitiveness,
> and ensures that the benefits of our trade agreements are shared by > all
> Americans," Kirk wrote.
>
>
> http://www.nationaljournal.com/congressdai...091215_5131.php
>
> -----
> ENVIRONMENT: TOP CLIMATE DELEGATE SEES LONG WAY TO GO ON AGREEMENT
> By Darren Goode
>
>
> COPENHAGEN, Denmark -- Top U.S. climate delegate Todd Stern said late
> Monday that while some progress has been made in talks here, > "there's still
> a long way to go if we're going to reach the kind of agreement" that > major
> players would back.
>
> The core issues remaining for the U.S. negotiators include having > major
> developing nations like China "indicate their resolve" to implement
> emission reduction goals as well as to have the parties ensure that
> implementation of those actions have "adequate transparency," Stern > said.
>
> He said the progress made over the weekend was "clarifying and > defining
> more clearly where there are differences."
>
> Former Danish climate minister Connie Hedegaard, who is president of > the
> talks, started informal discussions with 48 ministers over the > weekend.
> Stern said that talks on Saturday night and particularly Sunday "were
> constructive."
>
> The baby steps come as more than 100 heads of state will start > arriving
> Wednesday. President Obama is planning to arrive Friday morning, the > last
> day of the two-week summit, Stern said. He said there is a broad > desire to
> get issues resolved before Obama gets here and to not have anything > "kicked
> upstairs." But, he said, his view is "there will be an issue or two > that
> does require the engagement of leaders."
>
> "The pending arrival of well over a hundred leaders absolutely > affects the
> negotiation" by putting pressure on the negotiators, Stern said. > "This is a
> completely unprecedented situation."
>
> Monday started with a protest by some of the poorest nations -- led by
> those in Africa -- who cited concern that the official negotiations > were
> sliding away from including a second commitment period for nations > under
> the 1997 Kyoto Protocol. Kyoto expires at the start of 2013.
>
> The protest disrupted conference negotiations for much of the day,
> although U.S. officials and observers said they did not believe it > affected
> behind-the-scenes negotiations going on involving the United States, > China
> and other major players who are working on a separate treaty.
>
> "This is actually the one highly contentious issue that doesn't really
> involve the United States very much," Stern said.
>
> But he also said it did not help overall progress toward reaching any
> political agreement either. "We don't have very much time," Stern > said.
> "The clock is definitely ticking. ... There was some time lost there."
>
> A final agreement on whether the Copenhagen conference should > outline both
> political agreements on a new climate treaty and another commitment > period
> for nations covered under the Kyoto Protocol appears to be unresolved.
>
> African and other poor nations want to ensure major greenhouse gas
> emitters will be subject to new and binding emission reductions. > They worry
> that big emitters would not be bound to emission targets unless they > amend
> the Kyoto Protocol, as opposed to abandoning that treaty by letting it
> expire.
>
> But the United States and China -- the world's two biggest > greenhouse gas
> emitters -- are not covered under Kyoto.
>
> While there are "legitimate concerns" being raised about the process,
> "it's really important that countries focus on the essential and > focus on
> the pragmatic and focus on getting this done," Stern said.
>
> Today will be the official start of the "high-level" portion of the > talks.
>
> Heads of state such as U.K. Prime Minister Gordon Brown and Australian
> President Kevin Rudd are expected here today.
>
> More than 90 presidents, prime ministers and other heads of state are
> expected to address the plenary Wednesday and Thursday and more than > 100
> heads of state are expected to be here eventually.
>
> Those tentatively set to address the plenary include Venezuelan > President
> Hugo Chavez and Zimbabwean President Robert Mugabe on Wednesday and > Iranian
> President Mahmoud Ahmadinejad on Thursday.
>
> Other high profile leaders -- including Chinese Premier Wen Jiabao and
> Israeli President Shimon Peres -- will address the plenary Thursday.
>
> Former Vice President Al Gore and California Gov. Arnold > Schwarzenegger
> are scheduled to be here today.
>
>
> http://www.nationaljournal.com/congressdai...091215_1099.php
>
> -----
> FINANCE: IG WILL INVESTIGATE WHETHER DEPARTMENT MISUSED FUNDS
> By Kasie Hunt
>
>
> The Education Department's inspector general will investigate > whether the
> administration misused federal money when officials pushed colleges > and
> universities to change how they make student loans, according to a > letter
> sent to lawmakers Monday.
>
> House Education and Labor ranking member John Kline asked for the > review
> after Education Secretary Duncan wrote and called schools to urge > them to
> abandon the Federal Family Education Loan program in favor of the > Education
> Department's Direct Lending program. The administration wants to > eliminate
> FFEL and use the estimated $79.6 billion in savings to increase aid to
> low-income students.
>
> Kline asked Mary Mitchelson, the acting inspector general at the > Education
> Department, to investigate whether the administration violated the > annual
> appropriations bill's stipulation that federal money not be used for
> lobbying activities.
>
> "The calls made to institutions of higher education were clearly > designed
> to persuade these institutions to switch to the administration's > favored
> Direct Loan program, despite the fact that Congress has not mandated > the
> switch," Kline wrote in a Nov. 25 letter to Mitchelson. "This type of
> activity is symptomatic of a brand of politics that employs > deception and
> public pressure to combat political adversaries," he wrote.
>
> The House passed legislation in September that would require schools > to
> make the switch before students begin arriving for the fall 2010 > semester.
> But the bill has stalled in the Senate, leaving colleges hanging; > emergency
> legislation that would keep money flowing through FFEL has a July
> expiration.
>
> The timeline for the investigation is unclear. In her Monday letter,
> Mitchelson said the investigation would begin "as soon as staff > resources
> are available."
>
>
> http://www.nationaljournal.com/congressdai...091215_9045.php
>
> -----
> PEOPLE: PEOPLE
> By Sara Jerome
>
>
> HULEN RULIN'. Rep. Marsha Blackburn, R-Tenn., has tapped Anthony > Hulen as
> her chief of staff. Hulen was the White House liaison and director of
> external and intergovernmental affairs at the Agriculture Department > during
> the George W. Bush administration. Before that, he served as chief > of staff
> to Rep. Randy Neugebauer, R-Texas, and deputy chief of staff to Rep. > Edward
> Whitfield, R-Ky. He also got his feet wet this year in the private > sector
> at the Consumer Bankers Association. He graduated from Arkansas State
> University with a major in broadcast news and -- you guessed it --
> political science. Hulen succeeds Stephen Brophy, now an associate at
> Barnes, Richardson & Colburn, where he registered to represent Florida
> Citrus Mutual and the Meat Importers Council of America. Before > joining
> Blackburn's office, Brophy was a legislative assistant for former > Sen. Bill
> Frist, R-Tenn.
>
> TABLE FOR ONE. Scott DeFife is joining the National Restaurant > Association
> as executive vice president of policy and government affairs. He was a
> senior policy adviser to House Majority Leader Hoyer and a legislative
> director to Rep. Bart Gordon, D-Tenn. and former Rep. Karen > McCarthy, D-Mo.
> DeFife arrives at NRA from the Securities Industry and Financial > Markets
> Association, where he was senior managing director of government > affairs.
> DeFife's private-sector experience has included stints representing > the
> American Public Power Association, the National Conference of State
> Legislatures and the Texas Office of State-Federal Relations. He > also has
> his own restaurant experience from his college days. DeFife received > his
> bachelor's in communications from the University of Texas and a > master's in
> public affairs from the Lyndon B. Johnson School of Public Affairs.
>
> PRESIDENT FLYNN. The Center for National Policy has named Stephen > Flynn as
> its president. Flynn previously served on the National Security > Council as
> director of the office of global issues. He arrives at the center > from the
> Council on Foreign Relations, where he was a senior fellow. Before > that, he
> had a career in the Coast Guard after graduating from the U.S. Coast > Guard
> Academy. Flynn also received a doctorate from Tufts University. At > CNP,
> Flynn plans a special focus on questions surrounding the nation's
> infrastructure, which he says has faced "reckless neglect." He sees a
> solution in a "hybrid infrastructure for the 21st century," which > would be
> flexible enough to respond to new risks while also "creating real > jobs for
> Americans." Previous CNP leaders have included such former > secretaries of
> State as the late Cyrus Vance and late Edmund Muskie of the Carter
> administration, and Madeleine Albright, as well as former Rep. Tim > Roemer,
> D-Ind., now ambassador to India.
>
>
> http://www.nationaljournal.com/congressdai...091215_6329.php
>
> -----
> OFF TO THE RACES: GOING WITH THE FLOW
> By Charlie Cook
>
>
> Monday morning's announcement by Rep. Bart Gordon, D-Tenn., that he > would
> not seek re-election certainly stirred things up on Capitol Hill.
>
> It's an exaggeration to say that the dam is breaking for House > Democrats,
> as incumbents in tough districts retire. But neither is it accurate > to say
> that four such members announcing their retirements in four weeks is a
> trickle.
>
> One can understand the indigestion building in Democratic leadership
> offices in seeing Reps. Dennis Moore, D-Kan., John Tanner, D-Tenn., > Brian
> Baird, D-Wash., and now Gordon all stepping down and opening up > seats that
> will be difficult to defend. Add to that number the open seat > created by
> the Senate run by Rep. Charlie Melancon, D-La., which is a goner.
>
> Gordon's contest had been rated by the Cook Political Report as Likely
> Democratic until Nov. 19th, when it was shifted to Lean Democrat. > With his
> departure triggering an open seat, and given that it has a Cook > Partisan
> Voting Index of R+13 -- meaning that in presidential balloting it > votes 13
> percentage points more Republican than the nation as a whole -- it > is now
> rated likely Republican.
>
> Quite simply, not enough House Democratic members in tough districts > have
> retired to cost them their majority, but if a trend were to develop, > it
> would start pretty much as this has so far.
>
> Always being helpful, the National Republican Congressional Committee
> already has an effort designed to push a dozen or so wavering > Democratic
> toward retirement decisions. On the other end, former Democratic
> Congressional Campaign Committee Chairman Martin Frost of Texas > recently
> suggested that the Obama White House be willing to guarantee post-> midterm
> election jobs to certain members if they opt to run for re-election > and
> still lose.
>
> Probably the best way to look at the Democrats' situation is to look > how
> at relative levels of security of each of their 435 seats at this > point
> compared to early June.
>
> The Cook Political Report now has 174 seats in the Solid Democratic
> column; 44 others rated as Likely Democrat, meaning not yet but > potentially
> competitive, and 23 more seats in the Lean Democratic column, meaning
> competitive.
>
> There are 19 seats rated as Toss Up, in which neither party can > claim a
> clear advantage. There are eight seats in the Lean Republican > column, 16 in
> the Likely Republican group and 151 rated as Solidly Republican.
>
> Put in a more understandable format, the current number of Solid and
> Likely Democratic seats is 218, coincidentally the barest possible
> majority.
>
> That means today, if Democrats just hold the seats that they ought > to be
> able to hold, but lose 100 percent of the 50 competitive races, they > would
> still hang onto their majority by an eyelash.
>
> As a practical matter, no party has ever lost or won 100 percent of > the
> competitive races, but the shrinkage we have seen lately in those > Solid and
> Likely Democratic columns means that any more retirements in tough
> districts will be a problem for Democrats.
>
> On June 2, there were 199 seats in the Solid Democratic column and > 34 more
> in the Likely Democratic column, for a total of 233 in seats strongly
> favored for Democrats, 15 more than there are today. There were 21 > seats in
> the Lean Democratic column and five seats for both parties in the > Toss Up
> column.
>
> On the Republican side, there were six seats in the Lean Republican
> column, 36 more in the Likely Republican column, and 134 in the Solid
> Republican column.
>
> The field of endangered GOP seats is shrinking -- though Democrats > do have
> legitimate chances in a handful -- while the number of Democratic > seats in
> jeopardy has been expanding, in a trend that really accelerated over > the
> summer.
>
> As this column pointed out last week, when parties have tough years, > they
> tend to lose a lot of open seats, though the range varies enormously.
>
> Republicans lost 38 percent of their open seats in 2006, but Democrats
> lost a whopping 71 percent of their open seats 1994. The variable is > the
> kind of open seats they are, whether they are safe or endangered > districts.
>
> But the more Democratic retirements in tough districts there are, the
> larger the GOP win percentage from that group is likely to be and > the lower
> the percentage of Democratic incumbents that the GOP would have to > knock
> off.
>
> Ten percent of all Republican House incumbents running for re-> election in
> 2006, a tough year for the GOP, lost, and 15 percent of all of the
> Democratic incumbents running in 1994 lost.
>
> So this business of whether the GOP can or will capture a majority > next
> year is based on a lot of moving parts, but one of the most critical > is
> Democratic retirements in tough districts.
>
> So far, only Illinois' filing deadline has passed. Over the next few
> months it will be critical to watch whether there will be a constant > flow,
> if the dam breaks or it diminishes to a trickle. One thing is > certain, the
> last month can't make Democrats feel any better.
>
>
> http://www.nationaljournal.com/congressdai...091215_4305.php
>
> -----
> POLITICAL ROUNDUP: ABERCROMBIE DEPARTURE DATE, SPECIAL ELECTION TIMING
> UNCLEAR
>
> Rep. Neil Abercrombie, D-Hawaii, would not give a date for when he > would
> resign his seat, but he said Sunday he would stay for key votes, > Honolulu
> Advertiser reported.
>
> Abercrombie, who is running for the open governor's seat next year,
> indicated his departure would likely come within weeks.
>
> It is unclear how soon a special election would be called. State Chief
> Election Officer Kevin Cronin said the price tag was about $2 > million the
> last time a stand-alone special election was held.
> <

[Snuffysmith]

> CongressDaily AM for Wednesday, Dec. 16, 2009
>
> --------------------
> CONTENTS
>
> HEALTH: AFTER OBAMA'S CALL TO ARMS, DEMS LOOK TO CLOSE RANKS
> By Anna Edney with George E. Condon Jr., Peter Cohn and Dan Friedman
> contributing
>
>
> Senate Democrats are attempting to shore up a few holdouts in their > ranks
> to commit to passing healthcare legislation, as President Obama > Tuesday
> reminded them there might not be another chance in their lifetimes.
>
> Despite the holdouts, senators said they expect to pass a bill by
> Christmas.
>
> "We are still working with a few senators who have not made a > commitment
> and until those commitments and votes are made, we are going to keep
> working," Majority Whip Durbin said after Senate Democrats met with > Obama
> at the White House. "I think ultimately we will pass it before > Christmas,"
> he added.
>
> Sen. Bernie Sanders, I-Vt., was critical of the bill Tuesday and > would not
> say whether he will vote for it without a public option. "I think > we're in
> a very disturbing, difficult situation," Sanders said.
>
> He does not believe the growth of health spending can be slowed unless
> insurance companies have competition from a public option.
>
> Sen. Jim Webb, D-Va., said he is waiting to see CBO scoring before > making
> a final decision. Sen. Roland Burris, D-Ill., said he needs to see > the bill
> before deciding. Burris reiterated Monday he could not support a bill
> without a public option.
>
> Sen. Mary Landrieu, D-La., officially lent her support to the Senate > bill
> after the White House meeting. "While there is still some work to > do, I am
> confident that we have found enough common ground for the Senate to > seize
> this historic opportunity," she said. Landrieu was opposed to some > earlier
> provisions, particularly on the public option, but said the bill now
> achieves "a consensus that combines the best blend of private and > public
> approaches to reduce cost, expand coverage and increase choice and
> competition for Americans."
>
> Senators said Sen. Joseph Lieberman, D-Conn., spoke at the White House
> meeting, telling Obama the bill appeared to be moving in the right
> direction.
>
> Finance Chairman Max Baucus described Lieberman as saying something > like,
> "We're all different. We've got to work together."
>
> Lieberman opposes a public option and his opposition to a Medicare > buy-in
> helped jettison that proposal. Sen. Sherrod Brown, D-Ohio, said he > will
> vote for the bill but will continue to push the buy-in.
>
> Baucus summed up Obama's comments, reading from a napkin with a
> presidential seal on it on which he took notes.
>
> He said Obama said doing these kinds of bills are "why people run for
> these offices. Why most of us ran for office ... why he ran for > office."
>
> Baucus said several times Obama told them to "be joyful." He said > Obama
> said, "Hey guys, this is fun," and made the point that this is what
> lawmakers are here to do.
>
> Sen. Robert Casey Jr., D-Pa., said a lot of the focus of the meeting > was
> on the public option. A group of 10 Democrats negotiating a > replacement for
> it are considering a national plan where the federal government would
> negotiate rates with private insurers.
>
> AARP pushed Tuesday for passage of the Senate bill, though it did not
> exactly lend the measure a full endorsement. The White House and > Majority
> Leader Reid praised AARP for its support after the seniors' lobby > thanked
> Senate Democrats for pledging to close the "doughnut hole" coverage > gap in
> the Medicare prescription drug benefit during a conference with the > House.
>
> AARP CEO Barry Rand wrote, "AARP is pleased to support your efforts to
> obtain cloture, and urges timely passage of this legislation by the
> Senate."
>
> "People probably read these things the way they want to read it," > David
> Sloane, vice president of government relations at AARP said.
>
> Sloane said the organization likes many provisions in the bill but
> believes it is missing two crucial elements: a reduction in the gap > between
> what insurance companies can charge seniors versus younger customers > and a
> solution to close the doughnut hole.
>
> "If we don't get a bill passed [out of the Senate], we don't get to
> conference and get the things we want," Sloane said.
>
> On Tuesday evening, the Senate rejected two prescription drug > amendments,
> both of which failed to reach a previously agreed-upon 60-vote > threshold.
> An amendment by Sen. Byron Dorgan, D-N.D., to allow the > reimportation of
> prescription drugs failed 51-48. And an amendment by Sen. Frank > Lautenberg
> that would have set virtually out-of-reach safety standards for > reimported
> drugs failed, 56-43.
>
>
> http://www.nationaljournal.com/congressdai...091216_5880.php
>
> -----
> OUTLOOK: REID'S CHRISTMAS WISH LIST IS GROWING
> By Dan Friedman with Billy House contributing
>
>
> In a legislative feat to rival Santa dropping off a world of gifts by
> Christmas morning, Senate Majority Leader Reid is set to try passing > a FY10
> Defense Appropriations bill, a continuing resolution, short-term > debt limit
> increase and a healthcare overhaul bill before Dec. 25.
>
> The marathon push would probably require the Senate to meet > throughout the
> weekend; it's possible but is a tall order, according to one > Republican
> leadership aide. Senate Minority Whip Kyl went so far as to say he > didn't
> see how Reid could succeed.
>
> Following the House's expected passage of the FY10 Defense > Appropriations
> bill today, Senate aides expect Reid to file cloture on the bill, > which
> carries a two-month extension of unemployment and COBRA benefits. > Reid's
> action would set up a cloture vote by Friday or sooner, with a final
> passage vote possible Saturday.
>
> Passage of the defense bill could be complicated by the likely "no" > vote
> by Sen. Russell Feingold, D-Wis., an opponent of expanding the war in
> Afghanistan, but Senate aides are confident they will prevail either > by
> limiting Feingold's opposition to his final passage vote or by > picking up
> GOP support.
>
> Once the defense bill passes, which Senate leadership aides still hope
> will be Friday if Republicans yield time, Reid is expected to file > three
> cloture motions on his healthcare bill -- on a manager's amendment,
> substitute amendment and the bill -- setting up a series of > consecutive
> cloture clocks that total 90 hours. By keeping the Senate in all > weekend
> and for marathon sessions Reid would have time for a vote on passage > by
> Christmas Eve.
>
> Democratic senators said the first and likely decisive cloture vote > could
> come Saturday, or early Sunday morning. Subsequent cloture votes > could come
> Monday and late Tuesday or Wednesday. Democrats appear to be banking > on
> Republicans, if cloture is invoked on the healthcare manager's > amendment
> and passage is assured, possibility yielding back time to allow the > chamber
> to go home Dec. 23.
>
> The Senate this week will also have to pass a continuing resolution to
> extend funding for the Defense Department through Dec. 23 or Dec. 24 > to
> provide time to pass the defense spending bill after the existing CR
> expires Friday and a standalone short-term extension of the debt > limit.
> Senate aides said Democrats hope to pass both by unanimous consent.
>
> Democrats contend Republicans might agree to a quick vote on the debt
> limit because it is a vote they view as politically favorable, > particularly
> if the agreement includes the chance to offer several amendments, > which
> Democrats might allow for quick contention.
>
> Democrats say they also hope the GOP will allow a short-term CR, > perhaps
> on the grounds that military funding otherwise could run out, one aide
> said.
>
> The Senate's task would be complicated if the House leaves, making it
> impossible to alter bills and return them to the lower chamber.
>
> House leaders said passage of the four bills today would wrap up their
> chamber's legislative business for the year. If that happens, Speaker
> Pelosi said she is hoping to lead a congressional delegation to > climate
> change talks in Copenhagen, Denmark. The delegation would leave as > early as
> tonight.
>
> "Let's see how we do," she said. "I'm very excited about going. And I
> would be very disappointed not to go. But our work comes first."
>
>
> http://www.nationaljournal.com/congressdai...091216_2148.php
>
> -----
> TAXES: DEMS SHORT OF VOTES FOR SHORT-TERM ESTATE TAX EXTENSION
> By Peter Cohn, with Humberto Sanchez and Dan Friedman contributing
>
>
> Senate Democratic leaders were scrambling late Tuesday to line up > another
> vote or two to back a two-month extension of the estate tax and > avoid the
> once-unthinkable scenario that Democrats would allow it to expire.
>
> The matter was holding up action in the House on must-pass items > like the
> Defense spending bill and an increase in the debt limit at > presstime, as
> House leaders waited for instructions on which vehicle could carry the
> estate tax measure and still garner 60 votes.
>
> Votes from senators such as Agriculture Chairwoman Blanche Lincoln, > who
> supports a more generous version, and Sen. George Voinovich, R-Ohio, > who
> backs a permanent extension of the 2009 estate tax, were in play. > Leaders
> were also eyeing Senate Appropriations ranking member Thad Cochran, > who
> manages the Defense bill for Republicans and has historically > supported
> such measures in bipartisan fashion.
>
> Lincoln said she could possibly support a short extension. "A two- or
> three-month extension would certainly indicate that we are serious > about
> doing something that is smart and reasonable and beneficial to > families and
> businesses," said Lincoln, who wants to lower the current rate to 35
> percent from 45 percent, and increase the exemption to $5 million > from $3.5
> million. "Anything that is less permanent gives us a greater > opportunity to
> put something forward that is going to be meaningful," she added.
>
> Even if Lincoln backs the measure, Democratic leaders are expected > to lose
> the vote of Sen. Russell Feingold, D-Wis., if the estate tax > extension is
> attached to the Pentagon funding bill because he opposes that > measure. A
> Feingold spokesman said he opposed the Defense bill because the war > funds
> were "not in our national security interest." That makes a GOP vote
> necessary to get to 60.
>
> Voinovich has introduced legislation with Sen. Thomas Carper, D-> Del., to
> make the 2009 estate tax permanent but with changes, such as > indexing the
> exemption for inflation. Another key moderate, Sen. Olympia Snowe, R-> Maine,
> would not tip her hand other than by saying, "I support something > that will
> address the issue on a sustainable basis."
>
> Democratic aides were insistent that some accommodation would be > found to
> at least temporarily continue the estate tax, but there was less > confidence
> among members themselves. "There's probably not time now before the > end of
> this year," Senate Budget Chairman Kent Conrad said. "Most Republicans
> don't want to vote for it, and really the dominant reason is time. > Most
> things will get done but this is one thing that's gonna have to be
> addressed next year."
>
> Sen. Mark Pryor, D-Ark., on behalf of Senate Majority Leader Reid, > tried
> to bring up a free-standing, two-month extension by unanimous > consent late
> Tuesday, using the House-passed permanent estate tax fix as a shell, > but
> Republicans objected.
>
> "Harry could maybe ... pull a rabbit out of his hat and get a vote on
> this. Maybe [Senate Minority Leader] Mitch [McConnell] and Harry can > agree
> on something, but it seems to me it will be really difficult by the > end of
> the year," said Pryor.
>
> Another option is to pair the short-term estate tax extension with the
> debt limit increase, but Rep. Earl Pomeroy, D-N.D., said that plan > appeared
> unlikely. As the House Rules panel prepared to meet late Tuesday, > Rules
> Chairwoman Louise Slaughter said of the estate tax: "I don't think > that's
> going anywhere. I think they missed the boat on that."
>
> If no action is taken, the tax would go to zero on Jan. 1, although > in a
> quirk of current law, all but the first $1.3 million in inherited > assets
> sold for gain by an heir would be hit with capital-gains tax. > Pomeroy said
> one possible scenario would be to void that tax increase > retroactively next
> year, but avoid reinstating the estate tax itself back to Jan. 1.
> Republicans had been licking their chops at the prospect of Democrats
> acting to slap a retroactive tax increase on heirs of those who died
> earlier in the year.
>
> Senate Republicans appeared to largely be in lockstep against even a
> two-month extension, barring any defections. "I'm opposed to any > extension
> of rates; what I'm for is the rates to go into effect as of [Jan. > 1], which
> I like. Good rates. Zero," Minority Whip Kyl said.
>
> The anger among House Democrats was palpable that there did not yet > appear
> to be 60 votes in the Senate to act on the estate tax. "I think that > the
> law as it exists is an absurdity, and the fact that this Congress > couldn't
> find a way to fix it so the absurdity didn't play out is > disappointing,"
> Pomeroy said.
>
> If the estate tax disappeared next year and multimillion-dollar
> inheritances were to largely go tax-free, one House Democrat said no > one
> would be to blame but his own party in the Senate.
>
> "If the Senate does not do that, then Democrats in the Senate should > hang
> their head[s] in shame. I can only concern myself with my own > party ... and
> what people have been saying about the Senate, that they're bought and
> about to be sold, there may be some truth to that," said Rep. Bill
> Pascrell, D-N.J. "They don't want [the estate tax] at all. You know > what?
> We've had it up to our eyeballs over there."
>
>
> http://www.nationaljournal.com/congressdai...091216_7715.php
>
> -----
> TELECOMMUNICATIONS: NAB URGES CONGRESS TO PROTECT BROADCAST TV > SPECTRUM
> By David Hatch
>
>
> With his industry's fate on the line, National Association of > Broadcasters
> President and CEO Gordon Smith urged Congress Tuesday to preserve > free,
> over-the-air television and not cave to pressure to reallocate the > airwaves
> for broadband connectivity.
>
> "Broadcasting and broadband are not 'either/or' propositions as some > have
> suggested. That's a false choice," he told the House Energy and > Commerce
> Communications Subcommittee during a hearing on reclaiming wireless
> spectrum.
>
> Smith, who took the NAB helm in September after serving two terms as a
> Republican senator from Oregon, warned that the elderly, poor and
> minorities would be hurt the most if the broadcasts cease.
>
> The hearing focused on two pending bills, introduced by House Energy > and
> Commerce Chairman Henry Waxman and Rep. Jay Inslee, D-Wash., that are
> designed to do an inventory of government spectrum and make it > easier for
> federal agencies to relinquish frequencies for commercial use. > Witnesses
> discussed an array of options to bolster spectrum efficiency and > identify
> more airwaves, including better management, technological advances and
> improved sharing techniques.
>
> Unthinkable just months ago, the specter of ending or diminishing
> broadcast television is now under serious consideration by the FCC > as it
> frantically searches for additional airwaves to enable universal,
> affordable broadband access by 2020.
>
> The agency will present a national broadband plan to Congress by > Feb. 17
> that would precipitate a significant spike in wireless demand if
> implemented.
>
> FCC Chairman Julius Genachowski has warned that a looming spectrum
> shortage is forcing the agency to consider shifting some or all
> broadcast-dependent viewers, about 8 percent to 20 percent of > households,
> to pay service.
>
> "We want to engage constructively with the FCC," Smith said in an
> interview after the hearing. "We just need to prepare for best and > worst
> cases."
>
> The FCC proposal drew static from Rep. Greg Walden, R-Ore., a former > radio
> broadcaster, who called it "a real abomination" and criticized the > agency
> for recently hiring Stuart Benjamin, a telecommunications law > professor on
> leave from Duke University who has championed the idea.
>
> Former Energy and Commerce Chairman John Dingell, D-Mich., who also
> supports the NAB's stance, questioned whether the wireless industry is
> using its existing megahertz effectively.
>
> Steve Largent, president and CEO of the wireless association CTIA,
> countered with statistics indicating that the United States is among > the
> world's most efficient spectrum users.
>
> While his member companies have enough airwaves for now, they'll > need more
> within a decade, yet the process for reallocating frequencies can take
> longer, said Largent, a former Republican House member from Oklahoma.
>
> Other lawmakers sympathized with the wireless industry's plight, > including
> Rep. Mike Doyle, D-Pa., who expressed doubt that consumers would > want to
> watch digital broadcasts on tiny portable televisions. Broadcasters > have
> warned that their nascent mobile DTV technology could be a casualty,
> alongside free high-definition broadcasts, if their spectrum is > reassigned.
>
> Dale Hatfield, an influential telecommunications professor with the
> University of Colorado at Boulder, said consumer preferences will > factor
> into the debate.
>
> "If people want to watch simultaneously, the television is a very
> efficient way to do it," Hatfield said. But, he added, if they want
> individualized content available on demand, broadband is better.
>
>
> http://www.nationaljournal.com/congressdai...091216_4205.php
>
> -----
> FINANCE: SENATE PANEL EYES NEXT MONTH TO MARK UP REGULATORY BILL
> By Bill Swindell and Dan Friedman
>
>
> The Senate Banking Committee is aiming to mark up its revamp of the
> nation's regulatory system next month, as the Obama administration > has been
> making a concerted push to get key Republicans on board to help smooth
> passage in the upper chamber.
>
> "I hope we can do something ... by late January, or early February,
> whenever we are ready," said Banking ranking member Richard Shelby. > Banking
> Chairman Christopher Dodd and Shelby met with Treasury Secretary > Geithner
> Monday afternoon for an hour to brief him on their talks.
>
> An announcement of an intention to mark up the bill could come as > early as
> Thursday during its final meeting of the year, when the panel votes to
> confirm Federal Reserve Chairman Bernanke for another term as > chairman. It
> is expected that the markup would come, at the earliest, the week of > Jan.
> 25.
>
> Shelby noted that the talks have been going well since Dodd took his
> discussion draft "off the table" and appointed working groups among
> committee members to handle some of the thornier provisions of the > package.
> Staff will work on resolving issues over the Christmas break.
>
> "We're making progress," Shelby said, adding, "I would think if we
> continue to make progress," the panel could mark up a bill by the > end of
> January.
>
> That time frame was seconded by Dodd, but with a caveat. "We're > moving in
> that direction ... But I don't want to disrupt the process" by > setting a
> deadline without consultation, Dodd said Tuesday.
>
> Lobbyists have been told that if they have last-minute concerns, they
> should get in to see Banking staff by early January.
>
> The movement comes as the House passed its measure Friday, 223-202.
>
> Geithner meets individually with the teams working on issues. One such
> team, made up of Sens. Mark Warner, D-Va., and Bob Corker, R-Tenn., is
> attempting to find a compromise on a council to monitor systemic > risk in
> the financial system and on whether to allow it to have resolution
> authority to unwind large financial firms on the verge of collapse.
>
> One lobbyist noted that the Corker-Warner talks have made progress. > The
> two are not expected to include House language that would set up an > upfront
> resolution fund to cover costs associated with a federal takeover of > an
> at-risk firm.
>
> Other problems remain, according to the lobbyist, including the most
> difficult issue that Dodd and Shelby are trying to work out: the
> administration's proposal to create a Consumer Financial Protection > Agency
> that would take away rule-writing, examination, and enforcement from
> banking regulators over such products as home mortgages, credit > cards, auto
> loans and payday lending. There has been little movement on the issue,
> according to lobbyists.
>
> Geithner has met with Sens. Charles Schumer, D-N.Y., and Mike Crapo,
> R-Idaho, who are working on provisions in the Dodd draft that would > place
> new executive compensation policies. Such provisions have been a > hard sell
> for Republicans. Treasury did not include such language in its > proposal and
> the House has a more limited scope on that issue.
>
> Sen. Jack Reed, D-R.I., has made good progress with Sen. Judd Gregg,
> R-N.H., in crafting language to better regulate the over-the-counter
> derivatives market, according to an aide and lobbyist.
>
> One variable is how much GOP Senate leadership will fight the Dodd > effort
> when it is slated for floor consideration, given that Dodd is the most
> vulnerable Democrat running for re-election. Several of his missteps > over
> the last couple of years have not gone over well with Connecticut > voters,
> setting him up for a tough re-election bid in 2010. They include > moving his
> family to Iowa when he was running for president and charges that he
> inappropriately received a sweetheart mortgage from Countrywide Home > Loans,
> which the Ethics Committee later cleared him of.
>
>
> http://www.nationaljournal.com/congressdai...091216_9151.php
>
> -----
> IMMIGRATION: NEW APPROACH TO VISAS, TEMP WORKERS STIRS CONTROVERSY
> By Chris Strohm
>
>
> Key House Democrats asserted Tuesday that their sweeping immigration
> reform legislation addresses both labor and business needs, but > industry
> groups slammed the measure, saying several provisions could be
> counterproductive to their interests.
>
> A main concern for industry groups is that the bill, which was > unveiled
> Tuesday, does not create a temporary-guest worker program that > addresses
> the labor needs of companies, especially high-tech industries.
>
> Instead, the bill would create a system under which 100,000 work visas
> would be issued to foreigners via a lottery.
>
> But under a lottery system, employers would not get to choose > workers they
> need, and the level of 100,000 visas is arbitrary, said Angelo Amador,
> director of immigration for the U.S. Chamber of Commerce.
>
> He said the Essential Worker Immigration Coalition, which includes the
> Chamber along with other heavyweights like the American Hotel and > Lodging
> Association and the National Association of Home Builders, proposed a
> system under which workers are given a temporary visa to meet short- > to
> medium-term workforce needs.
>
> "We don't know how they're going to explain that to the American > people,"
> he said. "Our proposal is that nobody gets to come in until the > American
> market gets tested first."
>
> Beto Cardenas, executive counsel to Americans for Immigration Reform,
> another business coalition that support an overhaul of immigration > laws,
> echoed the concern.
>
> "While the intent by the Hispanic Caucus and others with filed > legislation
> is positive and clear toward finding solutions, the sensible > solution is to
> authorize a future flow worker program that respects boundaries, and > is
> connected to employment based needs so that we ensure that those > entering
> our country have a clear purpose and contribute to our economic
> prosperity," he said.
>
> Another concern of industry groups is that the bill does not > increase the
> cap for H-1B and H-2B work visas.
>
> Rep. Luis Gutierrez, D-Ill., chairman of the Congressional Hispanic > Caucus
> Immigration Task Force and a key architect of the bill, said the
> legislation tries to find common ground in addressing the needs of
> Hispanics and workers -- and U.S. industries.
>
> He said the bill breaks with legislation he co-sponsored two years ago
> with Rep. Jeff Flake, R-Ariz., that called for 400,000 new work visas.
>
> The level of 100,000 visas is appropriate given the current U.S.
> unemployment rate of 10.2 percent, Gutierrez said.
>
> "Don't you think that every introduction of every bill should be a
> reflection of the precise moment in which you introduce it? I mean, > this is
> not four years ago," he said. "Now we're confronted with American > workers
> literally in fear of losing their jobs and I'm going to put 400,000 > more
> workers in there and expand H-1B and H-2B? No."
>
> Instead, a commission would be created to address needs of the labor
> market. Gutierrez said the bill would expand the EB-5 regional work > visa
> program, which allows wealthy foreign investors to get green cards by
> creating jobs.
>
> But unlike the bill he introduced with Flake, this one does not > require
> undocumented workers in the United States to return to their home > countries
> before being given legal status in the United States. And it does not
> include penalties on undocumented workers in the past bill.
>
> Gutierrez said those provisions were dropped to help ensure that > Hispanic
> and liberal groups will rally if legislation gets bogged down in the
> Senate.
>
> "Two years ago when it was in the Senate in 2007, and it was > crashing, I
> called upon the immigrant community and advocacy groups. You know > what they
> told me? You made your bed with Flake," he said.
>
> "Now at least when I make the call and it's in the Senate and Barack > Obama
> needs 500,000 people to e-mail and to text, we have an organizational
> capacity to do that because people are committed to something."
>
>
> http://www.nationaljournal.com/congressdai...091216_7421.php
>
> -----
> JUDICIARY: ANTI-PIRACY PLEDGES PLEASE MEDIA EXECS, WORRY OTHERS
> By Terry Kivlan and Neil Munro
>
>
> Led by Vice President Biden and Attorney General Holder, top Obama
> administration officials Tuesday vowed an all-out, government wide > effort
> to fight the international pirating of American movies, music > recordings
> and other intellectual property products.
>
> "It offends me that in the international community this is treated > as a
> minor irritant," Biden told a group of entertainment and other media
> company executives at a meeting near the White House.
>
> Biden said the administration was committed to stepping up > enforcement of
> intellectual property rights law by pooling the resources of the > agencies
> with jurisdiction, including the Justice Department, the Homeland > Security
> Department, the FBI and the Commerce Department.
>
> "This is the first time we are doing this in a really coordinated > way, and
> I think it is long overdue," Biden said, adding to the industry > officials:
> "They are stealing from all of you. ... They are stealing from the > United
> States of America."
>
> But it is not clear if the meeting was intended to be anything more > than a
> symbolic display of concern for the donor-rich entertainment > industry. "We
> wanted you to get a sense" of our concern about piracy, said Biden, > "and
> maybe get a fundraiser."
>
> The meeting also unnerved advocates for telecommunications and > Internet
> companies, who fear White House officials will saddle them with
> international legal obligations favored by the Hollywood, TV and music
> companies.
>
> The White House is overseeing closed-door talks with the European > Union on
> the international Anti-Counterfeiting Trade Agreement. Lobbyists for > the
> technology companies have repeatedly said they're being shut out of > the
> talks, even as entertainment companies help shape the U.S. negotiating
> posture.
>
> The primary fear, according to these high-tech lobbyists, is that > treaty
> would allow entertainment companies to sue high-tech companies in > European
> courts whenever their networks, computers and software are used by > anyone
> around the world to transmit an illegally copied movie, TV show or > song.
>
> "For many in the tech industry, being left out of today's meeting is
> likely to feel like receiving a political lump of coal for the > holidays,"
> according to a statement from Phil Bond, the president of > TechAmerica, an
> association of high-tech companies, including Microsoft, Verizon, > AT&T,
> Texas Instruments and Verizon. "Technology and content industries > depend
> upon each other in the digital economy [and] we will have to work > together
> to protect privacy and to help the government enforce the law," > according
> to the statement.
>
> During the 30-minute open portion of the meeting, administration > officials
> promised to reinvigorate existing anti-piracy programs, but did not > promise
> any significant new initiatives. However, said Biden, "we need to > come out
> of this [closed-door portion of the] meeting with a concrete and > complete
> set of action items" for combating piracy.
>
> Holder said the Justice Department's part of the intensified effort
> included the reinvigoration of an intellectual property task force > formed
> several years ago to focus on high-impact cases. He said he also > intended
> to convene a meeting of U.S. trading partners to get their > cooperation in
> the anti-pirating campaign. "This is not a problem that the United > States
> can solve by itself," Holder said.
>
> In addition, he said Justice was continuing a program to train state > and
> local law enforcement officials to investigate and obtain > prosecutions in
> intellectual property cases.
>
> In other remarks at the meeting, Commerce Secretary Locke pledged to > work
> for the inclusion of intellectual property enforcement provisions in
> international treaties and to lobby foreign leaders on the > importance of
> the piracy issue to the United States.
>
> Homeland Security Secretary Napolitano pledged greater enforcement
> cooperation among agencies in her department such as Immigration and
> Customs Enforcement, Customs and Border Protection, and the Secret > Service.
>
> Also at the meeting were FBI Director Robert Mueller, Secret Service
> Director Mark Sullivan and the White House intellectual property czar,
> Victoria Espinel, who won Senate confirmation earlier this month.
>
> Among the industry officials in attendance were Barry Meyer of Warner
> Brothers, Jeff Zucker of NBC, Edgar Bronfman of Warner Music, Michael
> Lynton of SONY, Philippe Dauman of Viacom and Brian Murray of Harper
> Collins Publishing.
>
>
> http://www.nationaljournal.com/congressdai...091216_6320.php
>
> -----
> ECONOMY: OBEY DEFENDS TARP TRANSFER AS 'BUY AMERICAN' SPAT ENSUES
> By Humberto Sanchez and Peter Cohn, with David Hatch contributing
>
>
> House Appropriations Chairman David Obey Tuesday defended plans to
> redirect about $75 billion from the nearly $700 billion financial > services
> rescue package enacted last year to pay for a portion of jobs > legislation.
>
> The Troubled Asset Relief Program "was used to assist Wall Street. > Now the
> problem is on Main Street," Obey said. "We make no apologies > whatsoever to
> try to give the same amount of attention to Main Street needs as > were given
> earlier to Wall Street needs."
>
> Under the bill -- which the House hopes to pass today along with three
> other bills -- the FY10 Defense spending package, a short-term debt > ceiling
> increase, and a five-day continuing resolution, respectively -- $75 > billion
> in unspent TARP funding would be used to pay for infrastructure > projects,
> as well as assistance to states and localities to help avoid layoffs > of
> police officers, firefighters, teachers and other government workers.
>
> The jobs package will also carry a six-month extension of unemployment
> insurance, COBRA health benefits and an increase to states' federal > medical
> assistance percentage (FMAP), which total about another $75 billion.
>
> House Democrats also included two-month extensions of unemployment
> insurance and COBRA benefits -- as well as extensions of other > programs,
> such as the USA PATRIOT Act -- in the Defense bill because those items
> expire at the end of the year and the Senate is not expected to take > up the
> jobs bill until early next year. Meanwhile, another spat over "Buy
> American" language is brewing on the jobs package, similar to > complaints
> from trading partners and the business community after similar > language was
> included in the stimulus.
>
> The provisions were "perhaps politically expedient but it was without
> question economically destructive," Ways and Means Republicans led > by Trade
> Subcommittee ranking member Kevin Brady, R-Texas, wrote Tuesday to > Speaker
> Pelosi and Minority Leader Boehner. "They have delayed deployment of
> stimulus funding and impeded the creation of American jobs."
>
> They wrote that any new Buy American provisions should at least exempt
> counties, municipalities and states from the requirements, and only > apply
> to infrastructure projects directly administered by federal agencies.
>
> Trade Subcommittee Chairman Sander Levin, D-Mich., said the provisions
> were simply a restating of current law dating back to 1979 and > should not
> be cause for concern.
>
> In a speech to the Washington International Trade Association, Levin > said
> critics have unfairly labeled the provisions "protectionist." He > said it
> was merely upholding "the principle of reciprocal market access. We > give a
> trading partner access to our procurement markets if they agree to > give our
> suppliers access to theirs."
>
> Last week, Congressional Populist Caucus Chairman Rep. Bruce Braley,
> D-Iowa, and Rep. Michael Michaud, D-Maine, head of the House Trade > Working
> Group, wrote to House leaders urging them to include Buy American > language
> in the jobs bill. Levin said the language was being finalized, and > other
> sources familiar with the provision said it was similar to what > ended up in
> the earlier stimulus bill.
>
> House and Senate aides said Tuesday evening that lawmakers were > weighing
> the inclusion in the Defense spending bill of a short-term extension > --
> possibly up to 90 days -- of a satellite television law expiring > Dec. 31,
> instead of the planned five-year reauthorization. The satellite law > governs
> the retransmission of broadcast television services via DirecTV and > the
> Dish Network. A short-term fix would force Congress to take up the > highly
> technical legislation next year after lawmakers labored over it for > most of
> 2009.
>
>
> http://www.nationaljournal.com/congressdai...091216_5719.php
>
> -----
> LABOR: KERRY BILL TAKES AIM AT WORKER MISCLASSIFICATIONS
>
> Sen. John Kerry, D-Mass., introduced legislation Tuesday to crack > down on
> employers who classify workers as independent contractors in order > to avoid
> rules governing overtime, minimum wages, unemployment insurance and
> workers' compensation.
>
> Kerry said a loophole in tax law enables employers to misclassify some
> workers and deny their rights and protections under labor laws.
>
> Kerry's proposal would change a section of the tax code known as "safe
> harbor" that allows employees to be considered independent contractors
> "regardless of the worker's actual status under the common law test, > unless
> the employer has no reasonable basis for such treatment or fails to > meet
> certain requirements."
>
> The bill is co-sponsored by Senate Majority Whip Durbin, Senate > Health,
> Education, Labor and Pensions Chairman Tom Harkin, and Sens. Charles
> Schumer, D-N.Y.; Sherrod Brown, D-Ohio; Robert Menendez, D-N.J.; and > Paul
> Kirk, D-Mass.
>
>
> http://www.nationaljournal.com/congressdai...091216_1815.php
>
> -----
> PEOPLE: PEOPLE
> By Sara Jerome
>
>
> FORD TOUGH. Randy Ford is slated to become chief of staff for Rep. > John
> Tanner, D-Tenn., at the beginning of next year. His promotion comes > after
> two others in the office recently gave their notice. Tanner > announced this
> month he will retire at the end of this term, and his chief of staff > Vickie
> Walling said this week that she is heading to Prime Policy Group > after 36
> years on Capitol Hill.
>
> Rising to the top staffing slot at an unusual time, Ford stressed > the need
> to stay focused on Tanner's priorities despite his looming > retirement. "We
> still have a year here, and we have a lot of things to wrap up," he > said,
> pointing to Tanner's efforts on redistricting, local economic > development,
> and "working closely with the Blue Dogs." Tanner is a founder of the > Blue
> Dog Coalition. Ford previously served as Tanner's communications > director,
> assuming the post in 2004. He arrived in Washington three years > earlier to
> take a job as the office's press secretary, later moving to a stint > at the
> Distilled Spirits Council. A graduate of Middle Tennessee State > University,
> he worked as a reporter at the Tennessee Radio Network following
> graduation.
>
> Walling has worked for Tanner for the last 20 years and as his chief > of
> staff for the last 16. Before that, she worked for the late Rep. Ed > Jones,
> D-Tenn. Walling's hop to the private sector will be a considerable > change.
> "It's going to be an adjustment -- not driving to the Capitol to > work every
> day, trying to figure a different approach to take, being on the other
> side," she said.
>
> Also in Tanner's office, Carling Dinkler, previously a legislative
> assistant, has been promoted to senior policy adviser. His portfolio
> includes Social Security, tax, trade, budget, economy and energy > issues.
> Dinkler's previous gigs include working as a legislative assistant for
> former Rep. Chris John, D-La., and -- although he hates to admit it --
> landing a spot in The Hill's "50 Most Beautiful People on Capitol > Hill."
>
> TRADING UP. Rep. Michael Michaud, D-Maine, has tapped Nora Todd as his
> legislative director. She succeeds Kim Glas, who was appointed deputy
> assistant secretary for textiles and apparel at the Commerce > Department.
> Todd arrived on Capitol Hill three years ago and has served as a
> legislative assistant for Rep. Hank Johnson, D-Ga., and as a senior
> legislative assistant for Rep. Dennis Cardoza, D-Calif. She will > work on
> efforts by the House Trade Working Group, which Michaud chairs. As a
> student, Todd took up trade issues during a year abroad in Santiago, > Chile.
> She received her undergraduate degree from Stanford University, and > her
> master's in political rhetoric from Georgetown University.
>
>
> http://www.nationaljournal.com/congressdai...091216_2317.php
>
> -----
> POWER PLAY: CRUNCH TIME
> By Darren Goode
>
>
> COPENHAGEN, Denmark -- U.N. leaders and other top negotiators here > hope
> the arrival of heads of state today and the formal start of high-level
> talks will jump-start climate change deliberations that have yielded > little
> progress.
>
> "Now is the time for common sense, compromise and courage," said U.N.
> Secretary General Ban Ki-moon after Tuesday's opening ceremony that > kicked
> off the high-level stage of negotiations.
>
> There is concern the conference will fall short of reaching political
> consensus on key issues that would be part of a binding climate > treaty next
> year. "I'm afraid the negotiation has been too slow," Ban said. If > no more
> progress is made today, "It may be too difficult for them to agree > in just
> one or two days," he said.
>
> But veterans of international climate talks say no one should be > surprised
> at the way it has gone so far.
>
> "That's par for the course," said Jim Connaughton, head of the White > House
> Council on Environmental Quality under former President George W. > Bush,
> echoing others.
>
> Most observers believe the appearance of more than 100 heads of > state --
> including roughly 60 more today -- expected here this week will > increase
> pressure for a political agreement world leaders can tout as a > blueprint
> for future action.
>
> "It's not going to make everybody happy," said Mark Helmke, senior > policy
> aide to Senate Foreign Relations ranking member Richard Lugar. "It's > going
> to have some huge vague areas in it, but it's based upon the > politics of
> the doable."
>
> "I think we'll get a political agreement, how strong it is is the
> question," said Elliot Diringer, top strategist here for the Pew > Center on
> Global Climate Change and White House environmental policy adviser for
> former President Bill Clinton.
>
> There are still major issues on the table.
>
> "We are likely to achieve both more and less than we had hoped for,"
> Diringer said. "More in the sense that every major economy comes to
> Copenhagen with an explicit pledge to curb emissions," but also "less
> perhaps in terms of real progress on the architecture" needed to > produce a
> legally binding treaty, he said.
>
> China, for example, might not move much at all from its opposition to
> international scrutiny of emission reduction efforts there that are > not
> financed by developed countries.
>
> Other major developing nations might not move much from their
> already-stated commitments now given the lack of U.S. climate > legislation.
> "The bill hasn't passed the Senate, so they don't have a sufficient > signal
> that the U.S. is really going to do this," said Annie Petsonk,
> international counsel for the Environmental Defense Fund and veteran > of 13
> United Nations climate change conferences. "That's what they're > looking for
> and you'll start to see positions loosen up."
>
> Negotiators here will also look to what President Obama says to the
> plenary on the last day of the conference Friday, including whether > he will
> commit to working with the Senate to finish a bill by this spring > and the
> full Congress to enact a new climate law by the end of next year, > she said.
>
> Diringer, Petsonk and some others here say solid language could result
> this week on issues like combating deforestation and transferring
> technology from rich to poor nations, as well as an aggregate level of
> financing promised by rich nations over the next three years to help > the
> poorest adapt to droughts, floods and other effects of climate change.
>
> Obama has promised the United States would pay its "fair share" of a
> short-term commitment, peaking at $10 billion in 2012. European > nations
> have suggested giving poor nations a committed $10 billion annually > over
> the next three years.
>
> Meanwhile, issues of potential consensus like deforestation have "the
> potential to be a confidence builder that can help give the overall
> negotiation some needed momentum," Petsonk said.
>
> Nongovernmental observers stress it has been difficult to follow any
> closed-door progress made at a conference this immense and complex. > "It's
> entirely unpredictable," Diringer said.
>
> "We rely on the same set of rumors that you probably do: somebody's
> contact with somebody's brother who's on the Argentinean negotiating > team,"
> said David Foster, executive director of the Blue Green Alliance, a
> coalition of environmental and labor groups.
>
> Foster -- who is leading a delegation here of 28 labor union
> representatives -- said, "The only conventional wisdom I have is > that I
> think the U.S. negotiating team has correctly and smartly learned the
> lesson from Kyoto that there's no value in negotiating treaty terms > that
> are not ratifiable in the United States Senate."
>
> That will mean the United States is not expected to go further than > its
> committed target of reducing emissions in the range of 17 percent > below
> 2005 levels by 2020.
>
> Top U.S. climate negotiator Todd Stern underscored that to reporters
> Tuesday, saying the administration's 2020 target and its longer range
> targets match up well or even better than European and other nations
> depending on how you measure it.
>
> This includes whether it is a per capita reduction or carbon > intensity.
> "It's only in the hermetically sealed world of global climate change
> negotiations that a baseline year of 1990 to measure the reduction of
> emissions from now to 2020 would be treated as sacrosanct," Stern > said.
>
> Three more days to go.
>
>
> http://www.nationaljournal.com/congressdai...091216_6549.php
>
> -----
> POLITICAL ROUNDUP: BEGALA ASSISTS HOUSE DEMS WITH MESSAGE ON ECONOMY
>
> Democratic strategist Paul Begala, a veteran of the Clinton White > House,
> is coaching House Democrats on how to message when it comes to the > economy.
>
> In a memo sent to House Democratic staffs, Begala acknowledges the
> Democrats have suffered a steep decline in public opinion polls on > their
> handling of the economy, and he lays out five points on how they can > turn
> the perception around.
>
> Calling President Ronald Reagan's 1984 address to the Republican > National
> Convention a "masterpiece of economic blame assignment," Begala urges
> Democrats first to use the same playbook, considering that Reagan > carried
> 49 states in his re-election effort just 10 weeks later.
>
> Begala considers the current economic situation a "case of arson" > rather
> than the "natural disaster" he says Democrats are treating it as and > urges
> them to step up the blame game.
>
> His second point encourages messengers to point out that Republicans > "want
> to return to the policies that created the mess in the first place," > versus
> Democrats who seek "a new direction" to dig out from the recession.
>
>
> http://www.nationaljournal.com/congressdai...091216_1331.php
>
> -----
> POLITICAL ROUNDUP: PRIDEMORE JOINS DEM FIELD FOR BAIRD'S SEAT
>
> Democratic state Sen. Craig Pridemore announced Tuesday he would run > for
> the seat Rep. Brian Baird, D-Wash., will vacate, the Vancouver > Columbian
> reported.
>
> "I've never been so fired up for a campaign in my life," said > Pridemore.
> "It's 320 days to Election Day, and the clock has started."
>
> If elected, Pridemore said he would focus on job growth in southwest
> Washington.
>
> "This election presents an opportunity to send someone to Washington,
> D.C., who will lead on issues that matter here at home and will > fight for
> our values and priorities," he said.
>
> He joins state Rep. Deb Wallace in the Democratic primary.
>
> Other Democrats are considering bids.
>
> On the Republican side, state Rep. Jaime Herrera, a former aide to > Rep.
> Cathy McMorris Rodgers, R-Wash., is already in race.
>
>
> http://www.nationaljournal.com/congressdai...091216_7038.php
>
> -----
> POLITICAL ROUNDUP: STATE LAWMAKER EYES CHALLENGE OF GRAYSON
>
> Republican state Rep. Kurt Kelly said Monday that he expects to > announce
> his bid to run for the seat held by freshman Rep. Alan Grayson, D-> Fla., in
> the next several weeks, the Orlando Sentinel reported.
>
> "Every indicator is pointing to me jumping in the race," said Kelly.
>
> No other Republican challenging Grayson has elective experience.
>
> "There will be distinct differences between Kurt Kelly ... and Alan
> Grayson, who has done a marvelous job of pandering to the extreme > left,"
> said Kelly, a self described conservative.
>
> The Republican field includes developer Armando Gutierrez and attorney
> Todd Long. Meanwhile businessman Bruce O'Donoghue is set to announce > his
> bid in the next few weeks.
>
>
> http://www.nationaljournal.com/congressdai...091216_4180.php
>
> -----
> POLITICAL ROUNDUP: FORMER REP. JOHNSON ENDORSES CALIGIURI
>
> Republican state Sen. Sam Caligiuri, who is seeking Connecticut's 5th
> District seat, picked up the endorsement Tuesday of former Rep. Nancy
> Johnson, the last Republican to hold the seat.
>
> "Sam Caligiuri has demonstrated both as Acting Mayor of Waterbury > and as a
> State Senator his understanding of the needs of his constituents and > has
> repeatedly stood up for what he believes serves them best, even if > that
> meant standing alone against fierce pressures," said Johnson. "With > the
> growing problems our country is facing, we need leaders like Sam > Caligiuri
> in Congress."
>
> Johnson served from 1982 until she was unseated by now-Rep. Chris > Murphy,
> a Democrat, in 2006.
>
> Caligiuri began the year running for Democratic Sen. Christopher > Dodd's
> seat, but switched races last month. He faces a primary field that > includes
> Justin Bernier, a former senior legislative aide to former Rep. Rob
> Simmons, R-Conn.
>
>
> http://www.nationaljournal.com/congressdai...091216_5521.php
>
> -----
> POLITICAL ROUNDUP: STATE LAWMAKER JOINS OPEN KANSAS HOUSE RACE
>
> Republican state Rep. Kevin Yoder will seek to fill the seat Rep. > Dennis
> Moore, D-Kan., will vacate, the Lawrence Journal-World reported.
>
> "We deserve an experienced leader who will stand up to Congress on
> job-killing policies such as 'cap-and-trade,' 'card check' and the
> government takeover of health care," Yoder said.
>
> He joins a Republican field that includes former state Sen. Nick > Jordan
> and former state Rep. Patricia Lightner. State Rep. Pat Colloton is > also
> exploring the contest.
>
> Among Democrats, Joe Reardon, the mayor of Kansas City, Kan., is
> considering a bid and Carol Marinovich, a former mayor of Kansas City,
> Kan., is viewed as a prospective candidate.
>
>
> http://www.nationaljournal.com/congressdai...091216_7662.php
>
> -----
> POLITICAL ROUNDUP: REPUBLICAN IN ARK. SENATE RACE LOANS $200,000 TO
> CAMPAIGN
>
> Republican state Sen. Kim Hendren says he has loaned $200,000 of his > money
> to his bid to challenge Sen. Blanche Lincoln, D-Ark., the Associated > Press
> reported.
>
> Hendren said Tuesday that the money has already been deposited in his
> campaign account and will be on his next campaign finance report. > Hendren
> has several businesses, including a real estate office and five auto
> dealerships.
>
> Hendren did not say how much money this quarter he has raised other > than
> the loan. He is among eight Republicans who have announced they're > seeking
> the party's nomination to challenge Lincoln next year.
>
> Lincoln, who is seeking a third term, has more than $4.1 million in > the
> bank for her re-election bid.
>
>
> http://www.nationaljournal.com/congressdai...091216_8036.php
>
> -----
> HILL BRIEFS: GEORGIA TOURISTS ENJOYED A WHITE HOUSE BREAKFAST
>
> It was not a state dinner, and they did not crash it on purpose. > Still, a
> couple who showed up at the White House a day early for a tour somehow
> wound up at an invitation-only breakfast with President Obama and > his wife,
> Michelle, on Veterans Day, the Associated Press reported Tuesday.
>
> It left the White House trying once again to explain how people who > were
> not on an event guest list wound up being ushered into the > presidential
> mansion.
>
> The improbable adventure of Harvey and Paula Darden, Obama > supporters from
> Georgia, took place two weeks before Tareq and Michaele Salahi > infamously
> crashed the Obamas' state dinner for Indian Prime Minister Manmohan > Singh.
>
> The Dardens mistakenly showed up a day early for a tour scheduled > through
> the office of Rep. Lynn Westmoreland, R-Ga. The Dardens live in
> Hogansville, in Westmoreland's district.
>
> Harvey Darden, 67, a retired pharmacist, said he and his wife > thought they
> were simply starting their tour until they were ushered into the > East Room,
> offered a buffet spread and told they would be meeting the presiden

[Snuffysmith]

CongressDaily AM for Wednesday, Jan. 20, 2010

--------------------
CONTENTS

SENATE RACES: GOP WINS KENNEDY'S SEAT, UNSETTLING POLITICAL LANDSCAPE
By Erin McPike


State Sen. Scott Brown won Tuesday's special Senate election in
Massachusetts, imperiling Democratic plans to pass healthcare overhaul
legislation and unsettling the national political landscape ahead of
November's congressional elections.

Brown became the first Republican senator to be elected from Massachusetts
since Sen. Edward Brooke won a second term in 1972. When he is sworn in, he
will become the 41st Republican senator, leaving Democrats one vote short
of the 60 votes needed to overcome GOP filibusters.

At presstime Tuesday night, with 99 percent of precincts reporting, Brown
had 52 percent to 47 percent for state Attorney General Martha Coakley.

In proclaiming victory, Brown never once called himself a Republican. "I
go to Washington as the representative of no faction or interest, answering
only to my conscience and to the people. I've got a lot to learn in the
Senate, but I know who I am and I know who I serve," he said.

Although Brown's victory is likely to slow President Obama's agenda, the
president called to congratulate him soon after Coakley conceded.

Even before the polls closed, national and state Democrats were blaming
each other for not responding aggressively enough when Brown moved from
sacrificial lamb to a contender for the seat that became available by the
death of Democratic Sen. Edward Kennedy.

Shortly after Coakley conceded, Democratic Senatorial Campaign Committee
Chairman Robert Menendez of New Jersey said his party would move quickly to
try to recover its footing.

"In the days ahead, we will sort through the lessons of Massachusetts: the
need to redouble our efforts on the economy, the need to show that our
commitment to real change is as powerful as it was in 2008, and the reality
that we cannot take a single thing for granted and cannot afford even a
second of complacency," he said.

Brown has pledged to oppose healthcare legislation, meaning Senate
Democratic leaders would be one vote short of pushing through a final
compromise hashed out with the House. Hours before the result was known,
Democrats in Washington were weighing how to respond. (See related story on
page 1.)

Brown benefited from growing discontent about the health package and from
donations flooding in from around the country from activists who saw a
chance to kill a bill that had no GOP support in the Senate and was backed
by only one Republican in the House.

In a recent interview with CongressDaily, Brown emphasized that he wasn't
just campaigning in Republican areas and was making an effort to win over
potentially disaffected Democrats. He also tried to portray himself as an
independent voice who supported more than half of Democratic Gov. Deval
Patrick's vetoes.

While Brown's election threatens the healthcare push that Obama had made
the centerpiece of his first year in office, his surge among independents
-- picked up in numerous pre-election polls -- might give Democrats concern
well beyond that vote.

Indeed, top Democratic strategists acknowledged Tuesday that they have a
lot of work to do to try to win back independents before November's general
election.

One Democratic Senate strategist said that in the wake of Coakley's
defeat, it was time for the party to conduct a "forensic examination" into
what went wrong.

The strategist went so far as to suggest that after two successful cycles
for the DSCC, the loss might help determine what the party needs to do in
order to hold off a drubbing this fall.

"The electorate is volatile and with this upset, we can process all this
data," the strategist said. "It might be the best thing to happen."

Some Democrats contend that if they had done more to tie Brown to Wall
Street earlier in the campaign, they might have been able to undercut
Brown's distinctly populist message -- he drove himself to political events
in his pickup truck -- and save the seat.

Instead, Democrats mocked the truck. At a rally Sunday in Boston, Obama
said, "Everybody can buy a truck." Brown quickly pounced, noting that in a
diminished economy the president's statement was not true.

Brown's surge emboldened Republican candidates across the country and
prompted many of them to send last-minute support even as they copied his
style.

Ed Martin, a GOP attorney running against Rep. Russ Carnahan, D-Mo.,
hosted a watch party Tuesday night. In an interview, he made it clear that
he hoped Brown's populist appeal was infectious.

"You do realize that I drive a pickup truck and have been all over the
district in it, right?" he said.


http://www.nationaljournal.com/congressdai...100119_3201.php

-----
HEALTH: HOUSE LEADERS SAY THEY'LL CONTINUE TO WORK ON A DEAL
By Anna Edney and Billy House


House Democratic leaders Tuesday maintained they will continue to work out
a deal on healthcare legislation despite the apparent victory of Republican
Scott Brown over Democrat Martha Coakley in the Massachusetts Senate race,
giving the GOP 41 votes in the upper chamber.

"Regardless of what happens in Massachusetts, we still have to resolve the
differences in our two bills," House Speaker Pelosi said before polls had
closed in Massachusetts.

Michael Steel, a spokesman for House Minority Leader Boehner fired back.
"Regardless of what happens in Massachusetts, it's clear that jamming this
government takeover of health care through Congress will set off a
political firestorm," he said. "The American people are screaming, 'stop'
at the top of their lungs, and out-of-touch Democratic leaders ignore them
at their peril."

Rep. Anthony Weiner, D-N.Y., said the Massachusetts results should make
Democrats "think about what it is that we're doing wrong here."

"To have a conversation as if nothing happened, I think, sounds to a lot
of voters -- whether you're in Massachusetts or not -- as being tone deaf,"
said Weiner.

"We're in full whistling-past-the-graveyard mode in there," added Weiner,
referring to what he said was a focus at Tuesday night's House Democratic
Caucus meeting on negotiations with the White House, not "an entirely
different scenario" in light of the Massachusetts results.

"When you have large numbers of citizens in the United States of America
who believe this is going in the wrong direction, there is a limit to which
you can keep saying they just don't get it," said Weiner. "We should maybe
internalize that we're not doing things entirely correct here."

At least one Democratic senator called for a timeout on the healthcare
effort.

"In many ways the campaign in Massachusetts became a referendum not only
on healthcare reform but also on the openness and integrity of our
government process. It is vital that we restore the respect of the American
people in our system of government and in our leaders. To that end, I
believe it would only be fair and prudent that we suspend further votes on
healthcare legislation until Sen.-elect Brown is seated," Sen. Jim Webb,
D-Va., said.

But House Democratic leaders were unapologetic. "The reports of
[healthcare reform's] death, as Mark Twain would say, have been
exaggerated," said House Democratic Caucus Chairman John Larson of
Connecticut. "So, we're going to move forward and we're going to pass
healthcare reform," he said. "Listen, this is a tough business. There are
many obstacles and hurdles that have been placed in front of us," he said.
"But we're going to overcome them. Why? Because the American people demand
it."

Pelosi indicated leaders still need to sell two issues to their Caucus:
The excise tax on high-cost plans with exemptions negotiated by unions and
a commission designed to make Medicare cost-cutting decisions.

Leaders are weighing a contingency that would involve the House passing
the Senate bill and afterward passing separate legislation to make
agreed-upon changes to the measure. The Senate would pass the changes
through the budget reconciliation process, which requires a simple majority
to pass.

Provisions related to federal funding of abortion and the structure of the
exchanges might not fit the definition of what can pass under
reconciliation, but other differences will, said Ron Pollack, executive
director of the advocacy group Families USA that came up with the two-step
process.

Rep. Stephen Lynch, D-Mass., who briefly considered running for the
Massachusetts Senate seat, poked a hole in the two-step theory Tuesday
evening.

"I don't think that's going to happen," Lynch said. "Just to go back a
little, we keep sending bills to the Senate, and they just never come back,
so I guess I've lost my faith in anything happening quickly that requires
Senate action."

Some liberals -- including Rep. Patrick Kennedy, D-R.I. -- said they could
support a strategy of passing the Senate bill, provided a legislative
package would later be enacted to make some changes.

"Absolutely," said Kennedy. "The perfect cannot be the enemy of the good.
That's what my dad always said," referring to Sen. Edward Kennedy, D-Mass.,
whose death set off the Massachusetts contest.

Rep. Baron Hill, D-Ind., added, "If that's the only option in town, then
maybe that's what we ought to do."

Lynch took the opposite position: "If it comes down to that Senate bill or
nothing, I think we're going to end up with nothing. I don't hear a lot of
support on our side for that bill."

Rep. Allen Boyd, D-Fla., a leading member of the Blue Dog Coalition,
indicated the prominence of health care as an issue in Massachusetts was
causing some members pause. "When it happens in Massachusetts, it really,
really throws us a curve," he said.

Ways and Means Chairman Charles Rangel wasn't sure whether the Senate bill
could pass the House if changes hinged on a separate measure passed through
reconciliation.

"I don't know," said Rangel, heading into Tuesday night's Democratic
Caucus. "Meetings like this help us to better decide the difficult
questions that you ask."

A House Democratic aide said Rangel spoke in the meeting about what is a
"fluid" deal on expanding the Medicare payroll tax increase in the Senate
bill to unearned, or investment, income. The tax would hit those earning
$200,000 a year and joint filers making $250,000.

House Democratic leaders also said they were moving on to nonbudget
tussles over federal funding of abortion and immigration.

House Education and Labor Chairman George Miller said House leaders have
sent most budget-related compromise proposals to CBO. Leaders have received
some analysis back, but Miller did not share what proposals have
preliminary scores.

House leaders received a preliminary report from the Joint Committee on
Taxation on the excise tax on high-cost insurance plans, a Democratic aide
said, but its contents are unclear.


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FINANCE: LENDING WOES PRESENT CREDIT UNIONS WITH AN OPPORTUNITY
By Bill Swindell


Stymied for years by opposition from the bank lobby, the credit crisis
might provide the credit union industry a victory for one of its top
legislative priorities, an increase in the number of business loans they
are allowed to make.

The credit union lobby is pushing to include language in a Senate jobs
bill to allow credit unions to increase their lending to business members
to 25 percent of total assets from the current 12.25 percent limit.

Credit union officials are pushing the jobs bill architects, Senate
Majority Whip Durbin and Sen. Byron Dorgan, D-N.D., to include the bill
sponsored by Sen. Mark Udall, D-Colo. They tick off a list of the
advantages: Spurring business lending is a primary concern of the
administration; the package is on a fast-track; it might skip committee
action; and there would be no cost to taxpayers.

"These are the loans that are going to go to Main Street," said Ryan
Donovan, vice president of legislative affairs for the Credit Union
National Association. CUNA members will make it top priority at their
legislative conference next month.

The strategy represents a change for the credit union lobby, which for
years has been thwarted by the bankers in advancing a similar measure by
House Financial Services Capital Markets Subcommittee Chairman Paul
Kanjorski, D-Pa.

Financial Services Chairman Barney Frank has not brought up the bill for a
markup given the bitter opposition of the banking lobby, which contends it
would only serve the interest of large credit unions instead of the vast
majority of the 8,000 U.S. credit unions, as well as divert from their
primary mission to serve those with modest means.

Moderate and conservative Democrats on Frank's panel have been hesitant to
weigh in for fear of alienating either industry, lobbyists noted, making a
markup risky. But the lending crisis has changed that. Frank has even
raised the possibility of such legislation moving this year as his
committee will hold a hearing soon on initiatives to spur more lending,
including making SBA loans more available.

"In the hearing, that is going to be one of the things we are going to
talk about," Frank said. "Paul Kanjorski is trying to get that in the jobs
bill. Those are legitimate issues to talk about. The goal is to increase
lending to small businesses."

The industry contends the Udall bill could provide as much as $10 billion
in new capital to small businesses, creating 108,000 jobs. The average
credit union business loan is $200,000. It also is arguing that the
increase will not come with risks, noting that the average charge-off for
business loans at credit unions was 0.32 percent during the first half of
2009, compared to 1.96 percent at banks.

"We wouldn't oppose something similar for banks," said John Magill, senior
vice president of legislative affairs at CUNA. "And I don't think the banks
should oppose our bid as well."

But the bank lobby is not going quietly. Floyd Stoner, the American
Bankers Association executive vice president of congressional relations,
said the bill is not needed because only 41 credit unions are near 1
percent of their cap, and about 1,700 such institutions make business
loans.

"If people want the credit union industry to make more business loans,
there are thousands and thousands of credit unions that could make those
loans today within the cap that exists," Stoner said. "There's plenty of
opportunity for credit unions to make business loans today. There are a
small number of large and aggressive institutions that are seeking to get
this cap raised."

Credit unions dispute that charge. Dan Berger, executive vice president
for government affairs at the National Association of Federal Credit
Unions, said he has heard primarily from medium-sized members from
Massachusetts and upstate New York, while noting that the largest credit
union, Navy Federal Credit Union, does a very small amount of business
lending.

"The big banks aren't providing it, and we have the capital to provide it.
Why would you not allow credit unions to do it?" Berger said.


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TELECOMMUNICATIONS: FCC WILL NOT PLAY HARDBALL WITH TV BROADCASTERS -- YET
By David Hatch


The battle over broadcasting's future is on.

Despite growing opposition in Washington and strong resistance from
television stations, the FCC is proceeding with a controversial plan to
reallocate a significant portion of digital airwaves to wireless carriers.

But in a nod to congressional overseers and the powerful National
Association of Broadcasters, headed by former Sen. Gordon Smith, R-Ore.,
the commission prefers to take a soft-pedal approach.

"Depending on what the proposal is, it could make the broadcasters a
subordinate feature in American life," Smith warned in an interview.

Citing the billions of dollars spent on last year's digital TV transition,
Smith added: "To have a federal policy in place that essentially says
'never mind' I think is very unwise and very unfair."

While the FCC initially floated the idea of forcing stations to relinquish
half their spectrum, it now says that would be a last resort. Instead, it
wants to give stations -- particularly struggling ones -- a chance to turn
in licenses voluntarily.

This approach would buy time for pending legislation that could free up
more airwaves by requiring the government to inventory its communications
spectrum.

If necessary, tougher measures could be imposed. "They're not really
mutually exclusive," said Phil Bellaria, director of scenario planning for
the FCC's Omnibus Broadband Initiative, referring to the ideas in play.

The tussle is a flashpoint in the agency's upcoming national broadband
plan that will seek to achieve universal, affordable wireless broadband by
2020. Some experts think the challenge of finding more spectrum contributed
to the FCC's decision to give the plan to Congress on March 17, a month
late.

Broadcasters speak of dire consequences if their frequencies are cut, with
free over-the-air high-definition broadcasts and ancillary digital channels
among the casualties. That message is resonating with key lawmakers,
including House Energy and Commerce Communications Subcommittee Chairman
Rick Boucher, D-Va., former House Energy and Commerce Chairman John
Dingell, D-Mich., and Rep. Greg Walden, R-Ore.

Sen. Olympia Snowe, R-Maine, a senior Senate Commerce Committee member,
issued a statement expressing "reservations about the FCC's increased focus
on broadcasters" while several spectrum proceedings are pending.

Like Snowe, Commerce ranking member Kay Bailey Hutchison prefers an
analysis of previously allocated commercial spectrum to determine "if we
can promote leasing and other arrangements" that use it more effectively, a
committee source said.

"There has been a rush to judgment by some to identify particular areas of
the spectrum for reallocation," the source said, referring to broadcast
airwaves. "This type of snap judgment is premature without the type of
broad analysis and inventory she supports."

The FCC has sought to assure broadcasters that their airwaves can be
reallocated with few disruptions. It wants to begin with a "market-based"
approach under which stations could voluntarily hand in licenses or
consolidate while receiving financial compensation for returned
frequencies. But success hinges on the level of participation.

Mandatory steps include requiring broadcasters to cede half their airwaves
and double up on transmission towers. The FCC insists each station could
offer either one high-definition signal or up to three ancillary signals in
not-as-sharp standard definition.

David Donovan, president of the Association for Maximum Television
Service, a broadcast industry group, counters that the high-definition TV
alternative cannot be offered under this approach, grousing: "To call it
HDTV is like calling a weed a rose."

The FCC could "repack" stations closer together without reducing spectrum,
though there are downsides. Many broadcasters would have to acquire new
transmitters, which could be paid for with auction proceeds, and relocate
on the dial. Only a small amount of frequencies would be recouped and
viewers would have to rescan their sets.

Another option involves auctioning "overlay licenses" that would let
wireless carriers use unoccupied TV spectrum. To expand service, auction
winners could negotiate with stations to relocate on the band or go dark,
prompting broadcasters to worry about interference and undue pressure.

"We'll explore any ideas the FCC puts on the table," said NAB spokesman
Dennis Wharton.


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TRADE: DEMS CITE COLOMBIA PROGRESS, BUT PESSIMISTIC OF VOTE SOON
By Peter Cohn


House Democrats back from a Latin America trip this month made it clear
that trade deals with Panama and Colombia are unlikely to see a vote this
year, given the 2010 midterm elections and other matters dominating the
agenda.

But they also indicated the ground might be shifting a bit when it comes
to deep-rooted concerns with Colombian violence, and that President Obama
cannot indefinitely postpone decisions affecting key U.S. allies.

"We spent several hours with [Colombian] President [Alvaro] Uribe, and I
must say I walked away very impressed," said Rep. Shelley Berkley, D-Nev.
"While I have never voted for a free-trade agreement before, I would say
that I am leaning in that direction should it come to the floor for a
vote."

Berkley represents union-friendly Las Vegas, and half of her top 20 donors
since her first election in 1998 are labor groups, according to the Center
for Responsive Politics. Stopping the Colombia pact is a top labor
priority, citing violence against union members in that country. Recently,
House Education and Labor Chairman George Miller said "you're liable to get
killed when you're on your way home" if you try to join a union in
Colombia. Berkley disputed that assessment.

"That was not the impression we came away with. As a matter of fact, we
think they've made an extraordinary turnaround," she said. "Uribe has done
a remarkable job in taking what was close to a failed narco-state and
bringing it back from the brink to a very vibrant and independent nation.
He has never failed to work with the Americans, and at some point you have
to demonstrate that there is a benefit for partnering with the United
States, particularly in that part of the world where [Venezuelan President
Hugo] Chavez is extending his reach and creating very big problems."

Berkley, a Ways and Means member, said the economic case for passing the
Colombia pact made sense, given their goods already come into the United
States duty-free under a special trade preferences program for the Andean
region. The same goes for Panama, she said, which also enjoys preferential
tariff treatment; a bilateral deal is on hold because of concerns about
loose tax-secrecy laws in that country.

Berkley also cited the potential loss of market share in Colombia to
Canada and the European Union, which are negotiating their own trade deals
with Uribe's government.

Berkley traveled to Colombia, as well as Panama and Argentina, between
Jan. 7-10, along with Democratic Reps. Lynn Woolsey of California, Eliot
Engel of New York and Pedro Pierluisi of Puerto Rico, the island's resident
commissioner and delegate to Congress.

Woolsey, who co-chairs the Congressional Progressive Caucus, was a little
more circumspect than Berkley, although she, too, had positive things to
say. "We learned how hard Colombia is really working to stop the
narco-traffic problems. They've got a long way to go, but they're on their
way," Woolsey said. "They did talk about the free-trade agreement a lot,
and we were very clear with them we didn't think it was coming up this
year. And I, believe me, did not make any commitments to vote for it."

Engel, who chairs the House Foreign Affairs Western Hemisphere
Subcommittee, said he didn't see any trade deals coming to a vote this
year. "I do think however at some point -- I can't say what we say in New
York -- you've got to either do it or not do it. You can't leave it
hanging," he said.

Hearing both the arguments of the Colombian government and labor officials
opposed to the deal was "almost like being in two parallel universes,"
Engel said. While stressing his pro-labor credentials -- "my Dad was a
card-carrying member of the ironworkers for years," he said -- the
Colombians "have done everything an ally would do."

"They say, 'You know, we're your geopolitical ally here, why are we
getting screwed?'" Engel continued. "I think we've got to show that there
is something in it for people that follow our path other than Chavez's
path. So I'm conflicted ... at some point you've got to grab the tiger by
the tail and address these labor concerns and also address the free-trade
needs of Colombia, and I think it's going to take the president of the
United States to do that."


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ENVIRONMENT: MURKOWSKI LIKELY TO INTRODUCE DISAPPROVAL RESOLUTION
By Darren Goode


Senate Energy and Natural Resources ranking member Lisa Murkowski is
likely to introduce a resolution disapproving of EPA regulating greenhouse
gas emissions Thursday, rather than offering an amendment to debt limit
legislation, a Senate GOP aide and other sources said.

Murkowski's decision -- which her spokesman said will be announced
Thursday -- comes as debate is set to start today on legislation raising
the debt limit. Senate leaders in both parties had agreed to give Murkowski
the ability to offer an amendment to that bill blocking EPA from regulating
greenhouse gas emissions.

But as she continues to seek Democratic support, she is expected to
introduce a resolution that might not receive a vote until the spring, the
GOP aide and other sources said. The Alaska Republican has made her
decision, spokesman Robert Dillon said, but he declined to specify Tuesday.

Offering the resolution might buy Murkowski more time to court Democrats.
It also is "probably the more pure way of getting at the essence of the
issue, which is the Clean Air Act was not meant to deal with greenhouse
gases," Dillon said.

While neither an amendment nor a disapproval resolution appears likely to
pass, Murkowski can undermine efforts by the White House and congressional
Democratic leaders to expedite broad climate and energy policy by sending
the message that there is bipartisan concern. Her effort has drawn the ire
of leading Democrats. Senate Majority Leader Reid last week argued she
would threaten the chance of a bipartisan debate on climate and energy
policy.

Environmental groups also argue this and are preparing for combat.

The National Wildlife Federation Action Fund is starting a weeklong
$125,000 TV campaign today in Alaska and on cable stations in Washington.
The ad scolds Murkowski for "fighting to open a new carbon pollution
loophole in the Clean Air Act while working closely with lobbyists from
outside Alaska," said the fund's executive director Sue Brown.

On Tuesday, Friends of the Earth Action started 60-second radio ads in
Alaska, as well as in North Dakota, home to Democratic Rep. Earl Pomeroy,
who has offered a bill also curbing EPA's ability to regulate greenhouse
gases under the Clean Air Act. The group spent $8,000 for their two-day ad
campaign on five stations in Anchorage, Alaska, and $2,000 for ads on four
stations in Fargo, N.D., a spokesman said.

Both groups said they are prepared to expand their campaigns depending on
when a vote would occur.

Dillon dismissed their efforts, saying Alaska and its lawmakers are
different than the rest of the country. "These are outside groups and they
are thinking they are Alaskans," Dillon said. "They've proven once again
they don't know the state."

Murkowski has generally argued EPA regulations would further sour the
economy. Defenders of the agency's work say administrative action might be
necessary if Congress cannot approve a bill and it would at the very least
cover emissions the legislation does not.

Murkowski has lined up at least one Democratic backer, Dillon said, though
he declined to specify whom. Likely candidates are those who have sided
with the GOP on other energy issues: Sens. Mary Landrieu of Louisiana and
Ben Nelson of Nebraska, and others with misgivings about legislation
establishing a market for the capping and trading of greenhouse gas
emissions. She called Landrieu Tuesday, and has previously spoken to Sen.
Jim Webb, D-Va., and other Democrats, Dillon said. In all, Murkowski
contacted 21 Democrats, Dillon said. Landrieu was undecided on a Murkowski
amendment "though she does have serious concerns about the EPA using the
Clean Air Act to regulate greenhouse gas emissions," an aide said.

On Tuesday, Greenpeace sent letters to five Democrats -- Landrieu, Webb,
Nelson and Sens. Blanche Lincoln of Arkansas and Byron Dorgan of North
Dakota -- asking them to clarify whether they will support Murkowski.
Spokesmen for Dorgan and Nelson said they are not yet supporting anything
they have not yet seen.

A Webb spokeswoman issued a statement saying he "has shared with Sen.
Murkowski his concerns about the EPA's latest finding concerning the
regulation of carbon dioxide emissions, in the absence of clear
congressional involvement and direction." A Lincoln spokeswoman did not
respond to an e-mail seeking her position.


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BUDGET: LEADERS EXPLORING VOTES ON WHITE HOUSE PANEL'S WISHES
By Humberto Sanchez


House and Senate Democratic leaders will work to hold a vote on
recommendations from a deficit-reduction commission President Obama is
considering creating by executive order if a similar Senate proposal fails.

"I think we will" hold a vote on a White House commission's
recommendations, House Majority Leader Hoyer said Tuesday after Democratic
leaders met on the issue with Vice President Biden.

House Budget Chairman John Spratt, who attended the meeting, said Senate
Majority Leader Reid made a similar commitment to bring the recommendations
to the Senate floor.

Such pledges could go a long way toward clearing the path for Congress to
pass legislation to raise the statutory debt limit, which needs to be
cleared by mid-February.

Hoyer said that "I think we are very close" to an agreement. He added that
a final pact would likely include Senate passage of pay/go legislation, a
priority for House Democratic leaders. The House passed a pay/go bill in
July.

At issue are the votes of about 14 Democrats, led by Senate Budget
Chairman Kent Conrad, who have said that unless Congress takes steps to
address the deficit, they would oppose the debt limit increase -- which
Spratt said would be enough to prevent Congress from having to act on the
limit until after the November elections.

Conrad is expected to offer an amendment to the debt limit bill, which the
Senate is set to begin debating today. The amendment would create a
commission whose recommendations Congress would be required to take up.

If Conrad's proposal fails, Obama will likely create a deficit-reduction
commission by executive order. Conrad has been skeptical of such a
presidential commission because Congress would not be required to take up
its recommendations. It is unclear if a pledge from Democratic leaders to
hold a vote would satisfy Conrad's desire for a guaranteed vote on the
commission's recommendations.

Under one scenario, Spratt said, Congress would vote on the commission's
recommendations, but also vote on a version amended by Congress, which
Conrad's proposal would not allow. "You'd get a vote on the base agreement
coming out of the commission and then as amended," he said.


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PEOPLE: PEOPLE
By Sara Jerome


OUT WEST. Former Rep. David Skaggs, D-Colo., has joined McKenna Long &
Aldridge as a senior strategic adviser in the firm's Denver office. His
government affairs work will include clients interested in education,
national security and technology policy. Skaggs served 12 years in the
House, retiring in 1999. He will remain board chairman at the House Office
of Congressional Ethics and a member of the Public Interest
Declassification Board.

RELIEF EFFORT. After two years as communications director for Rep. Betty
McCollum, D-Minn., Cleve Mesidor will become a public affairs director at
the Commerce Department, working for the Economic Development
Administration, which focuses on jobs. Mesidor, who is Haitian-American,
has spent the days since the earthquake lending a hand at the Haitian
Embassy's press shop. "I'm trying to provide whatever services I can,
whether it's helping with media or opening doors," she said. Not all of
Mesidor's family members in Haiti have been accounted for, but she did get
good news recently about a cousin who travelled to Haiti for a visit
shortly before the disaster. "This past Thursday, we got an e-mail from the
State Department and it included a special message from her, and she was
flown back to the U.S. on a military plane," Mesidor said. Mesidor is one
of the founding members of the Congressional Caribbean Staff Association.
She has also served as communications director for Rep. Barbara Lee,
D-Calif. A Howard University alumna, she started her career at CNN's
Washington Bureau as a production assistant.

CHAMBER HOP. Antonia Ferrier is changing positions after working for House
Minority Leader Boehner as press secretary, moving across the Capitol to be
a spokeswoman for Sen. Orrin Hatch, R-Utah. Ferrier previously served as
communications director for Sen. Olympia Snowe, R-Maine, and Rep. Roy
Blunt, R-Mo., when he was GOP whip. She was also deputy press secretary for
former Senate Majority Leader Bill Frist.

WHITEHOUSE DEPARTURE. Carlos Angulo has left the office of Sen. Sheldon
Whitehouse, D-R.I., where he was legislative director, to join his former
law firm, Zuckerman Spaeder, as a partner. He will assist clients on FDA
matters. Angulo has also served as legislative counsel for former Sen. Paul
Sarbanes, D-Md., and as counsel for the late Sen. Paul Simon, D-Ill., on
the Judiciary Committee. Before that, he was a trial attorney at the
Justice Department.

KEYED IN. Aaron Keyak has been tapped as communications director for Rep.
Steve Rothman, D-N.J. He was previously the communications director at the
National Jewish Democratic Council, which promotes Jewish values among
Democrats. Before that, Keyak was an associate for Rabinowitz/Dorf
Communications, a public affairs firm in Washington. He has also done
district internships with House Speaker Pelosi and Sen. Dianne Feinstein,
D-Calif.


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OUTSIDE INFLUENCES: THE CALM AFTER THE STORM
By Megan Scully


The panic pervasive in the defense industry a year ago has largely
subsided as officials await an FY11 Pentagon spending request that most
budget watchers expect will not include the program terminations and deep
cuts that made FY10 a major turning point for many firms that do business
with the military.

Industry officials and outside analysts will undoubtedly eye the defense
budget and the accompanying Quadrennial Defense Review of military
priorities and capabilities for any new investment areas or shifting
procurement priorities.

But most say they feel they have a read on the administration, now in its
sophomore year, and feel confident that top officials are prepared to
invest in defense -- even if that amounts to more modest annual increases
than those enjoyed during the Bush years.

Sources say they view the FY10 cuts, now a painful memory, as a seismic
shift intended to change the Pentagon's course. A repeat of last year, they
said, is neither likely nor necessary.

"It's probably never over -- whether it's a thousand cuts or one big one,
I think one always wonders what's out there," one defense industry source
recently said.

But the source, who, like many in the defense industry, has been
scrambling to learn details of the Obama administration's closed-door
budget negotiations, said the prevailing thought within industry is that
Defense Secretary Gates laid out his major programmatic changes and cuts in
last year's request.

The budget request, as well as the QDR, are expected to be an outgrowth of
that FY10 request, which focused on ending problematic or unnecessary
programs in favor of funding technologies deemed more critical to
operations in Afghanistan and Iraq or essential to providing a hedge
against future threats.

Industry sources said they don't anticipate many major new program starts
in the FY11 request and only a modest uptick in the base defense budget.
And much of that increase will likely be spent to pay for rising personnel
and healthcare costs instead of buying new weapons systems.

But there are some areas that could see increased investments, including
unmanned aerial vehicles -- one of Gates' favorite technologies -- as well
as directed energy, short- and mid-range missile defenses and cybersecurity
programs.

There is "some concrete anticipation that you'll see investment in those
areas," the industry source said.

One long-suffering sector of the defense industry -- shipbuilders, who
have faced erratic budgets over the last several years -- are hoping for
stability and at least a $15 billion investment for next year, said Cindy
Brown, president of the American Shipbuilding Association.

The industry, Brown says, hopes the Pentagon maintains the requirement
that the Navy field 12 aircraft carriers. They also believe the Navy will
commit to investing in research and development of a replacement for
Ohio-class submarines, which are set to begin retiring in the late 2020s.

Another industry source closely tracking the budget said battlefield
communications technology -- down to the level of the individual soldier --
could get a heavy investment in the FY11 budget.

Meanwhile, troop increases in Afghanistan could mean more money spent on
vehicles, generators, transport aircraft and helicopters, as well as
innovative solutions to key problems such as improvised explosive devices
and energy use, according to an analysis released Tuesday by Deloitte's
aerospace and defense sector.

"The bottom line is ... are you in a fast current?" the second industry
source said. "Do you have the program that's going to be paying dividends?
And if you are, you're good."

The QDR, essentially a planning document, could shed some light on which
firms will be riding a fast current. Past QDRs have delineated new spending
and offered rationales for launching of ambitious long-range programs.

But the much-anticipated quadrennial reviews traditionally include
scarcely a mention of defense industry or industrial base concerns -- a
fact that industry officials believe will change this time.

"At this point, we are cautiously optimistic that this QDR will be
different and ... will actually take into account to some degree the issue
of we must maintain the human capital, the expertise, the facilities and
the resources to address future threats," said Marion Blakey, president of
the Aerospace Industries Association. "And as a result, those kinds of
factors are going to have to be part of our strategy, not just what we need
for the immediate conflicts we are involved in."

In an unusual move just weeks before the release of the budget and the
QDR, Gates and two other senior Pentagon officials met with AIA and leaders
from top aerospace firms behind closed doors last week.

Blakey, who attended the meeting but would not discuss the details, said
she viewed it as a "positive sign" of the administration's desire to reach
out to industry. "The administration is showing a willingness to approach
the defense needs of the country as a real partnership, where we are able
to work together in a way really that I don't think we have seen in recent
years, and this is a really encouraging thing," Blakey said.


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POLITICAL ROUNDUP: PARADISE VALLEY MAYOR SEEKS SHADEGG'S SEAT

Paradise Valley Mayor Vernon Parker, a Republican, is abandoning his
possible candidacy for governor of Arizona to run instead for the seat Rep.
John Shadegg, R-Ariz., will vacate.


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POLITICAL ROUNDUP: LAWMAKER LAUNCHES BID AGAINST GIFFORDS

Republican state Sen. Jonathan Paton announced he would join a crowded
field of Republicans vying to take on Rep. Gabrielle Giffords, D-Ariz., the
Arizona Republic reported.

While Paton noted his Republican foes -- Jesse Kelly, Brian Miller and
Andrew Goss -- are military veterans, he said he was the only one with
legislative experience.


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POLITICAL ROUNDUP: ROMANOFF TO CONTINUE HIS CHALLENGE OF BENNET

Former state House Speaker Andrew Romanoff, a Democrat, said Tuesday he
would remain a candidate for the seat held by Sen. Michael Bennet, D-Colo.,
the Denver Post reported.

Speculation had been growing Romanoff might withdraw from the Senate race
and run for governor.


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POLITICAL ROUNDUP: MORE DEMS CONSIDERING RUN FOR SNYDER'S SEAT

Two more Democrats are looking at the seat Rep. Vic Snyder, D-Ark., will
vacate and a spokesman says retired Army Gen. Wesley Clark is listening to
supporters about joining the race.

Little Rock Mayor Mark Stodola and state Sen. Mary Anne Salmon said
Tuesday they're thinking about running.


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HILL BRIEFS: CLOTURE VOTE LIKELY FRIDAY ON BERNANKE NOMINATION

Senate Majority Leader Reid is expected to file cloture today on the
nomination of Federal Reserve Chairman Bernanke to a second term, setting
up a Friday cloture vote, Senate aides said. A confirmation vote, which
Bernanke is expected to win easily, would follow Friday if a time agreement
is reached, or it could be scheduled for Monday.

Bernanke's current term expires Jan. 31. A cloture vote, unusual for a Fed
chairman, appears necessary due to several holds, including by Sens. Bernie
Sanders, I-Vt.; Jim Bunning, R-Ky.; and Jim DeMint, R-S.C.

Though not seriously threatened, Bernanke has faced criticism over the
Fed's efforts to help the financial industry, the added authority it has
assumed in recent years, and the lingering economic crisis. The Banking
Committee in December approved Bernanke's nomination in a 16-7 vote. A
Senate vote with a similar ratio would mean about 30 "no" votes, more than
any Fed chairman in recent history received.


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HILL BRIEFS: FBI IS SAID TO BE PROBING ENSIGN'S ADMITTED AFFAIR

Sen. John Ensign, R-Nev., is under investigation by both the FBI and the
Senate Ethics Committee over his actions following an extramarital affair
with a former campaign staffer married to Ensign's friend and former aide,
people familiar with the probes said.

Ensign acknowledged the affair with Cynthia Hampton in June. He helped her
husband, Doug Hampton, gain employment with a lobbying firm and his parents
provided the Hamptons with a payment of nearly $100,000 that they called a
gift.

According to the Associated Press, a person familiar with the FBI's review
said agents recently contacted Ensign's former co-chief of staff, John
Lopez. The person spoke on condition of anonymity because of the FBI's
involvement and said the FBI only contacted Lopez. The person would not
provide any other details about FBI discussions with Lopez.

The Senate Ethics Committee, which last month subpoenaed documents related
to the matter, is continuing its investigation. A committee spokeswoman
said the investigation is ongoing and for that reason she could not
comment.

Committee rules require the Ethics panel to suspend its investigation if a
separate criminal probe commences, except in specific circumstances. That
suggests the FBI probe remains preliminary, people familiar with the
process said.

A spokeswoman for Ensign, Rebecca Fisher, would not say Tuesday whether
the Republican lawmaker has talked with the FBI.

Ensign is not up for re-election until 2012. He repeated Tuesday that he
has done nothing illegal and promised to cooperate with any investigation.


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HILL BRIEFS: LAWMAKERS HAIL DECISION BY JAPAN TO OPEN AUTO PROGRAM

Lawmakers applauded a decision by the Japanese government Tuesday to allow
U.S.-made cars to qualify for that country's version of the
"cash-for-clunkers" program, which granted U.S. consumers rebates for
trading in gas-guzzlers for more environmentally friendly vehicles.

"Now, after excluding our vehicles for months, Japan is finally doing what
is fair by including American cars in its program," Sen. Debbie Stabenow,
D-Mich., said in a statement. Stabenow sponsored a resolution -- introduced
by Rep. Betty Sutton, D-Ohio, in the House -- calling on U.S. trade
negotiators to persuade Japan's subsidy program to open up to U.S. cars or
file a dispute at the World Trade Organization. Trade Representative Kirk
also praised the decision and said he has been raising concerns with the
Japanese government since the fall. "USTR will continue to work with our
trading partners to ensure that American automakers and workers receive
fair treatment in Japan and around the world," Kirk said in a statement.

On Friday, 40 members of the pro-trade New Democrat Coalition in the House
called on Japan to reverse course, following appeals by U.S. business and
labor groups.

House Ways and Means Trade Subcommittee Chairman Sander Levin, D-Mich.,
had scheduled a hearing for Thursday to examine barriers to U.S. auto
exports in Japan and South Korea, which has a pending trade deal with the
United States on hold until the auto issue is worked out. But Levin
announced Tuesday that the hearing will be postponed "so we can examine the
details and implications of Japan's announced change to their Clunkers
program."


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HILL BRIEFS: BERNANKE ASKS GAO TO PROBE AIG BAILOUT

Federal Reserve Chairman Bernanke took the unusual step Tuesday of asking
the GAO to investigate the Fed's role in bailing out insurance giant
American International Group in 2008.

"To provide a comprehensive response to questions that have been raised by
members of Congress, the Federal Reserve would welcome a full review by GAO
of all aspects of our involvement" in the AIG bailout, Bernanke wrote to
the congressional watchdog agency.

The House Oversight and Government Reform Committee is examining the AIG
bailout, which included $182 billion from the Troubled Asset Relief Program
and a $60 billion credit line extended by the Federal Reserve Bank of New
York. Oversight and Government Reform Chairman Edolphus Towns and ranking
member Darrell Issa have subpoenaed documents related to the bailout from
the New York Fed, which was run at the time by now-Treasury Secretary
Geithner.

Congress passed a law last year giving the GAO authority to review Fed
documents in the AIG bailout. The GAO said Bernanke's request will be
weighed against other demands on the agency's staff.


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[Snuffysmith]

CongressDaily AM for Monday, Jan. 25, 2010

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CONTENTS

OUTLOOK: CONGRESS SETTLES FOR LIGHT LOAD FOR STATE OF THE UNION WEEK
By Anna Edney and Humberto Sanchez, with Billy House, Megan Scully, Darren
Goode, Chris Strohm, Erin McPike and David Hatch contributing


Congress has a fairly light legislative schedule this week as lawmakers
prepare to receive President Obama's State of the Union and continue
mulling what to do about healthcare legislation.

Democrats do not appear in any rush to decide how to proceed with a
healthcare overhaul. They are likely to maintain that they need to take a
breather to determine the best path forward and will be able to use cover
from the State of the Union to turn more heavily toward a jobs agenda.

Many House Democrats favor slicing up the overhaul effort so they can work
only on proposals that prove popular with the electorate and could gain
bipartisan support in the Senate.

Last week, many rejected the idea of simply passing the Senate bill and
making changes to it through the reconciliation process, though senators
hoped House Democratic leaders could convince their Caucus otherwise.

Rep. Bill Pascrell, D-N.J., is working on a handful of bills that would
include popular proposals like ending discrimination against pre-existing
conditions, providing tax credits for coverage and allowing young adults to
stay on their parents' insurance longer. He said he could begin rolling out
the measures as early as this week and could have GOP support.

Any final decisions on how to proceed are unlikely in the next few days.

House Speaker Pelosi has indicated she did not want to hurry a decision
and Sen. Christopher Dodd, D-Conn., suggested Democrats take a month to
think about a path forward.

Senate Democrats this week are looking to finish work on legislation that
would boost the statutory debt limit by $1.9 trillion to $14.294 trillion.

They will first vote on a handful of amendments, including a proposal to
create a deficit-reduction commission whose recommendations Congress would
have to take up.

Budget Chairman Kent Conrad, who sponsored the commission amendment with
ranking member Judd Gregg, argues that a special process is needed to make
decisions to cut spending and raise revenue that committees of jurisdiction
have failed to make.

It is unclear if the amendment will win the 60 votes needed to pass.
Finance Chairman Max Baucus, and an array of progressive and conservative
groups, would prefer the committees of jurisdiction take on the deficit in
regular order.

Baucus has offered an amendment to protect Social Security from the
commission. "Sens. Conrad and Gregg have painted a big, red target on
Social Security and Medicare," Baucus said. "That's what this commission is
all about. It's a big roll of the dice for Social Security and Medicare."

Conrad is working with Democratic leaders on a fallback plan under which
President Obama would create a similar commission by executive order. Under
a tentative agreement, House and Senate Democratic leaders would pledge to
put the presidential panel's proposals to a vote. Without the pledge, the
commission's recommendations would not have to be voted on by Congress.

Republicans are critical of the presidential commission, saying it would
be toothless. "Without the statutory structure to guarantee an up-or-down
vote, nothing can be accomplished," Gregg said.

The agreement is needed to ensure passage of the debt ceiling increase
bill by bringing along about 14 Senate Democrats, led by Conrad, who have
said they would oppose the boost unless Congress establishes a process to
reduce the deficit.

As part of the tentative deal, the Senate would pass pay/go legislation to
require that increases in mandatory spending and tax cuts would have to be
offset. Senate Majority Leader Reid is expected to offer the pay/go
amendment.

Making pay/go a law has been a priority for House Democratic leaders, who
pushed a pay/go bill through the House in July. That measure exempted four
policy items: cutting middle class taxes; reducing the estate tax; patching
the alternative minimum tax; and providing higher Medicare payments to
physicians.

Conrad has opposed the House pay/go bill, taking exception to the
exemptions, even though the Senate typically has not offset them in recent
years.

The compromise under discussion would have the Senate pass a pay/go bill
that limits the exemptions. The AMT and estate taxes exemptions would be
limited to two years, and physicians' payments would be exempted for five
years. But the Bush-era tax cuts for the middle class would be exempted
without a time limit.

Expected action on the debt ceiling comes as the CBO is scheduled to
release its outlook for FY11.

Other possible amendments include a proposal from Sen. Jeff Sessions,
R-Ala., to seek cap discretionary spending to no more than a 2 percent
increase a year for five years. Sessions said he plans to offer the
proposal this week.

* The Senate meets today at 2 p.m. for morning business, then resumes
consideration of debt ceiling legislation.

* The House is not in session today. The House meets Tuesday at 12:30 p.m.
for morning hour and 2 p.m. for legislative business. Votes will be
postponed until 6:30 p.m. On Wednesday the chamber meets at 10 a.m. for
legislative business and will recess at 5 p.m. for a security sweep. At
8:35 p.m., the House will meet in a joint session with the Senate for the
State of the Union. No votes are expected Thursday and Friday.

DEFENSE

The Senate Armed Services Committee will meet behind closed doors
Wednesday for a Pentagon briefing on cybersecurity, an issue that is
expected to take on increased importance in the Defense Department's FY11
budget request and the accompanying Quadrennial Defense Review of military
requirements and capabilities.

A draft Pentagon budget document obtained by CongressDaily states the
upcoming QDR will list operations in cyberspace as one of six missions
critical to achieving U.S. strategic objectives. The security environment,
according to the "pre-decisional" document, demands better capabilities
designed to counter threats in cyberspace.

Marine Corps Gen. James Cartwright, vice chairman of the Joint Chiefs of
Staff, and James Miller, principal undersecretary of Defense for policy,
are scheduled to brief the panel.

ENVIRONMENT

The success of efforts by Democratic leaders this year to get broad
climate and energy legislation passed will largely hinge on whether they
can convince moderates in both parties that it would create jobs.

The Senate Environment and Public Works Committee will hold another in a
series of hearings this week to try to further that argument.

Thursday's hearing stars Interior Secretary Salazar and focuses on jobs
that could be created through expanding the use of solar energy.

Democratic leaders have a tough climb toward reaching 60 votes for a bill
similar to the one passed in the committee last year that calls for an
economywide cap-and-trade program. It is unclear also how persuasive
Thursday's hearing will be to the overall debate in a panel that -- other
than Baucus -- does not have a strong representation of moderates in either
party.

At the same time, Senate Energy and Natural Resources ranking member Lisa
Murkowski and Senate Agriculture Chairwoman Blanche Lincoln are leading an
effort to try to pass a resolution blocking EPA from regulating greenhouse
gases. There is some fear this effort could undermine the attempt to pass
broad climate legislation by this spring, as both Murkowski and Lincoln
have cautioned that that timeline may be too quick to do a bill that has a
deep impact on the economy.

HOMELAND SECURITY

Lawmakers will continue a series of hearings this week into government
failures associated with an attempt to blow up Northwest Flight 253 over
Detroit on Christmas, with an eye toward crafting legislation to improve
counterterrorism programs.

The Senate Homeland Security and Governmental Affairs Committee plans a
hearing Tuesday to examine whether more reforms to intelligence agencies
and operations are needed.

The hearing will feature testimony from former Rep. Lee Hamilton, D-Ind.,
and former New Jersey Republican Gov. Thomas Kean, who led the 9/11
Commission.

The House Homeland Security Committee plans a hearing Wednesday to examine
the failed plot.

Also on Tuesday, former Sens. Bob Graham, D-Fla., and Jim Talent, R-Mo.,
will release a report card on the government's efforts to counter the
proliferation of weapons of mass destruction.

"The report card assesses U.S. government progress in such areas as the
biological threat, nuclear weapons proliferation, government reform and
citizen participation," according to an announcement.

Graham and Talent chair the congressionally chartered Commission on the
Prevention of Weapons of Mass Destruction Proliferation and Terrorism.

HOUSE LEADERSHIP

Buoyed by the victory last week of Sen.-elect Scott Brown, R-Mass., House
Republicans will finish up the week with their members' issues retreat,
Thursday through Saturday in Baltimore.

Obama has agreed to speak at the event on Friday, setting up a quirky
circumstance of a Democratic president headlining a GOP conference with the
theme of "Winning Back America."

Republicans say they chose Baltimore for their conference because it is a
working-class city struggling with high unemployment. They say they will be
working on solutions to fix what they describe as failed Democratic
policies enacted over the last year.

Newly inaugurated Virginia GOP Gov. Bob McDonnell, former House Speaker
Newt Gingrich, R-Ga., and former House Majority Leader Dick Armey, R-Texas,
are expected to address lawmakers.

POLITICS

Tuesday is the filing deadline for House and Senate races in Kentucky, but
the roster of candidates for the headline race to replace GOP Sen. Jim
Bunning has been set for months.

Lt. Gov. Dan Mongiardo and state Attorney General Jack Conway are the top
two contenders for the Democratic nomination, while Secretary of State Trey
Grayson and eye surgeon Rand Paul are the big names on the GOP candidate
list. No Bluegrass State House members are retiring but some might face
primary challenges.

Saturday is the filing deadline in West Virginia, where there is no Senate
race and all three House members are running for re-election.

TELECOMMUNICATIONS

Comcast Chairman and CEO Brian Roberts delivers a Wednesday morning
keynote at the annual State of the Net conference that's certain to attract
plenty of attention, given the company's pending merger with NBC Universal.

Also speaking that morning will be House Energy and Commerce
Communications Subcommittee Chairman Rick Boucher, D-Va., who heads one of
the four congressional panels that will hold hearings on the deal. The
event kicks off on Tuesday with a "pre-conference" featuring remarks by FCC
regulators Michael Copps and Meredith Baker.

On Thursday, the Senate Commerce-Justice-Science Appropriations
Subcommittee, headed by Sen. Barbara Mikulski, D-Md., holds an oversight
hearing on the Commerce Department's role in the $7.2 billion broadband
stimulus program. Commerce Secretary Locke and Larry Strickling,
administrator of the National Telecommunications and Information
Administration, are scheduled to testify. The witnesses are expected to
discuss changes that Commerce and the Agriculture Department have made to
the program in response to congressional concerns about red tape.


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POLITICS: MURKOWSKI SEEKS TO ERECT A BIG TENT
By Erin McPike


Senate Republican Conference Vice Chairwoman Lisa Murkowski is using her
leadership position to try to make the GOP a big tent party, tailoring her
role to focus on outreach to Hispanic communities and women's groups.

When the 111th Congress convened last January, Senate Minority Leader
McConnell conceded Republicans had to do a better job in this kind of
outreach. But it was Murkowski's idea, using the position's tradition of
allowing the incumbent to decide on a portfolio, to pitch to Hispanics and
women.

That represents a marked departure from her recent predecessors. When
Republican Policy Committee Chairman John Thune of South Dakota had the
job, he focused on the business community and conservatives, and when
National Republican Senatorial Committee Chairman John Cornyn of Texas had
the post before Thune, he focused on messaging and operations on the Senate
floor.

Murkowski's leadership team kicked off its Hispanic outreach program
Thursday, gathering nine Hispanic leaders and more than a dozen leadership
staffers to review data and discuss what the Republican Conference has done
and how it can improve.

"We can, through the network that we build, attempt to get our message out
through them as messengers," the Alaska Republican said in an interview.
"We want to encourage our Republican members to build better constituent
relations with the members of their Hispanic community."

Since all senators have Hispanic constituencies, she said, "if we have
identified some areas where this really resonates with the Hispanic
population, we can then go to our members and say, 'don't forget when
you're talking back home, you very likely have Hispanic TV stations, media
opportunities, good strong messages to relate.'"

Although Murkowski doesn't think Florida's Republican Senate primary
between Gov. Charlie Crist and former state House Speaker Marco Rubio, who
is of Cuban descent, will turn on Hispanic issues, she is the only member
of the Senate GOP leadership who has not endorsed Crist.

Murkowski said the country's economic situation provides Republicans with
a strong opportunity to appeal to Hispanics and draw the voting bloc back
to the GOP this year, but she cautioned that a one-size-fits-all approach
would not succeed.

"It is so important for us to recognize that the interest of a Puerto
Rican who lives in New York might be entirely different than the
Mexican-American who is living in El Paso, Texas. And yet we lump them all
together in the same community and say a Hispanic is a Hispanic is a
Hispanic. And that is so wrong, and it's so naïve, and we shouldn't use it
that way."

Specifically on Puerto Rico, which is undergoing a renewed push for
statehood, she said, "I know that it has been an issue that has provoked a
great deal of stress on both sides, but I think if the people of Puerto
Rico believe strongly that they need to become a state, we need to respect
that." She has been to Puerto Rico to look into the issue and has spoken
with Puerto Rican leaders in Washington about it.

On a more personal level, Murkowski is positioned to lead the GOP charge
in reaching out to women because she is the only woman in the GOP's Senate
leadership team.

"I know that when I'm looking at a group, you're sensitive as to the
make-up. And sometimes I wonder if our male counterparts are tuned into
that. That, you know, we don't have a lot of women represented here. And I
think it's important that we have that consciousness," she said.

In terms of reaching out to women, she said, "So much of it is just being
there and being present. Outside of [Texas Sen.] Kay Bailey Hutchison, we
haven't had a woman in [GOP] leadership. ... When you have kind of an
all-male, white team, it lends the appearance that that's who Republicans
in the Senate are, and that's not the way it is, nor the way it should be.

"We need to do better, we need to get more women, we need to get more
people of color, we need to get more minorities and encourage them to be
part of the legislative process with us back here, but I do think it is
important to send the message that Republicans are more than just older
white men."

For her leadership staff, Murkowski hired Tzaicel Hernandez and Ashley Hoy
as coalitions directors for women and diversity outreach and Christine
Mangi as communications director. Hernandez did Hispanic outreach for
former Massachusetts Gov. Mitt Romney's GOP presidential campaign in 2008
and worked for former Sen. Mel Martinez, R-Fla.

While Murkowski is the only woman in a Senate GOP leadership role, she
also serves as ranking member of the Energy and Natural Resources Committee
and has earned one of the top seats at the table in critical energy
negotiations for being an expert on what's not often considered in the
matrix of "women's issues."

In that role, she has attracted bipartisan support for some of her
legislative priorities, just last week winning the backing of Sens. Blanche
Lincoln, D-Ark., Mary Landrieu, D-La., and Ben Nelson, D-Neb., for her
resolution to block the EPA from issuing greenhouse gas emission
regulations. Top Democratic aides who were once wary of Murkowski now call
her one of the most reasonable Republicans to work with and say she has
proven to be, in the words of one, "a very smart legislator."

While willing to work across the aisle, Murkowski made it clear she wants
to win.

"I think the best way to win is to speak to the issues women are concerned
about. And I phrased it that way instead of women's issues, because I think
women's issues can be lumped into abortion, health care, education -- what
some have described as soft issues. I don't think they're soft issues at
all. I think the health issues and education issues are some of the most
difficult ones that we face domestically."

Murkowski has been helpful this cycle to the NRSC, which could field up to
five women in competitive Senate races this fall. "I'm hopeful that as
these months unfold, I'm going to be able to do more for the women
candidates out there, whether it's Kelly Ayotte in New Hampshire or going
out to Colorado to help Jane Norton," she said.


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PEOPLE: GO-TO PERSON GOES
By Mike Magner


Rep. Bob Filner, D-Calif., has been in Congress for 17 years, but until
this month, his top legislative aide, Sharon Schultze, had been with him
for three decades.

Schultze, born in Iowa and raised in Nebraska, first began working for
Filner in 1979 when he was elected to the San Diego School Board.
Schultze's husband at the time was a political science professor at San
Diego State University, where Filner taught history, and Filner wanted a
part-time assistant to help with the school board, which had only a
secretary for five members.

Filner left the board in 1983, but four years later he was elected to the
San Diego City Council and asked Schultze, who had since gone to work for
the San Diego Mediation Center, to be his aide. After Filner won his first
election to the House in 1992, Schultze came with him to Washington. "I had
planned to stay a couple of years," she said, "but like so many others I
caught 'Potomac fever' and never left."

"Throughout the years, she has been my go-to person when I need something
done and done right," Filner said. "In fact, she has done almost everything
in my office," from meeting with constituents and lobbyists to writing
speeches and press releases, he said.

Schultze said she considered herself fortunate to work for someone with
the same core beliefs, particularly about civil rights. She especially
admired the fact that Filner was a "Freedom Rider" in the South during the
'60s, and spent time in a Mississippi jail as a result. "The things he
believed in, I believed in," Schultze said.

Among her accomplishments, Filner noted that Schultze traveled to
Bangladesh to learn about the Grameen Bank founded by Nobel Laureate
Muhammad Yunus, and helped bring the principles of microcredit to this
country.

She also worked for years on legislation for Filner, the chairman of the
Veterans Affairs Committee, to compensate Filipinos who had been drafted
into military service during World War II, when the Philippines was a U.S.
commonwealth. Filipino war veterans were stripped of equity and benefits by
an act of Congress in 1946, and their status was finally recognized last
year when $198 million was included in the economic stimulus package to
provide lump-sum payments of $15,000 for surviving Filipino veterans who
are now U.S. citizens and $9,000 for noncitizens.

Schultze decided last year it was time for her to retire, and she left
Filner's office Jan. 11. She said she plans to stay in the area and spend
more time on two of her passions: local politics and the arts.


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CHINA WATCH: NOT INHERITED
By Art Pine


One area where President Obama can't complain that he inherited a mess
from his predecessor is U.S.-China relations. Although George W. Bush was
criticized for many missteps in both domestic and foreign policy, he was
widely given high marks for his handling of China.

During Bush's tenure, the two governments held high-level talks on a
variety of economic issues. China allowed its currency to appreciate.
Washington helped tamp down provocations from Taiwan, paving the way for
closer economic ties between Beijing and Taipei. Trade tensions were held
to a minimum. China treated Bush as a friend.

Now, a year later, U.S.-China relations seem in turmoil. The yuan's
appreciation has ended. The United States and China have filed a barrage of
trade complaints against each other. China visibly stiffed Obama during his
visit in November. And it left him dangling -- and embarrassed -- at the
Copenhagen climate conference last month.

"There's been a turning-point in U.S.-China relations," says Harald
Malmgren, a former U.S. economic official who follows U.S.-China relations
closely. "The Chinese leadership now feels that it can successfully
confront the United States without any adverse consequences. It's a new
China, and one that's a lot more confident."

To be sure, that isn't all Obama's fault. He didn't jettison Bush's China
policy; he embellished it. He expanded the high-level talks to include
foreign policy issues, not just economics. He obligingly placed human
rights on the back burner. And he treated China as America's partner in the
lead-up to Copenhagen.

"He's had a good year, compared to other first-year presidents," says
Carla Hills, who was the top U.S. trade official in George H.W. Bush's
administration and heads the National Committee on U.S.-China Relations.
Former presidents George W. Bush and Bill Clinton both began their terms
with confrontations with China.

Much of Obama's problem has stemmed from the 2008-2009 financial collapse,
which sent the U.S. and global economy tumbling into a recession and soured
China's respect for U.S. economic power. That China has recovered more
rapidly than the United States has bolstered Beijing's view that America is
on the decline and China is rising.

China has begun exhibiting "a surfeit of triumphalism," China-watchers
have become fond of saying. It's a euphemism for hubris.

Also shaping China's attitude are Obama's falling domestic approval
ratings. The same concerns about the United States' exploding budget
deficit that are worrying American voters are causing the Chinese to furrow
their brows as well. China is the United States' biggest debtor and is
nervous about its huge holdings of dollars.

Yet Obama's handling of China may share a significant portion of the
blame. His efforts to present a kinder, gentler diplomatic face to the
world were taken by the Chinese as a sign of weakness, some analysts say.
His aides didn't do well in advance planning for his visit to Beijing. And
they fluffed negotiations in Copenhagen.

Obama himself set off a series of trade skirmishes between the two
countries when he imposed tariffs on Chinese-made tires last September in
response to a complaint by the United Steelworkers union. The case,
considered dubious by many trade experts, opened the door to a raft of
other trade complaints -- matched tit-for-tat by China.

This year Obama is facing a series of major issues that some fear are
likely to underscore how far relations between Washington and Beijing have
fallen since his inauguration:

* Washington will need China's help in pushing tougher sanctions against
Iran through the United Nations Security Council. China might not vote for
such a tightening, but the United States is hoping it won't veto it either.
The administration also wants China to help keep the long-standing
six-country talks with North Korea from falling apart.

* The administration is facing a difficult diplomatic situation with
Japan, which is forming closer ties with China and appears to be seeking to
loosen its U.S. ties. China's rise also is prompting other longtime U.S.
trading partners in Asia to turn to regional trade agreements, rather than
rely on Washington to proffer such pacts.

* Finally, Obama is likely to face more challenges from Congress, which is
coming under mounting pressure over the continuing high unemployment and is
looking for a scapegoat. As usual, China, whose trade surplus with America
-- that is, America's trade deficit -- still is growing, is an easy target.

Persuading China to resume letting the yuan's value rise wouldn't have
been easy under any circumstances. With a sluggish economy, America isn't
as big an export market for China as it was. Despite its quick economic
rebound, China is reluctant to risk losing jobs in export industries by
pushing up its currency.

Pressing Beijing for economic concessions will be even harder than it was
a year ago, Malmgren predicts. "We're playing with a weakened hand, and I
don't see any improvements on that score," he says. Whether Bush's legacy
on U.S.-China relations was squandered, or damaged irreparably by the
2008-2009 recession, isn't clear yet.


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BEYOND THE BELTWAY: BRACING FOR HURRICANE POLITICS
By Peter Bell


In Florida, election season is hurricane season, and politicians seek
shelter from disasters at their own peril. So when an earthquake leveled
nearby Haiti's capital two weeks ago, candidates got out where citizens
could see them. Television interviewers found Democratic senatorial
candidate Rep. Kendrick Meek rendering aid in Port-au-Prince after he
finagled a last-minute flight and a car ride into the city. Meanwhile, Gov.
Charlie Crist, a GOP senatorial candidate, praised the work of rescue teams
from an emergency operations center at the Orlando airport.

If the candidates weren't thinking before the earthquake about how they'd
respond to a major storm in the midst of an election, they are now.

Recent history shows that politicians, particularly incumbents, who can
govern through a disaster are best positioned on Election Day.

In August and September of 2004, four hurricanes and one tropical storm
hit Florida. President George W. Bush's five visits and the work of his
brother, then-Gov. Jeb Bush, helped shore up his position in the swing
state, while his challenger, Sen. John Kerry, D-Mass., kept a lower profile
to avoid the appearance of taking political advantage of a disaster. The
episode was in stark contrast with the 1992 aftermath of Hurricane Andrew,
when a slow federal response contributed to President George H.W. Bush's
unexpectedly slim victory in the state that November.

Hindsight suggests that Crist, as sitting governor, could make the best of
a bad situation. But the uncertainties major storms bring can spin any
campaign off course.

"You can't plan for what you're going to do," says Florida political
consultant David Beattie, "but you need to plan on having to respond." That
includes the possibility of spotty polling as people prepare for a storm;
having volunteers leave to help with relief efforts, and suspending
campaign activities as incumbents focus on their official duties.

"You may be running, but you have the safety of the people to worry
about," says Beattie, who is working for Florida Chief Financial Officer
and State Fire Marshal Alex Sink, a Democratic candidate for governor.
"Charlie Crist is in the same boat."

Given the disaster next door in Haiti, a foreclosure crisis at home and a
formidable primary opponent in former Florida State House Speaker Marco
Rubio, the possibility of a hurricane six months from now could be the
least of Crist's worries.


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OUTLOOK: HOT TICKET
By Jason Mann


A SECOND HELPING OF MILK. Tonight the Washington, D.C. Jewish Community
Center's Gay & Lesbian Outreach Engagement program is hosting an evening
with writer Dustin Lance Black. Black earned an Academy Award last year for
penning the screenplay to "Milk," a film about activist Harvey Milk, the
first openly gay American elected to public office. Black, a gay activist
himself, will discuss how Milk paved the way for other openly gay
individuals to seek office, like Reps. Barney Frank, D-Mass., and Jared
Polis, D-Colo., and congressional actions that have affected the gay
community, such as the Defense of Marriage Act and the military's "don't
ask, don't tell" policy. The event begins at 8 p.m. at 1529 16th Street,
NW. Tickets cost $25 at the door, $20 in advance, and can be purchased
online at www.washingtondcjcc.org.

WHAT IT FEELS LIKE FOR A GIRL. Tonight, the National Press Club is hosting
a discussion of women in politics with author Leslie Sanchez. Sanchez, who
served as executive director of the White House Initiative on Educational
Excellence for Hispanic Americans under President George W. Bush, has
written a book analyzing the three main female players in the last
presidential election. "You've Come a Long Way, Maybe: Sarah, Michelle,
Hillary and the Shaping of the New American Woman" asks such questions as,
why are fashion and approachability stressed more for women than men? One
item likely to be discussed is Massachusetts GOP Sen-elect Scott Brown's
nude centerfold and the effect it had, if any, on his victory. Sanchez will
be joined with Patti Solis Doyle, the former campaign manager for Secretary
of State Clinton's presidential campaign. The forum starts at 6:30 p.m. and
is free. For more information, call (202) 662-7523.

DEVELOPING PLANS. President Obama's scheduling of his State of the Union
for Wednesday relieved fans of the television show "Lost" but caused a
problem for the Society for International Development. The organization has
moved its annual gala from Wednesday to Thursday to make sure the guests of
honor will be able to attend. Senate Foreign Relations Chairman John Kerry
and ranking member Richard Lugar will be presented with the SID-Washington
Award for Leadership in Development for their contribution to aiding
reform, specifically for their work co-sponsoring the Foreign Assistance
Revitalization and Accountability Act. The dinner starts at 6 p.m. at the
Omni Shoreham Hotel at 2500 Calvert Street, NW. Tickets cost $225 and can
be bought by calling (202) 884-8590.

BEAR IT ALL. Special Olympics Maryland is hosting a unique fundraiser this
weekend. Unlike most fundraisers in this town, where you're asked to dress
to the nines and bring your checkbook to bid on items in an auction,
Special Olympics Maryland requests that you leave your tuxedo at home and
bring only your bathing suit Saturday. The charity is hosting its annual
Polar Bear Plunge and participants who have raised $50 in pledges will
ignore the winter weather and go for a dip in the Chesapeake Bay. Plungers
will receive a sweatshirt, a free lunch and, most importantly, bragging
rights. For more information, including how you can register and where to
meet, visit www.plungemd.com.


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DRAWING BOARD: DRAWING BOARD
By Mark Armstrong



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[Snuffysmith]

LOTS OF STUFF ABOUT CLIMATE CHANGE AND HEALTH CARE IN THIS ISSUE.


CongressDaily AM for Wednesday, Jan. 27, 2010

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CONTENTS

ECONOMY: STILL IN FLUX, SENATE JOBS BILL COULD GET THURSDAY RELEASE
By Peter Cohn and Brian Friel


The Senate's job-creation bill, or portions of it, could be unveiled
Thursday, Senate Democratic Policy Committee Chairman Byron Dorgan of North
Dakota said as senators continued ironing out details Tuesday.

Each passing day gets the calendar closer to the Feb. 28 expiration of
unemployment insurance and health benefits for laid-off workers -- and a
freeze in Medicare physician payments that face a 21 percent cut if no
action is taken. The urgency to extend those measures is driving talk that
a package of must-do items could be broken out and taken up first,
Democratic aides said.

Tuesday's policy luncheon centered on the renomination of Federal Reserve
Chairman Bernanke, senators said, not on the jobs bill, as was expected.
"We need and will have a very strong jobs bill, but I don't know what it is
yet, because, first of all, there was no discussion at all about it," said
Senate Finance Chairman Max Baucus. "But we will have a jobs bill; that's
front and center."

Baucus is working with a handful of other senators on a tax credit for new
hires, estimated to be worth around $20 billion, said Sen. Bob Casey, D-Pa.
Others with similar proposals include Sens. Russ Feingold, D-Wis., and
Charles Schumer, D-N.Y., although they differ on the details.

The idea clearly has some momentum for inclusion in a final package,
senators said. "I'm excited about the fact that there's a lot of people
proposing a jobs tax credit; it makes me think something's going to
happen," Feingold said.

Proposals circulated by Dorgan and Senate Majority Whip Durbin call for
about $82.5 billion in total spending and tax initiatives, including the
hiring credit, although the numbers are still moving around. Most of that
would be paid for out of unobligated Troubled Asset Relief Program funds,
although that idea got a chilly reception from Senate Budget Chairman Kent
Conrad on Tuesday based on new CBO budget estimates.

The numbers unveiled Tuesday show an improved budget picture for TARP: it
is estimated to have a net cost of only $99 billion, sharply reduced from
$356 billion estimated last March. "Reductions in the allocation for TARP
would appear to be a saver for the government, but in fact, relative to our
new baseline, when we think the money will not be used, there isn't really
money there to be saved," CBO Director Elmendorf said.

Congress could still count the unspent TARP funds as an offset because
lawmakers are still operating under last year's budget baseline, he added.
But such scoring may be "actively misleading," Elmendorf said, given the
improved picture for the TARP funds. While current scores "would show
considerable savings perhaps from reducing TARP authority, those would not
be real relative to the baseline we're presenting" in Tuesday's report,
Elmendorf said.

Asked about the new numbers, Conrad said he would rather find other
offsets. "That should be taken into consideration," he said. "I personally
favor funding this in a way other than using TARP funds, and I've tried to
make that clear to my colleagues."

Conrad appears to be losing that battle, however, as TARP is emerging as a
piggy-bank for new spending proposals and potentially a small-business
lending program. The White House has been working on a proposal to free up
TARP capital to aid small businesses, but many Senate Democrats want to
speed up the process by mandating new small business lending in the jobs
bill. "They better get going," Senate Banking Chairman Christopher Dodd
said of the White House.

Other details to be worked out on the jobs bill include a proposal to ease
pension funding requirements for cash-strapped companies. Early estimates
show the plan could raise as much as $7.5 billion in revenues for
job-creation measures, because firms would be able to spread out their
tax-deductible pension contributions required by a 2006 law. That would
free up money for cash-strapped firms and also create taxable corporate
income.

Democrats are considering attaching strings to the pension relief sought
by unions, including restrictions on executive compensation and a
prohibition on freezing pension plans. Sources said that, depending on how
those restrictions are written, they could dissuade some employers from
accepting the pension relief. That, in turn, could reduce the anticipated
new taxable income and the $7.5 billion in projected revenues.


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WHITE HOUSE: OBAMA FORCED TO ADJUST SOTU GOALS
By George E. Condon Jr., with Erin McPike contributing


President Obama's first State of the Union address tonight, to a nation
increasingly concerned about his priorities and a Congress increasingly
looking toward the midterm elections, will not be the speech the president
and his team once envisioned him delivering.

The White House had once hoped this speech would give the president a
chance to celebrate the successful passage of healthcare legislation that
had become his top legislative priority. Instead, the speech gives him a
chance to try to bounce back from his party's loss of a Senate race in
Massachusetts that cost Democrats their key 60th vote and has brought the
healthcare push to a halt.

Obama is expected to use the address to promise a renewed focus on fixing
the economy and a new-found emphasis on fighting deficit spending.

The stakes are enormous for Obama's legislative agenda, his standing with
the public and his party's ability to retain its congressional majorities
in November.

"The speech is a way for him to address any perceived differences between
his priorities and the public's priorities," said Michael Dimock, associate
director of the Pew Research Center. The most recent surveys by Pew and
other pollsters show that the president retains the high regard of the
public for personal attributes but is lagging on job approval.

One key reason for the disconnent, Dimock said, is jobs. "The fact that
health care has dominated Congress' agenda and to some extent the
president's, there is some public frustration over that."

This speech is Obama's best opportunity to deal with what he has
acknowledged is "frustration and anger." And the White House seems eager to
take advantage of that opportunity.

"The key in this speech, what he'll discuss more than anything, is getting
our economy moving again," said White House Press Secretary Robert Gibbs,
promising that the president will be "feisty" at times and will indicate
"that Washington has to be pushed" to make progress on health care and
cutting spending. He said the president will also talk about
counterterrorism and "the continued steps that we have to take ... to
continue to keep our country safe."

But White House aides bristle at the notion that the speech is a chance to
hit "reset" after a troubled first year in office. Gibbs insists "you'll
find a remarkable amount of similarity" between what Obama is doing today
and what he promised in the campaign and in 2009.

Stephen Hess, an aide to two presidents and a longtime analyst at the
Brookings Institution, said his experience writing two State of the Union
addresses persuades him that the White House could not have made major
changes to this speech just because of the Massachusetts setback.

"It is very hard to turn this thing around on a dime just because he had a
bad week," he said. "The rhetoric may be tinkered with and he may use the
phrase 'I'm fighting for you' 27 more times. But the program can't change
that much from what he was planning."

Politically, Democrats are pulling for Obama to shake them out of their
post-Massachusetts depression. "There is a certain level of panic and
despondency on the Hill among Democrats," said a veteran party strategist
who spoke on background because he works on so many House campaigns. "That
panic can lead to paralysis. And paralysis is not good for Democrats on the
Hill and is not good for the president."

The strategist added that it was "enormously important for him to be able
to rally those folks and at least be perceived as rallying the country in a
particular direction. Because otherwise it is going to be very hard for him
to get anything done with this Congress in the next year."

Congressional Republicans, who sense victories in November, are not about
to help the president out of his dilemma, though they are likely to avoid
any outbursts that would recall Obama's last major speech to Congress, when
Rep. Joe Wilson, R-S.C., shouted "You lie."

Rep. Phil Gingrey, R-Ga., said Republicans are particularly skeptical of
the president's claims that he is cutting deficit spending. "I doubt if
anybody is going to yell out, 'You lie,'" said Gingrey. "But it might be
appropriate to stand up and say, 'The hypocrisy of all of this,'" he said.

Senate Republican Conference Chairman Lamar Alexander of Tennessee said
Republicans are ready to give Obama credit for his decisions on Iraq and
Afghanistan. But he sees little support on domestic issues.

"Years ago, I learned that a governor who throws himself into a single
issue with everything he's got for as long as it takes usually can wear out
everybody else," he told reporters Tuesday, citing his own experience. He
said the lesson applies to presidents as well, offering President
Eisenhower's work in Korea at the beginning of his presidency as evidence.

"President Obama should focus with Eisenhower-like intensity on jobs," he
said.


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TELECOMMUNICATIONS: IT'S PRIME TIME ON CAPITOL HILL FOR COMCAST-NBC MERGER
By David Hatch


Comcast Chairman and CEO Brian Roberts will deliver a keynote address in
Washington this morning, but there is a more pressing reason why he's in
town: to build congressional support for his company's pending merger with
NBC Universal.

After speaking at the annual State of the Net conference, Roberts will
meet with lawmakers and staff with the Senate Judiciary Antitrust
Subcommittee and the House Energy and Commerce Communications Subcommittee.
Both have set Feb. 4 hearings on the deal to receive testimony from Roberts
and NBC Universal President and CEO Jeff Zucker.

Today's trip is Roberts' latest effort to sell regulators on the proposed
marriage of Comcast businesses valued at $7.25 billion with NBC assets
valued at $30 billion.

In December, he met with Senate Judiciary Antitrust Subcommittee Chairman
Herb Kohl, D-Wis., who Hill sources say is considering writing to the
Justice Department and FCC, the agencies reviewing the transaction, to
recommend how they should proceed. Last Thursday, Roberts huddled with
House Communications Subcommittee Chairman Rick Boucher, D-Va.

Roberts will have many more opportunities to ride the Acela, which he uses
for the trip from Comcast's Philadelphia headquarters, because both Justice
and the FCC are not expected to issue their decisions until the fourth
quarter of the year.

As the first communications megamerger on President Obama's watch, the
union of the nation's largest cable television company with a programming
empire that includes a major broadcast network and Hollywood studio could
set the mold for future transactions.

Those high stakes help explain why a deal that was announced last month
and still has no FCC docket number already is the focus of intense
jockeying. Public disclosures filed by Comcast indicate that, as of late
2009, it has tasked nine outside firms with augmenting its lobbying on the
merger.

The regulatory review process begins in earnest this week when Comcast
files a "public interest statement" with the FCC summarizing how the union
would benefit consumers and sends documents to Justice that will initiate
the antitrust review.

With four oversight hearings planned -- the remaining two will be held
before the Senate Commerce and House Judiciary committees -- Congress
appears to have guaranteed itself an outsized role in the decision-making
process.

Among the issues Kohl will closely scrutinize are the impact on cable
rates, competitors, and programming, including online video.

The deal's fate may rest with Christine Varney, antitrust division chief
at Justice, which is expected to rule before the FCC and would lead any
charge to block the transaction.

The tea leaves on Varney are mixed. On Monday, the antitrust division
imposed significant conditions on the proposed merger of the nation's
largest ticket vendor and concert producer in an effort to protect
competitors.

While serving as an FTC regulator, Varney voted in 1997 to restructure
Time Warner's acquisition of Turner Broadcasting System to ensure a robust
programming marketplace.

Yet one of Varney's top lieutenants is Gene Kimmelman, the longtime head
of Consumers Union's Washington office, who is close to vocal opponents
working to block the Comcast deal -- including his former employer and the
watchdog group Free Press. And looming over the Justice Department's review
is Obama's goal of reinvigorating the antitrust laws after years of
Republican laissez faire policy.

While Democratic FCC regulator Michael Copps has said the deal faces "a
very steep climb," sources noted the agency rarely rejects these sorts of
transactions.

"Is there a significant loss of competition from this merger? The answer
is largely 'no,'" said Paul Gallant, a telecommunications analyst with
Concept Capital's Washington Research Group. "The game is all about
conditions."


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SENATE: COBURN ACCUSES PARLIAMENTARIAN OF HELPING DEMOCRATS
By Dan Friedman


Sen. Tom Coburn, R-Okla., on Tuesday angrily accused Senate
Parliamentarian Alan Frumin of concocting Senate precedent to help
Democrats block a parliamentary step that would have snarled consideration
of a bill to raise the federal debt limit.

"You can't do that. You can't do that," Coburn loudly told Frumin Tuesday
afternoon in an unusual dispute in the Senate well after Frumin ruled
Coburn could not divide one amendment allowed under a unanimous consent
agreement into 17 amendments.

The dispute marked the second time in two months Frumin has ruled against
a parliamentary move by Coburn and left the Oklahoman suggesting Frumin is
ignoring the Senate tradition to help Democrats expedite Senate action.

The dispute came after Coburn tried to use a rare tactic known as a "clay
pigeon" to divide a pending amendment to a bill to increase the federal
debt limit. The original amendment would eliminate what he calls wasteful
federal programs. Coburn has used the technique before, including in May
2006, when he broke one amendment into 19 parts.

When he asked to divide the amendment, Sen. Kirsten Gillibrand, D-N.Y.,
who was presiding, huddled with Frumin. A few minutes later, she said
Coburn could not divide his amendment because he was permitted just one
under a unanimous consent agreement limiting amendments.

Coburn headed to the Senate well, where Frumin said he had told both
parties years ago of a precedent preventing division of an amendment under
a consent agreement.

Coburn repeatedly asked Frumin to point to a written basis for the ruling.

When Coburn asked how the ruling differed from the last time he divided an
amendment, Frumin said debate was limited by a time agreement, but Coburn
quickly pointed out the consent agreement does not include a time
agreement.

Coburn's office later cited a May 2001 ruling in which the parliamentarian
allowed division of an amendment despite a unanimous consent agreement
governing amendments.

"Division is not a motion. It is a right of any senator," the presiding
officer said then.

Coburn appeared particularly incensed because he believes Frumin erred
last month by allowing Sen. Bernie Sanders, I-Vt., to withdraw a nearly
700-page amendment to the Democrats' healthcare bill that Coburn had forced
to be read. Typically waived, the reading of a bill or amendment, if
forced, must usually be completed unless withdrawn by unanimous consent.
But Frumin, relying on a past ruling Republicans called an error, let
Sanders pull his amendment unilaterally.

"You can't two times in a row come up here and change precedent," Coburn
said Tuesday.

"I am not changing precedent," Frumin responded quietly.

Coburn demanded that Frumin respond to a Jan. 10 letter seeking an
explanation of the Dec. 16 ruling. When Frumin suggested they could discuss
the issue, Coburn insisted on a written response.

"I want an answer," he said.

A spokesman for Senate Majority Leader Reid said that regardless of
parliamentary rules, Coburn had reneged on a deal allowing him one
amendment.

"We had a deal on amendments and Sen. Coburn tried to disregard that
deal," Reid spokesman Jim Manley said. "What's the point of reaching such
an agreement, which is the way most business in the Senate is handled, if
someone who signed onto it is going to go to great lengths to break the
deal that the entire Senate agreed to?"

Democrats later backed down a bit, agreeing to votes on four amendments
from Coburn.


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ENVIRONMENT: CLIMATE TRIO CHAFES AT ADDING PROVISIONS TO JOBS BILL
By Darren Goode


Senators working on a deal on major climate and energy legislation are
pushing back against efforts to inject provisions into jobs legislation.

"It makes no sense," Sen. Lindsey Graham, R-S.C., said. "You need to have
a vision on energy independence and climate change, and taking a few items
out of the energy bill and say you've solved the problem is a nonstarter
for me."

Foreign Relations Chairman John Kerry said he is not worried about any
major and popular nuggets in an energy bill being moved in the jobs bill.
"There's automatically going to be some small component in terms of the
green jobs piece of this, and that's good, that's fine," he said of the
jobs bill. "But I think the larger pieces require a more comprehensive
approach to energy."

That includes a renewable electricity mandate that is a centerpiece of a
bill the Senate Energy and Natural Resources Committee passed last year
with bipartisan support, and which Democratic leaders are looking to merge
with a plan to cap and trade greenhouse gas emissions.

Energy and Natural Resources ranking member Lisa Murkowski -- who has
pushed for slower negotiations on major climate legislation than Majority
Leader Reid's call to present a bill to the Senate this spring -- has
misgivings about breaking up her panel's energy strategy with a jobs bill.
"I'm always hesitant to use a good bill to carry things that are added
baggage," she said. "And if the jobs bill is added baggage, then you're not
going to find me so supportive of it."

Sen. Maria Cantwell, D-Wash., said she would argue in favor of taking
elements of the energy bill and putting them in the jobs package, and that
it would not take away any emphasis for doing the larger climate plan. "No,
no, no, no, no. It's all part of the same debate," she said. "It's about,
you want to create jobs in America. This is one of the biggest jobs
opportunities there is."

A recent draft of a $82.5 billion jobs bill set aside $11 billion for
energy efficiency, including $6 billion for retrofitting residential homes
and $4 billion for retrofitting manufacturing plants. Both figures were
slightly higher than an earlier draft from late last week, suggesting that
details of a bill -- expected to be revealed Thursday -- are in flux. One
line item in an earlier draft that appears to have been omitted, for
example, is $3 billion sponsored by Energy and Natural Resources Chairman
Jeff Bingaman for retrofitting commercial buildings. "I'm still hoping we
can get not only residential but commercial building retrofit included in a
jobs package," said Bingaman, who added he did not know whether the
commercial retrofitting funding would be in a bill Democratic leaders
introduce.

Some Democrats, in the wake of Republican Sen.-elect Scott Brown's victory
in Massachusetts, have said Democrats need to focus more on jobs and the
economy than climate legislation. "Well, I understand that, there's an
immediate reaction to an election," Kerry said. "But the reality is, this
issue isn't going away."

Kerry, Graham and Sen. Joe Lieberman, D-Conn., met last week with the U.S.
Chamber of Commerce and are sitting down with moderates in both parties to
try to at least modify cap-and-trade plans passed last year in the House
and the Senate Environment and Public Works Committee.

Graham -- who has labeled those bills dead -- said, "I think you'll have a
hybrid approach on the emissions side. But I don't want to give any
details; it's a work in progress." He said emissions standards "will have
to be meaningful or you won't get environmental support, but they also have
to be better for business than the current construct."

Added Lieberman: "We're really working hard to get something done this
year and we're prepared to compromise."

The three met Tuesday with Cantwell and Sen. Susan Collins, R-Maine, on
the Cantwell-Collins "cap-and-dividend" bill. The plan is intended to
remove concern that a trading system for carbon emissions would lead to the
same manipulation and excessive speculation that has plagued oil futures
and other commodity markets.

"I respect it because it has the same goal as we have, which is to do
something about global warming," Lieberman said before the meeting. "It
does put a price on carbon; it's a different approach, but this is our
attempt to reach out to them and see if we can find common ground with
them." The three are also expected to meet with others soon, including Sen.
George Voinovich, R-Ohio, who has suggested the possibility of a bill
focused solely on electric utilities.

One thing the trio is not looking to do is follow the lead of Sens. Byron
Dorgan, D-N.D., and Blanche Lincoln, D-Ark., who have suggested running the
energy and climate halves separately. "I don't think an energy-only bill is
the right way to do it," said Lieberman, emphasizing a link between
reducing energy imports and greenhouse gas emissions. "That's not the
compromise."


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HEALTH: A WAY FORWARD ON OVERHAUL EFFORT STILL STUCK IN NEUTRAL
By Anna Edney and Billy House with Peter Cohn and Darren Goode
contributing


House Democratic leaders believe they can muster the votes to pass the
Senate healthcare overhaul bill through the House if changes were made to
the measure, but Senate Democratic leaders do not know whether they can
deliver assurances their members will fall in line.

"We could get the votes in the House to pass the bill ... if fixes to the
Senate stuff can be done," House Majority Whip Clyburn said Tuesday
afternoon entering a bicameral leadership meeting in Senate Majority Leader
Reid's office.

When asked whether she agreed, House Speaker Pelosi said, "[It] depends
what the fixes are."

Those fixes must include changes to the excise tax, exclusion of
sweetheart state-specific deals and inclusion of a national exchange, a
Clyburn spokeswoman said. Whether the exchange provision can be considered
under the budget reconciliation process is unclear.

"At this time, in this form, there aren't the votes in the House, not
anywhere near, to pass the Senate bill. But again, some kind of package
that we can put together might produce that result and we had a
constructive meeting to that end," Pelosi said after leaving the bicameral
leadership meeting.

Rep. Anthony Weiner, D-N.Y., said later Tuesday after a closed-door Caucus
meeting that leaders are waiting on Senate Democrats to determine what they
can pass.

"The sense they [House Democratic leaders] gave us is that Reid doesn't
know from issue to issue what he can get votes for," Weiner said.

"Generally, [Pelosi's] message was that they are still kind of negotiating
around how you make the Senate bill palatable, and they put some things on
the table for the senators to try to figure what they got votes for -- and
they don't know what they have votes for," said Weiner.

Weiner said he does not think the Senate has to move first, "but at least
they have to give us the high sign of what it is they can and can't do,"
Weiner said.

Such a move would likely require senators to consider the package of
changes under the fast-track reconciliation process that requires only 51
votes to pass. Two senators Tuesday said they could not support
reconciliation.

Sen. Evan Bayh, D-Ind., said the reconciliation process would ruin the
chances for bipartisanship during future endeavors and Sen. Blanche
Lincoln, D-Ark., said she would not support changes to the Senate bill.

Senate Majority Whip Durbin cautioned against assuming negotiators had
settled on the reconciliation process as the most viable option. "I
wouldn't go that far," he said.

House Education and Labor Chairman George Miller shared a similar
sentiment. "We're a ways from there," he said.

Durbin also said earlier in the day, "I think reconciliation has been used
effectively by both parties," Durbin said. "I think it's an option that we
should keep on the table."

Reconciliation was used by Republicans to push tax cuts signed into law by
President George W. Bush.

Many House members also distrust the Senate, making it difficult to
persuade them to pass something they are unsure the Senate will approve as
well.

Weiner said leaders haven't dismissed the idea of doing a smaller health
bill or a series of smaller health bills, but that the parts are
interrelated, and "it's very hard to take these things out."

"And we're also not getting much guidance from the mother ship about what
the White House really wants -- what they're prepared to push for, etc.,"
said Weiner.

Weiner said it would be helpful if President Obama relayed tonight during
the State of the Union three or four relatively simple things he needs to
have in the bill.

"He needs to give us some legislative marching orders here," he said.


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SENATE RACES: KENTUCKY FILING CLOSES WITH SENATE RACE, HOUSE SEAT IN PLAY
By Erin McPike


With Kentucky's filing period closing Tuesday, Republicans believe they
have a strong possibility for picking up a House seat, but their chances of
keeping retiring GOP Sen. Jim Bunning's seat are anything but certain.

Three statewide officeholders -- two of whom are the leading Democrats --
are running for Bunning's seat, which may trigger a scramble in next year's
state elections.

Lt. Gov. Daniel Mongiardo and Attorney General Jack Conway are locked in a
fierce and tight primary battle for the Democratic nomination. Joining them
in the primary are James Buckmaster, a physician; Darlene Price, an Army
veteran; and Maurice Sweeney, a farmer who touts 14 years in state
government.

For the GOP nomination, insiders hope Secretary of State Trey Grayson
beats eye surgeon Rand Paul, son of former presidential hopeful and Rep.
Ron Paul, R-Texas. But Paul has the bulk of support of the Tea Party
movement and has used his father's e-mail list to, so far, build a
fundraising lead over Grayson.

Cathy Bailey, a Republican activist who chaired Minority Leader
McConnell's 2008 re-election race and raised money for President George W.
Bush, floated the idea of running for the seat last year but did not file.

Four other Republicans did, including John Stephenson, a former
superintendent of public instruction who told the Associated Press he plans
to spend less than $5,000 on the race; Bill Johnson, a businessman; Gurley
Martin, a World War II veteran; and Jon Scribner, who refers to himself on
his Web site as a "common citizen."

Both Democrats in the state's six-member House delegation, Reps. Ben
Chandler and John Yarmuth, avoided giving the Democratic Congressional
Campaign Committee heartburn. Both filed to run for re-election.

Republicans believe Chandler's seat is a better target because Yarmuth's
district leans more Democratic.

Against Chandler, the National Republican Congressional Committee is
promoting Andy Barr, who has raised more than $300,000 for his campaign.
Barr is an attorney and constitutional law professor who served as a deputy
general counsel to former Gov. Ernie Fletcher.

Republicans are also excited about retired coal executive Mike Templeton,
who was joined by businessman Perry Barnes, John Kemper, funeral director
Matt Lockett and George Pendergrass in the primary against the
front-running Barr.

Against Yarmuth, Republicans think Jeff Reetz, who owns 25 Pizza Hut
franchises in the state, has promise. Four other Republicans filed for the
primary, including Jerry Durbin; Larry Hausman, a commercial real estate
booker; Todd Lally, a commercial pilot; and Brooks Wicker, a financial
consultant.

All four House Republicans in the delegation -- Reps. Ed Whitfield, Brett
Guthrie, Geoff Davis and Hal Rogers -- filed for re-election, and Democrats
do not have any of the four seats on their radar at this point.

Should the political climate change, however, Democrats are looking to
disabled Iraq veteran John Waltz, who they say has a very compelling story
to tell, against Davis. They also have Ed Marksberry, a real estate agent,
running against Guthrie.


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CAMPAIGN FINANCE: FOREIGN SUBSIDIARIES BASH DEM PUSH TO LIMIT DONATIONS
By Billy House


The head of a foreign subsidiaries trade group Tuesday lashed out at
reports that congressional Democrats are looking to block foreign-owned
corporations from seizing on the Supreme Court's campaign finance ruling
last week to influence American politics.

"Over 5 million U.S. citizens work at the U.S. operations of foreign
companies. Surely, their political rights should not be called into
question," said Nancy McLernon, president of the Organization for
International Investment.

McLernon argued that sufficient federal rules already are in place to
prevent foreigners from exerting influence on American politics, and that
last week's opinion in Citizens United v. FEC does not change that.

The 5-4 ruling held that corporations should be treated as individuals
when it comes to free speech and their decisions to spend unlimited amounts
on political ads are fundamentally protected by the Constitution.
Congressional Democrats have called that decision disappointing and say
they are forming a task force of lawmakers to come up with legislation to,
as Speaker Pelosi said, "mitigate" its impact.

Democratic Congressional Campaign Committee Chairman Chris Van Hollen of
Maryland has said that one area for legislation is a ban on foreign-owned
companies indirectly spending millions of dollars in U.S. elections through
their American subsidiaries.

McLernon said U.S. subsidiaries of global companies remain subject to FEC
restrictions on campaign spending.

The rules prevent subsidiaries from using funds from foreign parent
companies for election-related spending, and bar foreign nationals from
participating in decisions on political expenditures.

"The concern over foreign influence in our political system is a red
herring," said McLernon.

An aide to Van Hollen countered, "this far-reaching and radical decision
certainly does allow multinational-corporations who aren't putting America
first to spend millions of dollars to try and buy our democracy. That's not
fear-mongering, that's the truth, and every American should be very
concerned."


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TELECOMMUNICATIONS: GOP REGULATOR URGES FCC TO DELAY ACTION ON NET RULES
By Juliana Gruenwald


Commissioner Meredith Attwell Baker Tuesday urged her FCC colleagues not
to push forward with a network neutrality proceeding until the U.S. Court
of Appeals for the District of Columbia Circuit rules on whether the agency
overstepped its authority by taking action against Comcast for certain
network management practices.

Baker, who made the comments during an event related to the Congressional
Internet Caucus' annual State of the Net conference, said the appeals court
could undermine the FCC's authority to impose tougher net neutrality
regulations.

"I think we should wait until we hear what the court says before pressing
forward," said Baker, one of the commission's two Republicans. The court
heard oral arguments in the case this month.

The case before the court revolves around Comcast's challenge to the FCC's
August 2008 action, under then-Chairman Kevin Martin, against the broadband
provider for interrupting service to customers who used high-bandwidth
applications. Comcast challenged the legal basis for the action because it
was based on a policy statement instead of formal rules.

FCC Chairman Julius Genachowski proposed in September that the agency's
four net neutrality principles be strengthened to bar network operators
from engaging in discriminatory behavior, require more disclosure about
online traffic management practices and subject violators to stepped up
enforcement. In October, the FCC voted 3-2 to tentatively approve the
proposed changes, with the commission's two Republicans voting no.

The period for initial public comment on the proposed rules closed Jan.
15, and another comment period closes March 5. The FCC plans to continue
its public workshops to explore issues raised in the proceeding well into
spring but has not indicated when it will vote.

Baker said she has reservations about Genachowski's proposal. While she
agrees on the need to keep the Internet open, she said it is not clear if
there are any "symptomatic failures that warrant government intervention."

One of the Democratic commissioners, Michael Copps, who spoke before
Baker, said after her speech that he believes the FCC needs to move forward
expeditiously with its net neutrality proceeding.

"There's not lot of time to waste when guaranteeing an open Internet," he
said.

In his comments, Copps said an open Internet, "ubiquitous" broadband
access and vigorous journalism are all key to ensuring the strength of the
democratic process.

He spent much of his remarks focusing on the importance of ensuring
journalism, in whatever form it evolves into, is preserved. "This democracy
of ours relies on a well-informed citizenry," Copps said.


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BUDGET: CONRAD CONFIDENT DEAL FOR PRESIDENTIAL PANEL WILL HOLD
By Humberto Sanchez


Senate Budget Chairman Kent Conrad Tuesday said that before the Senate
votes on legislation to raise the debt ceiling by $1.9 trillion he expects
Democrats and the White House to finalize a plan whereby President Obama
would create a commission by executive order to make recommendations to
Congress on how to cut the deficit.

"Time is running out ... so we have to search for alternatives" to deal
with cutting the deficit. The Senate is expected to complete work on the
bill Thursday, Majority Leader Reid said.

Senate Democratic leaders are working with their Republican counterparts
on an agreement to have a final vote on the debt bill this week.

Conrad's comments came after an amendment he offered to set up a similar
commission whose proposals Congress would be required to take up failed to
win the 60 votes needed to pass, as expected.

The presidential commission -- a plan developed in case the amendment
failed -- is needed to win the support of about 14 Democrats, led by
Conrad, who have said they would oppose the debt limit increase unless
Congress takes steps to cut the deficit. The debt boost needs 60 votes to
pass and must be cleared by Congress by mid-February, when the current
limit is expected to be breached.

Conrad's comments also came after CBO said Tuesday the deficit is expected
to hit $1.35 trillion in FY10, or 9.2 percent of the gross domestic
product.

Under the tentative agreement, House and Senate Democratic leaders would
pledge to take up the presidential panel's recommendations.

"What is critical is that the recommendations of the commission get a
vote," Conrad said, which he added would make a presidential commission
"credible."

The tentative deal also assumes that the Senate will pass a pending pay/go
amendment to the debt bill that would require that increases in mandatory
spending and tax cuts be offset. Giving pay/go the force of law has been a
priority for House Democratic leaders.

The Senate pay/go amendment, which needs 60 votes to pass, would exempt
patches to the alternative minimum tax and reduction of the estate taxes
for two years. Providing higher Medicare payments to physicians would be
exempted for five years. But the 2001 and 2003 tax cuts for the middle
class would not be limited. The limits on the exemptions are compromises
from the House-passed pay/go bill, which exempted all those items with no
time limits.

Conrad also said he supports the Senate pay/go amendment, but he said that
his vote is conditioned on the creation of a "credible commission put in
place."

Meanwhile, Sen. Claire McCaskill, D-Mo., a member of Conrad's group, said
she expects some Republicans to support the debt limit increase.

"The Republicans are not going to let us default on our debt," she said.

But Republicans said their support won't be forthcoming. Minority Whip Kyl
said he doubted Republicans would support the $1.9 trillion increase. Sen.
Jeff Sessions, R-Ala., said Republicans will likely react as Democrats did
when the GOP held the White House and led Congress: "You've got the
majority; it's your problem to cast the vote."

McCaskill added that the Conrad-led group is concerned that an amendment,
if passed, from Finance Chairman Max Baucus to create a similar commission
that would not require consideration by Congress could undermine the
presidential panel.

Passage of Baucus' version "makes it more difficult for the president's
version, which we think is stronger than Baucus' version," McCaskill said.

After McCaskill's comments, Reid announced on the floor that Baucus will
withdraw his amendment.

McCaskill and Sessions have also offered an amendment capping
discretionary spending to no more than a 2 percent increase a year for five
years.


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BUDGET: REACTION TO OBAMA FREEZE PROPOSAL COMES WITH CAVEATS
By Humberto Sanchez, with Darren Goode and Dan Friedman contributing


A proposal from President Obama to freeze nonsecurity discretionary
spending for the next three fiscal years in his FY11 budget got mixed
reviews even amid bipartisan calls to tackle the deficit.

The proposal is expected to save $250 billion over 10 years, but the
savings is small compared with CBO's projected $6 trillion deficit over 10
years. Defense Department spending, veterans programs, foreign aid and the
Homeland Security Department would be exempt.

Senate Majority Leader Reid said he wants to see the proposal before
passing judgment. "We have to make sure that we have money for education.
We have to make sure we have money to take care of the -- our civil
society, police, fire. We have all kinds of programs I'll look at very,
very closely," he said.

Senate Labor-HHS Appropriations Subcommittee Chairman Tom Harkin, D-Iowa,
said he favored a freeze but added that many of the programs under his
panel's jurisdiction should also be exempted.

"National security has more implications than just defense or homeland
security," Harkin said. "It has to do with the health and the welfare of
our people, the education of our kids, the safety of our streets, the
availability of jobs and economic opportunity all has to do with the
security of this country."

Sen. Sherrod Brown, D-Ohio, said that he is not sure about the proposal.

"I'm concerned that the people that are most hurting in this society may
be hurt by this, so I need to be convinced," he said.

Senate Armed Services Chairman Carl Levin said he "generally favors" the
Obama proposal and added that Congress is more apt to go along with the
idea because of the deficit. "I gotta kinda see the details, but my
instinct is that it's the right way to go," Levin said.

CBO said Tuesday the deficit is expected to hit $1.35 trillion in FY10, or
9.2 percent of the gross domestic product.

Senate Budget Chairman Kent Conrad said the freeze sends an important
signal that Obama takes the deficit seriously. While the proposal affects
about one-seventh of the budget, and amounts to "a modest contribution,"
Conrad said, "more needs to be done."

Sen. Evan Bayh, D-Ind., said "the president's commitment to freeze ...
spending is a major step" toward fiscal responsibility.

Sen. Joe Lieberman, D-Conn., said, "this is a good first step by the
president to begin getting our fiscal house in order."

Senate Budget ranking member Judd Gregg said he would likely back the
freeze.

"If the president is suggesting a real freeze in some broad areas of
discretionary spending for three years, he will have my support, especially
if he includes some kind of enforcement mechanism, such as statutory caps,
to enforce the freeze levels," Gregg said.

Other Republicans were skeptical, citing recent spending trends. "If you
take something that's an eight and you raise it to a 20, and then you
freeze it at the 20, you're still 12 over eight and that's kind of where he
is," said Sen. James Inhofe, R-Okla.

House Minority Leader Boehner called on Obama to ask Democrats to pass
legislation imposing spending caps to enforce the freeze.

"Without the adoption and enforcement of strict annual spending caps, the
federal budget deficit will continue to spiral out of control, and any
'spending freeze' is destined to be a mirage," Boehner said.


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PEOPLE: PEOPLE
By Mike Magner and Sara Jerome


SCHALL IN THE FAMILY. John Schall, a former Capitol Hill and White House
aide and a one-time candidate for Congress in Michigan, is now the deputy
CEO of the Parkinson's Action Network, the group announced Monday. Schall
started in Washington as an OMB staffer in the Reagan administration, was
legislative director for former Rep. Connie Mack III, R-Fla., and then
joined the George H.W. Bush administration as a White House domestic policy
adviser and as chief of staff at the Labor Department. He then was a chief
budget adviser for former Senate Majority Leader Bob Dole, R-Kan. In 1994,
he ran for the House seat vacated by the late Rep. William Ford, D-Mich.,
but lost to then-state Rep. Lynn Rivers, a Democrat, who went on to serve
four terms. Schall later worked for the law firm of Alston & Bird and the
National Congress for Community Economic Development. Most recently, he has
been a healthcare lobbyist for a number of companies and patient advocacy
groups.

FINANCIER. Paul Kangas, a onetime House Financial Services Committee
staffer, has been tapped to join Assurant as the vice president of federal
policy and government relations. Assurant is a major specialty insurance
provider. Kangas arrives from the Property Casualty Insurers Association of
America, where he was assistant vice president of federal government
relations. Before that, he spent five years on the Financial Services
panel, where he served as a senior professional staff member. Prior to
working in the House, he was director of the Transatlantic Policy Network.
At the Insurers, he worked on financial services regulations, the National
Flood Insurance Program and reauthorization, natural catastrophe insurance
policy, data security and the Employee Free Choice Act. He has been elected
a member of the American League of Lobbyists' board of directors, and
received his bachelor's degree from Cornell University.

MINTED. Sen. Jim DeMint, R-S.C., has tapped Amanda Carpenter as a senior
communications adviser and speechwriter. She is a former Washington Times
reporter, and has worked for Townhall.com, Townhall Magazine, Human Events
newspaper, and was a weekly writer for Glamour's election blog in 2008. She
also wrote the book "The Vast Right-Wing Conspiracy's Dossier on Hillary
Rodham Clinton," an unflattering look at Clinton. DeMint said Carpenter's
experience writing for news publications will be an asset in the position.
"She has spent years reporting on the failures of out-of-control
government, and she is committed to advancing solutions that increase
freedom and opportunity for all Americans," he said in a statement.
Carpenter graduated from Ball State University.


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POWER PLAY: REFRAMING THE DEBATE
By Margaret Kriz Hobson


Republican pollster Frank Luntz is the last person on earth that the
environmental community might be expected to consult as they struggle to
reinvigorate their campaign to pass climate change legislation.

But last week there he was, standing shoulder-to-shoulder with
Environmental Defense Fund President Fred Krupp and NRG Energy Chief
Executive Officer David Crane at the National Press Club podium. Crane is
part of an industry coalition that supports congressional action to control
U.S. global warming pollution.

Luntz' forte is formulating terminology that can redefine political policy
debates. During the Bush administration, he wrote a memo suggesting that
Republicans could dampen public concern about global warming by stating --
over and over -- that the environmentalists' proposals were loaded with
"scientific uncertainty" and would impose an "unfair economic burden" on
the nation. By embracing the Luntz approach, climate change skeptics
successfully sowed seeds of doubt on climate change and delayed federal
action.

But that was then. Now Luntz is applying his "language guidance" talents
to help the greens sell their proposals to curb greenhouse gas emissions.
Based on polling conducted at the end of 2009, Luntz said that the vast
majority of Americans believe that global warming is real and that mankind
is contributing to the problem.

However, the public is turned off by the terminology of the climate change
debate, he said. "The least important component of climate change is
climate change," Luntz argued. "Americans are more concerned about national
security. They are more concerned about the health of the environment.
They're more concerned about creating jobs in this country, particularly
new technology, innovation."

According to Luntz, Americans tend to dismiss the scare tactics that
environmentalists and global warming skeptics use to shape public opinion.
"If you really want to scare Americans, it's not about glaciers that are
melting or the struggle of the polar bear," he said. "What scares Americans
is the idea that this great technological industry will be developed in
China or India rather than here in America."

Luntz' report was released at a time when the environmental community is
waking up to the reality that the ambitious, economywide climate change
bills passed last year by the House and the Senate Environment and Public
Works Committee are dead.

In the weeks leading up to the December United Nations climate change
conference in Copenhagen, Denmark, some environmental leaders continued to
boast that they would force the Senate to pass a tough cap-and-trade
program to slash domestic pollution. Now the Copenhagen hangover has set
in, and advocates of global warming action are pondering more sober moves.

That reality was further hammered home when Massachusetts elected
Republican Scott Brown to the Senate, ending the Democrats' 60-vote
supermajority. "Many of us thought for some time that we were not going to
get a Kerry-Boxer bill or Waxman-Markey bill through the Senate," noted
Eileen Claussen, president of the Pew Center on Global Climate Change. But
the Massachusetts results forced the last holdouts to "start to think more
constructively on what actually can pass," she said.

Environmental advocates acknowledge that climate change and energy policy
are likely to be folded into more pressing congressional priorities,
notably jobs and the economy. Some proponents of global warming legislation
favor a scaled-down cap-and-trade program solely for utility companies to
discourage construction of coal-fired power plants.

Others suggest a phased-in approach that begins with the electricity
industry and adds other industrial sectors on a long-term schedule. "What
you're after in the end is low-carbon or no-carbon electricity," noted
Claussen. "So I think you're looking at a performance standard which you
could meet with any technology that gives you the [environmental] result
you're seeking. That could be through cap-and-trade or some kind of a
performance standard."

Krupp said any new approach must cut U.S. emissions of greenhouse gases
over the long term. He criticized suggestions that the energy efficiency
and renewable electricity provisions passed last year by the Senate Energy
and Natural Resources Committee would be a sufficient first step. "You take
out the declining cap [on global warming pollution] and what you have is an
energy-only bill," he said. "And that would be a failure for the
environment, a failure for the economy, and a failure of the leadership."

As the environmentalists and pro-legislation businesses decide their next
steps, they're likely to keep Luntz' advice in mind. "The American people
don't accept the status quo," he said. "The American people not only think
that we can do better as a country, they want us to do better as a country.
And they don't care whether it's Republicans or Democrats who are offering
it -- they expect more."


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POLITICAL ROUNDUP: FORMER REP. BETHUNE ENDORSES GRIFFIN

Former U.S. Attorney Tim Griffin Tuesday picked up the endorsement of
former Rep. Ed Bethune, R-Ark., in his bid for the seat Democratic Rep. Vic
Snyder will vacate.

Restaurateur Scott Wallace and David Meeks, a former insurance project
manager, are also seeking the Republican nod.

State Sen. Joyce Elliott is running on the Democratic side. Democratic
state House Speaker Robbie Wills is expected to announce today whether he
will run.

Meanwhile, Republican state Sen. Gilbert Baker, who is part of a
nine-candidate field vying to take on Sen. Blanche Lincoln, D-Ark., Tuesday
denied speculation he would seek the seat Snyder will vacate.

Some observers have said that the possible entry of GOP Rep. John Boozman
into the Senate race could prompt Baker, viewed as a leading candidate, to
seek the open House seat.


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POLITICAL ROUNDUP: ASHBURN OPTS OUT OF ANOTHER CHALLENGE OF COSTA

Republican state Sen. Roy Ashburn will not run for the seat held by Rep.
Jim Costa, D-Calif., the Bakersfield Californian reported.

Ashburn, who is term-limited, had been mentioned as a possible candidate
for the seat.

"I think people are looking for new faces and new people," Ashburn said.
"I think that was one of the messages I took out of the vote in
Massachusetts."

Republican consultant Tracy Leach said grassroots Republicans appear to be
supporting farmer Andy Vidak's bid for the seat.

"I have spoken to many of them regarding who they are backing and that's
the name I consistently hear," he said.

Costa defeated Ashburn 53-47 percent to win the open seat in 2004.


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POLITICAL ROUNDUP: MARINO TO RUN FOR CARNEY'S SEAT

Former U.S. Attorney Tom Marino announced Tuesday during a radio
appearance that he would seek the seat held by Rep. Chris Carney, D-Pa.,
the Danville News reported.

Marino made the announcement on WKSB-FM in Williamsport.

Marino joins Snyder County Commissioner Malcolm Derk in the Republican
primary.


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HILL BRIEFS: CLOTURE VOTE IS THURSDAY ON BERNANKE NOMINATION

Senate Majority Leader Reid has set a Thursday cloture vote on Federal
Reserve Chairman Bernanke's nomination for a second term, setting Bernanke
on course for confirmation following a surge of Democratic support this
week.

The step, made under an agreement with Republicans, reflects confidence
that despite vocal opposition from some Democrats last week, Bernanke now
has the votes for confirmation, aides said.

More than half of senators by late Tuesday had said they will or will
likely back Bernanke. "He has the votes to be confirmed," Sen. Judd Gregg,
R.-N.H., said Tuesday.


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HILL BRIEFS: ACORN FILMMAKER, 3 OTHERS ARRESTED AT LANDRIEU'S OFFICE

Federal authorities charged four men Tuesday for entering the New Orleans
office of Sen. Mary Landrieu, D-La., under false pretense, including the
filmmaker who made undercover videos at offices of the grassroots group
ACORN.

The Times-Picayune reported that the four, including the filmmaker James
O'Keefe, told a staffer in Landrieu's office Monday morning that they were
there to work on the phone system. Two men, Joseph Basel and Robert
Flanagan, the son of a U.S. attorney in Louisiana, were dressed in utility
clothes and hardhats, while O'Keefe and another man, Stan Dai, were already
in the office after telling a staffer they were there to see someone, the
newspaper said, citing an affidavit filed in federal court.

While O'Keefe used a cell phone to make a video, Basil and Flanagan
manipulated the main phone at the reception desk and tried to call it from
their cell phones, the affidavit said. They then asked where the telephone
closet was located and were taken to the main General Services
Administration office, where a GSA employee asked for the men's
credentials. The men said their IDs were in their vehicle and left, and
were arrested a short time later by U.S. marshals.

All four were charged with entering federal property under false pretenses
with the intent of committing a felony.

Landrieu issued a statement Tuesday calling the incident "a very unusual
situation and somewhat unsettling for me and my staff. ... I am as
interested as everyone else about their motives and purpose, which I hope
will become clear as the investigation moves forward."

O'Keefe became a conservative hero last year when he posed as a pimp and
filmed staffers in offices of the Association of Community Organizations
for Reform Now offering advice regarding a prostitution ring. Last week,
O'Keefe gave a speech at the Pelican Institute for Public Politics, a
libertarian group in New Orleans.


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HILL BRIEFS: EARLY TERMINATION FEES TARGET OF FCC INQUIRY

The FCC on Tuesday asked AT&T, Google, Sprint Nextel, T-Mobile and Verizon
Wireless to provide details about the early termination fees they charge
customers as penalties for exiting wireless service contracts early.

Google was included because the company recently released a mobile phone,
the Nexus One. The inquiry is the first launched by the agency's Consumer
Task Force, designed to enhance consumer protection.

"We hope that there is a recognition by the FCC that these fees are part
of the rate and rate structure that allows wireless carriers to, among
other things, subsidize phone purchases," the wireless association CTIA
responded in a statement. It emphasized that customers have "multiple
options when it comes [to] choosing plans and devices without early
termination fees."

[Snuffysmith]

CongressDaily PM for Wednesday, Jan. 27, 2010

--------------------
CONTENTS

ECONOMY: BOXER PITCHES MULTIPLE BILL STRATEGY
By Darren Goode and Peter Cohn


Senate Democrats are considering a plan to move an initial package of
unemployment assistance and health benefits for laid-off workers, coupled
with several infrastructure-related measures and small-business tax
incentives, before moving to a broader job-creation bill, a key senator
said today.

"People understand it better than if you put 10 things in one bill," said
Senate Environment and Public Works Chairwoman Barbara Boxer. "And I think
it should help us get passage from our colleagues on the other side."

Senate Majority Whip Durbin and Democratic Policy Committee Chairman Byron
Dorgan of North Dakota are putting the finishing touches on an $80
billion-plus package of new spending on infrastructure, energy-efficiency
and aid to states, as well as tax credits for companies that hire
unemployed workers.

That measure could be unveiled as early as Thursday after President Obama
lays out his job-creation priorities in tonight's State of the Union
address, but it might not see floor action until mid-February. At that
point, the President's Day recess and GOP opposition to tapping unspent
bank bailout funds to finance new spending could delay final approval.

Meanwhile, unemployment insurance and COBRA health subsidies will be
exhausted Feb. 28 if lawmakers do not act, which is partly driving
discussion of an initial bill.

Boxer said the measure may also include a short-term extension of surface
transportation programs, also expiring Feb. 28, and an expansion of Build
America Bonds, which are taxable bonds to finance state and local
infrastructure projects, with the interest payments partially subsidized by
the federal government.

The surface transportation fund spending would be paid for through
interest it is owed from the Treasury's general fund, she said, and
extended through the end of the year. Tax incentives for businesses could
be included as well, Boxer said, and the package would not require dipping
into Troubled Asset Relief Program funds.

"Let's see how our Republican friends react," Boxer said. "I don't know
what in that package they can find a problem with."

Some pieces could also be broken out into smaller bills, Boxer said,
although she emphasized that strategies are still being discussed and the
timing is unclear.

"We're hoping to move very quickly," she said.

Senate aides said final decisions have yet to be made and that various
options are under consideration.

The initial proposals described by Boxer are largely under the
jurisdiction of Senate Finance Chairman Max Baucus, although her panel is
working together with the Finance Committee to reauthorize highway and
transit program financing.

The surface transportation spending would be designed to tide state
highway authorities over through the spring construction season, while
Boxer's panel begins to look at a five-year reauthorization bill in March.

Other initiatives under consideration by Baucus include an extension of
the higher federal matching share for Medicaid payments authorized by last
year's stimulus bill. The House's $154 billion jobs bill passed in December
wrapped together that provision as well as unemployment insurance and COBRA
extensions and various spending on infrastructure programs and aid to
states.

But there appears to be little appetite in the Senate for tackling one
massive bill. When asked whether this is a lesson learned from the
difficulty in passing healthcare reform, Boxer said, "I just think it's the
pragmatics of getting it done."


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HEALTH: PELOSI STILL SEES 'COMPREHENSIVE' BILL
By Anna Edney, with Billy House contributing


House Speaker Pelosi insisted today Congress will pass a healthcare
overhaul, following comments Tuesday from Majority Leader Hoyer that not
passing a bill is an option.

"I don't see that as a possibility," Pelosi said of Hoyer's suggestion.
"We will have something."

"We want to pass comprehensive healthcare reform," she said, in comments
at a photo opportunity this morning for the Special Olympics. "We'll pass
it in a way that we can."

Rep. Bill Pascrell, D-N.J., said today Democratic leaders indicated
Tuesday night during a Caucus meeting they want a commitment from the
Senate to pass changes to its bill through separate legislation that would
free up the House to pass the Senate version.

"The impression I got last night was that we're still holding out hope ...
that we could take the Senate bill and in some way or form shape it,"
Pascrell said.

He added that House Democratic leaders are working to convince lawmakers
the Senate will hold up its end of the bargain. Rep. Anthony Weiner,
D-N.Y., said Pelosi conveyed late Tuesday the message that Senate Majority
Leader Reid was not sure what changes his members could get behind.

Pascrell has pushed for an approach that would employ smaller, bipartisan
bills.

"I had Republicans come to me today and say they're on board with what I'm
suggesting," he said.

Three or four GOP members offered their support, he added, selling
bipartisanship as a plan for getting health care done quickly and moving on
to economic issues.

"If there's some way to do this in a bipartisan fashion, we can expedite
the process," he said.

Pascrell suggested a conference committee should be considered to come up
with some bipartisan measures.

"The American people need to know we can read, to start, and that the
Democrats are aware of what's going on out there with the electorate,"
Pascrell added, referring to the Massachusetts Senate vote that many
believe was a referendum on Democrats' approach to health care.

Meanwhile, House Budget ranking member Paul Ryan today reintroduced a
plan, first offered in 2008, that he said would include universal access to
health care.

The updated healthcare part of his plan provides individuals a $2,300
refundable tax credit and $5,700 credit for families to purchase coverage
in any state, and it allows them to keep their coverage if they move or
change jobs. He says it makes sure people with pre-existing medical
conditions get affordable health coverage through risk pools.

His proposal also has an automatic enrollment strategy so that anyone who
interacts with government -- for example, to get a driver's license -- is
instantly enrolled into a basic healthcare insurance plan. He said he does
not yet have specific CBO coverage estimates.


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FINANCE: GEITHNER DEFENDS U.S. BAILOUT OF AIG
By Bill Swindell


Embattled Treasury Secretary Geithner today defended himself against
skeptical Republicans and Democrats on the House Oversight and Government
Reform Committee over his role in the $182 billion bailout of American
International Group and the government's decision to allow counterparty
banks to be paid billions through the rescue.

Most significantly, Geithner disputed GOP charges that he was involved in
a cover up by the Federal Reserve to fight disclosure of the big banks that
received payment as a result of the AIG action.

At the time of the rescue in fall 2008, Geithner served as president of
the New York Federal Reserve. But the Federal Reserve did not release the
names of the banks that received AIG money until March 2009, under pressure
by Congress.

"I had no role in making those decisions," Geithner said of the release of
the counterparty list.

He noted he recused himself from AIG decisions on Nov. 24, 2008, after
President-elect Obama nominated him for Treasury secretary. Before Nov. 24,
he had no discussion with Fed colleagues on whether to release the names of
the banks, he added.

House Oversight and Government Reform ranking member Darrell Issa was
skeptical, noting an e-mail from Geithner, dated March 15, 2009, to William
Dudley, Geithner's replacement at the New York Fed, that read: "Where are
you on the AIG counterparty disclosure issue?"

Geithner said he was simply inquiring where the Fed was in the process of
making a decision, noting it had been a source of controversy. He added he
thought it was appropriate that the Fed release the names of beneficiaries,
including Goldman Sachs, which got $13 billion, and Societe Generale, which
received $12 billion.

"Should that have come sooner? I think reasonable people could come to
that judgment. But I did not stand in their shoes," Geithner said of New
York Fed officials that made the decision.

But such statements did not satisfy his GOP critics.

"You have given lame excuses then; you are giving lame excuses now," said
Rep. John Mica, R-Fla., who asked why Geithner did not step down from his
post.

Even House Oversight and Government Reform Chairman Edolphus Towns said he
was disheartened by the New York Fed's action. E-mails showed that the
bank's officials directed AIG to withhold from the SEC the names of its
counterparties.

"The lack of transparency we have seen in the double bailout of AIG leads
to distrust which leads to anger," Towns said.

Neal Barofsky, special inspector general for the $700 billion Troubled
Asset Relief Program, is investigating the New York Fed's actions in the
AIG case.

Meanwhile, Democrats focused their concern on the Fed's call to hold off
on pushing the banks to accept a "haircut" instead of receiving the 100
percent they were owed through insurance like contracts that AIG could not
pay.

Rep. Stephen Lynch, D-Mass., noted that shareholders of failed investment
bank Bear Stearns received only 2 cents on the dollar, but regulators did
not leverage AIG counterparties to accept any reduced amount.

"I just think it was a terrible decision on your part," Lynch said. "It
just stinks to the high heaven what happened here. ... It makes me doubt
your commitment to the American people."

Geithner disagreed, noting the Fed's primary concern was to ensure that
AIG would not default because it could send shock waves through the
financial system and send markets reeling. Given such a dire negotiating
stance, regulators had no leverage.

"If it would be possible, we would have done it," Geithner said.

Barofsky told the panel that his investigation found that New York Fed
employees tried to persuade the counterparty banks to accept "haircuts."
But seven institutions rejected the offer, and only the Swiss bank UBS was
willing to take a 2 percent concession if the others did. Geithner then
"acquiesced" to the recommendations of senior officials at the New York Fed
to fulfill the contracts, Barofsky said, even though the market value was
48 cents on the dollar.

His investigation also found that the French banking regulator was open to
further negotiations with the Fed to discuss the possibility of concessions
because of its fear the transactions could violate French law.


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BUDGET: ELMENDORF SEES LIMITED ECONOMIC GROWTH
By Humberto Sanchez, with Billy House contributing


CBO Director Elmendorf today said the economic stimulus package enacted
last year boosted economic growth between 1.3 percent and 3.5 percent in
the second half of 2009, but he added that economic growth is expected to
be a meager 2.1 percent between the fourth quarter of 2009 and the fourth
quarter of 2010.

Appearing before the House Budget Committee to discuss the CBO's FY10
economic outlook, Elmendorf also said the stimulus package created 600,000
to 1.6 million jobs. Elmendorf stressed that the figures are relative to
what these statistics would have been without the stimulus.

"We do believe ... that the stimulus package did moderate the severity and
shorten the duration of the [economic] downturn," Elmendorf said.

The stimulus was enacted by Congress in February in response to what
economists have said was the worst economic downturn since the Great
Depression.

Republicans charge the Democrats exploited the economic crisis to push
through their agenda, including the stimulus.

They have said that the package -- which CBO now says cost $862 billion,
$75 billion more than previously estimated due in part to
higher-than-expected spending on unemployment insurance and food stamps --
did not live up to Democrats' billing, including their warning that the
unemployment rate would rise above 8 percent without it. The Labor
Department earlier this month reported the unemployment rate at 10 percent.

"Last year the Congress enacted ... a stimulus sold with the promise that
it would hold the unemployment rate below 8 percent; and yet the
unemployment rate continues to rise and now stands at a 25-year high, 10
percent," said House Budget ranking member Paul Ryan.

Ryan added that the Democratic agenda, including double-digit increases in
nondefense discretionary spending, has driven up the deficit, which CBO
estimates will be $1.35 trillion in FY10 or 9.2 percent of the gross
domestic product.

Ryan also raised concerns that without fiscal restraint the nation's
standard of living would be jeopardized.

Democrats defended that stimulus and blamed the economic policies of
former President George W. Bush and the Republican led-Congress, which they
claim sparked the recession.

Rep. Jim McGovern, D-Mass., said he finds it "ironic that the same people
that drove this economy into a ditch are now complaining about the size of
the tow truck."

"The numbers ... are daunting to say the least," said House Budget
Chairman John Spratt, adding that Congress must figure out how to lift the
economy in the short term while beginning to focus on the need to cut the
deficit down the road.

Spratt said making pay/go a law would also help Congress rein in the
deficit. Pay/go, currently a parliamentary rule, requires that increases in
mandatory spending or tax cuts be offset.

Spratt also said he is exploring targets to focus the budget to bring the
deficit down to 3 percent of GDP and the debt to 60 percent of GDP, a
threshold projected to be breeched by the end of FY10.


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HOMELAND SECURITY: DIRECTOR: NCTC HAS ANALYST SHORTAGE
By Chris Strohm


The National Counterterrorism Center does not have enough analysts to comb
through the thousands of pieces of terrorism-related information it
receives every day, even though a plan to cut millions of dollars from its
budget has been reversed, NCTC Director Michael Leiter told House lawmakers
today.

The hearing was held to review government failures associated with a
botched attempt to blow up Northwest Flight 253 on Christmas near Detroit.

The failed bombing has thrust under the microscope the government's
ability to connect disparate pieces of intelligence and prompted lawmakers
to press the Obama administration to place more people on terrorist watch
lists.

Though lawmakers want the lists expanded, the NCTC is short on analysts
and personnel who are qualified to carry out watch listing activities,
Leiter told the House Homeland Security Committee.

Ironically, only days before the Christmas incident, Leiter was notified
that 20 percent of the center's budget for analysts and watch listing
operations would be cut.

"Those initial cuts have now been canceled for us," Leiter said, adding
that the reversal is "a silver lining" amid the fallout from the failed
bombing attack.

Leiter did not say whether the administration's FY11 budget request will
include more money for analysts, saying only that he was in discussions
with Director of National Intelligence Dennis Blair and OMB. The NCTC
director said he was not trying to enlarge his turf but rather to ensure
there are enough personnel to carry out the center's work.

Funding for the center was to be reduced based on cuts made by Congress in
an enacted FY10 appropriations bill, a spokesman for Blair said. It was
determined after the bombing attempt that the center would be exempt while
other elements under the office of the DNI would absorb a larger share of
cuts, the spokesman added.

Each day, the NCTC receives more than 5,000 pieces of terrorist-related
information and reviews 5,000 names of suspected terrorists, Leiter said.

Democrats and Republicans on the Homeland Security Committee also said
they were upset that Homeland Security Secretary Napolitano did not appear
to testify today.

Napolitano originally was scheduled to be out of town and the department
and committee agreed to have the department's deputy secretary testify. But
Napolitano's schedule changed and she remained in Washington.

"It's probably fair to ask where the hell is Secretary Napolitano for this
hearing," Rep. Chris Carney, D-Pa., said. "She was invited. She needs to be
here to address something of this magnitude."

Asked for a response, a Homeland Security spokeswoman said, "It's
unfortunate that these members have chosen to raise this today. This
witness was agreed upon two weeks ago, and no concerns were raised in the
multiple conversations and briefings that the secretary, deputy secretary
and other staff have had with members and staff since then."

The spokeswoman added that Napolitano "is ready and willing to appear
before Congress, as evidenced by her two testimonies last week and four
additional hearings at which she will appear in early February."

On a related front, several Senate Republicans, including Minority Leader
McConnell, sent a letter to Attorney General Holder today demanding answers
about the decision to give Miranda rights to the suspect in the Christmas
bombing attempt.


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CAMPAIGN FINANCE: APPEALS COURT SKEPTICAL OF FEC ARGUMENTS
By Sara Jerome


The Supreme Court's watershed decision last week to strike down campaign
finance restrictions appears to be steering a lower court toward scaling
back other election money rules, appeals court arguments today in another
case indicated.

Judges of the Court of Appeals for the District of Columbia Circuit seemed
sympathetic to SpeechNow.org's stance in its lawsuit against the FEC that
political committees should not be subject to a $5,000 cap per donor on the
contributions it receives.

They were more hesitant about the argument that disclosure requirements
should be slackened for such groups, including 527 groups, since part of
the Supreme Court's decision upheld disclosure requirements.

But before a SpeechNow.org attorney even began his argument, David
Sentelle, the chief judge for the circuit court, injected the Supreme
Court's decision into today's case.

"Is there anything you'd like to add to Justice Kennedy's opinion?" he
said, referring to the 5-4 majority decision written by Justice Anthony
Kennedy that struck down bans on corporations spending on elections through
independent expenditures.

At issue are restrictions on SpeechNow.org, which makes independent
expenditures to support politicians who favor looser campaign finance
rules.

Citing the Citizens United v. FEC decision, Judge Douglas Ginsburg pointed
out that the Supreme Court found that independent expenditures "do not give
rise to corruption or the appearance of corruption," undermining a major
argument the FEC had made in its briefs.

When FEC lawyer David Folker appeared to continue down this line of
argument, Ginsburg asked, "Are you saying the Court got it wrong?"

The FEC worries that unfettered spending by such groups could give rise to
"shadow parties that take in money ... and have very close ties to the
parties," providing candidates a way to circumvent contribution limits, he
said.

Appeals court judges questioned SpeechNow.Org attorney Steven Simpson
about very little except disclosure requirements. They appeared unwilling
to accept the argument that filing with the FEC presents an enormous
burden, asking Simpson to describe specific filing procedures.

Advocates of campaign spending restrictions were disappointed with the
thrust of the court's questioning. "The case will turn on how much
SpeechNow.org fits in the box of Citizens United," said Tara Malloy,
counsel to the Campaign Legal Center. "That's unfortunate."


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AGRICULTURE: VILSACK NAMES MORE KEY DEPUTIES
By Jerry Hagstrom


Agriculture Secretary Vilsack today announced a series of appointments
with implications for the Obama administration's policies on trade
promotion and food aid, as well as for President Obama's global food
security initiative.

None of the appointees is close to farm, commodity or food-aid groups, and
they do not require Senate confirmation.

Vilsack appointed Darci Vetter as deputy undersecretary for farm and
foreign agricultural services, replacing Burnham (Bud) Philbrook, who
resigned for family reasons. Vetter is a Senate Finance Committee
Democratic staffer and previously served as director of agricultural
affairs and sustainable development at the Office of the U.S. Trade
Representative, where she also worked on trade negotiations.

Vilsack named John Brewer as administrator of the Foreign Agricultural
Service. Brewer has been the FAS associate administrator, the No. 2
position in that agency, and the acting administrator since late December,
when Vilsack reassigned the previous administrator, Michael Michener, as
his special representative in the U.S. embassy to the United Nations food
agencies in Rome.

Brewer previously worked for Booz Allen Hamilton on intelligence and
finance-related projects and for the American International Group. He also
worked on Vilsack's short-lived presidential campaign for the 2008
Democratic nomination.

To replace Brewer as associate administrator, Vilsack named Janet Nuzum, a
former International Trade Commission commissioner, House Ways and Means
staffer and aide to former Rep. Cal Dooley, D-Calif.

Nuzum was also general counsel for the International Dairy Foods
Association. Although she is taking Brewer's position as FAS associate
administrator, she will also carry the title of FAS general sales manager.

In addition, Vilsack has appointed Ann Tutwiler as his global food
security adviser, USDA Deputy Secretary Kathleen Merrigan confirmed today.
Tutwiler will report directly to Vilsack, Merrigan said. Tutwiler was an
international affairs aide to Rajiv Shah, the USDA undersecretary for
research, education and economics who recently became administrator of the
U.S. Agency for International Development.

Tutwiler was a Washington-based grants officer for the William and Flora
Hewlett Foundation and president and chief executive officer of the
International Food & Agriculture Trade Policy Council, a foundation and
agribusiness-funded group that advocates free-trade policies.


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HILL BRIEFS: BARBOUR, OTHERS ADDRESS GOP RETREAT

Senate. Mississippi Gov. Haley Barbour, who heads the Republican Governors
Association, addressed Senate Republicans at their annual issues conference
today. Aides said senators were briefed on the electoral outlook for
November and key policy issues this year. In the five-hour meeting, GOP
senators also heard from Minority Leader McConnell, National Senatorial
Republican Committee Chairman John Cornyn of Texas, and Republican
Conference Chairman Lamar Alexander of Tennessee. They were also expected
to get a House overview from House Minority Leader Boehner. Alexander gave
an upbeat review of Senate Republicans' 2009, noting GOP success derailing
Democrats' healthcare overhaul plan through unified opposition, aides said.


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HILL BRIEFS: KERRY: TRIO HAS NOT CHANGED GOALS

Environment. Senators trying to orchestrate a deal on climate and energy
policy today denied that they are now seeking a more modest proposal.
Foreign Relations Chairman John Kerry hit back against a New York Times
article stating that he, Sens. Lindsey Graham, R-S.C., and Joseph
Lieberman, D-Conn., are scaling back their ambitions this year following
the win of Sen.-elect Scott Brown, R-Mass. "Nothing could be further from
the truth," Kerry said at a forum hosted by the Natural Resources Defense
Council. "We haven't changed our goals one bit. We're simply trying to
figure out what the magic formula is to get 60 votes." He said there "are
any number of ways" of putting a price on carbon emissions and reducing
those emissions. "We're not stuck on any one idea," Kerry said. Graham also
pushed back, saying a bill remains feasible. The South Carolina senator
argued in a statement, however, that an energy bill passed by the Senate
Energy and Natural Resources Committee was too weak, and that cap-and-trade
bills passed by the House and the Senate Environment and Public Works
Committee were too onerous. But Graham echoed Lieberman in showing interest
in a "cap and dividend" bill from Sens. Maria Cantwell, D-Wash., and Susan
Collins, R-Maine. Their bill has "many attractive components," Graham said,
describing a meeting Tuesday with them as "eye opening."


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HILL BRIEFS: FED KEEPS RATES LOW

Economy. The Federal Reserve today again kept its key lending rate at a
record low level of between zero and 0.25 percent, and it pledged to keep
it there for an "extended period" to nurture the economic recovery and
reduce high unemployment. One member -- Thomas Hoenig, president of the
Federal Reserve Bank of Kansas City -- dissented from the decision, saying
the economy has improved sufficiently to drop the pledge, which has been in
place for nearly a year. The Fed also made no changes to an economic
support program aimed at driving down mortgage rates and bolstering
housing, even as reports on home sales this week pointed to a fragile
housing market.


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HILL BRIEFS: BOUCHER DETAILS HIS 2010 AGENDA

Telecommunications. House Energy and Commerce Communications Subcommittee
Chairman Rick Boucher, D-Va., today offered some details of his 2010
telecommunications agenda during a speech at the annual State of the Net
conference. In February or March, he'll formally introduce legislation
overhauling a federal fund subsidizing telecommunications service in
impoverished and rural areas, with a markup to follow. Boucher also plans
to soon circulate a bipartisan "discussion draft" of legislation designed
to strengthen online privacy protections. Regarding efforts to renew a law
governing the transmission of broadcast signals via satellite TV, Boucher
said lawmakers are homing in on a legislative vehicle. The law was extended
late last year through Feb. 28 after efforts to secure a five-year renewal
failed. Later this year, Boucher will introduce a bill to create a national
set of consumer protections for wireless phone users. He also revealed
plans for two additional oversight hearings: one, tentatively slated for
February, on the second and final round of funding under the $7.2 billion
broadband stimulus program, and another in March on the FCC's upcoming
national broadband plan. Boucher said he is encouraged by changes that both
the Agriculture and Commerce departments have made for the second round of
broadband funding in response to concerns raised by lawmakers and grant
applicants about red tape.


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HILL BRIEFS: COALITION PUSHES FOR REFORM BILL

Health. Insisting that the battle to salvage a healthcare reform bill is
"winnable," a coalition of reform interests pledged today to mount a
lobbying campaign this week to spur action on the beleaguered legislation.
The 80-member National Coalition on Health Care, whose members range from
small businesses and labor unions to churches, said at a news conference
that the struggle to reform healthcare coverage and delivery is too
important to let fail. "It would be a disaster" for the millions of
Americans without coverage or anxious over the rising costs of insurance,
said Coalition CEO Ralph Neas, "and a disaster for the American economy.
Runaway costs are bankrupting our families, our businesses, and our
governments." Ron Pollack of Families USA said about 800 activists are
gathering here this week to press Congress to rescue reform legislation.
Neas said there is a four-step legislative pathway to enacting it.
President Obama and the House and Senate should immediately resume
"compromise negotiations," then the Senate should move a budget
reconciliation bill and a "corrections" reconciliation measure that would
require a simple majority to pass. Separately, the House should tee up the
Senate-passed reform bill. After Senate passage of the corrections bill,
the House could approve the reconciliation bill and the Senate-passed
reform bill. Both bills could be sent to Obama for his signature.


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THE FINAL WORD: THE FINAL WORD

"I'm almost eating it."

-- Treasury Secretary Geithner to House Oversight and Government Reform
Chairman Edolphus Towns today as he tried to bring his microphone closer
before his testimony on the federal government's rescue of American
International Group.


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[Snuffysmith]

CongressDaily PM for Friday, Jan. 29, 2010

--------------------
CONTENTS

POLITICS: OBAMA, HOUSE FOES FACE OFF AT RETEAT
By Billy House


BALTIMORE -- President Obama went toe-to-toe with some of his toughest
critics today, engaging in an edgy and occasionally humorous give-and-take
with House Republicans at their annual issues retreat.

He accused Republicans of telling voters that he is "doing all kinds of
crazy stuff that's going to destroy America." To hear some in the GOP, he
said, some people might start to view Democratic efforts to reform health
care as some "Bolshevik plot."

Obama spoke for about 20 minutes, then, in a televised bit of political
theater, took questions from some of the GOP lawmakers.

He announced a revised plan to offer tax credits for small businesses that
expand hiring. But the thrust of his talk was an echo of Wednesday's State
of the Union address, including a plea to set aside partisan rancor and
work together on the nation's problems.

But neither he nor his Republican inquisitors pulled any punches when the
time came for questions.

Obama disagreed that Republicans had been shut out of the healthcare
debate and said he was still interested in hearing their proposals.

"I am not an ideologue," Obama said.

"I can look you in the eye and say ... we have not been obstructionists,"
said one questioner, freshman Rep. Jason Chaffetz, R-Utah.

At another point, Rep. Peter Roskam, R-Ill., who served with Obama in the
Illinois statehouse, told him that the ability he had exhibited there has
not been in "full bloom" in Washington as president.

Obama professed at one point that the back-and-forth was fun. But, he
stressed at another point, "It can't be all one way or the other."

In the end, both Obama and the Republicans seemed to score points.

"I don't think anyone could have watched that and said Republicans don't
have any solutions," said Republican Study Committee Chairman Tom Price of
Georgia, a physician who questioned Obama about health care.

Obama had the opportunity to defend his administration and to say he was
reaching out to political enemies on their turf.

The rest of the agenda for the three-day retreat, which ends Saturday, is
devoted to Republican efforts to craft a legislative and political strategy
that will position them to challenge Democratic control of the House in
November's elections, participants said.


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HOUSE RACES: BUYER, CITING WIFE'S ILLNESS, PLANS TO RETIRE
By Erin McPike


Rep. Steve Buyer, R-Ind., today said he will not seek re-election in
November, citing his wife's incurable disease.

Buyer, who is in his ninth term, announced his decision in a statement
this morning. He becomes the 15th House Republican to retire or seek other
office. He also announced his retirement from the U.S. Army Reserves.

Buyer did not offer details of the condition of his wife, Joni, but said
she had been diagnosed with what physicians called an incurable autoimmune
disease.

"While Joni's sister died 21 months ago from this disease, I will not call
it incurable because it's our faith that allows us to believe that all
diseases will be cured," he said.

In its first reports about Buyer deciding not to run -- before he
disclosed his wife's illness -- the Indianapolis Star noted that Buyer has
come under scrutiny for the Frontier Foundation scholarship group he
founded because it has not yet funded any scholarships despite holding
seven golfing fundraisers.

Buyer's district is heavily Republican and an unlikely takeover target for
Democrats, even without Buyer on the ballot. Sen. John McCain, R-Ariz.,
outpolled President Obama in the district in 2008, by 56-43 percent.

"Voters in this district have long supported conservative candidates and
values, and we are confident that these Hoosiers will continue to be
represented by a Republican who shares Congressman Buyer's record of fiscal
responsibility and limited government," said Tom Erickson, a spokesman for
the National Republican Congressional Committee.

Among the names of potential GOP candidates being floated are state Sen.
Brandt Hershman and Lt. Gov. Becky Skillman.

So far, David Sanders, a professor, is the only Democrat in the race, but
Buyer's departure could prompt others to run.

Ryan Rudominer, a spokesman for the Democratic Congressional Campaign
Committee, said the overall number of Republican retirements demonstrates
that "House Republicans continue to show a lack of confidence as Republican
retirements are mounting and their own members refuse to invest in the
NRCC."


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HEALTH: AIDE: LEADERS TO FINALIZE STRATEGY NEXT WEEK
By Anna Edney, with Dan Friedman contributing


Democratic leaders hope to decide by the end of next week how to proceed
on the healthcare overhaul, Jim Manley, a spokesman for Senate Majority
Leader Reid, said today.

House Majority Leader Hoyer indicated earlier this week a decision was
necessary in that time frame.

The overhaul was left in limbo after the special election Jan. 19 in
Massachusetts that will leave Democrats without a supermajority in the
upper chamber when GOP Sen.-elect Scott Brown is sworn in.

Reid met Thursday with other Senate leaders and key committee chairmen to
discuss what changes to the already-passed Senate bill they might be able
to move through their chamber to appease House members and persuade them to
pass the Senate bill. The leaders will take the temperature of their
Conference to see what is possible.

Reid said this morning he spoke with Speaker Pelosi today on health care
and "we are moving forward." Both leaders have been adamant the last few
days that Congress would accomplish healthcare reform.

Three major changes the House is seeking are a softening of the excise tax
on high-end insurance plans, inclusion of a national exchange, and more
generous subsidies to help consumers purchase coverage.

The reconciliation process the Senate would use to make those changes only
requires 51 votes. But it is proving controversial, with some Democrats
saying they prefer regular order rather than risk being portrayed as
participating in a shady process.

The House appears poised to move ahead on a package of smaller bills that
will work around the fringes on health care while leaders determine a path
forward on the comprehensive overhaul.

A bill stripping insurance companies of their antitrust exemption is
expected up first either this week or next. House Democrats widely support
the measure, but it faces a tougher time in the Senate.


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TRADE: KIRK: EXPORTS ARE NO-COST STIMULUS
By Peter Cohn


As trade-watchers continue to parse President Obama's remarks on the
subject in his State of the Union speech, Trade Representative Kirk is
spreading a message that could have come from the playbook of business
groups and Republican leaders: Exporting more goods and services can jolt
the U.S. economy without adding to the deficit.

"It's what we've been talking about for months: A smart, targeted export
program is a great way to help grow the economy and create jobs," Kirk said
in a brief interview on Capitol Hill Thursday. "It's stimulus without the
taxpayer having to fund it."

It was a surprise to some that trade even came up in the Wednesday speech.
As many in the Washington trade community see it, Obama's remarks aimed to
straddle the divide between business and labor and giving both sides just
enough to avoid upsetting either.

For instance, Obama mentioned a goal of doubling exports over the next
five years - something U.S. Chamber of Commerce President Tom Donohue has
also called for.

"As I tell people, success is never an orphan," Kirk allowed. But
trade-watchers said simply promoting exports was easy; the question is how
to accomplish that if overseas markets remain closed.

Obama addressed that situation as well.

"If America sits on the sidelines while other nations sign trade deals, we
will lose the chance to create jobs on our shores," he said, echoing the
Chamber.

There was also an admonition to enforce trade deals "so our trading
partners play by the rules" - a tip of the hat to the labor movement.

Then he mentioned "we'll continue to shape a Doha trade agreement," and
that "we'll strengthen our trade relations in Asia and with key partners
like South Korea and Panama and Colombia."

There Obama did two things: tout the Doha Round of global trade talks and
a proposed Trans-Pacific Partnership with Asian countries without calling
for their timely completion. And he noted the U.S. relationship with South
Korea, Panama and Colombia without mentioning stalled free-trade agreements
with those countries.

Republicans welcomed the sentiment but argued words needed to be followed
by deeds. "If we are to meet your call to double our exports over the next
five years, we must break down foreign trade barriers and that begins with
the three trade agreements at hand," Senate Finance ranking member Chuck
Grassley wrote in a letter to Obama Wednesday. "At this point, these
agreements represent one year and billions of dollars of lost sales
opportunities for U.S. exporters since you took office."

At the same time, critics of the FTAs left over from the Bush
administration thought Obama should have said more about what a new trade
policy should look like.

"He did not repeat his campaign commitments to create the new American
trade policy about which many Americans still have high expectations,
especially after the Massachusetts Senate election, given trade is an issue
that does not break down blue versus red but populist versus elite," said
Lori Wallach, director of Public Citizen's Global Trade Watch.

Kirk declined to parse his boss' statements. "You can figure that out," he
said, when asked when pending agreements would finally be submitted.

"But I think [the speech] was a public validation of all the work that
we've been doing at the president's direction to get those agreements to a
place so we can make an honest case to the American pubic that they make
sense," said Kirk. "My strong bias is to have us talking. Every time we
talk about jobs, every time we talk about recovery, we talk about the role
of exports."


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ENVIRONMENT: ADMINISTRATION ANNOUNCES EMISSIONS CUTS
By Darren Goode and Andy Leonatti


President Obama today announced the federal government will reduce its
greenhouse gas emissions 28 percent by 2020 through actions such as using
more solar energy, cutting electricity use in buildings and reducing fuel
consumption.

"As the largest energy consumer in the United States, we have a
responsibility to American citizens to reduce our energy use and become
more efficient," Obama said in a statement. "Our goal is to lower costs,
reduce pollution, and shift federal energy expenses away from oil and
toward local, clean energy."

A White House statement said the move would save $8 billion to $11 billion
in energy costs, noting that the federal government spent more than $24.5
billion on electricity and fuel in 2008.

The Natural Resources Defense Council called it "a bold target and real
leadership in the fight against global warming."

The emissions reductions would be spread out over 35 federal agencies and
are based on 2008 emission levels. The White House said emissions would be
cut by roughly 88 million metric tons and energy use would be reduced by
646 trillion British thermal units.

Each federal agency by June is required to send OMB a plan to meet the
goal.

The announcement comes a day after the United States formally notified the
United Nations it is abiding by last month's international political
climate agreement in Copenhagen, including a pledge to cut U.S. economywide
greenhouse gas emissions 17 percent below 2005 levels by 2020.

Meanwhile, in news that is likely to get a cooler welcome by environmental
groups, Energy Secretary Chu announced today the creation of a 15-member
commission to re-examine the government's nuclear waste policy. The
commission will be co-chaired by former Rep. Lee Hamilton, D-Ind., and
former National Security Adviser Brent Scowcroft.

Stressing "this is not a siting commission," Chu said the panel would help
provide recommendations on alternative storage techniques, technology and
waste disposal policy. Hamilton said the commission would produce a final
report within two years but is "hoping to move on a faster track than
that."

In a conference call, White House climate adviser Carol Browner said the
canceled storage project at Yucca Mountain in Nevada remains off the table,
"as the president has made clear many times."

In a statement, Christopher Guith, vice president of policy at the Chamber
of Commerce's Institute for 21st Century Energy, praised the decision while
noting it "was long overdue." He added all alternatives should be
considered, including reopening the Yucca Mountain project.


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FINANCE: GENSLER SHARPENS TONE ON DERIVATIVES
By Jerry Hagstrom


Commodity Futures Trading Commission Chairman Gary Gensler today signaled
the Obama administration will capitalize on anti-Wall Street sentiment as
it pushes Congress to pass strict regulation of the derivatives markets.

In prepared remarks to the American Bar Association Committee on
Derivatives and Futures Law in Naples, Fla., Gensler described a recent
visit with local tomato growers, whom he had helped a few years ago in
negotiating with Burger King higher prices for their produce.

"The proud, hardworking people in Immokalee do not use derivatives
markets," he said. "[But] their lives have been affected by the failure to
contain the risks created by Wall Street."

While acknowledging many in his audience believe that particular
regulations would hurt Wall Street as well as the public, he said he has
concluded "what's good for Wall Street is often not what's good for the
American public."

Gensler said statistics released in December by the International Bank for
Settlements strengthened the administration's argument that derivative
transactions involving end-users such as airlines and electric
cooperativess should not be exempt from trading and clearing requirements.

While industry officials have argued that end-user transactions make up
only a small part of the standardized market, Gensler said the data
revealed that an end-user exemption could leave up to 60 percent of
standardized transactions out of the transparency and clearing
requirements.

The data also showed that dealer-to-dealer transactions make up less than
40 percent of markets trading in single-currency interest rates,
over-the-counter foreign exchange derivatives, and equity-linked and
commodity derivatives.

The administration will continue to fight to bring derivatives into
regulated trading facilities and exchanges to increase transparency,
Gensler added.

"I understand that such a transparency requirement is one of the things
that Wall Street likes the least. It is only dealers that benefit from
keeping standardized trades off of transparent trading venues because
dealers can internalize the transaction information," he said. "The banks
and dealers profit from access to trading information while businesses,
municipalities, consumers and others pay the costs."

Gensler said that if Congress determines that commercial end-users should
be exempt from a clearing requirement, the exemptions should apply only to
nonfinancial entities hedging their risks and not include an exemption from
transparency.

Commercial end-users have complained that clearing would require them to
tie up capital to fulfill margin requirements, but Gensler said the trading
requirement can be separated from the clearing requirement and that modern
technology can make this separation easier. Gensler did not address the
House-passed bill or Senate deliberations on financial services directly.

The administration supported passage of the House bill, but consumer
advocates and Sen. Maria Cantwell, D-Wash., have criticized the derivatives
section as weak for allowing too many trades to escape regulation.


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LABOR: BECKER NOMINATION RENEWS NLRB FIGHT
By Terry Kivlan


The White House's recent resubmission of AFL-CIO Associate Counsel Craig
Becker's nomination to be a member of the National Labor Relations Board
has set the stage for a renewed confrontation with Sen. John McCain,
R-Ariz., over the issue.

McCain promptly responded by asking Senate Health, Education, Labor and
Pensions Chairman Tom Harkin to hold a hearing on Becker and reasserted his
opposition to the nomination.

"As you know, Mr. Becker has a long career of writings and activities that
suggest his views concerning labor-management relations are far outside the
mainstream of America," McCain said in a letter this week to Harkin. "As
such I have serious questions about whether Mr. Becker has the ability to
fairly consider important cases that come before the NLRB."

McCain said that by moving Becker's nomination, along with two
noncontroversial ones to the NLRB, straight to markup last year without a
hearing, Harkin deprived senators of the opportunity to question him in
public.

A spokesman for Harkin said the Iowa senator was reviewing McCain's letter
and conferring with HELP ranking member Mike Enzi on how to proceed. The
spokesman said Becker answered more than 280 written questions from panel
members when his nomination was pending before the committee last year.

Glenn Spencer, a spokesman for the U.S. Chamber of Commerce, which has led
the fight to block Becker, said he would be surprised if McCain
relinquished the hold. "If you are opposed to card-check, you would be
opposed to this nominee," Spencer said, referring to the labor-backed
legislation to eliminate the right of employers to insist on secret-ballot
voting in union-organizing elections.

McCain and business critics of Becker have charged that he would prevent
employers from communicating with their workers during union organizing
efforts and reduce them to bystanders.

In last year's committee markup, the panel approved by voice vote the
other two NLRB nominees -- Brian Hayes, a legal policy aide to Enzi, and
Mark Pearce, a union lawyer from Buffalo, N.Y. After McCain requested a
roll call on Becker, the panel cleared him, 15-8, with Enzi and Sen. Lisa
Murkowski, R-Alaska, voting in the affirmative.

The full Senate's failure to act on the three nominations last year
prolonged a legal limbo of the board at the beginning of 2008 when its
membership dropped to two as a result of Democratic holds placed on
President Bush's nominees.

In a ruling that cast a pall over the 80 decisions issued by the board in
recent years, a federal court of appeals said in May that the decisions of
a two-member board could not be enforced. Spencer argued that Harkin could
solve the problem by moving the nominations of Hayes and Pearce through the
full Senate.


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HILL BRIEFS: OBAMA TO SEEK $7B FOR NUCLEAR STOCKPILE

Defense. The Obama administration's FY11 budget request to Congress Monday
will include $7 billion to maintain the nation's nuclear weapons complex,
and for related purposes, Vice President Biden revealed today in an op-ed
in the Wall Street Journal. The request marks a $600 million increase over
FY10 funding. Over the next five years, Biden wrote, the Obama
administration intends to boost funding in this area by more than $5
billion. "Even in a time of tough budget decisions, these are investments
we must make for our security," he wrote. The added funding will help
strengthen the United States' ability to recruit, train and retain skilled
people, support the work of nuclear labs, and clean up and close down
facilities that are no longer needed, the column said. The request comes as
the Pentagon is completing its Nuclear Posture Review, which will be
released March 1. Meanwhile, the United States and Russia are weeks away
from concluding a nuclear arms reduction deal to succeed the Strategic Arms
Reduction Treaty, a 1991 pact that expired Dec. 5.


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HILL BRIEFS: SENATE ETHICS SAYS FOUR PROBES ARE OPEN

Ethics. The usually secretive Senate Ethics Committee said it has four
preliminary inquiries open, according to its two-page annual report
released today. It did not identify which four senators are the focal
points of those investigations. Last year, the committee continued eight
probes from 2008 and started another five based on allegations submitted to
it. The only open inquiry the committee has confirmed is an investigation
into Sen. John Ensign, R-Nev., on various charges related to assistance he
gave to the husband and family of a former aide with whose wife Ensign had
an affair. The committee last year dismissed eight probes -- including
ethics allegations against Sens. Kent Conrad, D-N.D., and Christopher Dodd,
D-Conn., and Sen. Mary Landrieu, D-La. -- and admonished Sen. Roland
Burris, D-Ill. The panel says it received 99 allegations of ethics
violations against senators in 2009 and carried over 26; 103 of the 125
were dismissed during the year.


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HILL BRIEFS: ECONOMY GREW 5.7 PERCENT IN FOURTH QUARTER

Economy. The nation's economy expanded 5.7 percent in the fourth quarter
last year, more than doubling the 2.2 percent growth in the third quarter,
according to estimates released today by the Commerce Department. But
economists expect growth to slow next year as companies finish restocking
their inventories and government stimulus efforts fade, the Associated
Press reported. Still, House Speaker Pelosi called the numbers "a sign of
economic progress, marking another step forward on the road to recovery and
job creation, clear evidence that our efforts to revitalize the economy are
starting to pay off." She added the House will continue to push initiatives
to help small businesses, improve infrastructure, overhaul healthcare
programs and tighten regulation of the financial sector.


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POLITICAL ROUNDUP: NRCC ELIMINATES ITS DEBT

National. The National Republican Congressional Committee has zeroed-out
its debt, a spokesman announced today. However, the House minority's
campaign team is starting off small in this election year. The committee
raised $3.2 million in December and spent $4.9 million -- $2 million of
which went to debt payment. The NRCC began this election year with $2.7
million in the bank.


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POLITICAL ROUNDUP: REID RAISES $2 MILLION IN 4TH QUARTER

Nevada. Senate Majority Leader Reid raised about $2 million in the fourth
quarter of last year, his campaign announced today. "Our campaign is fully
operational and ready to ensure Sen. Reid will continue his work creating
jobs and getting Nevada's economy back on track as leader of the Senate,"
said campaign manager Brandon Hall. "These resources allow the campaign to
highlight the choice they have between candidates whose rhetoric doesn't
match reality and Sen. Reid's record of delivering for all Nevada."


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POLITICAL ROUNDUP: ANOTHER REPUBLICAN JOINS OPEN RACE

South Carolina. Former Charleston County School Board member Larry
Kobrovsky, a Republican, Thursday announced he would join a crowded field
vying for the seat Rep. Henry Brown, R-S.C., will vacate, the Charleston
Post and Courier reported. "Congress is going beyond what the Constitution
allows with the economy and other things, and I think they need to be
reined in," he said. Republicans running include Isle of Palms City
Councilman Ryan Buckhannon, Charleston businessman Carroll Campbell, GOP
activist Katherine Jenerette, attorney Paul Thurmond and former Brown aide
Stovall Witte. Commercial pilot Robert Burton of Mount Pleasant,
businessman Robert Dobbs and retired accountant Dick Withington are running
on the Democratic side.


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THE FRIDAY BUZZ: POND-HOPPING
By Jerry Hagstrom


Those who fear one world government, beware. Congress and the European
Parliament might be joining forces.

In a speech this week, House Agriculture Chairman Collin Peterson revealed
he hopes to coordinate the contents of the 2012 farm bill with the European
Union's reform of its Common Agricultural Policy in 2013. His comments came
shortly after Paulo De Castro, an Italian who is the European Parliament
agriculture committee chairman, traveled to Washington and met with
Peterson.

De Castro told Peterson that under the European Union's new structure, the
parliamentary committees will have power over the European Commission, the
European Union's executive body. The Commission has dominated agriculture
policy and often been in conflict with the United States.

Peterson said De Castro wants Peterson and his committee to come to Europe
in June, to be followed by a Washington visit by De Castro's committee in
December.

"His ideas are close to mine," Peterson said.

But an inquiry to the European Commission's office in Washington revealed
the European parliamentarians might have a much broader relationship in
mind. With its new power, the European Parliament is in the process of
opening a Washington office, a commission spokesman said.

The State Department currently makes arrangements for members of Congress
overseas. But if the European Parliament has its own office in Washington,
might Congress not want its own office in Strasbourg, France, the home of
the European Parliament - and maybe with a branch in Brussels, the seat of
the commission?

There are still enough differences between the United States and Europe
that could hold up agreements on policy, but U.S. lawmakers could be
enticed by the dining possibilities in Brussels and Strasbourg. And with
its own staff across the pond, Congress would not have to put up with those
Foreign Service officers who are always complaining about taking care of
them.


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THE FRIDAY BUZZ: NOT TAKING THE BAIT
By Erin McPike


While President Obama's State of the Union criticism of the legislative
pace was widely seen as a slap at the Senate, reaction from his former
colleagues has been decidedly low key.

Obama urged the Senate to pass some of the major legislation the House has
already approved, and he complained that the "pet projects" of some
senators shouldn't stand in the way of nominations, among several other
complaints about the upper chamber.

Since Democrats control the Senate -- for the moment with the necessary 60
votes to shut down Republican filibusters -- the early betting line was
that somebody would take exception. Senate Majority Leader Reid, perhaps?
No, as it turns out.

"This may surprise you, but I've taken a few swings at the Senate myself,"
Reid said Thursday. "It's a body that is difficult to understand everything
that goes on. I think I'm a pretty good student of history and know what's
going on here. And if anyone is not, on occasion, frustrated with what goes
on here, I think their thought process may be a little faulty."

Added a Democratic Senate aide: "I don't think anyone was annoyed. I think
it served as motivation, like a challenge to get things done."


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THE FINAL WORD: THE FINAL WORD

"When you get out of Washington and you come here, it's nice to see a
functioning, well-oiled machine. That's a nice change of pace from what we
see sometimes up in Washington."

-- President Obama praising Baltimore today as he unveiled a jobs tax
credit program.


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[Snuffysmith]

CongressDaily PM for Monday, Feb. 1, 2010

--------------------
CONTENTS

BUDGET: OBAMA: LOWER DEFICIT KEY TO GROWTH
By Humberto Sanchez


With the deficit projected to hit a record $1.6 trillion, or 10.6 percent
as a share of the economy, in FY10, President Obama stressed today the need
to tame the deficit while boosting job growth.

Following the release of his $3.8 trillion FY11 budget, Obama blamed much
of the deficit on the policies of the previous administration and the
urgent need to enact the stimulus package last year, which will add $1
trillion to the debt.

"On the day my administration took office, we faced an additional $7.5
trillion in national debt by the end of this decade as a result of the
failure to pay for two large tax cuts, primarily for the wealthiest
Americans, and a new entitlement program," Obama said. "We also inherited
the worst recession since the Great Depression -- which, even before we
took any action, added an additional $3 trillion to the national debt."

The stimulus package enacted in response to the crisis, he said, added
only 10 percent to the deficit. But in the long term, "we cannot have
sustainable and durable economic growth without getting our fiscal house in
order," he said.

The White House projects the deficit will be $1.3 trillion, or 8.3 percent
of the gross domestic product in FY11, and will dip to $706 billion in
FY14, or 3.9 percent of GDP, before rising to $1 trillion in FY20, or 4.2
percent of GDP.

Among steps to lower the deficit, the budget would allow the 2001 and 2003
tax cuts to expire in 2011 for those making more than $250,000 a year,
which would reduce the deficit by almost $700 billion over 10 years.

The budget also includes a three-year freeze on nonsecurity discretionary
spending, capping it at the $446.3 billion these programs received in FY10.
In FY11, the budget projects that nonsecurity discretionary spending would
be $441.3 billion, while security spending is expected to rise to $719.2
billion, which is more than the $683.7 billion provided in FY10.

The White House also offered a proposal to cut or reduce 126 programs that
would save over $23 billion in FY11.

About $10 billion of those savings would come from 78 terminations and
reductions of discretionary programs, and 33 mandatory spending cuts and
reductions would save $240 billion over 10 years.

Big ticket items set to be eliminated include NASA's manned moon-missions
program, which would save $3.4 billion, and the C-17 air transport plane
program, which would save $2.5 billion.

These and other policies will get the deficit to 3.9 percent of GDP by
FY14. But to get it down to the administration's goal of 3 percent of GDP
by FY15, Obama will create a commission by executive order that will make
recommendations, after the November elections, on how to reduce the
deficit, such as tax increases and cutting entitlement spending. Democratic
leaders have pledged to take up the recommendations.

For job creation, the budget includes $100 billion for immediate
investments in small-business tax cuts, infrastructure and clean energy,
including a new tax cut to spur small-business hiring and wage increases.
The latter is expected to cost $33 billion.


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BUDGET: OBAMA'S BLUEPRINT GETS MUTED RECEPTION
By Dan Friedman and Billy House


President Obama's budget and his proposed freeze on nonsecurity
discretionary spending got a tepid welcome today from the House's top
Democrat while Republicans blasted it as inadequate.

Speaker Pelosi was mostly supportive of the budget plan but continued
pushing for defense spending to come under further scrutiny.

"I look forward to examining the president's proposal to freeze spending
and believe waste can be found in all departments and agencies, including
the Defense Department, so it, too, must come under scrutiny," she said.

GOP leaders gave Obama little credit for the partial spending freeze,
calling it a half-measure likely to be ignored by Democratic appropriators.

Pelosi and other Democrats have made it clear the freeze "is a nonstarter,
so today's baseline is likely to get even more costly," House Minority Whip
Cantor said.

Senate Minority Leader McConnell called the budget "more of the same -
more spending, more taxes and more debt."

Senate Budget ranking member Judd Gregg echoed McConnell's "more of the
same" view, saying "circumstances call for a bold, game-changing budget
that will turn things around."

The budget contains a potential boost for Senate Majority Leader Reid's
embattled re-election effort, with the elimination of all funding for a
nuclear waste repository at Yucca Mountain in Nevada. The Energy Department
announced it is withdrawing its request for a construction license to build
at Yucca. Reid, who is touting his clout in home-state re-election ads, has
worked for years to kill the project.

"President Obama is keeping his word to Nevada, and I thank him for
working with me as we try to find a safer solution for dealing with the
nation's nuclear waste," Reid said in a statement.

Other top Senate Democrats also pointed to the inclusion of provisions
they have pushed.

Senate Finance Chairman Max Baucus said he was pleased that "health reform
is assumed to be part" of the budget and cheered inclusion of money for an
energy manufacturing credit pushed by his committee.

House Appropriations Chairman David Obey said his panel would adhere to
Obama's bottom line but not all of his specifics.

"We will not exceed his requested level for appropriations; but we will
also not exempt any department or activity from review, including foreign
aid and the Pentagon, because none of them are without waste," he said in a
statement.

Added House Budget Chairman John Spratt, "On both the budget and the
economy, there are hard choices ahead of us, but the budget sent up by the
president today marks one more step toward moving the economy up while
bringing the deficit down."


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BUDGET: OBAMA: SHORT-TERM DEFICIT IS UNAVOIDABLE
By George E. Condon Jr.


President Obama today said record deficits in his proposed FY11 budget
were unavoidable, but he promised to reduce the red ink in future budgets
and implored lawmakers to take a "fresh look" at popular programs they have
protected from the budget ax.

Obama pinned blame for the deficit on the recession and on past
administrations and past Congresses, while taking credit for policies that
he said have lessened the impact of the recession.

Still, he warned, "We simply cannot continue to spend as if deficits don't
have consequences, as if waste doesn't matter, as if the hard-earned tax
dollars of the American people can be treated like Monopoly money, as if we
can ignore this challenge for another generation."

He challenged Congress to help tackle the deficits, saying he welcomes
ideas from both parties. But he added sharply, "What I will not welcome,
what I reject, is the same old grandstanding when the cameras are on and
the same irresponsible budget policies when the cameras are off."

It is time, he said, "to save what we can, spend what we must and live
within our means once again."

As proof that he is willing to swallow the bitter medicine he is
prescribing for others, Obama said he proposed eliminating a $120 million
program he supports that allows people to claim the earned income tax
credit in advance.

"I'm asking Republicans and Democrats alike to take a fresh look at
programs they've supported in the past to see what's working and what's not
and trim back accordingly," he said.

The president defended his failure to tackle the deficit in his first
year, saying that would have been unwise during a recession. "One year
later, because of the steps we've taken, we're in a very different place,"
he said. But, he cautioned, "we won't be able to bring down this deficit
overnight, given that the recovery is still taking hold and families across
the country still need help."

A jobs bill, for example, will cost money. And he defended some spending
increases, saying they "lay a new foundation for lasting growth."

While it would be wrong to borrow against future generations, he said it
would be just as bad "to neglect their future by failing to invest in areas
that will determine our economic success in this new century."

The numbers are particularly grim looking into future years, with OMB
Director Orszag projecting a deficit of more than $8 trillion in coming
years. Most of that, he said, stemmed from tax cuts pushed by
then-President George W. Bush in 2001 and 2003 and the Medicare
prescription drug benefit that was adopted before Obama came to the White
House.

Orszag said the economic recovery would reduce the deficit from 10 percent
of GDP to 5 percent by 2015, and congressional approval of Obama
administration proposals would reduce it to 4 percent of GDP. That would
still be short of the president's goal of 3 percent.


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TAXES: BUDGET SEES $2T HIT OVER 10 YEARS
By Peter Cohn


President Obama's budget blueprint envisions tax increases totaling about
$2 trillion over the next decade above an extension of current policies --
a figure that includes $743 billion in new revenues associated with the
yet-to-be-realized healthcare bill.

Obama's budget would continue and make permanent most of the 2001 and 2003
tax cuts for the middle class, protecting individuals earning less than
$200,000 and households making less than $250,000 a year from tax increases
looming Jan. 1. As in last year's budget, it would also make the 2009
estate tax rate and amount exempted from the alternative minimum tax
permanent.

The White House counts those policies as an extension of current law in
their budget baseline, so they do not show up as adding to the deficit. But
when congressional scorekeepers evaluate the proposals, they will add up to
a roughly $3 trillion cost to the government, net of tax increases. Much of
that would not require offsets under the new pay/go measure lawmakers are
expected to approve this week.

>From that standpoint, it would allow Democrats to argue the Obama
blueprint provides an overall net tax cut.

The budget's tax increases on upper-income earners and corporate "loophole
closers" total about $1.4 trillion over a decade. Of that figure, about
$329 billion is redirected to additional tax cuts for middle-class families
and businesses and "temporary recovery measures" to help aid the unemployed
and jolt the economy.

"After years of tax policies that have disproportionately benefited
high-income Americans and corporations, the country has been left with a
tax code that is unbalanced and insufficient to meet national needs," the
budget document reads. "The administration's agenda represents a change in
course, providing tax relief to working American families while asking
corporations and high-income families making more than $250,000 to pay more
after the economy recovers from the effects of the recent recession."

After Dec. 31, income tax rates for high earners would return to their
pre-2001 levels and capital gains and dividend rates would go up to 20
percent from the current 15 percent. Obama would also revive a proposal to
limit the value of itemized deductions for those upper-income households,
such as for charitable deductions and mortgage interest, to 28 percent. The
total tax increase on individuals and families above the $200,000/$250,000
threshold is $969 billion over a decade.

On the corporate side of the ledger, the budget revives many similar
proposals from last year and a few new ones. It would target oil, gas and
coal companies, multinationals' overseas profits, and banks and insurance
companies, as well as a handful of proposals designed to increase IRS
corporate tax collections. The total corporate tax increase is $468 billion
over a decade.

But the Obama budget includes some sweeteners. In addition to the
extension of current-law tax cuts for the middle-class, another $300
billion or so would go toward additional tax cuts for families and
businesses and "temporary recovery measures" to help aid the unemployed and
jolt the economy.

The budget plan would extend for another year, at a $61 billion cost,
Obama's signature "Making Work Pay" tax credit of up to $400 for
individuals and $800 for families.

He proposed to make that permanent last year, but Congress would now be
charged with raising taxes or cutting spending elsewhere to make up the
difference.

The budget would also provide more generous earned income tax credits and
child care credits, as well as incentives for Americans to save for
retirement and to help pay for college.

There are also extended and expanded tax breaks for companies' equipment
purchases, clean energy investments and a permanent extension of the
research and development tax credit, as well as a break on the tax
treatment of employer-provided cell phones.

A host of other expired and expiring tax breaks for individuals and
families are extended for two years, at a $46.7 billion cost.

The pain is also largely delayed overall until 2012. On net, U.S.
individual and corporate taxpayers overall would see $70 billion in tax
relief over the next two years under the combined impact of Obama's budget
plan.


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DEFENSE: OBAMA SEEKS BIG INCREASE FOR DEFENSE
By Megan Scully


The Obama administration today requested a $708.2 billion defense budget
for FY11, plus an additional $33 billion to pay for the wars in Iraq and
Afghanistan for the remainder of the fiscal year.

For FY11, the request includes $548.9 billion for the Defense Department's
base budget - an $18.2 billion, or 3.4 percent increase, over FY10 enacted
levels -- as well as $159.3 billion to pay for the wars.

Within the base budget, the Pentagon is requesting $112.9 billion for
procurement, an $8.1 billion increase over current spending. Among the
priorities are 42 F-35 Joint Strike Fighters and 52 unmanned aerial
vehicles for the Air Force and 10 ships for the Navy. There is also one
F-35 in a separate FY11 budget request for "overseas contingency
operations."

But research and development accounts took a hit, dropping about $4
billion from $80.6 billion this year to $76.7 billion in the request.

Meanwhile, the administration is seeking $200.2 billion for operations and
maintenance accounts, a $15.8 billion increase over FY10. Military
personnel accounts rose only slightly - from $135 billion this year to
$138.5 billion in the request.

As expected, the FY11 budget proposes ending Boeing Co.'s C-17 Globemaster
III cargo plane and the General Electric/Rolls Royce alternate engine for
the F-35 Joint Strike Fighter. The administration attempted to end both
programs last year, but lawmakers added them back into the enacted FY10
Defense spending bill, for a total of $3 billion.

At the Pentagon, Defense Secretary Gates said he would "strongly
recommend" that President Obama veto any bill that restores funding for
either of those two programs.

The latest budget request also ends the Third Generation Infrared
Surveillance program, which the administration expects will save $73
million. In its place, the military ultimately plans to buy upgraded
Space-Based Infrared System Satellites.

The request includes a 1.4 percent military pay increase, the smallest in
recent memory but one OMB says is "in line with those in the private
sector." The administration also is requesting an average housing increase
of 4.2 percent, as well as a variety of monthly special skill-based
payments, enlistment and re-enlistment bonuses and other benefits.

As the Bush administration did during its wartime spending requests, the
budget includes placeholder estimates for war funding of $50 billion a year
for FY12 and beyond.

But OMB stressed that the estimates "do not reflect any policy decisions
about specific military of intelligence operations, but are only intended
to indicate that some as-yet unknown costs are anticipated."

Besides the F-35 purchases, the budget restructures the program to address
concerns about cost and development. It also includes $864 million for
research and development for a new tanker for the Air Force, reflecting the
service's hopes to get the program under contract in FY11.

In addition, the Pentagon budget requests $200 million for a
next-generation bomber, and pledges $1.7 billion for the effort between
FY11 and FY15.

For the Army, the Pentagon is requesting $3.2 billion to modernize the
service's brigade combat teams -- a follow-on effort to the Future Combat
Systems, which was canceled last year.

Meanwhile, the budget includes $15.7 billion for Navy shipbuilding and
conversion accounts. The requested funds will pay full or partial costs for
10 new ships, including two Virginia class submarines, two DDG-51
destroyers, two Littoral Combat Ships, one Landing Helicopter Assault
Replacement, one Mobile Landing Platform and two Joint High Speed Vessels,
one of which is for the Army.

In addition, the budget includes $9.9 billion for missile defense
programs.


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ECONOMY: WHITE HOUSE OUTLOOK ROSIER THAN CBO
By Humberto Sanchez, with George E. Condon Jr. contributing


The White House today projected the economy will grow by 3 percent in 2010
and by 4.3 percent in 2011 and 2012 - a more optimistic outlook than what
CBO presented last week.

The White House forecast, which it presented along with its FY11 budget,
is a more robust forecast than the CBO growth rates of 2.1 percent and 2.4
percent for this year and next, respectively.

Council of Economic Advisers Chairwoman Christina Romer, who said the
projections are based on data available through mid-November, offered some
qualifications.

"All forecasts have to be understood to be subject to substantial margins
of error," she said. "Particularly in the wake of a severe downturn ...
usual patterns surely provide less guidance than in more ordinary times.
But we have certainly attempted to base the budget projections on our best
estimate of what lies ahead."

CBO attributed the muted growth to the continuing fragility of some
financial markets and institutions; the winding down of last year's
stimulus package; slow wage and jobs growth; and an excess of vacant
houses.

Romer noted that CBO assumed none of the stimulus provisions are extended,
and that Congress does not pass a new jobs bill. CBO also assumes that all
of the 2001 and 2003 tax cuts expire at year's end, whereas the Obama
administration wants to extend cuts for middle-income earners.

"CBO's report was careful to explain that under the assumption that some
of these policies will be extended, its forecast would have looked much
more similar to other forecasts," said Romer.

The White House said its projections, particularly over the next two
years, are in line with the private Blue Chip Consensus, an average of
about 50 private-sector economic forecasts. That forecast puts real GDP
growth in 2010 at 2.9 percent and 3.2 percent in 2011.

By the end of 2010, the unemployment rate will be about 9.8 percent, then
drop to 8.9 percent in 2011, Romer said. By the fourth quarter of 2012, the
White House projects it will be 7.9 percent.

"These estimates are again in the range of other forecasts, both for the
short and the medium run," Romer said.

CBO puts the 2010 unemployment rate at 10.1 percent, then falling to 9.5
percent in 2011.


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ENERGY: NO REVENUE ASSUMED FROM CLIMATE BILL
By Darren Goode


In a reversal from last year, the Obama administration is neither assuming
a specific amount of revenue in its FY11 budget request from a market-based
climate change plan nor directing any of that revenue to middle-class tax
cuts or other unrelated White House priorities.

This year's budget request includes a placeholder for any revenue earned
from charging businesses the ability to emit carbon, but it does not
contain a specific dollar figure. Last year's budget assumed that $650
billion over 10 years would be raised by auctioning emission credits, with
nearly $526 billion of that going to Obama's "Making Work Pay" middle-class
tax cut by 2019.

Senators in both parties -- including Sens. John Kerry, D-Mass., and John
McCain, R-Ariz. -- questioned that assumption, which was also used by
critics to try to undermine efforts by the administration and lawmakers to
enact a climate bill. This time, both backers and detractors of a climate
bill are praising the administration.

"These guys are learning," said GOP strategist Michael McKenna. "They
figured out the right answer is not to always lead with your chin. It
simultaneously helps your friends and denies your adversaries an opening to
attack."

"They're sounding the right tone and signaling they want it now ... but
they're leaving room for a bipartisan group of senators to figure out the
right package," said Jeremy Symons, a senior vice president at the National
Wildlife Federation.

Kerry also praised the administration, saying in a statement "it makes
sense to avoid making revenue assumptions other than to specify that
pollution reduction revenues should be used for climate-related purposes."

The budget signals an unclear path forward on the details and timing of
Senate and final climate legislation this year. Kerry and Sens. Lindsey
Graham, R-S.C., and Joe Lieberman, D-Conn., are trying to put together a
deal that might not include setting up a cap-and-trade program as called
for in a House-passed bill.

While Senate Majority Leader Reid has said there should be time on the
floor to consider a broad climate and energy plan this spring, other
legislative priorities and political difficulties in the climate
discussions might block that from happening.

The budget includes a footnote stating that any revenue earned from any
market-based program "will be deficit neutral because proceeds from
emissions allowances will be used to compensate vulnerable families,
communities and businesses during the transition to a clean energy
economy."

Funding also "will also be reserved for investments to reduce greenhouse
gas emissions, including support of clean energy technologies, and in
adapting to the impacts of climate change, both domestically and in
developing countries."

This essentially echoes a House-passed cap-and-trade bill that the
administration has so far used to dictate its own positions in
international climate talks in Copenhagen in December and discussions
continuing this year toward a climate treaty.

The budget notes that the administration will still work toward
"implementing a market-based policy" reducing greenhouse gas emissions "in
the range" of 17 percent in 2020 and more than 80 percent by 2050, again
echoing the position the administration has taken in international talks.

The budget includes specific line items designed to transition to this
type of program, including $54.5 billion for loan guarantees to construct
new nuclear power plants, an increase of $36 billion.

It also provides another $5 billion in tax credits created in last year's
stimulus bill for private investment in facilities that manufacture green
technologies and steers $545 million toward research and development into
carbon capture and storage technologies.

At the same time, the administration is proposing to eliminate 12 tax
incentives for oil, gas and coal companies, totaling nearly $39 billion.


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HILL BRIEFS: INSURERS PROTEST TERRORISM INSURANCE CUT

Finance. Insurance groups are protesting a budget provision that would
eliminate $378 million in federal subsidies over the next five fiscal years
for carriers that participate in the federal government's terrorism risk
insurance program. As part of its budget trimming, the Treasury Department
proposed eliminating the subsidies because the economy is expected to
recover this year and the insurers should be forced to pick up more of any
potential losses under the program. The program, first created in 2002 in
the aftermath of the Sept. 11, 2001, terrorist attacks, was reauthorized in
2007 and provides a federal government backstop to the market still in its
infancy. "[The law] was reauthorized for a period of seven years as the
result of a carefully negotiated compromise. Any attempt to modify this
reauthorization would have a detrimental impact on the availability and
affordability of terrorism risk insurance," said Blain Rethmeier, spokesman
for the American Insurance Association.


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HILL BRIEFS: ROKITA, HERSHMAN TO RUN FOR BUYER'S SEAT

House Races. Indiana Secretary of State Todd Rokita, a Republican, will
announce his candidacy today for the seat being vacated by Rep. Steve
Buyer, R-Ind. Kevin Kellems, an adviser to Rokita, said the candidate will
post an announcement of his candidacy on Facebook. Meanwhile, state Sen.
Brandt Hershman, who served as an aide to Buyer, said this morning he would
run, the Indianapolis Star reported. Hershman said his former boss is
endorsing him. Buyer, saying his wife has an incurable disease, announced
Friday he would not seek another term. So far, the only Democrat in the
race is David Sanders, a Purdue University biology professor. Buyer easily
defeated Sanders in both 2004 and 2006.


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HILL BRIEFS: WEST VA. INCUMBENTS FACE PRIMARIES

House Races. All three House members from West Virginia will have
opponents in this year's primaries. State Sen. Michael Oliverio, who works
for Northwestern Mutual, filed to run in the Democratic primary against
Rep. Alan Mollohan. By Saturday's deadline, six Republicans filed for the
contest -- Cindy Hall, a Realtor; David McKinley, a former state House
delegate; R. Scott Smith, a coal contractor; Thomas Stark, a small-business
owner; Daniel Swisher, a financial executive; and attorney Mac Warner.
Democratic Rep. Nick Rahall will be challenged by state Del. Ralph
Rodighiero in the primary. Republican candidates include nurse-anesthetist
Lee Bias, attorney Conrad Lucas and businessman Marty Gearheart. The West
Virginia delegation's lone Republican, Rep. Shelley Moore Capito, is being
challenged in the primary by Virginia Graf, an elementary school principal,
and David Harless, an attorney.


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THE FINAL WORD: THE FINAL WORD

"That's an economist's version of 'Told you so'."

-- CBO Director Orszag after Council of Economic Advisers Chairwoman
Christina Romer told reporters the administration's prediction of economic
growth over the past year was more accurate than the outside blue chip
forecast.


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[Snuffysmith]

CongressDaily AM for Tuesday, Feb. 2, 2010

--------------------
CONTENTS

BUDGET: BLUEPRINT RESURRECTS OBAMA PLAN TO RECLASSIFY CONTRACTORS
By Peter Cohn


President Obama's budget plan would resurrect a measure he championed as
an Illinois senator that could force companies to pay more for employee
benefits and send more tax revenues to federal coffers.

The measure is a two-for-one legislative coup, both for Obama's union
supporters and for deficit reduction. But critics argue it could stifle an
economic recovery by denying opportunities for millions of self-employed
workers, from bicycle messengers to freelance journalists to computer
technical support.

The FY11 budget blueprint would raise $7.3 billion in revenues through a
rewrite of the 1978 law that protects the status of firms employing
independent contractors. The joint proposal from the Labor and Treasury
departments would enable the IRS to require "reclassification" of workers
currently designated as contractors, making them regular employees for the
purposes of benefits and workplace protections. It also means firms would
be responsible for payroll and unemployment taxes on wages, which they can
avoid with independent contractors.

"It's a matter of equity and justice, really getting people paying the
taxes they should be responsible for and giving people the benefits that
they're entitled to," said House Ways and Means Income Security
Subcommittee Chairman Jim McDermott, D-Wash. He has introduced legislation
on the issue several times, most recently in July. "It's an issue that's
been a long time coming," McDermott said.

McDermott already had some powerful support. House Education and Labor
Chairman George Miller and Ways and Means Select Revenue Measures
Subcommittee Chairman Richard Neal, D-Mass., are co-sponsors. The Senate
version's lead author is Sen. John Kerry, D-Mass. Majority Whip Durbin was
Obama's original co-sponsor in 2007.

"Things like this sometimes have to hang around for a while for people to
think about them and begin to see, 'Well, this doesn't make sense,'"
McDermott said in an interview. He plans to raise the proposal with Ways
and Means Chairman Charles Rangel when he returns to Washington today.

According to a Treasury summary, the plan would permit the IRS to require
reclassification of workers based on a set of guidelines they would
develop. Employers would be required to give notice to new independent
contractors of how they will be classified, and of the tax, workers'
compensation, wage and hour implications.

Contractors paid more than $600 a year by a service recipient could
require their employer to withhold taxes for them so the contractor would
not have the added compliance cost.

Firms employing contractors exempted under current law would not be
affected until a year after enactment, while those with written contracts
laying out their classification would get a two-year reprieve. To enforce
the measure, the budget includes $25 million for the Labor Department to
target misclassification with 100 additional personnel.

"I'm pleased the budget addresses this issue head-on," Kerry said in a
statement. "The best way to level the playing field for America's workers
is by ensuring that they get the protections they deserve and make an
honest day's pay for an honest day's work."

The proposal is backed by unions including the AFL-CIO, Change to Win and
the International Brotherhood of Teamsters. AFL-CIO President Richard
Trumka said in a statement Monday that "the administration 'gets it' that
new jobs must be good jobs," citing "a new initiative to crack down on
businesses that misclassify their employees as independent contractors in
order to evade their responsibilities as employers."

The use of independent contractors is pervasive in industries such as
construction and home-building, as well as increasingly among high-tech
firms. FedEx Corp., the giant express delivery carrier, has been embroiled
in legal disputes over its contract drivers for years. Industry groups like
the Associated Builders and Contractors, although they declined comment for
this story, have opposed similar efforts in the past.

Advocates for small businesses and the self-employed have been among the
loudest critics. National Federation of Independent Business tax counsel
Bill Rys said the law surrounding the use of contractors could use a little
clarity. However, the administration proposal would empower the IRS to make
the determination while taking away defenses firms have if they're audited,
he said.

"You're creating a lot of uncertainty here for business owners about what
the rules will look like in terms of who is and who isn't an independent
contractor," said Rys. "You've got a lot of workers who find themselves out
of work who are able to make a certain amount of income because they are
doing contract work. So if these rules become too tight, you may be taking
away an opportunity these workers have to start their own business. ... I
think right now is an especially bad time to try to tackle something like
this."

The National Association for the Self-Employed estimates there are more
than 22 million self-employed businesses operating in the United States,
representing 78 percent of small businesses, said executive director
Kristie Arslan. She said the measure would force tiny businesses -- most of
her members have 10 or fewer employees -- into higher costs and burdensome
paperwork that they don't have the capacity for, resulting in fewer hires.

"The goal is supposed to be creating jobs, but I think that this is going
to basically put a ton of people out of work," Arslan said. "What you
should be doing is providing a favorable environment for the self-employed
to flourish, and what this proposal does is just add to their regulatory
burdens, on both sides -- for anyone who wants to use a contractor and for
those who enter self-employment and plan to contract out to other
companies."

McDermott said the goal was exactly the opposite.

"We're not trying to drive businesses into the ground or lose jobs.
There'll be all kinds of yelling and screaming about things like that, but
that really is not true," he said. "Almost every matter of equity in the
workplace has been considered the end of the free enterprise system as we
know it. Whether you're talking about workers' comp or unemployment
insurance or the eight-hour workday ... people always like the status quo,
but in fact this is not fair."


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DEFENSE: GATES SACKS F-35 MANAGER, WITHHOLDS LOCKHEED PAYMENTS
By Megan Scully


Frustrated with projected cost increases and schedule delays on the
high-stakes F-35 Joint Strike Fighter, Defense Secretary Gates announced
Monday he has replaced the head of the program and is withholding $614
million from prime contractor Lockheed Martin Corp.

Gates made the announcement as he unveiled a $708.2 billion Pentagon
budget proposal that includes $11.4 billion to buy 43 of the advanced
fighters for the Air Force, Navy and Marine Corps and support continued
research and development.

That $11.4 billion makes the F-35 the largest single weapons program in
the new budget, even though they will buy nine fewer planes than had once
been anticipated for FY11. Meanwhile, the military will continue to
restructure the program to resolve problems that have plagued it for years.

During a Pentagon briefing, Gates said he believes the F-35 is on the
right course, but added that he opted to withhold the performance fees
because "the taxpayers should not have to bear the entire burden of getting
the JSF program back on track."

Lockheed Martin agreed with the decision to withhold the fees, he said.

But Gates, who has never shied away from publicly sacking high-level
defense officials, said the government was also responsible for the
problems with the program.

"Accountability is not just about holding contractors responsible," he
said. "The Department of Defense also bears responsibility for the JSF's
troubling performance record."

The department ultimately plans to buy more than 2,400 of the planes to
replace older fighters, including the Air Force's F-16s and the Navy's
F-18s.

With Gates giving his brand of tough love to the F-35 program and other
senior officials predicting only modest increases in defense spending for
the next several years, a clear warning emerged from the Pentagon that
years of belt-tightening lay ahead.

"Reforming how and what we buy continues to be an urgent priority," Gates
said. "The department and the nation can no longer afford the quixotic
pursuit of high-tech perfection that incurs unacceptable cost and risk, nor
can the department afford to chase requirements that shift or continue to
increase throughout a program's lifecycle."

The FY11 request includes $548.9 billion for the Defense Department's base
budget -- an $18.2 billion, or 3.4 percent increase, over FY10 enacted
levels. But with inflation factored in, real growth in the base budget is
1.8 percent, officials said.

Over the next four years, the Pentagon anticipates real growth in the
defense budget to be roughly 1 percent. The Defense, Homeland Security and
Veterans Affairs departments were excluded from President Obama's
three-year discretionary spending freeze announced last week.

Pentagon Comptroller Robert Hale said department officials feel strongly
that they need "modest, real growth" to train, equip and grow a military
that is at war. But he added, they recognize the country's economic
challenges.

"We can accommodate 1 percent annual growth in the short-term and still
maintain the current forces, and we're doing it, frankly, to try to be
mindful of a serious economic problem and make our contribution to that,"
Hale said.

Procurement accounts, the low-hanging fruit in the Pentagon budget, are
not the only ones scrubbed for savings.

Hale urged Congress not to add a half-percent to the military pay raise --
an annual practice that costs the department $500 million. The
administration requested a 1.4 percent pay raise for the troops, which is
lower than recent memory but on par with the private sector, officials
said.

Meanwhile, Gates said he wants to work with Congress on a way to get
military healthcare costs under control. Lawmakers have repeatedly rejected
efforts to raise premiums or co-pays, which have not been increased since
1995.

As he did last year, Gates did not propose raising co-pays because he did
not want to be caught with a gaping budget hole if Congress blocked the
increases.

"We certainly would like to work with the Congress in figuring out a way
to try and bring some modest control to this program," he said.


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BUDGET: APPROPRIATORS WARY OF RUMBLINGS ABOUT ANY DEFENSE CUTS
By Humberto Sanchez


As Democrats increasingly call for including defense spending in the White
House's FY11 budget proposal to freeze nonsecurity discretionary funding
for three years, Senate Appropriations Chairman Daniel Inouye Monday urged
caution.

Including defense spending "is easier said than done," in part because the
nation is fighting two wars in Iraq and Afghanistan, said Inouye, who is
also chairman of the Defense Appropriations Subcommittee.

The White House proposal, unveiled in its $3.8 trillion budget Monday,
caps the spending at $447 billion, the amount nonsecurity received in FY10,
but exempts defense, homeland security, veterans' programs and foreign aid
spending.

Inouye added that he is still studying the budget, and that he expects
that "there will be a few things that we disagree with" in the budget but
said that was part of the normal process.

Inouye's comments come after House Appropriations Chairman David Obey
Monday said, "We will not exceed his requested level for appropriations;
but we will also not exempt any department or activity from review,
including foreign aid and the Pentagon, because none of them are without
waste."

Obey echoed House Speaker Pelosi, who has said that those items should
come under scrutiny.

The spending freeze was part of a raft of proposals designed to cut the
deficit by $1.2 trillion over 10 years. About $250 billion is expected to
be saved over 10 years. The White House said that the FY10 deficit would
hit a record $1.6 trillion, or 10.6 percent as a share of the economy, and
projected that the 10-year deficit will top $8.5 trillion.

Senate Legislative Branch Appropriations Subcommittee Chairman Ben Nelson,
D-Neb., also urged caution in expanding the freeze to defense.

"I am concerned when we talk about defense we are talking about overseas
operations," Nelson said. "You have to balance it all out."

However, Nelson praised the freeze as a signal that the deficit is in the
government's crosshairs.

"But going with the freeze is a good starting point," Nelson said. "This
is just the beginning of the process. This is a marathon, not a sprint.
Obviously, Congress is going to have its own view."

However, Senate Interior-Environment Appropriations Chairwoman Dianne
Feinstein, D-Calif., said she is concerned that the freeze could ultimately
short important programs.

"Interior will probably be OK, because we had a good increase last year
that can go for a while, it would seem to me, but some departments may not
be able to," Feinstein said. "In my life, in government, I have never
favored necessarily an arbitrary freeze."

She added that Congress should look to growth in entitlement programs,
which make up more half of government spending, for savings. Nondefense
discretionary spending totals about 14 percent of the budget, she said.

"You [are] essentially arguing over 14 percent of the budget and some of
these programs are really important to people," Feinstein said.

On another front, Sen. Mary Landrieu, D-La., also an appropriator, was
critical of the budget for seeking to eliminate subsidies for fossil fuels,
including oil and gas producers -- a move that the White House said would
put the nation on a path to a clean energy future and save $40 billion over
10 years.

"To transition to a low-carbon energy future, we should be increasing our
domestic energy production, while at the same time investing in the
alternative fuels and advanced batteries that will power our cars in the
future," Landrieu said. "Unfortunately, the administration's proposals
would reduce not only American oil production but also American natural gas
production. With 50 percent less emissions than coal, natural gas should
serve as the bridge to our low-carbon future. But this budget proposal
could blow up that bridge."

Meanwhile, Senate Appropriations ranking member Thad Cochran said he
expects Congress to act as an independent branch of government and develop
its own priorities.

"The president's proposals will be closely examined as the FY2011 budget
and appropriations process gets under way," Cochran said. "I expect that
many of President Obama's spending priorities and tax increase
recommendations will be viewed critically in Congress, which will have
different priorities in some areas."

House Appropriations ranking member Jerry Lewis said the budget spent too
much and will not fly with Congress.

"The American people do not want the kind of massive spending, increased
taxes and misplaced priorities that are included in President Obama's
budget," Lewis said. "In my view, this bloated, unbalanced budget request
should be dead on arrival."


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DEFENSE: GATES CONTINUES PUSH TO 'REBALANCE' U.S. MILITARY FORCES
By Otto Kreisher


A major factor in shaping the 2010 Quadrennial Defense Review was the
realization that the complexity of the current security environment and the
uncertainty of future threats requires the nation to have "a broad
portfolio of military capabilities with maximum versatility across the
widest possible spectrum of conflicts," Defense Secretary Gates said
Monday.

For that reason, the QDR and the FY11 defense budget would continue the
efforts the secretary started last year, to rebalance the military's forces
and programs to meet the current threats and to reform the way the Defense
Department does business, Michelle Flournoy, the undersecretary of defense
for policy, said later.

"If the QDR has a bumper sticker it would be 'Rebalance and Reform,'"
Flournoy said.

At separate Pentagon briefings, Gates and Flournoy emphasized the shift of
focus to prevailing in the current irregular conflicts in Iraq and
Afghanistan, instead of preparing for conventional wars against national
armies, and to making preservation of the all-volunteer military force "a
strategic imperative."

That change in focus drew considerable criticism last year, when Gates
accompanied the message with termination of some major weapons programs.
And it drew similar concerns this year.

House Armed Services ranking member Howard (Buck) McKeon praised Gates for
the emphasis on winning the current wars, but added that "choosing to win
in Iraq and Afghanistan should not mean our country must also choose to
assume greater risk in the conventional national defense challenges of
today and tomorrow."

But Gates repeated the argument he made last year, that only 10 percent of
the new budget's funding for research and procurement would pay for systems
primarily for unconventional conflicts, while the rest was for future
capabilities or could be used for either kind of conflict.

Due to the previous focus on the "out of date" requirement to maintain
forces to fight two major wars, "our highest risk was in the current fight,
not the higher capabilities," Gates said.

And Adm. Michael Mullen, chairman of the Joint Chiefs of Staff, said he
and the other service chiefs "fully support" the budget and the
recommendations of the QDR and the Ballistic Missile Defense Review, which
also was released Monday.

All the chiefs and regional combatant commanders "had a hand in the
results you see before you, and every one of them shares my enthusiasm for
the way ahead," said Mullen, who appeared beside Gates.

Despite the shift Gates called for, the QDR proposes little change in the
existing units and capabilities of the four armed services, and it calls
for big investments in some future conventional, and even nuclear,
war-fighting capabilities.

The Army would transition one of its "heavy" combat brigades, armed with
tracked Abrams tanks and Bradley Fighting Vehicles, into a lighter force
with wheeled Stryker armored troops carriers. But the QDR and the budget
supports continuation of the Army's revised program to develop a new
generation of ground combat vehicles and would add a combat aviation
brigade of armed and transport helicopters.

The Army would create the first active-duty Civil Affairs brigade, which
could be used for what critics often call "nation-building."

The Navy would maintain nearly the same array of major surface combatants
and submarines, but would increase its ability to operate in lower
intensity situations with additional Littoral Combat Ships and a fourth
squadron of small boats for riverine operations.

And while all the services are instructed to add unmanned air vehicles for
reconnaissance and intelligence, the Navy is urged to increase its unmanned
underwater capabilities.

Although it has received less attention in advance, the Ballistic Missile
Defense Review could draw as much criticism from Republicans and
conservative Democrats as parts of the QDR.

The BMDR changes the focus of missile defense from the national system to
countering the threat to deployed U.S. forces and allies, which it says "is
growing rapidly." The increasing missile capabilities of potential
adversaries, "has implications to our ability to project power, to deter
future conflicts and to prevail should deterrence fail," the review said.

"I have made defending against near-term regional threats a top priority
of our missile defense" programs and plans, Gates said in the review.

The BMDR said the nation is protected against "limited ICBM attack" and
should be safe against the emerging threat from Iran and North Korea "for
the foreseeable future."

The review proposed maintaining the current national system, which will
have 30 interceptors in Alaska and California by the end of FY10, and a
network of land- and sea-based radars. And it supports continue research on
new capabilities, including the two-stage ground-based interceptor that was
to have been deployed in Europe, and new sensors and the early-intercept
kinetic kill system to overcome countermeasures.

But, the review adds, "there is no uncertainty about the existence of
regional threats."


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FINANCE: VOLCKER: BANK LIMITS NEEDED FOR 'FAIR AND OPEN' SYSTEM
By Bill Swindell


Former Federal Reserve Chairman Paul Volcker will tell Senate Banking
Committee members today that his proposal to severely limit commercial
banks from making proprietary trades is essential to promote "fair and open
competition" in financial services.

Volcker will offer up a defense of his plan to prohibit the nation's
biggest banks from trading for their benefit rather than a client because
it is a conflict of interest that undermines the financial markets by
creating more risk in the system.

"I am not so naive as to think that all potential conflicts can or should
be expunged from banking or other businesses," Volcker says in his prepared
testimony. "But neither am I so naive as to think that, even with the best
efforts of boards and management, so-called Chinese walls can remain
impermeable against the pressures to seek maximum profit and personal
remuneration."

Volcker is testifying at the behest of President Obama, who has endorsed
his plan as part of the revamp of the financial regulatory structure
following the banking crisis. Large banks worry that it could signal a
return to the Glass-Steagall Banking Act of 1933, which prohibited
commercial banks from engaging in riskier investment banking until it was
repealed.

He chides critics who say it may be difficult to define what acts
constitute proprietary trading, noting the five U.S. banks and dozens
worldwide make such distinctions every day. "Every banker I speak with
knows very well what 'proprietary trading' means and implies," Volcker's
testimony reads. "In the past, they have sometimes explicitly labeled a
trading affiliate or division as 'proprietary,' with the connotation that
the activity is, or should be, insulated from customer relations."

Volcker argues that the United States should move forward even if other
nations have not and there is not an international consensus.

"The needed consensus remains to be tested," he says. "However, judging
from what we know and read about the attitude of a number of responsible
officials and commentators, I believe there are substantial grounds to
anticipate success as the approach is fully understood."

The Volcker proposal also would prohibit commercial banks from investing
in or owning a hedge fund or private equity group. It also expands a rule
limiting what each bank can hold in the deposit market to other financial
activities and nonbanks. The current cap is 10 percent.

Volcker is calling for broad language on the prohibition on hedge funds
and private equity, because he is sure that banks would try to circumvent
it. Recent reports say Citigroup is preparing to sell its private equity
arm.

"We do not need or want a new breed of bank-based funds that in all but
name would function as hedge or equity funds," he says in his testimony.

He also notes eight separate "potentially profitable" services that would
remain under the auspices of commercial banking.


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FINANCE: ADMINISTRATION SAYS GSE OVERHAUL BLUEPRINT COMING SOON
By Bill Swindell


The Obama administration pledged Monday to release soon a blueprint of its
overhaul of mortgage giants Fannie Mae and Freddie Mac after not including
it in the FY11 budget proposal.

HUD Secretary Donovan downplayed the omission, noting that the
administration never said that its plan would be contained in the budget,
but around the time of its release. "You shouldn't read anything into the
fact that there isn't a fuller statement in the budget document itself.
There will be a statement forthcoming very shortly," Donovan said.

Republicans have criticized the administration for not developing a plan
for an overhaul of both government-sponsored enterprises. The two GSEs were
taken over by the federal government in September 2008 during the credit
crunch, with the Treasury Department providing a lifeline of up to $200
billion to each to keep the mortgage market afloat because the two own or
guarantee 31 million home loans worth about $5.5 trillion.

The GOP ire increased when Treasury announced on Dec. 24 that it would
cover losses beyond a $200 billion limit. Treasury has provided $110.6
billion to the two firms, which purchase mortgages from lenders and either
hold them as investments or repackage them to sell off to the secondary
market. It has in turn received $6.8 billion in dividend payments.

"It is past time for the administration to reveal its long-term plans for
Fannie and Freddie," said House Financial Services ranking member Spencer
Bachus.

"Fannie and Freddie were at the epicenter of the economic meltdown and
have already cost American taxpayers over $110 billion. Americans deserve
an exit strategy, and the administration has yet to provide them with one."

Financial Services Chairman Barney Frank said last month that the
public-private structure of Fannie and Freddie should be abolished.
Nationalization or privatization of both seems politically untenable in the
political environment and shaky housing market.

But Frank said his committee will examine the future of both GSEs within a
broader range of revamping the nation's housing finance structure,
including the roles of the Federal Home Loan Bank system and Ginnie Mae.

The Mortgage Bankers Association last year announced a proposal to break
them into smaller, privately held companies that would have a government
charter to issue mortgage securities. A new government agency would then
provide a government backing on the payments.


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TRADE: THREE CONGRESSIONAL AG LEADERS WANT MORE ACTION FROM OBAMA
By Jerry Hagstrom


Three lawmakers key to farm issues Monday urged the Obama administration
to push for congressional approval of pending trade agreements with Panama,
Colombia and South Korea to help boost agricultural exports.

The comments from three of the four leaders of the House and Senate
Agriculture committees followed a statement by Agriculture Secretary
Vilsack that President Obama's State of the Union commitment to doubling
exports in five years did not mean the administration has pledged to double
exports from farms in five years.

In his address last week, Obama said, "We will double our exports over the
next five years, an increase that will support 2 million jobs in America.
To help meet this goal, we're launching a National Export Initiative that
will help farmers and small businesses increase their exports, and reform
export controls consistent with national security."

Obama also said his administration would enforce trade agreements,
"continue to shape a Doha trade agreement that opens global markets" and
"strengthen our trade relations in Asia and with key partners like South
Korea, Panama, and Colombia."

During a briefing Monday on USDA's FY11 budget proposal, Vilsack said the
president "was not suggesting by referring to agriculture that there was
going to be a doubling of agriculture exports."

Referring to pending free trade agreements, Vilsack said, "We hope they go
ahead."

Senate Agriculture Chairwoman Blanche Lincoln, who wrote Obama Friday
urging passage of the agreements, reacted Monday to Vilsack's statement.
"Opening more markets for agricultural producers will help Arkansas farmers
and rural communities who have felt the devastating effects of the current
economic climate," she said. "Approving the Colombia, South Korea and
Panama trade agreements will increase agriculture exports, create new jobs
and improve our nation's economy."

Senate Agriculture ranking member Saxby Chambliss said, "Farmers and
ranchers should not be left out of the president's agenda. U.S. agriculture
is one of the sectors that can immediately benefit from the pending free
trade agreements and increased attention to enforcement. Agriculture
already exports more than it imports and we can do more by reducing tariff
and non-tariff barriers around the world."

House Agriculture Chairman Collin Peterson was traveling Monday and could
not be reached, but Agriculture ranking member Frank Lucas called for swift
action on the pending trade agreements.

"The administration has been virtually absent on the issue despite the
fact that the potential for these markets is critically important in this
current economic climate," Lucas said. "We can't live on hope. If these
free trade agreements are to pass, the administration has to push for them
on the Hill, and it hasn't done that."

Vilsack said the administration has not determined sector targets for
increasing exports, but said that he, Trade Representative Kirk and
Commerce Secretary Locke will soon announce details of the export
initiative.

Vilsack noted that the president's budget includes some shifts in USDA
export programs and a plan to send more technical teams overseas to work
with foreign officials on export certificates and other agreements that
could remove barriers to U.S. products.


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PEOPLE: PEOPLE
By Sara Jerome


ENERGIZED. House Global Warming Chairman Edward Markey announced that
Michael Goo will become the panel's staff director and chief counsel. Gerry
Waldron, who previously held the post, is departing to return to the law
firm Covington & Burling as a partner. Waldron was a longtime Markey aide,
first working for him in 1982. He worked for Markey three times in his
career, and did work that included telecommunications and energy issues. In
a statement, Markey said Waldron "understands the nexus between legislation
and innovation better than anyone in Washington." Goo joined the committee
as a counsel a year ago. Before that, he held posts with Rep. John Dingell,
D-Mich., Senate Environment and Public Works Chairwoman Barbara Boxer, and
at the EPA.

VEEPS. Ogilvy Government Relations has tapped Justin Daly and John O'Neill
to join the firm as senior vice presidents this month. Daly most recently
served as counsel to SEC Commissioner Kathleen Casey. Before that, he was
chief securities counsel on the Senate Banking Committee, advising Banking
ranking member Richard Shelby. He was also chief securities counsel at the
House Financial Services Committee, where he advised that panel's chairman,
former Rep. Michael Oxley, R-Ohio. Prior gigs include tenures as counsel to
former Rep. Vito Fossella, R-N.Y., the late Rep. Gerald Solomon, R-N.Y.,
and a stint at the Financial Services Roundtable. O'Neill arrives from law
firm Venable, where he was a partner. He has previously served as policy
director and counsel for former Senate Minority Whip Trent Lott, R-Miss.
Before that, he was a tax counsel on the Senate Finance Committee, advising
Finance ranking member Chuck Grassley. O'Neill said the firm is structured
so that associates could be assisting with any clients throughout the
firm's repertoire. "It's all sort of cats and dogs," he said.

DEFENSIVE POSTURE. Defense Secretary Gates has announced several new
department assignments. In public affairs, Sumit Agarwal has been assigned
as deputy assistant Defense secretary for outreach and social media.
Agarwal previously worked at Google, where he was head of mobile product
management for North America. Elaine McCusker has been assigned as deputy
director for operations in the Defense comptroller's office. She previously
served there as associate director for integration programs. Guy Stratton
has been assigned as principal director for manpower and personnel in the
office of the assistant secretary of Defense for reserve affairs, office of
the undersecretary of Defense for personnel and readiness. He previously
served as a program analyst there.


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OFF TO THE RACES: TOO MUCH ALL AT ONCE
By Charlie Cook


Obviously a great deal has happened over the last year to affect the
political situation for President Obama and congressional Democrats. Some
serious mistakes and miscalculations were made by Democrats on both ends of
Pennsylvania Avenue that created some of these problems, while others were
problems that were not necessarily of Democrats' making.

Arguably, however, the series and sequence of events that laid the
groundwork for many of the Democrats' problems began before Obama was
elected. These problems started in the fall of 2008 when Lehman Brothers
fell, the worldwide credit markets seized up and President George W. Bush,
along with Treasury Secretary Henry Paulson and Federal Reserve Chairman
Bernanke, crafted and convinced Congress to pass the $700 billion Troubled
Asset Relief Program that has come under so much scrutiny.

While deficits soared over the previous eight years, with the national
debt swelling, causing consternation among many, it was TARP that sent
increasing numbers of Americans into apoplexy.

A flawed and insufficient economic stimulus package was followed by
bailouts and takeovers of banks and auto companies. Finally, a move for
significant healthcare reform and a cap-and-trade climate change bill
occurred, and concerns about the size, scope, reach and cost of government
skyrocketed, leading Obama and Democrats into the predicament they are
currently in.

Arguably, TARP may have been one of the most important ingredients in this
combination of events that created political nitroglycerin, resulting in
the series of political explosions that have been taking place since last
summer.

This week, Paulson's book, "On the Brink: Inside the Race to Stop the
Collapse of the Global Financial System," is being published and is already
creating a stir. I had the chance to speak with Paulson twice, both times
before the September 2008 financial crisis, once in July 2006 and the
second about a year or so later.

He was one of the smartest and most impressive public officials I have
ever met, which gave me comfort during those days 16 months ago when the
economy began its downturn.

While only knowing Bernanke by reputation, it was reassuring to know that
two extremely bright people were tasked with cobbling up a solution,
authorized by Bush, to do whatever it took to keep the worldwide financial
system from collapsing.

To be sure, it was trial and error, and we ended up with a tough
recession. But the system held up, and it was not the second Great
Depression that it could have been.

While Bush can legitimately be blamed for much that occurred for eight
years, in my mind he passed a major test of leadership by delegating the
responsibility to these two men and supporting them no matter how
ideologically offensive it might have been for him.

What Obama and Democrats failed to realize was that the escalation of
spending under Bush, the bailouts and the implementation of TARP created a
political environment that made significant climate change and healthcare
reform ring up "No Sale" in the minds of voters. It was too much for them
to handle when all they wanted was a focus on job creation and the economy.

The jobs package being crafted appears to be a solid one, although it
comes five months too late. One would have thought that in early August --
when the July jobless numbers were released showing a third straight month
of 9 percent unemployment -- the news would have triggered a package that
would have looked like this, along with a more robust renewal of
homebuyers' tax credits than the ones passed several months later.

Perhaps best summing up the sea change in public attitudes is the NBC
News/Wall Street Journal poll. In Obama's first full month in office, in
February 2009, the poll asked respondents whether they thought "government
should do more to solve problems and meet the needs of people" or whether
"government is doing too many things better left to business and
individuals."

Fifty one percent thought government should do more, while 40 percent
thought the government was doing too much. This was the sixth consecutive
NBC/WSJ poll that showed either a majority or a plurality wanting
government to do more. But by April, when it was asked again, the
difference was within the poll's error margin, with 47 percent saying
government should do more and 46 percent saying government was doing too
much.

In early January of this year, government doing too much held a 5-point
edge. That most recent poll of 1,002 adults was conducted Jan. 10-14 and
had a 3-point error margin.

The point of all this is to say that while the healthcare reform effort
certainly contributed to Democrats' problems, it is only part of a longer
series of events that have caused a major shift in public attitudes.
Americans want a focus on the economy and jobs, and the appetite for major
systemic change that involves the expansion of government is very different
from what it was just after the 2008 election. TARP was the effective
beginning of the sequence and health care was the straw that broke the
camel's back.


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POLITICAL ROUNDUP: PALIN ENDORSES RAND PAUL

Former Republican Alaska Gov. Sarah Palin is endorsing the son of Rep. Ron
Paul, R-Texas, in Kentucky's Senate race, the Associated Press reported.

Palin's endorsement gives eye surgeon Rand Paul an inroad into the state's
conservative Republican base that might otherwise be skeptical of an
outsider. The younger Paul has never before run for office.

Paul is running to replace retiring GOP Sen. Jim Bunning. He faces
Secretary of State Trey Grayson in the May primary.


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POLITICAL ROUNDUP: ANOTHER DEMOCRAT JUMPS IN RACE FOR GERLACH'S SEAT

Lower Merion Commissioner Brian Gordon, a Democrat, announced his bid
Sunday for the seat held by Rep. Jim Gerlach, R-Pa., Philadelphia Inquirer
reported. He will join a primary field that includes former Inquirer
editorial writer Doug Pike and physician Manan Trivedi.


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HILL BRIEFS: VITTER LIFTS HOLDS IN LA. AS U.S. ATTY. GETS POST

Sen. David Vitter, R-La., says he'll stop blocking President Obama's
nominees to be federal prosecutors and judges in his state.

Vitter had been refusing to sign off on the nominations because he wanted
assurances the White House would not fire U.S. Attorney Jim Letten in the
Eastern District, based in New Orleans. Vitter said Monday he is confident
Letten will remain in the post and he will remove his objections to the
other appointments.

Vitter says he has that confidence because Attorney General Holder on
Monday named Letten to a committee that advises on policy, management and
operational issues at the Justice Department. Letten's appointment to that
committee will expire in 2011.

Meanwhile, Letten removed himself Monday from the case of four activists
arrested last week trying to make videos and tamper with phone lines in the
New Orleans office of Sen. Mary Landrieu, D-La. Letten did not explain his
recusal, but handed off the case to assistant U.S. Attorney Jan Mann.


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HILL BRIEFS: LABOR NOMINEE ADVANCES, BUT FOUR OTHERS BLOCKED

The Senate voted 60-32 to invoke cloture on the nomination of Patricia
Smith as Labor Department solicitor despite GOP objections over what
Republicans called misleading or incorrect testimony Smith gave the Health,
Education, Labor and Pensions Committee about a program she oversaw as head
of the New York Labor Department.

The vote sets Smith on a path to likely confirmation by Wednesday. The
Senate is then expected to vote on cloture on the nomination of Martha
Johnson to head the General Services Administration. Johnson has been
stalled since July by a hold by Sen. Kit Bond, R-Mo., who was seeking a
firmer commitment that GSA will move a facility to downtown Kansas City,
Mo.

Meanwhile, Senate Majority Leader Reid attempted to get unanimous consent
for four nominees he said were critical for national security, but Sen.
Richard Shelby, R-Ala., objected.

The nominees are Clifford Stanley to be undersecretary of Defense for
personnel and readiness, Laura Kennedy to be U.S. ambassador to the
Conference on Disarmament, Philip Goldberg to be assistant secretary of
State for intelligence and research, and Caryn Wagner to be undersecretary
of Homeland Security for intelligence and analysis.


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HILL BRIEFS: APPROPS SUBCOMMITTEE CLERK IS COLLINS' NEW CHIEF OF STAFF

Sen. Susan Collins, R-Maine, announced Monday that her chief of staff will
be Mary Dietrich, previously the clerk for the Financial Services
Appropriations Subcommittee, where Collins is ranking member.

Dietrich replaces Steve Abbott, who recently left Collins' office to run
for governor of Maine.

Dietrich began as a clerk for the subcommittee in 2001, when it was the
District of Columbia Appropriations Subcommittee. She previously was a
staffer on the Labor-HHS Appropriations Subcommittee, and she was a GAO
auditor for 10 years.


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HILL BRIEFS: OBAMA PICKS EX-SENATE AIDE FOR ENERGY DEPT. HILL LIAISON

A longtime Senate aide has been tapped by President Obama to be assistant
secretary for congressional and intergovernmental affairs at the Energy
Department.

Jeffrey Lane, whose nomination for the post was sent to the Senate Monday
by the White House, has served as chief of staff for Sen. Michael Bennet,
D-Colo., and former Sens. Ken Salazar, D-Colo., and John Edwards, D-N.C.

Lane previously was a senior aide to former Senate Majority Leader Tom
Daschle, D-S.C. He began his career on Capitol Hill as legislative director
for former Sen. James Sasser, D-Tenn.

He also worked in the general counsel's office at the Small Business
Administration during the Clinton administration, and was a counsel at
Womble Carlyle Sandridge & Rice from 2002-06.


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[Snuffysmith]

CongressDaily PM for Tuesday, Feb. 2, 2010

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CONTENTS

TAXES: OBAMA BUDGET GETS HEAT FROM BOTH SIDES
By Peter Cohn


Senate Finance Committee members on both sides of the aisle took aim today
at President Obama's FY11 budget, with some of the loudest criticism coming
from Democrats.

Senators served notice that tax increases on energy companies,
multinationals and small businesses and cuts in farm subsidy programs could
face a heavy lift.

"I see a budget that puts a bull's-eye on many policies that rural America
relies on," Senate Agriculture Chairwoman Blanche Lincoln told Treasury
Secretary Geithner. "I don't know how many people you talk to, folks out
there in the real world. ... I don't know how many farms you visited or
farm country you visited. So I do want to help pass along that message that
the budget and the administration's economic policies of late provide more
questions oftentimes than they do answers."

Lincoln, who faces a potentially tough re-election bid in November, laid
into the administration's budget plan for continuing to promote a
cap-and-trade regime that could raise energy prices. She also warned the
$36.5 billion in oil and gas industry tax increases would depress domestic
production.

In addition, Lincoln said she objected to the budget's imposition of
$122.2 billion in taxes on multinationals over 10 years as well as its
inclusion of cuts to agricultural spending enacted in the 2008 farm bill.

Sen. John (Jay) Rockefeller, D-W.Va., who said his state "has a very
hostile attitude toward any changes" in federal coal policy, argued the
repeal of $2.3 billion in coal tax breaks would outweigh the budget's
investment of $545 million in clean coal technologies.

The coal tax provisions came out of a pledge made at last year's G-20
summit in Pittsburgh, Rockefeller acknowledged, but he added, "I also don't
really believe China and India are ever going to be a part of that."

Rockefeller said he is trying to pull his constituents toward a
cap-and-trade system that would reduce emissions while offsetting the
impact on coal, but that "this budget is going to make it really hard for
me" to sell changes back home.

"Thank God it's in the president's budget," he said. "The staying power
may be a week or two. We write the legislation."

Sen. Olympia Snowe, R-Maine, one of the few potential GOP partners for
Obama on various issues, lashed out at the budget's proposed tax increases
for wealthier earners, both through letting the top rates expire in January
and in the proposed healthcare bill.

"People say, 'How do I calculate the costs of doing business when I'm
hearing in Washington we're going to increase the tax rates?'" Snowe told
Geithner. "So until we get certainty on taxes, on regulation, on the issue
of health care and how that's ... boomeranging off the walls here between
the House and Senate, we're not going to experience job creation."

Geithner said the budget's proposed extension of various small-business
tax incentives, such as faster write-offs for equipment purchases and
elimination of capital gains tax on stock sales, makes it "a very powerful
package that gives assistance and clarity to small businesses on balance."
He also said only "2 to 3 percent" of small businesses would face tax
increases when the top rates expire at the end of the year.


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ECONOMY: SENATE DEM JOBS PACKAGE COMING THURSDAY
By Darren Goode, with Peter Cohn contributing


Senate Democratic leaders plan to unveil a jobs package Thursday, Senate
Democratic Policy Committee Chairman Byron Dorgan of North Dakota said this
afternoon.

"It'll be most of the things you've heard discussed," said Dorgan, who
will introduce a plan with Senate Majority Whip Durbin.

Democratic leaders initially planned to propose a menu of items to their
Conference last Thursday, but ideas proposed by President Obama in his
State of the Union address and intraparty policy and procedural differences
among Democrats delayed that introduction.

Obama today further detailed his plan for Congress to transfer $30 billion
in unused Troubled Asset Relief Program funds for new small-business
lending. He said the $30 billion would be limited to banks with assets
under $10 billion, which the White House says account for more than half of
all small-business loans nationwide.

"It's a pretty decent proposal," said Dorgan. "If you can convert some
opportunity for additional capital for small- and medium-sized businesses
you can create a lot of jobs."

House Minority Leader Boehner countered that Obama's idea is "like
offering a lollipop to a critically ill patient; it just doesn't deal with
the real problem."

Senate Finance Chairman Max Baucus has been pushing for his panel to mark
up portions of a jobs plan. When asked today whether he would hold markups,
Baucus said, "We're trying to put [a plan] together as quickly as we can
without unnecessary time delays."

The subject is expected to come up when Obama spends an hour with Senate
Democrats at a policy retreat Wednesday.

Separately, Senate Finance Committee members grilled Treasury Secretary
Geithner today on the administration's job-creation proposals.

Baucus endorsed the tax credit for new hires and wage increases, also
mentioning that Sens. Charles Schumer, D-N.Y., and Orrin Hatch, R-Utah,
have a competing proposal along similar lines.

He praised the inclusion of additional small-business tax incentives, such
as faster equipment write-offs and higher expensing limits, as well as
excluding from capital gains tax the sales of small business stock that
Sens. John Kerry, D-Mass., and Olympia Snowe, R-Maine, have endorsed.

Baucus also praised the administration for including in its FY11 budget a
permanent extension of the 2009 estate tax, which he said would provide
certainty for businesses.

He noted the interest of Senate Agriculture Chairwoman Blanche Lincoln,
Sen. Maria Cantwell, D-Wash., and Senate Minority Whip Kyl in perhaps
making the tax more generous. Cantwell and Lincoln would give Kyl and the
Republicans a majority on the Finance Committee for a lower estate tax rate
than Obama and most Democrats want.

Meanwhile, senators continue to roll out their own ideas for what should
be included. Four Democrats -- Sens. Kirsten Gillibrand of New York, Bob
Casey of Pennsylvania, Carl Levin of Michigan and Mark Begich of Alaska --
introduced a bill today providing a one-year tax credit to employers who
increase their payroll of up to 20 percent for small businesses and 15
percent for larger companies that have at least 100 full-time employees.
Casey said Monday the price tag of the tax credit is north of $20 billion.

But companies "are not going to hire a new employee if they don't have
work that needs to be done," said Bill Rys, a tax counsel for the National
Federation of Independent Business. This is the case when "there's just no
customers coming through the doors and orders to be filled," he said.


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BUDGET: GREGG BLASTS SMALL BIZ LOAN PROPOSAL
By Humberto Sanchez


A White House plan to use $30 billion in Troubled Asset Relief Program
repayments to boost small-business lending got a cold reception today from
a key Senate Republican, who said the proposal would add that amount to the
deficit.

At a hearing on President Obama's $3.8 trillion FY11 budget, Senate Budget
ranking member Judd Gregg criticized the administration for unveiling the
small-business loan proposal in Nashua, N.H., on the same day that OMB
Director Orszag appeared before the Budget Committee to call for fiscal
responsibility.

Gregg and other Republicans have blasted Democrats for using TARP for
priorities beyond stabilizing the financial industry, TARP's original goal.
Since the industry is back on its feet, they argue, TARP should be ended.

Orszag agreed the program would add to the deficit but said that access to
credit for small businesses has been too tight and that the program would
help create jobs.

An incensed Gregg interrupted Orszag.

"No. No. No. You can't make that type of statement with any legitimacy.
Let me tell you what the law says ... because you don't appear to
understand the law," Gregg said. "The monies recouped from the TARP shall
be paid into the general fund of the Treasury for the reduction of the
public debt. It is not for a piggy bank because you are concerned about
lending to small businesses, and you want to get a political event when you
go out and make a speech in Nashua."

In response, Orszag stressed the law would need to be changed by Congress.

Sen. Bernie Sanders, I-Vt., took issue with Gregg's comments but was
chastised by Budget Chairman Kent Conrad for speaking without recognition.

"I don't like being lectured on deficits when you and many members of your
party helped cause the situation we are in right now," Sanders said later,
noting the Iraq war and the 2001 and 2003 tax cuts were not paid for.

Meanwhile, Conrad said he agreed with the White House that Congress must
act to create jobs in the short-term and avoid turning too soon to reducing
the deficit. But in the long-term, when the recovery is expected to take
hold, the White House budget does not move strongly enough to take on
deficit reduction, Conrad said.

Orszag pressed the case for quick passage of healthcare reform, and he
pointed to the commission Obama will create by executive order to make
recommendations on cutting the deficit. House and Senate Democratic leaders
have pledged to take up the panel's recommendations.

But Republicans have been reluctant to support the deficit panel because
they think it will be a partisan exercise.

Conrad said he asked Vice President Biden Friday to reach out to
Republican leaders about the makeup of the panel to see whether they could
find some agreement.

Senate Republican Conference Chairman Lamar Alexander of Tennessee and
Sen. Mark Warner, D-Va., said they hope the commission proposal can be
passed by the Senate. A previous attempt to establish a congressionally
chartered panel fell seven votes short of the 60 it needed to pass.

But Conrad said it might be too late to try again, noting the commission
needs to submit its recommendations between the November elections and the
end of the year.


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DEFENSE: GATES WARNS AGAINST CUTTING FY11 BUDGET
By Megan Scully


As the Obama administration proposes a three-year domestic spending
freeze, Defense Secretary Gates warned today against any reductions to the
Pentagon's budget, arguing that the worldwide security situation requires a
continued healthy investment in the military.

During testimony before the Senate Armed Services Committee, Gates said
the Pentagon's $708.2 billion budget proposal for FY11 was within
"historical norms." The proposal includes a $548.9 billion request for the
department's base budget, a 3.4 percent increase over this year, and $159.3
billion for the wars in Iraq and Afghanistan.

"I think that situation out there in the world doesn't change, and the
world is becoming more complex and, I would say, more dangerous rather than
less so," Gates said. "There are many reasons for the deficit, and the
Defense Department certainly spends a lot of money. But if you look at
where the Defense Department is today, it is within historical norms in
terms of both GDP and percentage of the budget."

Gates warned that any "significant reductions" to the defense budget would
force the military to sacrifice its force structure.

"We cannot do it any other way," he said. "The result of that would be a
reduction in military capability and a reduction in our flexibility."

But Gates reiterated the need for spending Defense Department money wisely
and on systems the military needs.

Laying down a marker for what will likely be a battle with Congress this
year, Gates repeated a pledge he made with the budget rollout Monday that
he would "strongly recommend" that President Obama veto any Defense
Appropriations bill that continues funding for Boeing's C-17 Globemaster
III cargo plane or the General Electric/Rolls Royce alternate engine for
the F-35 Joint Strike Fighter.

The administration tried to end both programs last year, but lawmakers
added $3 billion to the enacted FY10 Defense spending bill to keep them
alive.

The Senate panel, in particular, has been divided on the alternate engine
issue, with Armed Services Chairman Carl Levin supportive of the back-up
engine, arguing that competition could bring down costs and improve
technology.

"I am disappointed, Secretary Gates, that you have announced that you will
recommend a veto if the defense bills include funding for the F-136
alternate engine," Levin said today.

Levin said he wants a study on the cost savings generated by the second
engine, now that the military has already invested billions of dollars into
its development.

Armed Services ranking member John McCain said he strongly supports the
early veto threat but said he fears it may "fall upon deaf ears up here"
unless Obama reiterates the same warning, early and consistently.


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DEFENSE: PANEL TO STUDY IMPACT OF GAY BAN REPEAL
By Megan Scully


Defense Secretary Gates today announced he is appointing a task force to
study how the military would implement a repeal of the controversial "don't
ask, don't tell" policy that bars gays from serving in the military.

The announcement was made during a hearing of the Senate Armed Services
Committee. It comes less than a week after President Obama told Congress he
plans to work with lawmakers and senior defense and military officials this
year to repeal the 1993 law, which has resulted in the discharge of an
estimated 13,500 service personnel.

Gates has tapped Pentagon General Counsel Jeh Johnson and Gen. Carter Ham,
commander of U.S. Army Europe, to lead the working group and report their
findings by the end of the year.

The group's guiding principle, Gates said, is to minimize disruption in
the ranks, with special attention paid to deployed troops. They will study
a range of issues, including any changes to benefits, base housing and
personnel policies that would be made necessary by repealing the law.

Meanwhile, the Pentagon is conducting a 45-day review to determine how to
implement the current law in a "more humane and fairer manner," Gates said.

"We believe that we have a degree of latitude within the existing law to
change our internal procedures in a manner that is more appropriate and
fair to our men and women in uniform," Gates said.

Senate Armed Services Chairman Carl Levin, who strongly supports allowing
gay men and women to serve in the military, told reporters that the FY11
defense authorization bill could carry a moratorium on enforcing the 1993
law to allow the Defense Department more time to study the issue.

"It's a question of what's achievable," he said, adding that he would
prefer a repeal.

Several Republicans on the panel argued that changing the law,
particularly during a time of war, is unnecessary and could harm unit
cohesion.

"Has this policy been ideal? No, it has not," said Armed Services ranking
member John McCain. "But it has been effective. It has helped to balance a
potentially disruptive tension between the desires of a minority and the
broader interests of our all-volunteer force."

The 1993 law is itself a compromise forged by the Joint Chiefs of Staff
and then-President Bill Clinton, who had promised repeatedly during his
campaign for the White House to end the expulsion of gays in the military.
Under that law, military commanders cannot ask about a person's sexual
orientation and military personnel must keep their homosexuality hidden.

During the 90-minute hearing, Joint Chiefs of Staff Chairman Michael
Mullen said the military must proceed carefully and address any issues that
could be disruptive to the force. But the admiral said allowing gays to
serve openly in the military is the "right thing to do."

"To me, personally, it comes down to integrity - theirs as individuals,
and ours as an institution," he said.


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CAMPAIGN FINANCE: SENATORS MULL RESPONSE TO COURT RULING
By Terry Kivlan


Advocates of campaign finance restrictions urged prompt action today on
measures to blunt the Supreme Court's recent decision lifting restrictions
on independent expenditures by corporations and labor unions in federal
elections.

Legislative remedies could include tough new disclosure rules for
companies and unions, a ban on spending by government contractors or
government bailout money recipients, a mandate requiring shareholder
approval of corporate political expenditures, and the closure of any
loophole that would allow foreign companies to funnel money in through
their domestic subsidiaries.

The court decision arose from a case filed by Citizens United, a nonprofit
advocacy group that produced a 90-minute film, "Hillary: The Movie," in
2008 to discredit the fitness of former Sen. Hillary Rodham Clinton,
D-N.Y., to serve as president.

"The court has in effect produced a Frankenstein," said Sen. Russ
Feingold, D-Wis., in testimony before the Senate Rules Committee. Feingold
said it would only take one senator losing a close election because of a
last-minute corporate advertising barrage, and "everyone will have one eye
on what might happen to them."

Sen. Dianne Feinstein, D-Calif., agreed that the threat of a corporate
campaign spending deluge would have a chilling effect on the courage of
senators. "One of the reasons we have six-year terms is so that we can be
courageous," said Feinstein, a committee member.

Another witness, Sen. John Kerry, D-Mass., urged the committee to move
corrective legislation as soon as possible and added: "But we may need to
think bigger. I think we need a constitutional amendment to make it clear
once and for all that corporations don't have the same free speech rights
as individuals."

Sen. Tom Udall, D-N.M., another committee member, offered to co-sponsor
the amendment. Senate Rules Chairman Charles Schumer said he was working on
legislation to counter the court decision and intended to introduce it in
the very near future.

Senate Rules ranking member Bob Bennett defended the decision, noting it
would merely extend to all companies the same political free speech rights
now enjoyed by corporate media entities. "All of us should have the right
to make fools of ourselves by going over the top" without having to worry
about being prosecuted for it," Bennett said.


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SCIENCE: NASA: HUMAN SPACE FLIGHT TO CONTINUE
By Otto Kreisher


NASA Administrator Charles Bolden today denied that President Obama's
decision to cancel the foundering Constellation program intended to take
astronauts to the moon and Mars was an abandonment of America's historic
leadership in manned space flight.

"We are not abandoning human space flight," Bolden told a National Press
Club audience, noting that NASA was committed to 10 more years of
operations of the International Space Station and had just hired a new
class of astronauts.

Because the Constellation program had fallen so far behind schedule due to
inadequate funding, Bolden said, with the shift to commercial human space
exploration and a big budget boost, "I think we're going to get there
quicker than we would have otherwise."

Bolden's message was reinforced by John Holden, presidential assistant for
science and technology, who said Obama was convinced "this is not a retreat
from human space flight but an exciting step forward."

While conceding that "we are departing from the model of the past," Bolden
said the technology shortfall confronting the Constellation program "is so
fundamental that incremental changes or tinkering on the margins will not
be sufficient to address current and future needs."

The former Space Shuttle astronaut also rejected concerns that the safety
of future astronauts would be compromised, noting that the firms that would
be providing and launching future manned space craft already are
responsible for launching all the government's national security and
communications satellites.

The commercial carriers also will be subjected to all of NASA's safety
standards and will have had to demonstrate safe and reliable operations of
their systems before the first manned flight, he said.

Bolden equated the future commercial manned space flights to passenger
airliners, which operate under strict government regulations and periodic
inspections.

The administrator said he was not fooling himself that carrying out this
"bold and ambitious effort" was going to be easy.

"I still have to walk to the other end of Pennsylvania Avenue," he said,
referring to Congress, where sharp protests already are being heard,
particularly from lawmakers from states with large numbers of jobs tied to
NASA programs.

But with the additional $6 billion Obama has offered NASA over the next
five years, Bolden said he believed the revised manned space program and
other NASA efforts would create more jobs. He also expressed enthusiasm
over the additional funding for scientific research that could inspire the
new generation of scientists and engineers the nation needs.

Bolden introduced five companies that would be sharing $50 million in
contracts, funded by the Recovery Act, to develop technologies needed for
commercial manned space flight.

They are Blue Origin of Kent, Wash.; Boeing Co.'s Houston-based Space
Exploration Division; Paragon Space Development Corp., of Tucson, Ariz.;
Sierra Nevada Corp., of Centennial, Colo.; and United Launch Alliance, a
partnership of Lockheed Martin Corp. and Boeing, based in Chicago.


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HILL BRIEFS: MCCONNELL'S CHIEF OF STAFF LEAVING

People. Kyle Simmons, who has been chief of staff for Senate Minority
Leader McConnell for 11 years, will leave the Senate payroll at the end of
the month. A GOP leadership aide said Simmons did not have a job lined up.
Deputy Chief of Staff Sharon Soderstrom will replace Simmons. In a
statement, McConnell said he would "deeply miss" Simmons. "Kyle has been at
my right hand through critical races in Kentucky and for the Senate
leadership," McConnell said. "He has the rare combination of political
acumen and personal grace that has made him an invaluable adviser to me and
to the entire Republican conference."


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HILL BRIEFS: POLICY NOT ON AGENDA FOR PELOSI, BOEHNER

Congressional Leadership. House leadership aides from both parties caution
that this afternoon's meeting between Speaker Pelosi and House Minority
Leader Boehner is not a watershed event aimed at rekindling bipartisanship.
While the timing is notable -- coming less than a week after President
Obama called for greater interparty cooperation in his State of the Union
speech and spoke to House Republicans at their retreat in Baltimore -- one
Democratic aide said today's meeting had been on the schedule before the
retreat took place. Aides said the meeting would deal with institutional
housekeeping topics that both parties have a say on. A House GOP aide
stressed that the meeting was not designed to discuss health care, the
budget or any other substantive issue. Another Republican aide, trying to
underscore the routine nature of the meeting, said he is not even sure why
Democrats announced that the meeting would take place. Perhaps it has
something to do with how Republicans told the president that Pelosi has
been ignoring Republicans despite Obama's talk about bipartisanship.
Republicans have "really been stiff-armed by Speaker Pelosi," Rep. Peter
Roskam, R-Ill., told Obama Friday.


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HILL BRIEFS: MURTHA IN INTENSIVE CARE AFTER SURGERY

House. House Defense Appropriations Subcommittee Chairman John Murtha,
D-Pa., is in the intensive care unit at Virginia Hospital Center in
Arlington, following complications from gall bladder surgery, his office
confirmed today. Murtha, 77, underwent a scheduled laparoscopic surgery to
remove his gall bladder last week. He was hospitalized in December after
suffering stomach pains arising from gallbladder problems, but he returned
to Capitol Hill in time to usher the final FY10 Defense Appropriations bill
to passage in the House.


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HILL BRIEFS: OBAMA MEETING WITH DEMS TO BE AIRED

Senate. Following President Obama's televised meeting last week with House
Republicans, Senate Democrats plan to televise their session with Obama at
their retreat Wednesday. Staffers said the details of the appearance were
being worked out today. The retreat will be held at the Newseum. Senate
Majority Leader Reid said the Senate would not be in session Wednesday
because of the daylong meeting.


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HILL BRIEFS: CORRECTION

An item in Monday's CongressDailyPM erroneously reported that Rep. Shelley
Moore Capito, R-W.Va., faced a primary challenge. She is unopposed in the
primary, but will face a general election opponent.


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THE FINAL WORD: THE FINAL WORD

"Yesterday was Mike Enzi's birthday. Today is John Cornyn's birthday. I
could offer a resolution commending them, but I don't know that I'd get 60
votes."

-- Sen. Tom Carper, D-Del., at today's Senate Finance hearing on President
Obama's budget.


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[Snuffysmith]

CongressDaily PM for Wednesday, Feb. 3, 2010

--------------------
CONTENTS

TAXES: NEW JOBS CREDIT GETS COOL RESPONSE
By Peter Cohn


House Ways and Means Committee Democrats today ticked off a litany of
concerns with President Obama's $33 billion tax credit proposal to
stimulate hiring, arguing the money could be put to greater use rebuilding
infrastructure and hiring civil service workers.

Panel Democrats raised their concerns with Treasury Secretary Geithner at
a hearing to review Obama's $3.8 trillion FY11 budget plan. Their comments
served as a reminder that various job-creating initiatives being considered
by the Senate will still need approval in the House, where any bill
affecting revenues must originate under the Constitution.

"Seattle needs a seawall. ... If we have an earthquake like we just had in
Haiti, the city would slide into the ocean," said Rep. Jim McDermott,
D-Wash., who also cited the need for more teachers and nurses. "Convince me
that your balance of putting money on the side of hopeful small-business
job creation [will work], because if people don't have money, they don't go
to small businesses to buy from them."

Geithner responded that the new-hires tax credit represented only
one-third of a $100 billion down payment on recovery efforts, with the rest
focused in infrastructure and aid to states to prevent layoffs.

Rep. Lloyd Doggett, D-Texas, joined in the criticism. "The general
consensus among tax experts is that the credit is a stinker because it
simply encourages people to do what they would have done anyway," he said.

Doggett added that it "distorts the market" by providing no new benefit to
firms that have kept their workers on despite great financial pressures,
adding that CBO has said this provision will be the "least-felt where
there's greatest need."

Rep. Mike Thompson, D-Calif., said: "I don't know anybody in business who
hires an employee because they're going to get a tax credit. They hire an
employee because they have work to do." He added, "At the same time, this
budget cuts the Army Corps of Engineers," citing it as an example of
neglected infrastructure investment.

Another Democrat, Rep. Earl Blumenauer of Oregon, said the cost set-aside
for business tax breaks in the budget, such as the new-hires credit, would
provide "about the fiscal headroom that would be actually necessary to fund
a transportation bill." Blumenauer is among those Democrats lobbying for a
robust multiyear surface transportation reauthorization bill, which would
require additional revenues that the White House has been reluctant to
propose.

Rep. Ron Kind, D-Wis., got into the act as well, saying that a similar
hiring credit enacted in the 1970s basically fell flat. "I guess this fits
into the category of 'We don't do anything new around here except the
history we repeat,' " he said.

Geithner allowed that the administration was ready to work with lawmakers
to structure the credit successfully. "You're right this is a controversial
proposal, and we're trying to be creative about it and pragmatic about it,"
he said.


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ECONOMY: EXPANDED MEDICAID HELP TO STATES ON TAP
By Humberto Sanchez and Anna Edney


Two Senate Democrats are determined to continue to try to help states with
additional Medicaid funds and are crafting legislation in hopes of
including it in a jobs measure looming on the Senate's calendar.

Senate Majority Leader Reid and Sen. John (Jay) Rockefeller, D-W.Va., plan
to introduce the bill this week. The senators are preparing the legislation
to ensure its passage one way or another, arguing the measure will retain
state jobs and relieve budget pressures.

States tend to look to Medicaid first when budgets are squeezed. States
and the federal government share the responsibility for funding the program
for low-income people.

The measure will extend by six months an increase in the formula used to
determine the federal match that was included in last year's economic
stimulus.

"We absolutely need these six months of relief while we weather this
economic storm. Too many families depend on this program for us to allow a
shortfall of funding," Rockefeller said today.

Rockefeller's comments come as Democrats and President Obama focus on
passing job-creation legislation. The White House included a $100 billion
placeholder for a jobs package in its FY11 budget.

Also today, Sens. Olympia Snowe, R-Maine, and John Thune, R-S.D.,
introduced legislation that would have OMB offer recommendations to
Congress within 15 days of the bill's passage to redirect unused stimulus
funds.

"Given ... that CBO is now projecting a baseline deficit of $6.047
trillion over the next 10 years, we simply cannot afford to be poor fiscal
stewards and engage in wasteful spending that will rob future generations
of prosperity," Snowe said in a release.

"This legislation will ensure the administration and Congress both remain
accountable to guarantee that each dollar we spend on stimulus either
creates jobs at a greater rate or protects displaced individuals at a lower
cost than competing policies on the table," she said.

Citing continuing high unemployment despite passage of the stimulus bill a
year ago, Thune said "now is the time to redirect some of the unobligated
stimulus funds to provide small businesses with much needed tax relief so
they can create jobs."

Under the bill, OMB would be required to promptly provide Congress with a
list of provisions from the stimulus that still have unobligated funds.
Among those programs, OMB would also have to outline funds that could be
redirected toward more effective programs to either assist the unemployed
or spur job creation.

Action on jobs creation legislation also comes as the Joint Economic
Committee plans to hold a hearing Tuesday on jobs, which will be a priority
from the panel this year, Joint Economic Chairwoman Carolyn Maloney of New
York said today.

Witnesses will include CBO Director Elmendorf; Princeton economist and
former Federal Reserve Vice Chairman Alan Blinder, and economist Mark
Zandi.


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ENERGY: OBAMA REVIVES CALL FOR BROADER BILL
By Darren Goode


President Obama today clarified he is still pushing for the Senate to do a
combined climate and energy strategy, while the top Senate Republican
working on that effort said he will not support a "half-assed energy bill."

Obama raised eyebrows Tuesday by suggesting for the first time publicly
that the Senate might end up moving an energy bill separately, and before
passing a bill that caps U.S. carbon emissions. But today he implored
Senate Democrats at a policy retreat to try to get a broader bill done.

"Don't give up on it," Obama said. "I don't want us to just say the easy
way out is for us to just give a bunch of tax credits to clean-energy
companies."

The market, Obama said, "works best when it responds to price. And if they
start seeing that ... dirty energy is a little pricier, clean energy is a
little cheaper, they will innovate."

He singled out an effort by Sens. John Kerry, D-Mass., Lindsey Graham,
R-S.C., and Joe Lieberman, D-Conn., to try to find 60 votes for a bill that
combines incentives for nuclear power, offshore drilling and other energy
items with a plan to charge businesses the right to emit carbon as a way to
limit U.S. emissions across the economy.

Graham this morning dismissed the idea of separately moving energy and
climate bills.

"If we break this apart, what you're going to do is have a watered-down
solution on both fronts," said Graham, speaking to a gathering of business
leaders lobbying Capitol Hill this week to pass a combined climate and
energy bill.

Some moderates in both parties -- including Senate Agriculture Chairwoman
Blanche Lincoln, Democratic Policy Committee Chairman Byron Dorgan of North
Dakota and Senate Budget ranking member Judd Gregg -- are pushing for the
Senate to pursue just an energy bill this year.

"If the plan is to try to pass some half-assed energy bill and say that's
moving the ball down the road, forget it with me," Graham said.

Graham was referencing an energy bill approved last year by the Senate
Energy and Natural Resources Committee that he said is "woefully
inadequate" in boosting nuclear power and does not include revenue sharing
for states who drill for oil and gas off their coasts.

Graham, Kerry and Lieberman have drafted some energy language, including
provisions on offshore oil and gas drilling and providing loan guarantees
and tax incentives for expanding nuclear power. But they are still
searching for a tentative deal on capping carbon emissions.

Graham said they are considering a hybrid approach, including parts of a
cap-and-dividend bill offered by Sens. Maria Cantwell, D-Wash., and Susan
Collins, R-Maine, that avoids creating a massive market for buying, selling
and trading of carbon emission credits called for in cap-and-trade bills
passed by the House and the Senate Environment and Public Works Committee.

"There are some aspects of that that make sense," Graham said of the
cap-and-dividend idea, which can be coupled with "the idea of a fee on
carbon for certain elements of the economy and a trading system for
others."

He added he would support the idea of including in a climate and energy
plan a bill he is co-sponsoring with Sen. Tom Carper, D-Del., and others
that would limit emissions of sulfur dioxide, nitrogen oxide and mercury.

"Congress should set the standards for pollutants ... not the EPA," he
said. "And having legislation that deals with all forms of pollution would
be good."

Carper, Graham and eight other senators plan to unveil the three-pollutant
bill Thursday.


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DEFENSE: GATES REJECTS MULTIYEAR F/A-18 DEAL
By Megan Scully


Defense Secretary Gates today shot down congressional efforts to enter
into a multiyear commitment to buy more F/A-18 aircraft for the Navy,
arguing that the deal would not save enough money to make it worthwhile.

During testimony before the House Armed Services Committee, Gates
estimated the multiyear deal would cut only 6.5 percent off the price of
each of the Boeing Co. aircraft, far less than the 10 percent savings
threshold that is customary for such long-term commitments.

The Navy's FY11 budget request, sent to Congress Monday, includes $1.9
billion to buy 22 F/A-18E/F Super Hornet carrier-based fighter jets and
$1.1 billion for 12 EA-18G Growlers, electronic attack aircraft built with
the same airframe. In FY12, the Navy plans to buy 24 more Growlers and one
Super Hornet, followed by 25 more Super Hornets in FY13.

After that, the Navy will focus its fighter procurement exclusively on
F-35 Joint Strike Fighters, which will ultimately replace the service's
older F-18s.

Multiyear procurements "don't deliver unless you've got them out over many
years. The question obviously, I think, for the F/A-18 is, when is the line
going to end?" Joint Chiefs of Staff Chairman Michael Mullen said. "It's a
great airplane. It's been a great airplane; we know that. But the JSF is
the right answer for the future from a war-fighting perspective, from my
perspective."

At the urging of the House Armed Services Committee, the FY10 defense
authorization bill includes language that allows the Navy to pursue a
multiyear deal for F/A-18s. Senate authorizers, including Armed Services
Chairman Carl Levin, had voiced concerns that the deal would not save
enough money.

Boeing has been pushing hard for the multiyear deal and has promoted it as
a cost-effective way to address an impending shortfall in the Navy's fleet
of strike fighters.

Indeed, the firm has given the Navy an unsolicited offer of 149 planes as
part of a multiyear procurement at $49.9 million apiece. But the Navy plans
to buy only 84 of the planes before shutting down production after FY13.

A Boeing spokesman did not immediately address Gates' comments on the
multiyear deal but said in a statement that the Super Hornet and Growler
programs "continue to perform as model defense acquisition programs, with
every aircraft delivered on schedule and on budget."

Armed Services Seapower Subcommittee ranking member Todd Akin, R-Mo.,
whose district is near Boeing's defense headquarters in St. Louis, today
raised concerns about the Navy's fighter shortfall, particularly as the
Pentagon restructures the F-35 amid cost and schedule problems.

"You're talking about having 10 aircraft carriers, and I would submit they
work better when you put airplanes on them," he said.

The size of the shortfall, which also affects the Marine Corps, ranges
widely, with estimates reaching as high as 243 aircraft. Gates said today
he believes the shortfall is estimated at 100 airplanes, due in part to
steps taken by the services to mitigate the problem.


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SENATE: OBAMA TELLS DEMOCRATS TO 'FINISH THE JOB'
By Dan Friedman


President Obama gave Senate Democrats a pep talk and took a few pokes at
Republicans in a televised appearance today that gave some endangered
senators a chance to score points with voters at home.

"We've got to finish the job on health care. We've got to finish the job
on regulatory reform," Obama said at the Senate Democrats' annual issues
retreat held at the Newseum. "We've got to finish the job even though it's
hard."

Arguing against political calls to "tread lightly" and "keep your head
down and play it safe" in the wake of the Massachusetts special election
that will cost Democrats a key 60th vote, Obama told the senators that
improving health care was the kind of step many of them sought office to
take.

While much attention is paid to the fact that Sen.-elect Scott Brown,
R-Mass., will give the GOP a filibuster-blocking 41st vote when he is
sworn, Obama said it was important to remember that Democrats would go from
having "the largest Senate majority in a generation to the second-largest
Senate majority in a generation."

Obama, who last week called for more bipartisanship when he spoke at the
House Republican retreat, today accused Senate Republicans of launching
more filibusters in this session than the Senate faced from 1950 to 1969,
and of trying to "gum up the works" by forcing cloture even on bills that
eventually pass easily.

The president cited a pending cloture vote on Martha Johnson's nomination
to head the General Services Administration. The nomination has been
stalled since July because of a hold by Sen. Kit Bond, R-Mo., that does not
relate to her job qualifications.

A spokesman for Senate Minority Leader McConnell said "that line of
discussion doesn't grow jobs or stop terrorists" and suggested McConnell
had little power to limit holds because of unanimous consent rules that
allow any senator to slow a nominee.

Obama also appeared to fault the deal-making process that Senate Majority
Leader Reid used to move the healthcare bill, urging Democrats to continue
embracing transparency. "Some of that transparency got lost, and I think we
paid a price for it," Obama said.

When Obama opened the floor to questions, Reid called on senators who are
running for another term in November, including a number who face
potentially tough challenges, like Sens. Arlen Specter of Pennsylvania,
Michael Bennet of Colorado, Blanche Lincoln of Arkansas, Kirsten Gillibrand
of New York and Evan Bayh of Indiana.

Specter asked Obama to commit to toughening trade laws that he said
allowed China to dump exports in the United States, winning sympathy but no
commitments from the president.

Bayh asked Obama to explain "why should the Democratic Party be trusted"
to make tough decisions to cut the deficit and not "tax too much and spend
too much." Obama responded by noting that Bill Clinton was the last
president to balance the federal books.


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INTELLIGENCE: BLAIR BEMOANS POLITICIZING OF SECURITY
By Chris Strohm, with Otto Kreisher contributing


Director of National Intelligence Dennis Blair lashed out today at how
politicized the government's handling of the Christmas bombing plot has
become, saying the debate has not been "particularly good" for intelligence
and law enforcement officials trying to keep the country safe.

"I've been surprised by the combination of reality and politics having to
do with this issue," Blair said during a House Intelligence Committee
hearing, referring to the arrest of Umar Farouk Abdulmutallab for
attempting to blow up Northwest Flight 253 near Detroit on Christmas.

"I just can't control all of the politics," he said.

The incident has created a firestorm on Capitol Hill. Some Intelligence
Committee Republicans criticized the White House for informing reporters
late Tuesday that Abdulmutallab has resumed cooperating with investigators
after weeks of silence once U.S. authorities read him his Miranda rights.

"The political dimension of what can be [and what] ought to be a national
security issue has been quite high," Blair said. "I don't think it's been
very particularly good, I will tell you, from the inside in terms of us
trying to get the right job done to protect the United States."

"We're just trying to bring intelligence and law enforcement to bear to
get the right information, to make sure that those who threaten our country
get behind bars. And I just don't want to go into the political side of
it," he said.

But political attacks continued to escalate, as Senate Minority Leader
McConnell bashed the Obama administration over the incident in a speech
today at the Heritage Foundation. He criticized nearly every aspect of
President Obama's antiterrorism efforts, charging that he has "too often
put symbolism over security."

"The attempted Christmas Day bombing should have been a wake-up call,"
McConnell said. "Unfortunately, there's no evidence it was."

"The administration still appears more interested in managing its message
than explaining to the American people and to lawmakers on both sides of
the aisle why an al-Qaida-trained terrorist fresh from Yemen and caught in
the act of attempting to blow up an airliner was handed over to a lawyer
after a 50-minute interview," McConnell said.

The administration's biggest mistake, McConnell said, was to treat
international terrorism as a law-enforcement matter, instead of acts of
war, and putting Attorney General Holder "in charge of key intelligence and
military and defense matters."

"This is wrong. The attorney general should not be running the war on
terror," he said.

Holder sent a letter to McConnell and 10 other GOP senators defending the
decision.

"The decision to charge Mr. Abdulmutallab in federal court, and the
methods used to interrogate him, are fully consistent with the
long-established and publicly known policies and practices of the
Department of Justice, the FBI, and the United States

Government as a whole, as implemented for many years by Administrations of
both parties," Holder wrote.

Holder added that Abdulmutallab has recently provided additional
intelligence to the FBI.

Meanwhile, Republicans sent a letter to Senate Judiciary Chairman Patrick
Leahy today asking for Holder to be summoned before the committee this
month. The letter was signed by every Republican on the panel.

At the House hearing, Blair disclosed that Abdulmutallab is not being
interrogated by a new group created specifically to question high-value
terrorism suspects. But a law enforcement official downplayed the matter,
saying Abdulmutallab is being questioned by a team that includes the FBI,
CIA and behavioral analysts.

On Tuesday, FBI Director Robert Mueller and CIA Director Leon Panetta told
a Senate hearing that the new group is finally operational, but Blair said
the charter for it has not been finalized. The group was not operational in
time to interrogate Abdulmutallab on Christmas Day, officials said.


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TRANSPORTATION: LAHOOD SAYS TOYOTA PROBE HAS EXPANDED
By Terry Kivlan


Transportation Secretary LaHood today confirmed the National Highway
Traffic Safety Administration has started an investigation into possible
electronic system defects in Toyota automobiles.

In testimony before the House Transportation-HUD Appropriations
Subcommittee, LaHood said that while Toyota apparently has come up with a
fix for its accelerator pedal problem, NHTSA has also received a lot of
complaints about the electronic parts in the Japanese automaker's vehicles.

"We are in discussions with Toyota every day about the safety issues with
their automobiles," LaHood said. It took pressure from his agency to push
Toyota to launch the massive recall of its vehicles now under way to
correct the accelerator pedal defect, he added.

LaHood scaled back comments he made earlier in the hearing when he advised
owners of recalled Toyotas to stop driving them. He later said he misspoke
and instead urged those owners to take the vehicles to dealerships for
repairs.

Nonetheless, the secretary's testimony sent the price of Toyota stock
tumbling.

LaHood said NHTSA representatives met with Toyota officials in Japan and
told them, "You've got a problem; you need to fix it."

Aides to LaHood said the probe of the electronic systems has caused
consternation at Toyota because it had hoped to close the books on its
quality problems with the pedal recall. Critics of Toyota have charged that
it watered down its vaunted quality control program to accommodate a large
expansion of production in the United States and China.


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HILL BRIEFS: BROWN TO JOIN SENATE THURSDAY

Senate. Sen.-elect Scott Brown, R-Mass., is expected to be sworn in
Thursday, Senate aides said. Brown, whose victory in last month's special
election was certified today by Massachusetts officials, had been scheduled
to be sworn in next week, but he asked that the ceremony be moved up. Brown
will give the GOP a crucial 41st vote in the chamber.


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HILL BRIEFS: BOEHNER: NO CHANGES TO TERM LIMITS

House. Minority Leader Boehner told Republican lawmakers today not to
expect changes to the Conference's six-year term limits for committee
chairmen and ranking members, leadership aides said. "This rule is
important. It's a reform we promised to put in place, and we've lived by
it," Boehner was quoted as saying during a closed-door meeting, regarding
the rule embraced when the GOP took over the majority in January 1995.
Boehner did note that waivers of the policy have been considered "when
extraordinary circumstances warranted it, and I expect that will continue
to be the case."


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HILL BRIEFS: MCCAIN PUSHES REGULATION OF SUPPLEMENTS

Health. Sen. John McCain, R-Ariz., and the U.S. Anti-Doping Agency
proposed changes today to legislation mandating the listing of all
ingredients in over-the-counter dietary supplements and granting the FDA
power to revoke supplements they see as unsafe. "All Americans should know
the exact ingredients of any dietary supplement they use and the FDA must
have the tools necessary to ensure the safety of dietary supplements,"
McCain said. He added that surveys show most Americans believe the FDA
already regulates supplements. Professional athletes affected by the lack
of regulation told their stories. Former U.S. swim team member Kicker
Vencill told how his dreams of swimming in the 2004 Olympics were crushed
because he ingested a multivitamin he did not know was laced with a
steroid. McCain hopes to get his legislation a hearing within a few weeks.


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HILL BRIEFS: U.S. TO SET UP AG LENDING BODY FOR AFGHANS

Agriculture. The U.S. government plans to help the Afghan government
develop an agricultural lending institution, two top officials announced
today. Agriculture Secretary Vilsack, joined by Richard Holbrooke, the U.S.
special envoy for Afghanistan and Pakistan, said the institution would
provide long-term financing to Afghan farmers but they acknowledged that
its creation presented a major challenge. A USDA Foreign Agricultural
Service spokesman said that preliminary plans called for reviving an Afghan
farm credit institution that existed in the 1960s. U.S. officials hope that
the capital to back it will come from multiple donors, not just the United
States, the spokesman added.


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HILL BRIEFS: SUBPANEL SEEKS BALANCE IN COURT RULING

Campaign Finance. Still scrambling to find a path to alter the recent
Supreme Court ruling that opened the gates for unlimited corporate and
union independent spending in campaigns, a House Judiciary subcommittee
today held a contentious seminar on suggestions for making changes. Several
panelists told the Judiciary Constitution Subcommittee that Congress could
mitigate the impact of free spenders by restricting spending by U.S.
companies with foreign investors, by companies with U.S. government
contracts, and by ordering stronger rules requiring full and timely
disclosure of such expenditures. None of the panelists favored the idea of
a constitutional amendment to vitiate the First Amendment's guarantee of
free speech. "That would be the first time that an attempt was made to
amend the Bill of Rights," fumed Constitution Subcommittee ranking member
Jim Sensenbrenner, R-Wis., who defended the court's decision. He noted that
earlier congressional approval of independent spending limits "was clearly
unconstitutional." Constitution Subcommittee Chairman Jerrold Nadler,
D-N.Y., blasted the court's decision and said it had "substituted its
judgment for that of Congress in determining what constitutes corruption
[of elections]."


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POLITICAL ROUNDUP: COONS ENTERS RACE FOR BIDEN'S SEAT

Delaware. New Castle County Executive Chris Coons entered the Senate race
this morning, giving Democrats a candidate to challenge Republican Rep.
Michael Castle in November. Republicans are eager to put the seat in play
because it was held for years by Vice President Biden. Biden's son, state
Attorney General Beau Biden, had been expected to run but announced last
month that he would seek re-election to the state post. Coons has family
ties to the GORE-TEX company, which Democrats view as providing an ability
to help fund the campaign. Democrats wasted no time framing the race, with
Democratic Senatorial Campaign Committee Chairman Robert Menendez of New
Jersey saying voters "will face a choice between a proven reformer who has
created an engine of economic growth and a longtime Washington insider who
has voted with the special interests." Sen. Ted Kaufman, a Democrat, was
appointed to the seat when Biden resigned to become vice president but is
not running.


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POLITICAL ROUNDUP: COATS TO CHALLENGE BAYH

Indiana. Former GOP Sen. Dan Coats will run for the seat held by
Democratic Sen. Evan Bayh. "After much thoughtful consideration, I have
authorized my supporters to begin gathering signatures as I test the waters
for a potential challenge to Evan Bayh in 2010. Over the next few weeks, I
will be talking to Hoosiers from all walks of life, and I will make a
formal announcement regarding my intentions in the near future," said Coats
in a statement. Coats decided not to run in 1998, clearing the way for
Bayh, who was then governor, to win his first term. Coats has since served
as ambassador to Germany under President George W. Bush and worked as a
Washington lobbyist. Several Republicans, including former Rep. John
Hostettler and state Sen. Marlin Stutzman, are already running for the
seat.


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THE FINAL WORD: THE FINAL WORD

"I think Duncan owes me a beer when we get back in Washington."

-- Rep. Eric Massa, D-N.Y., proposing a "beer summit" to Rep. Duncan D.
Hunter, R-Calif., after the two had a heated exchange Tuesday over "don't
ask, don't tell" on CNN's "Newsroom."


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[Snuffysmith]

CongressDaily AM for Thursday, Feb. 4, 2010

--------------------
CONTENTS

POLITICS: HOUSE DEMOCRATS FRUSTRATED BY SENATE'S LACK OF ACTION
By Billy House


House Democrats are growing increasingly frustrated by Senate Majority
Leader Reid for what they describe as his failure to do more to challenge
Republicans on their threats to filibuster health care, a jobs bill and
other issues.

"Harry, as a leader, has to make them vote, or at least filibuster," Rep.
Dennis Cardoza, D-Calif., exclaimed Wednesday, saying the resentment among
House Democrats has reached a boiling point.

House Democratic Caucus Chairman John Larson of Connecticut acknowledged
the growing anger, which he said included comments made Wednesday during
the closed-door Caucus meeting attended by Speaker Pelosi and other House
leaders.

Larson said many in the Caucus simply want Reid to stop caving in to
Republicans and "just vote. Call the Republicans' bluff."

Larson said the House leadership team "has empathy in terms of knowing
what Harry is going through," said Larson. But Larson said he can't blame
fellow House Democrats for being upset that as many as 264 bills passed by
the House have yet to be voted on by the upper chamber.

"The frustration is that we didn't know that with 59 people [in the
Senate] you are in the minority, or 41 seats puts you in the majority,"
said Larson.

Jim Manley, a spokesman for Reid, said the frustration is understandable.
"But the fact is that we don't have a Rules Committee like they have in the
House that the leadership can use to jam legislation through. The rules of
the Senate require consensus."

Rep. Raul Grijalva, D-Ariz., co-chairman of the Congressional Progressive
Caucus, said he is among those who believe Senate Republicans should be
forced by Reid to take up-or-down votes on legislation or explain on the
Senate floor why they are filibustering.

"Let's see them filibuster a jobs bill," Grijalva said.

Noting that the House has passed about 270 bills that have not been taken
up by the Senate, Cardoza scoffed, "There's got to be at least some gems in
that pile of manure."

Cardoza pointed out that his district has a 20 percent unemployment rate
and a foreclosure rate that is even higher. "And [the Senate] can't pass a
foreclosure bill? They can't pass a bankruptcy act?" he asked.

"You know, this is fairly frustrating," he added. "One house is doing its
job and the other needs to get busy."


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TELECOMMUNICATIONS: COMCAST-NBC MERGER STIRS UP CABLE FIRMS, TV AFFILIATES
By David Hatch


The proposed union of Comcast and NBC Universal has triggered opposition
from a predictably long list of public interest groups, but criticism from
the cable industry and NBC's television affiliates could prove tougher for
corporate brass to dismiss during congressional hearings on the merger
today.

Comcast President and CEO Brian Roberts and NBC President and CEO Jeff
Zucker will testify about the deal during back-to-back sessions before
House and Senate panels. They will share the spotlight with representatives
of small cable operators and NBC affiliates who plan to express strong
reservations and demand that tough conditions accompany any approval of the
merger.

The concerns of NBC's 200 independently owned affiliates could prove
particularly thorny because they are partners with the peacock network.

In written testimony submitted to the House Energy and Commerce
Communications Subcommittee in advance of its hearing this morning, NBC
Television Affiliates Board Chairman Michael Fiorile says he is encouraged
the merger parties have pledged to preserve free, over-the-air TV
transmissions.

Nevertheless, he wants "enforceable conditions" to guarantee a
continuation of the network-affiliate model and television broadcasting.
"At such an early stage," Fiorile writes, "I cannot yet know with certainty
whether these discussions [with Comcast] will even result in a common
understanding as to appropriate conditions, which, to state the obvious,
will be a prerequisite to our support."

In a Wednesday blog posting, Comcast Executive Vice President David Cohen
sought to alleviate such fears. "We want to preserve the local broadcast
affiliate model," he affirmed, offering to work with NBC stations "to
secure a viable future for the network and affiliates alike."

Cohen revealed that during recent meetings with members of Congress,
several expressed concern about a detrimental impact on NBC News. "To us,
no part of NBC Universal is more important," he wrote, reiterating a pledge
to invest in news and public affairs nationwide.

Matt Polka, president and CEO of the American Cable Association, which
represents small and mid-sized systems, insisted during a Wednesday
conference call with reporters that a merged Comcast-NBC would result in
higher subscription fees and could undermine already struggling
competitors, particularly in minor markets.

Polka also warned that the new company would be able to leverage its
"must-have" sports programming -- including Olympics coverage -- in
"anticonsumer, anticompetitive ways."

Independent cable channels such as Wealth TV and small cable operators
such as WOW!, a firm that serves Midwest households and will have an
executive testify before both the House subcommittee and the Senate
Judiciary Antitrust Subcommittee, are worried the new company would have
even more of an upper hand in programming negotiations.

Addressing those arguments, Cohen countered in his posting that Comcast
operates in a "fiercely competitive" environment. While Comcast is the
nation's largest video service provider, DirecTV and the Dish Network rank
second and third, respectively, and both have nationwide footprints that
Comcast lacks.

"Verizon and AT&T, both much larger than Comcast, are now aggressively
overbuilding our cable systems all around the country," said Cohen,
referring to the practice of competitors moving into already served
markets.

In a joint written statement submitted to the House panel, Roberts and
Zucker claim that "antitrust law, competition experts, and the FCC have
long recognized" that a vertical merger pairing a distributor and supplier
can produce significant benefits.

The resulting innovation would spur others to improve service, "thus
enhancing competition," they wrote.

Polka is urging the imposition of rigorous conditions because he expects
the FCC and Justice Department to approve the transaction. But consumer
advocates dug in their heels during Wednesday's conference call, saying
they do not want the government to approve the deal.

"In the past when we've seen conditions they've ultimately had a shelf
life," said Corie Wright, policy counsel with the watchdog group Free
Press, one of the deal's most vocal opponents. "The danger of this merger
is that the anticompetitive incentives are baked into the structure."


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ECONOMY: SENATORS ZERO IN ON $81B IN SHORT-TERM STIMULUS MEASURE
By Peter Cohn with Darren Goode contributing


Senators appeared to be moving toward a bipartisan deal late Wednesday on
a package of short-term stimulus efforts totaling around $81 billion,
although the final contents and price tag were still being negotiated.

The measure would be the first installment in a series of bills
encompassing what Majority Leader Reid this week called a "jobs agenda,"
designed to win 60 votes and demonstrate at least some movement before the
Presidents Day recess.

Potential flashpoints remained, such as a three-month delay in looming
Medicare physician payment cuts that might hitch a ride. Democratic leaders
nonetheless scheduled a briefing for this morning to announce details of
their proposals, meaning they were fairly confident a deal could be
reached. The package would head to the floor next week.

One area of general agreement was on including a payroll tax cut for new
jobs, based on a proposal from Sens. Charles Schumer, D-N.Y., and Orrin
Hatch, R-Utah. Their plan would cost roughly $11 billion, although there
was some discussion of boosting that figure to as much as $18 billion. That
bipartisan support for a new jobs tax break was in contrast with skeptical
House Democrats, a number of whom raised concerns at a Ways and Means
hearing Wednesday on President Obama's budget proposals. (See related
story, page 9.)

The payroll tax proposal would be paired with an extension of higher
expensing limits for small business equipment purchases, and measures to
pump money into infrastructure investment. Those are an expanded Build
America Bonds program, which subsidizes interest payments on taxable bonds
issued by state and local governments, and an extension of surface
transportation trust fund financing until the end of the year.

The Highway Trust Fund extension would cost around $20 billion but is
technically revenue-neutral. It is paid for with interest owed from the
general fund, which Republicans, including Budget ranking member Judd
Gregg, have labeled a "gimmick." The move would also postpone a debate on
contentious financing options, such as raising the gasoline tax, until
after the midterm elections.

Even Environment and Public Works ranking member James Inhofe, normally a
staunch supporter of highway investments, expressed reservations about the
jobs bill. He said Republicans have been shut out of the process despite
calls by Obama for better cooperation between the two parties. "I don't
think that the Democrats have learned anything since the Massachusetts
election," Inhofe said. "It's just business as usual."

Hatch and Finance ranking member Chuck Grassley appeared to be involved in
the talks on the GOP side, however.

Another piece of the bill would include $33 billion in extensions of tax
breaks that Congress let lapse last year, such as the research and
development tax credit, a credit for biodiesel production and deduction for
state and local sales taxes. It would be a slightly more expansive version
of a tax "extender" bill passed by the House, including renewal of a
capital gains break on timber sales sought by lawmakers like Senate
Agriculture Chairwoman Blanche Lincoln, that was left out by the House.

The package would also provide around $33 billion for three-month
extensions of unemployment insurance and health subsidies for laid-off
workers, as well as the Medicare physician payment fix. That patch was
running into concerns from some Republicans and physicians advocating for a
longer-term reversal of the looming 21 percent payment cuts. All three
programs expire on Feb. 28 if Congress does not take action.

Negotiators were still debating the amount of offsets in the mix, but
appeared to be closing in on paying for as much as $48 billion, or more
than half of the combined package. The biggest single revenue-raiser was
shaping up to be eliminating the potential for paper firms to claim a
cellulosic biofuels tax credit, bringing in $24 billion. Senators also
planned to include provisions cracking down on the use of offshore accounts
to shelter investments from U.S. tax collectors, raising another $7
billion.

Those measures alone could practically pay for either the tax extenders,
or the health and employment benefits expiring Feb. 28. Sources said that
was designed so that Republicans would not appear to be offsetting tax
cuts, and so Democrats would not be seen as offsetting social services
spending.

Of benefit to cash-strapped companies facing mandated pension
contributions, the measure might also include relief enabling those firms
to delay their payments and spread them out over a longer period of time.
The result would free up more income for hiring and investments, which
would actually raise around $7 billion because the money would be taxable.

Other potential revenue-raisers included a delay in new interest expensing
rules for multinational firms; codifying the "economic substance" doctrine
requiring firms to prove business transactions had a purpose other than tax
avoidance; and dipping into a fund for unspecified improvements to
Medicare.


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SENATE: BROWN'S FASTER ARRIVAL MIGHT DOOM NLRB NOMINATION
By Dan Friedman


Sen.-elect Scott Brown, R-Mass., will be sworn-in today after abruptly
backing off an agreement to join the Senate next week.

The timetable endangers the nomination of Craig Becker to the National
Labor Relations Board but otherwise should have little impact on Senate
business.

Brown changed his mind about the swearing-in date Wednesday, after
Massachusetts Secretary of State William Galvin confirmed that Brown won
the Jan. 19 special election for the seat previously held by the late
Democratic Sen. Edward Kennedy.

"February 11 was always a tentative date. Since the election results are
now complete, there's no reason to wait," a spokesman for Brown said.
"There are important votes coming up that Sen.-elect Brown wants to
participate in."

In a letter Wednesday to Gov. Deval Patrick, Brown's lawyer said the
senator-to-be "had been advised there are a number of votes scheduled"
before Feb. 11.

But Becker's nomination seems to be the only matter in which Brown's
presence would be decisive. Becker's nomination was approved by a
bipartisan vote of the Senate Health, Education, Labor and Pensions
Committee last year, but a hold on his nomination prevented confirmation by
the full Senate and required President Obama to renominate Becker this
year.

The nomination has since become a charged issue for opponents of labor
unions. Groups opposed to legislation designed to make it easier for unions
to organize claim Becker favors achieving the same result by changing NLRB
rules, making the vote a proxy for the broader organizing issue.

The HELP Committee is expected to vote to recommend confirmation of Becker
at a hearing today, sending it on to the full Senate. A spokeswoman said
that Senate Majority Leader Reid wants to confirm Becker as soon as
possible. But Sen. Johnny Isakson, R-Ga., and HELP ranking member Mike Enzi
accused Reid of trying to ram through the nomination before Brown arrived.

Brown's arrival in the Senate would prevent passage of a cloture vote on
the nomination, if, as appears likely, the vote is on party lines. The
Senate Monday voted along party lines to invoke cloture on the nomination
of Patricia Smith as Labor Department solicitor, another personnel move
monitored closely by labor groups and their opponents.

Eric Fehrnstom, a Brown aide, said Brown would like to vote on those
nominations, along with the nomination of Martha Johnson to head the
General Services Administration.

But Smith will likely be confirmed in a vote early this afternoon and the
cloture motion on Johnson is scheduled for 3:30 p.m., before Brown will be
sworn in.

Democrats hope to start action on a jobs bill next week, but votes are
unlikely before Feb. 11.


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FINANCE: CANTWELL PUSHING FOR DERIVATIVES REFORM BEYOND HOUSE BILL
By Bill Swindell, with Jerry Hagstrom contributing


Sen. Maria Cantwell, D-Wash., said Wednesday she intends to keep pressure
on the Senate Agriculture Committee to produce a strong measure to rein in
the multitrillion-dollar derivatives industry, noting that a House-passed
bill contained too many loopholes to benefit the big banks that dominate
the market.

"Lobbying has already been seen here in the Senate to encourage such
loopholes," Cantwell said during a briefing that featured business owners
-- who use such derivatives -- calling for tougher regulations. "We must
stop these loopholes."

Cantwell said she will focus much of her efforts on the Agriculture
Committee, which has supervision over the Commodity Futures Trading
Commission, rather than the Banking Committee, which has jurisdiction over
the SEC.

Banking Chairman Christopher Dodd is working with ranking member Richard
Shelby to craft a bipartisan measure to revamp the nation's financial
regulatory system, with a section to regulate the derivatives market.

Agriculture Chairwoman Blanche Lincoln has been on a slower path with
ranking member Saxby Chambliss to craft a derivatives bill. She pointed out
that CFTC will be the main agency to focus on derivatives, especially in
the unregulated over-the-counter market, where trades are conducted between
parties and do not go through a traditional exchange.

"She [Lincoln] continues to work closely with Sen. Chambliss to write a
bipartisan derivatives bill. She intends to move forward quickly, but most
importantly, thoughtfully and correctly with writing this legislation. They
are not working under a timeline," a Lincoln spokeswoman said Wednesday.

Cantwell has become the Senate's strongest proponent for placing greater
regulation on the industry. She was initially spurred to action over market
manipulation of energy trading by Enron Corp., and pledged to continue the
fight on the floor if her concerns are not addressed. She added that she
will try to pick up GOP support, noting Maine Republican Sens. Susan
Collins and Olympia Snowe are sympathetic.

She has been especially critical of the House-passed bill because it "was
riddled with loopholes." House Financial Services Chairman Barney Frank
attempted to tighten the bill on the floor but was beaten back by some
moderate Democrats and solid GOP opposition.

"We cannot allow an end-user [exemption] that would allow up to 60 percent
of the derivatives market to be without capital behind those bets,"
Cantwell said.

Frank failed in a floor amendment that would give regulators the authority
to impose margin requirements on commercial firms that use the OTC market.
In addition, the House adopted an amendment by Rep. Scott Murphy, D-N.Y.,
to narrow the definition of who would be considered a major swap
participant for derivatives trading under the bill, so that businesses such
as John Deere and Southwest Airlines would not fall under such additional
oversight. Consumer groups oppose the amendment, fearing it would establish
a loophole.

Small-business groups have formed the Commodity Markets Oversight
Coalition to lobby for greater curbs on the OTC market. But most major
businesses that use derivatives have signed on with a U.S. Chamber of
Commerce campaign that is aligned with banking interests. Cantwell wants
all standardized trades to go through a clearinghouse, where a third party
imposes capital and margin requirements, before they are placed on an
exchange. She also wants greater oversight of foreign-exchange swaps and
trades.


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BUDGET: HOUSE SET TO TAKE UP DEBT LIMIT, PAY/GO MEASURE TODAY
By Humberto Sanchez


The House today is set to take up legislation to raise the debt limit to
$14.3 trillion, a record $1.9 trillion boost, and make pay/go budget rules
the law, a priority for House Democratic leaders.

President Obama said Wednesday at a meeting with Senate Democrats that "I
expect the House to get it done [and] I want to sign" the bill into law.

The Senate passed the debt bill last week after attaching the pay/go
amendment without any Republican support. Congress must act on the debt
limit by the end of the month, when the current $12.4 trillion limit is
expected to be reached, the Treasury Department said Wednesday.

House Majority Leader Hoyer said he expects the bill to pass, possibly
with Republican support.

"America is going to pay its bills. That is essential," Hoyer said. "At
the same time, we will say that America is going to make sure when it buys
things in the future, it's going to pay for it."

House action on the debt ceiling and pay/go comes after the White House
released its FY11 budget, which projected the FY10 deficit to be a record
$1.6 trillion, or 10.6 percent of the gross domestic product. The White
House projected that the FY11 deficit will be a hefty $1.3 trillion, or 8.3
percent of GDP.

House Democratic leaders made passing statutory pay/go a priority after
making that promise last year to the Blue Dog Coalition, whose members then
supported the FY10 budget resolution and the economic stimulus package.

Supporters of pay/go credit it with helping create budget surpluses in the
1990s and blame Republicans for letting it expire when they controlled
Congress and the White House.

"The Blue Dogs have fought for nine years to restore the same statutory
pay-as-you-go rules that brought about budget surpluses in the 1990s," said
Rep. Jim Matheson, D-Utah, a Blue Dog co-chairman for communications. "This
proven effective, bipartisan budget enforcement tool was signed into law by
both President George H.W. Bush and President Bill Clinton, and we look
forward to sending this same common-sense legislation to President Obama's
desk."

Increasing the debt limit is typically an unpopular vote for lawmakers.
But by including pay/go, House Democratic leaders expect to win enough
votes to pass the rule for the measure and the debt limit bill itself,
which is a motion to concur with the Senate's package.

Liberal Democrats, typically wary of pay/go because they see it as a
threat to funding for social programs, appear split on the package.

When asked recently if he would back the bill, Rep. Raul Grijalva,
D-Ariz., who is co-chair of the Congressional Progressive Caucus, said he
told Democratic leaders that "at this point, I wasn't supporting it."

He said "the reasons were simple: It has to do with too many exemptions to
[pay/go] and ... it is going to affect domestic spending more than anything
else."

However, Grijalva said he believes the measure will probably pass.

Another progressive, House Financial Services Chairman Barney Frank, said
he supports the bill, pay/go and all, in order to help bring down the
deficit.

"I think it is necessary in this context," Frank said. "I think without
doing that, things would be worse."

On the other side of the aisle, Republicans contend it's not their
responsibility to take this unpopular debt vote and not to expect their
help.

Rep. Mike Simpson, R-Idaho, a member of the Budget Committee, said, "That
is the burden of the majority."

Republicans also think Democrats waive pay/go too often, and it therefore
lacks credibility as a deficit-reduction mechanism.

According to House Budget Committee Republicans, since it was reinstated
as a rule in 2007, when Democrats took control of Congress, the deficit has
swollen from $161 billion to $1.6 trillion. They also claim that pay/go has
been waived or circumvented for $1.3 trillion in deficit increases; and,
when applied, it has been used mainly to justify chasing higher spending
with higher taxes.

Under the debt bill the House will take up, four policy items are exempted
from pay/go, including an unlimited exemption for extending the 2001 and
2003 tax cuts for the middle class. Patches to the alternative minimum tax
and reduction of the estate taxes would be exempted for two years, while
providing higher Medicare payments to physicians would be exempted for five
years.

Pay/go advocates say the exemptions are needed because Congress typically
does not offset the items and it prevents pay/go from having to be waived.

Another exemption would be for emergency spending, possibly for
jobs-creation legislation Democrats are working on.

Hoyer said Democrats have not decided if jobs or other legislation will be
deemed an emergency.

"We haven't made the determination on what [legislative] issues will be
[designated as] emergencies," Hoyer said But, "clearly we believe that
unemployed Americans are an emergency, for that ... we have been prepared
to borrow."


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ENERGY: RENEWABLE FUELS RULE MOSTLY PLEASES ETHANOL PRODUCERS
By Jerry Hagstrom, with Darren Goode contributing


In what appears to be a boost for the renewable fuels industry and the
campaign for green jobs, EPA Administrator Jackson on Wednesday finalized a
rule for the National Renewable Fuel Standard program, saying the agency
has concluded that corn-based ethanol will reduce greenhouse gas emissions
by 21 percent when it replaces gasoline.

Renewable fuels must have emission levels at least 20 percent below those
from gasoline to meet EPA's standards.

Some environmentalists have charged that corn-based ethanol uses more
energy than it produces and can cause environmental damage by shifting more
land globally to farm production.

But Jackson, in a telephone news conference with other Cabinet officers,
said that new research indicated higher levels of productivity and crop
yields. She said ethanol would shift land use in some countries, but that
after the agency had increased the number of countries from 40 to 160 in an
analysis of indirect land use, the new study showed that "the impacts of
indirect land use were different and lesser than what we thought."

Jackson warned, however, that corn-based ethanol will qualify as an
advanced biofuel only if the industry is "smart" and produces ethanol
efficiently with the use of natural gas. But she said the rule should give
investors confidence in both corn-based ethanol and soy-based diesel.

The rule fulfilled a 2007 Energy Independence and Security Act requirement
that EPA develop a plan to boost renewable fuels to 36 billion gallons by
2022.

House Agriculture Chairman Collin Peterson said he was pleased by the
decisions that ethanol and biodiesel will qualify as fuels that reduce
greenhouse gases. But he added, "To think that we can credibly measure the
impact of international indirect land use is completely unrealistic."

Sen. Tom Harkin, D-Iowa, said the announcement "keeps the nation on its
trajectory of strongly expanding production and use of biofuels, including
biodiesel, and gives the biofuel industry the assurance that the nation
does support their efforts."

Tom Buis, CEO of Growth Energy, an ethanol industry group, said EPA's
ruling would create a market for corn-based ethanol beyond the 15 billion
gallons reserved for it under the energy bill. But Buis said that the
inclusion of the indirect land use analysis lowered corn-based ethanol's
greenhouse gas reduction level from 60 percent to 21 percent, placing it at
a disadvantage compared to other renewable fuels.

One environmentalist called the rule inadequate. "Unfortunately, the RFS
rule takes no action to limit the cynical and politically-driven exemptions
in the 2007 energy bill for corn-ethanol plants from meeting any greenhouse
gas reduction standards," said Craig Cox, senior vice president of the
Environmental Working Group.

There could be litigation, though, from one or more industries, one energy
industry official said. "It's safe to say the oil and gas industry will be
looking very closely at this rule," the official said.


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EDUCATION: SUBCOMMITTEE EXPLORES WAYS TO IMPROVE STEM PROGRAMS
By Juliana Gruenwald


A House Appropriations panel Wednesday examined federal programs to
improve science, technology, engineering and math education, and discussed
ways to put approaches that work into U.S. classrooms.

During a hearing, House Commerce-Justice-Science Appropriations
Subcommittee Chairman Alan Mollohan, D-W.Va., said advances in STEM
education are key to the future of the country, which is why the panel
focused on the issue in its FY10 spending bill and will do so again in its
FY11 measure.

In its FY11 budget plan, the Obama administration said it also is
emphasizing improvements in STEM education, directing about $1 billion of
the $3.7 billion in proposed funding at several agencies to elementary and
high school education. The National Science Foundation would be the biggest
recipient of STEM funding under the president's budget plan with about $1.2
billion, a 2.3 percent increase over FY10.

During the panel's hearing, two academics who have received NSF-funded
STEM grants noted broad consensus that inquiry-based instruction, where
students are actively involved in problem-solving, is the best approach to
teaching science in particular. Eleanor Miele, head of science education at
the City University of New York's Brooklyn College, said students in such
courses reported increased ability to analyze and solve problems than those
in more traditional courses.

"We know the best way to teach science is to be doing science," Miele
said, adding that children need to be taught to think independently and to
solve problems.

Mollohan and Subcommittee ranking member Frank Wolf, R-Va., asked why this
approach to teaching science is not being widely adopted by school
districts across the country.

Miele said most of the people making decisions about science curricula in
elementary and high schools are "generalists" and not trained in science.
She added that more funding needs to be directed toward materials that help
students do science and not just learn about it in textbooks.

Virginia State University psychology professor Oliver Hill, who was the
lead investigator on two NSF grants at his school, also noted a concern
voiced by many educators that teachers are too focused on making sure their
students pass standardized tests, and so they are "teaching to the test."


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BUDGET: ORSZAG CATCHES FLAK ON DEFICIT COMMISSION, OTHER ISSUES
By Terry Kivlan


OMB Director Orszag found critics on both sides of the House Ways and
Means Committee Wednesday as he attempted to explain President Obama's
proposal for a bipartisan commission to recommend ways for reducing the
deficit.

The skeptics included House Ways and Means Chairman Charles Rangel, who
pressed Orszag to explain why a commission should be created to co-opt
Congress and its responsibility to put the country's financial house in
order. "It doesn't seem like a profile in courage to me," said Rangel.

Orszag said the administration believed that a bipartisan solution was
needed to prevent a fiscal train wreck. "The commission is the avenue for
doing that," he explained.

The OMB director noted that Senate Majority Leader Reid had pledged a
prompt Senate vote on the commission plan, and House Speaker Pelosi had
promised to follow suit in the House if the Senate cleared the fiscal
blueprint.

"We can get a vote but we don't know which way the vote is going to go,"
retorted Rangel.

House Ways and Means ranking member Dave Camp also expressed qualms about
Obama's deficit-reduction panel, saying he was concerned about its
structure and its power to recommend tax increases.

In other testimony, Orszag was forced to defend last year's $787 billion
economic stimulus measure against Republican allegations that it had
exacerbated the deficit while failing to achieve its goal of keeping the
unemployment rate below 8 percent. "I can tell you the folks in my district
are very, very reluctant about going forward and spending more money," said
Rep. Peter Roskam, R-Ill.

Orszag argued that the stimulus package saved between 1.5 million and 2
million jobs and slowed the rate of job losses from 700,000 a month at the
beginning of 2009 to 100,000 a month now. Without the stimulus, "we would
have had a much higher probability of entering a recession," Orszag said.

He also put in a pitch for reviving the stalled healthcare reform
legislation, warning that ultimately the deficit could not be tamed without
action to bring down runaway health costs. "Unless we address [that] ...
there is nothing else that is going to matter," he said.

Rep. Wally Herger, R-Calif., challenged this assertion, noting that an
audit of the congressional reform bills done by the Centers for Medicare
and Medicaid Services concluded that they would not reduce healthcare
spending.

Republicans also complained that the business tax increases called for in
the White House's FY11 budget plan, such as the elimination of the $38
billion-a-year energy production tax credit, would cause additional job
hemorrhage.


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PEOPLE: PEOPLE
By Gregg Sangillo


NEW MISS. Sen. Thad Cochran, R-Miss., just made several moves in his
Washington office. Sara Peters has been hired as legislative counsel, and
former legislative aide P.J. Waldrop has been promoted to legislative
assistant dealing with agriculture and water infrastructure development
issues. Peters hails from Tupelo, Miss., the birthplace of Elvis Presley.
She most recently was an associate at the law firm King & Spalding, and she
worked in the firm's tort and environmental litigation group. She is
expected to deal with budget, banking, judiciary, tax, trade and other
issues for Cochran. Peters is replacing Hugh Gamble, now legislative
director for Sen. Saxby Chambliss, R-Ga. Waldrop, a native of Byram, Miss.,
was an aide at the Senate Agriculture Committee.

VERY EVENTFUL. Shelley Hymes was recently named managing editor for
Masterplanner D.C. Hymes still runs her public relations and special event
planning firm called Angel Enterprises, which is partnering with BizBash
Media. BizBash Masterplanner bills itself as a "major event conflict
resolution and event intelligence service for Washington." Hymes was
formerly executive director of the Joint Economic Committee. And Hymes, who
is quite experienced in the world of event planning, doesn't see the field
as too far of a leap from her days on Capitol Hill. "The JEC had a bunch of
hearings, and hearings, in effect, are minievents. And the hearings that we
had were fairly large in scope," says Hymes, who served at the committee
under former Sen. Connie Mack, R-Fla. During one two-day period, the
committee hosted former Federal Reserve Chairman Alan Greenspan and about
12 corporate CEOs, including Microsoft's Bill Gates. Hymes has also worked
as director of the 21st Century Workforce at the Labor Department during
the George W. Bush administration. A native of Wilkes-Barre, Pa., Hymes
went to the Emma Willard all-girls boarding school in Troy, N.Y., where she
knew and graduated with Sen. Kirsten Gillibrand, D-N.Y. (Both were
co-captains of the school tennis team.) Hymes later graduated from Rollins
College in Florida. Her interest in enterprise zones from a political
science class led her to inquire about working for then-HUD Secretary Jack
Kemp, and she ended up landing a job with Kemp in the George H.W. Bush
administration. Kemp remained a mentor and friend to her until he died last
year, and the Angel Enterprises office used to house the firm Kemp
Partners. "Once you're a Kemp person, you're always a Kemp person," she
says.


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BALANCE OF PAYMENTS: FACING THE DRAGON
By Bruce Stokes


The Obama administration came into office intent on getting off to a
better start in dealing with Beijing than did the Clinton White House. It
hoped to build on Sino-American cooperation begun in the Bush
administration because the new president's team was convinced that America
needed Chinese help to resolve a range of issues, from the global recession
to climate change to Iran.

The effectiveness of that policy is now in question. China has pegged its
currency to the dollar, hobbling efforts to correct the trade imbalances
that helped generate the recent financial crisis. Beijing has refused to
cap carbon emissions to slow global warming. And it has declined to ratchet
up pressure on North Korea or Iran to curb their nuclear weapons programs.

Moreover, the Chinese stiffed President Obama during his visit to China in
November, denying him the opportunity to speak to the Chinese people on
national television. They then publicly snubbed Obama at the Copenhagen
climate summit in December.

Subsequent revelations that Chinese hackers have penetrated the computer
systems of Google and other major U.S. firms, plus mounting concern about
potential Chinese cyberterrorism, raise new concerns about Beijing's
intentions and its judgment.

Such Chinese assertiveness is only likely to worsen in the months ahead.
Beijing is on a roll thanks to its booming economy and its success riding
out the recession. And standing up to foreigners has become a badge of
honor for Chinese politicians as they jockey for position in the run up to
an internal leadership change in 2012.

It might be time for Washington to signal to China that it should not
presume the United States will simply continue to turn the other cheek in
the face of repeated aggressive and irresponsible Beijing behavior.

In the past, Congress has played the role of agent provocateur, prodding
administrations into action while giving the White House political cover,
enabling presidents to say to foreigners: "Deal with me or deal with those
crazies on Capitol Hill". It is time for Congress to take on this role
again.

This spring the Treasury Department must issue its semiannual report on
currency issues and must decide whether to label China a "currency
manipulator." Such designation is something Treasury has never done,
despite ample evidence of Beijing's manipulation.

Chinese officials have already sent signals they may attempt to pre-empt
such labeling by allowing the renminbi to appreciate some small amount, say
10 percent. This one-time appreciation would blunt American demands for
action without meaningfully addressing the renminbi's undervaluation.

To ensure that such an appreciation actually takes place, that it is
significant and that firms don't simply swallow the cost of the
appreciation, negating the effect of the currency change, Congress could
pass long-proposed legislation making any currency manipulation an unfair
government subsidy subject to countervailing duties.

Barring that, Congress could pass a resolution calling on the
administration to scrutinize Chinese exports in the wake of an
appreciation, to ensure that Chinese firms are not receiving backdoor
subsidies that compensate them for their loss of competitiveness after
appreciation. The administration could be instructed to report back on what
is found in six months.

To ensure that U.S. trade policy toward China is not the victim of
administration discretion depending on the changing foreign policy winds,
Congress could also channel more China-related trade matters into the
federal courts.

CYBERsitter, a California-based Web-filtering company, has recently filed
a federal lawsuit claiming the Chinese government has purloined some 3,000
lines of its software code. It is not clear if this approach, rather than
pursuit of traditional trade action in Washington, will succeed.

But Capitol Hill could make trade action in the courts easier. For
example, Congress could pass pending legislation to allow consumers to sue
foreign manufacturers of unsafe products, effectively bypassing the lax
enforcement of U.S. regulatory agencies.

China has also recently threatened to require that products eligible for
its government procurement contain intellectual property that is developed
and owned in China and that any associated trademarks be originally
registered in China.

Congress could pass mirror-image legislation setting similar standards for
all U.S. public procurement from countries not a party to the World Trade
Organization's public procurement code. China is the most important
non-signatory.

Such congressional initiatives would signal to Beijing that its recent
feistiness has not gone unnoticed on Capitol Hill. And that support is
growing in Washington for a more hardnosed approach to China, if Beijing
remains uncooperative.

It is time for Congress to give the administration a bit more of a
backbone when it comes to dealing with China.


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POLITICAL ROUNDUP: ROMNEY TO ATTEND S.D. EVENT FOR THUNE

Former Massachusetts Republican Gov. Mitt Romney is heading to South
Dakota on Feb. 19 to raise money for GOP Sen. John Thune's 2010 re-election
bid. According to a copy of the invitation obtained by CongressDaily, the
suggested contribution is $100 for the event at the Holiday Inn City Centre
in Sioux Falls.

With $6 million in Thune's war chest and no Democratic challengers on the
horizon ahead of the March 30 filing deadline, why the early, splashy
fundraiser? As Thune campaign manager Justin Brasell put it, "Sen. Thune
has been through two grueling and very expensive Senate races, and if there
is one lesson he took away from those contests it's that you can never be
too prepared."

Romney and Thune met several years ago in the Capitol and have seen each
other at some social functions since then, but they have never made a joint
appearance.


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POLITICAL ROUNDUP: STATE LAWMAKER POISED TO SEEK DORGAN'S SEAT

Democratic state Sen. Tracy Potter of Bismarck is expected to announce his
bid for the seat Sen. Byron Dorgan, D-N.D., will vacate this year, the
Fargo Forum reported.

While Potter would not confirm what his announcement Friday would be
about, state Democratic Party Chairman Mark Schneider said Potter intends
to seek the party's nomination.

"He's a longtime Democrat in state office and managed to win in a district
that's been historically Republican," Schneider said. "He's a welcomed
progressive voice. We're glad to have him in the race."

Potter's candidacy would make him the first Democrat to jump into the
election. Gov. John Hoeven is already running on the Republican side.

Schneider said he expects other Democrats to run once former state
Attorney General Heidi Heitkamp announces her plans.


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POLITICAL ROUNDUP: GILLIBRAND LEADS FORD, GOP FOE, POLL FINDS

Sen. Kirsten Gillibrand, D-N.Y., holds a 36-18 percent lead over her
possible primary rival, former Rep. Harold Ford Jr., D-Tenn., according to
a new Quinnipiac University poll.

Both Ford and Gillibrand lead former Nassau County Legislator Bruce
Blakeman, a Republican.

Gillibrand tops Blakeman 44-27 percent while Ford bests Blakeman 35-26
percent.

The survey of 2,182 voters was conducted Jan. 27 through Monday, and has a
2.1-point error margin. The Democratic subsample of 921 has a 3.2-point
error margin.

Meanwhile, former Rep. Joseph DioGuardi, R-N.Y., says he will decide in
the next few weeks whether he will seek to challenge Gillibrand, the
Journal News reported.

DioGuardi, who served from 1985-89, said he is "leaning very heavily
toward running."


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POLITICAL ROUNDUP: ANOTHER REPUBLICAN ENTERS RACE FOR DELAHUNT'S SEAT

State Rep. Jeff Perry became the latest Republican to eye one of
Massachusetts' congressional seats, the Associated Press reported.

Perry announced Tuesday that he plans to run for the 10th District seat
held by Democratic Rep. Bill Delahunt.

Republicans Don Hussey and Ray Kasperowicz have also declared.

Republicans have been encouraged by the election of Scott Brown to the
Senate last month.

Perry said he would work for healthcare reform without mandates, jobs,
checks on illegal immigration and lower taxes.

Former state treasurer Joe Malone and state Sen. Robert Hedlund are also
considering bids.

The Bay State's 10 congressional districts are all held by Democrats.


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HILL BRIEFS: RANGEL AND LEVIN PRESS KIRK TO ACT ON JAPAN AUTO TRADE

House Ways and Means Chairman Charles Rangel and Trade Subcommittee
Chairman Sander Levin, D-Mich., prodded Trade Representative Kirk in a
letter Wednesday seeking more action to open the Japanese market to U.S.
auto exports.

The two lawmakers are upset that Japan doesn't seem to be keeping its
promise to include imports in its version of the "cash for clunkers"
program, giving credits to buyers of more fuel-efficient cars.

Under pressure from the United States, Japanese officials announced Jan.
19 that U.S. vehicles would be eligible for purchase as "eco-cars" in the
program, but now they appear to be using the lower fuel economy ratings for
city driving, rather than higher combined ratings for city and highway
driving, to determine the eligibility of imported cars, Rangel and Levin
said.

"We understand that Japan's use of the 'city' rating will limit the
eligibility of, and the practical commercial impact for, U.S. vehicles
under the eco-cars program," they wrote. "U.S. vehicles are competitive and
should be allowed to compete in the Japanese market on a level-playing
field."

Rangel and Levin asked Kirk to demand that the Japanese "ensure that
imported U.S. vehicles are eligible for the eco-car program not only in
theory, but in practice," and use only combined ratings to determine the
eligibility of all vehicles.


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HILL BRIEFS: WU URGES MARKET RESEARCH ON AIRLINE SCREENING DEVICES

Homeland Security officials apparently ignored the advice of top
scientists and failed to conduct market research on airline passenger
screening technology before moving to advance new methods after the
attempted bombing of a commercial jet on Christmas, House Science
Innovation Subcommittee Chairman David Wu, D-Ore., said Wednesday.

"As far as I know, I'm the only person that's asked this question," Wu
said, as witnesses from the Homeland Security Department, the National
Academies of Sciences and the National Institute of Standards and
Technology could not answer if passengers had been questioned on screening
preferences.

Wu noted that NAS reports in 1997 and 2007 said public acceptance needed
to be taken into account when rolling out passenger-screening technologies.

"No wonder the deployment of body-scanning technologies has proven to be
such a public failure," Wu said. "The relevant agencies did not do their
homework and follow up on the Academies' recommendation in a serious way."
He added that he would want to see polling and market research performed in
the near future.

Bradley Buswell, deputy undersecretary for Homeland Security's Science and
Technology Directorate, said his office uses panels of experts from within
the industry and public interest groups to identify possible passenger
acceptance issues.


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HILL BRIEFS: GONZALEZ, GREEN WORRIED ABOUT GOOGLE BOOKS DEAL

A final settlement expected today in a longstanding lawsuit between the
publishing industry and Google Books drew some early fire Wednesday from
two Texas lawmakers on the House Energy and Commerce Committee.

Reps. Charles Gonzalez and Gene Green, both D-Texas, said the settlement
may protect the interests of publishing industry giants but not those of
small and minority publishers.

"The proposed settlement was negotiated between Google and the Association
of American Publishers and the Authors Guild," said Gonzalez, "but it would
affect every author and publisher in the country."

Gonzalez added, "Digital book distribution holds out great potential and
we have to see that progress makes the most of this technology for
everyone, not just for the largest players."

Gonzalez and Green wrote Attorney General Holder asking him to review the
settlement to "ensure that the rights of all publishers are represented and
protected."

"We don't want this settlement process to go forward if it will not
protect the work of small and minority publishers," Green said.


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HILL BRIEFS: 'DIRTY MONEY' POURS INTO U.S. FROM SCOUNDRELS, PANEL FINDS

Foreign dictators, high-living bureaucrats and arms dealers are still able
to funnel millions of dollars in potentially corrupt money into the United
States, despite laws passed after the Sept. 11, 2001, terrorist attacks
cracking down on money laundering, according to a Senate investigation.

The son of the president of Equatorial Guinea moved $110 million in
suspect funds into the United States from 2004 to 2008 while an Angolan
arms dealer, now in a French jail, was able to pay $9.6 million for an
Arizona home in 2000 and maintained U.S. bank accounts handling $60 million
in transactions between 1999 and 2007, the report found.

The Senate Homeland Security and Governmental Affairs Permanent
Subcommittee on Investigations, which wrote the report, has summoned
several of the U.S. lawyers, real estate agents and bankers involved in the
financial transactions to a hearing today.

The subcommittee chairman, Sen. Carl Levin, D-Mich., said that while banks
are doing better in blocking dirty money because of money-laundering
safeguards in the 2001 PATRIOT Act, there are still "so many vehicles in
our system where corrupt money can flow." The findings of the report, which
focused on four case studies, are "infuriating," he said.

The 330-page report concluded powerful foreign officials and their
families, known internationally as "politically exposed persons" or PEPs,
have used lawyers, real estate and escrow agents, lobbyists, bankers and
university officials to circumvent anti-corruption laws.


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[Snuffysmith]

CongressDaily PM for Thursday, Feb. 4, 2010

--------------------
CONTENTS

ECONOMY: REID SEES JOBS BILL ACTION NEXT WEEK
By Darren Goode and Dan Friedman


Senate Democrats are hoping to vote next week on an initial bipartisan
jobs bill, but details remain elusive as they continue to search for enough
Republican support.

Senate Majority Leader Reid said the plan is to unveil the bill by Friday,
and he might bring it to the Senate floor without a vote in the Finance
Committee. He said a floor vote -- presumably an initial procedural move --
will occur Monday, and he hopes to finish considering it by the end of next
week. It would be the first of a series of jobs bills Democrats plan to
bring up this year.

"This is a good-faith offering on the Democratic side," Senate Majority
Whip Durbin said of their overall jobs strategy this year. "We're inviting
our friends on the Republican side to join us. Bring your best ideas
forward."

But Democratic leaders are scrambling to find the right combination of
initiatives to secure 60 votes for an initial bill, which ideally would be
the least contentious of the lot. In a surprise, they did not specify at a
briefing this morning what exactly would be in that first bill.

"We're not going to, in effect, step on the message," Reid told reporters.

The first bill would be dominated by -- if not consisting entirely of --
items under the oversight of the Finance Committee. Durbin told reporters
after the briefing it will include items Democrats believe will create jobs
immediately, including a tax credit to spur new hiring; Build America bonds
and extending surface transportation funding; as well as "safety net"
measures to extend unemployment benefits and health insurance subsidies for
laid-off workers that are set to expire at the end of the month. Reid
deferred to the Finance Committee regarding details of the hiring tax
credit.

Reporters were only given a broad outline of the Democrats' overall
agenda. A Democratic aide said Democrats did this to avoid being attacked
for not announcing anything at all, while they held off on releasing
details so Republicans could not charge that they have not been consulted.

"We want to work with Republicans, and it appears on the jobs package they
want to work with us," Reid said.

Discussions with Republicans are occurring at various levels, including
with Senate Minority Leader McConnell, the aide said. One of the GOP
conditions has been that debate start soon on the estate tax, but Reid
today said that would not occur "in the near future."

A Democratic aide said the reason Democrats held a news conference with
few details is that Finance Chairman Max Baucus has told Democratic leaders
he is in sensitive negotiations and is "close to a deal" with two or three
Finance Republicans. Finance ranking member Chuck Grassley and Sen. Orrin
Hatch of Utah are two Republicans who have been working with Democrats.
Sen. Olympia Snowe, R-Maine, said her staff was still reviewing a draft
they received late Wednesday.

Baucus and other Democrats are staying mum to avoid upsetting those talks,
aides said. Baucus told reporters today he did not know whether his panel
would mark up a jobs strategy, but he added that "that does not seem to be
a big issue" with Republicans.

"It's just getting it done," he said.


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ECONOMY: GROUPS SEEK TO FREE UP PENSION FUNDS
By Peter Cohn


Businesses, nonprofits and unions facing unexpected higher pension
contributions due to the market downturn called on lawmakers today to act
swiftly to let them free up needed cash for payroll and investments, a move
being considered as part of a Senate jobs package.

Rep. Earl Pomeroy, D-N.D., the lead sponsor on the House side, joined
advocates on a conference call to argue that the measure is "directly
related to jobs" because it would allow companies and nonprofits the use of
$66 billion over the next few years they would ordinarily have had to sock
away in pension plans.

"I believe that it's entirely appropriate - in fact, imperative - that
Congress pass immediately pension funding relief for defined-benefit
pension plans," said Pomeroy. He said he secured a commitment Wednesday at
a Ways and Means hearing from Treasury Secretary Geithner to consider the
plan.

The proposal could raise as much as $7 billion by letting companies delay
their required pension contributions for two years, although details of the
Senate bill were still under wraps.

Joining Pomeroy were representatives from the American Benefits Council,
which represents companies with defined-benefit plans; nonprofits,
including the Girl Scouts of America and Easter Seals; and the National
Federation of Nurses.

"The perfect storm analogy has certainly been overused ... but it really
does ideally describe the situation which has brought us to this point,"
said Council President James Klein. "This is first and foremost a jobs
issue, which helps explain why business and organized labor are working
arm-in-arm on this matter."

Klein said the measure would not impact companies' ability to pay
benefits.

"Pension plans will be fully funded, but it would be done in a logical and
timely manner," he said. The additional money saved would count as taxable
income, which is being eyed as a revenue-raiser for the jobs bill, an added
bonus.

Pomeroy said the 2006 law requiring the pension payments contained an
"extraordinarily conservative funding requirement" that calls for greater
contributions than are actually needed.

The result of those requirements, combined with the 2008 market downturn
and low interest rates that have depressed pension plan values, means that
this year, for example, firms would have to set aside 400 percent of the
obligations required in 2009, he said.

Girl Scouts of America CEO Kathy Cloninger said her group owes $60 million
in pension contributions over the next few years. Last year, the Girl
Scouts contributed 3.8 percent of payroll to fund its defined-benefit plan.
This year, that amount has jumped to 9 percent, and will swell to 30
percent in 2011 and beyond if Congress does not act.

"That is absolutely not sustainable or doable," Cloninger said. "One of
our only options is going to be cutting expenses, which in a nonprofit
entity translates into cutting staff." She added, "We do not need to take
women out of the workforce."

There is some concern in the business community that onerous strings would
be attached to ensure company executives did not pad their deferred
compensation plans while freezing benefits for workers.

But Pomeroy said he thought those concerns could be resolved. "In the end
we want to pass relief that is meaningful," he said. "We want to pass
relief that works. If we put a bill together that no one's going to use,
that's not going to work."


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HEALTH: LANDRIEU: GOP OK'D STATE MEDICAID DEAL
By Anna Edney


Facing continuing criticism for scoring a special deal for Louisiana in
the Senate healthcare bill, Democratic Sen. Mary Landrieu today defended
the play she made for her home state, claiming the deal was made openly,
with Republican support.

Landrieu released documents that showed GOP Gov. Bobby Jindal and the
bipartisan Louisiana congressional delegation had been discussing for a
year getting additional federal help for the state's Medicaid expenses.

"The fact that this was secret is a lie," Landrieu said on the Senate
floor. "The fact that it wasn't supported by our delegation is a lie."

The overhaul included $300 million for Louisiana's Medicaid coffers to
help make up for a shrinking federal split with the state over Medicaid
costs after Hurricane Katrina.

Louisiana's case, Landrieu argued, is "unique." A higher per capita income
in the state as a result of rebuilding led to the threat of a smaller
federal Medicaid share, she explained.

States and the federal government share Medicaid costs, with the federal
share sliding as per capita income rises.

"And either the people of my state would have had to cut $400 to $600
million out of programs today, or they would have had to raise $400 to $600
million in taxes," Landrieu said.

Republicans, and even some House Democrats, have criticized the Senate
bill for such sweetheart deals. Also under fire was a Medicaid deal worth
$100 million for Nebraska, secured by Sen. Ben Nelson, D-Neb. Nelson
already has backed off the provision, inserted by Senate Majority Leader
Reid, asking the leader to either eliminate it or offer the deal, which
would cover the state's cost of a Medicaid expansion, to everyone.

Forceful at times, Landrieu insisted she did what was best for her state,
and said she will stay on the Senate floor all day if any senator wants to
debate her over her stance.

"Being in office takes more than being smart or having a fancy resume. It
takes guts," she said.


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BUDGET: DEBT LIMIT INCREASE NEARS FINAL HOUSE VOTE
By Humberto Sanchez


The House today cleared a major hurdle toward passing legislation to boost
the debt limit by $1.9 trillion to nearly $14.3 trillion and give pay/go
the force of law.

The chamber passed, 217-212, the rule for the measure, which was designed
by House Democratic leaders to count as a vote to increase the debt limit.
The House must still vote on passing the pay/go provision, after which the
package would go to President Obama for his signature.

Republicans charged that House Democratic leaders structured the rule this
way to protect their members from having to directly vote on raising the
debt limit.

"The majority party has used deceitful procedural games to hide the fact
that they are raising the debt limit again for the sixth time since they
have taken control of the House. Why, you ask? It's to give their members
political coverage and a vote on statutory pay/go again," Rep. Pete
Sessions, R-Texas, said during debate.

House Rules Chairwoman Louise Slaughter said that using the rule to pass
the debt increase was just the "easiest way to get this done."

As the vote approached, House Democratic leaders were scrambling to win
enough votes to pass the debt limit increase, according to a Democratic
aide.

House Majority Leader Hoyer said during debate he intends to vote for
future debt limit increases even if Democrats are no longer in the majority
as a gesture of putting the nation's need to pay its obligations over
politics.

Democrats blamed Republicans for adding to the deficit while they were in
charge of Congress and the White House by not paying for the wars in Iraq
and Afghanistan, providing drug benefits to seniors, and enacting tax cuts
in 2001 and 2003.

"We are in this position because of the policies that have been
implemented over the past decade," said Rep. Jim McGovern, D-Mass. "Ten
years ago, we had a budget surplus. Since then our country was attacked and
the worst recession in our lifetimes took a severe economic toll on our
nation's economy."

"But we also had two wars that were unpaid for, tax cuts -- mostly for the
wealthy -- that were unpaid for and a prescription drug benefit that was
unpaid for," McGovern said. "Yes, Republicans and Democrats have had to
increase the debt limit because of these policies and events, and
unfortunately we have to do it again today."

Sessions argued that Democratic spending plans are at fault for the debt
limit increase. He highlighted the stimulus package Congress passed last
year, which was initially projected to cost $787 billion. But CBO recently
estimated that the package would cost $862 billion due in part to
higher-than-expected spending on unemployment insurance and food stamps.

Democratic leaders "took out a monster loan that is not paying off,"
Sessions said. "The [Democratic] policies are not creating jobs. They are
creating debts. They are creating circumstances where this country has to
again today borrow ... so our government doesn't go belly-up."

House Appropriations ranking member Jerry Lewis said, "There is one easy
way to avoid this kind of colossal national debt -- the Democrat majority
can stop spending so much taxpayer money."

"Without serious action to rein in spending, these massive levels of debt
will continue to dampen our economy and make it even harder for millions of
Americans to find decent work," Lewis said.


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FINANCE: SENATE LIKELY TO TRIM VOLCKER RULE
By Bill Swindell


The Obama administration's proposed "Volcker rule" ran into continued
resistance today as Banking Chairman Christopher Dodd grappled over how to
define the kind of trades that the nation's five big banks would be
prohibited from conducting under the former Federal Reserve chairman's
plan.

During the second hearing this week on the issue, Dodd said Congress would
have to "draw that bright line" for fear large banks would look for ways
around Volcker's plan, which would effectively restrict proprietary trading
for the bank's own benefit rather than the client.

"Nothing will change unless the definition is ironclad," Dodd said. "Can
we write such a thing?"

John Reed, former chief executive of Citibank, said yes, noting "if you
run a bank, you have to know what you are [trading]."

Others disagreed. Barry Zubrow, chief risk officer of JPMorgan Chase, said
such trading is likely to benefit the client because it would reduce
overall risk. "It's very important that firms like ours have the ability to
manage the risks that we take on," Zubrow said.

Gerald Corrigan, managing director of Goldman Sachs, noted that
proprietary trading would make up at most 10 percent of his firm's
revenues, and that a greater concern to lawmakers should be how banks are
interconnected with each other through their various deals. Those ties make
one firm's collapse dangerous for its competitors as well, he said.

Banking ranking member Richard Shelby has been skeptical about the
proposal since the administration announced support for the plan last
month, an 11th-hour addition to the negotiations over a bipartisan bill to
revamp the nation's regulatory structure.

Shelby asked the witnesses whether banking regulators already have such
powers to restrict such trading if they view it as a threat to a bank's
safety and soundness.

"I think they have the power," said Hal Scott, a professor at Harvard Law
School, echoing a view shared by others.

"But they don't have the will?" Shelby asked. Scott said there could be
value in underlying language stating that regulators do have such authority
to restrict proprietary trading if it poses too much risk.

Dodd said that route might be the most feasible, especially because he
wants to produce a bill next month.

A compromise, Dodd said after the hearing, would be "hard," but not
"impossible."

The Volcker proposal also would prohibit commercial banks from investing
in or owning a hedge fund or private equity group. It also expands a rule
limiting what each bank can hold in the deposit market to other financial
activities and nonbanks -- another proposal opposed by the industry.

Some have theorized the Volcker rule would force Goldman Sachs and Morgan
Stanley, which were investment banks before the crisis, to shed their
status as bank holding companies to get out from such restrictions. But
Corrigan said "it is not entirely clear to me that would be the result."

Sen. Jack Reed, D-R.I., is attempting to search for another avenue in the
debate, such as whether to make the Federal Reserve's discount window
available only to those banks that engage in traditional banking
activities, such as taking deposits and making home loans. He has argued
that banks engaging in risky activities such as proprietary trading should
not have the benefit of such low-cost loans.

Dodd and Shelby, according to a knowledgeable source, reached a stalemate
this week over whether to give a proposed consumer protection division
rule-writing authority over credit cards, home loans and other financial
products. Dodd wants to give it such powers, while Shelby is fighting such
a drive, the source said.

Shelby has already shot down making a proposed Consumer Financial
Protection Agency independent from bank regulators, as proposed by the
Obama administration, forcing Dodd in his talks to make it part of a new
federal bank regulator, according to sources.


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TELECOMMUNICATIONS: PARTISAN SPLIT EMERGES OVER COMCAST DEAL
By David Hatch


Lawmakers appeared generally split along party lines during a House
hearing today on the proposed union of Comcast, the nation's largest video
service provider, and NBC Universal, the country's fourth-largest
entertainment company.

But there was an important silver lining for the merger parties: Several
Republicans called for approval, while the worst thing Democrats could say
was that the transaction should be closely scrutinized and heavily
conditioned.

No lawmakers called for the merger to be blocked -- as several public
interest groups have demanded.

The first hour of the hearing before the House Energy and Commerce
Communications Subcommittee was devoted to members' opening statements,
followed by a series of floor votes that disrupted the session.

As a result, the star witnesses -- Comcast President and CEO Brian Roberts
and NBC Universal President and CEO Jeff Zucker -- did not begin testifying
until two hours into the session. It should be a long day for both, with a
second hearing taking place this afternoon before the Senate Judiciary
Antitrust Subcommittee.

Among the cheerleaders for the merger was House Energy and Commerce
ranking member Joe Barton.

"We should allow companies to take risks," he said. "We should allow
companies to seek out niche markets and allow companies to use their
natural competitive advantages to serve up material for the marketplace of
various interests."

"Since NBCU and Comcast do not compete in most segments of the market,
this deal will not bring about consolidation," added Energy and Commerce
Communications Subcommittee ranking member Cliff Stearns, R-Fla.

Echoing those views was Rep. Fred Upton, R-Mich., who emphasized: "Comcast
and NBC have very little overlap. The combined entity will be a more
diverse company and will be in a better position to succeed during these
very difficult economic times."

Several GOP lawmakers warned the FCC and Justice Department, the two
agencies responsible for scrutinizing the agreement, not to play politics
in setting conditions for approval of the deal. "This merger should not be
used as an opportunity to push unrelated policy agendas or extend
unnecessary regulations that do not extend to the broader market," Upton
said.

He and other Republicans are worried the FCC might condition the deal on
adherence to proposed network neutrality regulations the agency is seeking
to adopt. The controversial proposal, designed to enhance existing
protections of the Internet's openness, is opposed by many broadband
providers.

Democrats were more cautious about the merger, warning it could adversely
impact competition, program access and content diversity. A particular
concern relates to how Comcast-NBC would make programming available online,
a burgeoning sector of the video business that is expected to grow rapidly.

House Energy and Commerce Communications Subcommittee Chairman Rick
Boucher, D-Va., noted that Hulu.com, a free, online programming site in
which NBC Universal holds a minority stake, has been accused of blocking
the online service Boxee from letting viewers stream Hulu directly to their
TV sets.

"This was a decision made by the Boxee management," Zucker responded,
insisting the streaming was illegal.

In another exchange with Boucher, Roberts pledged that content on NBC's
main Web site would not be limited to the company's cable customers.
Critics fear that marquee programming owned by the company, including
Olympics coverage and movies, would only be available to Comcast
subscribers.


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SENATE LEADERSHIP: REID CHANGES MIND ON RECESS APPOINTMENTS
By Dan Friedman


Senate Majority Leader Reid, who kept the Senate in pro forma session over
holidays to prevent former President George W. Bush from making recess
appointments, today suggested President Obama consider recess appointments
for stalled national security nominees and others.

"I have been someone, madam president, who has tried hard not to ... have
recess appointments, but what alternatives do we have?" Reid said on the
floor today. "What alternative do we have? We have on the calendar dozens
of people who have been held up. Dozens."

For the second time this week, Reid assailed Republicans for holds on
nominees whose jobs relate to national security.

Those nominees include Clifford Stanley as undersecretary of defense for
personnel and readiness; Caryn Wagner as Homeland Security undersecretary
for intelligence and analysis, Phillip Goldberg as the State Department's
intelligence chief and Laura Kennedy as U.S. representative to a conference
on disarmament.

When Reid sought confirmation of the nominees by unanimous consent today,
he drew an objection from Minority Leader McConnell on behalf of Sen.
Richard Shelby, R-Ala.

Shelby said he has placed some holds to win concessions from the Pentagon
in a long-running fight over the bidding process for a new Air Force tanker
contract. Shelby argues the process is unfair to Northrop Grumman Corp. and
Alabama.

"We're trying to deal with the Pentagon on the tanker and on some other
issues dealing with fairness and with requests for proposals," Shelby said.
"They won't talk to us."


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OUTLOOK: DEMS LOOK TO MOVE HEALTH, JOBS BILLS
By Billy House and Dan Friedman


The House plans to bring a stripped-down healthcare bill to the floor next
week, but Speaker Pelosi and other Democratic leaders said the decision
does not mean they have shelved a broader health bill that has been
stalled.

Senate Majority Leader Reid said today he hopes the Senate will be able to
start voting on a jobs bill next week. Sticking to that schedule depends on
the outcome of negotiations between Democrats and Republicans on the
Finance Committee.

The jobs bill is likely to be the first major vote with Republicans in
position to block legislation. The minority will get that power when
Sen.-elect Scott Brown, R-Mass., is sworn in this afternoon, leaving
Democrats one short of the 60 votes needed to end filibusters.

In the House, a vote is likely Wednesday or Thursday on a bill that would
strip health insurance companies of an antitrust exemption. Aides said the
House Rules Committee is likely to hold a hearing Tuesday.

The repeal is part of the House-passed healthcare bill, but was left out
of the Senate's version. Supporters say removing the exemption would help
bring down insurance costs in parts of the country where one insurer
dominates the market.

Republicans have not said how they will vote. Only one House Republican
voted for the overall package.

Reid and aides did not discuss the procedure for moving the jobs bill. GOP
aides said they expected Reid to bring up a House-passed
Commerce-Justice-Science Appropriations bill to which the House jobs
package was attached. Reid could replace the underlying measure with a
substitute amendment, setting up an expected cloture motion on that
amendment.

Reid also might file cloture this week on the nomination of Craig Becker
to join the National Labor Relations Board. That nomination was reported
out of the Health, Education, Labor and Pensions Committee on a party-line
vote today, but unified GOP opposition would block his confirmation.


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HILL BRIEFS: CONTESTED NLRB NOMINATION ADVANCES

Labor. On a party-line 13-10 vote, the Senate Health, Education, Labor and
Pensions Committee today approved the nomination of Craig Becker to serve
on the National Labor Relations Board, a move that sets up a likely
filibuster in the full Senate. President Obama renominated Becker to the
NLRB after his nomination was blocked last year by Sen. John McCain,
R-Ariz. Republicans and business groups say they are concerned Becker would
seek to administratively implement the card check bill, a measure to end
secret ballots in union organizing elections. HELP ranking member Mike Enzi
said he had not been assuaged by what he called Becker's "vague" assurances
that he would follow precedent in the law and not pursue "radical" changes
in labor law without congressional authorization. The U.S. Chamber of
Commerce sent a letter to HELP Chairman Tom Harkin and Enzi saying that
"too many concerns remain for employers to be comfortable with this
nomination." With Republican Sen.-elect Scott Brown expected to be sworn in
today to fill the remainder of the term of the late Sen. Edward Kennedy,
D-Mass., Democrats will lose their filibuster-proof majority. A spokeswoman
for Majority Leader Reid would only say he "is committed to doing what is
necessary to bring the nomination to the floor as soon as possible and get
his nomination confirmed."


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HILL BRIEFS: GROUPS ASK $253M MORE FOR FOOD BANKS

Agriculture. A coalition of farm and antihunger groups is asking Congress
to include an additional $253 million for commodity purchases for food
banks, perhaps in one of the pending jobs bills. The coalition sent House
and Senate Agriculture Appropriations leaders a letter asking for
additional funding for emergency food assistance. According to the group,
the farm bill provided $250 million in mandatory spending for commodities
purchases in FY09, while the economic stimulus package provided $100
million more and USDA used its authority to keep commodity prices up by
buying another $400 million in commodities. But in FY10, the emergency food
assistance program will get less. Maura Daly of Feeding America, the food
bank network, said the number of people coming to food banks continues to
rise and that food banks need to replenish their rapidly depleting
inventories.


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HILL BRIEFS: FDA ROLLS OUT IMPORT REGULATORY SYSTEM

Health. FDA Commissioner Margaret Hamburg today formally introduced the
agency's new, computerized import regulatory system at a session held at
the Center for Strategic and International Studies. Imports are screened at
random, but the new system would assign imports a number based on how risky
they are based on factors such as history. Hamburg said FDA's import
regulation needs to shift from a reactive approach to a more proactive one
with 20 million shipments expected this year, compared to 6 million a
decade ago. Some question whether new regulatory fees will
disproportionately affect smaller companies, but former HHS policy analyst
Thomas Bollyky agreed with Hamburg that safety is worth it. Bollyky said if
unsafe products were discovered, that would be more detrimental to a
business than a fee. Coca-Cola's senior director for food safety, Henry
Chinh, represented business' viewpoints. Although Chinh declined to offer
his opinion on user fees, he expressed a desire for cooperation with the
FDA's goals. "It will take time to harmonize standards, but I think we can
all agree that's the way to go," he said.


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HILL BRIEFS: WALDEN FILLS LEADERSHIP VACANCY

House Leadership. Rep. Greg Walden, R-Ore., has been named chairman of the
Republican leadership, a post that has been vacant since 2005. The
appointment, announced today by House Minority Leader Boehner, gives Walden
a seat at the table for GOP leadership strategy meetings. It also positions
him to direct special projects, such as the one now under way that is
designed to make the House more accountable to the public. Walden will
continue to serve as deputy chairman of the National Republican
Congressional Committee, but will take a temporary leave from the Energy
and Commerce Committee. The leadership post was last held by Rep. Rob
Portman of Ohio, who left Congress in 2005 to become U.S. Trade
Representative for then-President George W. Bush. The job was created for
then-Rep. Bob Walker, R-Pa., after he lost a leadership election in 1995.
Spokesman Michael Steel said Boehner filled the job because he and others
"wanted Rep. Walden's voice at the leadership table."


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HILL BRIEFS: SMITH CONFIRMED AS LABOR SOLICITOR

Labor. By a 60-37 vote, the Senate today approved Patricia Smith's
nomination as the new solicitor of the Labor Department. Approval came nine
months after the New York state labor commissioner was nominated. Senate
Republicans had held up a confirmation vote because they claimed she misled
lawmakers about her role in creating a New York program that allowed labor
unions to help uncover wage-and-hour violations. Democrats Monday invoked
cloture on her nomination on a 60-32 vote, which meant she needed just a
simple majority today.


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HILL BRIEFS: CHU GETS HEAT ON YUCCA FUNDING

Energy. Energy Secretary Chu came under fire today from Senate Energy and
Natural Resources Republicans, who questioned the White House budget's
elimination of funding for the Yucca Mountain nuclear waste repository in
Nevada. "When the president called for more nuclear energy, I took that to
mean his agency would support a waste repository, such as Yucca," said
Energy and Natural Resources ranking member Lisa Murkowski. "This leaves us
without a viable repository option at this point." Chu said the department
can afford to do a longer review because it has decades to come up with a
permanent storage site. Sen. Richard Burr, R-N.C., said that even with the
FY11 budget increasing loan guarantees for new nuclear plants to $36
billion, a standstill in waste disposal policy would prevent companies and
shareholders from investing in a new plant. "We've got to pick a path and
go for it," Burr said.


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HILL BRIEFS: BOXER, WEBB TARGET WALL STREET BONUSES

Finance. Executives of firms that got more than $5 billion in Troubled
Asset Relief Program funds and who also received bonuses could face a 50
percent tax on those payments under legislation introduced today. Sens.
Barbara Boxer, D-Calif., and Jim Webb, D-Va., introduced the bill to impose
the tax. "It is outrageous that these companies are now doling out millions
of dollars in bonuses while the rest of America feels the pain of their
reckless decisions," said Boxer. Webb denied the bill is class warfare.
"This is not something that's going to run the gamut of all executive
compensation and bonuses. This is a one-shot deal," he said. Their bill
would impose a 50 percent excise tax on the amount of bonuses that exceeded
$400,000 in 2009.


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HILL BRIEFS: WU MULLS INTERNET FREEDOM MEASURE

Technology. Rep. David Wu, D-Ore., said Wednesday he might sponsor a House
version of the resolution the Senate passed Tuesday condemning the cyber
attack against Google that originated from China. Wu, who chairs the
Science Technology and Innovation Subcommittee, said such an institute also
would be charged with sponsoring research into technologies aimed at
helping citizens bypass measures imposed by foreign countries to restrict
or censor access to information. Google revealed in January it had been
attacked from a source in China that appeared to be aimed at gaining access
to the e-mail accounts of human rights activists. In response, Google
announced it would stop censoring its search results for users in China.


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THE FINAL WORD: THE FINAL WORD

"J.D. had a fairly short, undistinguished congressional career with
virtually no initiative on his part. I just don't see any reason why we
should be concerned about that race."

-- Former House Majority Leader Dick Armey, R-Texas, on whether his group
FreedomWorks would get involved in the primary between Sen. John McCain,
R-Ariz., and former GOP Rep. J.D. Hayworth, as reported Wednesday by the
Arizona Republic.


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[Snuffysmith]

CongressDaily AM for Friday, Feb. 5, 2010

--------------------
CONTENTS

ECONOMY: MUST-PASS NATURE OF JOBS BILL ATTRACTS UNRELATED RIDERS
By Peter Cohn with Darren Goode, Billy House and Chris Strohm
contributing


Senate leaders continued to negotiate a bipartisan package of tax
incentives and safety-net spending for laid-off workers Thursday, but the
must-pass nature of the bill meant it was beginning to attract unrelated
legislative freight.

There was no deal at presstime, and with a winter blizzard expected this
weekend, senators were sent home and it was unclear when a bill would be
unveiled.

According to Senate officials, Democratic leaders were seeking legislative
fixes beyond the scope of an initial $80-$90 billion package of tax breaks,
benefits for the unemployed and other items intended to create jobs and
jolt the economy.

Those included extensions of the USA PATRIOT Act domestic surveillance law
and satellite television licensing provisions that expire Feb. 28. An
agreement on a process to consider estate tax legislation at some point, a
condition sought by Republican leaders, was also still elusive.

Earlier drafts circulating would have made controversial changes to the
PATRIOT Act, but negotiators appeared to have tailored their proposal
simply to a clean extension of the law's expiring provisions. It was
unclear at presstime if such language would make it into the final bill,
but the effort is apparently being driven by Senate Majority Leader Reid.

When asked if PATRIOT Act provisions would be included in the jobs bill,
Sen. Charles Schumer, D-N.Y., a member of the Judiciary Committee and
Democratic Conference vice chairman, replied: "Talk to Harry." Senate
Judiciary Chairman Patrick Leahy said he was unaware of such a move, and
that he would prefer to move his PATRIOT Act bill separately. That bill has
language opposed by Republicans, however, which has dimmed chances for
renewing the expiring pieces of the law. A Reid spokeswoman would say only
that "we are considering all of our options to reauthorize the legislation
before the end of the month."

The jobs bill was already slated to carry a number of three-month program
renewals, including unemployment benefits and health insurance subsidies
for laid-off workers expiring Feb. 28. It was also expected to stave off
Medicare physician payment cuts that would otherwise take effect, although
that was still in play Thursday, as well as an extension of surface
transportation financing.

Other programs expiring on Feb. 28 include Small Business Administration
loan guarantees, the national flood insurance program and supplemental
nutrition assistance, formerly known as food stamps.

Senate leaders want to get a bill to the floor next week because the
one-week Presidents Day recess beginning Feb. 12 stands in the way of
extending the expiring provisions and demonstrating some movement on items
important to small businesses. The urgency has heightened the chances for
success, but Democrats also risk losing support if they load up the bill
with too many unrelated measures.

They have sought GOP buy-in by including a payroll tax break for firms to
hire unemployed workers co-authored by Sen. Orrin Hatch, R-Utah, as well as
a package of expired tax provisions important to Finance ranking member
Chuck Grassley, including the biodiesel production credit. Hatch said the
basic outlines of the bill negotiated in the Finance Committee appeared to
be acceptable. "I think my colleagues should support it," he said. "It's
basically a set of ideas that they can live with."

However, the estate tax was still lingering as an issue, as Democrats want
to avoid a divisive fight on the issue during floor debate. They have not
yet committed to a time-certain to consider the measure, as sought by
Republicans.

"We need a pathway," Senate Finance Chairman Max Baucus said. "It's
important to have an understanding." Added Senate Minority Whip Kyl: "One
of these days, we're going to have a process. We don't know. You guys are
assuming that ... we all know what we're doing and everything is nailed
down."

Even if senators strike a deal, House Democrats might have their own ideas
about creating jobs. House Ways and Means Chairman Charlie Rangel said the
chamber could take up a bill as early as next week, although aides said it
remained unclear when a bill would come up or if they would wait for the
Senate to act. Speaker Pelosi told reporters the focus could be on small
business-lending and tax incentives, and extensions of expiring safety-net
programs.

The House passed a $154 billion bill in December that was heavily focused
on infrastructure and aid to states. By contrast, the emerging Senate bill
is titled toward tax breaks, something that does not sit well with many
House Democrats. "It would not be what most House Democrats want, so I
don't know" if the House would take up the Senate bill, said House
Financial Services Chairman Barney Frank. "Not having aid to the states, I
think, is a terrible mistake. You're talking about quality of life, cops,
teachers, people who clean up the snow."

Senate Republicans have asked for a commitment not to pair new spending
initiatives with the initial, tax-cut heavy, jobs bill. Frank said by
including most of the popular tax breaks in the first bill, Senate
Democrats would lose leverage to get some of their priorities passed. "I'd
argue whether they'd have the votes to do it later. If they give away the
tax cuts, they may not have support to do that later," Frank said.


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SENATE: REID: SHELBY HAS HOLD ON ALL NOMINEES
By Dan Friedman and Megan Scully


Sen. Richard Shelby, R-Ala., has placed a blanket hold on all executive
nominations on the Senate calendar in an effort to win concessions from the
Obama administration and Pentagon on a variety of fronts affecting his home
state, according to aides to Senate Majority Leader Reid.

Reid spokeswoman Regan Lachapelle said Shelby is blocking more than 70
pending nominations. Reid can force a vote on any nomination by filing
cloture.

Because of the time required to vote on multiple nominations, the Senate
processes most nominations by unanimous consent. Any one senator can block
any of those nominations by objecting to a unanimous consent request to
take it up. The nominations will remain stalled unless Reid files cloture.

While holds are frequent, Senate aides said a blanket hold represents a
far more aggressive use of the power than is normal.

"He should not be holding up 70-plus nominees for a parochial issue," a
Democratic aide said. "They're qualified and they should be moving
forward."

Disclosure of the blanket hold came after two days in which top Democrats
voiced mounting frustration with Republican holds on executive nominees.

"We've got a huge backlog of folks who are unanimously viewed as well
qualified -- nobody has a specific objection to them -- but end up having a
hold on them because of some completely unrelated piece of business,"
President Obama said Wednesday in a televised meeting with Senate
Democrats.

On the Senate floor Thursday, Reid, Senate Majority Whip Durbin, Senate
Judiciary Chairman Patrick Leahy and Senate Armed Services Chairman Carl
Levin ripped Republicans for holds on national security nominees and
judges.

Reid, who kept the Senate in pro forma session over recent holidays to
prevent former President George W. Bush from making recess appointments,
said he has grown so frustrated he might advocate such appointments, which
the president can make when the Senate is out of session.

"What alternatives do we have?" Reid said on the floor Thursday. "What
alternative do we have?"

Earlier in the day, a spokesman for Shelby said the senator has placed
holds on "several pending nominees due to unaddressed national security
concerns," including frustrations with the Air Force's handling of the
competition for an aerial refueling tanker. The spokesman did not respond
to later requests for comment about the blanket hold.

Northrop Grumman Corp. and EADS, the European consortium behind Airbus,
and Boeing Co. are vying for the high-stakes contract, potentially worth
$40 billion. The Northrop/EADS team would build the planes in Mobile, Ala.,
but has threatened to pull out of the competition unless the Air Force
makes changes to a draft request for proposals.

"Nearly 10 years after the U.S. Air Force announced plans to replace the
aging tanker fleet, we still do not have a transparent and fair acquisition
process to move forward," the spokesman said. "The Department of Defense
must recognize that the draft request for proposal needs to be
significantly and substantively changed."

Defense Secretary Gates Wednesday told House lawmakers the Pentagon plans
to issue the final request for proposals soon, and will proceed with the
program whether or not there is a competition.

"Obviously we would like to have a competition for it, and we hope that
both companies will agree to participate, but we will move forward," Gates
said. "We have to have new tankers."

In addition to the tanker issue, Shelby's spokesman said he is frustrated
that the Obama administration won't build an Alabama-based FBI center to
analyze improvised explosive devices.

Shelby secured a $45 million earmark in the FY08 omnibus appropriations
bill for a Terrorist Explosive Device Analytical Center to be set up at the
Army's Redstone Arsenal.

"Sen. Shelby will continue to work with the FBI to give them the
capability to coordinate intelligence as well as forensic and technical
exploitation related to IEDs, but this administration's coddling of
terrorists makes this an uphill effort," the spokesman said. "He has made
the administration aware of these concerns and is willing to discuss them
at any time."

Also Thursday, Vice President Biden said he was so frustrated by
Republican foot-dragging that he was considering whether Senate rules
should be changed.

"There's a little disappointment in that it seems like the only way to do
business up here anymore is with a supermajority on almost everything,"
Biden said moments after swearing in Sen. Scott Brown, R-Mass., who gives
Republicans 41 votes, enough to filibuster on any issue.

"What I have been doing is spending a lot of time having my staff go back
and scrub this, you know, the use of the filibuster and how it's worked,"
Biden said. "This is not a constitutional requirement."

Biden defended the 60-vote requirement, calling it "a useful tool. It's
legitimate, but from my perspective having served here, having been elected
seven times, I've never seen a time when it's become sort of standard
operating procedure. ... Requiring a supermajority is just not a good way
to do business."


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HEALTH: PROGRESSIVES LOOK FOR WAYS TO GET PUBLIC OPTION REVIVED
By Anna Edney


Progressives plan next week to reach across the Capitol and plot a
strategy to revive the public option, the single provision in the
healthcare overhaul that dominated the debate for weeks only to die in the
Senate at the hands of entrenched GOP opposition and a few Democrats.

Progressives have been holding smaller talks, but this is the first time
key players will huddle as a group.

Rep. Raul Grijalva, D-Ariz., co-chairman of the Congressional Progressive
Caucus, said his caucus' health task force and his co-chairwoman, Rep. Lynn
Woolsey, D-Calif., will meet Tuesday evening with a handful of progressive
senators.

Sen. Bernie Sanders, I-Vt., said he anticipates attending the meeting.

"The game plan is to say, "Look, don't bury the public option yet,' "
Grijalva said. "We support it, and we think it needs to be part of any and
all discussions."

Progressives plan to discuss the different mechanisms at their disposal to
put the public option back in play and push Senate Majority Leader Reid to
bring it to the floor. Reid spokesman Jim Manley declined to comment on the
likelihood Reid might bring up the public option again.

Those options include inserting a public option in a reconciliation
package that would make changes to the Senate-passed overhaul bill,
Grijalva said, or bringing it up through normal channels and forcing a
GOP-led filibuster.

"One option is if the Republicans are going to continue to threaten, and
some of the Democrats are going to filibuster, let them filibuster,"
Grijalva said. "Let them filibuster; that way the American people get to
see where the roadblock is."

"It's about putting them on the spot," he added.

One leadership aide said the increasingly public effort to breathe life
into the public option could anger leaders while they try to keep the focus
on jobs and let a plan to move health care unfold quietly. Leaders expect
to gauge the House vote next week on legislation to strip health and
medical malpractice insurance companies of their antitrust exemption and
move from there.

The House-passed overhaul bill included a public option. Reid failed to
get a public option through the Senate that would allow states to opt out
if they wanted.

With the Jan. 19 election of Sen. Scott Brown, R-Mass., Democrats lost
their 60-vote majority that would allow them to pass a compromise measure
with the House without Republican support.

"Right now, I think Democrats are on the defensive and squeamish, which is
where we shouldn't be," Grijalva said.

Leaders are considering changes to the bill the Senate already passed to
appease the House. The Senate would likely only be able to pass those fixes
through reconciliation, which requires a majority to pass.

House progressives and other public-option supporters in the chamber have
been building support for bringing a government-run program back in recent
weeks.

Freshmen Reps. Jared Polis, D-Colo., and Chellie Pingree, D-Maine,
co-authored a letter they sent Reid Wednesday with signatures from 120
House members urging him to include a public option through reconciliation.


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FINANCE: DODD ACKNOWLEDGES POSSIBILITY OF PARTY-LINE BREAKDOWN
By Bill Swindell, with Dan Friedman contributing


Senate Banking Chairman Christopher Dodd Thursday dismissed claims that
talks over revamping the nation's financial system have broken down with
Banking ranking member Richard Shelby, but he acknowledged that it might
not be possible to get GOP support on the bill.

Dodd was negotiating with Shelby Thursday night over the scope of consumer
protections to be included in legislation that would revamp the nation's
regulatory structure, wrangling which will make or break a bipartisan
compromise on a top priority for the Obama administration.

The two had a "blowup" in negotiations this week on whether to give a
proposed consumer protection office rule-writing authority over credit
cards, home loans and other financial products, Hill and K Street sources
said. Dodd wants to give it broad powers, while Shelby wants to limit its
reach, they said.

Dodd downplayed any dissension Thursday night, calling it an "unfounded
rumor." "We're still moving forward," he said. "This is a difficult
process. It's a complicated set of proposals. And we are not just
representing ourselves obviously but our colleagues ... that have an
interest, obviously in the bill. So we are trying to navigate these waters
with a common determination to get a consensus bill if we can and we
realize that may not happen, but we're gonna try."

He noted the two had talks during a committee hearing Thursday morning
over a proposal by former Federal Reserve Chairman Paul Volcker to limit
proprietary trading by big banks.

"We're doing fine,' Dodd said. "We don't meet every day, [but] we talk
every day. We spend two hours together, you know, as we do in committee
hearings. And [Thursday] morning from 10:30 to quarter-to-one, we sat there
and talked. We talked again, [Thursday] afternoon; we talk all the time."

Shelby has already shot down making a proposed Consumer Financial
Protection Agency independent from bank regulators, as proposed by the
administration, forcing Dodd in his talks to make it part of an Office of
Consumer Protection in a new federal bank regulator, according to sources.

Dodd, thus, needs to show some progress for the concession given
stand-alone authority was a major plank for consumer activists, who have
told him to "not even go there" in his negotiations, one lobbyist said.

They also are wrangling over the scope of the new office, one source said,
differing over what institutions would be covered under the new office.
Dodd wants all financial firms, outside of securities and insurance,
covered, while Shelby is pushing for those that are under-regulated at the
state level such as payday lenders, finance companies and mortgage brokers.
Business lobbyists are concerned that the proposed office could be a
division in name only, and operate with broad autonomy to carry out strict
rules, making it in effect a stand-alone agency.

Dodd would likely have to show some accomplishments on the rule-writing
aspect because another major dilemma is looming in negotiations: whether
the new office would have pre-emption authority over state laws. The issue
was the biggest fight over the House-passed bill, as Rep. Melissa Bean,
D-Ill., was able to expand concessions for national banks under an
agreement worked out with Financial Services Chairman Barney Frank, who was
still able to keep the office as a stand-alone agency in his bill.

The Bean language would allow pre-emption if the Office of the Comptroller
of the Currency determines that a state law would prevent, significantly
interfere, or materially impair a federally regulated institution from
engaging in the business of banking.

But the big banks are demanding a complete pre-emption in any deal, which
consumer activists oppose because they note that states typically set a
high bar for consumer protection beyond that of the federal government. "If
you can get to a point where you have an independent agency, then
pre-emption becomes important because it is obvious that taking the states
out of the game in consumer protection harms consumers," said Travis
Plunkett, legislative director for the Consumer Federation of America.

Dodd is working with Shelby on the consumer provisions and the scope of a
new bank regulator, where the retiring Democrat has proposed a broad-scale
consolidation that would take away the FDIC's and Federal Reserve's
prudential regulation over banks. That stance is likely to be revised in
negotiations, especially after community banks protested the FDIC
exclusion.

Other committee members are working on other issues. Sen. Jack Reed,
D-R.I., has taken the lead on derivatives and credit-rating provisions,
teaming up with Sen. Judd Gregg, R-N.H. "We're still negotiating. I am
hoping we can get something done," Gregg said.

Sen. Charles Schumer, D-N.Y., is working on corporate governance with Sen.
Mike Crapo, R-Idaho, and also tackling executive compensation issues. And
Sens. Mark Warner, D-Va., and Bob Corker, R-Tenn., have done much work on
creating a resolution authority to unwind at-risk firms and put them into
bankruptcy.


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BUDGET: HOUSE SENDS DEBT LIMIT INCREASE, PAY/GO TO WHITE HOUSE
By Humberto Sanchez, with Billy House contributing


The House Thursday sent President Obama legislation to increase the debt
limit by $1.9 trillion to $14.3 trillion after voting to give pay/go budget
rules the force of law.

Under the rule for the measure, the House had to approve the rule -- which
counted as a vote for the debt limit increase -- and then vote separately
on the pay/go provision to send the package to Obama.

The House passed the rule 217-212, with all Republicans and 37 Democrats
opposing.

The pay/go provision fared better and was approved 233-187, with all
Republicans and 15 Democrats voting against.

Thursday's vote contrasts with House passage in July of a pay/go bill
265-166. That vote included 241 Democrats and 24 Republicans voting in
favor, and 13 Democrats and 153 Republicans opposing the legislation.

Pay/go, currently a House budget rule, requires that new increases in
mandatory spending and tax cuts must be offset.

House action on the package comes after the Senate last week passed the
debt limit with no Republican help after attaching the pay/go provision as
an amendment.

Republicans accused House Democratic leaders of trying to give their
members political cover by not requiring a vote directly on the debt limit
boost, a record for a one-time increase.

House Democratic leaders said the vote was structured in the easiest way
to pass the package. The Treasury Department this week said Congress had
until the end of the month to act before the debt limit was breached, and
borrowing to run the government would be affected.

During debate on pay/go, House Majority Leader Hoyer said the need to
increase the debt limit was regrettable, but he argued that most of the
deficit was the result of policies put in place when Republicans controlled
Congress and the White House.

"We however, we believe America got into this mess, this Congress can
begin getting America out of it," Hoyer said. "That is why Congress must
pass one of the most proven deficit-cutting tools we know: statutory
pay/go."

Hoyer said that statutory pay/go played a major role in producing budget
surpluses in the 1990s, and should not have been allowed by Republicans to
lapse in 2002.

Republicans contend Democrats want to get serious about spending only
after going on a spending spree. They also charge that pay/go does nothing
to rein in spending because Democrats are quick to waive it.

"What pay/go does is it lock in deficits at current levels and it doesn't
address the spending crisis," said House Budget ranking member Paul Ryan,
adding that pay/go "is rife with loopholes."

Under the pay/go provision in the debt bill, four policy items are
exempted from pay/go, including an unlimited exemption for extending the
2001 and 2003 tax cuts for the middle class. Patches to the alternative
minimum tax and reduction of estate taxes would be exempted for two years,
while providing higher Medicare payments to physicians would be exempted
for five years.

Pay/go advocates say the exemptions are needed because Congress typically
does not offset the items and prevents pay/go from having to be waived.

House Ways and Means ranking member Dave Camp appealed to his colleagues
to vote against pay/go as the last chance to derail the debt limit
increase.

"If this legislation fails, there is no increase in the debt limit and you
cannot separate the two concepts," Camp said. "If this legislation passes,
the debt limit increases by an astounding $1.9 trillion, the largest
one-time increase in the debt limit ever."

Camp added, "We have heard a lot of talk recently from the president about
the need to put America's fiscal house in order. However, according to the
president's own budget, Congress will have to raise the debt limit again
before 2011 is over."

After the vote, House Speaker Pelosi thanked former President Bill Clinton
during a telephone conference call for his leadership in helping restore
pay/go and the fact, she said, "that we can say we've done it once, and we
can do it again."

Clinton said during the same conference call with reporters: "I think this
is important for our party, because it reminds people that for the last 30
years, we've had a better record on debt reform."

Clinton also urged Democrats to not be "discouraged that people don't know
about it yet." He told them they "just need to get out and tell the story."


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INTELLIGENCE: HOUSE DEMS REVIVE INTEL BILL, SET UP BITTER FLOOR FIGHT
By Chris Strohm


House Democrats are reviving their moribund FY10 intelligence
authorization bill, setting the stage for what could be a brutal partisan
fight next week over whether the CIA misled or lied to Congress about the
use of harsh interrogation techniques on suspected terrorists.

The House Rules Committee is expected to consider the authorization bill
next week for the second time in less than a year. The committee approved a
rule for the bill in July, but abruptly yanked the measure from floor
consideration after the White House threatened to veto it.

The bill also triggered a heated political dispute in the summer because
it was slated for floor action soon after House Speaker Pelosi charged the
CIA with misleading Congress.

To address Democrats' concerns about the CIA, the bill included language
that would give the House and Senate Intelligence committees the power to
change the rules governing how intelligence agencies brief them on covert
activities.

The language was added to ensure that all members of the committees would
have access to information about covert operations. But the White House
issued a Statement of Administration Policy opposing the language, saying
it would "run afoul of tradition" and restrict the executive branch's
power.

To revive the bill, the language on congressional notification is likely
to be changed to address concerns raised by the White House.

"I'm continuing to work with the Senate and the White House to address the
concerns raised in the Statement of Administration Policy issued in July
2009," House Intelligence Chairman Silvestre Reyes said in a statement late
Thursday. "My first goal is to move this bill off the House floor and get
it to conference."

The Senate has already passed its version of the authorization bill.

"In my discussions with the White House, I have committed to a final
product that the president can sign," Reyes added. "My objective and the
president's objective are the same.

"We want to provide the intelligence community with the necessary
resources, tools, and authorities to keep our nation safe. At the same
time, we both want to address the issues of oversight and accountability
that have lingered for years."

Floor debate on the bill next week is also likely to provoke another round
of partisan fighting over whether terrorist suspects should be given
Miranda warnings or prosecuted in criminal court. The bill includes a
provision that would prohibit government officials from reading Miranda
warnings to terrorist suspects seized abroad, which the White House also
objected to over the summer.

For weeks, Republicans and Democrats have exchanged attacks over whether a
Nigerian man accused of trying to blow up a Detroit-bound airliner on
Christmas should have been given his Miranda rights. The man, Umar Farouk
Abdulmutallab, was read his rights and processed through the criminal
justice system, not in the military system for enemy combatants or
prisoners of war as Republicans have demanded.


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TELECOMMUNICATIONS: EX-'SNL' STAR FRANKEN DOUBTS VERACITY OF NBC, COMCAST
By David Hatch


The chief executives of NBC Universal and Comcast received a
tongue-lashing Thursday from a former NBC comedian-turned-senator who
lectured them about the consequences of their proposed merger.

Sen. Al Franken, D-Minn., who drew laughs on the set of "Saturday Night
Live" from the late 1970s to the mid-1990s, questioned during a hearing
whether the companies would live up to the public-interest commitments
they've made to federal regulators to win approval of the megamerger.

"It matters who runs our media companies," Franken told the star
witnesses, NBC Universal President and CEO Jeff Zucker and Comcast
President and CEO Brian Roberts at a hearing of the Senate Judiciary
Antitrust Subcommittee.

"When the same company that produces the programs runs the pipes that
bring us those programs, we have a reason to be nervous," Franken added.

His comments were the sharpest uttered by lawmakers during back-to-back
House and Senate hearings Thursday featuring the testimony of both
executives.

To reinforce his argument, Franken accused NBC and other television
networks of failing to fulfill promises they made long ago in exchange for
FCC repeal of its financial syndication rules in 1992. The rules, which
barred networks from owning or investing in programming, were rescinded
after the networks agreed not to favor programs they own -- a pledge
Franken said was not upheld.

Today, "it is routine practice -- and you guys know it -- for the network
to demand at least part ownership of the show," the senator asserted. "And
that's a fact," he said, explaining that ownership of programs guarantees
better schedule placement and other advantages.

"While I commend NBC-U and Comcast for making voluntary commitments as
part of this merger, you'll have to excuse me if I don't trust these
promises -- and that's from experience in this business," Franken added.

Later in the hearing, Franken lashed out again, effectively implying that
Roberts had lied to him during a private visit to his office a week ago in
which the Comcast executive had apparently insisted the newly merged
company would protect consumers by adhering to program carriage rules
barring discrimination against unaffiliated networks.

"You sat there in my office, and told me to my face, that these rules
would protect consumers, but your lawyers had just finished arguing in
front of the commission that it would be unconstitutional to apply the
rules," Franken said.

Referring to voters in his state, he said, "How are they to trust you when
you come here and to my face say something that either you know wasn't
true, or you didn't know -- and I don't know which is worse."

While taking questions from reporters after the hearing, Comcast Executive
Vice President David Cohen, who participated in the meeting with Franken,
insisted categorically that his boss had not lied.


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DEFENSE: HOUSE PANEL: QDR LACKS PRIORITIES, RESOURCES FOR FUTURE
By Otto Kreisher


The 2010 Quadrennial Defense Review received a chilly reception Thursday
from the House Armed Services Committee, with members from both parties
complaining that it lacks clear priorities and calls for too few forces to
meet the future threats and missions envisioned.

House Armed Services Chairman Ike Skelton called the QDR "superior" to
previous documents updating national defense strategy, military force
structure and modernization plans and praised its focus on a force able to
counter more than one threat at a time.

But Skelton complained that it seemed to require a force "capable of being
all things in all contingencies," which makes it hard for the committee to
determine what the priorities are and which of the many possible risks are
the most important.

"This makes our task much more difficult, because although the QDR should
not be budget-constrained, the plain fact is that resources are not
unlimited" and the QDR "comes up short" on giving Congress any guidance on
how to make the essential tradeoffs, he said.

Armed Services ranking member Howard (Buck) McKeon echoed those concerns,
repeating his protest that the QDR's focus on winning the current conflicts
in Iraq and Afghanistan short-changed the forces needed for the future.

Michele Flournoy, undersecretary of defense for policy, and Vice Adm.
Stephen Stanley, director for force structure and resources for the Joint
Chiefs of Staff, insisted that the QDR did set priorities. But they
acknowledged that the forces had to be flexible and adaptable to respond to
the wide range of possible threats.

Skelton said the scope of missions described appeared to require a larger
Army and Marine Corps, and McKeon asked how the current force would handle
a major contingency, such as North Korea, while involved in those
conflicts.

Flournoy said that because Iraq and Afghanistan involved mainly the Army
and Marines, the Navy and Air Force would be able to respond to a threat
from North Korea.

But McKeon replied that the QDR and the FY11 budget cut the size of the
Air Force and did not enlarge the Navy.

Seapower Subcommittee Chairman Gene Taylor, D-Miss., also complained that
the QDR did not allow the Navy to reach the 313-ship fleet it wanted, and
asked why it called for retiring the Perry-class frigates when they could
fill missions such as the antipiracy patrols off Somalia.

Taylor warned the defense officials to expect "a shot across the bow" from
his panel in legislation that would require them to propose building two
new ships for every ship they planned to retire.

Virginia lawmakers demanded to know if the officials regarded anticipated
funding shortfalls for ships and aircraft as less important than spending
as much as $1 billion to move an aircraft carrier from its home port in
Norfolk, Va., to Mayport, Fla. Flournoy could not provide an immediate
answer.

In response to a question about the Marine leaders' concerns over their
fading amphibious capabilities, Stanley said the QDR supported amphibious
operations to ensure that U.S. forces can enter hostile areas to neutralize
a threat. And he said the expeditionary fighting vehicle, which has been
repeatedly delayed, will be a part of that capability.


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JUDICIARY: JUSTICE DEPT. OBJECTS AGAIN TO GOOGLE BOOKS SETTLEMENT

The Justice Department announced late Thursday that it still has problems
with a proposed settlement between the publishing industry and Google Books
on plans for developing a global online library.

In a filing with the U.S. District Court in New York, which is hearing
litigation between Google and book publishers, the department said there
are issues of class certification, copyright and antitrust" that remain in
an amended settlement worked out by the parties.

"Although the United States believes the parties have approached this
effort in good faith and the amended settlement agreement is more
circumscribed in its sweep than the original proposed settlement, the
amended settlement agreement suffers from the same core problem as the
original agreement: it is an attempt to use the class action mechanism to
implement forward-looking business arrangements that go far beyond the
dispute before the court in this litigation," the department said in its
filing.

The proposed agreement would settle a class action lawsuit filed in 2005
by authors and publishers who fear Google would infringe on their
copyrights by making books available online. The parties proposed a
settlement in September, but the Justice Department recommended that the
court reject it. An amended settlement was then worked out and is now
awaiting court action.

Earlier this week, Reps. Charles Gonzalez and Gene Green, both D-Texas,
urged Attorney General Holder to carefully review the proposed settlement
to ensure that the interests of small and minority publishers are
protected.


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PEOPLE: PEOPLE
By Gregg Sangillo


TONKON TRUCKIN'. Josh Kardon, former chief of staff to Sen. Ron Wyden,
D-Ore., has just forged a relationship with Tonkon Torp Policy Group as a
senior adviser. Kardon started working for then-Rep. Wyden in 1992 before
being named chief of staff in 1994. He's also a former top aide to
then-Rep. and now-Sen. Barbara Boxer, D-Calif. In the early 1990s, Kardon
was staff director for the House Government Affairs Subcommittee on
Transportation and Government Affairs. In addition to his work with Tonkon,
Kardon will be running his consulting firm, Grant Park Strategies, which
does political work and will help with Wyden's re-election campaign. Kardon
previously served as Oregon chairman of the 2008 presidential campaign of
former Sen. Hillary Rodham Clinton, D-N.Y. Kardon earned bachelor's and law
degrees from the University of North Carolina. Tonkon Torp is a business
and litigation law firm that serves clients in the Northwest.

MARKS-UP. David Marks, a Senate Energy and Natural Resources Committee
aide, is moving to Outreach Strategies, where he will be a vice president.
Marks joined the committee five years ago, serving most recently as a press
secretary to Chairman Jeff Bingaman, D-N.M. Outreach Strategies was founded
last year by two former Senate staffers, Tad Segal, who worked for former
Sen. Alan Simpson, R-Wyo., and Joe Clayton, who worked for former Sen. Alan
Dixon, D-Ill. The firm has a focus on advocacy communications and
represents such green-minded clients as the U.S. Climate Action Partnership
and the Geneva-based World Business Council for Sustainable Development.
Marks is from Austin, Texas, and went to Wittenberg University in Ohio. On
his interest in politics, he says he was "a late bloomer." But he soon
realized that he "could not only be challenged academically by politics,
but I'd enjoy it. I'd basically be studying my hobby." In addition, he
says, "Austin is a very political place. ... It's known as the music
capital, but it's got a lot of politics, too." While working on the Energy
and Natural Resources Committee, Marks went to school at night to earn his
master's degree in public policy from Georgetown University. "You know,
there were a number of long days and everything, but overall, I really
enjoyed it." The subject of his master's thesis? Alaska's Arctic National
Wildlife Refuge, which was a pretty timely issue in 2005 when he started.
"ANWR is such a complex political and policy issue that it was
fascinating," Marks says.


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HEALTH MATTERS: A VOTE FOR THE STATUS QUO?
By Julie Rovner


Does Congress really want to legislate a government takeover of the
nation's healthcare system? All it has to do is nothing. Really.

The proof comes in the latest projections from the HHS actuary. That, by
the way, is the same place Republicans have been going recently as an
alternative to CBO to analyze Democrats' health overhaul bills.

According to the actuary, over the next decade, average annual health
spending is expected to grow 6.1 percent. That will continue to outstrip
average annual growth in the overall economy, which is expected to grow by
4.4 percent. As a result, the public share of total healthcare spending is
expected to top 50 percent in 2012, and reach 52 percent by 2019.

Now THAT would amount to a government takeover of the healthcare system,
and it requires no action whatsoever.

Of course, in the topsy-turvy world that the health overhaul has become,
some of the people you might think would be happiest that a health bill has
hit the skids are the least happy.

"It's very bad," said longtime GOP health policy adviser Gail Wilensky in
an interview on NPR last week. "We have challenges we must take on. Fifteen
percent of the population ... about 45 million right now without health
insurance coverage is a serious problem to the individuals and the
communities where they live. And it's wrong."

Even the insurance industry is itching for closure. "There are things the
industry has not been happy with," said G. William Hoagland, vice president
of public policy at CIGNA, in a bit of an understatement. But at the same
time, he added "there are other things that we have been prepared to get on
with: The no pre-existing conditions, guaranteed issue and all that, and
this keeps it a little bit too much uncertainty as to our planning and our
moving forward."

What really worries much of the healthcare industry, though, is that as
attention turns from health care to deficit reduction, they might remain in
the cross-hairs, but only for cuts, not for the corresponding financial
windfall that might have come with 30 million newly insured customers.

"This wasn't like the early '90s, where people were sitting on the fence,"
says health policy analyst Jeff Goldsmith. "Everywhere that I go, hospitals
and doctors, people really want this to happen. And there is a tremendous
sense of let-down that it might not."

Even more ominous, Goldsmith says, is what's likely to come next. "Health
costs consumed 36 percent of federal spending in 2008. So how can you
balance the federal budget without going back and looking at where you have
been spending money?"

Even more frustrating to would-be health reformers is the fact that the
guts of both the House and Senate bills are, in fact, fairly centrist
proposals, despite President Obama's crack last week at the House
Republican retreat in Baltimore that Republicans have made the idea out to
be "some kind of Bolshevik plot."

While several states are busy trying to outlaw the idea of an individual
mandate that would require people to have health insurance, the idea did
not, as many people think, originate in 2006 with Massachusetts GOP Gov.
Mitt Romney, although he was the first to get it enacted in a state.

In fact, it dates back to a favorite conservative health economist, the
University of Pennsylvania's Mark Pauly, who proposed it "to give to George
[H.W. Bush], back in the day, ... a competition to the employer-mandate
focus of the Democrats at the time," says Len Nichols of the New America
Foundation. Nichols, by the way, has co-authored several papers with Pauly
over the years on the individual mandate.

Even more ironic, points out Nichols, a bill based on the individual
mandate was co-sponsored in the Senate as an alternative to then-President
Bill Clinton's health reform proposal by several Republicans who are now
opposing the current effort, including Finance ranking member Chuck
Grassley and Sen. Orrin Hatch, R-Utah. Now Grassley and Hatch obviously
have problems with the bill beyond the individual mandate. But they have
also been outspoken in their opposition to the very proposal they once
embraced.

Obama likes to point out that if overhauling the health system was easy,
it would certainly have been done before. Health futurist Ian Morrison is
one of many who know why. We Americans are simply spoiled.

"We have a healthcare delivery system that is an orgy of profligacy and
excess that offers the false promise of making ugliness, disease and death
all optional. And we the public love all of it, as long as it's free, at
least to us as individuals," Morrison wrote in a recent post on The Health
Care Blog. "We want high tech, high quality, high expectations met, highly
trained professionals delivering high standards, paid by someone else. And
the magic fairy that will pay for all of this? Health insurance. Give
everyone an insurance card, and they can have their everything and it will
be free, or close to it."


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POLITICAL ROUNDUP: REPUBLICAN ANNOUNCES CHALLENGE TO KENNEDY

Republican state Rep. John Loughlin says he's officially entering the race
for the seat held by Rep. Patrick Kennedy, D-R.I., the Associated Press
reported.

Loughlin made the announcement Thursday in Lincoln, where he said he will
focus on national security issues and growing jobs.


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POLITICAL ROUNDUP: GRANDSON OF JOHN SPARKMAN MULLS CHALLENGE OF GRIFFITH

Attorney Taze Shepard is considering a bid as a Democrat for the seat held
by freshman Rep. Parker Griffith, R-Ala., the Scottsboro Daily Sentinel
reported

Shepard, the grandson of the late Sen. John Sparkman, D-Ala., who served
from 1946-79 and was the 1952 vice presidential nominee, said he received
encouragement from friends to run.

Shepard didn't say when he would make his decision public.

Griffith, who was elected in 2008 as a Democrat, became a Republican late
last year.

He will face Madison County Commissioner Mo Brooks and businessman Les
Phillip in the GOP primary.

Republican Wayne Parker, a three-time candidate for the seat, is said to
be considering another run. He narrowly lost to Griffith in 2008.


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POLITICAL ROUNDUP: EMILY'S LIST ENDORSES DELBENE IN WASHINGTON

Former Microsoft Executive Suzan DelBene, a Democrat seeking to challenge
Rep. Dave Reichert, R-Wash., Thursday received the endorsement from EMILY's
List.

"Suzan DelBene is an accomplished businesswoman and will be an excellent
member of Congress," said Stephanie Schriock, the group's president.
"People are facing tough times. That's why in Congress, Suzan will work to
create jobs, promote innovation, and provide quality, affordable health
care for Washington State families."

Reichert has been a top Democratic target. In 2008, Reichert took 53
percent of the vote -- his highest percentage since being elected in 2004
-- against Democrat Darcy Burner.


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POLITICAL ROUNDUP: ANOTHER FEINGOLD FOE HAD ZERO '02 NET TAXES

Wisconsin tax records show that a second Republican candidate challenging
Sen. Russ Feingold, D-Wis., also reported zero net taxes to the state, the
Associated Press reported.

The records released to the AP this week show businessman Dave Westlake
reported zero net taxes in 2002. Fellow Republican challenger Terrence Wall
previously said he hadn't paid taxes in eight of the last nine years
because he didn't owe any.

Wall paid about $43,000 in 2005 but nothing in any other year between 2000
and 2008. His spokesman, Ryan Murray, said Wall used depreciation and legal
deductions to bring his tax liability down to zero in those years.


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HILL BRIEFS: CLOTURE VOTE SET FOR MONDAY ON NLRB NOMINEE BECKER

Senate Majority Leader Reid filed for cloture Thursday on the nomination
of Craig Becker to serve on the National Labor Relations Board, setting up
a vote to end debate on the appointment for late Monday afternoon.

The nomination is expected to have firm resistance from the 41 Senate
Republicans, who have voiced concerns that as a member of the NLRB, Becker
would seek to administratively implement the card check bill, a measure to
end secret ballots in union organizing elections.

Becker, a counsel for the AFL-CIO and the Service Employees International
Union, was blocked from confirmation last year by Sen. John McCain,
R-Ariz., forcing President Obama to renominate him. The Senate Health,
Education, Labor and Pensions Committee backed his confirmation Thursday on
a 13-10 party-line vote.

Reid also announced Thursday that the Senate will vote Monday afternoon on
the nomination of U.S. District Judge Joseph Greenaway of New Jersey to be
a U.S. circuit judge for the Third Circuit. Greenaway would fill the
vacancy left when Judge Samuel Alito was confirmed to the Supreme Court.


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HILL BRIEFS: BIPARTISAN GROUP OF SENATORS PUSHES UTILITY EMISSION CUTS

A dozen senators from both parties Thursday offered a plan to cut by more
than half sulfur dioxide, nitrogen oxide and mercury emissions from power
plants.

The effort -- led by Environment and Public Works Clean Air Subcommittee
Chairman Tom Carper, D-Del., and Senate Republican Conference Chairman
Lamar Alexander of Tennessee -- would reduce sulfur dioxide emissions 80
percent, from 7.6 million tons to 1.5 million tons, over a decade; nitrogen
oxide emissions by 53 percent, from 3 million tons in 2008 to 1.6 million
tons in 2015; and mercury emissions by at least 90 percent by 2015. Carper
said it would raise monthly utility bills by less than $2, while citing EPA
as saying it would save at least 215,000 lives and $2 trillion in
healthcare costs by 2025.

Despite a diverse set of backers already -- including six other Democrats
and four more Republicans -- the seventh time may not be the charm for
Carper and Alexander to get their plan through the Senate and Congress.
This time is different though, they say. "The opposition has greatly
diminished from where it was," Carper said. "The technology has improved,"
Alexander said. "It can be done and it can be done at a very low cost."

Supporters are trying to keep the effort separate from those aimed at
capping U.S. greenhouse gas emissions. Alexander said his bill with Carper
is different because carbon capture and storage technology is not mature
enough to warrant an economy-wide approach to limiting greenhouse gases.
"There's no excuse to wait" on limiting sulfur dioxide, nitrogen oxide and
mercury, he said.

Carper said he plans a subcommittee hearing by next month and that
Environment and Public Works Chairwoman Barbara Boxer has indicated
willingness to move the bill through her panel this year.


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HILL BRIEFS: DOT IG SAYS FAA LAGS IN REGIONAL AIRLINE SAFETY

One year after a regional airliner crashed into a house near Buffalo,
N.Y., killing 50 people, the government has failed to implement most of the
safety reforms it promised in response to the accident, Transportation
Department Inspector General Calvin Scovel told a House subcommittee
Thursday.

In testimony before the House Transportation and Infrastructure Aviation
Subcommittee, Scovel said the FAA has fallen behind schedule or failed to
meet goals on eight of 10 measures the agency said it would take, including
regulations to prevent pilot fatigue and better inspection of training for
regional airline pilots.

FAA Administrator Randy Babbitt countered that his agency deserves credit
for its hard work and said the law requires FAA to go through a
time-consuming process before adopting new regulations. "We would all love
to move faster," Babbitt told the subcommittee.

The Feb. 12 crash of the Colgan Air Inc. flight is considered one of the
most significant aviation accidents in recent years because it pointed to
what many experts say is a lower level of safety for smaller regional
airlines that operate short-haul flights for larger carriers. Regional
airlines provide the only scheduled service to about 440 communities,
accounting for about half of domestic departures and a quarter of airline
passengers.

The National Transportation Safety Board has said pilot error caused the
crash.


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HILL BRIEFS: GEITHNER BELIEVES CHINA WILL MOVE ON CURRENCY

Treasury Secretary Geithner voiced optimism Thursday that China would
begin letting its currency appreciate, despite Beijing's dismissal of U.S.
complaints that Chinese policies put American exports at a disadvantage,
Reuters reported.

Geithner's comments to the Senate Budget Committee came a day after
President Obama vowed to get tough on trade and exchange rates, putting
China's currency high on a growing list of bilateral disputes that includes
Taiwan, Tibet and cybersecurity.

"I think it's actually quite likely [China] will move," Geithner said. "I
think they recognize it is important to them, in their interest as well."

Correcting currency misalignments was a key part of U.S. efforts to get
the world economy growing, he said. "And that requires a level playing
field for American exporters generally and we're going to work very hard to
encourage those changes," Geithner said.


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CORRECTION: CORRECTION

A graphic in Thursday's CongressDailyAM misidentified Reps. Aaron Schock,
R-Ill., Brett Guthrie, R-Ky., and Parker Griffith, R-Ala.


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[Snuffysmith]

CongressDaily AM for Monday, Feb. 8, 2010

--------------------
CONTENTS

OUTLOOK: SENATE STILL LOOKING FOR RIGHT COMBO ON JOBS MEASURE
By Peter Cohn and Darren Goode, with Dan Friedman, Anna Edney, Megan
Scully, Bill Swindell, Chris Strohm, David Hatch and George E. Condon Jr.
contributing


Senate Democrats this week will try to muster enough support for an
initial package worth at least $80 billion in tax breaks, unemployment
benefits and other items intended to create jobs or protect those out of
work.

Senate leaders continued to negotiate late last week and it was unclear
when a bill would be unveiled. "We do still hope to consider jobs
legislation" this week, a spokeswoman for Senate Majority Leader Reid said.

While the winter storm that sent senators scurrying late last week
certainly played a part, other factors have pushed back introduction of the
first of a series of jobs bills Democrats want to offer this year.

Senate Finance Committee leaders appeared to have a general understanding
on provisions within their jurisdiction that would go into the bill, such
as a payroll tax break for new hires, small business tax incentives and
extensions of expiring safety-net programs.

The question could be the demands of other senators, who are lining up
with suggestions. Late last week, 23 senators led by Sens. Debbie Stabenow,
D-Mich., Finance Chairman Max Baucus and ranking member Chuck Grassley
wanted to extend the life of a clean energy manufacturing tax credit
established in last year's stimulus bill.

The White House supports the provision, but Senate leaders are trying to
keep the overall price tag of the jobs bill down. They will need to include
some popular provisions in the next installment of economic recovery
proposals, as Republicans are likely to object to more spending.

Many Democrats want to bolster aid to states to prevent layoffs of
teachers, firefighters, nurses and other public-sector workers. "Without
further federal aid, the actions states will have to take to close their
budget gaps could cost the economy 900,000 jobs," according to a report
Friday from the liberal-leaning Center on Budget and Policy Priorities.

Republicans don't seem to want pricey new spending initiatives in the
Finance package. There was no apparent deal on Senate GOP demands for
debate at some point on the estate tax.

The jobs bill is expected to renew unemployment benefits, health insurance
subsidies for laid-off workers and surface transportation funding expiring
Feb. 28. It also might stave off Medicare physician payment cuts that would
otherwise take effect.

Senate leaders want to get a bill to the floor this week because the
one-week Presidents Day recess that begins Friday stands in the way of
extending the expiring provisions and demonstrating some movement on items
important to small businesses.

The chamber is scheduled for a cloture vote this afternoon on the
nomination of Craig Becker to serve on the National Labor Relations Board.

It will be an early test of whether Senate Republicans, armed with 41
votes after the swearing in of Sen. Scott Brown, R-Mass., will use their
renewed ability to sustain a filibuster if they vote together to block
executive nominees.

Becker, a counsel for the AFL-CIO and the Service Employees International
Union, was blocked from confirmation last year by Sen. John McCain, R-Ariz.

President Obama renominated Becker last month.

Business groups, including the U.S. Chamber of Commerce, are working to
defeat the nomination. They argue Becker backs NLRB actions that, without
congressional consent, would effectuate parts of the Employee Free Choice
Act, which would ease union organization.

The Senate will also vote this afternoon on the nomination of U.S.
District Judge Joseph Greenaway of New Jersey to the 3rd U.S. Circuit Court
of Appeals. Greenaway would fill the vacancy left when Judge Samuel Alito
was confirmed to the Supreme Court.

Meanwhile, the House will take up legislation as early as Wednesday to
strip health and medical malpractice insurers of their antitrust exemption,
which allows them to collude to set prices.

The vote will be a test for whether House Democrats will hold future votes
on smaller pieces of health legislation while House and Senate leaders
determine how to best move a comprehensive measure forward.

Republican leaders have been unclear as to whether they will support the
measure, and Democrats hope they will be forced to make a stand. Taking
away the antitrust exemption is seen as a popular move, but the GOP has
blazed a trail of consistent opposition.

The antitrust bill is not likely to pass in the Senate, where Reid could
not get the votes to include the provision in the chamber's version of the
overhaul bill.

HHS Secretary Sebelius will be back on Capitol Hill this week for another
budget hearing. She had two last week and will go before the House Ways and
Means Committee Thursday to talk about the president's budget request for
her department.

* The Senate meets today at 2 p.m. and will proceed to executive session
to consider the nominations of Greenaway and Becker.

* The House is not in session today. The chamber will meet Tuesday at
12:30 p.m. for morning hour and 2 p.m. to consider suspension bills. Votes
will be postponed until 6:30 p.m. On Wednesday and Thursday, the House
meets at 10 a.m. for legislative business and will consider the
intelligence authorization bill and health antitrust legislation. No
recorded votes are expected on Friday.

APPROPRIATIONS

Following delivery of the president's FY11 budget proposal to Congress
last week, the House Appropriations Committee will hold a series of
hearings this week on funding requests for agencies and programs.

Wednesday will be a particularly busy day, with six hearings scheduled,
including a morning meeting of the State-Foreign Operations Appropriations
Subcommittee, where Secretary of State Clinton will discuss the agency's
budget proposal.

FDA funding will be the topic at a meeting of the Agriculture
Appropriations Subcommittee. The Energy and Water Appropriations
Subcommittee will meet with Jo-Ellen Darcy, assistant secretary of the Army
for civil works, and Lt. Gen. Van Antwerp, chief of engineers, to discuss
the Army Corps of Engineers budget. And the Military Construction-VA
Appropriations Subcommittee will hold a hearing on military quality of
life.

The Commerce-Justice-Science Appropriations Subcommittee will convene a
hearing in the morning on the National Science Foundation/National Science
Board and in the afternoon will host Michelle O'Neill, acting
undersecretary of Commerce for international trade to discuss the
International Trade Administration.

DEFENSE

Air Force Secretary Michael Donley and Chief of Staff Norton Schwartz will
testify on the service's FY11 budget request before the Senate and House
Armed Services committees on Tuesday and Thursday, respectively.

The Air Force request for next year totals $170.8 billion, including $20.8
billion to pay for the service's wartime operations. Meanwhile, the Air
Force is requesting an additional $6.1 billion for FY10 as part of a $33
billion wartime supplement spending proposal the Pentagon sent to Congress
along with the FY11 request.

The FY11 request includes funding for 149 aircraft, including 52 unmanned
aerial vehicles. Among the aircraft in the budget are 23 F-35 Joint Strike
Fighters, 48 Reaper drones and four high-altitude Global Hawk UAVs.

The budget request includes $864 million in research and development for a
next-generation tanker for the Air Force, the service's top procurement
priority. The Pentagon plans to release a request for proposals for the
lucrative contract this month, in the hopes of awarding a contract in the
summer.

Also this week, the Senate Armed Services Committee will hold a closed
briefing on Wednesday on the status of the Obama administration's Nuclear
Posture Review, which is expected to be released next month. Lawmakers will
met with Thomas D'Agostino, head of the National Nuclear Security
Administration, James Miller, principal deputy undersecretary of Defense
for policy, and Rear Adm. John Roberti, deputy director for strategy and
policy on the Joint Staff.

FINANCE

The Senate Banking International Trade and Finance Subcommittee will hold
a Wednesday hearing on how regulators can better monitor risk to prevent a
financial collapse. Banking Chairman Christopher Dodd has included in his
discussion draft to revamp the nation's regulatory system creation of a
council to monitor against such systemic risk to prevent another financial
crisis.

The House Financial Services Committee will hold a Wednesday hearing on
unwinding the Federal Reserve's emergency lending programs that were used
during the economic crisis to bring liquidity to financial markets.

The panel will focus on how the Fed can exit such programs without
triggering inflation or stalling any economic recovery. At its height,
banks received as much as $110 billion per day through the discount window,
though it has trickled to about $15 billion on a daily basis. Federal
Reserve Chairman Bernanke will testify.

The panel on Thursday will hold a joint hearing with the Small Business
Committee on the state of small-business and commercial real-estate
lending. Those sectors have complained that they cannot receive financing,
but banks said they are hampered because of examiners who are too zealous
with their loan portfolios and will not allow them to make loans.

HOMELAND SECURITY

House and Senate lawmakers will summon Homeland Security Secretary
Napolitano to hearings this week to justify her department's FY11 budget
request of nearly $44 billion in discretionary spending.

Napolitano will testify Tuesday before the House Homeland Security
Appropriations Subcommittee, where the top Republican on the panel, Rep.
Hal Rogers, R-Ky., has called the budget request "dead on arrival" because
it cuts several programs, including border security technology.

Napolitano will testify Wednesday before the Senate Homeland Security and
Governmental Affairs Committee and Thursday before the House Homeland
Security Committee.

The budget pointedly seeks to beef up aviation security in the wake of a
failed attempt to blow up an airliner on its approach to Detroit on
Christmas. Notably, the budget would allocate nearly $1 billion for the
Federal Air Marshals Service, about a 10 percent increase over current year
funding. It would also pump more than $200 million into buying 500
additional whole-body imaging machines at U.S. airports.

The Senate Commerce Committee plans a hearing Thursday to review the
government's screening technology for airline passengers and advanced
screening methods, including whole-body imaging machines, which privacy
advocates argue are too intrusive.

Much to the dismay of Republicans, the budget would reduce funding for the
SBInet border security program that seeks to build a network of cameras and
sensors along the Southwest border. The department argues the program is
behind schedule and not meeting expectations.

INTELLIGENCE

Democrats and Republicans are likely to battle this week over whether the
CIA misled Congress after using harsh interrogation methods and whether
terrorism suspects should be given Miranda rights and tried in criminal
court.

Those issues are likely to come to the forefront as the House Rules
Committee considers the FY10 intelligence authorization bill, which would
direct spending and policy for the nation's intelligence agencies. A date
for taking up the bill had not been announced.

But consideration of the bill is also likely to stoke a dispute that
erupted last year when House Speaker Pelosi accused the CIA of misleading
Congress on using waterboarding to interrogate terrorism suspects.

The bill will be taken up while tensions are high between Democrats and
Republicans over the Obama administration's decision to try Umar Farouk
Abdulmutallab in criminal court for allegedly attempting to blow up an
airplane on its approach to Detroit on Christmas, as well as the
administration's decision to give him Miranda rights.

Adding fuel to the fire, the White House threatened to veto the
intelligence authorization bill in the summer because it would expand the
number of lawmakers on congressional intelligence committees who could be
briefed on covert intelligence activities.

House Intelligence Chairman Silvestre Reyes said he plans to work with the
White House to write language in order to overcome the veto threat.

JUDICIARY

With cybersecurity and identity theft concerns mounting in Washington, the
Senate Judiciary Committee holds a Wednesday hearing on these issues
featuring the testimony of Lanny Breuer, assistant attorney general with
the Criminal Division of the Justice Department, and other experts.

Cybersecurity has dominated headlines recently with reports that Google
solicited the help of the National Security Agency after blaming China for
a cyberattack on the e-mail accounts of human rights activists there.

Late last week, cybersecurity legislation backed by House Science Chairman
Bart Gordon that paves the way for more research easily cleared the House,
with related measures pending in both chambers. In December, the Obama
administration named its first cybersecurity coordinator after extensive
delays and a tumultuous selection process.

TELECOMMUNICATIONS

On Thursday, the FCC holds a monthly public meeting that will include
another key status report about its national broadband plan.

The blueprint for nationwide, affordable Internet access has a March 17
congressional deadline after the agency fell behind schedule.

The session will include two votes on proposals designed to make the
commission more transparent, including rule changes that would require
parties to reveal more details about their meetings with FCC officials in
public disclosures known as ex parte filings.

WHITE HOUSE

The president on Tuesday will keep a promise he made in his Jan. 27 State
of the Union address and meet with the bipartisan leaders of the House and
Senate, with the focus on the economy and jobs. He is expected to sign
legislation increasing the federal debt limit and making pay/go budget
rules the law either Tuesday or Wednesday.


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INTELLIGENCE: PRESSURE TANGELS PROVISIONS' RENEWAL
By Chris Strohm


With less than three weeks to go and a congressional recess looming, key
lawmakers and aides have been scrambling to find a legislative solution to
prevent government surveillance and intelligence-gathering powers from
expiring at the end of the month.

With national security shaping up to be a major issue this election cycle,
Democrats are under intense pressure to reauthorize three expiring
provisions of the USA PATRIOT Act.

As of late Friday, Senate Democratic leaders were moving toward including
a one-year extension of the provisions in their jobs bill, which was
expected to be introduced this week.

The provisions set to expire give the government the ability to use roving
wiretaps to monitor the communications of suspects; get special court
orders forcing businesses to turn over evidence, and conduct surveillance
on a so-called "lone wolf," or somebody who is not knowingly associated
with terrorists.

But questions remained whether Democratic leaders would do a clean
reauthorization of the provisions or try to make substantive changes to
them. A spokesman for Senate Majority Leader Reid declined to comment
Friday, while aides for other key lawmakers expressed frustration and
confusion over the unresolved issue.

"It's hard to know what the starting point is until you figure out who's
amenable to what," one aide said. "Leadership is still trying to figure out
how they can get this done."

But if Democrats try to make substantive changes to the PATRIOT Act in the
jobs bill, Republicans said it would result in open warfare.

Indeed, Republicans have been champing at the bit to battle Democrats on
national security after the Obama administration decided to charge Umar
Farouk Abdulmutallab in criminal court and read him Miranda rights for
attempting to blow up an airplane over Detroit on Christmas Day.

"If they make any attempt to water down our defenses against terrorists, I
think they would be making a mistake," said House Judiciary ranking member
Lamar Smith.

"They've already got a long list of ways and policies that they've
undertaken that endanger Americans, and if they water down the PATRIOT Act,
I think that would be close to the last straw in their efforts to weaken
our defenses against terrorists," he added.

Senate Judiciary ranking member Jeff Sessions said he believed the
election of Sen. Scott Brown, R-Mass., has altered the political landscape
for Democrats in their handling of security issues.

"There's no need to weaken these provisions," Sessions said. "I think the
ground has shifted a bit after the Massachusetts vote, and his strong view
that we need to strengthen national security."

But Sessions, Smith and other Republicans conceded that they would support
adding a short-term, clean reauthorization of the provisions in the jobs
bill to give lawmakers more time to work out their differences. They said
the reauthorization could be for three or six months.

Both the Senate and House Judiciary committees have passed bills to
address the expiring provisions, and both bills would make several changes
to the provisions.

The House bill is considered to be the most far-reaching, because it would
allow the lone-wolf provision to expire and would place stricter standards
on the government's ability to use surveillance and intelligence-gathering
powers.

But the Senate Judiciary bill has been endorsed by the Obama
administration, meaning it is the most likely version to get through
Congress, several aides and national security experts agreed.

In an interview last week, Senate Judiciary Chairman Patrick Leahy did not
indicate support for inclusion of the PATRIOT Act revisions in the jobs
bill. He said his preference would be for the Senate to pass a stand-alone
bill his panel approved in October, which reauthorizes the three
provisions.

"I wish we could do that," he said.

But many civil liberties and privacy advocates support the House Judiciary
bill. They note it would also rein in the ability of the government to use
national security letters, which are demands for information without a
court order.

"This is a fantastic opportunity to limit [national security letter]
authority so it's targeted to actual terrorists," said Michelle Richardson,
legislative counsel for the American Civil Liberties Union.

"We did prefer the House bill, particularly because it had the fix for the
NSLs," she added. "We're waiting to see the final language [from Democratic
leaders] before we can provide an analysis to the members and make a vote
recommendation."


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PEOPLE: DOWN UNDER HERE
By Jackie Clews


Australian Cassandra Lawry visited the United States about five years ago
and had been eager to come back ever since. She is heavily involved in her
country's politics but pounced on the opportunity to intern for Rep.
Michael Castle, R-Del., and his staff in the heart of American politics,
Capitol Hill.

"Australian politics can be a little dull," Lawry said. "In American
politics, there have been so many changes lately, particularly with the
economy. There's a lot that needs working on here. It's just not as
interesting in Australia at the time."

Lawry came to Washington through the Uni-Capitol Washington Internship
Programme, established in 2003 to allow students at Australian universities
to intern at the Capitol for eight weeks in January and February. In each
of the past five years, more than 60 students from eight Australian
universities applied for the 12 spots, according to the program's 2010
guide. The students come from various fields of study.

Lawry, 28, just completed her second year majoring in history and politics
at the University of Wollongong. In Australia, she is heavily involved with
the Republican Party, which they refer to as the liberal party. She is
training to be a campaign manager at the end of the year for the federal
election there but hopes to return to D.C. as soon as possible.

While some congressional staffers may describe the concerned constituents
that flood their inboxes and voicemail with less loving words, Lawry said
it's that very passion that has her hooked on American politics.

"In Australia, we wouldn't get nearly as many calls and letters about
issues," Lawry said. "I think it's so great that people here will take time
to do that, and I'm really surprised by the number of people that are so
involved."

The program has given her great insight into the daily routines of
congressional staff by attending events like briefings and hearings and
listening to constituents' concerns and questions.

The two subjects that have interested her most here are education and
animal rights, and she hopes to work on those issues when she returns.

Politics isn't all she's learning on Capitol Hill, though. "The food is
going to kill me over here, but I love it!" Lawry said. "We're eating so
poorly. Reese's Peanut Butter Cups are my favorite food here. We have them
in Australia, but you have to seek them out. Here, they're everywhere."

Her favorite American TV show is a tossup between MTV's "Jersey Shore,"
which she describes as "absolute TV gold," and Bravo's "The Real Housewives
of Orange County."


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CHINA WATCH: SEARCH ENGINE
By Art Pine


For years, U.S. policymakers have generally left human rights issues on
the back burner in dealing with China. The rationale has been that
Beijing's autocrats eventually would become more democratic once China grew
prosperous and developed a more sophisticated middle class. Economic
liberalization inevitably would beget political liberalization.

Former President George W. Bush kept human rights issues for private talks
with the Chinese, eschewing provocative public pronouncements. President
Obama's Secretary of State, Hillary Clinton, obligingly averted human
rights issues during her first trip to China a year ago, indicating she
didn't want to jeopardize cooperation on broader issues.

Now Washington and Beijing have suddenly become embroiled in what might be
their biggest human rights squabble in decades -- the confrontation between
China and Google. Ironically, the spat involves both democratic values and
commercial interests. And it's getting front-burner attention from U.S.
officials.

Barely a week after the spat broke, Clinton seized on it to declare
unrestricted access to the Internet -- and protection against cyberattacks
-- a top U.S. foreign policy priority. "Those who disrupt the free flow of
information in our society ... pose a threat to our economy, our government
and our civil society," she said.

The Google controversy has drawn unaccustomed attention beyond what the
usual kinds of human rights abuses, such as the beating of dissidents,
usually garner. U.S. companies have warned they may re-evaluate doing
business in China unless the cyberhacking stops. Google has asked the
National Security Agency to help track it down.

James Mann, the journalist-turned-scholar who examined the human-rights
tradeoff in a 2007 book, "The China Fantasy," says the latest controversy
-- in which Google charged that China abused its search engine to monitor
dissidents abroad -- provides a rare confluence of human rights and
business issues.

"The assumption that several past administrations have operated on was
questionable from the start," Mann says. "China has shown that you can have
a different model in which you can trade extensively with the outside world
and also maintain tight political repression at home."

Google complained Beijing has required it to censor the content of its
search engine in China, has stolen intellectual property and has permitted
cyberhacking of computers used by human rights activists -- not only inside
China, but in other countries. It says the cyberattacks also have
penetrated the computer systems of 30 big companies.

Google and Beijing have negotiated a settlement of sorts over the
company's initial complaints, and Google has indicated that it will not
pull out of China, as it had hinted it might a few days ago. But the
broader problem seems unlikely to go away soon.

Derek Scissors, a China-watcher at the Heritage Foundation, says China's
propensity for interfering with Internet communications "still is a human
rights problem and a big one," with no indication so far that it will be
resolved.

"There's no place for this to go," Scissors asserts. "The Chinese are not
going to give the U.S. a throwaway concession. The only thing that will
change is that we'll raise the issue further. It's going to be an ongoing
irritant."

Indeed, the Google affair -- along with China's increasingly tough
attitude toward Washington since the start of the recession -- has helped
harden the response by both sides to the sort of recurring disputes both
governments previously have let pass after a few days of official
harrumphing.

After the United States approved another arms sale to Taiwan last month,
China threatened to retaliate against U.S. companies that manufactured the
weapons. After previous such sales, the Chinese merely complained loudly
and canceled scheduled exchange-visits among top military officers.

Beijing also has been more strident than usual over Obama's plan to meet
with the Dalai Lama soon, after having declined to see him last autumn for
fear of angering the Chinese. The Tibetan spiritual leader is scheduled to
come to Washington this month, and Obama is expected to see him.

Also uncertain is how much, if any, the flap over Google might affect
China's decision on whether to help persuade Iran to limit its development
of nuclear weapons -- a tack the United States has been pressing China to
take since Beijing has close ties with Tehran. China traditionally has
rejected calls to support such prodding.

As for the longtime hope that China's becoming more prosperous would make
it more liberal on human rights, the flap between China and Google hasn't
proven the optimists correct, says veteran China-watcher Minxin Pei,
director of the Keck Center for International and Strategic Studies at
Claremont McKenna College in California.

Indeed, the headlines have been filled in recent weeks with reports of
continued human rights abuses in China involving the treatment of
dissidents and the handling of complaints by minority groups.

"China is bigger, but not rich enough," Pei says. "Expections often may be
reasonable, but not grounded in political realities."


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BEYOND THE BELTWAY: V FOR VERIFICATION
By Chuck Jordan


As lawmakers around the country focus on unemployment in a challenging
economic climate, a Pennsylvania lawmaker believes he has found a way to
help protect jobs.

Democratic state Rep. John Galloway is advocating legislation that will
mandate contractors doing business with the state to verify their employees
are legal.

The contractors would have to use the E-Verify system, a free federal
program that allows employers to check workers' eligibility against a
database.

A second measure would require that private contractors use the program
for their employees.

The state's unemployment rate was 8.9 percent in December and Galloway
says he believes if the measure is enacted, it will immediately help jobs.

Contractors who violate the mandates could be excluded from state projects
or, in the case of private construction work, might face loss of state
licenses or certifications.

"These bills are about saving Pennsylvania jobs," Galloway said. "By
penalizing unscrupulous contractors who hire and abuse illegal workers, we
can level the playing field for honest contractors who do the right thing
and hire American workers and those legally authorized to work here."

During a hearing on the legislation, Jessica Vaughan, director of policy
studies for the Center for Immigration Studies, estimated there are 18,000
to 35,000 undocumented construction workers in the state. She based the
figure on statistics from CIS and the Pew Hispanic Center.

Galloway said he had been unsuccessful in previous attempts to get more
broad-based immigration legislation through the Legislature. He says his
latest effort is more narrowly crafted after laws Oklahoma and Arizona with
the E-Verify requirement.

Oklahoma's law, which was passed in 2007, requires public employers,
contractors and subcontractors to use the program.

Arizona passed a more sweeping law that mandates that all employers use
the E-Verify system on their workers.

Both states' laws have withstood legal challenges.

Galloway said the measures were carefully written after meetings with
civil rights groups and contractors about their concerns. He said the
measure, which unanimously passed a committee late last year, has
broad-based bipartisan support.

He said House leadership has promised a vote in March.

Similar legislation is being introduced in the Senate by Republican state
Sen. Kim Ward.

"This is going to make construction in the state fairer and safer," said
Ward. "Also, undocumented workers have been the victims of abuse by
employers for years. This legislation ensures accountability in the
construction industry."

Opponents argue the legislation is essentially asking the state to take on
immigration enforcement, a federal responsibility.

While supporters of the bill cite the accuracy and ease in using the
E-Verify system, the ACLU of Pennsylvania says there are problems with it.
The group contends the program's error rates are high, especially for
employees who are foreign born.

Andy Hoover, the group's legislative director, raised doubts about the
legislation's prospects, noting the unusual coalition on their side that
includes business and some labor groups, including Service Employees
International Union.

"When you see SEIU and the Pennsylvania Chamber working together along
with the ACLU -- that stands out," he said.

Hoover also questioned part of the legislation that would mandate all
contractors verify the legal status of their employees.

"It [would be] the only industry specific law in the country that we're
aware of," he said.

According to the National Conference of State Legislatures, 12 states have
made E-Verify a requirement in some form for either government or private
employers.

Other states are considering E-Verify-related legislation.

The Indiana Senate passed a measure last week that would require all state
agencies and local governments check the work eligibility of those newly
hired employees, along with barring agencies from entering into contracts
unless the contractor and subcontractors verify they do not employ illegal
immigrants.

"As an employer of approximately 30,000 employees, I believe state
government should lead by example," Republican state Sen. Mike Delph said.
"I encourage all Hoosier employers to be proactive and use this quick and
easy [E-Verify] program."

Delph has made attempts in previous years to push through legislation
targeting businesses that hire undocumented workers. The measure will now
move to the Democratic-controlled state House.

The Federation for American Immigration Reform, which advocates stricter
enforcement of immigration laws, says E-Verify is a good tool to make sure
undocumented workers are not being hired and is a means to fight illegal
immigration by drying up demand.

"The real heart of economic stimulus is E-Verify. It's already there, it's
already in place, it's an effective, widespread, well-managed
infrastructure," said Bob Dane, a spokesman for the group. "If we're
looking for a way to free up new jobs for legal U.S. workers, E-Verify is
right on the plane, ready to do it's job."


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OUTLOOK: HOT TICKET
By Jason Mann


DOING IT FOR THE KIDS. Before the Oscars are handed out in March, one
charity is rolling out the red carpet for the award-nominated films a month
early. On Tuesday, Tracy's Kids is hosting its "And The Winner Is ...
Tracy's Kids" fundraiser for the nonprofit, which helps young cancer
patients and their families cope with emotional stress. Cancer survivor
Rep. Debbie Wasserman Schultz, D-Fla., will receive the organization's
Courage Award. The reception starts at 6 p.m. at the Lucky Strike
Restaurant at Gallery Place and will be emceed by talk show host Chris
Matthews. Don't bring your bowling shoes. At 7:30 everyone will head
upstairs to the theater for a screening of some of the nominated films.
Tickets cost $250 and can be bought at www.tracyskids.org.

INSIDE MURDOCH'S MIND. Meet the man behind The Wall Street Journal and the
Fox network Tuesday when Rupert Murdoch sits down with journalist Marvin
Kalb for a taping of "The Kalb Report" at the National Press Club. There
are many questions to ask Murdoch: Does he regret buying MySpace? Will "The
Simpsons" be on television for another 20 years? How has he changed
journalism? Hopefully, Kalb, a commentator at Fox News, won't be too
uncomfortable interviewing his boss. The event is free and starts at 8 p.m.
To reserve a seat, call (202) 662-7501.

SOUNDS REASONABLE. This Tuesday Reason magazine is hosting a cocktail
party with former New Mexico Gov. Gary Johnson. Johnson will weigh in on
the current political climate, the deficit and the wars in Afghanistan and
Iraq, and hopefully address the rumors of whether or not he's serious about
seeking the Republican presidential nomination in 2012. The get-together
starts at 6 p.m. at the publication's offices at 1747 Connecticut Avenue,
NW. RSVP by calling (310) 367-6109.

GAME NIGHT. Can't make it to Vancouver for the Olympic Games? Neither can
we. Instead, do the next best thing and head over to the Canadian Embassy
Friday to watch the opening ceremony. Technically, you'll be on Canadian
soil, so you can tell people you went to Canada for the Games, but we'll
leave that up to the lawyers and ethicists to decide. The festivities will
be displayed on a JumboTron, but you won't just be sitting around watching
television. There will be a mini version of the Games with snowboarding,
ski jumping and, for the less adventurous, a Wii challenge. Dress warmly as
some of the events take place outdoors. The party starts at 7:30 p.m. at
501 Pennsylvania Avenue, NW.


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DRAWING BOARD: DRAWING BOARD
By Mark Armstrong



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[Snuffysmith]

CongressDaily AM for Tuesday, Feb. 9, 2010

--------------------
CONTENTS

ECONOMY: FARM DISASTER AID MIGHT HITCH A RIDE ON SENATE JOBS BILL
By Peter Cohn with Dan Friedman contributing


As yet another snow emergency threatened to blanket the Capitol, Senate
Democrats' jobs agenda was potentially picking up assistance for
weather-related catastrophes down South.

Senate Agriculture Chairwoman Blanche Lincoln is pressing to add more than
$2 billion for farm disaster aid to an emerging $80 billion-plus package of
tax incentives for job creation and safety-net spending for the unemployed.

Majority Leader Reid, like Lincoln facing a potentially tough re-election,
is sympathetic, according to Senate sources, although his office declined
to comment. But to some Senate Republicans, the whole effort was starting
to sound too much like election-year politics.

"We're still reviewing their [jobs] proposal, and hopefully it's obvious
to Democrats that if they include version 2.0 of the Cornhusker Kickback,
it would be much harder to pass the bill," said a Senate GOP aide,
referencing a much-criticized Medicaid carve-out for Nebraska in the
healthcare bill.

The agriculture disaster package was actually introduced jointly in
November by the Arkansas and Mississippi Senate delegations. Senate
Appropriations ranking member Thad Cochran is listed as the lead sponsor,
the others being Lincoln, Arkansas Democratic Sen. Mark Pryor and
Mississippi Republican Sen. Roger Wicker. The Senate GOP aide stressed that
the ire was not targeted specifically at farm disaster aid, but at any item
designed to woo votes for political reasons.

As estimated by CBO, the farm disaster measure would cost $2.2 billion. A
Lincoln aide Monday said the proposal "would provide timely disaster
assistance to farmers affected by heavy rains, floods and other
weather-related disasters." As to whether Lincoln was seeking to add it to
the jobs bill, the aide said: "She continues to work to find a vehicle for
this legislation."

The package as initially drafted would provide $1.3 billion in direct
assistance to producers in counties declared "primary" disaster areas by
USDA. It would also provide $650 million for specialty crop producers, $150
million for livestock producers and $42 million for first handlers of
cottonseed.

"Weather conditions have left many of our state's hard-working farmers
unsure if their operations will survive another year. In these difficult
economic times, this measure will help ensure our farmers can continue to
meet our food and fiber needs while providing much-needed economic strength
to our rural communities," Lincoln said in a statement introducing the
bill.

Over the weekend Rep. John Boozman, R-Ark., announced plans to run against
Lincoln in November, adding to a crowded field of GOP contenders. Even
before Boozman announced, The Cook Political Report's Charlie Cook on
Friday called both Lincoln's and Reid's seats an "even-money bet" for
Republicans to pick up.

As originally drafted, the disaster aid would be offset from Troubled
Asset Relief Program funds. But Democratic leaders have nixed that approach
for the initial jobs bill they hope to bring up this week, citing GOP
objections.

If they include unoffset agriculture aid, they risk exacerbating concerns
already expressed by some Republicans like Budget ranking member Judd Gregg
over the injection of $20 billion in general funds to replenish the Highway
Trust Fund. Gregg argues the move would simply add to the nation's debt,
even if it technically is not scored by CBO as new spending.

Democrats are hoping to push through the jobs bill by the end of the week
in time for the Presidents Day recess. Programs ranging from unemployment
insurance to the USA PATRIOT Act expire on Feb. 28, and the jobs outlook
remains dicey, providing an impetus for action.

But lingering disagreements over the scope of the package, as well as the
near-record snowfall, were threatening to push lawmakers up against the
deadline. The House would have to approve any bill without changes as well,
and senior aides in that chamber have said they would wait to see what
emerges in the Senate.


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HOUSE: MURTHA, LONGTIME MEMBER AND CHAMPION OF EARMARKS, DIES
By Humberto Sanchez and Billy House, with George C. Wilson and Megan
Scully contributing


House Defense Appropriations Subcommittee Chairman John Murtha, D-Pa. --
the first Vietnam War veteran to serve in Congress and an unabashed
earmaker of federal funds to projects in his southwestern Pennsylvania
district -- died Monday after complications from recent gall bladder
surgery.

According to Murtha's office he died "peacefully this afternoon at 1:18"
with his family at his bedside.

Murtha, who was 77 and served in the House for 36 years, passed away in
the intensive care unit at Virginia Hospital Center in Arlington where he
was admitted a week ago following a scheduled laparoscopic surgery to
remove his gall bladder, which took place the previous week.

In December, Murtha was hospitalized after suffering stomach pains arising
from gall bladder problems, but he returned to Capitol Hill in time to
usher the final FY10 Defense Appropriations bill to passage in the House.

On Saturday, Murtha became Pennsylvania's longest-serving member of
Congress, his office said. Murtha won his seat in a special election in
February 1974. It was prompted by the death of former GOP Rep. John Saylor,
then ranking member of the Interior and Insular Affairs Committee.

House Interior-Environment Appropriations Subcommittee Chairman Norm
Dicks, D-Wash., is the likely replacement for Murtha as head of the Defense
spending subcommittee.

Murtha was a close ally of House Speaker Pelosi and helped her in her
campaign to become minority whip in 2001, a position that she used to help
win the speaker's gavel.

Pelosi released a statement Monday evening saying: "All who served with
him were honored to call him colleague. I was privileged to call him
friend."

Upon winning the majority in 2006, Murtha was Pelosi's choice to become
majority leader over Rep. Steny Hoyer, D-Md. But Hoyer won that race
decidedly, with the backing of many of the chamber's old bulls and the Blue
Dog Coalition.

"He worked hard for Western Pennsylvania and he consistently guarded the
interests of our men and women in uniform," Hoyer said of Murtha in a
statement. "I offer my sincere condolences to his family."

Murtha's loss to Hoyer, some observers said, may have been partly due to
the lawmaker's brush with the 1980 Abscam scandal; although he was never
charged with any wrongdoing, some Democrats said his involvement was
inconsistent with the Democrats' 2006 campaign message, in which they
railed against what they claimed was GOP corruption.

President Obama offered his condolences in a statement released Monday
afternoon: "His passion for service was born during his decorated career in
the United States Marine Corps. ... Jack's tough-as-nails reputation
carried over to Congress, where he became a respected voice on issues of
national security."

While expressing his sorrow at Murtha's passing, House Minority Leader
Boehner also offered his "condolences to Speaker Nancy Pelosi, who valued
Congressman Murtha's advice and friendship. He will be missed."

Senate Majority Leader Reid said "the scores of friends and colleagues who
worked with Jack during his 36 years of service in Congress will miss the
tenacity and passion that he brought to his job every day."

House Appropriations Chairman Dave Obey said: "He understood the misery of
war. Every person who serves in the military has lost an advocate and a
good friend today."

The reaction spread across party lines.

Although Murtha could be a strong partisan, he worked closely with
Republicans, including Appropriations ranking member Jerry Lewis, who
chaired the Defense Appropriations Subcommittee when Republicans were in
charge of the House. The two swapped positions when Democrats regained
control of the House in 2006.

"Words cannot describe the loss my wife Arlene and I feel for my dear
friend, Jack Murtha," Lewis said in a statement. "Jack and I served
together for over 30 years, and I have never seen a more valiant defender
of the men and women of our armed forces, nor a more steadfast advocate for
our country's unequaled national defense. Jack was a true patriot, and the
Congress will be a much lesser place without him."

Defense Secretary Gates said in a statement that, "In our dealings over
the years, Jack and I did not always agree, but I always respected his
candor, and knew that he cared deeply about the men and women of America's
military and intelligence community."

Born in New Martinsville, W.Va., Murtha attended Washington and Jefferson
College, then in 1952 enlisted in the Marine Corps. He became a drill
instructor at Parris Island and was selected for officer candidate school
in Quantico, Va. He graduated from the University of Pittsburgh and
re-enlisted in the Marines in 1966, at age 34, and then served in Vietnam.
For his distinguished service, he was awarded the Bronze Star, two Purple
Hearts and the Vietnamese Cross for Gallantry.

Murtha was gruff and hawkish, and challenged both sides of the aisle.
During a battle with the Clinton administration over changes to the
military retirement system in 1998, Murtha pushed for incentives that would
help the all-volunteer force retain its most experienced personnel.

When a senior Defense official at a meeting with Murtha scoffed at his
claims that better retirement benefits would improve the retention rate,
Murtha replied: "Well, damn it ... Tell those OMB bean counters to get
their asses out to the field and talk to the troops before they make up
their minds."

Like other members of the House and Senate Appropriations committees,
Murtha managed to steer millions in federal money to his district, which
earned him criticism and scrutiny as the practice became increasingly
unpopular. It was used as fodder by political opponents.

Once elected, Murtha regarded it as his sworn duty to do whatever he could
to help the people of Johnstown, Pa. He did much of his business at what
became known as the "Murtha corner" on the House floor. No public official
could safely ignore Murtha once he rose as a power on the House
Appropriations Committee. Down deep, Murtha never understood what the fuss
about his earmarks on military money bills was all about. "That's just
[politics,]" he would tell people he trusted. "That's the way it works.
These young reporters don't understand that."

The rule of politics that Murtha understood and often practiced since
being elected was this one: "You help your friends and screw your enemies."

Although Murtha supported the original resolution sending U.S. troops to
Iraq, he later had second thoughts and argued that it was time to bring the
troops home.

In December, Murtha was among several lawmakers who had received news that
the Office of Congressional Ethics had recommended against a formal House
Ethics Committee investigation regarding their ties to the defunct lobbying
firm PMA Group.

Murtha had obtained nearly $2.5 million in donations from PMA and its
clients, and the OCE was looking into allegations that he and others had
gained those donations in return for undisclosed "official acts."

A House Ethics spokesman declined comment Monday on whether the panel had
followed the OCE recommendation and had abandoned scrutiny of Murtha
regarding his connections to PMA or any other issue.


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HEALTH: LAWMAKERS ARE WARY OF PRESIDENT'S CALL FOR NEW TALKS
By Billy House


>From doubt-riddled optimism to sarcasm, few congressional Democrats said
Monday they are confident that President Obama's plans for televised talks
with House and Senate leaders of both parties on Feb. 25 will jump-start
healthcare negotiations.

House and Senate Republicans also were skeptical, some describing the idea
as a less-than-genuine public relations stunt by a president desperate to
salvage his top domestic priority.

But House Education and Labor Chairman George Miller did suggest the GOP
"should take President Obama's invitation seriously. It's time to move past
the overblown political rhetoric and get to the real solutions that
families desperately need."

When Obama revealed his plans Sunday, early reaction from House and Senate
leaders from both parties was cordial. House Minority Leader Boehner and
Senate Minority Leader McConnell said they welcomed the idea of working in
a bipartisan fashion.

"Good luck with that," said Rep. Anthony Weiner, D-N.Y. "The GOP has been
the 'Party of No' all year. Republicans have made a tactical decision not
to cooperate, and they've even called healthcare reform Obama's Waterloo."

"Republicans have no interest in helping with healthcare reform --
Democrats do," said Weiner.

Rep. Raul Grijalva, D-Ariz., co-chairman of the Congressional Progressive
Caucus, said he applauded Obama's effort, but feared it could be more an
opportunity for "added grandstanding" by House Republicans.

"My level of optimism is not high," said Grijalva. "Especially if they
[Republicans] see this as a jugular issue with which to continue bleeding
Democrats."

In a letter Monday to White House Chief of Staff Emanuel, Boehner and
House Minority Whip Cantor wrote that House Republicans "would rightly be
reluctant" to participate if the starting point for this meeting is "the
job-killing bills the American people have already soundly rejected."

Grijalva did suggest such a televised summit could give Obama and
congressional Democrats a chance to publicly challenge the few ideas he
said Republicans have presented, such as a fiscal roadmap proposed by House
Budget ranking member Paul Ryan.

Grijalva said he and more than 120 House members won't be waiting for the
meetings to continue pressing to put a public option back on the
negotiating table. Grijalva and others plan to meet this evening with
several senators, including Sen. Sherrod Brown, D-Ohio, and Sen. Bernie
Sanders, I-Vt., on that issue.

Weiner echoed the view that it was time to bring the public option talk
back. "If the president wants to pass meaningful healthcare reform, here's
an idea from someone who actually wants to pass a bill - a public option.
The public option will increase competition, lower costs and provide more
coverage to Americans."

But among House Republicans, Rep. Tom Price, R-Ga., chairman of the
Republican Study Committee, said the president's plan for a bipartisan
summit "reeks of political gamesmanship" and underscores how healthcare
reform is in trouble.

"It seems the only play the President knows how to run is a hollow PR
blitz," said Price.

In the Senate, Sen. Mary Landrieu, D-La., sought to put Republicans on the
defensive. "I am hopeful that the president's attempt to reach across the
aisle during this bipartisan summit can move healthcare legislation
forward," Landrieu said. "This meeting should not be an excuse to start
over. It should help us pave a road to the finish line."

But Senate Minority Whip Kyl said, "If the point is to listen to
Republican ideas and really consider them, the president's announcement is
very welcome." But he said published reports suggested "that Obama does not
intend to restart the healthcare legislative process from scratch and that
he's adamant about passing comprehensive reform similar to the bills passed
by the House and Senate."

Senate Budget ranking member Judd Gregg said that he hopes the
conversations are "constructive and serious, not used as an arena for
political theater," said Gregg. "There is significant bipartisan ground
from which to reset the healthcare debate.


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SENATE: SHELBY LIFTS NOMINEE HOLDS, SAYS ISSUES BEING ADDRESSED
By Megan Scully and Dan Friedman


In the face of widespread attacks, Sen. Richard Shelby, R-Ala., announced
Monday he has dropped his holds on most Obama administration nominations,
saying he has finally gotten attention on the issues that prompted them in
the first place.

"The purpose of placing numerous holds was to get the White House's
attention on two issues that are critical to our national security -- the
Air Force's aerial refueling tanker acquisition and the FBI's Terrorist
Device Analytical Center," Shelby spokesman Jonathan Graffeo said in a
lengthy statement.

"With that accomplished, Sen. Shelby has decided to release his holds on
all but a few nominees directly related to the Air Force tanker acquisition
until the new Request for Proposal is issued," he said.

Shelby's hold, which CongressDaily reported Thursday, drew sharp attacks
from the office of Senate Majority Leader Reid, the White House and other
Democrats.

Democrats have long attacked Republicans for what they call rampant
obstructionism, and the hold on nominees to win home-state spending gave
Democrats an easy target to make their point.

Reacting to Shelby's decision to lift most of the holds, a Reid spokesman
ripped Republicans again.

"While it is good news that Sen. Shelby will allow the Senate to move
forward with consideration of some of the president's nominees, we hope
that he and his Republican colleagues will allow the Senate to move forward
with its constitutional duty to give advice and consent on all of the
president's nominees," the spokeswoman said. "It is unfortunate that Senate
Republicans have chosen time and time again to block everything, whether it
is legislation to address the many issues confronting our nation, or the
consideration and confirmation of nominees who are vital to the security
and welfare of the country."

Responding to media reports claiming Shelby blocked the nominations to get
earmarks, Graffeo said "the Air Force tanker acquisition is not an
'earmark' ... It is a competition to replace the Air Force's aging aerial
refueling tanker fleet."

"Sen. Shelby is not seeking to determine the outcome of the competition;
he is seeking to ensure an open, fair and transparent competition that
delivers the best equipment to our men and women in uniform. Sen. Shelby is
fully justified in his concern given the history and current status of this
acquisition," he said.

Northrop Grumman and EADS are vying for the high-stakes tanker contract
and plan to build the planes in Mobile, Ala. But company officials have
threatened to pull out of the competition because they believe a draft
request for proposals favors competitor Boeing Co.

The tanker contract, with a value of $40 billion, would be crucial to
building Alabama's aerospace sector beyond what exists in Huntsville, which
is home to NASA's Marshall Space Flight Center and the Army's Redstone
Arsenal.

The Air Force hopes to issue a final RFP later this month and award a
contract this summer.

The latest competition comes after Northrop won the contract in 2008, but
GAO ultimately upheld a protest filed by Boeing and the Pentagon canceled
it.

Graffeo also denied the FBI training facility in Alabama is an earmark,
saying the $45 million addition to the FY08 omnibus spending bill came at
the FBI's request. The center, which was not in the FY08 budget request,
would be built at Redstone Arsenal.

"It is a facility specifically requested by the Department of Justice and
the FBI," the spokesman said. "They need such a facility to forensically
examine Improvised Explosive Devices (IEDs) from Afghanistan, Iraq, the
Horn of Africa, and elsewhere, including the device the Christmas Day
bomber was wearing."

"Sen. Shelby is fully justified in his concern that the Obama
administration is seeking to rescind funds already appropriated for this
vital national security purpose," he added. "It is unacceptable that the
Obama Administration wants to read terrorists our Miranda rights and try
them in U.S. courts but is impeding the processing of evidence that could
also lead to their conviction and the capture of others."

An aide denied Shelby had placed a blanket hold on nominations, noting he
excluded judges, uniformed military personnel and Treasury Department
nominees. Senate Minority Whip Kyl already has a hold on Treasury nominees
over a dispute with the administration over Internet gambling.

Graffeo said Shelby had placed holds on 47 nominations, far fewer than the
70-plus Reid's staff estimated last week.

Shelby retains a hold on the following officials, the aide said: Terry
Yonkers, assistant secretary of the Air Force; Frank Kendall, principal
deputy undersecretary of Defense for acquisition, technology and logistics;
and Erin Conaton, undersecretary of the Air Force. Conaton currently is the
staff director of the House Armed Services Committee.


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OUTLOOK: HOUSE CANCELS VOTES TODAY AS ANOTHER SNOWSTORM NEARS
By Dan Friedman and Billy House


House votes on tap for tonight have been scrapped, and plans for the rest
of the week will be announced this afternoon, House Majority Leader Hoyer
said Monday as congressional leaders kept an eye on another winter storm
headed for the area.

Among the items that might have to be rescheduled is a vote, originally
set for Wednesday or Thursday, on a bill to strip insurance companies of
their federal antitrust exemptions.

As of Monday night, the Senate was still scheduled to hold a 5 p.m. vote
on a judicial nomination, followed by a cloture vote on the nomination of
Craig Becker to the National Labor Relations Board. But Senate aides and
leaders, too, were watching the storm.

The federal government was closed today for the second day in a row.

"We are taking it one day at a time, but as right now things are still on
as planned," a spokeswoman for Senate Majority Leader Reid said.

Democratic and Republican weekly policy luncheons are scheduled for
Wednesday.

The nomination of Becker, a former labor attorney, has become a proxy in a
contest between labor and business groups over efforts to ease union
organizing. GOP senators and groups such as the U.S. Chamber of Commerce
argue Becker favors NLRB actions that would impose parts of the Employee
Free Choice Act without congressional approval.

The votes would be the first in which Sen. Scott Brown, R-Mass.,
participates. The Becker vote will test if, with Brown, Republicans use
their ability to filibuster to block Democratic nominees. The Health,
Education, Labor and Pensions Committee cleared Becker's nomination on a
party-line vote last week. A similar Senate vote would spell his defeat.

The weather delay and continued talks between Finance Chairman Baucus and
committee Republicans have dimmed the chances that Senate Democrats will
start floor action on a jobs bill this week and will reach their goal of
passing a measure before the Presidents Day recess.


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HOMELAND SECURITY: AIRLINES OPPOSE RENEWED PUSH FOR HIGHER SECURITY FEES
By Chris Strohm


The airline industry is casting a wary eye on efforts to beef up U.S.
aviation security in the wake of the failed Christmas bombing attempt,
fearful that Congress and the Obama administration will push through a fee
increase on carriers to pay for security programs.

Fueling this concern is the administration's continuing desire to have
Congress approve an increase in passenger security fees paid by airlines
beginning in 2012.

The FY11 budget request for the Homeland Security Department did not call
for the fee increase, leading some to think the administration had dropped
it.

A spokesman for the Transportation Security Administration said the
administration's FY10 budget request to increase the fee remains pending
before Congress.

"With the fiscal 2010 budget, the administration transmitted an increase
proposed to take effect in fiscal year 2012. The proposal has not been
withdrawn or changed," said spokesman Greg Soule.

The fee is now capped at $2.50 per leg of a trip for each passenger, with
a $10 ceiling per one-way trip.

But the Obama administration wants to raise the fee to $5.50 per leg and
$11 per one-way trip by 2014, acting TSA Administrator Gale Rossides told
Congress in the summer. The fee would jump by $1 beginning in 2012, she
said.

Although the increase may appear to be insignificant, U.S. airlines are
facing mounting costs and struggling to remain profitable, said David
Castelveter, spokesman for the Air Transport Association of America, which
represents the nation's leading airlines.

The industry claims aviation security is solely a responsibility of the
federal government.

"We oppose paying anything for airport security, and we certainly further
oppose any increase," Castelveter said Monday. "Our country's at war, and
we need to have government funding just like any other defense initiative
for this type of security."

The fee was implemented after the Sept. 11, 2001 terrorist attacks. The
Bush administration tried unsuccessfully for years to increase it.

But a renewed focus on national security has swept across the federal
government since an attempt to blow up Northwest Flight 253 near Detroit on
Christmas. A Nigerian, Umar Farouk Abdulmutallab, has been charged in the
attempt.

The Homeland Security Department, for example, is seeking to buy and
install 1,000 whole-body imaging machines at the nation's airports by the
end of 2011. Each machine costs about $150,000.

The airline industry especially took note when Senate Commerce Chairman
John (Jay) Rockefeller said new funds will be needed to pay for aviation
security programs.

"All of this will require raising new revenues," Rockefeller said during a
hearing of his committee last month. "That's always a problem in the U.S.
Senate. But doing nothing is not an option."

A spokeswoman for the committee could not be reached Monday.

"It's pretty evident to us that there is going to be some attempt [to
raise fees]," Castelveter said.

In 2005, the Bush administration proposed raising the security fee to
$5.50 a flight. The effort was grounded amid a massive lobbying effort by
the airlines, which estimated it would cost the industry nearly $2 billion
annually.

The Obama administration contends that the current fee only covers about
36 percent of airport security costs.

In testimony to the House Homeland Security Transportation Security
Subcommittee in the summer, Rossides said the fee increase would align the
cost of aviation security services while simultaneously reducing the burden
on taxpayers.

"The administration and TSA ask for your support of this proposal, and we
commit to work closely with Congress to obtain the necessary authorization
to begin the fee adjustments in FY 2012," she said.

It was not immediately clear Monday which committees with jurisdiction
over TSA would consider the fee increase, or how it might move through
Congress.

Castelveter said the airline industry will be watching closely to see if
lawmakers try to add the fee increase to a massive bill to reauthorize the
FAA. That bill already includes a different fee increase.

"Whether it's 50 cents or a dollar, everybody wants to take a piece out of
the airline," he said. "We're not a piggy bank. We don't have an unlimited
amount of capital."


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AGRICULTURE: USDA'S ANIMAL ID PLAN HAS SOME KICKING UP HOOVES
By Jerry Hagstrom


House Agriculture Appropriations Subcommittee Chairwoman Rosa DeLauro,
D-Conn., is expressing reservations about Agriculture Secretary Vilsack's
plan to turn much of the proposed national animal identification system
over to the states.

"I am concerned that we are moving from a single system capable of
integrating and analyzing information across state lines to a collection of
over 50 smaller systems that rely on different technology will be less
effective for national animal disease surveillance and response efforts,"
DeLauro said in response to Vilsack's plan, announced Friday.

Meanwhile, ranch and farm groups that opposed the mandatory national plan
declared victory and packers expressed disappointment with the USDA
announcement.

After the discovery of mad cow disease in the United States in 2003, the
Bush administration put forward a plan to require tracking all meat animals
so that disease outbreaks could be traced to their origin. Ranchers said
the proposal would be costly and could make them liable for food-borne
illnesses that were not their responsibility.

Vilsack announced that USDA will require tags on all animals in interstate
commerce but that he would turn most of the operation over to state
governments and that they could incorporate the system with other tagging
programs used to fight brucellosis, tuberculosis and other diseases.

DeLauro has favored a national system but has been critical of USDA's
difficulties in creating a system that ranchers would accept. She said in a
release that she is encouraged that USDA is formulating a detailed plan.
But she added, "As the federal agency receiving funds, designing, and
implementing the program, USDA needs to maintain accountability for a
successful animal disease traceability system."

Bill Bullard, CEO of Ranchers-Cattlemen Action Legal Fund-United
Stockgrowers of America, a group that led the opposition to the mandatory,
national system, said in an interview that he was "very pleased by this
announcement." Bullard said the decision shows that USDA has "shifted away
from the international marketing goal and to the more legitimate goal of
controlling diseases."

Bullard also said he was also pleased that in a briefing with leaders of
producer groups Friday, Vilsack said USDA would also strengthen its border
controls to make sure that diseases do not enter the country. Bullard said
he did not expect producers to oppose an identification system for
interstate commerce because they must already furnish certificates for
brucellosis.

The U.S. Cattlemen's Association and the Western Organization of Resource
Councils, which also opposed the Bush administration proposal, issued
statements praising the decision. The National Cattlemen's Beef
Association, a larger cattle group, said Vilsack's decision offers "a
flexible approach to animal disease traceability, including greater state
involvement and choices in the use of technology," but stressed the group
favors a voluntary system.

Patrick Boyle, whose packer members contended the mandatory system would
ensure food safety and reassure foreign buyers of U.S. meat, said in a
release, "We are extremely disappointed by the failure to implement the
national animal identification system that has been in development and by
the prospect of waiting additional years before the U.S. has an effective
animal identification system in place. We will continue to work with USDA
and interested parties to support the development and implementation of a
mandatory animal identification system."


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ENVIRONMENT: LOCKE PROPOSES NEW 'ONE-STOP SHOP' CLIMATE AGENCY
By Darren Goode


The National Oceanic and Atmospheric Administration today proposed a
climate change service intended to consolidate and improve long-range data
and predictions, including rises in sea levels, droughts and other adverse
effects.

The plan is modeled on the 140-year-old National Weather Service, which
provides short-term information.

"Now we need a climate service ... to really focus on the long-range
impacts of climate change," said Commerce Secretary Locke. "This will
provide a single point of contact, a one-stop shop for businesses and
government that need NOAA's high-quality forecasting for making
predictions."

House and Senate appropriators would need to approve the restructuring,
Locke said. He wants the climate service to start in FY11. Thomas Karl,
director of the National Climatic Data Center, would be the transitional
director of the service, which would also have six regional directors.

The service would rely on existing resources but will eventually need
additional funds, said NOAA Administrator Jane Lubchenco.

The Obama administration's proposal comes amid controversy surrounding
some climate data released in a much-heralded report by the United Nation's
Intergovernmental Panel on Climate Change, which the United States and
others have used as justification to try to curb global greenhouse gas
emissions.

A 2007 IPCC report contained unsubstantiated figures to conclude the
melting of Himalayan glaciers, which officials at the panel said was an
accident.

Climate skeptics have pounced on the flub, with Sen. John Barrasso,
R-Wyo., last week calling for IPCC Chairman Rajendra Pachauri to resign.

"Every day, new scandals emerge about the so-called 'facts' in the UN
reports," Barrasso said in a statement. "The integrity of the data and the
integrity of the science have been compromised."

Lubchenco today defended the IPCC.

"The IPCC has recognized that that particular conclusion was in error,"
she said. "That said, the vast majority of the conclusions ... are
credible, have been through a very rigorous process and are absolutely
state of the science, state of the art."

Lubchenco said the inclusion of the glacier data "was unfortunate but
quite atypical of the rest of the IPCC," noting the panel "has thousands
and thousands of conclusions about specific changes in the climate system,
and that most of them have been shown to be quite reliable."


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HOUSE: MURTHA NOT AFRAID TO GO AGAINST GRAIN, EVEN WITH ALLIES
By Richard E. Cohen and Erin McPike


Rep. John Murtha, D-Pa., was a powerful appropriator and a savvy House
insider who knew what he wanted and knew how to get it, even if he ruffled
some feathers on both sides of the aisle along the way.

In the wake of his death Monday, lawmakers from both parties lined up to
offer words of respect, including some of those lawmakers he crossed.

With Democrats in the House minority, he played a vital role in their
return to the majority as a key ally for then-Rep. Nancy Pelosi, D-Calif.,
during her move into leadership. In her titanic struggle with Rep. Steny
Hoyer, D-Md., for minority whip in late 2001, Murtha was her campaign
manager, adding his old-style influence to her new-age style to secure a
narrow victory.

Even then, he retained his independence, voting against campaign-finance
reform in 2002, despite Pelosi's plea that his vote would be "an
embarrassment to her."

Murtha's quixotic challenge to Hoyer for majority leader after Democrats
won House control in November 2006 was another example of his stubborn
independence.

When Murtha said in June 2006 that he planned to challenge Hoyer, Pelosi
convinced Murtha to suspend his campaign in the interest of party unity and
because of the need to focus on the election. But he resumed his campaign
in October and Pelosi formally announced her support for Murtha five days
after the election.

Murtha retained his allies in "Murtha's Corner" -- largely from
Pennsylvania and his Defense Appropriations Subcommittee. But Hoyer, while
bewildered and unhappy with the challenge from a Pelosi ally, ran a more
skillful campaign, with the vocal support from several incoming House
committee chairmen, including Reps. John Dingell of Michigan, Henry Waxman
of California and Barney Frank of Massachusetts.

Murtha lost the secret-ballot vote, 149-86. The result was a significant
embarrassment to Pelosi.

But Murtha rubbed some Democrats the wrong way long before he helped clear
Pelosi's path to power. Murtha was among those targeted in 1980 during the
Abscam influence-peddling investigation, when he was shown in a videotape
with a purported Arab sheik -- actually an undercover FBI agent -- who
offered Murtha $50,000. Murtha replied that he wasn't interested "at this
point," but added that later "we might want to do more business."

Murtha was not charged, but some Democrats harbored lingering resentment
against Murtha because they suspected his evidence helped to secure the
conviction of other House Democrats, including Rep. Frank Thompson, D-N.J.,
who had been a leading liberal.

After losing to Hoyer and returning to his powerful subcommittee perch,
Murtha gained new and seemingly unexpected allies, especially with his
outspoken opposition in 2007 to then-President George W. Bush's "surge" in
the Iraq war.

In a statement issued following Murtha's death, Rep. Dennis Kucinich,
D-Ohio, who nominated Murtha for majority leader in 2006 and ran in 2008 as
an anti-war candidate for president, praised his former ally. "I nominated
him because of his dedication to America, his love of country, his love for
the men and women who serve America and his understanding of the practical
aspirations of those Americans who struggle every day," Kucinich said.

At the time of his death, Murtha was facing the prospect of one of his
toughest elections ever. Republicans put Murtha on their target list, in
part because of his support for earmarks and in part for his role in
helping the now-defunct PMA Group.

His death sets up a two-tier election system, including the May 18 primary
and November general election, in which Murtha planned to be on the ballot
and a special election to fill out the remainder of this term. Democratic
Gov. Ed Rendell has 10 days from when the seat is declared vacant to set
the date of the special election, and that election must come at least 60
days after the vacancy.

Political insiders said Rendell is likely to set the date of the special
election to coincide with the May 18 primary.

Republican candidates already in the race are businessmen Tim Burns and
William Russell. For the full term, the filing deadline is March 9. Even
with Murtha on the ballot, Republicans saw hope in the fact that his was
the only district in the country to vote for Sen. John Kerry, D-Mass., in
the 2004 presidential race and Sen. John McCain, R-Ariz., in the 2008 race.

Democrats were reluctant to discuss possible candidates Monday. But Murtha
had already drawn two primary challengers, including Ryan Bucchianeri, a
Naval Academy graduate who has worked on international business development
for Lockheed Martin, and Ron Mackell, an attorney and Air Force veteran.

In addition to creating a political opening, Murtha's passing clears the
way for the House to name a new Cardinal.

Many Democrats say they expect Rep. Norm Dicks, D-Wash., to become
chairman of the Defense Appropriations Subcommittee.

For that to happen, Dicks would have to give up his chairmanship of the
Interior-Environment Appropriations subcommittee. That would appear to give
the inside track to Rep. James. Moran, D-Va., to replace Dicks, since he
has seniority on the committee and is a Pelosi ally.

But also in the mix is Rep. Maurice Hinchey, D-N.Y., who has seniority on
the subcommittee and is close to Appropriations Chairman Dave Obey.

Murtha's numerical replacement on the overall committee might be a
Pennsylvanian, although that is not a requirement. If leaders do turn to
the Keystone State, the list might include Reps. Patrick Murphy, Jason
Altmire and Chris Carney. All face serious election challenges this year,
and the committee assignment would be a boost.


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PEOPLE: PEOPLE
By Sara Jerome


NEW CLASS. The House Education and Labor Committee has welcomed several
new faces on the majority side. Jamie Pueschel Fasteau comes aboard as a
senior education policy adviser. She previously served as vice president
for federal advocacy at the Alliance for Excellent Education, where she
focused on federal policy on secondary school reform. Before that, she was
a legislative assistant for Sen. Patty Murray, D-Wash., focusing on
education. Other gigs have included the National Parent Teacher
Association, the American Association of University Women and the U.S.
Student Association.

Charmaine Mercer is coming aboard as senior education policy adviser. She
worked at the Education Department as a special assistant. Before that, she
handled appropriations for the department during a stint on the House
Appropriations Committee. She also worked five years as an education policy
analyst for the Congressional Research Service. Gordon Lafer joins the
panel as senior labor policy adviser after 12 years as a professor at the
University of Oregon. During his time there, he served as acting director
of the school's Labor Education and Research Center.

The panel has also tapped a chief clerk, Sadie Marshall. She arrives from
the House Rules Committee, where she was a legislative clerk.

STRATEGERY. Colin Delany, the founder of Epolitics.com, has joined the
staff of New Media Strategies, the digital public relations firm based in
Arlington, Va. Delany will serve as a strategic manager in the NMS public
affairs practice. The self-proclaimed "lefty" joins a bipartisan shop whose
ranks include Republican operatives Jessica Boulanger, former spokeswoman
for Rep. Roy Blunt, R-Mo., and Soren Dayton, a strategist and a founder of
the blog The Next Right. Delany's political career began as an aide in the
Texas Legislature, "where politics is considered a contact sport," he says.
He entered the online political scene to work on a search engine devoted to
politics and policy, but that went under "during the first Internet boom
and bust," he said. After that, he consulted on advocacy campaigns and
served as online communications manager at the National Environmental
Trust. His blog readership grew during the 2008 presidential election as he
dissected the nuts-and-bolts strategy choices of online campaigns, doggedly
following President Obama's digital outreach efforts. He went on to write
"Learning from Obama: Lessons for Online Communicators in 2009 and Beyond."
Delany said he will continue to blog as he begins his new position and that
NMS supports its employees' "public intellectual and creative lives ...
[The firm] actively encourages blogging, Twittering, [and] Facebooking."


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OFF TO THE RACES: MULTIFRONT TACTICS
By Charlie Cook


That the news that former Republican Sen. Dan Coats was contemplating a
challenge to Democratic Sen. Evan Bayh in Indiana was barely public before
the aggressive attacks started -- with many attempting to persuade the
former GOP lawmaker not to proceed beyond the signature-gathering stage --
should come as no surprise.

Consider that, as a 24-year-old law student, Evan watched his father,
then-Sen. Birch Bayh, lose re-election in 1980, another tough year for
Democratic candidates.

Bayh supporters muscularly attacked Coats for changing his voter
registration to Virginia, for lobbying for an oil company with ties to
Venezuelan President Hugo Chavez, for telling an audience in North Carolina
that he and his wife were contemplating retiring to the Tar Heel State.

It was a flurry of attacks from a campaign that clearly prefers not having
any real opponent at all and is moving heaven and earth to make sure it
doesn't happen.

Had Florida Republican Gov. Charlie Crist responded to word of a potential
challenge to his Senate nomination by former state House Speaker Marco
Rubio, he would probably be a slam dunk to win that Senate seat. We'll see
if the attacks and Bayh's $13 million campaign war chest persuade Coats to
stay on the sidelines; he's never had a race quite like this one.

The news that Coats was contemplating a return to politics and a challenge
to Bayh was a shocker, but it reflects the reality that this is going to be
a very good year for Republicans and that the more races they are
contesting, the more seats they have a chance to win. Republicans were
already favored to win two seats in Democratic hands, in Delaware and North
Dakota, and have no worse than even-money chances in five more states
against Sens. Blanche Lincoln, D-Ark., Michael Bennet, D-Colo., Harry Reid,
D-Nev., and Arlen Specter, D-Pa., as well as in the open seat in Illinois.

Beyond those seven seats, Republicans would need to score a net gain of
three more to pick up the 10 seats they would need to win control of the
Senate.

Republicans have at least a plausible shot in an open seat in Connecticut
and against Sen. Barbara Boxer in California.

GOP strategists continue to look for a strong challenger to appointed
Democratic Sen. Kirsten Gillibrand in New York, and have added Democratic
Sens. Russ Feingold in Wisconsin and Patty Murray in Washington to the list
of races they would like to put in play. In Washington, Dino Rossi, former
state senator and two-time Republican nominee for governor, is the latest
name mentioned. In 2004, Rossi came within 129 votes of beating
then-Attorney General Christine Gregoire.

Often in strong years like this one, a party's greatest regret is that
they didn't put a full team on the field, that they left some potentially
vulnerable incumbents from the other party go unopposed or underopposed.
The Republican House and Senate campaign committees seem determined not to
let that happen this year.

While the idea of Republicans running the table and netting 10 seats
seems, and frankly is, far-fetched, it should be remembered that at this
point in 2006, Democrats needed a net gain of six seats and netted -- six
seats. Democrats won five out of the six GOP seats that were then thought
to be vulnerable, losing only an open seat in Tennessee, but knocking off
one seat that wasn't even thought, early on, to be competitive or even
potentially competitive, that of Sen. George Allen in Virginia.

But for Republicans, it's worth it. This is the most favorable political
climate for them since 1994, and the closer they get to a majority this
year, the less it takes for them to get over the top in 2012 when Democrats
have 23 seats up, to only nine for the GOP, and 2014, when 20 Democratic
seats come up, and only 13 for Republicans.

For potential GOP challengers, the very strong likelihood that Republicans
will capture the majority in the Senate in the not-too-distant future,
2014, if not 2012, makes it an attractive target, except for sitting House
members who are looking at an increasingly strong chance of winning the
majority this year.

To be sure, Republicans have some of their own Senate seats to defend this
November and four are not slam dunks: open seats in Kentucky, Missouri, New
Hampshire and Ohio.

While all four are competitive races, the odds of Republicans winning all
four and going 18-0 in all their own seats up this year are not bad in this
environment. In another year, Democrats would have had a good shot at
picking off several. But this time, it's looking awfully tough for
Democrats; they may be able to pick one off, maybe, but even that doesn't
look too great right now.


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HILL BRIEFS: REED INTRODUCES BILL CREATING A DATA-MONITORING INSTITUTE

Sen. Jack Reed, D-R.I., introduced a measure Monday that would create a
National Institute of Finance to give regulators better data to monitor
systemic risk throughout the financial system.

The NIF would collect and standardize data, conduct long-term research and
develop tools for measuring threats to the financial system in an effort to
prevent another banking crisis, according the Reed, chairman of the Senate
Banking Securities, Insurance and Investment Subcommittee.

"Our current financial regulations are outdated. ... Over the last several
decades, a completely unregulated 'shadow-banking' system has metastasized
to the point where many of these new products and market-participants, such
as derivatives and hedge funds, remain completely out of reach of financial
regulators," Reed said. "We need to address systemic risk and follow
through with a strong, independent and well-funded data, research, and
analytic capacity to fulfill its mission."

The legislation was spurred by a National Academy of Sciences finding that
the United States lacks the tools to comprehensively and precisely monitor
systemic risk to the financial system.


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HILL BRIEFS: BEST BUY HIRES CEA VEEP FOR NEW LOBBYING OFFICE

Best Buy Co. is opening a Washington lobbying office and has hired Parker
Brugge from the Consumer Electronics Association to staff it, the
electronics retailing giant announced Monday.

Brugge was an EPA assistant administrator for solid waste and emergency
response from 1993 to 1997. At CEA, he has been vice president of
environmental affairs and industry sustainability, and before that he
worked in two Washington law firms, Patton Boggs and O'Connor & Hannan,
where he specialized in EPA and state regulatory issues.

Brugge also did a stint as CEO of the American Wood Preservers Institute.
He begins his work for Best Buy on Monday.


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HILL BRIEFS: NELSON IS 'NO' VOTE ON BECKER NLRB NOMINATION

Sen. Ben Nelson, D-Neb., said Monday that he will vote against the
nomination of Craig Becker to the National Labor Relations Board, an
announcement that might doom Becker's chances of confirmation.

"Mr. Becker's previous statements strongly indicate that he would take an
aggressive personal agenda to the NLRB, and that he would pursue a personal
agenda there, rather than that of the administration," Nelson said in a
statement. "This is of great concern, considering that the board's main
responsibility is to resolve labor disputes with an even and impartial
hand."

Becker is a former attorney for the AFL-CIO and Service Employees
International Union. His nomination has become a front in a battle between
in business groups and labor groups seeking to ease union organization. GOP
senators and groups like the U.S. Chamber of Commerce argue Becker favors
NLRB actions that would impose parts of the Employee Free Choice Act
without Congress.

With Sen. Scott Brown, R-Mass., Republicans have 41 Senate votes, enough
to block nominations if they vote together. With the Becker vote appearing
likely to fall on partisan lines, Brown's swearing in last week endangered
the nomination. The decision by Nelson, and potentially other Democrats, to
oppose him makes his confirmation unlikely.


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HILL BRIEFS: TRADE RELATIONS MIGHT CHANGE DUE TO CROP ANNOUNCEMENTS

In an announcement with implications for prices of all commodities, levels
of farm subsidies and for trade relations, the National Cotton Council
announced over the weekend that southern and Western farmers intend to
increase their cotton acreage by 10 percent this spring and plant less
corn, soybeans and tomatoes.

The NCC announced its early season planting intentions survey released at
its annual convention in Memphis.

Cotton prices have been so low that cotton farmers have been the only
farmers getting subsidies generated by low prices.

As a result, many farmers switched to other crops. But the NCC said in a
release that conditions for higher cotton prices will be favorable compared
with other crops in 2010 because world and U.S. cotton supplies are
tightening, other crops have either larger supplies or lower demand and
weather conditions for cotton look better.

It's unclear whether cotton prices would rise so high that cotton
subsidies would go down. Brazil, which won a World Trade Organization case
against the U.S. cotton program, has been pressuring the United States to
make changes in the program and won the right to impose tariffs on other
U.S. products in retaliation. The survey showed farmers intend to plant 9.9
million acres of upland cotton, an increase of 10 percent from 2009, and
176,000 acres of extra long staple cotton, an increase of 24 percent. All
17 cotton-producing states intend to increase production except Florida,
where producers will cut production 2.7 percent and increase peanut
production, NCC economist Dale Cougot said.


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HILL BRIEFS: HHS SECRETARY DEMANDS ANSWERS ON RATE INCREASES

Anthem Blue Cross of California, the state's largest for-profit health
insurer, announced Monday it will increase premiums for its 800,000
customers by as much as 39 percent, drawing an immediate rebuke from HHS
Secretary Sebelius.

Sebelius said Anthem Blue Cross' parent company, WellPoint Inc., "has seen
its profits soar, earning $2.7 billion in the last quarter of 2009 alone."
Not counting roughly $2.2 billion it gained from the sale of a pharmacy
benefit management subsidiary, WellPoint earned $536 million in the final
three months of last year.

Anthem Blue Cross said in a statement Monday that the weak economy and
rising healthcare costs necessitated the rate increases, and "highlights
why we need sustainable healthcare reform to manage the steadily rising
costs of hospitals, drugs and doctors."


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POLITICAL ROUNDUP: SCOTT DROPS STATEWIDE RUN TO SEEK REP. BROWN'S SEAT

State Rep. Tim Scott, the first black Republican elected to the South
Carolina Legislature since Reconstruction, abandoned his bid for lieutenant
governor Monday to enter the crowded race for the open 1st District seat.

The state representative and insurance agent becomes the latest Republican
seeking the seat being vacated by Republican Rep. Henry Brown, who is not
seeking re-election.

Two candidates with well-known political names are running: Paul Thurmond,
the son of the late Sen. Strom Thurmond, R-S.C., and Carroll Campbell III,
son of the late South Carolina Gov. Carroll Campbell.

"I certainly don't come from a dynasty," said Scott, 44. "I come from a
working-class family."

Other Republicans running include Katherine Jenerette of North Myrtle
Beach, former Charleston County School Board member Larry Kobrovsky, Isle
of Palms City Councilman Ryan Buckhannon and former Brown aide Stovall
Witte.

Three Democrats are also seeking the seat: commercial pilot Robert Burton,
Georgetown businessman Robert Dobbs and retired accountant Dick Withington.


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POLITICAL ROUNDUP: STATE LAWMAKER JOINS GOP FIELD CHALLENGING MURRAY IN
WASH.

Republican state Sen. Don Benton announced over the weekend he will seek
to challenge Sen. Patty Murray, D-Wash., the Vancouver Columbian reported.

Benton said he had been considering the race for weeks and came to a
decision last week.

"I'm running because we need a senator who will represent all the people
of the state of Washington and not just the government," Benton said.

In 1998, he unsuccessfully ran against now-Rep. Brian Baird, a Democrat,
to represent the 3rd District. Baird defeated Benton, who campaigned on a
platform that included a flat tax, and respect for gun rights and property
rights, by 55-45 percent.

Several other lesser known Republicans have announced including
motivational writer and speaker Chris Widener; Sean Salazar, a
chiropractor; Clint Didier, a businessman and former Washington Redskins
player; Craig Williams, a Realtor; and physician Arthur Coday.


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POLITICAL ROUNDUP: DEMOCRAT TO PASS ON BID FOR ABERCROMBIE'S SEAT

A Democrat who had been considering entering the three-way race to replace
Rep. Neil Abercrombie, D-Hawaii, in a special election says he won't run.

State Sen. Will Espero said late last week he won't launch a campaign in
part because of concern from Democratic Party leaders that he would dilute
the party's chances of holding onto the congressional seat.

Senate President Colleen Hanabusa and former Rep. Ed Case, both Democrats,
will face off against Honolulu Councilman Charles Djou, a Republican.

In a winner-take-all special election, Espero says party members were
worried the Democrats would split the vote and allow the Republican
candidate to win.

Abercrombie has said he will

[Snuffysmith]

CongressDaily AM for Friday, Feb. 12, 2010

--------------------
CONTENTS

ECONOMY: REID OPTS FOR JOBS BILL WITH NO EXTENDERS, OTHER ADD-ONS
By Darren Goode and Dan Friedman, with Humberto Sanchez and David Hatch
contributing


Senate Majority Leader Reid has elected to push a scaled-back, four-part
jobs bill instead of a broader package.

The move came amid pushback from some Democrats over giving too many
concessions to Republicans. It is unclear whether Republicans will latch on
to a proposal that does not include extensions of tax breaks, a promise to
debate the estate tax and other items they have been pushing for.

The bill Reid wants to consider will include a payroll tax break from
Sens. Charles Schumer, D-N.Y., and Orrin Hatch, R-Utah; an extension
through this year of federal surface transportation programs; an expansion
of the Build America Bonds program of tax-credit bonds for state and local
infrastructure projects; and an expiring extension through this year for
higher expensing limits for small businesses included in last year's
stimulus bill. Reid said it will be paid for but did not detail how.

Reid's decision was clearly a surprise to senators in both parties who
have been heavily engaged in the discussions.

This first bill will not include a number of items from a draft $84
billion package released Thursday morning by Senate Finance Chairman Max
Baucus and ranking member Chuck Grassley, including a renewal of $31
billion worth of expired tax breaks that was considered an olive branch to
Republicans. "This Reid announcement undermines the carefully crafted
Baucus-Grassley effort and throws sand in the gears of bipartisan
negotiation," a Grassley spokeswoman said. "It's disappointing and
surprising, considering we were told that Reid staff was aware of and
signed off on the Baucus-Grassley statement this morning."

But Democrats have not been able to get broad Republican support yet for
the Finance package and are under pressure to show some initial effort to
address jobs. "We feel that the American people need a message ... that
we're doing something about jobs," Reid said after presenting the bill at a
Democratic Caucus lunch. "The message is so watered down, with people
wanting other things in this big package."

"No one can dispute we have a jobs bill," he added. "We're not going to
confuse this with tax extenders."

A Reid spokeswoman said the four parts in the new bill "are really the
foundation of the Baucus bill."

She said Democrats still intend by the end of the month to pass additional
measures that Reid excluded, like unemployment insurance, and COBRA
extension.

Sen. Benjamin Cardin, D-Md., said Reid settled on the slimmed-down package
because many Democrats felt Republicans would either oppose or delay
passage of the larger Finance bill by attempting to add additional
provisions.

"You say, well that's a good starting point, now we need to add this, that
or whatever ... And at the end of the day they vote against the bill and
you don't have the 60 votes to pass it. We don't want to be put in that
position. So I think that is the reason why the leader is moving in this
direction and I think we all understand that."

"It would have taken weeks to get that bill off the floor," Cardin said.

Cardin called the smaller bill, which Democrats hope can pass quickly
after recess, "a first step" that will serve as a confidence building
measure to allow Democrats and Republicans to "build trust and momentum."

Senate Minority Whip Kyl Thursday afternoon indicated Republicans would
support the draft Finance bill, just as Reid was presenting the smaller
bill to Democrats. But Minority Leader McConnell later declined to endorse
the Finance draft, calling it "a work in progress" that is "gonna be hashed
out over the next few weeks."

Kyl said an agreement between Baucus and Grassley for consideration of
bipartisan estate tax reform would have included a unanimous consent
agreement that would set up a vote on their plan to lower the estate tax by
increasing the exemption threshold from $7 million to $10 million per
couple and lowering the top rate to 35 percent from 45 percent. Their plan,
strongly opposed by some Democrats, already passed the Senate this year in
a nonbinding vote. But Schumer threw cold water on the idea of tagging an
estate tax deal to a jobs bill. "I think when you start tying it to too
many bells and whistles, you run into trouble," he said.

Reid said the Senate will turn to the tax extenders after the Presidents
Day break, just separately from this jobs bill.

Reid's bill does not include other items in the $84 billion Finance draft,
including three more months of unemployment benefits and COBRA health
subsidies for laid-off workerers and a physician payment fix.

Absent also from that draft is a one-year extension for USA PATRIOT Act
provisions expiring Feb. 28, a five-year reauthorization of satellite
television law and $1.5 billion in farm disaster aid backed by Senate
Agriculture Chairwoman Blanche Lincoln and Sen. Thad Cochran, R-Miss.

The satellite law, which governs the transmission of broadcast signals via
DirecTV and the Dish Network, was set to expire Dec. 31 before receiving a
last-minute, two-month extension until Feb. 28. Legislation to renew the
law is considered "must pass" because millions of satellite customers could
lose access to their local broadcast TV stations without it.

Reid said he made the decision to do the scaled-back bill before
Thursday's policy lunch. "I just wanted to make sure that they were
supportive of what I was doing, and they are very supportive," Reid said of
fellow Democrats.

But Democrats held a spirited debate during lunch regarding strategy for
moving their jobs agenda, arguing among themselves how big an initial bill
should be. "There's a healthy debate going on whether there should be a
limited number of provisions or a broader package," Budget Chairman Kent
Conrad said after he left the lunch early to attend a hearing.

"I think we have a very simple, straightforward bill," Sen. Claire
McCaskill, D-Mo., said afterward. "And it's going to create jobs right now.
It's not going to be a big complicated thing."

Reid said "Republicans are going to have to make a choice" on whether to
support the bill.

Sen. John (Jay) Rockefeller, D-W.Va., said he does not think the bill will
pass. "Why would the Republicans vote for something?" he said. "So we have
to keep trying."

Before the caucus meeting Sen. Byron Dorgan, D-N.D., who had helped
develop the jobs bill, said that the package had "morphed into a larger
package than just jobs. It does have a wage tax-credit, but much of the
rest of it is an extension of extenders" and other provisions.

Dorgan also slammed the potential deal with Kyl on the estate tax.

"I have no interest in being a part of anything that is going to decide
that we are going to give big tax breaks to the wealthiest Americans by
watering down the estate tax," he said.


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HEALTH: DEMS QUICK TO USE PROFITS TO ARGUE FOR REFORM MEASURES
By Anna Edney


Democrats jumped Thursday at news on a couple fronts that health insurance
premiums are skyrocketing while insurers are making record profits,
creating momentum for lawmakers to make the case for the stalled healthcare
overhaul.

Senate Majority Leader Reid condemned the premium spikes and needled
Republicans.

"That's what happens when we sit back and wait for insurance-company
executives to act out of the goodness of their hearts -- instead of
admitting they are acting in the interest of their wallets," Reid said
Thursday. "That's why we need health reform like the bills already passed
by the House and the Senate that will rein in insurance company abuses and
make coverage more affordable for millions."

Reid's comments stemmed from a 39 percent premium increase in California
by insurer WellPoint, which is under scrutiny by HHS. In addition, Health
Care for America Now released a report revealing the top five insurance
companies made record profits last year while increasing premiums 56
percent as they lost 2.7 million customers.

"Several of the firms did so while spending less of our premium dollars on
the actual delivery of health care, while spending more on administration,
advertising, CEO salaries and profits," Richard Kirsch, HCAN's national
campaign manager, said.

The largest for-profit insurance companies included in the report were:
UnitedHealth Group Inc., WellPoint Inc., Aetna Inc., Humana Inc. and Cigna
Corp.

The insurers made $12.2 billion last year, a 56 percent increase over the
$4.4 billion they made in 2008, HCAN found after examining SEC earnings
reports. Robert Zirkelbach, a spokesman for America's Health Insurance
Plans, defended the increases.

"For every dollar spent on health care in America, less than one penny
goes towards health plan profits. Health plan profits are well below other
industries within the health care sector," Zirkelbach said.

Aetna's profits are the only ones of the five companies that declined,
down $108 million, or 8 percent, to $1.28 billion. The company was also the
only one to increase enrollment and spend more on medical expenses opposed
to administrative costs.

"Spending more money on actual medical care and insuring more people is
not a solution that pleases Wall Street, although it's obviously what we
need," Kirsch said.

Rep. Anthony Weiner, D-N.Y., who has become increasingly outspoken against
the Senate's approach, ripped the upper chamber for giving Republicans too
much leeway.

"Today's news is just another sign of things to come if the Senate 41-vote
majority continues to dictate healthcare policy," Weiner said.

HCAN's report came as Anthem Blue Cross, owned by WellPoint, responded to
an inquiry from HHS Secretary Sebelius about a 39 percent premium spike it
imposed in California.

"Rate increases reflect the increasing underlying medical costs in the
delivery system, which are unsustainable," Brian Sassi, president and CEO
of WellPoint's consumer business unit, wrote Thursday.

Sassi also blamed a less-healthy risk pool in a bad economy and a tendency
for people to choose less expensive options in tough times. He noted that
the most striking premium increases would apply to the individual market,
which constitutes 10 percent of the company's customers, not employer-based
coverage. Sebelius maintained the increase is difficult to understand given
the company made $2.7 billion in the last quarter of 2009 and used the
occasion to call for a healthcare overhaul as well.

"Without comprehensive reform, fewer people will be able to afford health
insurance and Anthem's decision to raise their rates only demonstrates the
urgent need for real reforms that fix our broken health insurance system,"
she said.


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FINANCE: DODD PIVOTS, TO WORK WITH CORKER ON OVERHAUL MEASURE
By Bill Swindell


Senate Banking Chairman Christopher Dodd said Thursday he would work with
Sen. Bob Corker, R-Tenn., to strike a bipartisan deal on legislation to
revamp the nation's financial regulatory structure after he failed to reach
an agreement with Banking ranking member Richard Shelby.

Dodd said he called Corker Tuesday and asked him to negotiate a measure
that has been stalled for months over disagreements, most notably over the
creation of a Consumer Financial Protection Agency, and that Corker agreed
on Wednesday.

"Sen. Corker has proved to be a serious thinker and a valuable asset to
this committee," said Dodd, who announced last month that he is retiring
from Congress at the end of this year and wants to make the issue a
capstone of his 35-year legislative career. "For that reason, I called him
Tuesday night and asked him to negotiate the financial reform bill with me.
We met in my office on Wednesday, and, given the importance of these
issues, he agreed."

Dodd added he is now more optimistic his panel can produce a consensus
bill than he has been in recent weeks.

"While many difficult questions remain, financial reform is in a strong
position due to the good work done by Banking Committee members, both
Democrats and Republicans, to work out this bill," Dodd said.

Corker has already reached across the aisle, working with Sen. Mark
Warner, D-Va., on language to set up a procedure to unwind firms whose
collapse would disrupt financial markets, putting an end to propping up
firms "too big to fail" with federal dollars.

The two, according to K Street sources, have been leaning toward a
structure to force most firms through a specialized bankruptcy process. But
in a few exceptional cases, it would allow a resolution process like the
FDIC has for failed banks, a structure favored by the Obama administration.

The announcement gives Dodd a needed boost in moving forward a bill, a top
priority for the White House. It also comes a week after Dodd said
discussions with Shelby had broken down over CFPA.

"It breaks the logjam," one financial services lobbyist said.

Still in his first term, Corker has taken a leadership role on the
committee, most notably in trying to broker a compromise over the rescue of
domestic auto manufacturers. His work with Warner has only increased his
profile, even though he is fifth in seniority on the Republican side. "He's
filling a vacuum that exists on the Republican side," one banking lobbyist
said.

During the negotiations, Corker has consistently been hopeful about
reaching a bipartisan compromise on the issue, noting that the issues that
lawmakers are tackling are not necessarily ideological in nature.

A major question is whether Corker will be able to cut a deal with Dodd
over CFPA, which would be an independent agency that would assume
rule-writing, examination, and enforcement over credit cards, mortgage
lending and other services.

Corker said he told Dodd Thursday they should tackle the CFPA as the last
issue. "I think that is the best way to build a little trust between all
involved. We know that is the most contentious issue. I know Sen. Dodd
knows and everybody else knows that a free-standing agency is a non-starter
on our side of the aisle. But I think there is a way to have a program to
deal with it in another fashion that doesn't bump up against or undermine
the safety and soundness function of a bank or a regulator looking at a
bank," Corker said in an interview with CongressDaily.

He said that they will try to finish their work by mid-March. Corker said
the reaction by Senate Minority Leader McConnell was "very cordial and very
professional."

One lobbyist said the process could be fast-tracked if Dodd can also
retain all of his Democrats on the panel, including Warner and Sens. Evan
Bayh of Indiana and Jon Tester of Montana.

Shelby had demanded the CFPA be wrapped into an office of consumer
protection under a new federal bank regulator, according to sources. But in
return, sources added, Dodd wanted strong rule-writing powers for the
office, with more autonomy. One source noted that talks were centered on
having it housed in Treasury.

But Corker has signaled to some he has the same reservations as Shelby
about CFPA. "I don't think [Corker] is going beyond his ranking member,"
said one business lobbyist with close Senate ties.

Another lobbyist with GOP ties said he does not believe the announcement
is a game-changer. "Ultimately, Republicans have no incentive to help a
lame-duck chairman pass a bill their business supporters hate. However,
Republicans do not want to be branded as anti-reform. Therefore, the best
strategic option for Republicans is to continue negotiating with the
expectation that the bill will die of its own weight," said the lobbyist,
who, like others, asked not to be identified.

Shelby was a nonfactor in negotiations in 2008 over the legislation that
created the $700 billion Troubled Asset Relief Program, with Dodd opting to
work with Sens. Judd Gregg, R-N.H., and Bob Bennett, R-Utah. Shelby
protested the bill was an unwise bailout of the financial system.

A Shelby spokesman said the senator negotiated with Dodd based on the
unified position of Republicans on the panel on the major issues such as
improving derivatives regulation, creating a resolution regime, and
enhancing consumer protection without subordinating safety and soundness
concerns of regulators. "These are not 'talking points;' they are the
foundation upon which Republican support can be built. Sen. Shelby remains
committed to these principles and passing legislation that achieves them,"
said Jonathan Graffeo, a Shelby spokesman.

Gregg now sits on the Banking Committee and could be viewed as an ally in
Dodd's quest, especially as he is retiring at the end of the year. Gregg is
working with Sen. Jack Reed, D-R.I., on language to better regulate
derivatives and hedge funds and private equity groups.

In addition, Sens. Charles Schumer, D-N.Y., and Mike Crapo, R-Idaho, are
covering executive compensation and corporate governance. Dodd said he
wants to incorporate agreements made by such teams into his revised bill.


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DEFENSE: INDUSTRY SEES FEW CHANGES WITH DICKS CALLING THE SHOTS
By Megan Scully


Defense industry officials and analysts say they expect a seamless
transition when Rep. Norm Dicks, D-Wash., takes the gavel of the House
Defense Appropriations Subcommittee and promptly gets to work on the FY11
Defense spending bill when the House reconvenes later this month.

He has not been tapped officially for the chairmanship, but House Majority
Leader Hoyer has said he expects Dicks, the second-ranking Democrat on the
panel, to take over after the death this week of longtime chairman Rep.
John Murtha, D-Pa.

Dicks brings with him strong ties to aerospace giant Boeing Co., which
builds many of its largest planes in Everett, Wash., near his district. But
while he's known as an unabashed Boeing champion, defense sources said they
don't expect his chairmanship to bring about a significant change in
defense spending priorities.

After all, Boeing, the country's No. 2 defense contractor, hardly went
unnoticed during Murtha's tenure as chairman, which was marked with
multibillion-dollar congressional add-ons benefitting Boeing's product
line, such as the C-17 Globemaster III cargo plane and the F/A-18 Super
Hornet.

"I don't think a whole lot changes," said one defense lobbyist, observing
that Dicks' priorities are largely aligned with what Murtha advocated.

But the two lawmakers diverged last year when Murtha fought and lost a
battle to split the contract to build aerial refueling tankers for the Air
Force between rival bidders Boeing and a team led by Northrop Grumman Corp.
and EADS, the European consortium behind Airbus.

Murtha hoped splitting the contract would curtail what he feared would be
an endless cycle of challenges to contract awards. Dicks has favored giving
the contract to Boeing alone.

The Air Force is expected to release a final request for proposals this
month, in anticipation of selecting a contractor this summer. Northrop and
EADS already have threatened to pull out of the competition unless there
are significant changes made to the draft RFP, which they argue favors the
Boeing plane.

Dicks' chairmanship could have a psychological affect on down-and-out
Northrop supporters. "You're adding further weight against a Northrop
decision to bid," said Richard Aboulafia, an aerospace analyst at the Teal
Group.

A Northrop spokesman said the firm enjoys a good working relationship with
Dicks.

By law, Dicks cannot say who gets the contract, and he or other lawmakers
cannot pressure the GAO in deciding any contract protest. But he can try to
set funding levels and add conditions or riders to the tanker program in
the FY11 Defense spending bill.

"If the award goes to Northrop/EADS, you can bet there's going to be
trouble in the appropriations subcommittee," said Gordon Adams, OMB's
associate director of national security during the Clinton administration.
"If the award goes to Boeing, you can bet there won't be."

Meanwhile, Adams says Dicks will lead the subcommittee in the tradition of
his predecessor.

"Appropriators are appropriators are appropriators, and it kind of doesn't
matter whether it's a [Rep.] Jerry Lewis or a Jack Murtha or a [former GOP
Sen.] Ted Stevens or a [Sen.] Daniel Inouye or a Norm Dicks," Adams said.
"You have to have a particular frame of mind to be an appropriator. You
have to like details, you have to like dealing with the money, and you
really have to enjoy earmarks."

In the FY10 Defense spending bill, Murtha sponsored 23 earmarks worth
$76.5 million, according to public disclosures. Dicks obtained 14 earmarks
worth $39 million -- a figure likely to swell when he becomes chairman.

Dicks will have to realize that, to be effective, he must share the
wealth, as Murtha always did, Adams said. "They all have to make deals and
appropriators are the master dealmakers," he added

The biggest change, however, may be who benefits from those deals.

Dicks, though a close adviser to Murtha as the next-in-line on the panel,
will have his own friends and allies.

For the lawmakers who had curried favor and collected chits with Murtha,
"that bank has gone bust," said Steve Ellis, a vice president at Taxpayers
for Common Sense.


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TAXES: RUM REVENUE PROGRAM STOKES A CARIBBEAN KERFUFFLE
By Peter Cohn


A simmering battle between Puerto Rico and the U.S. Virgin Islands over
rum taxes could heat up the Capitol when the Senate considers tax
legislation after the Presidents Day recess.

The measure would renew dozens of provisions that expired last year,
including higher remittances from the $13.50 per proof-gallon federal rum
excise tax. The amount sent to the rum-producing territories, or
"covered-over," dropped to $10.50 per proof-gallon when the provision
expired Dec. 31; the extenders measure would raise that back to $13.25 for
a year.

The provision passed the House with little debate in December, and both
territories want Congress to renew the higher cover-over. The question is
how to allocate those revenues in light of a deal struck by the Virgin
Islands and Diageo PLC, maker of Captain Morgan and Myers's rum brands, to
move Captain Morgan production to St. Croix beginning in 2012 from its
longtime Puerto Rican distillery.

Stung by the move, Puerto Rico wants Congress to cap the amount of
cover-over revenues that can be used to subsidize the rum industry,
claiming the Virgin Islands lured Diageo away with the promise of lucrative
tax incentives.

The Senate bill would preserve a straight extension of current law, but
depending on what terms Senate leaders agree on for floor debate, the jobs
measure could be open for amendment.

The influential Service Employees International Union backs a legislative
fix, citing the potential impact on Diageo workers in Puerto Rico.
According to sources, sympathetic lawmakers include Florida Sens. Bill
Nelson, a Democrat, and George LeMieux, a Republican, as well as Democratic
Senatorial Campaign Committee Chairman Robert Menendez of New Jersey,
although their offices did not comment.

Puerto Rico's lobbying effort, led by GOP Gov. Luis Fortuno, has focused
on senators from states like Florida with large numbers of Puerto Rican
constituents, as well as Finance Committee members. Fortuno wrote to
senators last month urging them to not only renew the $13.25 cover-over but
to "ensure federal revenue is not used to excessively subsidize companies
that produce rum."

LeMieux wrote to Finance Chairman Max Baucus and ranking member Chuck
Grassley urging them to "find a fair solution that preserves the original
intent [of the tax] without causing dramatic shifts in the assistance to
the territories or subsidizing one market competitor over another."

The Virgin Islands government argues that capping their use of the
revenues, such as in a bill from Puerto Rico's Democratic House delegate,
Resident Commissioner Pedro Pierluisi, would abrogate not only their deal
with Diageo but also a new partnership with Fortune Brands, maker of Cruzan
rum.

They also say it would be an unprecedented intervention in territorial
affairs if Congress mandated how they could apply their rum tax funds.
"Florida does not tell Montana what its Legislature can or cannot do with
its general revenues," Virgin Islands Gov. John deJongh, a Democrat, wrote
last week to Baucus, who represents Montana.

Citing a recent Congressional Research Service report, deJongh argues
Puerto Rico has another motive: Under a 1983 law granting duty-free
benefits to Caribbean countries, taxes paid on foreign rum imports are
remitted to the two territories based on market share. If Diageo had moved
Captain Morgan to Jamaica, for example, where it already produces Myers's
rum [and Captain Morgan's namesake buccaneer was actually governor of
Jamaica under British rule in the 1680s], Puerto Rico would still have
received a share of the tax revenues.

Thus, Puerto Rico has an added incentive to scuttle the Diageo-Virgin
Islands deal, even if it means production moves to another country, deJongh
wrote in his letter, also sent to Grassley. "The CRS report identifies what
is likely the real reason for the Pierluisi bill," the letter states.

Historically, Puerto Rico has been the center of rum production and
received the lion's share of the tax revenues -- $5.4 billion, or 83
percent of the total $6.5 billion in cover-over funds remitted since 1990.
In 2008, Puerto Rico got $371 million to the Virgin Islands' $100 million,
according to CRS.

The Diageo and Fortune Brands deals would likely result in that allocation
tilting toward the Virgin Islands. The portion of cover-over funds expected
to flow to Diageo alone is estimated to total $2.7 billion over 30 years.

The Virgin Islands argues the CRS report lays out the issue clearly on its
behalf, however. It states "the justification for using tax incentives and
subsidies to attract industry has long been a part of sub-federal economic
development strategies."

The report also said limiting the cover-over "could be seen as
inconsistent with the intent" of the law as "Congress explicitly stated
that the government receiving the covered-over revenue was charged with its
disposition, not the U.S. Congress."

Pierluisi argues the report does nothing to undermine the rationale for
his bill, as the cover-over program -- created in 1917 for Puerto Rico and
expanded to the Virgin Islands in 1954 -- was intended to benefit both
territories, not turn them into competitors.

"It defies logic to claim that a territory should be free to use
cover-over money however it wants, regardless of the negative consequences
its decisions will have for its sister territory and for the integrity of
the cover-over program.," he said in a statement.


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HOUSE RACES: LINCOLN DIAZ-BALART, EHLERS, WATSON SAY THEY WILL RETIRE
By Erin McPike with Billy House contributing


Rep. Lincoln Diaz-Balart, R-Fla., an outspoken proponent of U.S. sanctions
against Cuba, announced Thursday he will retire instead of seeking
re-election in November.

At the same time, Rep. Mario Diaz-Balart, R-Fla., said he will run for his
brother's seat, which is a safer GOP seat than his own in an adjacent
district.

The Florida announcements came on the heels of news that Reps. Diane
Watson, D-Calif., and Vernon Ehlers, R-Mich., would also retire at the end
of the 111th Congress.

Lincoln Diaz-Balart said his decision comes in part because he believes he
can become "more useful to the inevitable change that will soon come to
Cuba, to Cuba's freedom, as a private citizen dedicated to helping the
heroes within Cuba."

He said one of his proudest achievements as a lawmaker was his work on the
U.S. embargo of Cuba, particularly the "requirement that before any U.S.
president can lift the embargo, all political prisoners must be freed; all
political parties, labor unions and the press must be legalized; and free
multiparty elections must be scheduled in Cuba."

Mario Diaz-Balart said running for his brother's seat "is a natural move
for me. ... As the only Broward native in the U.S. House of
Representatives, I look forward to the opportunity of representing
Broward's residents."

News that Mario Diaz-Balart will run for his brother's district this fall
prompted Democratic Party activity.

Joe Garcia, former executive director of the Cuban American National
Foundation and former chairman of the Miami-Dade County Democratic Party,
was on the telephone with officials at the White House and Democratic
Congressional Campaign Committee Chairman Chris Van Hollen of Maryland to
underscore his interest in running again, according to a source.

Garcia lost to Mario Diaz-Balart, 53-47 percent, in 2008.

Lincoln Diaz-Balart was first elected in 1992 and is the second-ranking
GOP member of the Rules Committee. Throughout his career, he was a fierce
supporter of the embargo against Cuba, a stance that was personal as much
as political.

His father was a legislator in pre-Castro Cuba and his aunt was married to
Fidel Castro.

GOP sources said the scenario of one brother retiring and the other
switching districts to replace him was first discussed when then-GOP Sen.
Mel Martinez announced his retirement last year and Lincoln Diaz-Balart was
considered for the short-term Senate appointment.

"He had been looking to retire, and the Senate was a good way to head
out," one of the sources said.

Republicans say state Rep. David Rivera would be a logical Republican
candidate for Mario Diaz-Balart's seat, as his state district closely
follows the congressional district.

Other potential GOP candidates include Miami-Dade County Mayor Carlos
Alvarez, state Sen. Alex Villalobos and Carlos Curbelo, a Diaz-Balart
protege.

Luis Rivera is also in the running for the Democratic nomination for Mario
Diaz-Balart's seat. Attorney William Sanchez is the only Democrat so far
running for Lincoln Diaz-Balart's seat.

Ehlers, 76, said he had decided that 16 years was enough.

"While I regret leaving when so much more needs to be done, I know it is
time for me to step down. I am in good health, but I recognize that I
should complete this chapter of my life," he said.

Ehlers, the first research physicist elected to Congress, serves on the
Education and Labor, Science, and Transportation and Infrastructure
committees.

He was named by former House Speaker Newt Gingrich, R-Ga., to the
transition team when Republicans regained control of the House after the
1994 elections, and he led efforts to upgrade the House's computer systems.

Ehlers came to Congress in December 1993 after winning a special election
caused by the death of former GOP Rep. Paul Henry. The district has been
reliably Republican, although it only slightly favored 2008 Republican
presidential nominee Sen. John McCain of Arizona -- by 2,072 votes.

National Republican Congressional Committee Chairman Pete Sessions of
Texas predicted the GOP will keep the seat this fall. Michigan's filing
deadline is May 10, and its primary is Aug. 3.

State Rep. Justin Amash said Tuesday he would run for Ehlers' seat.

Other potential GOP candidates include state Sens. Mark Jansen and Bill
Hardiman. Michael Van Kleeck is the only filed candidate so far.

Watson made her retirement announcement Thursday, but party sources
confirmed the move a day earlier. Watson's Los Angeles-area district is
heavily Democratic and will not likely be a GOP target this fall.

Assembly Speaker Karen Bass has privately expressed interest in the seat,
but had not commented publicly because she didn't want to be seen as
pressuring Watson to step aside, the Los Angeles Times reported.

Watson was elected in a special election in June 2001 to replace the late
Democratic Rep. Julian Dixon.

Watson is a member of the Foreign Affairs and Oversight and Government
Reform committees.

So far, 13 Democrats and 18 Republicans have announced they will not run
for another term in the House, either because of retirement or running for
other offices.


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APPROPRIATIONS: MORAN EXPECTS TO CLAIM SUBCOMMITTEE CHAIRMANSHIP
By Billy House


Rep. James Moran, D-Va., expects to be named chairman of the House
Interior Appropriations Subcommittee if, as anticipated, current
Subcommittee Chairman Norm Dicks, D-Wash., moves to the top seat on the
Defense Appropriations Subcommittee.

"Mr. Moran looks forward to being chairman of the Interior Subcommittee,
but right now he is focused on mourning the loss of his friend," Defense
Appropriations Subcommittee Chairman John Murtha, said Moran's spokeswoman,
Emily Blout.

After Dicks, Moran has the most seniority on the Interior Appropriations
panel. But the final determination of who will chair the two subcommittees
will be up to the entire Appropriations Committee and the Democratic
Caucus.

It is unclear whether criticism of some of Moran's earmarking practices
might play a role in the selection process. There might also be some hard
feelings from 2006, when Moran backed Murtha's unsuccessful challenge of
then-Minority Whip Hoyer for majority leader, then accused some Democrats
of double-crossing Murtha in secret balloting.

Moran was not available for further comment Thursday, beyond saying
through his spokeswoman that he expects to take over for Dicks.

Rep. Maurice Hinchey of New York was mentioned as a potential candidate to
replace Dicks, but he said Thursday that he would not challenge Moran.

Another senior Democrat on the Interior Subcommittee, Rep. Ed Pastor,
D-Ariz., said he is satisfied in his current role as acting chairman of the
Energy-Water Appropriations Subcommittee and supports Moran's becoming
chairman of the Interior Subcommittee.


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BUDGET: OBAMA TO ISSUE ORDER FOR DEFICIT COMMISSION WITHIN 10 DAYS
By Humberto Sanchez


White House Press Secretary Robert Gibbs said President Obama will issue
an executive order in the next 10 days to create a commission that would
make recommendations to Congress on how to lower the deficit.

"The snow got us a little off track," Gibbs said.

The commission was part of a plan hatched by Democratic leaders and the
White House to win the support of about 14 Democrats for a $1.9 trillion
increase in the debt ceiling, which Congress passed this month.

Democratic leaders have pledged to hold a vote on the panel's
recommendations, with the Senate moving first. The panel's proposals are
expected to be submitted to Congress after the November elections, so
Congress can act on them before the end of the year, panel supporters have
said.

The commission is expected to have 18 members, including six lawmakers
appointed by congressional Democrats and six lawmakers appointed by
congressional Republicans. Obama would appoint six others, only four of
whom could be Democrats. Fourteen commission members would have to agree on
any deficit-reduction plan. The White House has been trying to reach out to
Republicans, but they have been critical of the presidential panel, and it
is unclear whether they will participate.

Last week, House Minority Leader Boehner raised concerns with Treasury
Secretary Geithner about the commission, which would recommend potential
cuts federal spending and tax increases.

"The president's fiscal commission proposal is nothing more than a
partisan Washington exercise rigged to impose massive tax increases and
pass the buck on the tough choices we need to be making right now," Boehner
said in a statement after he talked with Geithner.


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EDUCATION: CABINET SECRETARIES PUSH BREAKFASTS, BETTER FOOD IN SCHOOLS
By Jerry Hagstrom


Agriculture Secretary Vilsack and Education Secretary Duncan said Thursday
that increasing the number of schools that offer school breakfast and
increasing the number of children in that program are top priorities for
the Obama administration in the reauthorization of child nutrition programs
that Congress is expected to take up this year.

In a joint media call with Duncan, Vilsack said more than 100,000 schools
offer school lunch and 31 million children eat it. But only 88,000 schools
offer school breakfast, and only 11 million children sign up for it.

President Obama's FY11 budget calls for a $1 billion per year increase in
child nutrition programs, and First Lady Michelle Obama said at the launch
of her "Let's Move" anti-obesity campaign on Tuesday that the
administration wants to increase the number of children eating school meals
by 1 million.

Vilsack, Duncan and USDA Undersecretary for Nutrition and Consumer
Services Kevin Concannon all called on states and school districts to
simplify the application process for free and reduced-price meals. Vilsack
said only two-thirds of lower-income children who qualify for those meals
are getting them.

He also noted that, while participation in the supplemental nutrition
assistance program -- formerly known as food stamps -- has grown
dramatically, there has not been a similar increase in participation in the
school meals programs.

Concannon said states already have authority to automatically qualify
children who get food stamps, direct welfare benefits and Medicaid or
children's health insurance for free and reduced-price school meals.

Duncan said that when he was superintendent of schools in Chicago, "We
used to put a lot of manpower in chasing parents to fill out these forms.
It was bureaucratic and not an easy process."

Duncan and Vilsack also emphasized the administration's commitment to use
the child nutrition reauthorization process to improve school meals. The
7.6 billion meals that the schools serve per year offer an opportunity to
teach nutrition lessons that last a lifetime, Duncan said. He added that he
believes that as the quality of food increases, "We will see an increase in
academic performance."


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PEOPLE: PEOPLE
By Gregg Sangillo


HARVARD CLASS. Ashley Harvard is getting acclimated to her new job at the
American Clean Skies Foundation. Harvard is serving as chief of staff and
special assistant for the environmental group. She was a research assistant
for the majority under Senate Environment and Public Works Chairwoman
Barbara Boxer. Harvard grew up in nearby Olney in Montgomery County, Md.
While attending Bowdoin College in Maine, she studied government and
environmental studies. "I got into [environmental studies] kind of
randomly," she said. "My first semester of college, I was short a couple of
credits. And the only class that was really open was an environmental
history of North America course, so I took it and kind of fell in love with
the subject." Harvard also spent a year during college studying in
Edinburgh, Scotland. Her initial interest in government came from a close
friend to her family, Maggie Williams, who served as then-First Lady
Hillary Clinton's chief of staff in the White House and later was Clinton's
campaign manager for her 2008 bid for the presidential nomination. When
Harvard first came back to the D.C. area after school, she worked as a
consultant for the Project Performance Corporation. Since leaving Capitol
Hill, Harvard says, "It's nice because I'm still a little connected to the
Hill. I can see the Capitol from my window. But it's nice to be off the
Hill, and have a different perspective. And the nonprofit arena is new to
me as well and I like it." Aside from work, Harvard is also a Civil War and
Abraham Lincoln buff.

DOWN TO ROSEDALE. G. Stewart Hall and John Green have opened a government
relations shop called Crossroads Strategies. Hall and Green both recently
worked at Ogilvy Government Relations. Hall has served as legislative
director to Sen. Richard Shelby, R-Ala., and Green is an ex-deputy chief of
staff to former Senate Majority Leader Trent Lott, R-Miss. Hall and Green
have worked as lobbyists together for a number of years, once as part of a
firm called Hall, Green & Associates and later with the Federalist Group.
Green has also worked as executive director of the New Republican Majority
Fund, and he was director of congressional affairs for the 2008
presidential campaign of Sen. John McCain, R-Ariz. Their first big hire at
Crossroads Strategies is Hunter Moorhead, most recently a staffer to Sen.
Thad Cochran, R-Miss. Moorhead has also worked as a professional staff
member at the Senate Appropriations Committee and was staff director for
the Specialty Crops and Foreign Agriculture Programs Subcommittee at the
House Agriculture Committee. Moorhead also spent time at the National
Economic Council under President George W. Bush. He's worked on both the
2002 and 2008 farm bills.


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1600: WHEN WILL TRADE WINDS BLOW?
By George E. Condon Jr., with Peter Cohn contributing


It was only 173 words in a 7,300-word speech, meriting only scattered
applause and earning no headlines the next day. But no section in President
Obama's State of the Union address has been more parsed, processed, pored
over or less understood than those two paragraphs devoted to the
president's trade policy.

The White House has steadfastly refused to explain what the president
meant when he mentioned the three countries -- South Korea, Panama and
Colombia -- whose trade agreements have been languishing unratified for so
long.

When pushed for the administration's timetable for submitting the deals to
the Congress, the White House has refused to elaborate, instead deflecting
attention to the National Export Initiative unveiled by Commerce Secretary
Locke the week after the State of the Union.

White House Press Secretary Robert Gibbs insists Obama has "a very robust
agenda on exports and they include those free-trade agreements."

But no one in the White House seems to understand that the vagueness of
those words in the State of the Union and what is seen as the smallness of
the National Export Initiative are widely viewed as the latest signs of the
dysfunction of the administration's trade policy.

Neither side in the ongoing debate over free trade was happy over the
State of the Union. Opponents of trade pacts styled after the North
American Free Trade Agreement were miffed there was no talk about finding a
new model of the type now embodied in the TRADE Act sponsored by Rep.
Michael Michaud, D-Maine. "The president was trying to thread the needle
with yarn," said Lori Wallach, director of Public Citizen's Global Trade
Watch.

And supporters of the three trade deals were deeply disappointed, finding
solace only in the fact that he mentioned trade and clinging to his remark
that "If America sits on the sidelines while other nations sign trade
deals, we will lose the chance to create jobs on our shores."

The disappointment was captured by the next day's Nelson Report, an
influential subscriber newsletter on international economic policy. The
remarks, said the report, "turned out to be far more vague, and thus fairly
disappointing, relative to the expectations raised by pre-speech briefings
and interviews." Lamenting the lost opportunity, the newsletter added, "Why
couldn't Obama bring himself to say 'FTA' last night, much less 'I plan to
submit...'''

Beyond the fallout from the State of the Union comments, there is the
lingering question of what happened to the big trade speech the president
was widely expected to deliver last summer.

The answer, both sides have concluded, is that the internal White House
debate over trade is far from concluded. U.S. Trade Representative Kirk,
who entered the administration highly regarded and with strong free-trade
credentials, now has his clout questioned. In the current issue of Foreign
Policy, he is even included in a list of administration officials who
should be replaced. That report said he "may go down in history despite his
earnest best efforts as the least productive occupant ever in that job."

Wallach, an opponent of NAFTA-style deals, said the White House still has
not done "an inclusive, comprehensive review of the old trade policies,"
saying that review was sidetracked by the need to deal with other
challenges.

C. Fred Bergsten, director of the Petersen Institute for International
Economics, said those other challenges combined with politics to block the
formulation of trade policy in Obama's first year.

"They just felt that the divisions within the Democratic Party were so
strong that to take any position, whichever way they came out, would
jeopardize some of their support, including on their top priority of health
reform," he said.

That has created a void that Michaud and his allies rushed to fill, to the
frustration of the supporters of free-trade agreements. "The administration
did not prioritize trade," lamented Rep. Adam Smith, D-Wash., a leader of
the business-friendly New Democrat Coalition. Smith told CongressDaily that
health care "dominated things and that compromised them ... in terms of
their ability to aggressively push some kind of trade agenda."

And White House hopes to buy time by pushing the new export initiative as
a substitute for a true trade agenda are likely to be disappointed.
Bergsten described the initiative as "some very modest, even miniscule
steps," contending that what Locke outlined was little more than "a mouse"
that avoided most of the big steps needed in any serious export promotion
program. "The only thing tangible," he said, "was a slight increase in
lending by the Export-Import Bank. But that was only $2 billion, and we're
talking about a base of exports of $1.5 trillion."

Both sides want more from Obama and are watching his approach to next
month's talks over a Trans-Pacific Partnership. But with crucial midterm
elections looming and a badly divided party, hope for action this year on
those stalled trade deals is fading. "I will eat my snow boot if those Bush
FTAs come up before the end of the session," said Wallach. "It would be
fatal politically."


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BALANCE OF PAYMENTS: FARMERS' ALMANAC
By Jerry Hagstrom


What will the Obama administration propose for the 2012 farm bill?

How will the farm lobbies react?

Two years before the bill comes up seems too early to ask, but since House
Agriculture Chairman Collin Peterson has said he will begin hearings this
year, it's worth the effort to read the tea leaves in the Obama
administration's Agriculture Department budget -- and to see how the
agriculture community has reacted.

Like many other Northern and Western Democratic politicians, President
Obama has proposed farm subsidy limits that would hit big Southern farmers
harder than any other group.

Specifically, his budget would lower the cap on the direct payments a
farmer gets whether times are good or bad from $40,000 to $30,000 and
reduce the levels of adjusted gross income payment eligibility limits for
getting subsidies currently set at $500,000 in farm income and $750,000 in
nonfarm income.

"This proposal would allow USDA to target payments to those who need and
can benefit from them the most," the department says.

USDA says that only 30,000 of the nation's 1.4 million farmers who receive
subsidies would be affected, but National Cotton Council Chairman Jay
Hardwick, a Louisiana cotton producer, said, "The president's proposal on
phasing down direct payments and limiting total payments affects the farms
that produce more than three-fourths of all agricultural products marketed
in the United States."

Peterson and Senate Agriculture Chairwoman Blanche Lincoln have already
declared any cuts in mandatory farm program spending or stricter subsidy
limits dead on arrival, but opposition to the $5 billion per year direct
payment program might be building. Peterson has said he will go along with
agriculture if producers still want direct payments, but he seems more
interested in new proposals.

The National Farmers Union, whose members had more to do with Obama's
election than any other farm group, did not mention them in its budget
reaction. And when a trade lobbyist who defends direct payments because
they are seen as non-trade-distorting suggested to a dairy lobbyist
recently that the dairy industry might work its way out of its quagmire
with a direct payment program, the dairy lobbyist said simply, "Congress
doesn't like them."

The administration has also proposed cutting expenditures for crop
insurance by $8 billion over 10 years, raising interesting questions about
what position the administration will take on crop insurance in 2012.

The administration maintains that government costs -- and crop insurance
company and agent profits -- have skyrocketed because the policy premiums
and government subsidies have risen as commodity prices have risen.

Cutting crop insurance costs is one action the administration can take
without congressional action because the farm bill gave USDA authority to
renegotiate the reinsurance agreement with crop insurance companies under
which they provide the policies to farmers.

But if there is one issue on which U.S. agriculture is unified this year,
it is opposition to the proposed level of crop insurance cuts. Even the
Farmers Union has joined that campaign. And Peterson has told Agriculture
Secretary Vilsack not to make the cut too big because it will reduce the
baseline for the 2012 farm bill.

In 2008, however, Congress used crop insurance as a budgetary honey pot,
and there's nothing to keep both Congress and the administration from doing
that again in 2012.

Vilsack and Deputy Agriculture Secretary Kathleen Merrigan have publicly
committed themselves to a strong conservation effort, but they shocked the
conservation and environmental communities by proposing cutting some
conservation programs by hundreds of millions of dollars.

The American Farmland Trust and the National Sustainable Agriculture
Coalition reacted swiftly, praising some USDA innovations but denouncing
the cuts. Just where those cuts leave the administration with
conservation-minded independent, suburban voters is unclear.

Expenditures for the supplemental nutrition assistance program -- food
stamps -- would rise under the budget. Some of the increase in
participation would result from continuing high unemployment, but the
administration has also proposed keeping the eased eligibility requirements
and benefit levels that were in the economic stimulus bill and adding new
provisions to ease eligibility.

If the economy improves and the number of people getting food stamps goes
down, the Agriculture committees might be tempted in 2012 to raid that
account for other purposes. But Ellen Vollinger of the Food Research and
Action Center, an anti-hunger group, warns that if there should be extra
money, it should be used to bring benefits up to levels in line with poor
people's needs.

The budget and the lobbyists' reaction raise, of course, the question of
whether there will be enough money to go around in the 2012 farm bill. Of
course there will.

No one wants to anger the farmers, the environmentalists or the hungry in
a presidential election year.


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HOUSE RACE HOTLINE EXTRA: ENTITLEMENT STRATEGY
By Tim Sahd


Democrats have turned to a couple of old friends to help them out of their
electoral stupor: Medicare and Social Security.

House Budget ranking member Paul Ryan recently offered a plan that he,
along with CBO, says will reduce the deficit. But Democrats said the plan
privatized Social Security and endangered Medicare. They've also attacked
Republican candidates espousing similar ideas.

We've seen this before. Democratic-allied groups used then-Speaker Newt
Gingrich's statement that the GOP believed Medicare would "wither on the
vine" against them in TV ads during the 1996 cycle. The ad was taken a bit
out of context, but it did help Democrats stop the bleeding from a
disastrous 1994 election, and they picked up eight seats.

And right after President George W. Bush's re-election, he thought he had
the political capital to alter Social Security. His plan would have allowed
people to put their investments in private accounts, but promised that
those nearing retirement age wouldn't see reduced benefits.

Democrats hammered the plan, and Bush began to tank, a tailspin from which
he never recovered.

Democrats are hoping a similar formula will aid them in 2010. The problem
with that is midterm elections are almost always referendums on the ruling
party. And so far, things haven't been going well on that score. As a
result, Democrats have no alternative but to try to turn this election into
a choice between the two parties, using two issues that have worked for
them in the past.

They know they can win a popularity contest with the GOP. While the
congressional generic ballot test has tightened, it's not because voters
like Republicans more. In fact, the GOP brand is still in the gutter. It's
that voters are deciding they don't like the agenda set by Democrats.

Democrats will be going against midterm history if they manage to make
this a referendum on the party out of power. But if Republicans, like Ryan,
continue to give Democrats ammunition, they'll help them accomplish that
goal.

The special election for the late Democratic Rep. John Murtha's seat in
Pennsylvania might give Democrats a chance to see if this strategy will
work.

A Democratic message that features Social Security and Medicare could be
effective in this western Pennsylvania district. It's an older district
where the playbook is well-worn.

After late-October polls showed 2008 GOP candidate William Russell homing
in on Murtha, the Democratic Congressional Campaign Committee aired TV ads,
claiming Russell wanted to privatize Social Security and raise the
retirement age. Murtha ended up winning with 58 percent of the vote.

But the trendlines show the seat will be difficult for Democrats to hold.
In 2008, Sen. John McCain, R-Ariz., eked out a 49 percent victory there by
873 votes, four years after Sen. John Kerry, D-Mass., won it with 51
percent. McCain improved upon Bush's 2004 performance in the district,
while at the same time losing the state by a wider margin than Bush.

But the internal numbers should give Democrats hope. The district's
Democrats have a big voter registration advantage, and they also control
five of the seven state Senate seats in the district.

It'll be up to party leaders to choose the nominees for both parties, but
state Sen. John Wozniak and lobbyist and former Lt. Gov. Mark Singel are
two potential Democratic candidates. Both are top-tier names and are from
Johnstown -- the base of the district -- but they have negatives in a
general election contest.

Wozniak will have to explain why he voted for the now-infamous 2005 pay
raise in the Legislature. Several legislators lost re-election bids after
taking that same vote, and Washington Democrats have already hit GOP state
Sen. Dave Argall -- who's running against Rep. Tim Holden, D-Pa. -- for
voting for it as well.

Singel, meanwhile, hasn't been on the ballot since losing the 1994
governor's race, and Republicans will certainly be happy to dig through his
lobbying work to find ways to attack him.

Republicans won't have it easy, either. Russell has raised tons of cash
and has a loyal following. But party leaders might opt for a candidate with
more experience and one with stronger local ties -- Russell moved into the
district to challenge Murtha in 2008. State Reps. Dave Reed and Jeff Pyle
are among the Republicans who might fit the mold.

But if Russell isn't picked, will his grassroots supporters revolt, like
some Tea Party types did in last year's special election for New York's
23rd District?

Even if there's no mass uprising, both parties will have to contend with a
potential mess on Election Day. If the special is held May 19, as expected,
the primary will be held the same day, meaning candidates who failed to be
nominated by their parties for the special may run on the same ballot for
the primary for the full term.

Considering all of these ingredients, it's hard to handicap this race. But
if Democratic attacks against Russell in 2008 were any indication, this
race may give them a chance to see if Social Security or Medicare can work
their magic again. It'll be a tough sell, considering the public is mo

[Snuffysmith]

CongressDaily PM for Monday, Feb. 22, 2010

--------------------
CONTENTS

HEALTH: OBAMA RELEASES NEW OVERHAUL PLAN
By Anna Edney, with George E. Condon Jr. contributing


President Obama released his version of a healthcare overhaul today that
is based on the Senate overhaul bill passed Christmas Eve but with some
changes to appease the House in advance of Thursday's bipartisan summit.

The president's proposal extends a deal made for Nebraska on Medicaid
expansion costs to all states, increases the threshold for a tax on
high-cost insurance plans and includes a proposal to regulate insurance
rates in an attempt to prevent looming increases.

Senior White House officials estimated the changes would increase the cost
of the $871 billion Senate bill to $950 billion and they insisted the new
provisions are fully offset. White House spokesman Dan Pfeiffer said
drafters carefully constructed the proposal in anticipation of a Republican
filibuster attempt, presumably meaning the measure could pass through
reconciliation if necessary.

"We view it as the opening bid for the health meeting," Pfeiffer said.

White House Press Secretary Robert Gibbs later was noncommittal on whether
Obama would support reconciliation but did say the president wants an
up-or-down vote on the proposal and pointed out Republicans used the budget
procedure, which requires a 51-vote threshold in the Senate rather than 60,
to pass tax cuts in 2001 and 2003.

Obama is attempting to convey bipartisanship in advance of Thursday's
summit and included GOP ideas in his proposal, such as one that attempts to
reduce Medicare fraud by requiring billing agencies to register and undergo
background checks.

"Saying that the president's proposal today is bipartisan because it
includes a handful of Republican ideas on waste, fraud and abuse is like
throwing a couple of chocolate chips into a jar of peanut butter and
calling it a Reese's," one healthcare lobbyist quipped.

Obama's proposal is based on meetings with House and Senate leaders and
White House officials as they attempted to merge both chambers' bills,
Pfeiffer said, though he stressed it is the president's plan. "We took our
best shot at bridging the differences," he said.

The House never liked the Senate provision designed to rein in health
spending and help pay for the overhaul by taxing high-cost insurance plans.
Obama's proposal shrinks the number of plans that would be taxed by raising
the threshold for a high-cost plan to $10,200 for individuals from $8,500
and to $27,500 for families from $23,000. Pfeiffer indicated a deal with
unions to exempt collectively bargained plans is still in place.

The excise tax is delayed until 2018. Nancy-Ann DeParle, White House
health reform czar, said the delay and increased threshold is made up for
by expanding the Medicare payroll tax to unearned income.

The new policy regarding insurance company rate hikes allows the
government to require insurers to make up for -- through lower premiums or
rebates -- what the department might consider an unreasonable and
unjustified rate increase. Karen Ignagni, president of America's Health
Insurance Plans, today chided the administration for focusing on insurers
to score political points.

"To suggest that cost containment can be achieved by singling out health
plans ... is incorrect," she said. Ignagni added that premium increases
reflect increasing health costs and lawmakers need to get to that issue
rather than focus on insurers.

The proposal also eliminates a gap in Medicare prescription drug coverage
by 2020. The provision is paid for with an extra $10 billion from the
pharmaceutical industry on top of the $80 billion the Pharmaceutical
Research and Manufacturers of America previously agreed to in order to aid
the overhaul.

The proposal appears to construct the exchange marketplace where consumers
can comparison-shop for insurance on a state-by-state basis, rather than in
a national fashion that the House hoped for. As expected, the plan does not
include a public option.

The measure does not include an employer mandate like the House-passed
overhaul bill did, but rather draws on a Senate idea to fine companies that
do not offer affordable insurance coverage. Obama's proposal would fine
businesses with more than 50 employees $2,000 per employee that receive a
tax credit to purchase insurance through the exchange if the firm does not
provide affordable coverage and $750 per employee that receives a tax
credit if the firm does not offer insurance at all.

Small businesses with fewer than 50 employees will receive $40 billion in
tax credits to help them afford insurance for workers.

The president's proposal also adopts the Senate way of handling the
individual mandate by assessing a flat rate on those who do not purchase
coverage, though it decreases the amount of the fine from $495 to $325 in
2015 and $750 to $695 in 2016. Subsequent years are indexed to $695 rather
than $750.


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HEALTH: GOP RIPS OBAMA'S OVERHAUL REVISION
By Billy House and Dan Friedman


President Obama's version of healthcare overhaul legislation today
received a hostile reception from Republican leaders in both chambers.

House Minority Leader Boehner said the Obama administration "crippled" the
credibility of Thursday's health summit "by proposing the same massive
government takeover of health care based on a partisan bill the American
people have already rejected."

Even House Majority Leader Hoyer suggested little was new or substantively
different than versions of legislation previously approved by the House and
Senate. "In combining elements of the House and Senate-passed bills, the
president has drawn a blueprint of ideas that have been thoroughly debated
and publicly examined," he said.

Senate Minority Leader McConnell ripped the plan, saying in a statement
that it is "disappointing that Democrats in Washington either aren't
listening, or are completely ignoring what Americans across the country
have been saying.

"Our constituents don't want yet another partisan, backroom bill that
slashes Medicare for our seniors, raises a half-trillion dollars in new
taxes, fines them if they don't buy the right insurance and further expands
the role of government in their personal decisions."

Boehner has not said whether he will attend Thursday's summit. House
Minority Whip Cantor has said he will be there, but his spokesman panned
the Obama plan, saying it "costs a trillion dollars, puts government in
control of personal health decisions, and allows the government to set
prices in the private market."

In those respects, spokesman Brad Dayspring said, the plan is similar to
proposals by House Speaker Pelosi and Senate Majority Leader Reid "that
have already been soundly rejected by the bipartisan majority of
Americans."

Rep. Tom Price, R-Ga., a physician and chairman of the Republican Study
Committee, said Obama's plan is "even more intrusive than before, relying
on government price fixing, a solution always fraught with unintended
consequences. A few empty nods to the Republican goal of clamping down on
waste, fraud and abuse doesn't change the fact that at its core this plan
takes power away from patients and gives it to bureaucrats in Washington."


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TAXES: HOUSE DEMS MULL CHANGING BANK FEE PLAN
By Peter Cohn


House Democrats are discussing a plan to restructure President Obama's
proposed fee on the nation's largest financial institutions into a pure
income "surtax," which they argue would be easier to understand - and
harder to oppose.

But the idea is already running into static from insurers and others that
did not take federal bailout funding and argue they could be penalized to a
larger degree than the banks that made risky bets and were more highly
leveraged -- and thus the target of the Treasury Department plan.

House Ways and Means Democratic staffers have floated the idea in meetings
with financial services industry officials in recent weeks and are gauging
reaction from aides to House Financial Services Chairman Barney Frank as
well. "An income-based levy would be a straightforward approach to ensure
that the American taxpayer is made whole for their extraordinary assistance
to financial institutions. It is one idea under consideration and will be
the subject of discussion in the coming weeks," a House Ways and Means
spokesman said today.

Talks are ongoing as to how the tax would be structured -- whether it is a
classic "windfall profits" tax on banks, insurers and other financial
institutions or a tax on overall revenues, for example, and what the rate
would be.

Another question is how to handle executive compensation. Discussions are
ramping up in the hope that a stand-alone bill can be brought to the House
floor that could put the populist stripes of Republicans on the spot, with
Democrats banking that GOP members would pay a political price in opposing
the measure.

The Obama proposal would apply a fee equal to 0.15 percent of the covered
liabilities of banks, thrifts, insurers and others with more than $50
billion in assets. It is designed to raise $90 billion over the next decade
that could be put toward deficit-reduction, and satisfy voters angered by
what they see as Wall Street excess.

According to sources, Ways and Means Democratic staff have determined that
the plan is too complex and unwieldy and risks delving into areas
unfamiliar to the tax code. But industry officials are complaining that the
idea of a simple income surtax gets too far afield from the intent of the
Obama proposal.

"The Treasury plan was both an attempt to raise money and attack risk and
leverage, whereas a surtax is just a surtax," one official said. And
depending on the way the tax is structured, sources said, firms such as
Citigroup -- initially projected to pay more than $2 billion a year under
the Obama plan -- could pay much less because of large net operating losses
bringing down their taxable income. On the flip side, insurers with better
balance sheets could pay more under the Obama plan. "It definitely changes
the winners' and losers' calculation," another industry official said.
Either way, the financial services industry continues to oppose any new tax
because they argue Troubled Asset Relief Program funds are already being
repaid ahead of the schedule outlined in the initial 2008 bailout law.

Since the House has passed its financial regulatory reform bill, the
thinking is that the tax could be hooked up with Senate Banking Chairman
Christopher Dodd's plan in that chamber, if not as a stand-alone bill.
Outside of House Ways and Means Chairman Charles Rangel, the idea of a new
tax on troubled Wall Street firms has upset some members of the New York
delegation, although Senate Democratic Conference Vice-Chairman Charles
Schumer of New York has embraced it.


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EMPLOYMENT: SIDES WAIT TO SEE WHO BLINKS ON JOBS BILL
By Dan Friedman and Darren Goode, with Billy House contributing


Senate Democrats and Republicans today appeared locked in a game of
political chicken, preparing to blame each other for failure of a jobs bill
if, as appears likely, Republicans filibuster the bill on a party-line
vote.

Because of the absence of Sen. Frank Lautenberg, D-N.J., who is being
treated for cancer, Democrats need at least two GOP votes. While several
Republicans, including Sens. Scott Brown of Massachusetts and Susan Collins
and Olympia Snowe of Maine, have not said how they will vote, no Republican
has committed to help Reid break the filibuster.

Defeat of tonight's cloture motion would intensify a pitched messaging
fight between Senate Democrats and Republicans. Republicans have blamed
Reid for dropping a draft $85 billion plan from Senate Finance leaders in
both parties and have hung opposition to his $15 billion bill on Reid's
decision to block amendments.

Senate GOP aides said they expect most or all Republicans to oppose the
bill over the amendment issue, including some who would normally rally
behind one or more of the provisions.

"Did the Democrats reach out to find common ground? No," Environment and
Public Works ranking member James Inhofe said in a statement. "The majority
leader simply put together his own package [and] said, 'Take it or leave
it.' "

Senate Finance ranking member Chuck Grassley is also planning to vote no.
"The process is such that it shuts out efforts to improve the bill," a
spokeswoman said.

"The point is he needs to bring up the bill," Senate Minority Leader
McConnell said Sunday on Fox News. "We need to have amendments and vote on
it."

Democrats have countered by touting the backing of both parties for each
of the four items on their own. "There's no reason this fully paid-for
proposal shouldn't get bipartisan support," Reid tweeted this afternoon.

A spokesman said Reid decided not to allow amendments so the focus remains
on provisions both parties have supported. "We wanted this to be a targeted
jobs bill and we wanted to move quickly with it and our reason for making
it more targeted was in hopes of gaining Republican support," she said.

If today's vote fails, House Democratic leaders are considering moving a
package extending items that are expiring at the end of the week, including
surface transportation programs, unemployment benefits, COBRA insurance and
tax credits.


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DEFENSE: AKIN RENEWS BID FOR MULTIYEAR F-18 DEAL
By Megan Scully


A key House Republican plans to press Navy leaders this week on the
Pentagon's apparent reluctance to enter into a multiyear deal with Boeing
Co. for F/A-18 aircraft, arguing that the costs saved are worth the risks
of a long-term financial commitment.

Armed Services Seapower Subcommittee ranking member Todd Akin, R-Mo.,
whose district is near Boeing's defense headquarters in St. Louis, last
year succeeded in attaching language to the defense authorization bill that
would allow the Navy to pursue a multiyear deal for the F/A-18E/F Super
Hornet fighters and E/A-18G Growlers, electronic attack aircraft built with
the same airframe.

But on Feb. 3, Defense Secretary Gates rejected the idea during testimony
before the House Armed Services Committee, stating that the multiyear deal
would cut only 6.5 percent off the price of each of the Boeing Co. aircraft
-- far less than the 10 percent savings threshold that is customary for
such long-term commitments.

An Akin spokesman said the lawmaker will question Navy Secretary Raymond
Mabus and Chief of Naval Operations Gary Roughead about the prospects for a
multiyear deal during a subcommittee hearing on the Navy's budget request
Wednesday.

In a follow-up letter to Gates Feb. 12, Akin argued that the secretary's
estimates were based on the 89 aircraft originally planned for FY10-FY13.
But Congress added nine aircraft to the FY10 order and the Navy's latest
annual budget request revealed plans to buy 26 more planes than planned
between FY11 and FY13.

"This procurement increase will likely represent an aggregate savings of
taxpayer dollars that far exceeds 6.5 percent, if purchased using a
multiyear contract," Akin wrote, adding that his authorization language
lets the Navy engage in a long-term deal even if savings fall short of 10
percent.

A 6.5 percent savings on 89 aircraft would cut $315 million from the total
price of the planes, Akin wrote. But he estimated that the additional
aircraft would push the savings close to $500 million.

"While this is a tiny fraction of DoD's overall budget, the fact that you
are so willing to forgo this savings is troubling," Akin wrote. "A half a
billion dollars here and there quickly adds up to real money."

The Navy has not yet finalized its FY10 contract with Boeing for the 18
Super Hornets and 22 Growlers, sources said.

Meanwhile, the Navy's FY11 budget request, sent to Congress Feb. 1,
includes $1.9 billion to buy 22 Super Hornets and $1.1 billion for 12
Growlers. In FY12, the Navy plans to buy 24 more Growlers and one Super
Hornet, with 25 more Super Hornets in FY13.

After that, the Navy will focus its fighter procurement exclusively on
F-35 Joint Strike Fighters, which ultimately will replace the service's
older F-18s.

Multiyear procurements "don't deliver unless you've got them out over many
years. The question obviously, I think, for the F/A-18 is, when is the line
going to end?" Joint Chiefs of Staff Chairman Michael Mullen said Feb. 3.
"It's a great airplane. It's been a great airplane; we know that. But the
JSF is the right answer for the future from a war-fighting perspective,
from my perspective."

A Navy spokesman declined to comment in advance of the hearing.


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WHITE HOUSE: OBAMA PUSHES GOVS ON SCHOOL STANDARDS
By George E. Condon Jr.


President Obama today pushed the nation's governors to adopt tougher
education standards to qualify for $4 billion in aid he is making available
to the states, complaining U.S. students are falling behind foreign
competitors.

Addressing members of the National Governors Association, the president
also tweaked Republican governors who resist crediting his stimulus program
for creating jobs in their states.

"I understand that some of you still claim it's not working or wasn't
worth it, but I also know that you've used it to close your budget gaps or
break ground on new projects," he told them. "I've seen the photos, and
I've read the press release. So it must be doing something right."

Even as he credited his policies with putting the country "in a better
place than it was a year ago," Obama acknowledged that "your states are
still in a very tough situation" and touted his administration's efforts to
reduce the jobless rate.

The Republican governor who has come under the greatest fire for
supporting the stimulus, Florida's Charlie Crist, stuck to his position.
After the session with the president, Crist credited the stimulus bill with
saving 87,000 jobs in his state and said he is paying "not one iota" of
attention to criticism in his fight for the Republican nomination for the
Senate.

But the president's focus was education. Obama said that under the No
Child Left Behind program pushed by the Bush administration, 11 states
lowered their standards in math to make themselves look better in
comparison to other states, but he said he was interested in performance,
not placing blame.

"We are tired of arguments between the left and the right, between
reformers and teachers' unions," Obama said. "We want to figure out what
works, and we want to make sure that we are giving you the support and the
resources that you need to implement what works."


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BUDGET: DEFICIT PANEL GETS CHILLY OUTSIDE RECEPTION
By Humberto Sanchez


Some budget experts are skeptical that a deficit reduction commission
created by President Obama will agree on a package of tax increases and
spending cuts and that the proposal will be approved by Congress.

"I think it is a real long shot that you could have the commission come up
with a real deficit reduction package," said Jim Horney, who was deputy
Democratic staff director on the Senate Budget Committee from 2001 to 2004
and is director of federal fiscal policy for the Center on Budget and
Policy Priorities. He said he sees little reason "for thinking that you are
going to get a change in the attitudes [of lawmakers] ... that would lead
to bipartisan support for a balanced package."

The commission, which could be named as early as this week, was
established by executive order last week. The order calls for the 18-member
panel to submit its proposals to Congress by Dec. 1; Democratic leaders in
both chambers have pledged to bring the recommendations to a vote by the
end of the year.

Obama has named Erskine Bowles, who was chief of staff to former President
Bill Clinton, and former Sen. Alan Simpson, R-Wyo., as co-chairmen of the
panel.

An administration official confirmed today that the White House is
strongly considering naming Honeywell International Inc. CEO David Cote, a
Republican. Two additional Democrats are also being considered, former CBO
chief Alice Rivlin and Andy Stern, president of the Service Employees
International Union.

That would leave one spot to fill among Obama's six appointees.
"Appointments will be made in the coming days," the White House official
said.

Democratic and Republican congressional leaders will also name six members
each to the panel, three for each party in each chamber.

Brian Riedl, a senior policy analyst on budget issues at the Heritage
Foundation, said the commission idea is flawed because it lacks
transparency.

"There are no public hearings. It will be done as a backroom deal," Riedl
said. He added that allowing a lame-duck Congress to consider the package
will provide "the complete most unaccountable way to reform entitlements
and taxes."

Still, he said, the commission could provide ideas that might turn into "a
more realistic and accountable process, maybe in the next couple of years."

Riedl and Horney both expect Democrats and Republicans to name their
appointees soon.

Republicans are wary of the commission idea because they believe it will
result in tax increases, but Reidl does not anticipate they will name
members who would seek to oppose the commission recommendations.

"I don't think that there are many Republicans at this point who would
endorse a plan that is substantially based on tax increases anyway, so I
don't think that the GOP has to worry about that litmus test," he said.


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LABOR: AFGE SEEKS TO REPRESENT TSA SCREENERS
By Chris Strohm


The largest federal employee union filed a petition today requesting an
election to represent about 40,000 airport security screeners -- a direct
challenge to Republicans in Congress who argue that giving those workers
collective bargaining rights will hurt national security.

In announcing its filing with the Federal Labor Relations Authority, the
American Federation of Government Employees asserted that more than 30
percent of the screeners employed by the Transportation Security
Administration and working in over 100 airports want the union to become
their sole representative.

The election would be a critical step toward winning collective bargaining
rights for TSA screeners, which they have never had since the agency was
founded in the aftermath of the Sept. 11, 2001, terrorist attacks.

"We are going to continue our quest for collective bargaining and we know
we are going to get it. But you have to do an election anyway," AFGE
president John Gage said today. "We're just not going to take no for an
answer."

The issue of giving screeners collective bargaining rights was thrust into
the public spotlight recently when several Republican senators opposed
President Obama's nominee to lead TSA because they feared he would support
collective bargaining for the agency workforce.

"TSA screeners can already join unions, but collective bargaining would
force TSA officials to ask union bosses for permission to make critical
security changes," argued Sen. Jim DeMint, R-S.C.

The nominee, Erroll Southers, withdrew from consideration last month. Gage
fired back at DeMint and other GOP senators today.

"They seem to equate union membership with something that is adverse to
national security and that's an insult to all of labor and all of labor is
standing up to that insult," he said, noting that the Border Patrol and
many other law enforcement agencies have collective bargaining rights.

The Obama administration has not yet found a new nominee for TSA.

But AFGE's petition to hold an election for screeners adds a twist to
efforts to confirm a new administrator. The nominee is likely to face
pointed questions from Republican senators during confirmation hearings
about the organizing effort.

Gage expressed frustration over the long process to find a new
administrator. "We're frustrated by the lack of having a strong leadership
at TSA. The agency desperately needs it. So we just decided to step out on
this," he said.

The union is also petitioning Homeland Security Secretary Napolitano to
grant screeners collective bargaining rights.

"I think the administration has some options. I'm not going to speak for
them," Gage said. "They can speak for themselves about the secretary and
her involvement in this."

AFGE is holding its annual legislative conference this week in Washington
and union officials plan to meet with lawmakers on several issues,
including collective bargaining rights for screeners.

The union plans a rally Tuesday specifically to support bargaining rights,
where Reps. Sheila Jackson Lee, D-Texas, and Nita Lowey, D-N.Y., are
expected to speak.

The union's petition to hold elections was filed with the Washington
Region of the Federal Labor Relations Authority. AFGE officials said the
agency is not under a deadline to act on the petition, but they hope to get
a quick response.

If the petition is denied, the union will appeal to the FLRA board, Gage
said.


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THE FINAL WORD: THE FINAL WORD

"You just can't say that having a union threatens national security. Facts
do matter."

--American Federation of Government Employees President John Gage,
responding today to Republican complaints that giving collective bargaining
rights to airport screeners would compromise security.


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CongressDaily AM for Friday, Feb. 26, 2010

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CONTENTS

HEALTH: IN WAKE OF SUMMIT, HOUSE DEMS READY TO PUSH SMALL BILLS
By Anna Edney and George E. Condon Jr.


As Democrats contemplate how to best pass an overhaul of the healthcare
system following a White House health summit Thursday that produced little
in terms of bipartisanship, House Democrats are emboldened by a push this
week on a single-issue health bill, and they are moving closer to pushing
more small pieces in the coming weeks, senior leadership aides said.

House Speaker Pelosi had talked about moving on smaller health bills as
they worked out a path forward for the overhaul. But little detail had
emerged beyond the legislation that passed overwhelmingly Wednesday
stripping health and medical malpractice insurers of the antitrust
exemption that allowed them to collude to set prices.

With a 406-19 victory on the antitrust measure, House Democrats are now
closing in on other single-issue health bills they could tee up. Those
include allowing people to stay on their parents' insurance until their
mid-20s, guaranteeing people do not lose their health insurance if they
lose their job, stopping insurers from dropping people who get sick and
even potentially prohibiting insurers from denying coverage based on
pre-existing conditions.

"Some people want to be even more ambitious," a senior leadership aide
said. Some want to close the coverage gap in the Medicare prescription drug
benefit known as the doughnut hole. The House healthcare overhaul bill, now
off the table as the bill under discussion for final passage, ended the
gap, while the Senate version did not go as far.

Aides did not anticipate any smaller bills coming up until at least the
week of March 8. It is unclear which of the bills could come up first, but
one senior aide said the search is on to determine which is most ripe.

The small bill strategy, which involves only extremely popular measures,
benefits Democrats no matter how Republicans vote.

"Politically, for Democrats, it's a no-lose situation," a leadership aide
said. "We force Republicans to take a tough vote; they vote with us. That's
a great message for our members to take back to their districts."

If Republicans vote in favor of the single-issue bills, the thinking goes,
Democrats get to show bipartisanship. And if the GOP votes against them,
they risk voting against popular pieces of legislation.

Such a push would come in the wake of the summit President Obama convened
at Blair House Thursday that seemed to change few minds.

Obama sparred for more than seven hours with his Republican opponents in
the nationally televised summit. Although ostensibly set up to work out
differences between the parties on healthcare reform, the session ended
with both sides signaling that little had changed.

Afterward, the president and Democratic leaders indicated they are ready
to press ahead with a version of the bill that passed the Senate, refusing
to rule out using reconciliation budget procedures to make changes to the
legislation. And Republicans made clear that their opposition was as stout
as it was at the beginning of the day.

The most biting reaction came from Senate Minority Whip Kyl. "I just don't
think the president was listening, even though he invited us to hear our
ideas," he said afterward. "He actually consumed more time than all the
Republicans combined or all the Democrats combined and much of it was
responding to our ideas." Kyl said of Obama, "He wanted to argue with us."

Kyl said that was understandable given the differences, but added, "It's
not going to be possible with that kind of an approach to come together
within the time frame he indicated if he insists ... on staying with this
2,700-page bill and then tweaking it with some of our ideas."

Obama implored the Republican leaders to re-examine their positions to
find possible areas of compromise. But that was quickly rejected by Senate
Minority Leader McConnell and House Minority Leader Boehner.

Both continued to insist that Democrats have to scrap the House- and
Senate-passed bills and the work of the past year. "Frankly," said
McConnell, "I was discouraged by the outcome. I think it is pretty clear
that the majority, including the president, want to continue with basically
the Senate bill, which has been made even more expensive."

Boehner admitted that he was saying the same thing after the meeting as
before. But he said, "The president kept saying the same thing, too."

Democratic leaders were more upbeat. "The president said we have to do
something very soon, and I agree with him," said Senate Majority Leader
Reid. "Time is of the essence."

Pelosi said she left the meeting "not overly optimistic" that any
Republican votes had been secured. But she said "today took us closer" to
passing a bill.

The afternoon session of the summit brought no breakthroughs, with
Republicans sticking to their script.

House Budget ranking member Paul Ryan told the president that his quest
for compromise was likely doomed. "There really is a difference between
us," he told Obama. "And it is basically this: We don't think the
government should be in control of all this. We want people to be in
control."

Rep. Peter Roskam, R-Ill., told the president he was trying to cook a bill
with "a little salt and a little pepper and a little Republican bread
crumbs on the top." It was a characterization that Obama took issue with in
his closing remarks.

Acknowledging the remaining differences, Obama admitted, "I don't know
frankly whether we can close that gap" with Republicans.


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ECONOMY: BUNNING SHOOTS DOWN UC ON EXPIRING PROVISIONS AGAIN
By Dan Friedman and Humberto Sanchez with Darren Goode contributing


Sen. Jim Bunning, R-Ky., threw up roadblocks to a measure that would
extend several provisions set to expire Sunday -- including surface
transportation funding, COBRA health benefits, a fix to Medicare payments
to physicians, the flood insurance program, Small Business Administration
loans and a law governing transmission of broadcast television signals via
satellite services -- through March 28.

Unemployment insurance would be continued through April 5, under that
measure. That series of extensions passed the House by voice vote on
Thursday.

On Thursday, Senate Majority Leader Reid for the second straight night
sought a unanimous consent agreement to pass the extensions, but did not
get it due to an objection by Bunning, who wants the extensions to be paid
for.

Reid said all senators have agreed to the unanimous consent agreement
except Bunning. Bunning said he has been negotiating for weeks but that
Reid late Thursday indicated "it was gonna be his way and no one else's
way." Bunning said he is eager to get the provisions passed.

In an effort to turn the screws on Bunning, Reid said that there would be
no votes until Tuesday, which means that the provisions would expire unless
Bunning changes his mind.

Meanwhile, House Democratic leaders might look to take up a $15 billion
Senate jobs bill, despite rumblings from some members over what they have
termed inequities in the provision extending surface transportation
programs through the end of the year.

"The current plan is we will be voting on the Senate version," said House
Transportation and Infrastructure Highways and Transit Subcommittee
Chairman Peter DeFazio, D-Ore. The issue will be revisited "in one form or
another either in some other miscellaneous piece of legislation or in a
long-term bill."

DeFazio doubts that members will oppose the bill because of concerns about
the unemployment rate.

"I think you'll find no matter what provisions are in there, there are
very few members on either side of the aisle who want to be seen against
something that might produce finally a few jobs in this country," DeFazio
said. "There are equity issues, and I think we can deal with them later.
This money isn't going to be spent tomorrow, next week, next month. ...
This is up until next December; we will have plenty of time to fix it."

At issue is the formula used to distribute funds to projects that are
deemed nationally or regionally significant. This formula -- based on
earmarks included in the last multiyear surface transportation bill
Congress approved in 2005 -- divides more than half of that funding among
four states -- California, Illinois, Louisiana and Washington.

Defazio's state of Oregon gets the fifth-largest amount of money under the
Senate formula.

Twenty-two states would receive none of the $932 million set aside for
these projects from Oct. 1, 2009 through the end of this year, while 30
percent -- or $278 million -- goes to California, home state to House
Speaker Pelosi and Senate Environment and Public Works Chairwoman Barbara
Boxer.

House Transportation and Infrastructure Chairman James Oberstar, who had
spearheaded efforts to fix the Senate jobs bill, appeared displeased
Thursday evening when it appeared Democratic leaders were leaning toward
taking up the Senate bill. He was seen engaged in a tense conversation on
the House floor with Rep. George Miller, D-Calif., one of Pelosi's top
lieutenants.

Oberstar had been leading what he said were dozens of House lawmakers who
are concerned with the formula and would vote against the bill unless their
matter was addressed.

Oberstar proposed an alternative that would distribute the $932 million
set aside for projects according to the same formula as FY09 highway
formula funding.

Democratic Congressional Campaign Committee Chairman Chris Van Hollen of
Maryland, the assistant to the speaker and a critic of the Senate bill's
transportation formula, said he would like to get a commitment from the
Senate to address the issue in the future before the House proceeds to the
Senate measure.

Taking up the Senate bill is "what we are still looking at right now," Van
Hollen said. "Let's wait and see if we get some agreement from the Senate
on a way forward on that issue. I think people are going to want some
reassurance from the Senate that, going forward, we'll have a different
allocation."


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TRADE: TAYLOR'S BID TO SCRAP NAFTA MIGHT PRESAGE MORE DISCONTENT
By Peter Cohn


Populist sentiment in the House against free trade is about to reach a
boiling point, as Rep. Gene Taylor, D-Miss., readies a bill to withdraw the
United States from the North American Free Trade Agreement.

The measure would be the first of its kind since the mid-1990s, just after
President Bill Clinton pushed NAFTA through a reluctant House. Many
Democrats blame Clinton and NAFTA for their loss of control of Congress the
following year in 1994. And while it has no chance of becoming law,
Taylor's bill is a clear shot across President Obama's bow as the White
House attempts to figure out its overseas economic engagement strategy.

Obama on the campaign trail in 2008 pledged to renegotiate or pull out of
NAFTA, but the realities of governing quickly melted away that promise.
Many House Democrats are angry that he hasn't done more to live up to his
campaign rhetoric, and Obama's comments on the topic since taking office
have been conciliatory to both sides.

"To those who would reflexively support every and any trade deal, I would
say that our competitors have to play fair and our agreements have to be
enforced," Obama told the Business Roundtable's quarterly meeting
Wednesday.

"At the same time, to those who would reflexively oppose every trade
agreement, they need to know that if America sits on the sidelines while
other nations sign trade deals, we will lose the chance to create jobs on
our shores."

Taylor said members need to ask themselves two questions: How many jobs
have been gained in their districts as a result of NAFTA, and how many have
been lost. Asked why he's introducing the bill now, Taylor replied:
"There's never a right time for anything. It's like asking a girl to marry
you."

Taylor is planning to formally introduce the bill after getting a few more
signatures. He is circulating a "Dear Colleague" with original co-sponsors,
Reps. Walter Jones, R-N.C., and Peter DeFazio, D-Ore., and Bart Stupak,
D-Mich. He's snagged 14 co-sponsors so far, including a second Republican,
Rep. Roscoe Bartlett of Maryland.

Taylor's letter shows a graph demonstrating a 29 percent decline in U.S.
manufacturing employment since 1993, or a loss of nearly 5 million jobs.
"NAFTA discourages investment in U.S. manufacturing facilities and
accelerates the erosion of our industrial base," the letter states.

"Thousands of people in my district have lost their jobs because of
trade," Taylor said in an interview. "I didn't vote for it; we tried it; it
didn't work, and now it's time to admit that."

House Ways and Means Trade Subcommittee ranking member Kevin Brady,
R-Texas, said Taylor's approach was misguided. He said NAFTA was the
combined largest market for U.S. goods in 2009, with exports to Canada and
Mexico totaling $333 billion, and last year actually produced a slight $6
billion combined surplus in manufactured goods with the two countries, he
said.

"It may be popular to bash NAFTA, but the fact of the matter is that
repealing it would kill American jobs, deepen our recession, and threaten
our relationship with two key allies," said Brady.

National Association of Manufacturers director of international trade
policy Doug Goudie said over the past decade NAFTA has "brought U.S.
manufacturers enormous opportunities for growth, particularly with regard
to export-driven jobs."

A Blue Dog Coalition member from the reddest of districts, Taylor is
conservative on social issues but very much an economic liberal. He has
voted against every free trade deal since arriving in Congress in 1990,
which is rare for a member from a coastal district, let alone one with
three ports, at Gulfport, Biloxi and Pascagoula.

Sen. John McCain, R-Ariz., took 67 percent of his district's vote in 2008,
but Taylor has never been in trouble: his lowest percentage of the vote was
60 percent, in the 1994 GOP landslide.

Earlier this week, Taylor became the latest House member to sign onto a
bill from Rep. Michael Michaud, D-Maine, that calls for a new trade policy
including a lengthy list of labor, environment, investment and consumer
protection standards for trade deals. Several major pacts, including NAFTA,
would face renegotiation under that bill, although it would not go so far
as Taylor's two-page bill to simply scrap NAFTA. In fact, Taylor's
aggressive approach surprised some in the trade community who had been
focused on Michaud's milder effort. Michaud nonetheless is among Taylor's
early co-sponsors.


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FINANCE: CONSUMER ACTIVISTS FEAR EROSION OF BROKER/DEALER PROPOSAL
By Bill Swindell


As they fight to protect a proposed Consumer Financial Protection Agency,
activists fear they might be losing another battle for consumers in a
revamp of the nation's financial regulatory system over forcing
broker/dealers to adhere to the same standards as investment advisers.

The groups are alarmed that Sen. Tim Johnson, D-S.D., could strip a
provision in Senate Banking Chairman Christopher Dodd's draft that would
require most broker/dealers to register as investment advisers. The change
is significant because investment advisers are held to a standard to act in
the fiduciary interest of their client, such as disclosing conflict of
interests. The current standard for broker/dealers requires them to make
sure their advice is suitable for their clients, which advocates note is a
higher bar for liability.

Instead, Johnson has put forth a proposal to have a study on the issue
with recommendations made to the SEC on any rule changes, which groups say
would be a needless delay that would harm consumers. The study would need
to be conducted within 18 months of enactment.

"The effect of the study is just to waste time," said Barbara Roper,
director of investor protection for the Consumer Federation of America.
"They would not have any new authority." Roper noted that the SEC had the
RAND Corp. in 2008 study the issue on the differences between the two
regimes and found that retail investors find it difficult to distinguish
between broker/dealers and investment advisers because they are regulated
under different laws -- though most found that they were happy with their
financial service provider.

Johnson has not issued an official comment on the matter. However, a
Democratic aide noted that the RAND study did not offer specific policy
recommendations, which is what Johnson is asking for. "At the end of the
day, it's about finding a way to move forward," the aide said. He added
that Johnson is not tied to one specific proposal.

The House-passed regulatory revamp includes a similar provision, though it
would require the SEC to go through a more cumbersome rulemaking process
than Dodd's measure would. The Treasury Department also backs boosting the
standard and SEC Chairwoman Mary Schapiro is for harmonizing the rule
between the two.

The change that Johnson is proposing would benefit retail brokers as well
as insurance agents that sell variable annuities. For example, Edward Jones
has issued talking points that read the broker could be restricted from
selling proprietary products, and in extreme cases, commissions could be
seen as a conflict.

The National Association of Insurance and Financial Advisors argues that
the suitability language is just as strong as a fiduciary standard, noting
that broker/dealers have more oversight under the Financial Industry
Regulatory Authority with inspections every two years, while the SEC checks
about once every decade.

"Suitability is actually a pretty rigorous standard based on rules that
are regularly enforced by FIRA," said Jill Edwards of NAIFA. "The
difference is, fiduciary is a principle that someone has to act in the
clients' best interest, but it is a principle but not a rule, so it's a
totally different approach."

Roper worries that the tradeoffs that Dodd might have to make to get a
bipartisan bill might mean that the Johnson language could be placed in a
revised bill that he is negotiating with GOP members.


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JUDICIARY: DRAFT PATENT REFORM AGREEMENT LOOKS TO ASSUAGE CONCERNS
By Juliana Gruenwald


Senate Judiciary Chairman Patrick Leahy said Thursday that a deal on
patent reform legislation he has reached with Judiciary ranking member Jeff
Sessions "preserves the core of the compromise" included in the measure
approved by his panel last year.

Among the areas addressed in a draft of the Leahy-Sessions agreement
obtained by CongressDaily are changes to language dealing with challenges
to patents after they have been granted. For example, it raises the
threshold for initiating a re-examination. There must be a "reasonable
likelihood" that, in light of the information submitted by a third party
and the response from the patentee, the third party 'will prevail with
respect to a claim' of the patent."

In addition, the draft also limits the arguments a third-party challenger
to a patent can relitigate in court. When third-party challengers lose a
patent challenge, they can not later bring up arguments they "raised or
reasonably could have raised" during an earlier review, the draft said.
Issues related to this language have divided small innovators, the
life-sciences sector and the information technology industry.

The draft also appears to attempt to address concerns raised by Sen. Orrin
Hatch, R-Utah, related to patent quality. The draft includes a provision
that would allow a patent owner to request a "supplemental examination,
prior to the institution of litigation, to consider any information
believed to be relevant to the patent."

Such a process might assist a patent holder in defending against a claim
of "inequitable conduct," when a patent challenger claims a patent holder
withheld relevant information from the Patent and Trademark Office when it
filed for its patent.

The Innovation Alliance, which has been critical of the legislation, said
the changes "appear to be a positive step in the right direction." The
group's executive director, Brian Pomper, said in a statement "We have
advocated for significant changes to the post-grant review provisions of
the legislation that would prevent repeat legal challenges to patents
because allowing repeat challenges would dampen U.S. job creation at the
worst possible time." Sessions also has raised concerns about the language
related to challenging patents after they have been granted that was
included in the bill passed by the committee.


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POLITICS: BRALEY TRYING TO REVIVE DEMOCRATS' HOLD ON POPULISM
By Erin McPike


Rep. Bruce Braley, D-Iowa, is trying to restore his party's hold on the
populist label that Midwestern Democrats embraced in the last two election
cycles but that Republicans are trying to co-opt this year.

Braley, who brought the Populist Caucus back to life a year ago, is trying
to bring his party back to the message.

"I think the Republican attempt to rebrand as populists is a sham," Braley
said in a recent interview, adding that he believes the Democratic Party
has the ability to tap into the political power and anger that the Tea
Party movement has generated.

Braley is well positioned to make his point. As vice chairman of the
Democratic Congressional Campaign Committee, Braley is charged with helping
DCCC Chairman Chris Van Hollen of Maryland protect the majority.

"Mr. Braley is smart, aggressive, and well-liked in our Caucus," said Doug
Thornell, a spokesman for Van Hollen. "He really understands message and
strategy, and has been very helpful to our newest members."

The populist group tilts heavily toward the heartland and includes mostly
freshmen and sophomores. Much of the focus is on Wall Street, including
executive compensation and market speculation, and on job creation. Some of
those same issues have roiled independents who have taken up the Tea Party
mantle.

"Doing nothing with regard to Wall Street is not an option," said Braley,
ticking off a list of bills and amendments caucus members have floated to
address the subject.

But Braley's populist positioning also has a particular Iowa focus. Sen.
Tom Harkin, D-Iowa, represented a House district in the 1980s and served as
chairman of the original Populist Caucus.

Indeed, speculation that Braley might try to follow Harkin to the Senate
at some point is something of a political parlor game in the Hawkeye State.
Braley rebuffed several efforts to interest him in running against GOP Sen.
Chuck Grassley this cycle, while not closing the door on a future shot at
the upper chamber, perhaps in 2014 if Harkin retires.


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DEFENSE: NEW ANALYSIS FUELS DEBATE OVER ALTERNATIVE F-35 ENGINE
By Megan Scully


A new Pentagon analysis strongly advises against funding an alternate
engine for the F-35 Joint Strike Fighter, despite finding that doing so
would cost no more than procuring only the primary engine for the jet.

The analysis, sent to the House Armed Services Committee on Wednesday,
comes amid threats from Defense Secretary Gates that he will recommend
President Obama veto any defense legislation that keeps alive the program
to develop an alternate engine to the one the Pentagon plans to use in all
2,400-plus F-35s it is buying.

"The department's position is based in part on updated analyses which
continue to show that the business case for a JSF alternate engine is not
compelling, and that the alternate engine program would require a
significant DOD investment of additional resources," according to an
"information memorandum" accompanying the proprietary report.

The Pentagon has tried since 2006 to cancel the alternate engine, which is
produced by General Electric and the British firm Rolls Royce. But
lawmakers, sighting the benefits of competition, have repeatedly added
funding to keep the engine alive, most recently inserting $465 million in
the FY10 Defense Appropriations bill for the unwanted program.

In 2007, the Pentagon estimated that the alternate engine would cost an
additional $1.2 billion. But $1.75 billion added by Congress over the last
four years eliminated the cost difference.

"While the 2010 updated result is in fact more favorable to a competitive
acquisition strategy than the 2007 analysis suggested, the fundamental
conclusion remains the same: the potential life-cycle cost savings from a
competitive sourcing of engines for the JSF program do not provide a
compelling business case," according to the memo.

The Pentagon estimates it will need $2.9 billion over the next six years
to finish developing the engine and buy support equipment and spare parts.

"This money can clearly be better spent buying capabilities that our
warfighters do need," Pentagon spokesman Geoff Morrell said Thursday. "This
is a luxury we cannot afford."

But even with that upfront investment, the analysis concludes that "the
estimated costs of a competitive engine acquisition strategy are projected
to be approximately equivalent to a sole-source scenario."

A House Armed Services information paper on the analysis criticized it for
ignoring the nonfinancial benefits of buying two engines -- including using
competition to spur technological innovation and make the contractors more
responsive to government concerns, as well as supporting a more robust
industrial base.

"While the committee is still reviewing the analysis, it appears that the
department's approach focuses on near-term costs to the exclusion of what
the committee sees as the long-term benefits of this program," House Armed
Services Chairman Ike Skelton said in a statement Thursday.

Skelton added that the report does not consider the risk posed by not
having a backup engine on a 2,400-plus fleet of F-35s, which will be flown
by the Air Force, Navy and Marine Corps.

"With this program, as with all others, we cannot use near-sighted vision
when long-term security is at stake," Skelton said.


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TAXES: DIVERSE GROUP OF MEMBERS PUSHING FOR R&D RENEWAL
By Peter Cohn


Over 100 House members on both sides of the aisle are urging congressional
leaders to renew and bolster the expired research and development tax
credit as part of upcoming jobs legislation, and an effort is building on
the Senate side as well.

A massive tax and safety-net extension package headed to the Senate floor
next week would renew the research credit through the end of 2010. Business
groups including manufacturers and the high-tech industry are also pushing
to boost the value of the credit to help U.S. firms compete with larger
benefits offered to global rivals.

"It is estimated that an expansion of the credit would lead to an
additional $90 billion in annual GDP, a significant increase in patents
generated by American inventors, and generation of additional revenues for
the Treasury through economic growth," states a letter from Reps. Anna
Eshoo, D-Calif., and Michael McCaul, R-Texas, sent to leaders Thursday.
"With this bipartisan support for this initiative, we believe it should be
part of any future efforts considered by Congress this year to spur
economic growth, and we urge you to work with the administration to renew
this important job-creating incentive as soon as possible."

On the Senate side, Sen. Orrin Hatch, R-Utah, chairman of the Senate
Republican High-Tech Task Force, is leading the charge to attach the
proposal to a jobs bill in that chamber.

"Expanding the R&D credit is a perfect candidate for one of these jobs
bills. It leads to job creation in the short term, while stimulating
innovation that leads to long term economic growth," said Ralph Hellmann,
senior vice president of the Information Technology Industry Council.

Hatch is also leading another bipartisan effort with Sens. Debbie
Stabenow, D-Mich., Olympia Snowe, R-Maine, and others to attach legislation
extending another expired tax break, the ability for cash-strapped firms to
monetize unusable corporate alternative minimum tax credits, which are
pre-payments to offset future AMT liability.

A diverse group of automakers, airlines, energy and mining,
telecommunications and mining firms are backing the proposal, which won the
endorsement of the U.S. Chamber of Commerce Thursday.

Bruce Josten, the Chamber's chief lobbyist, wrote to lawmakers that the
corporate AMT proposal "would provide companies with an immediate and
much-needed source of liquidity and capital to stimulate job growth and to
encourage new investment." Josten said the Chamber "believes that this
legislation could be included in broader legislation intended to spur
economic growth and job creation."


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ETHICS: RANGEL TAKES ISSUE AS PANEL PREPARES TO ADMONISH HIM
By Billy House, with Darren Goode contributing


House Ways and Means Chairman Charles Rangel is being admonished by the
House Ethics Committee for violating a House gift rule by accepting trips
to conferences in the Caribbean in 2007 and 2008 that were paid for by
corporations, the committee announced Thursday night.

Rangel, during a hastily called press conference with no questions
Thursday night, took sharp issue with the Ethics Committee's conclusion --
and said he and his lawyer will review it.

He would not answer questions about whether he would consider stepping
down as chairman of the powerful tax-writing committee, but his tenor
seemed to suggest not.

"I think right now I just have to let the general community make its own
judgment based on what the Ethics Committee said," Rangel said; he
suggested that close reading of the committee's report -- to be formally
released today -- will show that he is unfairly being taken to task for the
actions of two of his staffers.

In fact, Rangel noted, accurately, that the committee also says it "does
not find sufficient evidence to conclude" -- nor does it believe it would
find any -- that Rangel was personally aware that the corporate money may
have gone to the sponsor, the Carib News Foundation.

At issue is an eight-month investigation by the Ethics Committee's
investigative subcommittee into a trip by Rangel and other lawmakers to
Antigua and Barbuda in November 2007 and St. Maarten in November 2008.

But while Rangel was unaware of the financing of the trip, the committee
has determined that two members of Rangel's staff -- one of whom has since
been discharged -- were aware of it. And it found they failed to relay that
information to the Ethics Committee in getting the committee's approval for
the trip.

The committee concluded that Rangel was responsible for the knowledge of
his staff in the performance of their official duties.

"It is the intention of the Committee that the publication of this report
will serve as a public admonishment by the Standards Committee of
Representative Rangel," the committee states.

The committee will require Rangel to repay the costs of the trips to the
respective entities that paid for his travel. That amount has not been
determined.

The committee on Thursday said it has unanimously voted to clear Reps.
Bennie Thompson, D-Miss.; Yvette Clarke, D-N.Y.; Donald Payne, D-N.J.;
Carolyn Cheeks Kilpatrick, D-Mich.; and Del. Donna Christensen , D-V.I., of
any violation of House rules for accepting the trips, because they
"properly relied on the information provide to them.

"What this amounts to is the Ethics Committee authorized my trip and other
members to go there," said Rangel, but that the committee was not told the
sponsor was receiving corporate money.

"It's also saying my staff member -- or two of them -- knew
[contributions] were given to Carib News, but Rangel didn't know," said
Rangel. "But because they were my staff ... that was imputed to me."

As news of the Ethics Committee's action spread, the National Republican
Congressional Committee was quick to send out reminders Thursday night that
Speaker Pelosi and other Democrats had promised to demand the highest
ethics when they took over the majority in 2007.


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ENVIRONMENT: NHTSA SAYS MURKOWSKI RESOLUTION WOULD HARM INDUSTRY
By Darren Goode


Congressional efforts to block EPA from regulating greenhouse gas
emissions would harm the auto industry, the National Highway Traffic Safety
Administration has concluded.

A resolution from Senate Energy and Natural Resources ranking member Lisa
Murkowski would not legally prevent NHTSA from instituting higher fuel
efficiency standards. But it would have "profoundly adverse effects on the
national economy, national environmental and energy security objectives,
and the economically distressed automobile manufacturing industry,"
according to a letter NHTSA chief counsel O. Kevin Vincent sent last week
to Sen. Dianne Feinstein, D-Calif.

Benefits from President Obama's plan to harmonize NHTSA fuel efficiency
standards with national greenhouse gas restrictions for vehicles would
"substantially erode" if NHTSA would be forced to proceed on its own,
Vincent wrote.

This echoes the argument being used by congressional critics of
Murkowski's effort. They include Sen. John (Jay) Rockefeller, D-W.Va., who
is working on an alternative that would delay EPA from implementing
greenhouse gas regulations for power plants and non-vehicle sources longer
than the agency is seeking in order to give Congress more time to put
together a climate and energy strategy.

Murkowski remains 10 short of the 51 votes she would need to get her
resolution disapproving of EPA regulations through the Senate;
Rockefeller's effort might give a few moderate Democrats that Murkowski
would need a reason not to offer support.

Senate Majority Leader Reid has pledged to fight Murkowski's resolution.

Reid has called for Senate Foreign Relations Chairman John Kerry and Sens.
Lindsey Graham, R-S.C., and Joseph Lieberman, D-Conn., to give him a draft
climate and energy bill as soon as possible.


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INTELLIGENCE: BILL PULLED AFTER CLASH OVER PENALTIES FOR DETAINEE ABUSE
By Chris Strohm


House Democratic leaders abruptly pulled a massive intelligence
authorization bill from floor consideration late Thursday after a heated
dispute over establishing criminal penalties for abusing terrorism
suspects.

Democrats were rushing the bill back to the House Rules Committee to
strike language from a manager's amendment that would set prison terms of
15 years to life for U.S. intelligence officials or contractors who
participate in cruel and inhuman interrogations of terrorism suspects.

House Rules Chairwoman Louis Slaughter inserted the language because she
believes Congress should be on record against torture. But other aides said
House Democratic leaders did not fully support it.

Democratic sources said they expect the bill and clean manager's amendment
to be brought back to the floor today and approved.

During Thursday's floor debate, Republicans vigorously opposed the
proposed criminal penalties, calling them unprecedented and claiming they
would handcuff intelligence officials and create confusion.

"It's 11 pages of legalese creating all types of new and ambiguous rules
for our intelligence community," House Intelligence ranking member Pete
Hoekstra said.

But House Intelligence Chairman Silvestre Reyes was in the awkward
position of having to defend the language, saying it essentially restated
current laws. "Torture is a reprehensive and counterproductive practice,"
he said.

Hoekstra shot back: "If it's already a crime, why are you putting it in
here? I don't think it's at all clear that this is a restatement of current
law."

Republicans claimed credit late Thursday for killing the language.

"That Democrats would try to bury this provision deep in the bill, late at
night, when they thought everyone's attention would be focused on the
healthcare summit is a testament to the shameful nature of what they were
attempting," Hoekstra said.

The amendment would have set three tiers of criminal penalties.
Participants in an interrogation that results in the death of a suspect
would have faced a life sentence in prison. An act of medical malpractice
carried a 20-year prison term and cruel, inhuman or degrading treatment of
suspects would have a 15-year maximum penalty.

It would have barred such tactics as forcing suspects to be naked or
perform sexual acts; beatings, electric shock, burns or "other forms of
inflicting physical pain;" using "military working dogs;" and
waterboarding.

There also would be criminal penalties for committing blasphemy against a
suspect's religious beliefs or participate "in acts intended to violate the
individual's religious beliefs."

Republicans questioned what would constitute such an act. Would a female
interrogator violate a Muslim's religious beliefs if she interrogated him
while not covering her face? asked Rep. Mike Rogers, R-Mich.

During floor debate on the bill, Democrats and Republicans joined forces
to approve a bipartisan amendment that would require the director of
national intelligence to establish a new regulation defining conflict of
interests for intelligence agents who hold second jobs.

Rep. Anna Eshoo, D-Calif., drafted the amendment, which passed by voice
vote, after learning that some intelligence officials started a company to
sell "deception detection" services to hedge funds. "Government employees,
and especially those in the intelligence community, should adhere to the
highest ethical standards," Eshoo said.

Also easily approved was an amendment from Rep. Rush Holt, D-N.J., that
would require the inspector general of the intelligence community to
determine if any foreign entity was connected to the 2001 anthrax attacks
in the United States. The FBI concluded that the attacks were carried out
by Army scientist Bruce E. Ivins, who committed suicide in 2008.

In addition, the House overwhelmingly approved, 315-97, another bill that
extends for one year three expiring provisions of the USA PATRIOT Act.


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DEFENSE: MARINES STORM THE HILL SEEKING EQUAL BILLING WITH NAVY
By Otto Kreisher


A quiet, nine-year effort to give the Marine Corps equal billing in the
Department of the Navy went high profile Thursday with a Capitol Hill news
conference featuring retired Marine generals, a wounded Marine, parents of
Marines and a Hollywood star.

The event was aimed at giving momentum to a perennial effort by Rep.
Walter Jones, R-N.C., to expand the name of the department and its
secretary to the "Navy and Marine Corps."

Jones, whose district is home to two Marine Corps facilities, Camp Lejeune
and the Cherry Point air station, has introduced legislation to change the
department's name every year since 2001.

Although the proposal has been included in the House defense authorization
bill every year, it has never been accepted by the Senate, largely because
of the opposition of former Sen. John Warner, R-Va., a Marine Corps veteran
and former Navy secretary who was Senate Armed Services chairman or ranking
member for many years. With Warner retired, the main obstacle may be Senate
Armed Services ranking member John McCain, R-Ariz., a retired Navy captain.

Jones is pushing a stand-alone bill this year, which he said has 368
co-sponsors. A companion bill has been introduced by Sen. Pat Roberts,
R-Kan., a Marine veteran. Asked about getting McCain's support, Roberts
said McCain told him he had never been asked, an oversight Roberts plans to
address.

Among the non-legislators showing support for Jones' measure were retired
Marine Gens. Al Gray and Anthony Zinni, a former Marine Corps commandant
and a past U.S. Central Command head, respectively; officials from the
Marine Corps League and Marine Parents Association, and R. Lee Ermey, a
Marine Corps veteran who played the drill instructor in the movie "Full
Metal Jacket" and hosts the popular Military Channel TV shows, "Mail Call"
and "Lock N Load."

Jones and the Marines all emphasized that the call to add Marine Corps to
the department's title did not reflect any disrespect to their Navy
comrades or an attempt to separate from the Navy.

Roberts noted that the Marines were recognized as a distinct service in
the 1947 National Security Act. He said his father, who fought on Iwo Jima
in 1945, and the Marines who are leading the fight today in Marjah,
Afghanistan, "are equal partners" in the Navy-Marine Corps team.

"Is it too much to ask the civilian leading the department in which they
serve to recognize that?" Roberts asked.

"We'll always be part of the Navy, but we'll always be Marines," said
retired Marine Sgt. Eddie Wright, who lost both hands in Iraq. "We're out
there fighting, putting our butts on the line. I don't see anything wrong
with a little recognition."


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FINANCE: TREASURY, GMAC OFFICIALS DEFEND TARP LOANS TO PANEL
By David Hess


On the tab for $17.2 billion to the Treasury, GMAC came under scrutiny
Thursday by the Congressional Oversight Panel overseeing the Troubled Asset
Relief Program; TARP has dished out the money on three occasions to keep
the auto finance company liquid.

Congressional Oversight Panel Chairwoman Elizabeth Warren and three other
panel members grilled two of GMAC's top officers, as well as a pair of
Treasury officials, on the prospects for the government getting back the
money from its loans to GMAC.

The panel also puzzled over whether the decision to bail it out might
encourage other finance companies to engage in risky lending in the
expectation that the government would bail them out if their loans went
sour.

Panel members also wondered why it wouldn't have been better for taxpayers
if GMAC had been allowed to fail, reorganize through bankruptcy, and then
compete with banks and other lenders in the auto-loan market.

Both Ron Bloom and James Millstein, the Treasury's experts in the GMAC
case, said the federal loans to the company have put it on a steady track
to solvency and that the government expects over the next several years to
recoup most of its money.

Bloom also defended the decision to spare GMAC from bankruptcy, since its
long and intimate integration with General Motors and, more recently, with
a reorganized Chrysler could have cost as much as $50 billion in
government-backed economic salvage efforts during the latest financial
crash.

"Anytime a company as large and interconnected as GM or Chrysler becomes
insolvent," he said, "the collateral damage is enormous." Without the
financing expertise and resources of GMAC, Millstein said, coming at a time
when the teetering economy led to a credit freeze, the entire industry
could have toppled, with the loss of thousands of jobs and the onset of an
even deeper economic funk.

GMAC CEO Michael Carpenter said the company is undertaking a six-point
plan that will focus chiefly on strengthening its ability to provide credit
to auto dealers and buyers, improve its access to private capital markets,
reduce its exposure to the bad loans it made for residential housing, and
develop "a stable and reliable source of [cash]" through its subsidiary
Ally Bank.

He also reminded the panel that GMAC has paid some $1 billion to the
Treasury in stock dividends. As of Thursday, Warren said, the federal
government owns 56.3 percent of GMAC.


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AGRICULTURE: FINGER-SCANNING OF FOOD STAMP RECIPIENTS SEEN AS BARRIER
By Jerry Hagstrom


The Obama administration is investigating whether it could use federal law
to stop California, Texas, Arizona and New York City from requiring food
stamp applicants to have images taken of their fingers before receiving
benefits, according to a key USDA official.

Agriculture Undersecretary for Food, Nutrition and Consumer Services Kevin
Concannon said that he believes finger-imaging requirements and other
procedural issues discourage low-income people from applying for the food
stamp program -- now called the Supplemental Nutrition Assistance Program.

Participation rates in the three states and New York City have been lower
than average, he said, limiting efforts to reduce hunger and causing
farmers, supermarkets and truckers to lose billions of dollars in federal
benefits that could stimulate the economies of some of the biggest states,
Concannon said.

"We may have the authority" to stop finger-imaging, he said. "That is why
I am proceeding to have that reviewed. If we do have it, I want to make
sure it is a sustainable decision. We will look at the history of the
program."

Members of Congress and some officials in the affected states and New York
City have urged Concannon to try to stop the practice. California is losing
$7 billion a year in federal benefits due to finger-imaging and other
application problems, said Rep. Joe Baca, D-Calif., chairman of the House
Agriculture Department Operations, Oversight, Nutrition, and Forestry
Subcommittee, during a Jan. 25 hearing in Colton, Calif.

Concannon may have the authority to stop finger-imaging because the states
only began using it after USDA agreed under past administrations that it
would help reduce fraud in benefit programs.

At a recent ceremony to turn over artifacts from the old food stamp
program to the Smithsonian Institution, Concannon said he believes the
electronic benefit cards that have replaced physical coupons have
eliminated any need for finger-imaging. "I have made it very clear that if
any state came forward today, I would not approve it," he added.

Joel Berg of the New York City Coalition Against Hunger and other
advocates have told Agriculture Secretary Vilsack and Concannon that they
have the authority to stop finger-imaging because it is used
disproportionately against minorities and is a waste of funds needed to
administer the food stamp program.

Officials in the affected states and New York City still defend
finger-imaging.

"We need finger-imaging because in welfare programs there is a potential
for abuse and waste," Robert Doar, commissioner of New York City's Human
Resources Administration, told CongressDaily. Doar noted that USDA has
praised New York City for other steps it has taken to ease application
procedures. Concannon acknowledged that New York City officials have made
improvements, but added, "I can't give them a free pass on finger-imaging."

Concannon also noted that lower-than-average participation rates in Texas
and Indiana are due to failed experiments in privatization of the food
stamp application process. Washington, Oregon, New Mexico and other states
with high participation rates have streamlined the application process, he
said.


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SENATE: TRAVEL PROMOTION BILL PASSED AFTER LONG TRIP
By Dan Friedman


The Senate late Thursday passed a travel promotion bill that has been a
top priority for Senate Majority Leader Reid.

In a series of votes, the chamber ended debate on the bill, rejected an
amendment by Sen. Jim DeMint, R-S.C., and passed the bill.

The Senate last year approved the bill, which authorizes the use of
federal and private money to create an office to promote tourism to the
United States. But another vote was required due to the House's handling of
the measure.

The bill has been promoted by the travel industry and senators from
tourism-heavy states including Florida and Reid's home state of Nevada.


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PEOPLE: PEOPLE
By Gregg Sangillo and Jackie Clews


VETERANS DAY. Talib I. Karim was just designated a professional staff
member at the House Veterans Affairs Subcommittee on Disability Assistance
and Memorial Affairs. Karim formerly worked as chief counsel and
legislative director to Rep. Sheila Jackson Lee, D-Texas, where he dealt
with civil rights, immigration, criminal justice, health care and other
matters. He has a bachelor's degree in mechanical engineering and a law
degree, both from Howard University. He has also served in the Air Force
Reserves.

TELECOMMUNICATOR. XO Communications has named Patrick A. Thompson as its
director of legislative affairs. He gained experience on Capitol Hill in
several capacities: he was an aide to Sen. Mike Enzi, R-Wyo. and to former
Sen. Alfonse D'Amato, R-N.Y. He also worked as a legislative assistant to
former Rep. Barbara Cubin, R-Wyo. Thompson most recently was director of
legislative affairs for Covad Communications. Thompson, originally from
Redmond, Wash., also worked for Boeing. The company was founded in
Washington state but is now headquartered in Chicago. Thompson graduated
from the University of Washington. XO Communications is a large
telecommunications provider.

SCIENCE GUY. Arden Bement, director of the National Science Foundation
since 2004, is heading to the Midwest in June to take over a new research
institute at Purdue University in West Lafayette, Ind. The Pittsburgh
native is returning to Purdue, where he was a nuclear engineering professor
in the 1990s, to head the Global Policy Research Institute, aimed at
linking researchers to policymakers. Bement was director of the National
Institute of Standards and Technology from 2001-04, then was appointed by
former President George W. Bush to a six-year term at NSF in November 2004.
"I think we've shown our programs are effective and a kind of agency that
can deal with national problems through research," Bement says of his
tenure at the foundation. The Obama administration has been putting more
emphasis on basic research, he adds, a shift in focus that Bement says he
supports.

SEA CHANGES. Matt Tinning has been promoted to vice president for external
affairs at the Ocean Conservancy. Tinning was previously the organization's
legislative director. The Ocean Conservancy also recently hired Emily
Woglom as director of government relations. She has worked at OMB, where
she oversaw budget and policy issues related to the National Oceanic and
Atmospheric Administration. Tinning, who has been with the Ocean
Conservancy for 18 months, got his start in Washington as an aide to Sen.
Jeff Bingaman, D-N.M. and later worked for the Australian Embassy in D.C.


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LOOKING IN: MISSING THE MEMO
By Richard E. Cohen


On Capitol Hill, where words typically are shoveled by the bushel, the
intensity of the rhetoric often is an inverse measure of the utility and
progress of the debate. By that standard, recent weeks have indicated a
barren prospect for major legislative action.

Even at its arguably most eloquent level -- Thursday's grandeur of Blair
House, with President Obama moderating the bipartisan summit on health
reform -- the lengthy and mostly partisan set pieces did little to cast
Congress and its usual partisan skirmishing in a positive light.

But even that debate was far more balanced, informative and occasionally
nuanced than the recent Capitol Hill discourse on major issues.

Especially for congressional Democrats, who have been placed in the
uncomfortable position of seeking to enact and defend complex and often
politically controversial legislative pieces, the rhetorical points lately
seem to have become increasingly tendentious and perhaps irrelevant.

Take their focus on Republicans who have sought economic-stimulus funds
for their constituents after having voted against the spending. Democrats
profess to be horrified by the alleged hypocrisy, and have identified
dozens of perpetrators. "They're trying to vote against their cake and eat
it, too," Obama said during a Las Vegas speech a week ago.

The Democratic Congressional Campaign Committee has identified 75 House
Republicans (and counting) in the "House Republicans Hypocrisy Hall of
Fame." For example, House Budget ranking member Paul Ryan, was accused of
supporting an application to the Labor Department from a group in his
district which, he said, "intends to place 1,000 workers in green jobs."
Ryan's sin was not his support for the jobs, but his opposition to the
legislation.

The Democrats' critique suggests new standards to award federal funds.
Should Ryan's constituents in southeast Wisconsin -- and those of other GOP
lawmakers, and even a few Democrats -- be barred from seeking assistance
because their congressional representatives voted against the economic
"recovery" legislation?

This new approach could have broad ramifications. What about lawmakers who
vote against tax cuts or tax increases that later are enacted? Should their
constituents be exempt from those policy changes? Such an approach could
get very complicated.

"That is hyperbole," Mississippi Gov. Haley Barbour, a Republican, said
this week in response to Democrats' criticism of stimulus funds that he
sought for his home state. "Every one of our states has programs that we
participate in that we would change if we could. ... But we get offered
federal programs. Our taxpayers pay for them."

Democrats this week attacked the GOP's support for health-insurance
companies, some of whom have recently imposed scandalously large rate
increases. "The Republican Party is a wholly owned subsidiary of insurance
industry," Rep. Anthony Weiner, D-N.Y., said during House debate of a bill
to reduce the antitrust exemption for insurance carriers. Following a GOP
parliamentary objection, Weiner agreed to withdraw his remarks.

Then, as if to prove Weiner wrong, all but 19 House Republicans voted for
passage of the Democratic-sponsored measure. But since the legislation was
widely conceded to have no future in the Senate, that became a free vote
for all House members. So, where was the hypocrisy in that case?

Granted, Republicans have hardly been blameless in the recent scuffles.
Their rhetorical insistence to start with "a clean sheet of paper" on
legislation that already has been approved by both the House and Senate
seemed unrealistic and surely unconventional. And GOP lawmakers have
focused on some easy rhetorical big-spending targets that Democrats
designed on the stimulus bill, while ignoring the bill's hefty tax cuts,
for example.

These tactical maneuvers ignore larger, and more consequential, points:
The nation has suffered through a painful recession, while Democrats have
struggled to address short- and longer-term actions that they promised in
the 2008 campaign. With unemployment hovering near 10 percent, the party in
control has been flailing to show its competence, let alone its legislative
relevance. So, when they can't find the votes to change banking laws, they
launch populist volleys at the bankers.

These straw men not only fail to address the point, they also add to the
already high level of public cynicism toward all politicians.

Democrats may well believe they have repeatedly tried to make the case for
their various substantive proposals, most of which remain adrift. But
recent public-opinion polling, and some significant Republican election
wins, have shown that their earlier approach hasn't succeeded. So, they
have been struggling for alternatives, in what sometimes has seemed like
desperation.

During what was widely described as a civil exchange at the House
Republican retreat in Baltimore last month, Obama aptly lamented the
incessant attack machines in both parties. "That's how our politics works
right now," he said. "It's all tactics, and it's not solving problems." But
if the president's constructive suggestion to stop the blame game was
designed to change the tone of the debate, his operatives and allies across
town evidently didn't get the memo.


http://www.nationaljournal.com/congressdai...100225_1189.php

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POLITICAL ROUNDUP: STATE LAWMAKER ENTERS RACE FOR MARIO DIAZ-BALART'S SEAT

Republican state Rep. David Rivera announced Thursday he would seek the
seat Rep. Mario Diaz-Ba