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Obama's PAYGO proposal allows more borrowing for health care, and the Supreme Court lifts a stay on Chrysler's bankruptcy deal. Plus: Deeds wins big in Virginia gubernatorial primary.

White House: Obama's Budget Rules Permit Borrowing For Health Care

• "President Barack Obama on Tuesday proposed budget rules that would allow Congress to borrow tens of billions of dollars and put the nation deeper in debt to jump-start the administration's emerging health care overhaul," AP reports. "The 'pay-as-you-go' budget formula plan... would carve out about $2.5 trillion worth of exemptions for Obama's priorities over the next decade."

• "The Obama administration is pulling back from some of its most ambitious ideas for overhauling the financial system, after determining that the consolidation of power under fewer federal agencies would face grave opposition by lawmakers and regulators, sources familiar with the discussions said," the Washington Post reports. "Although the unveiling of the plan is a week away, several central elements have already been pummeled in public by lawmakers, wary of the concentration of authority in few hands, and in private by some economists and financial executives consulted by senior officials."


• "The Obama administration marked with little fanfare a major milestone in its bank rescue effort -- its decision on Tuesday to let 10 big banks repay federal aid that had sustained them through the worst of the crisis -- as policy makers and industry executives focused on the challenges still before them," the New York Times reports.

Health Care: Kennedy's Health Plan Includes Long-Term Care Provision

• "Americans would be able to buy long-term care insurance from the government for $65 a month under a provision tucked into sweeping health care legislation that senators will begin considering next week," AP reports. "The 651-page bill, released Tuesday by Sen. Edward M. Kennedy, D-Mass., would revamp the way health insurance works. Insurance companies would face a slew of new government rules, dealing with everything from guaranteed coverage for people with health problems to possible limitations on profits."

• "House Democratic leaders gave members their first glimpse of their version of" Obama's "healthcare overhaul on Tuesday, with liberals leaving the meeting happy and centrist Democrats walking away skeptical," The Hill reports. "The outline put forth lacked many of the details that will decide the fate of the overhaul -- notably, how the proposal would be paid for. But it made good on the commitment Obama and Democratic leaders made to include a government-run 'public option.'"


• "A broad consensus on the contours of legislation to remake the nation's health care system appeared to be developing among Democratic leaders on Tuesday as three House committee chairmen outlined a bill generally similar to one being written in the Senate," the New York Times reports.

• "Senate Democrats, who by their silence largely allowed Republicans to frame the debate over White House plans to close the detention facility at Guantanamo Bay, Cuba, have turned to" Majority Whip Richard Durbin, D-Ill., "to make sure the same thing doesn't happen with the high-stakes debate about health care," CongressDailyAM (subscription) reports.

Congress: House Oversight Panel Eyes Regulators In Merrill Lynch Deal

• "Congress is turning up the heat on banking regulators for their role in Bank of America's purchase of Merrill Lynch," Forbes reports. "The House Oversight and Government Reform Committee said" Tuesday it has "subpoenaed the Federal Reserve for e-mails, notes of conversations and other documents related to what transpired behind the scenes last fall and winter as Bank of America navigated the Merrill transaction."

• The Senate "rejected an alternative tobacco regulation proposal from North Carolina's senators Tuesday, setting up a final vote on the underlying bill as early as today," CongressDailyAM reports. The proposal by Sens. Richard Burr (R) and Kay Hagan (D) "would have created a new agency inside HHS to regulate tobacco and would have banned print advertising for cigarettes entirely."


Politics: Deeds Dominates In Virginia Primary

• "R. Creigh Deeds, a longtime state legislator from rural Bath County, won a stunning come-from-behind victory in the Democratic primary for Virginia governor" Tuesday, the Washington Post reports. "Deeds beat Brian Moran and Terry McAuliffe in every region of the state, including vote-rich Northern Virginia, despite a pro-gun stance and relatively conservative positions that are out of line with many of the area's voters."

• "House Republicans have come up with a novel way to rid themselves of the Democrats' 'party of no' label: Say yes sometimes," Politico reports. "Last week, 24 House Republicans broke with their leaders to support legislation granting federal employees a month of paid maternity leave. Last month, 105 House Republicans voted for a bill imposing tougher regulations on credit card companies."

• An early spring meeting between billionaire donor Tom Golisano and Malcolm A. Smith, then majority leader of the New York state Senate, "led to the dramatic collapse Monday of the Democrats' grip on the Senate majority as a frustrated Mr. Golisano secretly planned with Republicans to persuade two Democrats to join them in ousting Mr. Smith," the New York Times reports.

Economy: Supreme Court Lets Chrysler Deal Go Through

• "The U.S. Supreme Court on Tuesday cleared the way for Chrysler LLC to exit bankruptcy court, lifting a stay on its proposed sale to a group including Italy's Fiat SpA," the Wall Street Journal (subscription) reports. "The high court's move marks a victory for the Obama administration and its ambitious plan to remake the American auto industry by pushing both Chrysler and General Motors Corp. through quick and painful restructurings under Chapter 11 bankruptcy."

• "Oil prices soared above $71 a barrel Wednesday to reach a 2009 high, as investors poured money into crude markets to protect themselves against the inflation risks posed by a weakening U.S. dollar," AP reports. "Oil, which typically trades inversely to the dollar, has more than doubled in price in three months as traders also cheered news showing the worst of a severe U.S. recession is likely over."

• "There are two basic truths about the enormous deficits that the federal government will run in the coming years," the New York Times reports. "The first is that President Obama's agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying. The second is that Mr. Obama does not have a realistic plan for eliminating the deficit, despite what his advisers have suggested."

World: Australia's Rise In Swine Flu May Signal Pandemic

• "A sharp increase in swine flu cases in Australia may mean the infection has become a pandemic, the World Health Organization says," BBC reports. "For that to happen, officials would have to verify that the disease had become established outside North America, where the crisis began. More than 1,200 people have contracted the virus in Australia -- none fatally."

• "The Iraqi government is pressing ahead with plans to hold a national referendum on the Iraqi-American security agreement -- a measure likely to lose if put to a popular vote with the outcome that American troops could be forced to leave as early as next summer, nearly a year and half ahead of schedule," the New York Times reports.

• "U.S. Mideast envoy George Mitchell, who is in the Middle East to try and kick-start the peace process, will meet with Palestinian President Mahmoud Abbas" this morning "in the West Bank city of Ramallah, the seat of the Palestinian Authority," CNN reports.

• "Thousands of Iranians poured into the streets of the capital Monday to participate in election rallies both for and against" Iranian President Mahmoud Ahmadinejad. "The campaign has made visible the divisions in Iran, on key issues facing the country and the social differences of its political factions. There are no reliable polls in Iran, but both sides predict a close race," NPR reports.

National Security: Gates Confident Can Shoot Down A North Korean Missile

• "Defense Secretary Robert Gates is expressing confidence that the United States can shoot down any North Korean missile fired toward America," AP reports. "Gates told U.S. lawmakers at a hearing Tuesday that the U.S. would have a 'high probability of being able to defend ourselves' if the North fired a long-range missile."

• "The Obama administration will transfer as many as 17 Chinese Muslims from the U.S. detention center at Guantanamo Bay to Palau, a Pacific island nation that recognizes Taiwan sovereignty," Bloomberg News reports. "Palau, a former U.S.-administered territory about a third the size of New York City, is located about 15,000 kilometers (9,322 miles) from Cuba."

Technology: 'Fairness Tax' Bars New Fees On Cell Phones

• "Cities, counties and states do not see anything fair about the 'Cell Tax Fairness Act of 2009,' which would bar them from imposing new fees on mobile phone service for five years," CongressDailyAM (subscription) reports. "But the legislation, introduced by Rep. Zoe Lofgren, D-Calif., has considerable support, both from the wireless industry and 120 co-sponsors."

• "The board charged with oversight of stimulus spending is working with the Environmental Protection Agency to deploy a software package that agencies and recipients of stimulus funds can use to report spending data to, officials with the Recovery Accountability and Transparency Board said," Nextgov reports.

• "The House has approved legislation that would establish a committee to coordinate international science and technology cooperation across federal agencies and another bill that seeks to coordinate federal math and science education activities," Federal Computer Week reports. "The International Science and Technology Cooperation Act would create the committee under the National Science and Technology Council."

Transportation: 'Cash For Clunkers' Passes House

• "The House passed a plan to boost auto sales by providing vouchers of up to $4,500 for consumers who turn in their gas-guzzling cars and trucks for more fuel-efficient vehicles," AP reports. "The House bill, which passed by 298 votes to 119, is aimed at stimulating car sales during a bleak period for the auto industry and increasing the nation's fleet of cars that get more miles to the gallon."

• "Ford Motor Co. has shunned the kind of U.S. government bailout afforded to General Motors Corp. and Chrysler LLC. But that doesn't mean that the Dearborn, Mich., auto maker is going it completely alone," the Wall Street Journal (subscription) reports. "From governments around the world, Ford is trying to secure hundreds of millions in direct loans and loan guarantees to aid its credit arm and comply with environmental regulations in North and South America, Europe and Australia."

• "Rep. Barney Frank (D-Mass.) said he doesn't think his intervention on behalf of a General Motors center in his district will lead other lawmakers to do the same thing," The Hill reports. "The intervention has drawn criticism from those who question whether other lawmakers will ask for favorable treatment for GM entities in their states given the government's pending plan to take a 60 percent ownership stake in the company after it emerges from a managed bankruptcy proceeding."

Energy & Environment: House GOP Pushes Nuclear Power

• "Badly outnumbered and months behind in the debate on energy and climate change, House Republicans plan to introduce an energy bill" today "as an alternative to the Democratic plan barreling toward a House vote this month," the New York Times reports. "The Republican proposal, drafted by a group led by Representative Mike Pence of Indiana, leans heavily on nuclear power, setting a goal of building 100 reactors over the next 20 years."

• "Texas elected officials Tuesday railed against federal efforts to curb global warming, claiming it would throttle the state's economy -- one of the few that generated job growth last year," the Wall Street Journal reports. "State comptroller Susan Combs said that if passed, a landmark climate change bill winding its way through Congress could cost the state 164,000 jobs and shave some $25 billion per year, or 2%, off the state's total economic output."

• "A Senate panel voted on Tuesday to open up a huge new swath of the Gulf of Mexico to oil and gas drilling at a moment Democratic leaders are working to curb greenhouse gas emissions from tailpipes and other sources," The Hill reports. "Supporters heralded the move by the Senate Energy and Natural Resources Committee to open up the eastern Gulf that is now blocked to developers as a step toward a comprehensive plan that embraces all forms of energy and would reduce dependence on foreign oil."

Commentary: Reform Efforts In Spotlight

• Commentators in Earlybird's Pundits & Editorials section back tobacco regulation and permanently funded federal student loans, while individual health insurance mandates face both support and criticism.

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