**Republicans ramp up criticism of President Obama's Iran response...
**AARP endorses pharmaceutical makers' plan to help lower health care costs...
**Latest on the economy; outlook bleak...
**President to sign tobacco legislation today...
"The last thing that I want to do," the president said, "is to have the United States be a foil for -- those forces inside Iran who would love nothing better than to make this an argument about the United States. That's what they do. That's what we've already seen. We shouldn't be playing into that. There should be no distractions from the fact that the -- Iranian people are seeking to -- let their voices be heard.
"Now, what we can do is bear witness and say -- to the world that the, you know, incredible demonstrations that we've seen is a testimony to -- I think what Dr. King called the -- the arc of the moral universe. It's long but it bends towards justice."
Mr. Obama also delivered a message to the regime in Tehran, noting to Smith that, "The world is watching. And how they approach and deal with people who are, through peaceful means, trying to -- be heard -- will I think -- send a pretty clear signal to the international community about -- about -- what -- Iran is and -- and is not.
" ... This is not an issue of the United States or the West versus Iran. This is an issue of the Iranian people. The fact that they are on the -- the streets under pretty severe duress -- at great risk to themselves -- is a sign that -- there's something -- in that society that wants to open up."
In the wide-ranging interview, the president had some tough talk for North Korea, sharp words for former Vice President Cheney, and defended giving the Fed new, broad powers to oversee the financial industry. Click here for more from the interview.
The Associated Press' Anne Gearan adds, "He told Pakistan's Dawn newspaper, in an interview published Sunday, that the United States has no way of knowing whether the disputed Iranian election 10 days ago was fair or not.
"Iranians should be able to peacefully protest the results in any case, Obama said. That interview was also done last week. Obama said nothing about the crisis in public on Sunday, although a spokesman said he discussed Iran with foreign policy advisers in the Oval Office for more than 30 minutes. He later went golfing in Virginia.
"Tehran's streets were mostly quiet on Sunday for the first time since the bitterly disputed June 12 presidential election, but cries of 'God is great' and 'Death to the dictator' echoed from rooftops after nightfall. Iran's Revolutionary Guard, the country's most powerful military force, on Monday ordered demonstrators to 'end the sabotage and rioting activities' and threatened to crush any further opposition protests. The official death toll from the week of demonstrations stands at 17."
Iran Watch: Click Here For The Latest CBS News Updates From Iran
"'The president of the United States is supposed to lead the free world, not follow it,' said Sen. Lindsey Graham (R., S.C.), a member of the Armed Services Committee, on ABC's 'This Week.' He added that Mr. Obama was being 'timid and passive.' ... Since the protests broke out a week ago, Mr. Obama has taken a restrained tone, saying the election is an internal matter for Iran.
"[CBS News 'Face the Nation'] host Bob Schieffer asked how the president can avoid Iranian authorities blaming the United States for the upheaval. Commenting on Mr. Obama's recent statements, which some critics say have not been condemning enough, Schieffer said, 'He is walking a very fine line here.'
"'The fine line is being dictated by the brutalities on the streets of Tehran and other cities,' McCain said. 'The United States hasn't done anything.' 'Every time that there has been a totalitarian dictatorial government that has faced protestors from their citizens, they blame the United States,' the senator reasoned."
Washington Post's Glenn Kessler, "Cautious Response Reflects Obama's Long-Term Approach"
CBS News' Elizabeth Palmer, "Uneasy Calm Follows Violence In Tehran"
HEALTH CARE REFORM: "AARP, the nation's largest seniors lobby, will give its blessing today to an offer by drug manufacturers to contribute $80 billion over the next decade to reduce the cost of comprehensive health reform, in part by discounting the price of Medicare prescriptions," reports the Washington Post's Ceci Connolly.
"[At Noon ET] Barry Rand, chief executive of AARP, will join President Obama at the White House to announce the endorsement of an organization that boasts 40 million highly engaged, politically active members. ...
"After weeks of secret talks, the pharmaceutical industry trade group voted Friday to dedicate $80 billion to lowering the price of medicines sold to seniors and the government. The unusual offer by the Pharmaceutical Research and Manufacturers of America (PhRMA) is part of its effort to convince skeptical lawmakers that it backs major health-care legislation. Though the agreement represents a fraction of the total cost of health-care reform, it has been managed for maximum public relations exposure."
"An overhaul of the nation's health-care system was part of President Obama's campaign pledge to expand coverage to those who do not have health insurance while lowering costs in general. But an initial price tag for the Senate Finance Committee's proposal came to $1.6 trillion, according to the Congressional Budget Office. That figure caused enough consternation that the chairman, Senator Max Baucus of Montana, postponed a drafting session that was to have begun this week. 'So we're in the position of dialing down some of our expectations to get the costs down so that it's affordable,' Mr. Grassley said on CNN's 'State of the Union,' 'and most importantly, so that it's paid for because we can't go to the point where we are now of not paying for something when we have trillions of dollars of debt.'"
Meantime, "A clear majority of Americans -- 72 percent -- support a government-sponsored health care plan to compete with private insurers, a new CBS News/New York Times poll finds.
5013485"Most also think the government would do a better job than private industry at keeping down costs and believe that the government should guarantee health care for all Americans. The new poll shows the idea of a government-sponsored plan, or 'public option,' to be fair non-controversial, though Democrats in the Senate have considered nixing the proposal in order to win Republican support for the bill. House leaders on Friday unveiled a health care reform plan that includes a public option.
"The poll reveals, however, the obstacles that remain in the way of the public option and broader reform efforts. Many Americans are concerned that their own health care may be compromised if the government is involved, and while they are generally willing to pay more in taxes for universal coverage, that support drops when dollar amounts are mentioned."
Wall Street Journal's Avery Johnson and Vanessa Fuhrmans, "Co-Ops Gain Backing as Alternative to Government Insurer"
ECONOMY: Despite signs that the recession gripping the nation's economy may be easing, the unemployment rate is projected to continue rising for another year before topping out in double digits, a prospect that threatens to slow growth, increase poverty and further complicate the Obama administration's message of optimism about the economic outlook," reports the Washington Post's Michael A. Fletcher.
"The likelihood of severe unemployment extending into the 2010 midterm elections and beyond poses a significant political hurdle to President Obama and congressional Democrats, who are already under fire for what critics label profligate spending. Continuing high unemployment rates would undercut the fundamental argument behind much of that spending: the promise that it will create new jobs and improve the prospects of working Americans, which Obama has called the ultimate measure of a healthy economy. 'Our hope would be to actually create some jobs this year,' Obama said in an interview with The Washington Post in the days before taking office.
"With state revenues in a free fall and the economy choked by the worst recession in 60 years, governors and legislatures are approving program cuts, layoffs and, to a smaller degree, tax increases that were previously unthinkable," writes the New York Times' Abby Goodnough.
"All but four states must have new budgets in place less than two weeks from now — by July 1, the start of their fiscal year. But most are already predicting shortfalls as tax collections shrink, unemployment rises and the stock market remains in turmoil. 'These are some of the worst numbers we have ever seen,' said Scott D. Pattison, executive director of the National Association of State Budget Officers, adding that the federal stimulus money that began flowing this spring was the only thing preventing widespread paralysis, particularly in the areas of education and health care. 'If we didn't have those funds, I think we'd have an incredible number of states just really unsure of how they were going to get a new budget out.'"
5092323"From Riverside, Calif., to Baltimore, and from Duluth, Minn., to Phoenix, cities and towns are bracing for more big reductions in local aid and revenue-sharing from their state governments. The cuts are forcing belt-tightening moves that are very visible to voters," adds the Wall Street Journal's Leslie Eaton.
"In a recent survey, 18 states reported cutting local aid, 'and we think that's going to grow,' said Scott D. Pattison, executive director of the National Association of State Budget Officers. States are running record budget gaps as their tax revenue plunges while expenses increase. Federal stimulus money is helping to plug those holes, but most states are still struggling and have few options. Taxes are hard to raise, especially in a recession; costs for things like prisons and pensions are tough to trim."
ALSO TODAY: "Tobacco will be regulated as a drug, under a bill that President Barack Obama plans to sign this afternoon in the Rose Garden," reports Tribune's Mark Silva.
"The long-sought legislation gives the Food and Drug Administration unprecedented authority to regulate tobacco. The Family Smoking Prevention and Tobacco Control Act allows the FDA to cut nicotine in tobacco products, ban candy flavorings and block labels such 'low tar' and 'light.' It will require large warning signs on cigarette cartons. It won't allow the FDA to ban nicotine or tobacco but to regulate what goes into tobacco products, make public the ingredients and prohibit cigarette marketing campaigns targeting children."
"First lady Michelle Obama will be in San Francisco on Monday to deliver the keynote address to the National Conference on Volunteering and Service," KPIX-TV San Francisco reports.
"More than 4,000 national and international volunteer and service leaders are expected for the three-day conference at the Moscone Center. The event also kicks off United We Serve, a national call to community service from President Barack Obama. Earlier on Monday, Michelle Obama will join California's First Lady Maria Shriver to participate in the building of a playground at San Francisco's Bret Harte Elementary School."
"The diplomatic tensions stand in contrast to the rapturous greeting candidate Obama received in Berlin last July, when an estimated 200,000 people jammed the streets. The sorest point has been over how to respond to the economic crisis, with Merkel and some of her ministers warning darkly that U.S. fiscal and monetary policies have been reckless and will trigger a global wave of inflation.
"In turn, Obama's advisers have complained that Germany -- the world's leading exporter and Europe's largest economy -- has done the least of any industrialized nation to fight the recession. Merkel will meet with Obama in Washington for the first time Friday -- three months after she turned down a previous invitation to visit, according to German reports. The White House said the leaders will discuss 'a broad agenda of global issues of mutual concern.'"
Politico's Manu Raju, "GOP: no benefit to court fight"
Politics Daily's Lynn Sweet, "Sonia Sotomayor Quits All-Female Club"
SEN. JOHN ENSIGN
Las Vegas Review-Journal's Molly Ball, "Ensign's Approval Rating Drops - But he's still Nevada's most popular senior elected official"
LA Times' Peter Nicholas, "Mayors complain about stimulus spending"
USA Today's Matt Kelley, "Funds going to districts of key lawmakers"
LA Times' Jim Tankersley, "Under House energy bill, coal won't be going away"
Wall Street Journal's Stephen Power, "In the House, It's Peterson vs. Climate Bill"
NY Times' Katherine Q. Seelye, "White House Changes the Terms of a Campaign Pledge About Posting Bills Online"
McClatchy Newspapers' Michael Doyle, "In stark legal turnaround, Obama now resembles Bush"
Washington Post's Scott Wilson, "Obama's Travel Mixes Policy, Politics"
Politico's Carol E. Lee, "The art of Obama's stagecraft"
Washington Post's Perry Bacon Jr. "McConnell Carefully Chooses His Battles"
2009 NJ Governor: Press of Atlantic City's Derek Harper, "Christie, Corzine trade shots at A.C. forum"
2009 VA Governor: Associated Press, "Deeds, McDonnell agree to debate"
2010 CT Senate: Hartford Courant's Daniela Altimari, "Ted Kennedy Lauds Christopher Dodd In New TV Ad"
2010 NY Senate: Associated Press' Michael Hill, "NY senator hits her stride after wobbly beginning"