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Morning Bulletin – Tuesday, Jan. 27, 2009

(AP)
President Barack Obama heads to Capitol Hill this afternoon to meet with Congressional Republicans about his economic stimulus package. He'll meet with House Republicans at 12:15pm and with Senate Republicans at 1:25pm.

Politico's David Rogers points out, "The twin visits are an exceptional gesture for any president, but they follow two ominous signs late Monday. First, Obama's choice for treasury secretary and economic point man, Timothy Geithner, won Senate confirmation by just a 60-34 vote. Second, the Congressional Budget Office issued its final report suggesting that only about two-thirds of the money would reach the economy in the next 18 to 19 months, well short of the goal set by Obama.

"The 23 page CBO report, the first full analysis by the budget office of the House bill, predicts the measure will have 'a noticeable impact on economic growth and employment in the next few years.' But the outlay rate is still slower than the administration had hoped and could feed Republican demands to either scale back the package or add more new tax cuts. Nonetheless, the president is betting that politeness and high poll numbers will help defuse some of the partisan tensions stirred up by the massive, fast-moving stimulus bill."

The president has his work cut out for him as Congressional Republicans ramp up their criticism of the plan and continue to hammer their strategy: that the stimulus package is classic "liberal" spending and not enough stimulus.

A Senate GOP aide wrote in an e-mail today that the Republicans are "appreciative" of the face time with Mr. Obama, however, "Republicans are most likely wishing the new President could spend time convincing Congressional Democrats to come back to the middle."

One guy President Obama may want to chat with at his 12:15 lunch is House Budget Committee Ranking Member, Rep. Paul Ryan, R-Wisc., who clearly doesn't like how the stimulus package is shaping up.

"'This is 1936 economics,'" Ryan said to the New York Times' Carl Hulse. "'But it reflects [Appropriations Committee Chairman] David [Obey]'s, [D-Wisc.], ideology and his economic doctrine. They took everything in their file cabinet that has been piling up for 100 years, threw it in this bill and called it economic stimulus.'"

(AP Photo/Pablo Martinez Monsivais)
And Senate Minority Leader Mitch McConnell added this morning on NBC's "Today", "What's developing here is his biggest problem is with his own party, the Democratic Party, which seems to be drifting away from what he said he wanted, which was for the package to include at least 40 percent tax relief and to be earmark-free. ...

"We're anxious to help him. We think the country needs a stimulus. Listening to what he said he wanted, we think we may be closer to that, oddly enough, than the Democratic majority, which seems to be pulling in the direction of fewer tax -- less tax relief and things like fixing up the Mall. You know, most people don't think that's the way we ought to spend stimulus money."

McConnell's mention of the National Mall is a deliberate tactical move, as Politico's Lisa Lerer and Carrie Budoff Brown report. "They're using Obama's pledge to keep earmarks out of the massive bill to criticize Democrats in Congress. ...

"At issue is a list of programs that Republicans say will do little to stimulate economic recovery, including $21 million to sod the National Mall, $50 million to fund the National Endowment of the Arts and $650 million for digital TV coupons. ... The projects are a fraction of the massive spending bill – and Democrats dispute that they're pork. But the items have given Republicans a hook to rally opposition to the bill, on conservative talk-radio and elsewhere."

"Meanwhile, the White House said the second half of the Treasury Department's $700 billion financial-rescue package will be spent 'far differently' than the first half, and left the door open for a request for additional funds," reports the Wall Street Journal's Henry J. Pulizzi.

"Congress released the Troubled Asset Relief Program's remaining $350 billion earlier this month, but the Obama administration hasn't provided the specifics of how it intends to use the money. Between $50 billion and $100 billion is expected to be used to address home foreclosures, while other funds will go to shoring up the ailing financial sector."

(AP Photo/Manuel Balce Ceneta)
Treasury Secretary Timothy Geithner was confirmed by the Senate late yesterday with a 60-34 vote.

"His confirmation became unexpectedly complicated this month by the disclosure that he failed to pay Social Security and Medicare taxes for 2001-4, when he was a senior official at the International Monetary Fund," reports the New York Times' Jackie Calmes.

"Mr. Geithner ultimately paid a total of more than $48,000 in back taxes and interest, making one payment after an I.R.S. audit in 2006 and the rest last November. Privately and at his confirmation hearing last week before the Finance Committee, he apologized to senators for what he called an innocent mistake.

Senator Orrin G. Hatch of Utah, one of 10 Republicans to vote for Mr. Geithner, praised his credentials on the floor Monday, though he said Democrats would probably not have shown the same deference toward a Republican president's nominee with similar violations. Three Democrats — Senators Robert C. Byrd of West Virginia, Russ Feingold of Wisconsin and Tom Harkin of Iowa — voted against the nominee, as did an independent who caucuses with the Democrats, Senator Bernard Sanders of Vermont."

Today, on Geithner's first full day as Treasury Secretary, he will participate in the President's daily economic briefing, call foreign ministers and attend a dinner at the Federal Reserve in his honor, per a Treasury Department official.

Also, Geithner is announcing "new, stepped-up rules to limit the influence of lobbyists and special interests" in the federal bailout process. "These new rules go beyond the approach taken under the EESA [Emergency Economic Stabilization Act] to date, and will help ensure a new level of openness and accountability going forward."

Other events today: At 9:30am, the Senate Armed Services Committee hears from Defense Secretary Robert Gates about the challenges facing the military. And at 12:30pm, Vice President Joe Biden will swear-in Kirsten Gillibrand as New York's next senator. The Democratic congresswoman was appointed Friday to fill Secretary of State Hillary Clinton's vacant seat.

BLAGO


On CBS' "The Early Show", Gov. Rod Blagojevich, D-Ill., weighed in on his impeachment trial this morning: "If present trends continue, I'll be out of work in the not too distant future. I'm not delusional in terms of what my likelihood of success is to convince those senators to give me a fair trial."

Wall Street Journal's Douglas Belkin and David Kesmodel, "The governor, 52 years old, said in several television interviews Monday that he did nothing wrong. And he continued to accuse the state Senate of embarking on an unfair and unconstitutional trial.

"Mr. Blagojevich objected to rules adopted by the Senate requiring that any witnesses for the prosecution or defense be approved by a majority of the Senate. A spokeswoman for the Senate president has said those rules are fair because both the prosecutor and Mr. Blagojevich are treated equally.

"Mr. Blagojevich ignored several deadlines last week to respond to the impeachment allegations and seek witnesses or documents in his defense. The governor said during an interview Monday on ABC's 'Good Morning America' that he expected to be out of office 'relatively soon,' adding, 'the fix is in.'

"For the governor to be ousted, at least 40 of the state's 59 senators, or two-thirds, must vote for his removal. Lt. Gov. Pat Quinn, also a Democrat, would become governor if Mr. Blagojevich is removed.

"David Ellis, the lawyer appointed by the House to prosecute Mr. Blagojevich in the Senate, told senators Monday how he intended to present evidence and call witnesses. His prosecution will include testimony by Daniel Cain, a Federal Bureau of Investigation agent who described in a federal affidavit numerous conversations recorded by federal agents in which the governor allegedly sought campaign contributions and other favors in exchange for certain decisions, such as his pick for President Barack Obama's former Senate seat."

Chicago Sun-Times' Lynn Sweet, "Blagojevich may have whipped up some sympathy with media blitz"

Washington Post's Dana Milbank, "His lawyer has quit, the mayor of Chicago calls him 'cuckoo,' and Blagojevich probably wasn't helping his case with a media tour yesterday that included a taped appearance on the 'Today' show and live shots on 'Good Morning America,' 'The View' and 'Larry King Live.' But he just might establish himself as an unofficial poet laureate of the criminal justice system.

"At his news conference on Dec. 19, after federal prosecutors said they had him on tape trying to sell Barack Obama's Senate seat, Blagojevich quoted Rudyard Kipling...

"On Jan. 9, after he was impeached by the Illinois House, he came before the cameras with a little something from Alfred Lord Tennyson's 'Ulysses.' ...

"Then, on Friday, he told a Chicago radio station that he was in 'a 21st-century Frank Capra movie, Gary Cooper, Jimmy Stewart movie.'

"That afternoon, he compared himself to an accused horse thief in a cowboy movie.

"By the time the governor landed on the 'Good Morning America' set yesterday, Diane Sawyer had Shakespeare on her mind. 'Mrs. Blagojevich is also on these tapes, and some people in the columns have said she's like Lady Macbeth,' Sawyer said. 'How is Mrs. Blagojevich?' 'You know,' he answered, 'there's a phrase from a poem by Rudyard Kipling.' He then quoted a verse from 'If' that he had not read at his first news conference..."

Read more Hotsheet coverage of Blago>

WHITE HOUSE FOREIGN POLICY

Washington Post's Michael D. Shear and Glenn Kessler, "President Obama expressed optimism yesterday about the prospect of peace between Israel and the Palestinians, but he said a peace accord will take time and require new thinking about the problems of the Middle East as a whole.

"Obama's comments came during his first formal television interview as president, with a correspondent from al-Arabiya, the Dubai-based satellite network that is one of the largest English-language TV outlets aimed at Arab audiences.

"The president sat for the interview, at the White House, moments after officially dispatching George J. Mitchell, his special envoy for Middle East peace, to the region last evening. 'All too often the United States starts by dictating -- in the past on some of these issues -- and we don't always know all the factors that are involved,' Obama told al-Arabiya.

"'So let's listen. He's going to be speaking to all the major parties involved. And he will then report back to me. From there we will formulate a specific response.'"

LA Times' Paul Richter, "Obama sends George Mitchell on Mideast peace mission"

Washington Post's Colum Lynch, "Susan E. Rice, the new U.S. ambassador to the United Nations, told U.N. Secretary General Ban Ki-moon and top U.N. ambassadors Monday that she had not come with orders and that the Obama administration would collaborate more intensively with its international partners.

"The tone of Rice's comments on her first day on the job signaled a tenure that will be markedly different from some of her recent predecessors, notably Bush administration appointee John R. Bolton, who derided U.N. headquarters as a bubble and quipped before he was ambassador that 'it wouldn't make a bit of difference' if the United Nations lost the top 10 floors of its 39-story building.

"'I will listen. I will engage. And I will work to advance the United States interest, recognizing that in many, many instances, our national interests are best advanced when we are working hand in hand with that of others,' Rice told reporters after her 45-minute meeting with Ban."

OBAMA & THE ENVIRONMENT

(CBS)
Wall Street Journal's Stephen Power, "Obama's EPA Move Likely to Spur Fight":" In ordering the Environmental Protection Agency to consider allowing states such as California to regulate automobile emissions of greenhouse gases, Mr. Obama served notice that his administration doesn't intend to let the worst year of U.S. auto sales in more than a decade deter him from his goals of reducing emissions and U.S. dependence on Mideast oil.

"The announcement drew cheers from California's Republican governor, Arnold Schwarzenegger, and many environmental groups. It drew condemnation from congressional Republicans, who said it would allow the Golden State effectively to set fuel-efficiency standards for much of the country. Some Rust Belt Democrats said California's law would fall hardest on domestic auto makers, who sales mix skews toward pickup trucks, sport-utility vehicles and minivans."

NY Times' Nick Bunkley, "Automakers said Monday that they were working toward President Obama's goal of reducing fuel consumption, but rapid imposition of stricter emissions standards could force them to drastically cut production of larger, more profitable vehicles, adding to their financial duress. ...

"Shortly after the president spoke, General Motors said it would cut 2,000 jobs at plants in Michigan and Ohio because of slow sales. The California regulations, if enacted today, 'would basically kill the industry,' said David E. Cole, chairman of the Center for Automotive Research, an independent research organization in Ann Arbor, Mich. 'It would have a devastating effect on everybody, and not just the domestics.'"

MINNESOTA SENATE RACE

Minneapolis Star-Tribune's Pat Doyle and Mark Brunswick, "The trial to determine Minnesota's disputed U.S. Senate election got off to a slow start Monday -- and then bogged down.

"The trouble came over testimony that workers for Republican Norm Coleman's campaign had marked or obscured copies of some absentee ballot envelopes offered as evidence. The acknowledgment provoked confusion and prompted the judges to demand the original documents. On that note, the first day of the trial abruptly halted, leaving the second's agenda something of a mystery."

ALSO:

Time Magazine's Mark Thompson, "Obama's Lobbyist Ban Meets a Loophole: William Lynn"

Wall Street Journal's Evan Perez, "House Democrats renewed their effort to force former White House aide Karl Rove to testify in a probe into Justice Department controversies, presenting a challenge to President Barack Obama, who will have to decide whether to defend his predecessor's legal arguments.

"Michigan Rep. John Conyers, Democratic chairman of the House Judiciary Committee, on Monday issued a subpoena to Mr. Rove, seeking his appearance at a deposition Feb. 2. Mr. Conyers wants the former aide to President George W. Bush to answer questions on the Justice Department's firings of U.S. attorneys in 2006, among other matters."

Washington Post's Michael D. Shear, "The guy on the computer help line at the White House seemed a bit harried yesterday afternoon. Shortly after the workweek began, the tech-savvy Obama administration was hit with a mysterious 'server outage' that shut down all incoming and outgoing e-mail for more than eight hours, forcing aides to resort to old-fashioned phone calls and face-to-face conversation.

"'We're getting a few calls,' the worker deadpanned after answering phone calls from e-mail-starved employees at 1600 Pennsylvania Ave. How is it possible that the e-mail system for the White House could go down that long, a caller asked? Press secretary Robert Gibbs had just apologized on live television for the lack of any e-mail contact. 'We still don't know,' the help-line guy said, adding that two e-mail servers had been rebooted but that two others remained mysteriously down, with no immediate explanation.

"He then abruptly put the caller on hold, returning momentarily to say that he was no longer authorized to answer questions."

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