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EARLYBIRD

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Stress tests show banks need more capital, but stocks surge. Plus: Supreme Court nominee could come this week, Hatch says.

Economy: Stocks Return To Black

• "About 10 of the 19 largest U.S. banks being stress tested will be instructed by regulators to raise more capital, according to a source familiar with official talks," Reuters reports.

• "Hope spread among investors Monday as they drove stocks higher, sending the broad Standard & Poor's 500-stock index into the black for the year so far," the Wall Street Journal (subscription) reports. "Instead of selling stocks on expectations that some banks will be ordered to raise capital as a result of government stress tests, investors bought stocks, notably bank stocks, on optimism that the economy is nearing a low and preparing to turn up."

 

• "Is this what a bottom looks like?" the New York Times asks, in a report from Sacramento, Calif., on the housing market. "Indications of progress are visible in other hard-hit areas, including Las Vegas, parts of Florida and the Inland Empire in southeastern California. Sales in Las Vegas in March, for example, rose 35 percent from last year."

• "U.S. airlines, which saw much of their high-fare business traffic evaporate this winter, may finally be coming out of their tailspin," USA Today reports. "Reports on passenger volume and revenue from several carriers for April indicate that the steep fare discounts airlines have offered to fill coach seats are partially offsetting a big loss in business- and first-class fares."

• "In a historic first, Uncle Sam has supplanted sales, property and income taxes as the biggest source of revenue for state and local governments," USA Today reports.

 

Congress: Obey Stops Money For Closing Guantanamo

• "House Appropriations Chairman David Obey dealt a blow to President Obama Monday by rejecting his request for funding in the FY09 supplemental spending bill to shut down the military's Guantanamo Bay, Cuba, detention center by early next year," CongressDailyAM (subscription) reports. "The White House requested $80 million in the FY09 war supplemental to begin moving 240 detainees out of Cuba, but Obey said Monday he stripped the funding from his bill because the administration has not presented a plan to close the facility."

• After speaking to Obama Monday, "Republican Sen. Orrin Hatch says he believes the White House will move swiftly on its Supreme Court nominee, perhaps making an announcement by the end of this week," Politico reports.

• "Senate Republicans yesterday took the first steps in preparing to challenge President Obama's eventual nominee for the Supreme Court, selecting as their point man for confirmation hearings a backbench Alabama conservative whose own 1986 nomination to the federal courts turned into a racially tinged firestorm," the Washington Post reports. "Sen. Jeff Sessions was named the ranking Republican on the Senate Judiciary Committee," but Sen. Charles Grassley will take over next year as part of a deal, CongressDailyPM (subscription) reports.

White House: Tax Crackdown Consequences Analyzed

• Obama "yesterday announced a major offensive against businesses and wealthy individuals who avoid U.S. taxes by parking cash overseas, a battle he said would be fought with new tax laws, new reporting requirements and an army of 800 new IRS agents," the Washington Post reports. "During an event at the White House, Obama said his proposal would raise $210 billion over the next decade and make good on his campaign pledge to eliminate tax advantages for companies that ship jobs abroad."

 

• "The Obama administration's plan to restrict or shut down several widely used tax loopholes takes away many -- but not all -- of the sophisticated tax moves commonly used in corporate America," the New York Times reports. "The most widely used tactic not covered by the plan is known as transfer pricing, which multinational corporations employ routinely to reduce the taxes they owe to the United States by keeping their profits offshore in low-tax or no-tax havens."

• "Foreign-based companies are livid over comments by top Republicans that President Obama's plans to tax overseas transactions will put U.S. companies at a disadvantage and even spark a wave of acquisition by foreign buyers," CongressDailyAM (subscription) reports. ""Setting up the foreign company as a bogeyman is very disturbing," said Nancy McLernon, president of the Organization for International Investment.

Politics: Powell Critical Of Cantor's Rhetoric

• "The Republican Party is in big trouble and needs to find a way to move back to the middle of the country, former Secretary of State Colin Powell said Monday," CongressDailyAM (subscription) reports. "He also said he hopes that emerging GOP leaders, such as" House Minority Whip Eric Cantor, "will not keep repeating mantras of the far right."

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• "Senator Arlen Specter's switch to the Democratic Party appears to be paying off with a poll on Monday showing him ahead in his 2010 re-election race in Pennsylvania," Reuters reports. "A Quinnipiac University poll found Specter would defeat a conservative Republican who is in the race, Pat Toomey, if the election were held today by 53 percent to 33 percent."

• "A prominent antipoverty organization that drew criticism from Republicans during last year's presidential race was charged by Nevada officials Monday with engaging in voter registration fraud," the New York Times reports. "The organization, the Association of Community Organizations for Reform Now, or Acorn, is accused of paying canvassers only if they registered at least 20 voters per shift and providing bonuses of $5 for registering more than 21."

National Security: Mullen Says Afghanistan Top Priority

• "Afghanistan is now the U.S. military's top priority for assigning troops, equipment and other resources, the nation's most senior military officer said for the first time yesterday," the Washington Post reports. "Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, designated the war in Afghanistan as the military's 'main effort' -- or most important combat mission -- while acknowledging that fighting 'isn't over' in Iraq, where 136,000 U.S. troops still serve."

• "The top arms control negotiator for the United States said on Monday that the government was willing to agree to count both nuclear warheads and their delivery vehicles when renegotiating the 1991 Strategic Arms Reduction Treaty, or Start -- addressing one of Russia's longstanding concerns," the New York Times reports. "In an interview with the Russian news service Interfax, the negotiator, Assistant Secretary of State Rose Gottemoeller, also said the United States was open to a Russian proposal to use radar based in Azerbaijan or Southern Russia, rather than Eastern Europe, for the proposed missile defense system."

• "Robert Murtha said he is not at liberty to discuss in detail what his company does, but for four years it has subsisted on defense contracts, according to records and interviews," the Washington Post reports. "Murtha said he does not advertise being the nephew of John Murtha and considers it 'unfortunate' that some will unfairly assume Murtech received its federal contracts because of his uncle's influence at the Pentagon."

World: Karzai To Run Again, Picks Warlord As VP

• "President Hamid Karzai registered as a candidate for Afghanistan's August presidential election on Monday and selected a powerful warlord and former top political leader as his new vice presidential running mate," AP reports. "So far no candidates who could challenge Karzai's hold on power have registered for the Aug. 20 election."

• "Taliban forces tightened their grip on Pakistan's Swat region Monday and continued resisting the military's efforts to dislodge them from neighboring Buner, bringing a fragile peace accord closer to collapse and the volatile northwest region nearer to full-fledged conflict," the Washington Post reports. "Yet even as the Taliban continued its rampage and rejected the government's latest concession to its demands -- the appointment of Islamic-law judges in Swat -- Pakistan's military leaders clung to hopes for a nonviolent solution, saying that security forces were 'still exercising restraint to honor the peace agreement.'"

Energy & Environment: Administration Pitches Ethanol

• "The Obama administration on Tuesday will step up efforts to increase the availability of ethanol at filling stations and to speed up subsidies to struggling biofuel producers," the Wall Street Journal reports. "But the trade-off is that the administration is also expected to propose a rule that could make certain biofuels look less climate-friendly."

• Obama "will summon Democrats on the House Energy and Commerce Committee to the White House on Tuesday to try to break the impasse on the climate change bill, one of his highest priorities," The Hill reports. "Committee Democrats have split on the particulars of the massive bill as various constituencies, from nuclear utilities to farm groups, try to tweak or substantively alter a draft sponsored by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.)."

• "The U.S. Chamber of Commerce is taking heat from Johnson & Johnson, Nike and other corporate members over its opposition to global warming legislation pending in the House," Politico reports. "In a letter to the Chamber, Johnson & Johnson has asked the Chamber to refrain from making comments on climate change unless they 'reflect the full range of views, especially those of Chamber members advocating for congressional action.'"

Health Care: Cost Estimates Slow Reform

• "Senate Finance Committee leaders want to have bipartisan legislation drafted by June that would remake the nation's health-care system," the Wall Street Journal reports. "But Democratic and Republican aides say that timetable is looking challenging, and they have yet to resolve a variety of contentious issues. A key reason is that it is taking longer than expected to figure out how much each change will cost, or save, the government. Lawmakers must rely on estimates from the Congressional Budget Office."

• "In an effort to defuse the most explosive issue in the debate over comprehensive health care legislation, a top Senate Democrat has proposed that any new government-run insurance program comply with all the rules and standards that apply to private insurance," the New York Times reports. "The proposal was made Monday by Senator Charles E. Schumer of New York, the third-ranking member of the Senate Democratic leadership, in a bid to address fears that a public program would drive private insurers from the market."

• "Congress may well enact a comprehensive health reform bill this year, but it does not appear that it will include a permanent new policy in the area that has driven health legislation for the better part of a decade: Medicare physician payments," The Hill reports. "Since 2002, physicians have engaged in an annual lobbying fight to prevent actual cuts in the fees they receive for treating Medicare patients. A statutory formula universally regarded as flawed calculates these cuts every year and Congress must step in to block them."

Technology: 'Card Check' Battle Moves To Twitter

• "An anonymous organization backing the card-check bill is using tags on Twitter to con opponents of the legislation into signing a petition supporting it," The Hill reports. "The group, operating in apparent association with a primitive website called TheTruthAboutEFCA.org, links to a pro-Employee Free Choice Act petition in its Twitter feed, run under the name EFCANow. But in doing so, the EFCANow Twitter feed broadened its reach well beyond the 2,274 followers it has on the popular micro-blogging site."

• "Today's G.I.s are lucky if they get radios when they go on patrol in Iraq," Wired reports. "But by 2030, their uniforms will be packed with nano-antenna arrays, capable of communicating with everything from drones to satellites. The soldiers will all be Hulk-strong, and Spiderman-agile, thanks to their nanotech-based exoskeletons. ... That's the thinking, at least, over at the Soldier Research Design and Engineering Center in Natick, MA."

• "Should the federal government provide online maps of agencies' spending under the economic stimulus law? How about providing online performance budgets or due-diligence reporting system?" Federal Computer Week asks. "A total of 2,629 information technology vendors and experts posted and ranked 476 ideas for tracking and analyzing economic stimulus spending in a weeklong online forum that ended May 3."

Lobbying: Retailers, Credit Companies Clash Over Fees

• "Retailers and credit card companies are facing off over interchange fees as merchants try to add language to a Senate bill that limits the ability of banks to raise interest rates," Roll Call (subscription) reports. "The Merchants Payments Coalition has long lobbied against the fees, which are about 2 percent of each purchase and are charged to merchants each time a customer uses a credit or debit card."

• "From car companies to big retailers, firms looking for shelter in the recession are swarming around a promising opportunity: a multibillion emergency spending bill for the wars in Iraq and Afghanistan," AP reports. "Whenever such a must-pass bill comes along, it becomes a magnet for interest groups and industries looking to use its momentum for their own purposes. Lawmakers get in on the act too, using the bill as a shortcut to accomplish their goals."

• "A cybersecurity adviser in the White House would provide the coordinated and consistent approach industry needs to create and develop technology for the federal government, officials at the technology industry group TechAmerica said today," Federal Computer Week reports. "The group supports provisions in the Information and Communication Enhancement bill introduced by Sen. Thomas Carper (D-Del.), including naming a White House cybersecurity adviser."

Commentary: Supreme Scrutiny

• In Earlybird's Pundits & Editorials section, commentators discuss Justice David Souter's retirement and two issues in front of SCOTUS right now: the reverse discrimination case and the Voting Rights Act case.

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