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Obama's post-vacation challenges daunting, and Vicki Kennedy suggested as Senate replacement. Plus: Japanese voters unseat ruling party.

White House: Obama Faces Tough Return From Vacation

• "Back from his first presidential vacation, a break truncated by the death and remembrance of Sen. Edward M. Kennedy and the nomination of the Federal Reserve chief to a new term," President Obama "settles back into the Oval Office well aware his approval ratings have fallen," AP reports. "He now must spend heavily from that shrinking fund of political capital -- with a highly uncertain outcome -- if his vision of a health care overhaul is to emerge from Congress ... Then there is Afghanistan and declining support nearly eight years after the U.S. invaded and drove the militant Islamic Taliban from power, forcing its al-Qaida allies -- including Osama bin Laden, it is believed -- to scatter to mountain hideouts across the border in Pakistan."

• "Many have criticized the White House for not circulating money fast enough to create jobs and boost the economy," The Hill reports. "But some are worried about just the opposite -- that it is spending without properly assessing where the dollars will have the most impact."


• "The Obama administration says it is prepared to handle a major natural disaster on par with Hurricane Katrina," The Hill reports. Obama's "White House and agencies are winning high marks from both Democrats and Republicans for efforts at both rebuilding and preparing for other storms, four years after Katrina destroyed the Gulf Coast and damaged the Bush administration's legacy."

Politics: Hatch Suggests Kennedy Widow As Replacement

• "Sen. Orrin Hatch (R-Utah) said on Sunday that Vicki Kennedy should be considered to replace her late husband," Sen. Edward Kennedy, "in the Senate," The Hill reports. "Hatch, one of Kennedy's closest friends in the Senate, said on CNN's State of the Union that Vicki Kennedy is well-qualified to serve, even if only until a January special election to fill the rest of the term ... Another close friend of Kennedy, Sen. Chris Dodd (D-Conn.), acknowledged that Vicki Kennedy has not expressed much interest in filling in for her husband, but said he would support her next step."

• "After an August recess marked by raucous town halls, troubling polling data and widespread anecdotal evidence of a volatile electorate, the small universe of political analysts who closely follow House races is predicting moderate to heavy Democratic losses in 2010," Politico reports. "Some of the most prominent and respected handicappers can now envision an election in which Democrats suffer double-digit losses in the House -- not enough to provide the 40 seats necessary to return the GOP to power but enough to put them within striking distance."


• "Fifty-six Republican members of the South Carolina state House met Saturday in Myrtle Beach, and not a single one voiced support for embattled Republican Gov. Mark Sanford, numerous sources inside the meeting told POLITICO," Politico reports. "But despite a growing number of calls for his impeachment, few legislators expect that Sanford will be pressured from office."

Economy: Government Starting To See Bailout Profit

• "Nearly a year after the federal rescue of the nation's biggest banks, taxpayers have begun seeing profits from the hundreds of billions of dollars in aid that many critics thought might never be seen again," the New York Times reports. "The profits, collected from eight of the biggest banks that have fully repaid their obligations to the government, come to about $4 billion, or the equivalent of about 15 percent annually, according to calculations compiled for The New York Times."

• "The nation's largest labor union and some allied Democrats are pushing a new tax that would hit big investment firms such as Goldman Sachs reaping billions of dollars in profits while the rest of the economy sputters," The Hill reports. "The AFL-CIO, one of the Democratic Party's most powerful allies, would like to assess a small tax -- about a tenth of a percent -- on every stock transaction. Small and medium-sized investors would hardly notice such a tax, but major trading firms, such as Goldman, which reported $3.44 billion in profits during the second quarter of 2009, may see this as a significant threat to their profits."

National Security: Cheney Lashes Out At Obama, Holder

• "Former Vice President Dick Cheney delivered another harsh rebuke of the Obama administration, calling the Justice Department's new investigation into whether CIA interrogators broke the law 'an outrageous political act' and questioning" Obama's "ability to lead the country," Politico reports. "'I wasn't a fan of his when he got elected, and my views haven't changed any,' Cheney said in an interview that aired on Fox News Sunday."


• "A top US general in Afghanistan has called for a revised military strategy, suggesting the current one is failing," BBC News reports. "In a strategic assessment sent to US Central Command, Gen Stanley McChrystal said that while the Afghan situation was serious, success was achievable. The report has yet not been published, but sources say Gen McChrystal sees protecting the Afghan people against the Taliban as the top priority."

• "Pakistani soldiers killed at least 45 Taliban militants in scattered gunbattles across the northwestern Swat Valley after a suicide bombing on a police station killed 17 cadets, the army said Monday," AP reports. "Hundreds of miles (kilometers) away, a southwestern border crossing with Afghanistan reopened after an administrative dispute culminated in an attack on a line of waiting NATO fuel tankers. One driver was killed and 16 trucks destroyed when the fuel caught fire."

World: Japan Democratic Party Unseats Ruling Party

• "Handed a sweeping mandate for change, the Democratic Party of Japan (DPJ) begins the formidable task of delivering on a laundry list of promises intended to lift the country after its worst recession since World War II," CNN reports. "Dissatisfied with the way Prime Minister Taro Aso was handling the crisis, the electorate booted from power his Liberal Democratic Party (LDP), which has governed the country for nearly half a century."

Health Care: Reform Could Benefit Retirees

• "Medicare beneficiaries would often have to pay higher premiums for prescription drug coverage, but many would see their total drug spending decline, so they would save money as a result of health legislation moving through the House, the Congressional Budget Office said in a recent report," the New York Times reports. "Premiums for drug coverage would rise an average of 5 percent in 2011, beyond the level expected under current law, and the increase would grow to 20 percent in 2019, the budget office said."

• "[F]actors suggest that President Obama still has stronger prospects for achieving his health policy goals than surface impressions of the Congressional recess indicate," the New York Times reports. "He lags behind his own timetable for action, but remains ahead of presidential predecessors who pursued the same objective."

• "Some House members who have previously backed a single-payer healthcare reform bill say they will not vote for a similar measure when it hits the floor this fall," The Hill reports. "Of the 12 serving House members who co-sponsored Rep. John Conyers's (D-Mich.) single-payer bill (H.R. 676) in the last Congress but not in this Congress, four have indicated they will vote no on a single-payer bill to be offered by Rep. Anthony Weiner (D-N.Y.). The four members are Reps. Joe Baca (D-Calif.), Eddie Bernice Johnson (D-Texas), David Scott (D-Ga.), and Charles Rangel (D-N.Y.)."

• "An organizer for liberal House Democrats says the bloc 'isn't bluffing' as it prepares to take a reputation-defining stand to protect a public insurance option in the health care overhaul," Roll Call (subscription) reports. "Darcy Burner, executive director of the American Progressive Caucus Policy Foundation, said the health care debate has rallied traditionally disparate Congressional liberals to hang together, while galvanizing support for their position from an array of left-leaning outside groups."

Energy & Environment: Groups Brace For Climate Fight

• The battle over the upcoming climate bill "could be just as nasty as the one over healthcare, and many of the groups opposing or supporting the energy proposals are gleaning lessons from the current fight," the Los Angeles Times reports. "Groups on both sides 'are not just watching healthcare closely, but calibrating how we go about doing this based on what we see happening out there,' said Matt Bennett, vice president for public affairs at Third Way, a centrist Democratic think tank engaged in both the healthcare and climate fights."

Lobbying: Stimulus Reporting Lags

• Despite a presidential order to do so, few federal officials' contacts with lobbyists "have been reported even though lobbyists say they are busier than ever with the multibillion-dollar stimulus," AP reports. "Since the $787 billion American Recovery and Reinvestment Act passed in February, federal agencies have reported 197 contacts with lobbyists about stimulus grants."

• "Organized labor is betting big in Virginia and New Jersey, where two critical off-year gubernatorial races are taking place in November," Politico reports. "In New Jersey, where Democratic Gov. Jon Corzine trails Republican Chris Christie in the polls, the AFL-CIO earlier this month unveiled a web site slamming Christie for promoting an 'economic agenda threatens the middle class.'"

Transportation: States Look To Rest Stops For Relief

• "[O]fficials in Virginia, one of a number of financially strapped states closing rest areas, want to privatize the sites in order to maintain an important public convenience -- and maybe even make money," the Los Angeles Times reports. "[C]hanging the law, said Ben Jarratt, a Burger King franchisee in northern Virginia, would definitely hurt existing businesses that set up shop near interstate exits 'on the good faith that there would not be commercialization directly on the highway.'"

Commentary: Advise And Dissent

• In Earlybird's Pundits & Editorials section, President Obama is given some free advice on how to save health care reform -- including one suggestion that he write his own bill in September.

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