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Bush revamps spying rules, energy dispute threatens to shut down government, IG says U.S. wasted $560 million in Iraq reconstruction, illegal immigrants urged to self-deport, Fed steps up efforts to aid banks, Turkey's ruling party cleared in court.

• "Gas costs $4, credit is tight, housing is in a slump. What's a president to do? For President Bush, the answer is to focus much of his attention on foreign policy -- an area, analysts say, in which he has stashed his predilection for saber-rattling and turned to quiet diplomacy," USA Today reports. "From NATO to North Korea, Bush has become a believer in nurturing international alliances, much like his father was in the years after the fall of the Berlin Wall."

• "President Bush" Wednesday "signed two of the most significant measures of his presidency -- one the most sweeping housing legislation in decades and the other an extension of his massive global program to combat AIDS and HIV infections in the developing world," the Washington Post reports.


• Bush also "approved an order Wednesday that rewrites the rules governing spying by U.S. intelligence agencies, both in the United States and abroad, and strengthens the authority of the national intelligence director, according to a U.S. official and government documents," AP reports.

• "On May 17, 2005, the White House's political affairs office sent an e-mail message to agencies throughout the executive branch directing them to find jobs for 108 people on a list of 'priority candidates' who had 'loyally served the president,'" the New York Times reports. A Justice Department report released Monday "provided a window into how the administration sought to install politically like-minded officials in positions of government responsibility, and how the efforts at times crossed customary or legal limits."

• "Framing President Bush's sports-driven trip to China, the White House said with some skepticism Wednesday that it expects the communist country to show it is loosening restrictions on free expression -- and not just during the fleeting spotlight of the Olympic Games," AP reports. "The president plans to privately prod Chinese President Hu Jintao about human rights, and speak publicly about religious freedom after attending a church service in Beijing."


• "The White House is trying to reinvigorate the lobbying effort on the U.S.-South Korea Free Trade Agreement, as President Bush prepares for talks next week with South Korean President Lee Myung-bak en route to the Beijing Olympics," CongressDailyAM (subscription) reports.

• "Defense Secretary Robert M. Gates says that even winning the conflicts in Iraq and Afghanistan will not end the 'Long War' against violent extremism and that the fight against al-Qaeda and other terrorists should be the nation's top military priority over coming decades, according to a new National Defense Strategy he approved last month," the Washington Post reports. "The strategy document, which has not been released, calls for the military to master 'irregular' warfare rather than focusing on conventional conflicts against other nations."

Congress: Energy War Threatens To Shut Down Government This Fall

• "Spurred by high oil prices, legislation to tighten regulation of commodity markets showed surprising strength in the House on Wednesday," the Politico reports. "But the continued stalemate over energy policy means Congress is going home for the summer having failed to provide any immediate relief for drivers squeezed by high gasoline prices."

• "The prospect of a September government shutdown loomed over the Capitol on Wednesday as the two parties fought over rising energy prices," The Hill reports. "It's a fight some members of either party are willing to have, but others worry about who will get blamed for a repeat of the 1995 shutdown that President Clinton pinned on a Republican Congress."


• "The House voted overwhelmingly Wednesday to dramatically increase funding for the agency charged with protecting consumers and to expand its regulatory power to scrutinize imported toys and other products," CongressDailyAM (subscription) reports. "The conference report on the Consumer Product Saftey Commission legislation cleared the House by a 424-1 vote."

• "Cigarettes would carry larger warning labels, their ads would be limited, candy flavoring would be banned and nicotine levels might be lowered under landmark legislation the U.S. House passed Wednesday," USA Today reports. "The bill would give the Food and Drug Administration the authority to regulate tobacco products."

• "A House committee voted" Wednesday "to cite former top White House aide Karl Rove for contempt of Congress, as its Senate counterpart explored punishment for alleged Bush administration misdeeds," the Washington Post reports. "Voting 20 to 14 along party lines, the House Judiciary Committee said that Rove broke the law by not appearing at a July 10 hearing on allegations of White House influence over the Justice Department, including whether he encouraged prosecutions against Democrats such as former" Alabama Gov. Don Siegelman (D)."

• "Alaska Sen. Ted Stevens (R) is scheduled to be arraigned in federal court today on charges that he has repeatedly falsified financial disclosures," Roll Call (subscription) reports. "In a seven-count indictment announced Tuesday, the Alaskan is accused of submitting false disclosure forms to conceal more than $250,000 in gifts over an eight-year period."

• "Senate Republicans greeted their colleague with hugs and smiles Wednesday, even as they dumped campaign contributions the Alaska senator had given them," the Politico reports. "The mixed message: We love you, Ted, but we won't let you bring us down."

• "Congress has been awash in corruption scandals... but prospects for legislation to make questionable practices like Stevens' alleged acceptance of gifts illegal in their own right appear grim," the Los Angeles Times reports. "A year after a bipartisan group of senators proposed giving the Justice Department important new clout in pursuing official misconduct, the Public Corruption Prosecution Improvements Act is apparently blocked in Congress."

• "Economic stimulus legislation being drafted by the Senate Appropriations Committee would provide more than $24 billion in aid, including $10 billion for infrastructure improvements and $10 billion for natural disaster recovery," CongressDailyAM (subscription) reports. "'The Congress needs to act now and do its part to stimulate the U.S. economy and put our nation back on the right track,' Appropriations Chairman Robert Byrd [D-W.Va.] said in a release that provided details of his stimulus measure."

• "Congress wants to blow the whistle on colleges that raise tuition sharply, while helping students pay less for textbooks and making Pell grants available year-round -- part of a wide-ranging bill designed to address concerns about rising college costs," AP reports.

• "House Minority Leader John Boehner on Wednesday called on Speaker Nancy Pelosi to fire House Chief Administrative Officer Dan Beard, arguing he is too partisan for the office," The Hill reports. "Much of Boehner's (R-Ohio) criticism echoed previously raised objections to Beard's actions -- taken with Pelosi's (D-Calif.) support -- to green the Capitol, which Boehner called politically motivated and fiscally irresponsible."

Iraq: IG Claims $560 Million In Wasted Reconstruction Funds

• "The United States has 'wasted' more than half a billion dollars in Iraq repairing facilities that were damaged because of poor security, the special inspector general for Iraq reconstruction says in a report released Wednesday," CNN reports. "Stuart Bowen's quarterly report arrived at a price tag of $560 million by tallying the results of more than 100 audits his office has conducted."

• "The leader of the Sunni insurgent group al-Qaeda in Iraq and several of his top lieutenants have recently left Iraq for Afghanistan, according to group leaders and Iraqi intelligence officials, a possible further sign of what Iraqi and U.S. officials call growing disarray and weakness in the organization," the Washington Post reports. "U.S. officials say there are indications that al-Qaeda is diverting new recruits from going to Iraq, where its fighters have suffered dramatic setbacks, to going to Afghanistan and Pakistan, where they appear to be making gains."

• "Iraq's parliament ended its summer term Wednesday without passing legislation setting up provincial elections this year, forcing the government to call an emergency session for the weekend. However, a positive outcome remains far from certain," the Los Angeles Times reports.

• "Iraq and the United States are close to a deal on a sensitive security agreement that Iraqi officials said on Wednesday satisfies the nation's desire to be treated as sovereign and independent," the New York Times reports. "The agreement, under intense scrutiny in both countries, sets the terms for the presence of American troops in Iraq."

• "Residents of New Baqubah woke up Wednesday to a sight they had never seen before: hundreds of Iraqi national police officers blanketing the neighborhood in a city that until last year was a center of the Sunni Arab-driven insurgency," the Los Angeles Times reports. "For many of them, it was not a comforting sight. Most of the upscale neighborhood's doctors, teachers and retired military officers are Sunni Muslims, and the force sent from Baghdad to protect them is overwhelmingly Shiite Muslim."

• "The number of U.S. soldiers killed in combat in Iraq has dropped sharply in July and the monthly total is likely to be the lowest since the U.S.-led invasion of the country in 2003," Reuters reports. "Five U.S. soldiers have been killed in combat in Iraq so far in July compared to 66 in the same month last year, according to the independent website, which keeps records of U.S. military losses in the conflict."

Nation: Illegal Immigrants Urged To Self-Deport

• "Five states intend to sue the Environmental Protection Agency if it does not act soon to reduce pollution from ships, aircraft and off-road vehicles," AP reports. "In a letter that California Attorney General Jerry Brown was to send" today "to the EPA, the five states and New York City accuse the Bush administration of ignoring their requests to set restrictions."

• "Federal authorities" on Wednesday "urged illegal immigrants living in the United States in violation of deportation orders to turn themselves in under a pilot program planned for five U.S. cities next month," the Washington Post reports. "The self-deportation program, called 'Operation Scheduled Departure,' gives immigrants a chance to avoid the risk of being caught and jailed, have up to 90 days to put their affairs in order and in some cases leave with some family members, said James T. Hayes Jr., acting director of detention and removal operations with U.S. Immigration and Customs Enforcement."

• "A report released" Wednesday "by a Washington think tank that advocates stricter limits on immigration says the number of illegal immigrants in the country appears to have declined significantly over the past year, at least partly because of the chilling effect of stepped-up enforcement," the Post reports.

• "A Bush administration proposal aimed at protecting health-care workers who object to abortion, and to birth-control methods they consider tantamount to abortion, has escalated a bitter debate over the balance between religious freedom and patients' rights," the Post reports. "The Department of Health and Human Services is reviewing a draft regulation that would deny federal funding to any hospital, clinic, health plan or other entity that does not accommodate employees who want to opt out of participating in care that runs counter to their personal convictions."

• "Concerned that thousands of corporations have cut back on health coverage and pensions -- partly because of competitive pressures fueled by globalization -- the Rockefeller Foundation has begun a $70 million effort to help build a new social safety net for the nation's workers, especially the poorest and most vulnerable," the New York Times reports.

Economy: Fed Steps Up Efforts To Aid Banks

• "The Federal Reserve ramped up its liquidity support operations again on Wednesday in an effort to reduce money market strains and preempt the possibility of funding crises at the year-end or at other stress points," the Financial Times reports. "The US central bank said it would offer three-month cash loans to banks and create a new options auction facility."

• "The board that sets accounting rules for U.S. corporations" on Wednesday "postponed by a year a plan that could require banks and other financial services companies to raise mountains of new capital to protect themselves against financial exposures not currently reflected on their balance sheets," the Washington Post reports. "The Financial Accounting Standards Board took the action at the urging of federal regulators concerned about the potential impact on Fannie Mae and Freddie Mac, the mortgage funding giants, and lenders that provide credit for businesses and consumers."

• "The demise of the Doha world trade talks because of splits between wealthy and developing nations suggests other global undertakings, from slashing greenhouse-gas emissions to ending food-export restrictions, also will face hurdles," the Wall Street Journal reports. "Efforts at global cooperation are all grappling with the same forces: a resurgence of nationalism across the globe, muscle-flexing by emerging economic giants such as China and India, and a fraying of the Cold War ties that bound many developing countries to the U.S. and Europe."

• "The U.S. economy probably expanded at a faster pace in the second quarter as the temporary stimulus of federal tax rebates offset the drag from housing and rising unemployment, economists said before a report today. Growth accelerated to a 2.3 percent annual rate from April through June, more than double the previous three months' pace, according to the median forecast in a Bloomberg News survey of 79 economists."

• "The number of Americans who have seen their full-time jobs chopped to part time because of weak business has swelled to more than 3.7 million -- the largest figure since the government began tracking such data more than half a century ago," the New York Times reports. "The loss of pay has become a primary source of pain for millions of American families, reinforcing the downturn gripping the economy."

• "A record number of hotels are opening this year, and the timing could not be worse," the Times reports. "High gasoline prices and a slumping economy have put a damper on leisure and business travel.... While new hotels open, occupancy rates are falling across much of the United States."

World: Turkey's Ruling Party Cleared; Olmert Announces Resignation

• "Turkey's highest court struck down an attempt to outlaw the country's Islamic-rooted governing party Wednesday, averting for now a political crisis that could have destabilized a key Western ally in the Middle East," the Wall Street Journal reports. "In a historic decision, the Constitutional Court levied a relatively minor penalty against the ruling Justice and Development Party, or AKP, cutting in half the funding it receives from the state."

• "Prime Minister Ehud Olmert, embroiled in a high-profile corruption investigation, announced on Wednesday that he would resign after his party chose a new leader in September elections," the New York Times reports. "The televised announcement injected new uncertainty into Israeli politics and the Middle East peace effort, coming just as Mr. Olmert has been intensifying negotiations with the Palestinian Authority as well as Syria."

• "Clashes between insurgents and Pakistani troops escalated Wednesday in the country's fractious northwest as Taliban leaders threatened to withdraw their support for peace deals brokered this year with Pakistan's new government," the Washington Post reports. "Accounts of casualties from the skirmishes in Pakistan's Swat Valley, near the Afghan border, varied widely and could not be independently verified."

• "Pakistani Prime Minister Yousuf Raza Gilani said U.S. concerns about collusion between members of his nation's intelligence agency and terrorists are being taken seriously and 'will be resolved.' In an interview with reporters and editors of The Washington Times, Mr. Gilani said he had seen no evidence to support allegations that Pakistan's Inter-Services Intelligence, known as ISI, is compromised."

• "The International Olympic Committee and the Chinese government acknowledged Wednesday that reporters covering the Olympics will be blocked from accessing Internet sites that Chinese authorities consider politically sensitive," the Washington Post reports. "The avowed censorship, although standard procedure for China's millions of Internet users, contradicted pledges made earlier by IOC and Chinese officials that the estimated 20,000 journalists and technicians due in Beijing next week for the Olympic Games would have unfettered Web access."

• "Thailand's Criminal Court convicted the wife of former Prime Minister Thaksin Shinawatra of tax evasion and sentenced her to three years in jail, a decision legal analysts said could be an indicator of how judges might rule in several cases against Mr. Thaksin, who is himself facing an array of criminal charges," the Wall Street Journal reports. "About 300 police secured the court as the verdict was read" today, "reflecting intense public interest in the cases filed against Mr. Thaksin and his family after the billionaire businessman was ousted as premier in a military coup in 2006."

• "Brazil, South America's largest economy, is finally poised to realize its long-anticipated potential as a global player, economists say, as the country rides its biggest economic expansion in three decades," the New York Times reports. "That growth is being felt in nearly all parts of the economy, creating a new class of super rich" and "an expanding middle class."

• "North Korea is heading toward its worst food crisis since the 1990s because of flooding, successive crop failures and worldwide inflation for staples such as rice and corn, the United Nations World Food Program said Wednesday," the Los Angeles Times reports. "The agency shied away from predicting another famine like the one that killed as many as 2 million people in the 1990s, but said its field staff was observing some of the same warning signs."

Campaigns: Ready For His Close-Up?

• Presumptive Republican nominee John McCain assails Democrat Barack Obama's alleged celebrity status in a new ad. Earlybird's Campaign News section has details.

Commentary: Senatorial 'Sins'

• Which packs more heat in Congress -- being gay or being corrupt? One commentator seeks to answer that question in Earlybird's Pundits & Editorials section.

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