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AIG may undergo executive-pay provision test, while some Senate Democrats join Republicans in opposition to budget reconciliation tactic. Plus: U.S. supports U.N. gay rights declaration.

AIG: Treasury May Apply Stimulus Executive-Pay Clause

• "White House officials are looking to use an executive-pay provision inserted into the recently passed stimulus law" to recoup $165 million paid to American International Group employees in bonuses, the Wall Street Journal reports. "The administration has seized on language that would allow the Treasury secretary to claw back payments if they were 'inconsistent with the purpose' of the Troubled Asset Relief Program or 'otherwise contrary to public interest.'"

• "Senate Finance Committee leaders Tuesday announced they were preparing legislation to impose steep excise taxes, perhaps 70 percent or more, on bonuses granted by firms like" AIG "and others receiving government aid," CongressDailyAM (subscription) reports. Meanwhile, "Ways and Means Chairman Charles Rangel," D-N.Y., "expressed some unease at going after executive bonuses through the tax code."


• The controversy "has triggered alarm at other financial firms, threatening federal efforts to draw private investors into economic recovery programs... to revive consumer lending as well as a separate plan that relies on private money to buy toxic assets from banks, sources familiar with the matter said," the Washington Post reports. "Treasury officials planned to outline that second program as early as this week."

• "If not distancing itself from Treasury Secretary Timothy Geithner, the White House is placing firmly on his shoulders responsibility for how the government handled the" bonuses, AP reports.

Congress: Proposed Budget Maneuver Triggers Bipartisan Opposition

• Eight Senate Democrats "who want to water down new climate change legislation have... joined with Republicans and signed a letter opposing any attempt to use fast-track budget rules" known as reconciliation "to prevent filibusters," Roll Call (subscription) reports. "Many of the same Democrats also oppose using those budget rules to prevent filibusters of health care legislation."


• "Remember" Louisiana Republican "David Vitter's omnibus amendment scrapping automatic pay raises in the Senate? The one that was shot down to avoid a House-Senate conference so the $410 billion package could pass the House? Well, Senate Majority Leader Harry Reid (D-Nev.) fulfilled his promise to pass a stand-alone pay freeze on a quick unanimous voice vote Tuesday night," Politico reports.

• "Moderate Senate Democrats are stepping up their efforts on the budget and other Democratic priorities in a push to form a unified block urging fiscal restraint," CongressDailyAM (subscription) reports "Fifteen or more Democrats will announce today that they are aligning in a working group focused on fiscal responsibility, said Sen. Evan Bayh, D-Ind., a key member of the group."

White House: Obama To Sign U.N. Gay Rights Declaration

• "The Obama administration will endorse a U.N. declaration calling for the worldwide decriminalization of homosexuality that then-President George W. Bush had refused to sign, The Associated Press has learned. U.S. officials said Tuesday they had notified the declaration's French sponsors that the administration wants to be added as a supporter."

• "It was a year ago today that Barack Obama, then a candidate for president fearing a divisive racial backlash over his pastor, took to the stage in Philadelphia and said it was time to have a new conversation about race," Politico reports. "But in the year since that speech... Obama hasn't taken part in the discussion of race in America in any sustained way."


• "They gathered by the hundreds, some who had spent the night in tents or curled up on lawn chairs on the hard asphalt of the Orange County Fairgrounds for a chance to see" Obama, the Los Angeles Times reports. "But under the celebratory mood lay a current of anxiety and anger about the country's condition that could color the president's reception on his first official trip to California."

Politics: Locke To Face Questions On China Ties

• "Commerce Secretary nominee Gary Locke... has performed legal work for companies doing business with Beijing and was forced to refund several political donations that he received in the 1990s from key figures in a Chinese influence-buying investigation. The former Washington state governor is expected to face questions about both issues during his confirmation hearing" today, "Senate aides and an Obama administration official familiar with the vetting told The Washington Times."

• "Sen. Arlen Specter," R-Pa., "said Tuesday that he will not run for reelection in 2010 as a Democrat, but might run as an Independent.... He said in an interview with The Hill that the role of the Republican Party in Washington is too vital for him to switch to the Democratic side."

• "Rep. Ellen Tauscher (D-Calif.) will be tapped for a top State Department post" as an undersecretary, "sources with knowledge of the pending nomination said," Roll Call (subscription) reports. "Tauscher's exit would create a vacancy atop the New Democrat Coalition, a bloc of pro-business moderates emerging as a force in the new Congress."

Economy: Fed Officials To Discuss Further Steps In Revitalizing Economy

• "Federal Reserve policy makers will likely determine today that the U.S. recession is still deepening, while clashing on what to do about it. Officials will debate how to provide further stimulus to the economy, from purchasing more mortgage bonds to buying Treasury securities. They'll also keep the benchmark interest rate as low as zero percent, according to all 71 forecasters in a Bloomberg News survey."

• "The U.S. Federal Reserve on Tuesday announced a two-year delay of new capital requirements for bank holding companies that otherwise would have gone into effect later this month," the Wall Street Journal (subscription) reports. "Separately, The Federal Deposit Insurance Corp. moved Tuesday to extend the program guaranteeing debt issued by banks through October, though firms will begin paying a fee for the government protection."

• "World share prices rose" today, "while European government debt fell with forecast-beating U.S. housing data prompting more optimism among investors after the last week's rally," Reuters reports. "The stress that has scrambled markets for so long remained on radars, though, as a rare positive U.S. housing figure had no impact on European credit markets, allowing indexes to widen."

National Security: U.S. May Expand Covert War In Pakistan

• "Obama and his national security advisers are considering expanding the American covert war in Pakistan far beyond the unruly tribal areas to strike at a different center of Taliban power in Baluchistan, where top Taliban leaders are orchestrating attacks into southern Afghanistan," the New York Times reports.

• "The Justice Department urged the U.S. Sentencing Commission Tuesday to alter how it proposes to implement cybercrime legislation that passed Congress last year to reflect key differences between economic crimes such as fraud and those involving information theft," CongressDailyAM (subscription) reports.

World: Army-Backed Leader Becomes Madagascar President

• "Madagascar's new president," 34-year old "Andry Rajoelina, celebrated and consolidated power" today "after being appointed by the military in a move that flouted the Indian Ocean island's constitution," Reuters reports. "The priorities for Africa's newest leader are anti-poverty programs demanded by locals, handling international concerns at his rise and controlling some dissent in the armed forces."

• "The season's most sensational political sideshow is gearing up in the southern Russian city of Sochi, where a series of national figures are bidding to become mayor leading up to the 2014 Winter Games," the New York Times reports.

Technology: Military Contractors Preparing To Cash In On Cyber-Security

• "The Defense Department banned YouTube from its networks, and built a military-friendly video-sharing site to take its place," Wired reports. "But in an odd twist, many military bases are now blocking that new site, TroopTube, as well."

• "The biggest U.S. military contractors are counting on winning billions of dollars in work to protect the federal government against electronic attacks," the Wall Street Journal reports. "Anticipating the demand, defense companies are bolstering training, buying smaller firms and hiring former top government officials. The move into the cyber-security field could offer new revenue streams for the contractors and help offset declines stemming from budget pressures on the Defense Department's traditional weapons systems."

• "The Obama administration says the Fourth Amendment prohibition against unreasonable searches and seizures does not apply to cell-site information mobile phone carriers retain on their customers," Wired reports.

Health Care: Drugmakers Worry Over Patents, FDA Deputy

• "The debate over how long biotechnology drugmakers should retain exclusive rights to their patents -- five, seven or as long as 12 years -- has returned to center stage, prompted by soaring health care costs and cries for reform," Roll Call (subscription) reports. "Getting it right, stakeholders say, will save patients' lives and cut costs; if done incorrectly, however, it could cripple investment in products that cost billions to develop."

• "Food, pharmaceutical and medical device groups have lauded" Obama's pick to head the Food and Drug Administration, "but his selection for second in command is giving the drug industry heartburn," CongressDailyAM (subscription) reports. "Industry insiders describe their colleagues as cautiously optimistic about FDA Administrator-nominee Margaret Hamburg, a former New York City health commissioner who works at a nuclear nonproliferation think tank, and nervous in varying degrees about Baltimore City Health Commissioner Joshua Sharfstein."

• "An Obama administration proposal to bill veterans' private insurance companies for treatment of combat-related injuries has prompted veterans groups to condemn the idea as unethical and powerful lawmakers on Capitol Hill to promise their opposition," the Washington Post reports.

Energy: Chu Wants Tariffs To Discourage Carbon-Intensive Imports

• "House and Senate leaders have long struggled with how to eliminate the embarrassing cloud of pollution hanging over the nearby Capitol Power Plant," Roll Call (subscription) reports. "But fixing the problem is expensive -- and politically difficult."

• "As the Obama administration outlines its energy plans, it is caught between oil companies, who are reminding the president of his campaign pledge, and environmental groups, who are demanding a reinstatement of the drilling ban that Congress lifted in September," the New York Times reports.

• "Energy Secretary Steven Chu on Tuesday advocated adjusting trade duties as a 'weapon' to protect U.S. manufacturing, just a day after one of China's top climate envoys warned of a trade war if developed countries impose tariffs on carbon-intensive imports," the Wall Street Journal reports.

Lobbying: 'Card Check' Fight Gears Up In Three States

• "Rep. Jeff Flake (R-Ariz.) on Tuesday filed yet another resolution aimed at triggering a House ethics probe of the PMA Group, the defense lobbying firm under criminal investigation for allegedly providing improper campaign contributions," Roll Call (subscription) reports. "Flake's resolution... asks the ethics committee to examine the relationship between fiscal 2009 earmarks for PMA clients and campaign contributions from PMA CEO Paul Magliochetti and his relatives."

• "The battle over a bill that would ease union organizing is zeroing in on lawmakers in three states -- Pennsylvania, Arkansas and Colorado," the Wall Street Journal reports. "Business and labor are pressuring three key senators who are up for re-election in 2010, sparing little expense as they ratchet up television and radio ads, and recruit well-connected lobbyists."

• "Alliant Techsystems, a defense company with a relatively low profile, is preparing for growth even as the Pentagon works to cut what it spends on weapons systems," The Hill reports. "The Minnesota-based company, known as ATK, has increased its political giving and reached out to a number of offices on Capitol Hill to raise its profile in Congress and the administration."

Transportation: Predicted Budget Shortfall Shocks House Committee

• "A yawning gap between domestic transportation needs and the revenue stream to pay for them appeared to overwhelm the House Budget Committee" on Tuesday "as outside experts drew a grim and controversial picture of the nation's crumbling infrastructure and the hundreds of billions it would cost to modernize it," CongressDailyPM (subscription) reports.

Commentary: A Forgotten Anniversary?

• While anger mounts in the AIG bonus debate, one commentator in Earlybird's Pundits & Editorials section remembers a certain war that started almost exactly six years ago.

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