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Morning Bulletin – Monday, March 30, 2009

A roundup of news, schedules, and key stories from CBS News Political Director Steve Chaggaris:

(AP Photo/Gerald Herbert)
President Obama and Treasury Secretary Tim Geithner will announce the administration's auto bailout plan at 11am and they'll talk about what was reported overnight: the resignation – at the urging of the administration – of GM chief Rick Wagoner, a new timeline (60 days for GM to restructure, 30 days for Chrysler to work on a merger with Italy's Fiat SpA), and serious words for GM and Chrysler about their efforts to date: it's not enough.

Mr. Obama "was set to unveil on Monday that new direction for Detroit's automakers. Its details amount to a stern ultimatum to GM and Chrysler: Shape up in 30 to 60 days, or ship out. Only Ford, which has avoided a government loan so far, isn't in Obama's sights," writes the Associated Press' Ken Thomas.

"The White House determined that neither GM nor Chrysler is viable and the turnaround plans they submitted in February did not pass muster. Now, if GM and Chrysler LLC fail to meet their deadlines, they will face bankruptcy."

"In a dramatic development on the day before President Barack Obama was to unveil his plan for the auto industry, General Motors Corp. Chairman and CEO Rick Wagoner stepped down after the administration asked him to resign," write the Detroit News' Christine Tierney and David Shepardson.

"Obama has said he wants to help the U.S. auto industry and is offering GM and Chrysler LLC fresh short-term aid, but he faces mounting public opposition to industry bailouts. 'From the government's perspective, they had to show a visible form of sacrifice,' said David Cole, chairman of the Center for Automotive Research in Ann Arbor and the son of a former GM president. 'At one level I'm surprised, and at another level, not at all.' ... The government said late Sunday it will provide GM with an unspecified amount of working capital over the next 60 days. There will be no immediate management changes at Chrysler, which will receive aid for 30 days as it moves to conclude an alliance with Italy's Fiat SpA."

"The administration's auto team announced the departure of Mr. Wagoner on Sunday. In a summary of its findings, the task force added that it doesn't believe Chrysler is viable as a stand-alone company, and suggested that the best chance for success for both GM and Chrysler 'may well require utilizing the bankruptcy code in a quick and surgical way,'" report the Wall Street Journal's Neil King Jr. and John D. Stoll.

"The move also indicates that the Treasury Department intends to wade more deeply than most observers expected into the affairs of the country's largest and oldest car company. After over a month of analysis, the administration's auto task force determined that neither company had put forward viable plans to restructure and survive. The verdict was gloomier for Chrysler. The government said it would provide Chrysler with capital for 30 days to cut a workable arrangement with Fiat SpA, the Italian auto maker that has a tentative alliance with Chrysler. If the two reach a definitive alliance agreement, the government would consider investing up to $6 billion more in Chrysler. If the talks fail, the company would be allowed to collapse."

"Obama told Michigan lawmakers Sunday night that both companies had failed to meet the terms of their loans and weren't viable today," add the Detroit Free Press' Justin Hyde and Tim Higgins. "The administration will attempt to ease workers' concerns by appointing a director of auto recovery, and will back the warranties of GM and Chrysler vehicles in an attempt to keep shoppers coming. But for people who rely on the automakers, there will be little to soothe their worries when Obama launches his plan this morning."

President Obama previewed what his auto plan will look like in an interview with CBS News' Face the Nation host Bob Schieffer. "[I]t's got to be one that's realistically designed to weather this storm, and to emerge at the other end much more lean, mean and competitive than it currently is," Mr. Obama said.

"And that's going to mean a set of sacrifices from all parties involved — management, labor, shareholders, creditors, suppliers, dealers. Everybody is going to have to come to the table and say it's important for us to take serious restructuring steps now, in order to preserve a brighter future down the road."

BUDGET: "As the House and Senate take up their versions of President Obama's budget plan this week, the congressional budget process will be on full display. While the quirky, arcane proceedings can be mystifying at times, here are five things you need to know to follow the action," writes the Washington Post's Lori Montgomery.

"1. Congress holds the purse strings. ... 2. There will be a conference committee. ... 3. Reconciliation is probably in the cards. ... 4. The budget does not enact Obama's agenda. ... 5. Despite some squabbling, the Democrats have the votes."

PRESIDENT'S EUROPE TRIP: President Obama leaves for London tomorrow, his first overseas trip since taking office. "It's one of the most anticipated presidential trips since John Kennedy went to Berlin in 1963," writes USA Today's Richard Wolf.

"Although much of the attention will focus on Obama, the world economy hangs in the balance. Obama will try to persuade leaders of the Group of 20 that they should act boldly to stimulate spending, stabilize financial systems and sidestep increased trade protectionism. He also has a reinvigorated war plan for Afghanistan to promote. Still new on the world stage at 47, Obama will meet privately with at least six presidents, prime ministers and a king in London, then five more as he travels on to France, Germany, the Czech Republic and Turkey. He'll attend three summits, deliver two major addresses and hold a roundtable with students in Istanbul. He'll take time out to see Queen Elizabeth II at Buckingham Palace and sightsee from Strasbourg to Istanbul."

"This time, no one will accuse Barack Obama of acting like Paris Hilton," adds the New York Times' John Harwood.

"Last year, as a candidate, Mr. Obama traveled to Europe by choice. He profited from well-choreographed visits with allied leaders that depicted him to American voters as a plausible commander in chief. But the cheering throngs that greeted him also handed his Republican opponent in the presidential campaign, Senator John McCain of Arizona, an opening to paint him as a celebrity-politician.

"Mr. Obama returns to Europe this week as president, against a backdrop of crisis. He has no alternative but to try coaxing partners in the Group of 20 industrial and emerging market nations to help stimulate the global economy and to assure them he is shoring up an American financial system that shoulders substantial blame for the damage. Add the challenge of promoting a new strategy for the war in Afghanistan, and political strategists say there is no danger that Americans will confuse this trip with an escape from Mr. Obama's principal responsibilities."

"[A]s Obama makes his presidential debut on the diplomatic stage at the Group of 20 summit in London this week, he faces leaders from both Europe and Asia who have rejected some of his most important proposals for rescuing the global economy, including his call for more stimulus spending," writes the Los Angeles Times' Christi Parsons.

"Despite the diplomatic niceties, that means Obama's vision of himself as a conciliator will face challenges from the start. ... Across Europe, Obama's poll numbers are as high or higher than his substantial approval ratings at home. But neither popularity nor a more conciliatory approach has prevented some foreign leaders from brushing off Obama's proposals for recovery. German and French leaders have shunted aside the president's call for increased government spending to stimulate their economies. The Czech Republic's prime minister even characterized the U.S. proposal as charting 'the road to hell.'

Instead of more stimulus spending, European and Asian leaders want more government regulation of the financial system. And they have been openly skeptical of Treasury Secretary Timothy F. Geithner's regulatory plans, suggesting they don't go far enough. Nor have foreign leaders responded wholeheartedly to Obama's call for a greater commitment to the war in Afghanistan."

The Financial Times interviewed Mr. Obama in advance of his trip and the president "is voicing optimism that this week's crucial G20 summit will set the framework for recovery, saying that world leaders know they must 'deliver a strong message of unity' for the sake of the global economy. ...

"Mr Obama played down talk of a split between the US and the leading continental European economies, notably Germany and France. But he conceded that for all the US talk of the need for more measures to boost economic growth around the world, there has been a backlash at home against higher spending that may make it difficult for him to offer further economic stimulus measures soon.

"'In all countries there is an understandable tension between the steps that are needed to kick-start the economy and the fact that many of these steps are very expensive and taxpayers have a healthy scepticism about spending too much of their money, particularly when it is perceived that some of the money is being spent not on them but on others who they perceive may have helped precipitate the crisis.'

"He admitted that it would be difficult for him to ask for more money to recapitalise the banking system until Wall Street convinces voters it is not misusing the money. 'If voters perceive that it's a one-way street that we are just pouring more and more money into institutions and seeing no return other than avoiding catastrophe, then it is harder to make an argument for further intervention.'"

It's not just the economy the president will be focused on this week.

"Barack Obama learns this week whether his rock-star allure for Europeans translates into tangible support for U.S. foreign-policy goals," writes Bloomberg News' Hans Nichols.

"At an April 3-4 North Atlantic Treaty Organization summit along the French-German border, the president will seek to line up more allied manpower and money for his new plan to step up the fight against the Taliban and al-Qaeda in Afghanistan. He'll also try to forge consensus on deterring Iran's nuclear ambitions and put relations with Russia on a smoother course."

(AP/The White House)
And, as the Politico's Nia-Malika Henderson, this is also Michelle Obama's first overseas trip as First Lady. "The first couple's trip to Europe Tuesday takes Michelle Obama to a land that likes her husband but seems positively fascinated by her. The British press in particular has followed Michelle Obama's every move breathlessly, from her dresses to the 'kitchen garden' behind the White House.

"One London paper tracked down her high-school prom date. Another asked plaintively, 'Why Doesn't the UK Have a Michelle Obama?' So while the president has to juggle the politics, Michelle Obama's job is in some ways more subtle and just as complicated. France's first lady, Carla Bruni-Sarkozy, was judged recently on her curtsy before the Queen, and back in the day, Jackie O.'s outfits and her command of the French language were closely scrutinized."

NY-20: Tomorrow is the special election to fill the House seat vacated by Sen. Kirsten Gillibrand, D-N.Y. and "The race is being viewed as a political gauge that may indicate if Republicans can regain strength or if Democrats are still riding the momentum of President Barack Obama's election," report the Albany Times-Union's Lauren Stanforth and Scott Waldman.

(AP Photo/Tim Roske)
"Each congressional candidate Sunday used what they felt was most powerful in their arsenal. For [Scott] Murphy, a local businessman, it was rallying his base using local Democratic heavyweights and reinforcing his credentials as a business leader experienced in creating jobs. Murphy was still basking in Obama's endorsement of him. For [Jim] Tedisco, a state assemblyman, it was trumpeting his endorsement in Murphy's hometown paper, the Post-Star of Glens Falls, and continuing to hammer Murphy for supporting a federal economic stimulus plan that allowed bonuses for AIG executives.

"The heat turned up this weekend after a Siena Research Institute poll showed Murphy ahead by four points, a gain of 16 percentage points for the Democrat since Feb. 26. Murphy is fighting to maintain Democratic control over the Republican-majority district, which stretches from Essex to Dutchess counties."

"National issues are being debated in New York's special election Tuesday, but the outcome will be determined by purely local factors," adds CQ Politics' Emily Cadei. "The race will come down to 'who gets their vote out,' said John Jasper Nolan, Republican Party chairman in the 20th District's most populous county, Saratoga. 'That's been the issue from day one.'"

Meantime, the Washington Post's Chris Cillizza reports that a TV ad released touting President Obama's endorsement of Murphy is virtually invisible. "The DNC spent a meager $10,000 on the ad, according to reports filed with the Federal Election Commission -- a pittance in the world of political television. So very few actual voters in the Albany media market will ever see the Obama ad. Why spend any money, then? Because the DNC and the White House want to ensure that they won't get blamed if Murphy comes up short. Producing an ad, any ad, gives them political cover."

ALSO TODAY: President Obama will hold a signing ceremony for the Public Lands Management Act of 2009 at 3pm ET. Later, he'll meet with the House Democratic Caucus.

Vice President Biden wraps up his Latin American trip; today, he's in Costa Rica to meet with that country's president and other Central American leaders.

Tomorrow, the Senate Health Committee holds a confirmation hearing for Health and Human Services Secretary nominee Kathleen Sebelius.


Wall Street Journal's Matthew Dolan, "Task Force Says GM Can Bounce Back With Changes"

Wall Street Journal's Krishnan Anantharaman, "U.S. Sees Fiat Pact as Chrysler's Best Hope"

Detroit Free Press' Brent Snavely, "Ford execs: We want to steer clear of any aid"

NY Times' Micheline Maynard, "The Steady Optimist Who Oversaw G.M.'s Decline"

Detroit News' Mark Hornbeck, "Granholm calls Wagoner 'a good man'"


Wall Street Journal's Marc Champion, "U.S. Pushes Afghan Plan In The Hague This Week"

The Guardian's Paul Harris and Robin McKie, "Prospect of Barack Obama show causes UK to clear its decks"

NY Times' Nicholas Kulish and Judy Dempsey, "Merkel Is Ready to Greet, and Then Resist, Obama"


LA Times' Ralph Vartabedian and Tom Hamburger, "AIG crisis could be the tip of an insurance iceberg"

Bloomberg News' Ryan J. Donmoyer, "Geithner Says Some Banks Need 'Large Amounts' of Assistance"

Associated Press' Philip Elliot, "Treasury secretary: We've done a lot in 8 weeks"

Newsweek's Michael Hersh, "The Education of Timothy Geithner"

Wall Street Journal's James R. Hagerty, "New Task Seen for Fannie, Freddie"


Washington Post's Michael D. Shear, "Obama Says He Is Sharpening Focus of War in Afghanistan"

USA Today's Jim Michaels, "Afghan strategy a matter of trust"


NY Times' Jim Rutenberg, "Navy Secretary Nominee Drew Notice Over Divorce"

Washington Post's Juliet Eilperin, "Winds of Change Evident in U.S. Environmental Policy"


Politico's Manu Raju, "In Minnesota, it's still November"


IL-5 Special Election (4/7/09): CQ Politics' Emma Dumain, "No 'Rahmbo,' But Illinois House Special Favorite is Ready"

2010 AR Senate: Politico's Alex Isenstadt, "Is Arkansas still land of Lincoln?"

2010 CT Senate: Washington Times' Jennifer Haberkorn and Jerry Seper, "AIG chiefs pressed to donate to Dodd"

2012 President: Politico's Andy Barr and Jonathan Martin, "Staff infection: Allies rip Palin team"


NY Times' David D. Kirkpatrick and Charlie Savage, "Star Lobbyist Closes Shop Amid F.B.I. Inquiry"

Associated Press' Liz Sidoti, "Obama racial stereotypes, falsehoods flourish"

Politico's Carol E. Lee, "Obama gets personal": "Listen carefully to Obama's speeches, and there is almost always something personal. It might be a reference to a family member — parents, wife or daughters — an aside about their new routine in the White House or an anecdote from his early life."

Washington Post's Ellen Nakashima and Brady Dennis, "In a Down Time Everywhere Else, K Street Bustles"

NY Times' David Carr, "Cable News Stokes Political Fever"

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