Morning Bulletin – Tuesday, Jan. 6, 2009

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

It's the first day of the 111th Congress and 14 days before Inauguration Day. President-elect Obama continues his focus on the economy as he meets with his economic team this afternoon at his D.C. transition headquarters.

According to Mr. Obama's office, the meeting will focus on the budget as he and his budget team "will review the medium-term budget outlook and discuss their commitment to crafting a budget for 2010 that puts us on a path to bring down the deficit as the economy recovers," a deficit that looks like it could be an obstacle for Mr. Obama and Congress.

"[T]roubling realities threaten the Democratic agenda. Perhaps most dangerous is the spiraling budget deficit," reports the Associated Press' Andrew Taylor. "On Wednesday, lawmakers will get some very sobering news: New budget deficit projections from congressional estimators project a flood of red ink — likely to exceed $1 trillion for the current budget year — that could threaten other initiatives like extending health care to millions of the uninsured."

The House and Senate convene at noon ET today and the potential drama in the Senate was cut in half last night as Senate Majority Leader Harry Reid's spokesman Jim Manley said that there will be no move to seat Al Franken today, as the Minnesota Senate election continues to be sorted out. Yesterday, the state canvassing board declared Franken the winner over Republican Norm Coleman by 225 votes. Coleman will challenge the results in court.

The other half of today's possible Senate soap opera, Roland Burris, who was appointed by Gov. Rod Blagojevich, D-Ill., to fill Mr. Obama's vacant seat, is in D.C. and is expecting to be seated today. "I'm presenting myself as the legally appointed senator from the state of Illinois. It is my hope and prayer that they recognize that the appointment is legal," Burris told CBS News' "The Early Show" this morning.

However, Reid said Monday that Burris won't be seated because his appointment was "not certified by the state of Illinois" (the Secretary of State refused to certify Burris). Drama or no drama today, Burris is scheduled to meet with Reid and Sen. Dick Durbin, D-Ill., tomorrow.

"[T]he Burris episode has unexpectedly become the first example of how racial politics have changed with the election of Barack Obama to the White House," writes Peter Wallsten in the LA Times. "Many black leaders, including Obama, have declined to back Burris, even if that leaves the Senate with no African American members. Some view his appointment by Illinois' embattled governor as an odd playing of the race card. Others are renouncing the style of politics that highlights racial grievances and inequality, saying it can no longer work now that the nation has elected its first black president."

Politico's David Rogers reports that Mr. Obama's stimulus plan, while still being hammered out, looks to have support from both parties. "With new unemployment numbers out Friday and growing concern about deflation, President-elect Barack Obama won bipartisan pledges from Congress on Monday that lawmakers will approve a major economic recovery bill by mid-February. Disputes remain over the final content of the estimated $775 billion two-year package still being drafted by the incoming administration.

"But House Minority Leader John A. Boehner (R-Ohio) spoke of passage as almost a fait accompli and confirmed that a bill could be sent to the White House in the next six weeks. 'I do,' Boehner said. ... About $300 billion of the total package — an appealing number for Republicans — is expected to go to tax cuts. But the precise spending components are still an issue, and Obama must navigate through multiple crosscurrents — both political and economic. The whole exercise is made more difficult by the fact that he has yet to take office and is still assembling his administration. And fine-tuning the package can seem like some elaborate calculus equation — and a bit of 'Democratic hell.""

Meantime, the Wall Street Journal reports that the Democrats may be facing a tougher road in Congress than expected with their large majorities in both houses. "There are serious obstacles, starting with the party itself, which is hardly unified. Some Democratic congressional factions, like the more-conservative Blue Dogs, are deeply suspicious of expanded federal spending. Democrats from old industrial states worry that colleagues from California want to be too hard on the auto industry. Coal-state Democrats fear the party's environmental wing will go too far with efforts to clamp down on fossil fuels," report the Journal's Naftali Bendavid and Greg Hitt.

"Republicans, meanwhile, have made it clear they won't simply accept whatever Democrats propose, unlike in Mr. Roosevelt's day. Senate Republican Leader Mitch McConnell, joined by House Minority Leader John Boehner, recently issued a statement demanding "the consideration of alternative ideas, public congressional hearings and transparency -- not a rushed, partisan take-it-or-leave-it approach. ... The most important factor in the Democrats' success will likely be whether the party's actions reflect the 'change' voters had in mind when they voted Republicans out of power."

FYI: Vice President-elect Biden will be sworn-in for his seventh Senate term today, having won re-election in November. According to his office, he will resign his Senate seat officially sometime before Inauguration Day and Gov. Ruth Ann Minner, D-Del., indicated weeks ago that she will appoint longtime Biden aide Ted Kaufman to fill the vacancy.

Later this week, Biden will travel to Southwest Asia with Sens. John Kerry, D-Mass.; Jack Reed, D-R.I.; Susan Collins, R-Maine; and Lindsey Graham, R-S.C. Their exact stops have not been disclosed but there are reports that Pakistan is on their itinerary.

On Wednesday, Mr. Obama will attend a lunch with President Bush and former Presidents Carter, Bush and Clinton at the White House. And on Thursday, CBS News has confirmed that Mr. Obama will deliver an economic speech at a time and location TBA.

Upcoming Obama cabinet confirmation hearings this week: Health and Human Services Secretary nominee Tom Daschle, Thursday, Jan. 8, 10am, Senate Health, Education, Labor and Pension Committee; Labor Secretary nominee Hilda Solis, Friday, Jan. 9, 9:30am, Senate Health, Education, Labor and Pension Committee. Future hearings: Education Secretary nominee Arne Duncan, Jan. 13; Energy Secretary nominee Steven Chu, Jan. 13; Veterans Affairs Secretary nominee Eric Shnseki, Jan. 14; Agriculture Secretary nominee Tom Vilsack, Jan 14; Attorney General nominee Eric Holder, Jan 15; Interior Secretary nominee Ken Salazar, Jan. 15. TBA: Secretary of State nominee Hillary Clinton, Secretary nominee Shaun Donovan, Treasury Secretary nominee Tim Geithner, HUD Transportation Secretary nominee Ray LaHood, Homeland Security Secretary nominee Janet Napolitano, CIA Director nominee Leon Panetta. Defense Secretary Robert Gates does not need to be reconfirmed.

CIA DIRECTOR-DESIGNATE LEON PANETTA

To say Washington was surprised to hear that Leon Panetta was chosen by Mr. Obama to head the CIA is an understatement. The selection of Panetta, who aside from his experience on the Iraq Study Group is far from a intelligence insider, shocked even the incoming chairwoman of the Senate Intelligence Committee. "I was not informed about the selection of Leon Panetta to be the CIA Director. I know nothing about this, other than what I've read," said Sen. Dianne Feinstein, D-Calif., a longtime friend of Panetta. "My position has consistently been that I believe the Agency is best-served by having an intelligence professional in charge at this time."

The New York Times' Mark Mazzetti and Carl Hulse report, "The job was the last unfilled major post for Mr. Obama, who has criticized the agency for using interrogation methods he characterized as torture. Democratic officials said Mr. Obama had selected Mr. Panetta for his managerial skills, his bipartisan standing, and the foreign policy and budget experience he gained under President Bill Clinton. Mr. Panetta has himself been a sharp critic of the agency's interrogation practices. Some Democrats expressed strong support for the choice, with Harry Reid of Nevada, the Senate majority leader, describing him as 'one of the finest public servants I have ever served with and dealt with since he left the White House.'

"But Mr. Panetta, 70, was also widely described as a surprising and unusual choice to head the C.I.A., an agency that has been notoriously unwelcoming to previous directors perceived as outsiders. ... [S]ome intelligence experts called the selection underwhelming, given the important role the C.I.A. plays in disrupting terrorist attacks against the United States. 'It's a puzzling choice and a high-risk choice,' said Amy Zegart, a professor at the University of California, Los Angeles, who has written extensively on intelligence matters. 'The best way to change intelligence policies from the Bush administration responsibly is to pick someone intimately familiar with them,' Ms. Zegart said. 'This is intelligence, not tax or transportation policy. You can't hit the ground running by reading briefing books and asking smart questions.'"

"Mr. Obama chose Mr. Panetta for his strong management background and his centrist approach, said Democratic officials familiar with the decision," reports the Wall Street Journal's Siobhan Gorman. "They cited Mr. Panetta's tenure as Mr. Clinton's chief of staff and director of the Office of Management and Budget, where he earned a reputation as a deficit hawk.'He's recognized across the board as an exceptional manager,' one Democratic official said. 'He's someone who is known as being evenhanded and bipartisan.' Mr. Panetta's backers said he gained ample intelligence and national-security experience during the Clinton years, including involvement with the intelligence budget and key foreign-policy issues of the time, such as the Bosnian conflict. Mr. Obama also chose Mr. Panetta to signal to Congress his intent to keep lawmakers fully informed of the agency's activities, which a former senior CIA official said was 'a problem of the last several years" that is "not going to be repeated in the future.' The Bush administration, particularly in the early years after the Sept. 11 attacks, limited the information it provided to most lawmakers on intelligence matters, which led to outrage among many Democrats and some Republicans on Capitol Hill."

"An official close to the selection process said Obama sought an independent outside figure to lead the CIA in the hopes of restoring morale there," report the Washington Post's Anne Kornblut and Joby Warrick. "Although he was a Democratic congressman from California for many years -- and, like other Obama Cabinet appointees, a Clinton administration official -- Democratic aides repeatedly emphasized his more recent credentials as head of a nonpartisan public policy center, the Leon and Sylvia Panetta Institute for Public Policy, at California State University at Monterey Bay. The president-elect has also said he hopes to include more civilians in the national security apparatus. In March, in answering questions posed by The Washington Post, Obama said he favored new leadership for the intelligence community that 'would seek a greater balance between military and civilian officials.'"

BILL RICHARDSON

Washington Post's Carol D. Leonnig and Michael D. Shear, "Richardson, Obama Teams Trade Blame": "Sources within the transition and the Justice Department said that Richardson had played down the importance of the probe and did not reveal that his office and staff could be at risk. The seriousness of the matter became apparent after the FBI began its own background check on Dec. 2. But Richardson's longtime aides defended his disclosures, noting that subjects under examination by a grand jury are rarely aware of its secret deliberations. 'This was out there, and he told them,' said a senior Richardson aide, speaking on the condition of anonymity because of the ongoing investigation. 'I feel that they just missed the boat on it. The FBI or the campaign or something. I don't think it's fair that this is being portrayed as him holding anything back.' ... But a source with the Obama transition said Richardson's disclosures to the team were incomplete. A Justice Department source also said Richardson neglected to mention the ongoing investigation on a background-check questionnaire."

HILLARY CLINTON'S SENATE SEAT / CAROLINE KENNEDY

Associated Press' Michael Gormley, "Kennedy missteps might not trip her up in the end": "News articles nationwide, editorials and endless political blogs called her not ready for prime time, a valley girl for her diction, and worst of all for a Democrat of perfect pedigree, the next Sarah Palin, the Republican vice presidential nominee who was criticized for displaying flash but little substance. The print stories, TV news clips and blogs that counted Kennedy's use of 'you know' and 'um' during a series of interviews the weekend after Christmas took a toll even among a public where those speech patterns are common. None of it may matter. That's because she's playing to just one voter — the Democratic governor with the power of appointment — who has plenty of reasons to pick President John F. Kennedy's daughter. As governor and head of the Democratic Party in the state, Paterson has said he will take advice from his closest advisers in and outside government, including other elected and party officials. But he has also said that the decision is his alone, and that he will choose a senator who meets his requirements, including the ability to bring federal aid back to New York. If he does name her to the seat, Kennedy will have plenty of time and millions of dollars to spend on TV campaign ads to redefine her public image before she goes before voters in 2010 in a special election."

The Hill's Alexander Bolton writes, "Democratic lawmakers not intimidated by Kennedy bid" Democratic lawmakers seeking Hillary Rodham Clinton's (D-N.Y.) Senate seat have intensified their bids, even as political observers are ready to crown the daughter of the late President John F. Kennedy. Caroline Kennedy has emerged as the early favorite, but that hasn't stopped Reps. Carolyn Maloney (D-N.Y.) and Steve Israel (D-N.Y.) from following her lead. They spent the weekend and Monday meeting with political leaders and voters in the state's northern reaches, which are expected to be important battlegrounds in 2010 when the seat is up for special election. ... 'This is an appointment, not a campaign,' Maloney said in an interview. 'There are not candidates. There are people under consideration. The person who will make the decision is the governor of New York.'"

Maloney also told the NY Times, "If this is a celebrity beauty contest, I am not going to win. ... But if people want to look at someone's record and their service and their work to help people, I think I have a chance." Meantime, Israel told the Times, "Look, she's Caroline Kennedy. ... And it doesn't bother me, dissuade me or affect me in the least."

INAUGURATION

The Presidential Inaugural Committee announced its list of 10 official inaugural balls, which the Obamas will visit on inauguration night:

ALSO:

Associated Press' Judy Lin reports that ex-eBay CEO Meg Whitman is planning to run for California Governor in 2010. "She most recently served as a national co-chair of John McCain's failed presidential bid and previously had supported former Massachusetts Gov. Mitt Romney, who lost to McCain in the GOP primary. Whitman and Romney once worked at Bain and Co., a global business consulting firm. Romney later started Bain Capital, the venture capital firm where he made millions. ... If Whitman were to win the GOP primary, she would face a well-known Democratic opponent in a state where registered Democrats outnumber Republicans by 13 percentage points. Former Gov. Jerry Brown, now the state's attorney general, is thought to be the leading Democratic candidate if he decides to run. San Francisco Mayor Gavin Newsom and Los Angeles Mayor Antonio Villaraigosa also are considered potential Democratic contenders. Schwarzenegger, a Republican, is prohibited from running again under the state's term-limits law and will leave office in January 2011."

Washington Post's Dana Milbank, "Aspiring RNC Chairmen Wonder: What Would Reagan Do?"