FINANCE
Castle Looking For Middle Ground On House Mortgage Overhaul Legislation
Rep. Michael Castle, R-Del., thought he had the perfect idea to make it easier for borrowers to restructure their adjustable-rate loans so they could stay in their homes.
He sponsored legislation that would remove legal liability from the loan servicer who readjusts an at-risk mortgage -- under certain guidelines -- that would make the monthly payments affordable for the borrower, while at the same time keep a revenue stream for investors who bought portions of the loan in the secondary market. No one would benefit if the loan were to go into foreclosure, Castle theorized.
"It's a win-win situation," he said.
But as Castle soon discovered, the congressional debate over the best route to immediately assist the more than 2 million subprime mortgages that are scheduled to reset at a higher interest rate in the next few years has Balkanized.
It lingers even as the Senate will hail its passage as early as today of legislation providing targeted tax breaks and money for cities and states to purchase and rehabilitate foreclosed properties to place families back in them.
The issue has come down to whether to use the carrot or the stick to refashion at-risk mortgages. Neither side is winning, while foreclosure rates remain near record highs.
The Bush administration argues that its voluntary effort to encourage lenders to restructure loans -- dubbed "Hope Now" and refashioned as "Project Lifeline" -- is starting to pay off, with slightly more than 1 million homeowners receiving workouts since July. About 50 percent of those participating in the program have had their loans modified.
Democrats and consumer groups contend the effort is insufficient and too many families are falling through the cracks, with an estimated 240,000 foreclosures taking place in March. Senate Banking Chairman Christopher Dodd has complained the Bush-led effort has restructured repayment plans for twice as many borrowers as opposed to modifying the loans to lower principal or interest rates.
"Hope Now does not have the resources or capacity to deal with the sheer size of the problem that has millions of Americans in financial dire straits," Dodd said.
But Democratic proposals have been stymied. The banking lobby last week led opposition to a Senate bill by Majority Whip Durbin, which would have allowed a bankruptcy judge to lower the principal of a primary mortgage entering into foreclosure.
Advocates said it would provide an incentive for lenders to work out loans before they go into default. But banks argued the language would increase interest rates up to 2 percent because investors would not be assured of their rate of return. Lenders won the battle and Durbin's language was tabled on a 58-36 vote.
Castle tried to tack to middle ground, placing the loan servicer in charge of making the best decision for all involved. While he has found cooperation from some servicers and lenders, the investment community has raised objections, contending his bill is unnecessary and will have servicers picking winners and losers among the loan-portfolio holders, effectively shutting out some voices.
"In an effort to try and clear the way for servicers to do more, I think it winds up doing more harm than good," said George Miller, executive director of the American Securitization Forum. "And potentially it's doing significant long-time harm to the extent that investors draw the implication that when times become stressful, government will step in and change the terms of the deal."
The issue will play out as the House Financial Services Committee will hold Wednesday and Thursday hearings on its housing rescue package. Financial Services Chairman Barney Frank has spoken positively about the Castle bill and said it might be included in the more robust House measure, which could also feature the Durbin language.
Committee staff worked to tailor the Castle bill more narrowly, limiting it to workout plans initiated before 2011 and specifically to owner-occupied properties. The workout plan would have to remain in place for five years and could not result in additional points and fees.
But the changes have failed to sway many in the investment community that own a piece of any mortgage-backed portfolio, a large swath that includes mutual funds, hedge funds, pension funds and others that are monitoring the bill.
They worry the legislation is too broad in its leeway to the servicer to act in the best interest of the investor pool. For example, some investors in a mortgage pool could be receiving both principal and interest payment, while others just receive interest payments and some only principal payments.
A change in interest rates would reward some, while penalizing others without any legal recourse.
"What you are effectively saying to investors is: 'Sorry, the servicer can go ahead and do this modification, and if it can demonstrate some very amorphous benchmark that this is in the best interest of the pool, then you can't sue them,'" said one financial services lobbyist who opposes the bill. "That has a chilling effect, particularly if you are an investor sitting on a sideline."
Miller argues that servicers already have a duty to engage in loss mitigation as part of the mortgages they oversee, so the legislation is unnecessary. He also argues that it will set a bad precedent.
"We think long term that it is damaging and not desirable to the marketplace," Miller said. "When market conditions become unfavorable, then privately negotiated contracts will be abridged. We think that would be a very dangerous and undesirable precedent to establish."
Castle, who picked up the support of Financial Services Capital Markets Subcommittee Chairman Paul Kanjorski, D-Pa., as a main co-sponsor, said he is willing to work with investors to address their concerns, just as he reached out to servicers such as Wells Fargo and Bank of America to assuage any problems they had. The Mortgage Bankers Association, which fought the Durbin measure, does not oppose the Castle bill.
But in the end, Castle said investors across the board will be the loser if the status remains the same.
"What we are trying to do is to remove the possibility of class-action suits, or lawsuits that prevents these kinds of reclassification," Castle said. "I don't think it's to their detriment because ultimately it will save them from the foreclosure process, which would be a greater loss."
By Bill Swindell
TRADE
Codel's Influence Is Mainly In Perception
CARTAGENA, Colombia -- Nine House lawmakers led by Trade Representative Schwab met a duo of union officials opposed to the U.S.-Colombia Free Trade Agreement at a swank hotel Saturday night, as tourists sipped Coco Locos outside at the bar.
It would have been a good opportunity to try to convince a fence-sitter on the deal like Rep. Phil English, R-Pa., who hails from steel country where labor's presence is strong, to oppose the deal. English said later that he remains undecided, but the union representatives did little to advance their cause.
"They seem to slide too easily into anti-capitalist bromides and rants against the Uribe administration," he said, referring to the government of Colombian President Alvaro Uribe. "They also showed their hand when they made it very clear to [Rep.] Jean Schmidt [R-Ohio] and I separately that they really didn't have positive suggestions on how to do the FTA, apart from the fact that any FTA from Uribe, they would oppose."
Still, English has a tough vote ahead of him. As a pro-labor Ways and Means Republican, English is always in a unique position when it comes to trade votes. He said the economics of the deal make sense in this case, but that the human rights situation was still a matter of some concern.
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"There are a couple of issues that are unique to Colombia that you don't find with some of the other Andean communities, particularly with Colombia's strategic importance on one hand and its history of great violence, including some anti-labor violence," English said. "Now that by itself doesn't necessarily decide what we do in a case like this, but for people in my district, I think they want us on balance to be encouraging our trading partners to honor labor rights and they would prefer that we be trading with countries where other workers have an opportunity to participate in labor if they wish to."
English was one of the few members on the trip who were undecided.
Another was Rep. Bob Etheridge, D-N.C., who voted for last year's U.S-Peru trade pact and would appear to be a prime target of White House lobbying. While he said the Uribe government has made some progress, he is still undecided over the labor rights issue.
"I wanted to come down and see for myself because eventually it will come up for a vote at some point," he said. "They have excellent leadership, I think in President Uribe, and that's a credit of course to the Colombian people; they elected him. ... Still, I think more needs to be done in terms of providing the infrastructure to be able to investigate and prosecute those who are guilty of the murders that have taken place in a host of areas. And the cooperation with our agents on the ground has been, I think, quite good, but a lot more needs to be done."
One member the visit did not sway was Rep. Hank Johnson, D-Ga., a soft-spoken freshman from the suburbs east of Atlanta with a keen interest in ending the Iraq war and in social justice.
He voted against the Peru pact in his first major trade vote last year, and this deal poses even more problems, he said, particularly with regard to the treatment of Afro-Colombian workers and farmers, who have been displaced by paramilitary organizations.
"I was opposed to the trade agreement before the trip because I really don't trust the Bush administration to negotiate a fair trade agreement," Johnson said. "My decision to oppose the free trade agreement remains, but I have seen so many great things going on. ... There's a great story to tell, but I'm concerned about how Colombia will develop. And I think it should be development with all of the people being able to participate in the development, not just the large corporations from America, which will have a place to export jobs and sell goods to."
He said he was especially moved by the anti-FTA union officials the lawmakers met with in Cartagena. "I thought there was a conscious effort to show us the good side, but we were exposed also to the two labor unionists who came in and told us point blank why they were opposed to this agreement, and they talked about the violence union activists were exposed to every day and I thought that they were there at the risk of their own lives," Johnson said.
Schwab said the Colombia pact marked the first time USTR has led a congressional delegation, and the weekend's trip marked the second to that country.
"At the end of the day the best measure will be how many of these members decide they want to support the free trade agreement. But that's a little simplistic, because the purpose of these trips is to give members the opportunity to really have first hand exposure to what's going on in Colombia ... and so what they take away is important in terms of not just making up their own minds, but in terms of what they communicate to their colleagues."
Rep. Rodney Frelinghuysen, R-N.J., is representative of Schwab's goal. He said he was committed before the trip to voting for the trade agreement. Now, he said, he was so sure of its merits that he is going to start lobbying his colleagues.
"I plan on doing a bit of proselytizing," he said.
By Peter Cohn
IMMIGRATION
CBO Score Of Shuler Bill Erects Pay/Go Barrier In House
CBO has placed a 10-year, $23 billion price tag on an immigration enforcement bill sponsored by Rep. Heath Shuler, D-N.C., that Republicans want to force to the House floor.
That figure, at a minimum, sets up a major pay/go barrier for the bill's supporters.
CBO said the bill would cause federal revenues to decrease by more than $17 billion over the same time period because employers would stop paying taxes for their undocumented employees, according to an April 4 letter from CBO Director Peter Orszag to Judiciary Chairman John Conyers and ranking member Lamar Smith.
In a single year, CBO also said the bill would cost private-sector employers $136 million and state and local governments $68 million to comply with the bill's employment verification requirements.
Under the bill, employers would have to verify the work eligibility of all employees within four years using the currently voluntary system run by the Homeland Security Department. Many Democrats and advocacy groups say the system is too fraught with flaws to be expanded to the nation's entire workforce.
Democrats are hoping the CBO cost figures and a series of new immigration hearings will tamp down the growing support in their party for a Republican-led discharge petition on Shuler's bill. The petition now has 185 signatures, short of the 218 needed to force a floor vote, but supporters say conservative Democrats are wavering.
So far, 39 Democrats who have co-sponsored Shuler's bill have not signed the discharge petition. Republicans plan to point to their inconsistency as a lack of commitment to immigration enforcement. Ten Democrats, including Shuler, have signed it.
An aide for Rep. Paul Kanjorski, D-Pa., who was the most recent Democrat to sign the petition, was unapologetic about his decision to buck party leaders. "He supports the bill. There's nothing more to it," the aide said.
A Democratic leadership aide said House leaders want to emphasize the normal legislative process by holding a series of immigration hearings across several committees to explore a broader immigration bill. "The Republicans' discharge petition strategy is a political maneuver, not a policy strategy," the aide said.
Michael Steel, spokesman for Minority Leader Boehner, said the CBO cost figures are a "smokescreen" from House leaders who want to stop a bill with bipartisan support. "Surely, somewhere in the federal budget, which totals over 3 trillion dollars, the Democrats can find enough money to adequately secure the border," he said.
Supporters of the discharge petition say CBO's numbers are out of whack. "We have questions about the numbers and figures," said a Shuler spokesman. Shuler has requested a conference call with CBO analysts to discuss their assumptions.
For Shuler, a major complaint about the CBO analysis is that it does not counterbalance implementation costs with the costs of illegal immigration. In Shuler's state of North Carolina, for example, at least $1 billion annually goes to education and health care for illegal immigrants, the aide said.
Several aides said "outside groups" have been asked to produce alternative cost estimates. In the past, the Heritage Foundation and the Center for Immigration Studies both have produced reports on the costs of illegal immigration.
CBO's cost estimate also could be on the low end, particularly because the bill mandates an expensive phone option for employers to verify workers' eligibility.
In 2005, GAO said a mandatory dial-up electronic employment verification system would cost employers and the government $11 billion annually.
That report also said much of the cost would be borne by employers. "The business community has serious concerns with the costs associated with mandating this experimental program, particularly with all the well-documented problems and issues associated with it," said U.S. Chamber of Commerce Director of Immigration Policy Angelo Amador.
By Fawn Johnson
TRADE
Pelosi, Rangel Say Bush Colombia Move Jeopardizes Deal House Speaker Pelosi and House Ways and Means Chairman Charles Rangel Monday issued a sweeping condemnation of President Bush's move to force a vote on the U.S.-Colombia Free Trade Agreement, casting doubt on its outcome.
"President Bush's statement today regarding his unprecedented decision to send a free trade agreement to Congress without following established protocols of congressional consultation is counterproductive, jeopardizing prospects for its passage," Pelosi and Rangel said. "Under present circumstances, we cannot support the U.S.-Colombia Free Trade Agreement."
On Monday, Bush signed a letter to implement the trade pact, which congressional leaders will receive today. Once they do, it will start the clock running under "fast-track" trade promotion authority rules, which means Congress must vote within 90 legislative days. Senate Majority Leader Reid and Senate Finance Chairman Max Baucus expressed similar disdain for the move. The House reaction is of the most immediate importance, since under the Constitution all measures impacting revenues must begin in that chamber.
In the House, mistrust of trade agreements is strong and growing among Democrats, backed up by statements on the stump by the Democratic presidential candidates and labor unions that are unbending in their opposition.
Adding to the economic uncertainties surrounding trade pacts, critics say the Colombia deal in particular is unwarranted because of continued violence and mistreatment of workers in that country.
"Until Colombia has proven that it has a sustainable and effective system to protect the rights of working people in Colombia against physical harm, Congress should not consider this trade agreement," said House Education and Labor Chairman George Miller.
In a conference call, House Minority Whip Blunt and House Ways and Means ranking member Jim McCrery said the government of President Alvaro Uribe was making progress in stemming violence against trade unionists.
They said the deal was signed more than 500 days ago, was the product of intense negotiations that led to first-time breakthroughs on labor and environmental standards, and would be a "win-win" for workers and companies in both countries.
It would also shore up relations with a Democratic ally in a hostile environment, with Venezuelan President Hugo Chavez making threatening noises next door.
"It's highly unlikely that anything will come up in the next decade that will have more impact on our relationship with Latin America" than the Colombia FTA, said Blunt. He said Bush had to force Congress' hand or "it literally could have been one of those things that quietly laid on someone's desk and received little attention."
They noted that since Colombia exports about 92 percent of its products to the United States duty-free under the Andean trade preferences program, it's only fair that Colombia lower its tariffs to U.S. goods and services, which average 14 percent.
"It should be a no-brainer in terms of the economic benefits," McCrery said.
"While U.S. exporters wait, Colombian producers have duty-free access to the United States. It's a one-way street," added Senate Finance ranking member Charles Grassley. "There's no good reason for continued delay on this trade agreement." Senate Minority Leader McConnell and Minority Whip Kyl issued a statement Monday supporting the deal, saying, "In these economic times, we should be expanding overseas markets for American-made products and American-grown goods."
Pelosi and Rangel said Congress would continue to support Colombia and the Uribe government with foreign assistance, but that "sustained progress on the ground remains a prerequisite for our support" of the free-trade agreement.
Colombian officials countered that the trade pact was vital to their country's continued development.
"This is the moment when we need our allies side by side to keep building a new Colombia. FTA is a tool to enhance democratic security, recover peace and boost prosperity for all," the Colombian government said in a statement.
By Peter Cohn
HEALTH
Consumer Groups Push For Broader Food Safety Provisions
Key consumer groups in the food safety debate are pushing for more encompassing federal recall authority for food than previously included in the House's comprehensive bill as Energy and Commerce Committee leadership prepares to reintroduce the measure.
In a letter to Colorado Democratic Rep. Diana DeGette, a vice chairwoman of the House Energy and Commerce Committee, the consumer groups Center for Science in the Public Interest and Consumer Federation of America, highlighted their backing for DeGette's stricter recall measure as well as her bill to require a tracking system for food products that would aid in recalls.
"CSPI supports effective recall and traceback legislation and encourages the committee to include your legislation in the food safety bill it will produce this year," CSPI Executive Director Michael Jacobson and Food Safety Director Caroline Smith DeWaal wrote DeGette on Friday. CFA followed with a letter of support Monday.
DeGette's staff has been working with Energy and Commerce Chairman John Dingell's office, answering questions regarding her provisions and encouraging their inclusion in the final bill, an aide said.
DeGette's approach to recall authority would allow FDA to require a recall under broader circumstances and permits FDA to hand down civil penalties for more types of food safety violations than the original version of the bill Dingell is tweaking, according to David Plunkett, a senior staff attorney at CSPI.
While Dingell's bill would apply mandatory recall authority under threat of serious adverse health consequences or death, DeGette's measure would provide more flexibility, Plunkett said, giving FDA recall power when threats of injury and illness exist.
Dingell's bill also does not specify recall authority would apply to food companies that exclude or misidentify ingredients on their label, so-called misbranding, as well as adulterated food that has been contaminated either intentionally or in nature.
CSPI is pushing the DeGette language because it said the civil penalties for violating the bill will apply to more types of product violations, Plunkett said. For most violations, FDA has only the option to either seek an injunction, seize the product or pursue criminal penalties.
"What they don't have is the ability to fine someone for just a minor violation and it's important to have that because you don't have instances where it's appropriate all the time to use those nuclear options," Plunkett said.
The consumer groups and DeGette should know soon whether Dingell will heed their advice. The committee plans to mark up the legislation at the end of this month.
By Anna Edney
AGRICULTURE
Broadband Access Wanted In Farm Bill
Ten rural organizations Monday called on farm bill negotiators to include rural development initiatives, particularly ones to encourage rural access to broadband service, in the final version of the legislation.
The groups stressed that broadband development can greatly benefit economic development in rural areas and help keep residents from being forced to leave home to find work.
"Broadband is erasing distance," said Phillip Brown, national policy director for Connected Nation.
For ranchers, access would create a worldwide consumer market for cattle, which can be sold through live Internet auctions, said Jess Peterson, director of government relations for the U.S. Cattlemen's Association.
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Teachers would be able to earn degrees through online universities, added Yvette Sanchez, executive director for the National Migrant Seasonal and Head Start Association.
On another topic, National Farmers Union President Tom Buis said that, with proper funding, renewable energy jobs can be created and maintained in rural areas. Investment in renewable energy by locals would create even more economic benefit, he added.
Those groups that expressed a preference for either the House or Senate bills preferred the Senate version, which includes over $400 million in mandatory funding for expanding broadband access. It would also provide funding for libraries to gain broadband deployment.
The farm bill has stalled over debates about offsets for $10 billion that negotiators want to add to it.
Buis said he hopes the bill will include a "variety of programs to address rural development that are very worthy." But he acknowledged that legislation often doesn't come together until a deadline is imposed, such as the upcoming April 18 expiration of the current farm bill extension.
By Joshua Schubert
POLITICS
New Jersey GOP Goes Into Senate Battle Without Big Name
The most competitive part of New Jersey's Senate election might be in the June 3 Democratic primary, as Monday's filing deadline passed without a frontline Republican joining the race.
By the 4 p.m. deadline, Sen. Frank Lautenberg and Rep. Robert Andrews were the only Democrats on an unofficial list of candidates. Morristown Mayor Donald Cresitello was also expected to run and could still be added to the list when state elections officials complete their work on the filings.
With or without Cresitello, a Lautenberg-Andrews showdown would dominate the primary coverage and would leave the winner in a strong position to win in November.
Republicans learned over the weekend that their top choice for the nomination, wealthy biotech company founder John Crowley, opted not to seek the seat. State Sen. Joe Pennachio and former food company executive Andy Unanue filed for the Republican primary. Professor Murray Sabrin was not on the unofficial list, but he issued a statement earlier Monday saying he had filed for the GOP race.
The Democratic race is shaping up to look somewhat like the 2006 Democratic Senate primary in Connecticut, in which upstart Ned Lamont turned into a referendum on Sen. Joseph Lieberman. Lamont won the primary but Lieberman won re-election by running as an independent.
Andrews has seized on polling showing many New Jersey voters concerned about Lautenberg's age. If he wins another term, Lautenberg would be 90 years old when it ended.
Andrews has to give up his House seat to run for the Senate, but it still might stay in the family. His wife, Camille, filed to run. Also seeking the Democratic nomination are attorney David Evans and teacher Mahdi Ibn-Ziyad. On the Republican side, only Dale Glading made the early cut.
By Erin McPike
HOMELAND SECURITY
Democrats Seek Info On Homeland Security Use Of Satellites
Key House Homeland Security Committee Democrats demanded Monday that the Homeland Security Department provide Congress with more information on how a new office that coordinates the use of space satellites will legally operate and protect the privacy and rights of U.S. citizens.
In a letter to Homeland Security Secretary Chertoff, the lawmakers said they will prevent the office from opening until their concerns are addressed.
Bush administration officials finalized a charter last month outlining how the National Applications Office will operate within the department.
The office will help government agencies access satellites for nontraditional uses such as border security and emergency response. Administration officials do not rule out using the office to assist state and local law enforcement agencies.
Congress prohibited Homeland Security Department funds from being used to begin operations until the department certifies the office complies with all laws, and until the certification is reviewed by the GAO.
Although the charter is complete, the department has yet to submit to Congress the legal underpinnings and standard operating procedures for the office, according to the letter from House Homeland Security Chairman Bennie Thompson, along with Homeland Security Intelligence Subcommittee Chairwoman Jane Harman, D-Calif., and Homeland Security Management Subcommittee Chairman Chris Carney, D-Pa.
"The legal framework and SOPs should be completed as a seamless package so privacy and civil liberties are approached holistically and not haphazardly," they wrote. "Should you proceed with the NAO without addressing our concerns, we will take appropriate steps to discontinue it."
The department expects to send Congress key additional documents for the NAO this week, a Homeland Security spokeswoman said. They will include certification that NAO complies with all laws, a privacy impact assessment, a civil rights impact assessment, and the standard operating procedures, she said. The package of documents can then be reviewed by GAO.
She noted that the department's inspector general wrote in an unclassified report last week that the NAO is making good progress on privacy protections. The full report remains classified.
"In addition, we have been clear that the NAO will not be used for law enforcement purposes until such time that all legal, privacy and civil rights and civil liberties issues have been considered carefully and resolved, and Congress has been briefed," the spokeswoman added. "The department continues to take preparatory steps so that we can stand up the NAO once the congressional requirements have been met."
Among those steps is posting job openings for the office, a move that particularly irked Thompson, Harman and Carney.
"Instead of bringing on staff and touting the NAO's promise to potential customers, job number one needs to be the completion of a detailed legal framework and SOPs applicable to all NAO domains -- including the law enforcement domain -- without delay," they wrote.
"Only after we have had an opportunity to review these documents and to bring the privacy and civil liberties community into the process should NAO commence hiring and other development efforts," they added.
A committee aide said that, even if the requested documents are submitted, the committee must undertake a careful review to ensure that privacy, civil rights and civil liberties are protected.
"But even beyond those specific documents, DHS has not clarified appropriate and inappropriate uses to its potential customers," the aide said. "Whether you're a sheriff or an emergency manager, you should know exactly what the NAO can and can't provide and what is or is not an appropriate use of domestic intelligence."
By Chris Strohm
JUDICIARY
Groups Press Justice Dept. On Software To Battle Child Porn
Members of Congress and child safety advocates who have expressed concerns about the fate of a popular computer program used by law enforcement around the country to locate individuals who illegally swap child pornography over peer-to-peer networks may soon have some detailed answers from the Justice Department.
The department plans to incorporate the technology known as "Peer Precision" into its existing Regional Information Sharing System, a Bureau of Justice Assistance-run effort that serves over 7,000 agencies nationwide and complies with federal rules on criminal intelligence databases.
The P2P program, which gets federal and state funds, was created by Flint Waters, the chief of Wyoming's Internet Crimes Against Children task force.
Since October 2005, investigators have used Waters' program to identify 500,000 computers housing movies and images of child rape and abuse, wrote Grier Weeks, the founder of the National Association to Protect Children.
Officials who have tracked those leads said that although they find local victims in roughly one out of three arrests, limited resources only allow them to pursue 2 percent of known offenders.
When grilled about the future of Waters' program by Rep. C.A. (Dutch) Ruppersberger, D-Md., at last week's House Commerce-Justice-Science Appropriations Subcommittee hearing, Attorney General Mukasey could not respond, but promised to follow up.
"We want to make sure the Wyoming program stays in place until the new program is up and running," Ruppersberger said. Since then, the department has heard from other Capitol Hill offices that want details.
Mukasey is slated to testify Thursday before the Senate Commerce-Justice-Science Appropriations Subcommittee and a Democratic aide said the question could arise again if the department does not provide an adequate answer beforehand.
The Senate Judiciary Crime Subcommittee, which plans to hold a child exploitation hearing April 16, could be yet another forum for discussing the issue.
Sen. Joseph Biden, D-Del., who chairs the Crime Subcommittee, introduced a bill last summer to improve Justice Department coordination of child exploitation cases and bolster the more than 50 Internet task forces around the country. The House already approved a companion bill sponsored by Rep. Debbie Wasserman Schultz, D-Fla.
Wasserman Schultz said Monday she was confident that, given the role the Wyoming ICAC plays in identifying sex offenders, Justice "will reconsider and continue to fund this vital program."
The agency "understands that the fight against child pornography and exploitation needs to integrate the cutting edge work that the Wyoming ICAC has been doing to combat these disturbed criminals," she said.
According to Weeks, officials from Office of Juvenile Justice and Delinquency Prevention have indicated they intend to cease funding two employees who manage Waters' program in a matter of months.
But a Justice Department spokesman said Friday that Waters' effort will continue without interruption until it is made part of the RISS network.
The Senate aide said some stakeholders are concerned the change is "being made for the wrong reason" -- because Waters has publicly spoken about the growing child exploitation scourge and deficiencies in local, state and national attempts to address it. "We think Flint's done a great job and built a great program. If DOJ can make a solid case that moving it could create efficiencies, that's fine with us," the staffer said. "Before they make long-term commitments, they should make sure they do it effectively without shutting down the nerve center."
By Andrew Noyes
OUTLOOK
People
FREE BIRD. Paul Gay, a staffer to Sen. Robert Byrd, D-W.Va., has taken a position as an associate with Strategic Marketing Innovations, a government relations firm. Gay was deputy legislative director and floor staff member for Byrd, and he worked on issues such as climate change, telecommunications, agriculture, space and transportation. Gay, who has spent more than 14 years on Capitol Hill, was deputy chief of staff to Rep. Brian Baird, D-Wash. He's also been legislative director to Rep. Rick Boucher, D-Va.
HIGHER and HIGHER. Windstream Corp. has just signed up Clint Highfill to be director of federal legislative affairs and legislative counsel. Highfill previously worked as director of government affairs for USTelecom. Before that, Highfill spent five years working as a legislative assistant for former Senate Majority Leader Tom Daschle, D-S.D. Windstream is a voice and broadband company.
NEW TAXES. Chris Javens is departing from the Senate Finance Committee. He's off to Capitol Tax Partners, a consulting firm focused on tax issues. Javens will be a partner at the firm. He spent the past three years as tax counsel for Republicans at the Finance Committee. The Columbia Law School graduate has also worked as senior tax counsel at pharmaceutical giant Wyeth.
STAFF HELP. Rep. Hilda Solis, D-Calif., has named a scheduler and staff assistant. The new staff assistant, Claudia Montelongo, worked as an administrative assistant at the Justice Department's Community Relations Service. Scheduler Laura de la Torre, who is also handling "new media" and arts issues for Solis, is a graduate of New York University. She hails from Whittier, Calif., which is best-known, perhaps, as the boyhood home of Richard Nixon.
By Gregg Sangillo. Have a tip for CongressDailyAM's People column? Call 202-739-8400 or send an e-mail to people@nationaljournal.com.
OFF TO THE RACES
Playing To Win
Should Republicans want to hold onto the presidency in 2008?
It sounds like a stupid question and maybe it is. But one thing that has been true over the last couple of decades is that both parties have enormously strong self-destructive tendencies. If left to their own devices, they will in fact do themselves in. To give one party the White House and majorities in the House and Senate is like a ticking time bomb; it's only a matter of time before it explodes and the party loses, and loses big.
While conceding that the last year has supplied more unexpected twists and turns than any presidential election year since 1968, it is nearly certain Democrats will retain majorities in the Senate and House after this election. My hunch is that Democrats will pick up three to six Senate seats, bringing them from a 51-49 majority to somewhere from 54-46 to 57-43.
In the House, The Cook Political Report is being pretty conservative, with a current forecast of a Democratic gain of five to 10 seats, but the chance of bigger gains is much greater than the chance of smaller gains.
At this point in time, Sen. Barack Obama of Illinois has a 95 percent chance of winning the Democratic nomination. The window for Sen. Hillary Rodham Clinton of New York to win enough pledged delegates to persuade superdelegates to vote for her is pretty much closed.
She can't win the remaining contests by sufficient margins to appreciably close the gap at this point and superdelegates are breaking more toward Obama than Clinton. Short of a Rev. Jeremiah Wright-level embarrassment visiting Obama each week for four or five consecutive weeks, this thing is over.
So what about the general election? Tracking polling by the Gallup Organization of around 4,400 registered voters conducted Tuesday through Friday, Wednesday through Saturday and Thursday through Sunday, all show presumed GOP nominee Sen. John McCain, R-Ariz., and Obama tied at 45 percent. McCain had a 2-point lead over Clinton in all three sets of tracks, matching the error margin.
This race is more likely to be determined by either events that have yet to occur or circumstances that have not developed than anything specific we can point to today.
But it is also true that a Democrat needs to be ahead in the popular vote, measured by national polls, by at least a point or two in order for that to dependably translate into an Electoral College majority.
Simply put, the Republican vote is much more efficiently allocated around the country. Aside from Nebraska and Maine -- states that apportion their electoral votes in part by who wins congressional districts -- once a state is won by a single vote, there is no bonus for winning big. They count in the national polls like all other votes, but have no impact on the outcome of the election.
Democrats typically "waste" a lot of votes in California, Illinois and New York, winning by wide margins and running up huge vote totals. The only state where Republicans waste a large number of votes is Texas. In the states where Republicans win higher percentages, they tend to be lesser populated states that are over-represented in the Electoral College.
With millions of wasted Democratic votes, they have to run up the score a bit in the popular vote to be sure that they have won enough states to cover the 270 electoral votes needed to keep the election from being thrown into the House.
But this brings us back to the original point. Should Republicans want to win? If Democrats win the presidency and hold onto the House and Senate, how long will it be before they self-destruct?
Democrats had majorities in the House and Senate when Bill Clinton was elected president in 1992, and it took the party only two years to lose majorities in both. For Republicans, they already had control of the House and Senate when George W. Bush won in 2000. It took six years before they self-destructed, losing majorities in both chambers.
Lord Acton is famous for his line that "power corrupts and absolute power corrupts absolutely." It is debatable how much is corruption, how much is arrogance and over-reaching, and how much is sloth or growing out of touch, but the result is the same. Whether it is Democrats or Republicans, conservatives or liberals, too much unchecked power is an inevitable problem.
A different way of approaching it is that every decade or two, a party has to destroy itself and be reborn. Like forests need fire to begin the regeneration process, from time to time, parties need the dead wood cleared out and space made for new growth to emerge. But to rise like a phoenix, you have to get down to ashes first.
As painful as 2006 was for the GOP, the party did not appear to hit rock bottom. A good case can be made that the Republican Party would be a stronger better party five years from now if it reconstituted itself now.
An argument can be made that McCain is such a iconoclastic, non-traditional Republican that he could represent and bring change to the party. He could perhaps decrease its emphasis on cultural and religious issues, a move many see as important. Whether he could lead that rebirth without the GOP actually having to lose the White House is an interesting question.
All of this is fine to say from the cheap seats. But in the real world, competitors always play to win. Republicans and Democrats should fight this election as if there were no tomorrow. That's the way it should be.
By Charlie Cook
HILL BRIEFS Waxman Challenges Fed
On Bear Stearns Manager
The Federal Reserve's decision last month to have BlackRock manage $30 billion in assets from the nearly bankrupt Bear Stearns drew fire Monday from House Oversight and Government Reform Chairman Henry Waxman.
To save the investment bank from bankruptcy, the Fed agreed to take the assets off the books of Bear Stearns to facilitate its acquisition by JPMorgan Chase for $10 per share. The Fed hired BlackRock to manage the securities, mostly backed by residential mortgages.
Waxman sent a letter Monday to Timothy Geithner, president of the Federal Reserve Bank of New York, in which he questioned "the award of this potentially lucrative position to BlackRock without competition."
Last week, Federal Reserve Chairman Bernanke said he was "reasonably confident that we will be able to recover the full amount if we dispose of these assets on a measured basis, rather than sell them all at once."
Waxman, however, said that "if BlackRock is not successful, the taxpayers stand to lose billions of dollars. In effect, it appears that BlackRock is serving as a government contractor providing complex financial services to the Federal Reserve."
Democrats Increase Pressure
On Overseas Contract Fraud
Legislation to close a loophole that exempts overseas contracts from federal oversight was introduced Monday by Democrats on the House Oversight and Government Reform Committee, which announced an April 15 hearing on the issue.
"No contractor should be given a free pass to defraud taxpayers, at home or abroad," said Rep. Peter Welch, D-Vt., co-sponsor of the bill along with Oversight and Government Reform Chairman Henry Waxman and Rep. Edolphus Towns, D-N.Y., who chairs the panel's Government Management Subcommittee.
The bill would require all contractors to report fraud and over-billing to inspectors general and contracting officers.
Waxman's committee is investigating how the loophole exempting overseas projects from oversight was slipped into plans to crack down on fraud by government contractors. More than $100 billion has been spent to help rebuild Iraq and Afghanistan over the last five years, but in that time, the Justice Department has uncovered at least $14 million in contract bribes in those two nations.
Welch also said Monday that the Bush administration has delayed providing documents explaining the origins of the loophole. Documents from the OMB, the departments of Justice and Defense, the General Services Administration and NASA were due Friday.
"If this loophole was a bureaucratic mistake as some in the administration have claimed, then our requests should be easy to meet," Welch said. "This should be simple. Someone in the administration made this change and it should be easy to explain why. A delay only raises more questions."
Dodd, Former Quarterback
Push For Newborn Testing
Former Buffalo Bills quarterback Jim Kelly is scheduled to make a pitch on Capitol Hill today for legislation on the House floor requiring all states to screen newborns for the full complement of disorders that can be detected in early childhood.
Kelly, whose 8-year-old son died in 2005 of a nervous system disorder called Krabbe disease, planned to join Sen. Christopher Dodd, D-Conn., chairman of the Senate Health, Education, Labor and Pensions Children and Families Subcommittee, to urge the House to pass Dodd's newborn-screening bill. A vote on the legislation is scheduled for today.
Not all states screen infants for all disorders such as Krabbe, and Dodd's bill would require such testing to be uniform across the country.
Group Hires Lott, Breaux
To Lobby On Patent Bill
The Coalition for Patent Fairness, which has championed the congressional effort to overhaul the U.S. patent system, has hired former Sens. Trent Lott, R-Miss., and John Breaux, D-La., to help lobby on behalf of the group, whose members include Cisco Systems, News Corp., Time Warner and other technology and media companies. Senate Majority Leader Reid has indicated he wants to bring a bill sponsored by Senate Judiciary Chairman Patrick Leahy to the floor this month. The House approved a companion measure last September.
The powerful pair announced the formation of the Breaux-Lott Leadership Group earlier this year after Lott retired from his 34-year career on Capitol Hill. Breaux left the Senate in late 2004.
"It's a smart move to put your best players on the field when you are at the 10-yard line, looking to score," a former Republican Senate leadership aide said Monday.
Vitter's Car Hits Sign
As Senator Flees Media
A driver of a car carrying Sen. David Vitter, R-La., slammed into a sign outside the Gonzales, La., police station Monday as the senator was attempting to evade reporters awaiting his departure from a town hall meeting, the Gonzales Weekly Citizen reported.
The reporters were attempting to question Vitter about the prospect that he will be called as a witness in the trial of a woman accused of running a Washington prostitution ring.
As the car left the scene, it hit a No Parking sign that was encased in an orange safety cone and cemented into the driveway, the newspaper said. The car then sped away with visible but light damage.
POLITICAL ROUNDUP Jake Ford's Remarks Draw
Criticism From Family
Former Reps. Harold Ford, Sr. and Harold Ford, Jr. over the weekend rejected racially tinged comments that were made by family members Jake and Isaac Ford, the Memphis Commercial Appeal reported.
Isaac and Jake Ford are brothers of Ford, Jr.
Jake Ford is seeking to unseat freshman Rep. Steve Cohen, D-Tenn. He filed to run as an independent and ran unsuccessfully in 2006.
Jake Ford criticized Cohen, who is white, last week and contended the state deserves at least one black member of Congress.
Ford Jr., called his brother's remarks an insult. Ford, Sr. and Ford, Jr. urged Jake Ford to publicly apologize.
Jake Ford rejected the calls to apologize and said the comments were incomplete and not meant to be racially disparaging.
"My brother and I were not saying we have to have a black representative in this district. We said in the state of Tennessee, the western district was created as a predominantly black district so we would have black representation in Congress," Jake Ford said.
On Saturday, Ford, Sr. said that even if the remarks were taken out of context, "that type of message going out is not good for the city or the Ninth District."
Begich To Make Decision
On Senate Race By May
Anchorage Mayor Mark Begich, a Democrat, says he is not a candidate for the seat that Sen. Ted Stevens, R-Alaska, has held since 1968 -- not yet anyway, the Associated Press reported.
During a Friday visit to Juneau, Begich sounded like Stevens' opponent.
Begich formed an exploratory committee for the seat in February.
By month's end, Begich said, he will make a decision.
"Sometimes politicians stand up, look behind and no one's behind them," he said. "I want to make sure with what I'm saying and hearing, there are voters ready to move down that path."
The deadline for filing is June 1.
DCCC To Stay Out Of Primary For
Reynolds' Seat, Van Hollen Says
Democratic Congressional Campaign Committee Chairman Chris Van Hollen of Maryland said Monday he is staying out of his party's primary fight for the seat held by outgoing Rep. Thomas Reynolds, R-N.Y., the Associated Press reported.
The committee would like to avoid an internal battle as they look to win the Republican district. Reynolds, a once-powerful member of the House GOP majority, announced last month he will not seek re-election.
Van Hollen said Monday that "we've got a number of good candidates up in that district."
He specifically mentioned Jon Powers, an Iraq war veteran, saying he "obviously got off to a very early start," racking up five county party endorsements.
Young Raises More Money,
Legal Spending Continues
Rep. Don Young, R-Alaska, raised more funds for his re-election campaign during the first quarter of this year than in the last quarter of 2007.
The lawmaker continued to pay legal fees to defend himself against a federal probe of corruption allegations, the Associated Press reported.
According to a spokesman, Young's re-election campaign raised more than $164,000 in contributions between January and March. In the last quarter of 2007, just under $44,000 was raised.
Young's report to be filed soon with the FEC will show that he spent about $213,000 in legal fees in the first quarter of this year, the spokesman said.
Almost $94,000 was billed in January for legal work performed in December. Fees charged between January and March added up to about $119,000.
Lawsuit Filed To Remove
Vigil-Giron From Dem Ballot
A lawsuit was filed Friday claiming former New Mexico Secretary of State Rebecca Vigil-Giron should not appear on the Democratic ballot in the race to replace Rep. Heather Wilson, R-N.M., the Santa Fe New Mexican reported.
The suit was filed by former state Rep. Harriet Ruiz, attorney Whitney Buchanan and Albuquerque resident Rosemary Sanchez.
John Wertheim, the attorney for those suing, said that the research for the suit was done by volunteers for a primary opponent of Vigil-Giron, former state health secretary Michelle Lujan-Grisham.
The suit contends that Vigil-Giron turned in more than 600 invalid petition signatures, leaving her 100 names short of the number required.
Vigil-Giron did not garner enough support at the party's convention and needed to get on the ballot by gathering a sufficient number of petition signatures.
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