Morning Bulletin – Tuesday, Feb. 3, 2009

A roundup of news, schedules, and key stories from CBS News Political Director Steve Chaggaris:
(AP Photo/Ron Edmonds)
Work on President Obama's stimulus plan continues in the Senate today as the president readies for a media blitz – including an interview with CBS Evening News anchor Katie Couric – and as he continues to dig for Republican support for his plan.

"As Senate debate began Monday, the administration was already looking ahead to final negotiations with the House, and President Barack Obama called top Democrats to the White House late in the day to begin preparing an end-game strategy," Politico's David Rogers reports.

"Much of the session was members-only in the Oval office. The agreed goal is to stay below $900 billion and begin working on a final product even as the Senate continues its floor debate. Obama is open to Republican ideas, meaning funds are sure to be shifted to stay within the proposed cap."

"[T]wo Democratic sources with knowledge of the meeting said the president took a blunt tone with the lawmakers, urging them to drop whatever needs to be cut from the bill to gain bipartisan support and to pass Congress soon," report the Washington Post's Michael D. Shear and Shaleigh Murray.

"One source said Obama appeared to be frustrated by the public perception that the recovery bill was becoming laden with partisan pet projects."

The Wall Street Journal's Brody Mullins and Elizabeth Williamson pick up on the source of the president's frustration, writing, "Lobbyists for industry and labor are gearing up to add costly proposals Tuesday to the Senate's nearly $890 billion economic stimulus plan."

"Florida citrus growers, California wine growers and a range of agricultural interests are pushing a tiny change that would allow farmers to more quickly depreciate new fields.

"High-tech and pharmaceutical companies want to save billions in taxes by including a plan that would allow them to bring overseas profits back home at lower tax rates. Labor unions are pressing Congress to make sure that new government funding for green technology results in jobs with good pay and benefits for workers. ...

"A key Democratic architect of the bill, Senate Finance Chairman Max Baucus of Montana, said the measure 'has been carefully crafted to produce meaningful improvements to our economy.' Republicans are stepping up criticism of the measure, saying the spending that accounts for two-thirds of the package is a waste of taxpayer dollars.

"They are pushing instead for greater tax cuts. 'Republicans believe we must put money back into the pockets of taxpayers,' said Senate Minority Leader Mitch McConnell (R., Ky.)."

Politico's Rogers adds that "the massive bill, filling 735 pages, must get through the Senate, and its $884 billion price tag is already about $65 billion more than the House version. Neither the administration nor Democratic leadership wants senators to go too much higher. At the same time, Republican support will be needed to get the 60 votes needed to waive budget points of order, and this will almost certainly require some give on tax cuts and dedicating a greater share of the money to traditional highway, transit and clean water projects."

The Los Angeles Times' Janet Hook and Maura Reynolds remind us, "Not a single Republican voted for the House version last week. Senate Republicans will propose a panoply of amendments to make the bill more palatable -- including moves to strip out spending they consider inappropriate in an economic stimulus bill. One target: $75 million to help people quit smoking. Such changes, if accepted, could win support for the plan from conservative Democrats such as Sen. Ben Nelson of Nebraska, as well as Republicans.

"Both groups want to keep the program focused on short-term job creation. Senate Minority Leader Mitch McConnell (R-Ky.) suggested that Obama also believes the bill could be focused more sharply -- or that the president is at least open to compromise. 'Republicans agree with President Obama that we should trim things out that don't put people back to work,' McConnell said as he opened debate."

"The Obama administration is keen on getting the bill passed as soon as possible, not only to speed relief to the economy but to avoid having the stimulus plan become entangled in another, far more difficult and divisive issue: new action to shore up the still-unstable financial system.

"The possibility that at least two of the nation's biggest banks may be in danger of collapse could force the administration to ask Congress for another eye-popping bailout -- running to at least hundreds of billions of dollars.

"Tactically, the White House wants to have the stimulus plan approved and out of the way before any such proposal is made. Given the widespread anger over Wall Street bonuses and what are seen as other excesses, proposing to shell out more tax dollars could trigger extreme sticker shock in both parties. Treasury Secretary Timothy F. Geithner is expected to lay out the framework of the administration's financial sector plan early next week."

(AP Photo/Manuel Balce Ceneta)
DASCHLE NOMINATION INCHES AHEAD: "Tom Daschle offered a public apology on Monday evening for his failure to pay income taxes on use of a luxury car and driver, and Senate Democrats rallied behind him, saying they intended to win his confirmation as secretary of health and human services," report the New York Times' Carl Hulse and Robert Pear.

"At the same time, it became clear on Monday that Mr. Daschle was responsible for thousands of dollars in additional unpaid taxes related to his use of the car service, even after already paying $140,000 in taxes and interest. He has acknowledged that he owes Medicare taxes equal to 2.9 percent of the personal value of the car service he received from Leo Hindery Jr., a big Democratic donor and founder of a private equity firm to which Mr. Daschle was an adviser. ...

"Despite the tax issue, the chairman of the Finance Committee, Senator Max Baucus, Democrat of Montana, scheduled a formal confirmation hearing for next Tuesday and said he would support the nomination. Other Democrats on the panel said that the tax error, while embarrassing, was understandable because Mr. Daschle had not been provided a 1099 Internal Revenue Service form showing the car as income. ... But Republicans said they remained troubled by the nomination.

"Senator John Ensign, a Nevada Republican who sits on the panel, said he believed that the Daschle tax problems merited much more scrutiny and that the tax mistakes admitted by an earlier Obama administration nominee, Treasury Secretary Timothy F. Geithner, 'seem more plausible.'

"Senator Pat Roberts, Republican of Kansas, a member of the Finance Committee, refused to say what he thought of Mr. Daschle's explanation for his unpaid taxes. Public sentiment in Kansas is 'not especially good' for Mr. Daschle, the senator said.

"Republican aides said Senator Charles E. Grassley of Iowa, the senior Republican on the committee, continued to have questions that went beyond the taxes. In particular, they said Mr. Grassley was concerned about potential conflicts of interest, given the large amount of income Mr. Daschle received for speaking to health care companies and advising them."

The Washington Post's Ceci Connolly points out, "No one in Washington has a better-positioned network of allies in the Obama administration than Thomas A. Daschle.

"Over three decades on Capitol Hill, including 10 years as the Senate Democratic leader, Daschle has nurtured one of the largest, most experienced talent pools in the city. His charges guided Barack Obama from his first days in the Senate, through the presidential race and into the White House. Daschle's tentacles, moreover, stretch far beyond the agency Obama picked him to lead, reaching across the entire administration from the upper echelons of the White House to mid-level departmental positions to Obama's kitchen cabinet. ...

"If he weathers the tax controversy, Daschle is likely to be one of the best-connected Cabinet secretaries in the administration, if not history. At least a dozen Daschle alumni are stepping into the highest positions of the federal government.

"Already, Obama and Vice President Biden have tapped Daschle veterans to manage their staffs, guide foreign policy and craft public relations strategy. In addition to the new HHS chief of staff, the chiefs of staff to Biden, the National Security Council and Treasury Secretary Timothy F. Geithner all worked for Daschle. His allies oversaw Obama's transition team -- including vetting Daschle himself -- and one serves as the president's personal lawyer."

4771424Politico's Ben Smith and Eamon Jeavers report that Daschle was pushing for an administration job for Leo Hindery Jr., whose company Daschle once advised.

"Tom Daschle backed the patron who paid him a million-dollar salary and supplied him with a free car and driver for a job inside the Obama administration, two Democrats said Monday. Leo Hindery, whose InterMedia Partners employed the former Senate Majority Leader, had been mentioned as a possible Secretary of Commerce or U.S. Trade Representative.

"'Tom was pushing for him,' said one Democratic source. Obama's aides rejected Daschle's suggestion that a top job go to Hindery, for whose private equity fund Daschle had served as a rainmaker and adviser."

GREGG TO COMMERCE: President Obama will announce Sen. Judd Gregg, R-N.H., as his choice for Commerce Secretary at an 11am event at the White House. If Gregg is confirmed, he would be the third Republican to join Mr. Obama's cabinet, along with Defense Secretary Robert Gates and Transportation Secretary Ray LaHood.

"The deal was set after Sen. Gregg made clear that he would not take the post unless he was replaced in the Senate by another Republican," writes the Wall Street Journal's Jonathan Weisman. "If Gregg were replaced with a Democrat by New Hampshire's Democratic governor, and if Al Franken prevails in the contested Senate race in Minnesota, the Democrats would have a filibuster-proof, 60-seat majority."

"Mr. Obama's secret interview with the senator at transition headquarters last month, aides say, was one of the few serious one-on-one conversations between them. In Mr. Obama's brief time on Capitol Hill, they barely knew each other, aside from occasional chats in the Senate gym," reports the New York Times' Jeff Zeleny.

"The idea of offering the job to Mr. Gregg came, at least in part, from the Senate majority leader, Harry Reid of Nevada. (The two senators are close, aides to both men said.) Mr. Reid mentioned the idea to Rahm Emanuel, Mr. Obama's chief of staff, who passed it on to the president-elect. During the presidential campaign, Mr. Gregg spoke sharply against Mr. Obama's candidacy.

He called the Democratic nominee's spending proposals 'the Obama spend-o-rama.' Then he attacked the principles of the party at a rally in New Hampshire, saying: 'We don't need any more Democrats as president of the United States. We had enough when we had Bill Clinton.'

"But. Mr. Gregg, who has earned high marks for budget expertise and is well regarded by the business community, fit the profile of what the new president was looking for: a respected Republican in his cabinet ... to help argue on behalf of the administration's economic stimulus plan and take up politically sensitive discussions about overhauling Medicare and Social Security.

"Even when the possibility of putting a Democrat in Mr. Gregg's Senate seat dimmed, Mr. Obama pressed ahead, telling his advisers that it was more important to build a bipartisan cabinet than increase his Senate majority."

The Concord Monitor's Lauren R. Dorgan reports on who might succeed Gregg in the Senate: "As rumors of a political compromise abounded over the weekend, New Hampshire's Rockefeller and centrist Republicans enjoyed the greatest prominence they've had in years or even decades, with dozens of national newspapers and blogs chewing over the possibility of [former Gov.] Walter Peterson, [former N.H. House Speaker] Doug Scamman, [New Hampshire Executive Council member] Peter Spaulding, [former Concord Mayor] Liz Hager and others becoming the state's next senator.

By yesterday, speculation centered on Bonnie Newman, a North Hampton Republican who has high-profile ties to Gregg and [Gov. John] Lynch [D-N.H.]. The former University of New Hampshire and Harvard dean worked for Gregg when he was a congressman before going on to work for Presidents Reagan and Bush.

In 2004, Newman crossed party lines to become an early Republican backer of Lynch. Newman, 63, did not return calls for comment to her home and office yesterday, but Republicans across the spectrum cheered the idea yesterday. 'I am a fan. She has impeccable Republican credentials,' said former Republican Party chairman Fergus Cullen, citing her ties to Gregg, Reagan and Bush. 'She's thoughtful. She's pragmatic. She's not an ideologue.'

"Peterson called Newman a 'centrist Republican of the old school, with an appreciation for some of the issues that they are more tolerant on.' No one, however, claimed to know exactly where Newman stands on political issues such as abortion and taxes."

"It has been widely reported that Newman would promise not to run for a full term in 2010 if she is appointed, but that has not been confirmed," reports the Manchester Union-Leader's John DiStaso.

ALSO ON TODAY'S SCHEDULE: In addition to his 11am announcement of Sen. Gregg to be Commerce Secretary, President Obama has a series of closed meetings at the White House this morning.

Vice President Joe Biden has breakfast with Secretary of State Hillary Clinton this morning. He'll then head to the Justice Department to attend the 10am swearing in of Eric Holder, who was confirmed by the Senate yesterday as Attorney General.

Secretary of State Hillary Clinton holds meetings with Middle East envoy George Mitchell, British Foreign Minister David Miliband and German Foreign Minister Frank-Walter Steinmeier today.

Gov. Pat Quinn, D-Ill., who replaced impeached Gov. Rod Blagojevic last week, is on Capitol Hill this afternoon to meet with Senate Majority Whip Dick Durbin, D-Ill., and the Illinois Congressional delegation.

NY Times' Peter Baker, "Obama's Ethics Reform Pledge Faces an Early Test": "During almost two years on the campaign trail, Barack Obama vowed to slay the demons of Washington, bar lobbyists from his administration and usher in what he would later call in his Inaugural Address a 'new era of responsibility.'

"What he did not talk much about were the asterisks. The exceptions that went unmentioned now include a pair of cabinet nominees who did not pay all of their taxes.

"Then there is the lobbyist for a military contractor who is now slated to become the No. 2 official in the Pentagon. And there are the others brought into government from the influence industry even if not formally registered as lobbyists.

"President Obama said Monday that he was 'absolutely' standing behind former Senator Tom Daschle ... But the episode has already shown how, when faced with the perennial clash between campaign rhetoric and Washington reality, Mr. Obama has proved willing to compromise.

"Every four or eight years a new president arrives in town, declares his determination to cleanse a dirty process and invariably winds up trying to reconcile the clear ideals of electioneering with the muddy business of governing. Mr. Obama on his first day in office imposed perhaps the toughest ethics rules of any president in modern times, and since then he and his advisers have been trying to explain why they do not cover this case or that case. 'This is a big problem for Obama, especially because it was such a major, major promise,' said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington. 'He harped on it, time after time, and he created a sense of expectation around the country. This is exactly why people are skeptical of politicians, because change we can believe in is not the same thing as business as usual.'

"And so in these opening days of the administration, the Obama team finds itself being criticized by bloggers on the left and the right, mocked by television comics and questioned by reporters about whether Mr. Obama is really changing the way Washington works or just changing which political party works it.

"Some Republicans saw a double standard. 'What would it be like if Hank Paulson had come in without paying his taxes, or any other member of the cabinet?' asked Terry Nelson, a political strategist who worked for President George W. Bush and Senator John McCain, referring to Mr. Bush's Treasury secretary. 'It would be roundly attacked and roundly criticized.' Several Democrats, including some who have advised Mr. Obama, said privately that he had only himself to blame for delivering such an uncompromising message as a candidate without recognizing how it would complicate his ability to assemble an administration."

Associated Press' Charles Babington, "PROMISES, PROMISES: No lobbyists at WH, except ...": "Maybe he shouldn't have promised so much, some open-government advocates say. They're willing to cut him some slack — for now.

"On Jan. 21, the day after his inauguration, Obama issued an executive order barring any former lobbyists who join his administration from dealing with matters or agencies related to their lobbying work. Nor could they join agencies they had lobbied in the previous two years. However, William J. Lynn III, his choice to become the No. 2 official at the Defense Department, recently lobbied for military contractor Raytheon. And William Corr, tapped as deputy secretary at Health and Human Services, lobbied through most of last year as an anti-tobacco advocate.

"Corr says he will take no part in tobacco matters in the new administration. 'Even the toughest rules require reasonable exceptions,' said White House Press Secretary Robert Gibbs.

"That was a big step back from Obama's unambiguous swipe at lobbyists in November 2007, while campaigning for the Democratic presidential nomination. 'I don't take a dime of their money,' he said, 'and when I am president, they won't find a job in my White House.' The waivers granted for Lynn and Corr caused some in Washington to wince. But others, including many longtime advocates of tougher ethical standards, suggest it all says as much about deeply ingrained practices — and even necessities — in Washington as about a new president.

"'Sometimes you can over-promise,' said former Sen. Warren Rudman, a Republican from New Hampshire. 'This government is very complicated,' he said. 'Often you'll need people with a lot of experience in certain areas,' and current or former lobbyists sometimes fit that bill best."

Politico's David S. Cloud, "Secret report urges new Afghanistan Plan": "The Pentagon's top military officers are recommending to President Barack Obama that he shift U.S. strategy in Afghanistan — to focus on ensuring regional stability and eliminating Taliban and al-Qaida safe havens in Pakistan, rather than on achieving lasting democracy and a thriving Afghan economy, officials said.

"The recommendations to narrow U.S. goals are contained in a classified report by the Joint Chiefs of Staff that is likely to be shown soon to Obama as part of a review of Afghanistan strategy announced by the new administration. Obama is expected to announce later this week his decision on a request for additional forces from the U.S. commander in Afghanistan, Lt. Gen. David McKiernan. Several officials said they expected the president to approve sending three additional combat brigades to Afghanistan, totaling roughly 10,000 to 12,000 troops

"But a decision by Obama about whether to approve a more far-reaching shift in U.S. objectives in Afghanistan will be made later as part of the strategy review, the officials said. In addition to the Joint Chiefs, Obama will hear recommendations from Gen. David Petraeus, in charge of U.S. Central Command, and from Richard Holbrooke, Obama's civilian envoy to Afghanistan. The review is not expected to be completed for several months."

2010 RACES

Politico's Josh Kraushaar, "After Gregg, limited GOP bench in N.H.": "In other battleground states where Republican senators have retired — Ohio, Missouri and Florida — there have been logical successors waiting in the wings or a significant base of GOP voters for candidates to rely on. But in New Hampshire, Republicans have a limited bench of prospective candidates in a state that has been moving in a distinctly Democratic direction."

(AP Photo/Dennis Cook)
Associated Press' Erica Werner and Kathleen Hennessey, "Reid is GOP target in 2010 election": "Senate Majority Leader Harry Reid is among Republicans' biggest targets in 2010, but a GOP takedown is hardly a guarantee. As Reid, 69, prepares to seek a fifth term, analysts say his role as a Democratic mouthpiece has turned off some voters in libertarian-leaning Nevada and undercut his slogan from campaigns past: 'Harry Reid, Independent like Nevada.'

"Last week, the National Republican Senatorial Committee began airing its first attack ad against Reid, lambasting him as a 'super-spending partisan.' Committee spokesman Brian Walsh promised that Reid would have 'a very competitive race on his hands.' But for all the Republicans' tough talk, Reid, one of Capitol Hill's wiliest politicians, has ensured that he'll be difficult, if not impossible, to beat."

Dallas Morning News' Wayne Slater, "Sarah Palin endorses Texas' Perry for re-election": "Alaska Gov. Sarah Palin has endorsed Rick Perry for re-election, calling him the 'true conservative' in a primary election showdown with fellow Republican Kay Bailey Hutchison. Palin, who electrified the GOP base as the party's vice presidential nominee last year, has strong support among the party's social conservatives.

"Her endorsement appeared aimed at undercutting Hutchison's appeal with GOP women. Both groups will be important in picking the party's nominee in next year's GOP primary. In a letter to 'Texas Republican women' distributed by the Perry campaign, Palin touts the Texas governor's conservative credentials. 'He walks the walk of a true conservative. And he sticks by his guns – and you know how I feel about guns,' she said."

NY Times' Michael Powell, "Political Lessons Taken on the Fly by Gillibrand": "Eyes red-rimmed from lack of sleep, careening from the Port of Buffalo to Downtown Brooklyn to Manhattan fund-raisers for a Senate primary election that is still 20 months away (she attended 19 events in three days in three cities), [Sen. Kirsten] Gillibrand [D-N.Y.] has an occasional stranger-in-a-strange-land quality on her maiden voyage as New York's junior senator.

"Ten days ago, Gov. David A. Paterson tapped this 42-year-old Democratic congresswoman from a largely rural and politically conservative swath of eastern New York to fill the seat of Hillary Rodham Clinton, who stepped down to become secretary of state. Her appointment occasioned yawps of disappointment from downstate Democrats, who tend to view Senate seats as proprietary possessions.

"Charles E. Goodell, who was appointed to fill Robert F. Kennedy's seat in 1968, was the last senator to come from outside New York City or its suburbs. That Ms. Gillibrand was an ardent National Rifle Association supporter and a hard-liner on immigration soothed few hurt feelings. (She is more liberal on economic issues, opposing privatizing Social Security; favors a withdrawal from Iraq; and earns high scores from gay and civil liberties groups.)

"Ms. Gillibrand, a meticulous student of politics, has crafted her own political adult education course. Mrs. Clinton's former staff members, inherited by Ms. Gillibrand, made phone calls and churned out memos at a prodigious rate, and Ms. Gillibrand began dialing up congressional representatives and mayors from Rochester to Yonkers to the Bronx. Representatives Jerrold L. Nadler, Nydia M. Velázquez, José E. Serrano and Anthony D. Weiner: some were said to desire appointment to that Senate seat and all heard from her, an aide said. She talks of her progress as an honors student might of acing a forthcoming exam."

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    Steve Chaggaris is CBS News' senior political editor.