FINANCE
McCain Housing Plan Provides Boost
To Proposals To Allow FHA Refinancing
Democratic sponsors of a plan to allow the Federal Housing Administration to refinance up to 2 million at-risk subprime borrowers picked up an unexpected ally Thursday as they battle the Bush administration over their proposal: presidential candidate and Sen. John McCain, R-Ariz.
In an economic speech to small-business owners in Brooklyn, N.Y., McCain unveiled a plan to allow the FHA to refinance new loan guarantees for borrowers who face an interest-rate reset on their mortgage that will make them unaffordable.
Under his plan, a loan servicer would first have to write down the mortgage to near its current fair-market value and retire the debt. The borrower then could be eligible for an FHA-insured loan at a 30-year fixed rate. It would apply to only subprime borrowers who took out loans after 2005 and live in the home.
The McCain plan is not as expansive as proposals by Senate Banking Chairman Christopher Dodd or House Financial Services Chairman Barney Frank that aim to help up to 2 million at-risk borrowers and could cost up to $20 billion. But it represents a break from the Bush administration with apparently broader eligibility, applying it to borrowers who are delinquent, in arrears, facing a reset or otherwise show they cannot afford their current loan.
"We will combine the power of government and the private sector to find immediate solutions for deserving American homeowners," McCain said.
In contrast, the administration announced Wednesday it would expand its FHA Secure program to serve an additional 100,000 homeowners. Such help would apply to borrowers with adjustable-rate mortgages who were late on three consecutive monthly payments within the last year; previously they were required to make their monthly payments until their teaser rates reset. Overall, 500,000 homeowners are expected to receive workouts with the changes.
"He is trying to split the difference between us and the Bush administration. He is not necessarily splitting the uprights here," grumbled one House Democratic aide.
McCain's plan does give the Democrats' plan more momentum, especially after the Senate voted 84-12 Thursday to pass its housing-stimulus package. Though not briefed on details, Dodd said he was pleased McCain was coming around to his way of thinking and noted that other Republicans, such as Sen. Judd Gregg of New Hampshire, have been receptive.
"No one knows where the bottom is in this problem. Until they have some sense of where the bottom is, they're going to be unwilling to unleash capital," Dodd said of the need for FHA to enter the marketplace.
Dodd and Frank have picked up confidence in recent weeks that their plans stand a good chance of passage, feeling that both Federal Reserve Chairman Bernanke and Treasury Secretary Paulson will ultimately accept their final agreement.
Frank intends to mark up his bill April 23, according to an aide.
The two Democrats have a slight difference in eligibility standards: Frank would require a borrower to have at least a 40 percent debt-to-income ratio, while Dodd does not.
Ellen Harnick of the Center for Responsible Lending said a 40-percent ratio was too burdensome because servicers already have other criteria to filter out those in need of restructuring, and such a level would leave little remaining income for other household expenses.
By Bill Swindell
JUDICIARY
Leahy Frustrated With Patent Progress
Senate Judiciary Chairman Patrick Leahy Thursday fired back at colleagues who remain critical of his legislation to overhaul the patent system and have impeded the bill's progress to the floor.
"I have said repeatedly that the time for patent reform is now. Unfortunately, some have yet to fully grasp this fact," he said.
Leahy, who introduced the bill nearly a year ago, said he was disappointed "that just a handful of words" have stalled the measure. A number of those words are contained in a provision that would change how damages are awarded in infringement lawsuits.
Judiciary ranking member Arlen Specter, whose staff has been negotiating with Leahy's for months, said Wednesday that the parties thought they had reached an agreement "but the language continued to shift, so we do not yet have a deal."
"I am hopeful that we can reach an agreement, but more work has to be done to get it right," he said in a statement that he echoed on the Senate floor Thursday morning.
Pennsylvania Bio, the trade group that represents the biotechnology sector in Specter's home state, issued a statement thanking the senator for "holding firm in his resolve to get this important legislation right." A poorly constructed patent bill could "undermine the competitive vitality of American bioscience companies," the group said.
The national Biotechnology Industry Organization Thursday said it supported Specter's action, saying the senator "has stood firm to ensure that the Senate will consider a consensus bill that truly improves the patent system and does not undermine a structure that has been the driving force behind American technological leadership."
"We have been working on these reforms for years," Leahy said, calling the situation "a missed opportunity." Senate Majority Leader Reid wants to get the bill to the floor before Memorial Day, according to a Reid aide.
One Senate Democratic aide said his boss was "likely to vote against the patent bill no matter what" because the remedies proposed for handling damages and post-grant review of patents "aren't what's needed to fix the problem."
Senators from most every state, particularly those from the West Coast and Midwest, represent constituents whose businesses would be substantially harmed if the bill became law, the aide said.
Steve Elmendorf, a spokesman for the Coalition for Patent Fairness, said he was cautiously optimistic the bill could still reach the floor in the coming weeks.
"There are urgent problems with the patent system and there seem to be many senators who remain committed to crafting a bill that will solve them" he said.
The coalition represents Cisco Systems, News Corp., Time Warner and other technology and media companies that have championed the bill since its introduction.
Even though hopes of getting a vote next week have been dashed, "there is a lot of time between now and when they leave [for recess] and I haven't heard anyone close the door on this," Elmendorf said.
Gary Griswold, chief intellectual property counsel for 3M and member of the Coalition for 21st Century Patent Reform, said he believes a consensus could emerge. His group, which is backed by Eli Lilly, General Electric and Motorola, has been critical of some portions of the bill.
The Innovation Alliance, whose high-tech members oppose the bill, questioned why so-called compromise language has yet to be shared with most Senate offices and stakeholders. "We fear a bill with serious implications for many sectors of the U.S. economy is now turning into a political football," spokesman Eric Thomas said. "Transparency and true negotiation are long overdue."
Former Patent and Trademark Office official Steve Pinkos, who is an alliance adviser, said even if Leahy and Specter strike a deal, "that doesn't mean the other 98 senators will nod in agreement."
Senators want a genuine compromise bill and that does not have to happen immediately, he said. "Maybe it's time to take a time-out. Sometimes it takes a lot of courage to step back and say, 'let's work some more on this.'"
By Andrew Noyes
FINANCE
Democratic Leaders Continue To Shape Another Stimulus
House and Senate Democratic leaders are readying a second economic stimulus package -- to be voted on before Memorial Day -- that is likely to include extended unemployment benefits, additional funds for state and local construction projects, a temporary boost in federal Medicaid dollars and a food stamp increase.
The proposal also might include a second set of tax rebates "for low-income and middle-income families, additional help and assistance," said Senate Health, Education, Labor and Pensions Chairman Edward Kennedy, who met with Senate leaders and union presidents Thursday to discuss the package.
Union heads met with House and Senate leaders in separate meetings about the stimulus package. Unions represented in the meetings included the AFL-CIO, the Change to Win coalition, United Steelworkers, the Communications Workers of America, and the Service Employees International Union.
House and Senate leaders have not yet determined whether the second stimulus package will move as a stand-alone measure or be attached to a must-pass bill such as a supplemental defense spending bill. "We've been given assurance. ... We'll have an opportunity to do it and vote on it in a relatively short period of time," Kennedy said.
House leaders appear to be leaning toward a stand-alone bill, and Senate aides suggested that as the second stimulus package grows, it might be more difficult to attach it to an unrelated bill. President Bush said Thursday that he would veto an Iraq supplemental bill that exceeded the $108 billion he has requested for the war.
Other lawmakers, including Senate Majority Leader Reid and Sen. Debbie Stabenow, D-Mich., have said they would attach an unemployment extension to any vehicle they could find.
The candidates for inclusion in the second stimulus all were discussed and then scrapped as part of the first stimulus bill that passed earlier this year.
Senate Democratic Conference Vice Chairman Charles Schumer of New York said unemployment benefits are the highest priority for Democrats in the next package.
"If you want to get the economy moving, every economist, liberal, conservative, everyone says unemployment insurance gets the money in there the quickest," he said.
In both the House and the Senate, it is unclear whether a second stimulus package would go through the normal committee process or move directly to the floor. The package being discussed Thursday spans several committees in both bodies.
Aides pointed out that many of the provisions being considered now -- i.e., unemployment and food stamps -- already were approved by Senate committees during the first stimulus debate.
By Fawn Johnson
BUDGET
OMB To Agencies: Don't Bother Submitting FY10 Requests
The Bush administration will leave much for the next president, but its legacy will not include a FY10 budget, according to a recent memorandum OMB Director Nussle sent to agency heads.
Instead of readying a full federal budget, Nussle said OMB "will prepare a budget database that includes a current services baseline," or an estimate based on current spending that does not include proposed increases and new policy proposals.
In what some budget analysts called a surprising departure from past practices during the transition from one administration to another, Nussle also said agencies this year need not submit budget requests and supporting documents in September as they normally do.
Instead, agencies should estimate their baseline spending and submit budget requests only after a new administration or transition team arrives, Nussle said in his April 7 memo.
The decision means neither President Bush nor federal agencies will have to bother offering proposals that most experts agree are likely to be ignored by the next White House and Congress.
"We would love to have President Bush's budget policies carried on," OMB Deputy Director Steve McMillin said Thursday. "But as a practical matter, it's the next president who will be negotiating the 2010 budget with the Congress, and they'll probably need to own it."
Before Congress changed the law in 1990 to have incoming presidents, not their predecessors, submit budgets in transition years, lame-duck presidents generally sent a budget to Capitol Hill just before departing, McMillan said. Even President George H.W. Bush, hoping to remain in office, followed standard procedures and prepared a budget in late 1992.
McMillin said OMB's approach is similar to the one taken in 2000 by then-OMB Director Jack Lew under President Clinton.
But Nussle's approach was criticized by several budget analysts who argued it could cause agencies to delay consideration of FY10 budget plans until well into 2009. "It's pretty outrageous," said one veteran of the congressional budget process.
"It might create a kind of crisis environment in 2009, because they won't have done the planning that is needed," observed Cindy Williams, a former assistant director of CBO who studies the defense budget at the Massachusetts Institute of Technology's Security Studies Program.
Other budget experts said OMB's collection of baseline spending information would be sufficient for the transition. "I don't think it's a very big deal . . . as long as you have very good baseline information," said Alice Rivlin, who served as OMB Director under Clinton.
Former CBO Director Robert Reischauer said OMB's plan would not cause problems if agencies work on routine parts of their budget proposals before the transition and, as Nussle's memo suggests, work with the incoming president's transition team before January.
"The issue is you don't want to face the new president and his incoming staff the day after the inauguration with, in a sense, a blank sheet," Reischauer said.
By Dan Friedman, with Peter Cohn contributing
AGRICULTURE
Senate Farm Bill Conferees To Make Counteroffer Today
Senate farm bill conferees hope to make a counteroffer to the House today, according to Senate Agriculture Chairman Tom Harkin.
After emerging from a meeting of most of the 11 Senate conferees, Harkin said Thursday that the conferees plan to meet again in the early afternoon today and finalize the offer. Harkin said he would call a formal meeting of the conference committee for Monday or Tuesday.
On Thursday, House Agriculture Chairman Collin Peterson offered the Senate a farm bill package that would include a $5.5 billion budget increase to be paid for by an increase in government income from stricter credit-card reporting requirements.
Deputy Agriculture Secretary Chuck Conner said Thursday that the Bush administration would not agree to that offset, but House members and staff have said they believe the White House might accept it.
The House offer did not include a provision in the Senate-passed farm bill for a $4 billion farm disaster aid program or $2.5 billion in agricultural tax cuts.
Peterson said he is not personally opposed to the disaster aid program, but he does not believe it should be funded with money subject to pay-go rules.
In the past, disaster programs have been funded on an emergency basis. Peterson said he believes the tax package should be left out, but Senate Finance ranking member Charles Grassley said he considers it a necessary part of the bill.
After the Senate conferees' meeting, Harkin, Senate Agriculture ranking member Saxby Chambliss and Senate Budget Chairman Kent Conrad said the counteroffer would be for a $10 billion increase in the farm bill budget over 10 years and would include an offset proposal to cover it.
Grassley declined to comment on the meeting, but said he and Senate Finance Chairman Max Baucus would meet to discuss the offset issue and the tax package before the meeting today.
In a thinly veiled reference to Peterson and House Speaker Pelosi, Conrad said "everyone had previously agreed to" the $10 billion increase in the farm bill and to use measures under control of the Senate Finance and House Ways and Means committees to pay for it.
By Jerry Hagstrom
HEALTH
Family And Medical Leave Act Extension Gets A Long Look
Fifteen years after the Family and Medical Leave Act became law, Congress is seeking to extend the protections to more families and to those who cannot afford to be out of work for 12 weeks without pay.
At the same time, the Labor Department wants to clarify provisions of the act, which has had a deep impact on the workforce in the United States but has spawned more issues than anticipated.
Democrats on the House Education and Labor Workforce Protections Subcommittee, suggested that the two are at cross-purposes -- while they are trying to expand the act, President Bush's Labor Department is attempting to make it more difficult to implement.
Testifying at a hearing called by the panel to mark the law's 15th anniversary, Victoria Lipnic, assistant labor secretary for employment standards, denied her agency was attempting to scale down the act. Instead, she said, the department's new rules are designed to make the act more uniform.
"I don't believe on balance that it is pro-employer or pro-employee," she said, in response to questions by Rep. Timothy Bishop, D-N.Y. Bishop pointed to one proposed rule that would require those with chronic illnesses to get a doctor's certification on a regular basis in order to continue to qualify for the FMLA absences. He said that would cost employers and employees $26 million. "Don't you think that might discourage them from seeking the Family and Medical Leave Act?" he asked.
Lipnic said the current law only requires periodic visits to a doctor, something that is undefined "sometimes to the detriment of employers and employees."
One of the most difficult issues to contend with, Lipnic said, is the cases of "intermittent leave," not the standard 12-week stint to care for a newborn or adopted baby, for example. She said the rules governing stop-and-start leave need to be tightened to crack down on those who abuse the law and to provide necessary leave for regular doctor visits, for example.
House Education and Labor Workforce Protections Subcommittee Chairwoman Lynn Woolsey, D-Calif., who has introduced a bill to make the leave paid, said the act has allowed millions of workers to care for newborns, sick children or parents, or for their own medical conditions.
The panel praised the expansion of the act to include military families who need up to six months of leave to care for wounded veterans or 12 weeks of leave from work following the deployment of a family member. Lipnic said regulations governing those leaves are being promulgated, even as the leaves continue. Bishop suggested "de-linking" those veterans' rules from the regular Family and Medical Leave Act, so as to hasten the veterans' portion implementation, but Lipnic said they were too tightly tied to be unwound.
By Elaine S. Povich
TAXES
IRS Sharply Criticized For Lax Response To Tax Identity Theft
The IRS was sharply criticized Thursday for having inadequate procedures in place to respond to and measure the growing problem of tax-related identity theft.
During a Senate Finance Committee hearing, lawmakers as well as the IRS inspector general and national taxpayer advocate criticized the agency for failing to adequately address the problem.
"I am amazed the IRS has no mechanism for taxpayers to give the IRS a heads-up that their identities have been stolen," Senate Finance Chairman Max Baucus said. He said such taxpayers have been instead told to contact the FTC to report the problem.
Baucus said the FTC reported that 50,000 people complained about tax and employment-related identity theft in 2006 compared with 18,000 in 2002. Baucus urged the IRS to develop a comprehensive identity-theft strategy "with goals, timelines and milestones" and gave the agency 90 days to provide a status report on the issue.
IRS National Taxpayer Advocate Nina Olson said tax-related identity theft usually involves the filing of a false return to obtain a fraudulent tax refund or the theft and use of another person's Social Security number to obtain employment. Olson and others urged the IRS to establish a centralized unit to deal with identity theft cases.
Treasury Inspector General for Tax Administration Russell George said the IRS must improve its computer and network security procedures. A March 2007 audit by his office found that IRS employees reported at least 490 computers had been lost or stolen and that many IRS computers contained unencrypted sensitive data.
Rebecca Spencer, a tax preparer from Billings, Mont., said when one of her clients discovered that her identity had been stolen and used to file a fraudulent tax return, her first problem was trying to reach a live person at the IRS. Her subsequent efforts to resolve the problem with IRS officials were stymied and 10 days after notifying the agency of the theft, the IRS released her refund to the fraudulent taxpayer.
Spencer managed to block the refund from going to the fraudster by alerting the bank to the fraud. Spencer and others said it was almost impossible under current procedures to block a refund from going out once it has been processed. "Once (a refund is) accepted, that's the end of it," she said. "The thief is home free."
IRS Commissioner Douglas Shulman, who has been in his post for just a few weeks, acknowledged the problems and said procedures are being implemented. They include ensuring that specially trained employees will be in place by this fall to help taxpayers who call to report identity theft, creating an office to help bring an agencywide focus to the problem, and instituting a procedure that tags a taxpayer's account once identity theft has been established.
When asked why the agency lacks adequate data on the problem, Shulman noted that until recently the agency did not specify when a taxpayer was a victim of identity theft. Sen. Ken Salazar, D-Colo., pressed Shulman about whether the agency would have enough personnel to ensure taxpayers can reach a live person when they call about identity theft. "We will have enough people," he said.
By Juliana Gruenwald
ENVIRONMENT
Sponsors Tweaking Warming Bill To Make It Deficit Neutral
Top Senate backers of global warming legislation Thursday unveiled language they pledged to add to a committee-passed measure that CBO estimates would make it deficit neutral.
The three leaders on the bill -- Environment and Public Works Chairwoman Barbara Boxer and Sens. Joseph Lieberman, D-Conn., and John Warner, R-Va. -- proposed increasing the number of emission credits to be auctioned. The language will be added to the bill Boxer's committee approved in December when it hits the floor.
The three sent a letter Wednesday to CBO Director Peter Orszag with the new language, asking him to do another analysis because of the expectation that CBO was going to release an analysis of the committee-passed bill indicating it would increase federal costs.
According to a CBO analysis released Thursday, some of the proceeds from the auction would be deposited into a Climate Change Deficit Reduction Fund in the Treasury established in the new language. Spending that revenue would be subject to appropriation.
The committee bill allows credits to be auctioned by a five-member Climate Change Credit Corporation and EPA would distribute the remaining credits for free.
CBO estimated the bill as amended with the new language would increase revenues by about $1.21 trillion from 2009 through 2018 and direct spending by about $1.13 trillion.
CBO said the additional revenues would exceed the new direct spending by an estimated $78 billion, which would decrease future deficits by that amount over the next 10 years. CBO also estimated implementing the bill would increase discretionary spending by about $84 billion through 2018 and annual direct spending would be less than net revenues after 2018.
According to a CBO analysis of the committee version also released Thursday, without the new language the measure's direct spending would be $1.21 trillion versus $1.19 trillion in increased revenues through 2018.
CBO said a deficit of more than $5 billion would occur in at least one of the 10-year periods after 2018 without the new language.
The reaction to the proposed change was expectedly mixed by the two Environment and Public Works Committee leaders that have been at odds over the bill. "The CBO's recognition that our bill as amended will be deficit-neutral is an enormous breakthrough," Boxer said in a statement.
Environment and Public Works ranking member James Inhofe said in a statement that CBO's analysis reveals that the bill would impose a $1.2 trillion tax increase and increase entitlement spending by $1.3 billion over the next 10 years.
"Sen. Boxer just does not get it. Recognizing the tremendous burden this bill would have on the economy, she is attempting to use fuzzy math to cover up the enormous tax increase American families will face," Inhofe said.
By Darren Goode
ENERGY
McCain Calls For Halt In Filling Strategic Petroleum Reserve
Sen. John McCain, R-Ariz., Thursday differed from the Bush administration in calling for a halt in the filling of the Strategic Petroleum Reserve to combat high oil and gas prices.
McCain, in remarks to a small business roundtable in Brooklyn, N.Y., said suspending purchases into the reserve "will lessen worldwide demand for oil, and if the classic laws of supply and demand hold, we should see a welcome decrease in the price of oil." Light, sweet crude oil was just over $110 a barrel at the close of trading Thursday.
He joins fellow presidential contenders -- Sens. Barack Obama, D-Ill., and Hillary Rodham Clinton, D-N.Y. -- in calling for a suspension of the filling of the oil reserve, while President Bush has pledged to double the reserve's capacity.
(click to enlarge)
Obama and Clinton joined the rest of the Senate's Democrats in sending a letter to Bush in February calling for a suspension in filling the reserve for the rest of the year unless crude oil drops below $75 a barrel.
Sen. Byron Dorgan, D-N.D., has a bill that suspends filling the reserve for the rest of the year if oil is more than $50 a barrel. His 12 co-sponsors include Energy and Natural Resources Chairman Jeff Bingaman and Democratic Senatorial Campaign Committee Chairman Charles Schumer of New York.
The trucking industry has asked the administration to release oil from the reserve to combat record diesel prices, which rose to a national record of just over $4.04 a gallon Thursday. Gas prices also rose to an average nationwide record of $3.357 a gallon.
The Energy Department is proceeding with Bush's plan to double the capacity of the reserve to 1.5 billion barrels.
Energy Secretary Bodman argued in a Feb. 6 Energy and Natural Resources hearing that such action is needed to meet a U.S. commitment to the 27-nation International Energy Agency to have enough oil stockpiled to ensure the daily use of 20 million barrels for 90 days by 2025.
Bodman said doing this would not affect prices "in any meaningful way." The reserve holds just over 700 million barrels of oil and has a capacity to hold 727 million barrels.
By Darren Goode
DEFENSE
Gates Says He Hopes To Resume Troop Withdrawals In Fall
Defense Secretary Gates told senators Thursday that he hopes to resume U.S. troop withdrawals from Iraq in the fall after the 45-day suspension of force reductions recommended this week by Army Gen. David Petraeus, the top U.S. military commander in Iraq.
Appearing before the Senate Armed Services Committee, Gates expressed his desire to pull out more troops only hours after President Bush announced he was accepting the general's recommendations and ordering the drawdown to stop after July.
"The hope, depending on the conditions on the ground, is to reduce our presence further this fall," Gates said in his opening remarks. "But we must be realistic. The security situation in Iraq remains fragile and can be reversed."
While his comments may have been aimed at critics who have dismissed the pause in troop withdrawals as evidence of an "open-ended" military commitment in Iraq, Gates stopped short of offering a firm commitment to removing additional forces later this year.
Indeed, the secretary said he no longer believes that troop levels in Iraq could drop below 100,000 by January, as he had hoped late last year. He also emphasized that any further troop pullouts this year would reflect military commanders' operational needs.
Gates' testimony capped this week's high-profile hearings on the war, during which Petraeus called for a 45-day period of "consolidation and evaluation" in late July, when the force level is expected to be about 140,000 troops. This waiting period would be followed by an indefinite assessment period to determine if the military can pull more troops out without jeopardizing the security gains in Iraq.
At the White House Thursday, Bush publicly endorsed the commander's approach, saying he will give Petraeus "all the time he needs" -- a statement that brought swift attacks from key Democrats on Capitol Hill.
"Instead of continuous reductions beyond pre-surge levels or even a brief pause, what President Bush did this morning is reinforced our open-ended commitment in Iraq by suspending troop reductions in July for an unlimited period of time," said Senate Armed Services Chairman Carl Levin.
Responding to the congressional criticisms, Gates urged Levin and other lawmakers not to dismiss the advice of military leaders, who have all endorsed the strategy, so quickly.
"Some have lamented what they believe was an unwillingness to listen to our military professionals at the beginning of this war," Gates said. "I hope that people will now not dismiss as irrelevant the unanimous views of the field commander, CENTCOM [Central Command] commander and joint chiefs."
Also Thursday, Levin criticized the Pentagon for its plans to shift roughly $600 million away from Iraqi Security Forces training and equipment programs into accounts for construction and infrastructure improvements.
Levin has led a growing chorus of lawmakers who want the Iraqi government to take on more of the financial responsibility for the country's reconstruction.
In a letter sent to Gates shortly before the hearing, Levin said that the money transfer ran counter to testimony from Ryan Crocker, U.S. ambassador to Iraq, who told the committee April 8 that the "era of U.S.-funded major infrastructure projects is over."
Gates said he was unaware of the transfer of funds and said he would look into the matter.
By Megan Scully
TRADE
Congress, White House Begin Picking Up Pieces After Vote House Speaker Pelosi told top labor leaders Thursday she could not promise there won't be a vote this year on the U.S.-Colombia trade pact, even as President Bush blamed her for taking Congress down an "isolationist path."
Ten Democrats defected on Thursday's 224-195 vote to indefinitely delay consideration of the trade agreement, a surprising number for a procedural vote usually considered a strict party-line affair. Six Republicans crossed the aisle to support the rule change.
Trade Representative Schwab was on Capitol Hill Thursday, working members for about two-and-a-half-hours before the vote to sway the outcome, but to no avail.
Democratic leaders said removing the 90-day timetable for an up-or-down vote would not set a precedent, and that other pending trade agreements would be considered on their merits. The vote does not take away the privileged status of the Colombia deal or future agreements; it would still have to be voted up or-down without amendments.
Most importantly, it puts the ball back in Bush's court, who Democrats said violated protocol by sending up the bill for a vote without the approval of their leadership. House Ways and Means Chairman Charles Rangel said it merely removes an "artificial time constraint" so members can more fully debate the agreement.
But interest groups like Public Citizen were cheering the "end of the fast-track era," and Bush said Pelosi potentially had undermined U.S. credibility around the world. "The House has severed a bond of trust between the executive branch and the Congress, and with our trading partners, that has served our nation well for decades," Bush said in a statement.
Pelosi said Thursday's vote was the logical outcome. "I think that [Bush] either had bad advice or he knew it would lose, and that would serve some purpose for him," she said. "We've just won the vote. Now we can talk."
For House Democrats, the conversations have to include unemployment benefits, trade adjustment assistance, infrastructure spending and other items they argue will stimulate the economy before they agree to a vote on Colombia.
Despite their support for a second stimulus package, the heads of the major U.S. labor groups oppose any such trade-off for Colombia.
Change to Win Chair Anna Burger in a statement applauded Pelosi for "resisting strong-arm tactics by the White House" but added that the House "should not bring the Colombia [FTA] to a vote this year."
Pelosi and House Democratic Caucus Chairman Rahm Emanuel of Illinois met with Burger, AFL-CIO president John Sweeney, and others Thursday to discuss Colombia and the stimulus package. The labor officials pressed Pelosi, but sources said she made no commitment that there would not be a vote on Colombia if other economic concerns get addressed.
The White House and business community did not help themselves in the run-up to Thursday's vote, Democrats said. Several K Street groups told House members it would be a "key vote" for their annual scorecards, which did not sit well with a number of pro-FTA Democrats, leading to a round of angry phone calls this morning.
"If you stand up and kill trade, you've got to answer for it," one business lobbyist said.
Pro-business Democrats had a different take.
"I made it clear in numerous speeches over the last four months, that if they were to somehow force a vote without consulting the leadership of the House, that it would not only be a mistake, but that people like myself would not only vote against it, we'd whip against it," said Rep. Joseph Crowley, D-N.Y. "Quite frankly, if they're not happy with the outcome, they have no one but themselves to blame, because we warned them this would happen."
As Thursday's drama was playing out, U.S. trade negotiators were in South Korea trying to pave the way for consideration of the U.S.-Korea Free Trade Agreement by wrangling concessions on beef exports. South Korea's president, Lee Myung-Bak, is headed to Washington next week for talks.
"The Colombia vote is like a bomb blast that may send shockwaves that will affect the Korea FTA," said Ron Bonjean, a former House and Senate GOP leadership and Commerce Department aide. "We may very well lose our leverage on the beef issue if Congress doesn't back up our trade agreements."
By Peter Cohn
OUTLOOK
People
INTO THE FUTURE. Jennifer Leib has teamed up with colleague Robert Wells to launch HealthFutures. The operation specializes in "next generation" health care and preventive treatment. Leib and Wells come from the Washington office of Affymetrix, a company that develops technology to manage genetic information. Leib has worked for the National Institutes of Health and was detailed to the Senate Health, Education, Labor, and Pensions Committee under Sen. Edward Kennedy, D-Mass.
PROGRESSIVE POLITICS. Nikki Enfield will be executive director of Democratic GAIN, a professional development organization for political progressives. She was recently on the finance team of the presidential campaign of Sen. Christopher Dodd, D-Conn. Enfield has also worked on Howard Dean's presidential campaign.
HILL VETERAN. Patrick Devlin, the new communications director for Sen. Jon Tester, D-Mont., interned for Rep. Rick Boucher, D-Va., while he was earning his bachelors degree from Virginia Tech. Around that time, the Virginia native realized he wanted to pursue a career on Capitol Hill. Devlin has since worked as personal assistant to the late Rep. Les Aspin, D-Wis., legislative director for Rep. Rosa DeLauro, D-Conn., and Rep. Bob Etheridge, D-N.C. and a legislative assistant for Rep. Jim Chapman, D-Texas.
COMMUNICATIONS SAVVY. Angela Barranco is the communications director for Rep. Joseph Crowley, D-N.Y. She recently worked as the press secretary for Rep. Ciro Rodriguez, D-Texas. She has also been a science fellow for Rep. Eliot Engel, D-N.Y. She worked on Tim Kaine's successful 2005 bid for governor in Virginia and ran the congressional campaign for Christine Jennings in Florida.
By Gregg Sangillo and Winter Casey. Have a tip for CongressDailyAM's People column? Call 202-739-8400 or send an e-mail to people@nationaljournal.com.
LOOKING IN
Wynn Can't Win
As the ethics storm surrounding Rep. Albert Wynn, D-Md., continues, a paramount issue looms over the controversy, courtesy of a question Wynn posed in comparing his situation to three other lawmakers who have left office this term -- former Speaker Dennis Hastert, R-Ill., former Senate Minority Whip Trent Lott, R-Miss., and Rep. Richard Baker, R-La.
"My decision to move into another phase of my career is not unlike former Congress members Hastert, Baker and Lott," Wynn said in an April 1 statement. His unstated question appeared to be: Why should I be held to a different standard?
The obvious similarity between Wynn and the three Republicans is that each announced plans to quit within a seven-month period in the current Congress to pursue personal and financial interests.
That in itself is a relatively unusual phenomenon. A review of midterm resignations published in the official Congressional Directory showed no such departures by lawmakers in the 1980s, four who entered the business sector in the 1990s, and three from 2001 through 2006. Those tallies exclude members who left early because of health problems or pressing legal or ethical problems, or to take another government position or work for a nonprofit organization.
As Wynn conceded this week when he decided to resign from the Energy and Commerce Committee, there are important distinctions among the four recent cases. Hastert and Lott departed in late 2007, with no new job in hand and thus not subject to various new ethics standards.
The closest case to Wynn was Baker, who announced Jan. 15 that he would head the Managed Funds Association -- a group of hedge funds -- but did not formally quit the House until Feb. 2. But that three-week interval came during the relatively quiet start of this session. Plus, Baker stated that he would not participate in any committee business or vote on issues that posed potential conflicts. "I chose not to bump up against the rule," Baker said recently.
Wynn, by contrast, has said that he will remain in the House during a relatively busy two months until May 31. But his plans have evolved. On April 1, he said he was researching potential conflicts of interest, "and if and when they arise, I will, of course, recuse myself accordingly." That pledge was complicated by the fact that the law firm he is joining has a diverse list of clients, many of which have interests before the Energy and Commerce Committee.
Earlier, Wynn submitted a one-page recusal form to the Ethics Committee in which he said he would not participate in any official matter posing a conflict of interest. But the signed statement on March 28 -- one day after he announced his law firm job -- gave no details. Baker, by contrast, signed his recusal statement 11 days before he took his new job and, he said, before his job negotiations started.
But Wynn had a change of heart when he issued a statement Wednesday saying he was leaving the Energy and Commerce Committee so his presence "will not be a distraction from the critical work of the committee." Even then, Wynn's tone ranged from defensive in stating that he had complied with the rules to seemingly hostile when he criticized "unwarranted speculation about my motives."
Wynn has listed the following reasons why he plans to remain in office: GSA leasing opportunities in his district, a student arts program, an annual job fair, additional work on earmark requests, legislation about colorectal cancer screening, dental provisions in last year's bill to expand the State Children's Health Insurance Program, fair credit reporting demands on foreclosure victims and unspecified "other legislative issues not within the purview of Dickstein and Shapiro."
By continuing this work, Wynn said on April 1, "I am working against my personal interests, which would have been better served by an early March departure." Presumably, he was referring to the higher salary and benefits in the private sector, plus an earlier start of the required one-year lobbying ban for former members.
Still, Wynn's actions have raised numerous questions, which have led editorial writers and public-interest groups to demand that he resign immediately. Even assuming his public spirited intentions to remain in the House, he has failed to explain why his final tasks in office justify the resulting questions and perceptions of conflict of interest.
"Wynn has set a bad example," said Steven Hofman, who advised Baker during his job discussions; Hofman is a former House GOP leadership aide who advises business leaders on corporate strategy. "This is as much a question of appearance as reality. There is not now high public confidence in congressional performance and the ethical behavior of public officials." House Speaker Pelosi, who has insisted on higher ethical standards for the new Congress, offered less than a full embrace when she seemed to group Wynn with other members who have resigned when asked about him at an April 3 news conference. "I'm certain he will be responsible, and that his actions will not be much different from others who have chosen to make their life choice to leave the Congress."
But with Wynn's retirement plans remaining a work in progress, it is apparent that his case is "different."
By Richard E. Cohen
POLITICAL ROUNDUP Rep. Sali's 2006 Opponent
Abandons Bid For A Rematch
Former Micron Technology executive Larry Grant, a Democrat, Thursday ended his bid for a rematch against Rep. Bill Sali, R-Idaho.
Grant, who lost by 5 percentage points to Sali in 2006, encouraged voters to unite behind the presumptive 1st District nominee, Walt Minnick, the Associated Press reported.
"Bill Sali is one of the most ineffective and embarrassing congressmen we have ever had," Grant said. "It's time we put this seat in the hands of someone more responsible."
Grant made his announcement in downtown Boise, flanked by Minnick and former Idaho Gov. Cecil Andrus. Minnick, a businessman and former White House staffer, took 40 percent of the vote in his challenge of Sen. Larry Craig, R-Idaho, in 1996.
Another Republican Decides
Against Seeking Renzi's Seat
Arizona Corporation Commissioner Kris Mayes said Thursday she would not seek the seat held by retiring Rep. Rick Renzi, R-Ariz., the East Valley Tribune reported.
"At the end of the day, I had to decide where I can best serve the people of the state that I love and have the most impact on public policy and right now, that is on the commission," she said in a statement.
Other Republicans who considered a run and decided against it include former state Senate President Ken Bennett, state Sens. Jake Flake and Tom O'Halleran and state Reps. Bill Konopnicki and Andy Tobin.
Sydney Hay, the president of the Arizona Mining Association, is the only announced candidate.
However, Bennett recently announced he was reconsidering his decision not to run.
Meanwhile, the Democrats have five announced candidates, including former state Rep. Ann Kirkpatrick, former congressional aide Jeff Riley and former TV reporter Mary Kim Titla.
Diaz-Balart Challenger
Brings In More Than $615,000
Former Hialeah, Fla., Mayor Raul Martinez, a Democrat, has raised more than $615,000 in his bid to defeat Rep. Lincoln Diaz-Balart, R-Fla., the Miami Herald reported.
Democratic Party officials said the amount Martinez took in is the second-largest fundraising start ever by a congressional challenger, although not all candidates have released their fundraising totals for the first quarter.
The Martinez campaign said a majority of the contributions came from Republicans.
"The mayor has an appeal that transcends party lines. He always has," said his campaign consultant, Jeff Garcia.
A spokesman for Diaz-Balart said the lawmaker took in more than $600,000 in the first quarter -- about the same amount Martinez raised since joining the contest in late January.
Diaz-Balart has more than $1.4 million on hand, according to the campaign.
Arizona Education Group
Pulls Ad Praising Bee
An education group has pulled an ad praising Senate President Tim Bee, a Republican, that some viewed as an endorsement of his bid against Rep. Gabrielle Giffords, D-Ariz., the Tucson Citizen reported.
The Education Finance Reform Group began running the spot last week and did not say who funded the ad.
Vail School District Superintendent Calvin Baker said the group did not mean the spot to be an endorsement of his congressional bid.
"Our intent in running the ad was saying thank you to the president of the Senate in sponsoring a bill that was very critical to us and actively promoting it," Baker said.
He added Giffords has worked well "with us when she was in the legislature and continues to do so as a member of Congress."
Republican Seeking McCrery's
Seat Picks Up Endorsement
Jeff Thompson, a Republican, announced Wednesday he was running to replace Rep. Jim McCrery, R-La., and had received the retiring lawmaker's endorsement, the Shreveport Times reported.
"Barksdale Air Force Base and Fort Polk are integral parts of our communities and our economy. Speaking up on their behalf in Washington is vitally important," said Thompson, a Greater Bossier Economic Development Foundation member.
Ellison Endorses Madia
In Minn. Open Seat Primary
Rep. Keith Ellison, D-Minn., has endorsed lawyer and Iraq War veteran Ashwin Madia in the race to succeed Rep. Jim Ramstad, R-Minn., the St. Paul Pioneer Press reported.
Madia faces state Sen. Terri Bonoff for the Democratic nod.
Ellison, who represents the neighboring 5th District, compared Madia to Sen. Barack Obama, D-Ill.
"Like Sen. Obama, Ashwin has mobilized voters across generational, economic, educational, gender and racial divides,'' Ellison said in a statement.
On the Republican side, state Rep. Erik Paulsen is seeking the seat.
HILL BRIEFS House Judiciary Files Court Brief
Challenging Bush Privacy Claims
Lawyers for the House Judiciary Committee told a federal judge Thursday that the White House is making the broadest interpretation of executive privilege since Watergate by refusing to allow two top aides to testify about U.S. attorney dismissals.
"Not since the days of Watergate have the Congress and the federal courts been confronted with such an expansive view of executive privilege as the one asserted by the current presidential administration and the individual defendants in this case," the committee's court filing said.
The argument made to U.S. District Judge John Bates said that White House Chief of Staff Bolten, and former counsel Harriet Miers are not protected from subpoenas last year that sought information about the dismissals.
The committee is seeking the testimony as it tries to make a case that the White House directed the firings of nine U.S. attorneys because they were not supportive enough of Bush's political agenda. The White House says such information is private and covered by executive privilege, the doctrine intended to protect the confidentiality of presidential communications.
The committee's lawyers said subpoenaed White House officials cannot simply skip hearings as Miers did during the committee's investigation. The idea that Miers could disregard an order to appear at a hearing simply at the president's request suggests a return to the sentiment expressed in Nixon's statement, as quoted in a 1977 New York Times interview, that "when the president does it, that means that it is not illegal," the House lawyers wrote.
They also argued that any documents or testimony believed to be covered by executive privilege must be itemized for Congress to assess.
The administration is scheduled to respond to the House filing on May 9.
Six-Month Deficit For FY08
Sets Record At $311B
The federal deficit through the first half of FY08 is at an all-time high, underscoring the pressure the budget is coming under as the overall economy slumps.
The Treasury Department reported Thursday that the deficit through the first six months of the budget year totaled $311.4 billion, up 20.5 percent from the same period a year ago. That was the largest deficit for the first half of a budget year on record, surpassing the old six-month mark of $302 billion set in 2006.
The Bush administration, when it sent its budget proposal to Congress in February, estimated that the deficit for the whole year will total $410 billion, putting it very close to the all-time high in dollar terms of $413 billion.
Private economists are forecasting a much bigger deficit, reflecting the country's current economic problems and the $168 billion stimulus package that Congress passed and President Bush signed in an effort to jump-start growth.
Food Poisoning Remains Steady
Amid High-Profile Outbreaks
Despite a number of widely publicized outbreaks, food poisoning is not on the rise in the United States, but it is not declining, either, the Centers for Disease Control reported Thursday.
The CDC estimated that 76 million people get sick, more than 300,000 are hospitalized, and 5,000 Americans die each year from food-borne illness, and the numbers have remained steady for several years.
A food safety advocacy group called the report discouraging. "We don't consider this a success at all," said Nancy Donley, president of Safe Tables Our Priority, which was founded by victims of food poisoning. "We want to see these numbers going down."
Salmonella remains the most common cause of food poisoning, causing about 6,800 lab-confirmed illnesses. That translates to a rate of about 15 cases for every 100,000 people. Most experts say those numbers are lower than reality, however, because only a fraction of food poisoning cases are reported or confirmed by laboratories.
The most prominent food-borne illness outbreaks in 2007 included ConAgra's recall of peanut butter products after its Peter Pan peanut butter was linked to a salmonella outbreak that sickened at least 625 people in 47 states, and a ConAgra recall of its frozen Banquet pot pies after they were linked to at least 272 cases of salmonella in 35 states.
Delegate For Northern Marianas
Advances In Senate Lands Bill
The Senate approved legislation Thursday that would give the Northern Mariana Islands a nonvoting delegate in the House beginning next year.
The provision was included in a public lands bill that was approved 91-4, combining 62 different proposals for wilderness protection, heritage areas and water projects across the country.
Also included were provisions to extend federal immigration and labor laws to the Northern Mariana Islands, a U.S. commonwealth in the western Pacific that was tainted by associations with convicted lobbyist Jack Abramoff and reports of sweatshop labor.
The measure now goes to the House, which approved similar stand-alone legislation on the Northern Mariana Islands last December.
Correction
In an item in Thursday's CongressDailyAM, the name of Smithsonian Institution Acting Secretary Cristian Samper was misspelled.
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