U.S. Big NewS

Nuclear Energy Becomes Pivotal in Climate Debate

2009-10-25T04:33:00.001-07:00

WASHINGTON - Once vilified by environmentalists and its future dim, nuclear energy has become a pivotal bargaining chip as Senate Democrats seek Republican votes to pass climate legislation. The nuclear industry's long-standing campaign to rebrand itself as green is gaining acceptance amid the push to curtail greenhouse gases.

Nuclear power still faces daunting challenges, including what to do with radioactive reactor waste. Reactors also remain a tempting target for terrorists.

But 104 power reactors in 31 states provide a fifth of the nation's electricity while producing essentially carbon free power and no greenhouse gas emissions.

It's something the nuclear industry has been pushing in advertising and in lobbying on Capitol Hill for nearly a decade. But only recently has it begun to resonate, not only among industry supporters, but some skeptics as well.

"If you want to address climate change and produce electricity, nuclear has got to be a significant part of the equation," Marvin Fertel, president of Nuclear Energy Institute, the industry trade group, said in an interview.

Not unexpected from a top industry lobbyist. But the same is being heard from Republicans and Democrats in Congress, from a growing number of environmentalists, and from the White House where nuclear power otherwise has received tepid support.

The Senate this week will kick off three committee hearings on legislation to cap greenhouse gases from power plants and large industrial facilities, with an intent of cutting them about 80 percent by 2050. The House has already passed a bill.

It's chances in the Senate could hinge in part on whether demands by a handful of GOP senators for measures to help build new reactors are included in the bill.

A study by the industry-supported Electric Power Research Institute says 45 new reactors are needed by 2030. The Energy Information Administration puts the number even higher, at 70 new reactors. And the Environmental Protection Agency analysis assumes 180 new reactors by 2050 for an 80 percent decline in greenhouse gas emissions.

The Nuclear Regulatory Commission has applications for 30 new reactors, although only a handful likely will be built over the next decade.

Sponsors of the climate bill are far short of the 60 votes needed to overcome a GOP filibuster, but hope compromises could be forged to bring uncommitted centrist Democrats and some Republicans on board.

from : foxnews

Russia Tries to Control the Reset Button

2009-09-21T04:33:00.001-07:00

BRUSSELS ? When Russia issues a reminder that it wants to buy an advanced, helicopter-carrying warship from France that?s built for amphibious assaults ? hello all you folks along the Black, Baltic and Caspian Seas ? then it?s pressing deeper its own reset button on altered relations with the United States and NATO.

The Americans can insist that scrapping plans for a ground-based missile shield on Moscow?s borders is all about Iran and not Russia, and that the Obama administration has traded away nothing to the Russians in the process.

But the Kremlin has made clear its will to extend what it considers a triumph. It?s talking up a plan that Russia sees as containing an alliance-splitting downside for the United States whichever way it turns.

The latest gambit is the warship purchase bid. Trumpeted by Russia three times over the last month ? think Moscow wants to grab Europe?s attention? ? and confirmed by the French Defense Ministry, the Russian proposal involves buying a 21,300-ton Mistral class helicopter carrier and eventual joint production of four or five more.

A response of silence over the long term from the American side could look like another cave-in to Russia in the minds of the European and Central Asian allies who consider Moscow to have vetoed the ground-based missile defense system.

Even more problematically, should a deal for the helicopter carriers materialize, it would open the door ? at least in the view of an American specialist on international arms transactions ? for European allies to sell arms to China.

That?s a horrific idea for the American military, yet it remains a suspended project on a low flame inside the European Union. Indeed, China arms sales continue to have the open backing of President Nicolas Sarkozy.

But how does the United States say no nowadays to Russia (and France, if it agrees to build the ship and share the technology) on a major military transfer when the administration does not want to consider Russia a strategic threat?

Would the United States lie down across the tracks to block a Russian arms deal with the French, when the Russians say they could also make offers to the Netherlands or Spain, described as having the necessary technology? Not comfortably or coherently now, and certainly not without reviving the boss-in-big-boots NATO role President Barack Obama isn?t eager to play.

Russia, though, is exulting in a process in which its influence appears to be growing while American policy setbacks wobble from diminished control over events in Iran, North Korea and Afghanistan to taunting Russian arms sales to Venezuela.

In relation to the ship purchase talks ? against the background of Russia?s invasion of Georgia last year and its virtual annexation of two Georgian provinces ? the Russian Navy?s commander in chief, Adm. Vladimir Vysotsky, rhapsodized over how he could have done the Georgia job in 40 minutes instead of 26 hours if he had had the French warship.

Add Vladimir Putin?s voice to the armed forces chiefs of staff, and politicians who, while applauding an American fade on the missile shield, want to convert it into divisiveness in NATO and a weakened role for the United States as guarantor of Russia?s former Soviet bloc neighbors.

In an account of a conversation published in Germany last week just before the rollback, Mr. Putin said he could not understand why Europe would hesitate to move forward in ?cooperation? with Russia on military technology. (A hint: his country?s absence of a rule of law, its denial of Iran?s nuclear weapons intentions, and its past threats to target NATO members engaged in the missile shield.)

But those tactics may seem to Mr. Putin to have worked. And he appears to think he?s on a roll in relation to the United States ? able to frustrate Washington, divide it from friends, and to a certain extent maintain Russia as the obligatory point of passage for anything positive to happen on Iran.

The warship contract gambit is an example of his relish in playing this strong hand.

It?s striking, though, how hard people informed about U.S. administration policy here insist it?s meaningless that the Russians, who claimed in paranoid mode the land-based shield was a threat to their security, can now portray its elimination as their victory.

More reassuringly, I continued in Brussels to hear this description of America?s very realistic analysis of Russia:

A country that does not want Iran to have a nuclear weapon; yet one that will play out the issue to the disadvantage of the United States as long as possible, and above all would prefer no solution on Iran (or the anti-American fallout from an attack on Iranian installations) to accepting an arrangement in which Russia would see itself subordinated to a U.S. plan or design.

Difficult.

A rogue thought enters here. Is the United States in such a discomforted position that it could tell Moscow, we might want to think about your idea that Russia take over all of Iran?s nuclear enrichment? On the condition, of course, that Iranians are locked into an inspection regimen that blocks them from ever having enough enriched uranium to make a bomb.

It?s an idea that has run around, respecting the Russians to death and sparing them from ever having to admit they?ve disregarded the truth in insisting Iran?s atomic program has no military goals.

But at a time when Russia?s thumb is aggressively jabbing at its own reset button in relation to America, it?s a notion that makes two depressingly elementary mistakes: crediting the Kremlin with game-breaking influence over Iran (or anything else); and expecting the mullahs, in crisis, to turn back from what has become their existential mission.

Obama pushes health care reform in media blitz

2009-09-21T04:26:00.001-07:00

President Obama sought to blanket the airwaves Sunday with an impassioned defense of his health care reform effort during back-to-back broadcasts of taped interviews on five morning news programs.

In interviews conducted Friday at the White House, Obama acknowledged being "humbled" by the challenge of "breaking through" in the complicated and emotional battle over health care reform.

"I think there have been times where I have said I've got to step up my game in terms of talking to the American people about issues like health care," he told George Stephanopoulos on ABC's "This Week."

Republicans shot back quickly, sending out an e-mail to reporters titled "IF IT'S SUNDAY, IT'S MISLEADING THE PRESS." In it, the Republican National Committee offered its theory for the president's five-show Sunday blitz: "Desperate To Get Americans On His Side, Obama Continues To Push Falsehoods About His Government-Run Health Care Experiment," the release read.

After Obama's appearance on NBC's "Meet the Press," Sen. Lindsey Graham, R-S.C., said the issue is not one of rhetoric or style.

"The president is selling something people aren't buying," Graham said. "He's been on everything but the Food Channel."

In the interviews, which also included CNN's "State of the Union," CBS' "Face the Nation" and the Spanish-language Univision, Obama portrayed himself as willing to take politically difficult positions, citing his move to pursue alternative dispute resolutions in cases of medical malpractice.

The president brushed off suggestions by some allies that the fight over his centerpiece domestic policy initiative has been tinged by racial attitudes.

"What's driving passions right now is health care has become a proxy for a broader set of issues about how much government should be involved in our economy," he said on CBS.

On Tuesday, the Senate Finance Committee begins action on a bill drafted by panel chairman Sen. Max Baucus, D-Mont., and 564 amendments.

Several Democratic lawmakers said they hope to change a provision in the Baucus bill that would impose a 35 percent tax on high-priced insurance policies provided through the workplace.

In the CNN interview, Obama downplayed the impact of the proposal and said he was talking with union leaders who fear their members could be hard hit since their health coverage tends to be among the most generous in the country.

Arson caused California blaze, officials say

2009-09-03T19:01:00.001-07:00

LAKE VIEW TERRACE, California (CNN) -- The Station fire, which has burned nearly 145,000 acres north of Los Angeles, was caused by arson, U.S. Forest Service spokeswoman Rita Wears said Thursday.

The investigation is now being treated as a homicide because of the deaths of two firefighters, Wears said.

Firefighters are close to containing half the fire, officials said. They are not quite at the 50 percent mark but are making progress, particularly on the west side of the fire, officials said.

The fire is still producing hot spots, including one on the southwest front. There, at least 15 families were awakened around 4 a.m. and given three hours to leave their homes in the Dillon Divide community.

The Station fire, which has been raging more than a week, has displaced thousands of anxious Southern Californians. It had burned 140,150 acres by Wednesday.

The fire has destroyed 62 homes, three commercial properties and 27 other buildings since it began August 26, U.S. Forest Service spokesman Joseph Carlton said Wednesday.

The state of California has spent about $21 million so far fighting the fire in the Angeles National Forest, according to Mike Dietrich, the Forest Service's incident commander.

"I've made it clear that even though we have a budget crunch, and we have an economic crisis and we just solved a $23 billion deficit, we will always have the money available to fight the fires because public safety is our No. 1 priority," Gov. Arnold Schwarzenegger said at a news briefing Wednesday.

Schwarzenegger said 21 firefighters had been injured battling the Station fire in addition to two who were killed earlier this week. They died Sunday in a vehicular crash trying to escape fast-moving flames.

Schwarzenegger declared a state of emergency last week as a result of the Station fire.

from : cnn.com

Some Parents Oppose Obama Speech to Students

2009-09-03T18:59:00.001-07:00

HOUSTON ? President Obama?s plan to deliver a speech to public school students on Tuesday has set off a revolt among conservative parents, who have accused the president of trying to indoctrinate their children with socialist ideas and are asking school officials to excuse the children from listening.

The uproar over the speech, in which Mr. Obama intends to urge students to work hard and stay in school, has been particularly acute in Texas, where several major school districts, under pressure from parents, have laid plans to let children opt out of lending the president an ear.

Some parents said they were concerned because the speech had not been screened for political content. Nor, they said, had it been reviewed by the State Board of Education and local school boards, which, under state law, must approve the curriculum.

?The thing that concerned me most about it was it seemed like a direct channel from the president of the United States into the classroom, to my child,? said Brett Curtiss, an engineer from Pearland, Tex., who said he would keep his three children home.

?I don?t want our schools turned over to some socialist movement.?

The White House has said the speech will emphasize the importance of education and hard work in school, both to the individual and to the nation. The message is not partisan, nor compulsory, officials said.

?This isn?t a policy speech,? said Sandra Abrevaya, a spokeswoman for the Department of Education. ?It?s designed to encourage kids to stay in school. The choice on whether to show the speech to students is entirely in the hands of each school. This is absolutely voluntary.?

Mr. Obama?s speech was announced weeks ago, but the furor among conservatives reached a fever pitch Wednesday morning as right-wing Web sites and talk show hosts began inveighing against it.

Mark Steyn, a Canadian author and political commentator, speaking on the Rush Limbaugh show on Wednesday, accused Mr. Obama of trying to create a cult of personality, comparing him to Saddam Hussein and Kim Jong-il, the North Korean leader.

The Republican Party chairman in Florida, Jim Greer, said he ?was appalled that taxpayer dollars are being used to spread President Obama?s socialist ideology.?

And Chris Stigall, a Kansas City talk show host, said, ?I wouldn?t let my next-door neighbor talk to my kid alone; I?m sure as hell not letting Barack Obama talk to him alone.?

Previous presidents have visited public schools to speak directly to students, although few of those events have been broadcast live. Mr. Obama?s address at noon, Eastern time, at a high school in Virginia, will be streamed live on the White House Web site.

The first President George Bush, a Republican, made a similar nationally broadcast speech from a Washington high school in 1991, urging students to study hard, avoid drugs and to ignore peers ?who think it?s not cool to be smart.? Democrats in Congress accused him of using taxpayer money ? $27,000 to produce the broadcast ? for ?paid political advertising.?

This week, school officials were hearing from parents about the issue not only in Texas, but in other parts of the country as well ? California, Colorado, Connecticut, Georgia, Illinois, South Carolina and Utah.

Herb Garrett, executive director of the Georgia School Superintendents Association, said many of his members felt that the controversy had put them in an awkward situation, vulnerable to attacks from conservative talk-show hosts if they open up instructional time for Mr. Obama?s speech, and open to accusations that they have disrespected the president if they do not.

?It?s one of those no-wins,? Mr. Garrett said.

In Texas, calls and e-mail messages flooded into the offices of many local school officials. ?I didn?t get a positive call all day,? said Susan Dacus, a spokeswoman for the Wylie Independent School District outside Dallas.

School officials in Wylie decided to record the speech, review it and then let individual teachers show it, offering students the opportunity to avoid listening if they wished.

In Houston, teachers have been asked to tell parents if they intend to show the speech and the schools will provide an alternative class for those whose parents object, a spokesman for the district, Lee Vela, said.

Some Houston parents, however, said telling children they should not hear out the president of the United States, even if their parents dislike his policies, sends the wrong message ? that one should not listen to someone with whom you disagree.

?It?s difficult for me to understand how listening to the president, the commander in chief, the chief citizen of this country, is damaging to the youth of today,? said Phyllis Griffin Epps, an analyst for the city who has two children in public school.

frome : nytimes.com

$2.4 Billion in Grants to Make Cars Greener

2009-08-05T17:15:00.000-07:00

WASHINGTON — Seeking to put the nation back in the lead on an important technology, the Obama administration on Tuesday awarded more than $2 billion in grants for advanced battery manufacturing, mostly for electric cars.

The president and four members of his cabinet fanned out across the nation’s industrial heartland, hard hit by the recession, to announce the grants, meant to help companies scale up large-scale manufacturing lines for modern batteries of the sort now mostly made in Asia.

President Obama traveled to Elkhart, Ind., for example, to give a $39 million grant to Navistar International, a truck manufacturer. And he sent the vice president, the secretaries of energy and commerce, the deputy secretary of transportation and the head of the Environmental Protection Agency to other cities to make similar announcements.

In most cases, the recipients were required to match the federal money dollar for dollar. Some companies that received grants make chemicals for batteries, or components for chemical batteries. Several make capacitors, which are mechanical devices that can absorb or give off jolts of electricity in a few seconds. Those are useful in electric vehicles, for getting them moving or absorbing the electricity they can produce when the driver applies the brakes.

The money comes from the stimulus package and is intended to serve several goals: cutting dependence on petroleum, reducing carbon emissions, creating jobs and giving the United States a better start on what is likely to be a competitive global industry as companies start bringing electric cars to market.

Sarwant Singh, a consultant at Frost & Sullivan, said the business should work well in the United States, because only 10 to 15 percent of the cost of a battery was labor. “There’s no reason that this battery should be manufactured in China,” he said. “There’s no reason to look for a low-cost manufacturing base; you should look for a high-tech manufacturing base.”

The Volt, the coming electric car from General Motors that will have a small gasoline engine and also draw power from a wall socket, dominated the grants.

G.M. received $106 million for the production of battery packs for the car, which is planned for next year and is supposed to go the first 40 miles each day on electricity and the rest on gasoline. G.M. will make the packs in Brownstown, Mich.

Compact Power, an affiliate of LG Chemical, received $151 million, one of the largest grants, for production of cells for the Volt. It will do that work in the Michigan towns of St. Clair, Pontiac and Holland.

In addition, G.M. got $30 million to build 125 Volts for electric utilities and 500 more for other consumers to use as a test fleet. That comes to nearly $49,000 a vehicle.

And it received $105 million for construction of factories to produce a second generation of electric vehicles, with rear-wheel drive, in White Marsh, Md., and Wixom, Mich. (The Volt is front-wheel drive.)

The Ford Motor Company got $30 million to work with 15 electric utilities and deploy up to 150 plug-in hybrid vehicles, including the Escape, its small sport utility vehicle, and the E450, heavy-duty vans derived from the old Econoline series.

Chrysler got $70 million to develop and deploy 220 plug-in hybrid pickups and minivans. Since the auto bailouts, the federal government owns 61 percent of G.M. and 8 percent of Chrysler.

Greg Martin, a spokesman for G.M., said the reason that the company did so well in the grants was that it was ahead of its American competitors in developing a plug-in hybrid.

“It’s really captured the imagination of the country and the consumer,” Mr. Martin said. “If we’re not going to take the leadership in this, other countries will.”

In fact, foreign manufacturers with plants in the United States also got a slice. A partner of Nissan, Electric Transportation Engineering Corporation, which is based in Phoenix, got nearly $100 million to demonstrate up to 5,000 all-electric vehicles.

The money is mostly for lithium-ion batteries, but spread around several different chemistries within that group. A Seattle company, EnerG2, got $21 million, which it said would be used to build the world’s first commercial-scale plant for nano-structured battery materials. Those materials reduce battery weight by providing large amounts of space for chemical reactions, in nooks and crannies of finely textured materials.

Some of the money is for education, but it is not for research. Nearly all the money is being spent to reduce battery production costs, by getting manufacturing started on a mass basis.

Not all the money went to batteries. A small Oregon company, Cascade Sierra Solutions, got $22 million to install electric outlets in truck stops, and to help modify 5,450 trucks, so that when drivers park, the cabs can be heated or cooled without idling their diesel engines. Colleges and universities got money for research or for training mechanics.

By MATTHEW L. WALD
http://www.nytimes.com/2009/08/06/business/06battery.html?hp

Sotomayor picks up more GOP support as vote nears

2009-08-05T17:14:00.000-07:00

WASHINGTON — Supreme Court nominee Sonia Sotomayor picked up more GOP support Wednesday in her drive toward near-certain Senate confirmation this week as the first Hispanic justice, even as a growing chorus of Republicans called her unfit for the bench.

Republican Sens. Kit Bond of Missouri and Judd Gregg of New Hampshire broke with the party to announce they'd vote for President Barack Obama's nominee, saying while they may disagree with her, she's well-qualified to be a justice.

"There's been no significant finding against her, there's been no public uprising against her," said Bond, who is retiring. "I will support her, I'll be proud for her, the community she represents and the American dream she shows is possible."

Gregg said in a statement released by his office that politicizing the confirmation process — as he argued Democrats did when they blocked GOP nominees in the past — "undermines the public's views of our courts and the integrity of our judicial system."

Their comments came as Democrats were preparing to declare political victory on Sotomayor's confirmation and warning that Republicans who opposed Sotomayor would face a backlash from Hispanics, a large and fast-growing segment of the electorate.

"To say that you cannot vote for this qualified Latina to be on the United States Supreme Court sends a message to us as a community that we will not forget," said Sen. Robert Menendez of New Jersey, the Senate's lone Hispanic Democrat and his party's campaign committee chief. His comments, at a rally outside the Capitol with labor, civil rights and other liberal groups, were met with raucous cheers from a crowd waving signs bearing Sotomayor's picture and sporting "Sonia" buttons.

Sotomayor, 55, is the daughter of Puerto Rican parents who was raised in a South Bronx housing project and educated in the Ivy League before going on to success in the legal profession and then the federal bench. Obama chose her to replace retiring Justice David Souter, a liberal named by a Republican president, and she's not expected to alter the court's ideological balance.

Nearly three-quarters of the Senate's 40 Republicans oppose Sotomayor, leaving just a handful breaking with their party to join Democrats in backing her. That's still more than enough to easily confirm the judge, barring a surprise turn of events, in a vote expected as early as Thursday.

Many GOP senators, initially worried that opposing Sotomayor could alienate Hispanic voters, have nonetheless sided with their conservative base in branding her unacceptable for the high court. They're arguing that Sotomayor would bring bias to the court and allow a liberal agenda to trump the law.

"She has not stuck to the letter of the law," said Sen. Richard Burr, R-N.C. "I'm concerned by the several examples where I believe Judge Sotomayor strayed from the rules of strict statutory construction and legal precedence and went with her own deeply held beliefs."

Three more Republicans came out against Sotomayor as debate unfolded Wednesday, including Alaska Sen. Lisa Murkowski and Wyoming Sens. Mike Enzi and John Barrasso.

Murkowski said Sotomayor's speeches and rulings on gun and property rights have undermined her credibility and cast doubt on her ability to rule objectively. Those issues and a ruling Sotomayor joined rejecting the reverse discrimination claims of white firefighters who were denied promotions have become the top GOP complaints about the judge.

"I cannot vote to confirm a nominee to the United States Supreme Court who will restrict several of the fundamental rights and liberties in our Constitution, including our Bill of Rights," said Sen. John Cornyn, R-Texas. "The stakes, I believe, are simply too high to confirm someone who could redefine the law of the land from a liberal perspective."

The National Rifle Association, which strongly opposes Sotomayor, is threatening to downgrade any senator that votes for her in its influential candidate ratings. The warning has had little impact on Democrats, but it appears to have made a difference to several Republicans who had been considered possible supporters of Sotomayor but have said her position on the Second Amendment right to keep and bear arms makes her unacceptable.

GOP senators also say they're unsatisfied with Sotomayor's explanation of a 2001 speech — similar to comments she's made throughout her career — in which she said she hoped a "wise Latina" would usually make better decisions than a white male.

Democrats point instead to a long record of rulings in which Sotomayor has reached the same conclusions as judges who are considered more conservative. They call her a moderate who is restrained in her legal interpretations and argue that her controversial remarks — while perhaps worded inartfully — show nothing more than a belief that diverse experiences help a judge see all sides of a case.

"Real-world experience, real-world judging, an awareness of the real-world consequences of decisions are vital aspects of the law, and here we have a nominee who has had more experience as a federal judge than any nominee in decades," said Sen. Patrick Leahy, D-Vt., the Judiciary Committee chairman.

Associated Press writer Ann Sanner contributed to this report.

By JULIE HIRSCHFELD DAVIS (AP)
http://www.google.com/hostednews/ap/article/ALeqM5huyApqmCqq9U5Hw9jP5IYR1gSQEwD99T1IC00

Los Angeles Police Chief to Step Down

2009-08-05T17:13:00.000-07:00

LOS ANGELES — Chief William J. Bratton announced Wednesday that he would leave the Los Angeles Police Department after nearly seven years to lead a private international security firm.

At a City Hall news conference here, Mr. Bratton said he was resigning effective Oct. 31 to become chief executive officer of Altegrity Security Consulting, a new unit of Altegrity, whose headquarters are in New York.

The company conducts background checks for the United States government around the world and serves as a consultant on matters of policing to other national governments, including those of Iraq and Afghanistan.

The move comes only weeks after Mr. Bratton convinced a federal judge to phase out the federal oversight of the department after the success of anticorruption measures and safeguards against police brutality that will remain in place. Those reforms were instituted in the wake of a series of scandals that took place before Mr. Bratton arrived.

Mr. Bratton, 61, brought the same data-driven approach to allocating police resources that won him praise as chief of the New York City Police Department in the early ’90s. Mr. Bratton’s plainspoken, media-friendly style was a stark contrast with predecessors like the combative Daryl F. Gates, who presided during the 1992 riots, and Bernard C. Parks who often clashed with the mayor and city council.

Mr. Bratton came to Los Angeles at one of the lowest points in the police department’s history. The department had been shaken by the Rodney King beating, in March 1991, and the subsequent riots, the failure of the prosecution of O.J. Simpson due, in part, to tainted evidence, and widespread police corruption in the 1990s. .

Mr. Bratton worked alongside federal monitors and the civilian police commission to institute new measures to hold officers more accountable, while working to improve police services using real-time crime mapping systems and a robust program of constant briefings up the chain of command.

The approach, along with the hiring of thousands of police officers, is credited with a decrease in crime every year of Mr. Bratton’s term.

By SOLOMON MOORE
http://www.nytimes.com/2009/08/06/us/06bratton.html?em

Analysis: Obama struggling to keep no-tax pledge

2009-08-04T00:53:00.000-07:00

WASHINGTON — President Barack Obama is struggling to find a way to pay for an overhaul of the nation's health care system without violating his campaign promise not to raise taxes on the middle class.

Obama's dilemma was highlighted this week when two top economic advisers refused to rule out a middle class tax hike as a possible way to pay the health care overhaul bill or to reduce the rapidly escalating federal deficit. They were quickly overruled by a White House that insisted Obama intends to keep his campaign promise.

The scene underscored the peril of Obama's refusal to endorse specific proposals put forth by lawmakers to pay for a heath care overhaul that extends coverage to the uninsured and achieves the other broad goals he's outlined. Without a firm plan the White House can call its own, Obama has exposed himself — and the officials who speak for his administration — to an intense scrutiny of their every word.

For months, Obama has said that controlling rapidly escalating health cares costs is the cornerstone to bringing the federal deficit under control. And he's promised that paying for the changes won't add to the current deficit.

The problem is that his preferred financing alternative — limiting charitable deductions by the wealthiest of Americans — has gained no traction on Capitol Hill. And his nodding acceptance of a House plan to use a surtax on those with incomes above $350,000 has proven a nonstarter in the Senate.

So as lawmakers head back to their homes for August, Democrats are facing the prospect of defending a sweeping health care overhaul without having any solid commitment from Obama on how the changes will be financed. And the last thing Democratic lawmakers want is for their town hall meetings on the health care overhaul to be dominated by a debate on whether a middle class tax increase is the best way to pay for the changes Obama wants.

It would be a distraction from the already difficult sales job needed for Obama's top domestic priority. Critics have booed and jeered lawmakers at home while political parties and interest groups flood the air with a cacophony of competing ads.

So it was no shock when congressional Democrats quickly phoned the White House for clarification after hearing that Treasury Secretary Tim Geithner and Council of Economic Advisers chief Larry Summers had declined to rule out middle class tax hikes during separate Sunday television talk show interviews.

"There is a lot that can happen over time," Summers said, adding that the administration believes "it is never a good idea to absolutely rule things out, no matter what."

White House Press Secretary Robert Gibbs, peppered with questions about the economists' comments on Monday, insisted Obama intends to keep his campaign pledge not raise taxes on those making less than $250,000. And he said Obama told his economic team as much during a closed-door meeting in the Oval Office.

Ultimately, the decision to propose tax hikes remains with the president, not a government economist or Cabinet official. Obama's position has not changed: New taxes on the middle class are not a politically viable option.

The fallout reminded White House political aides that breaking the president's promise not to raise the middle class tax burden would be blow to his re-election chances in 2012 and would prove noxious to his party in the 2010 midterm elections.

But keeping that option off the table — and out of the August congressional town hall debates over health care — won't be easy unless Obama himself signals to lawmakers in the House and Senate which of the various financing plans he's willing to accept.

So far, he's left that to his aides and advisers. All of them.

EDITOR'S NOTE _ Philip Elliott covers the White House for The Associated Press.

Copyright © 2009 The Associated Press. All rights reserved.
By PHILIP ELLIOTT (AP)
http://www.google.com/hostednews/ap/article/ALeqM5hxxzKZaEnbqlZwxTMEODXOL6wyYQD99RTSTG1

McCain a no on Sotomayor; debate expected today

2009-08-04T00:51:00.001-07:00

WASHINGTON - Sen. John McCain (R., Ariz.), his party's 2008 presidential contender, said yesterday that he would join the vast majority of Senate Republicans to vote against Judge Sonia Sotomayor, who is on track to be confirmed this week as the first Hispanic justice.

McCain's decision, the day before the Senate debates the nomination, underscored the degree to which Republicans - even those who, like the Arizonan, represent large Hispanic populations - have turned against Sotomayor. Conservatives argue that the federal appeals court judge would bring her own biases to the Supreme Court.

At the same time, Sen. Ben Nelson (D., Neb.) - who had been publicly on the fence on Sotomayor and under pressure from gun-rights activists to oppose her - announced he would side with Democrats and vote yes.

Just six Republicans have said they would break with their party to confirm Sotomayor, while nearly three-quarters say they'll oppose her. No Democrats have said they will oppose Sotomayor.

Some in the GOP have faced a tough call about how to vote on President Obama's first high court nominee, torn between an impulse to please their conservative base by opposing her and a fear that doing so could alienate Hispanic voters. The vast majority are lining up with their core supporters against Sotomayor, despite her near-certainty of confirmation.

Sotomayor, 55, would succeed retired Justice David H. Souter. She is not expected to alter the court's ideological balance.

McCain called Sotomayor's background "inspiring and compelling," but he said that was "not enough to qualify one for a lifetime of service on the Supreme Court." He said she "has forsworn judicial activism in her confirmation hearings" but has "a long record of it."

But Nelson said that Sotomayor's rulings showed she was no activist and would not bring bias to the bench. He told Nebraska's Lincoln Journal Star that he believed she had "a great respect for the law" and that he was convinced she recognized "an individual's Second Amendment right to bear arms."

Nelson has a perfect rating from the National Rifle Association, which has threatened to downgrade senators who support Sotomayor in its annual candidate ratings. McCain has a spottier record with the NRA, garnering him a "C" grade, but the group endorsed his presidential bid.

By Julie Hirschfeld Davis
http://www.philly.com/inquirer/world_us/20090804_McCain_a_no_on_Sotomayor__debate_expected_today.html

McCain a no on Sotomayor; debate expected today

2009-08-04T00:51:00.000-07:00

Economic Messengers Perform on a Tightrope

2009-08-02T19:16:00.001-07:00

Amid signs that the economy is stabilizing, President Obama and his aides are moving to take credit for the gains.

In appearances on weekend talk shows, Obama's advisers gave a first look at how the administration seeks to navigate a tricky period for communicating about the economy. They wish to advertise the signs of economic improvement while not appearing out of touch with the millions of Americans who remain jobless.

The administration will keep using government policy to boost the economy in the short run, the advisers indicated, but will contain the deficit in the longer run, even if it means higher taxes. Treasury Secretary Timothy F. Geithner refused to rule out that possibility, saying the administration will "do what it takes" to bring the deficit down.

To reconcile the apparent tensions, they simultaneously tried to remind Americans of how bad conditions were at the beginning of the year, claim that the economic stimulus package they championed is part of the reason things are looking better now and acknowledge that the job market is likely to get worse before it gets better.

"Six months ago, the economy was in a nose dive, people were talking about the possibility of another depression, the statistics all suggested a vertical decline," said Lawrence H. Summers, the top White House economic adviser, on "Meet the Press." "None of that is the situation right now," he said.

As Congress goes on recess and the debate over a health-care overhaul stalls, attention is shifting back to the state of the economy and the prognosis for a sustained recovery -- along with how to deal with the budget deficits the nation could be left with in the years ahead.

Both Summers and Geithner argued that the Obama administration will contain those deficits. Geithner, under repeated questioning from "This Week" host George Stephanopoulos, refused to rule out tax increases to close the long-term budget gap.

"We're going to have to do what it takes" to contain the deficit, Geithner said.

Friday's better-than-expected report on gross domestic product offered strong evidence that the economic contraction that began at the end of 2007 could now be ending. Companies have cut back so aggressively that they will need to increase production levels just to keep up with demand for their goods and services.

That, forecasters say, will lead to an increase in GDP, the broadest measure of economic output, over the coming months. Sectors of the economy that have been in deep decline, including housing and autos, now appear to be leveling off.

Sunday, for example, Ford officials told reporters that they sold more vehicles in July than they did a year earlier -- the first monthly increase for the company in two years. Ford attributed the gain in part to the government's "Cash for Clunkers" program to encourage people to buy new cars.

Even as the nation starts producing more goods and services, though, joblessness is expected to continue rising -- both because the expansion is expected to be weak initially and because businesses are behaving with extreme caution, making them reluctant to hire even if they do see rising demand for their products.

By Neil Irwin
Washington Post Staff Writer
http://www.washingtonpost.com/wp-dyn/content/article/2009/08/02/AR2009080202094.html?nav=rss_business

Episcopal Church Picks Gay Priests for Promotion

2009-08-02T19:14:00.000-07:00

Only weeks after the Episcopal Church ended a de facto moratorium on promoting gay men and lesbians into the church hierarchy, church leaders in Los Angeles nominated two openly gay priests as assistant bishops on Sunday.

The move came a day after a church search committee in Minnesota announced that it had settled on three candidates, one of them a lesbian, for bishop.

The decisions are certain to rekindle the hostilities between the liberal and conservatives factions within the Episcopal Church in the United States and between the church and the Anglican Communion, the generally conservative global network of churches to which the Episcopal Church belongs.

The moratorium on ordaining gays and lesbians into the church hierarchy was adopted three years ago and helped calm conservatives in the Anglican Communion, which was nearly torn apart by the election in 2003 of the church’s first and only openly gay bishop, V. Gene Robinson of the Episcopal Diocese of New Hampshire. But church members voted overwhelmingly on July 14 at a general convention in Anaheim, Calif., to reopen the door to bishops who are openly gay.

The Diocese of Los Angeles, one of the largest and most liberal in the country, announced Sunday the nomination of six priests as candidates for two assistant bishop jobs. The list included two openly gay clerics, the Rev. Canon Mary D. Glasspool, 55, who is currently canon to the bishops in the Diocese of Maryland, based in Baltimore, and the Rev. John L. Kirkley, 42, who is rector of St. John the Evangelist Church in San Jose, Calif., part of the Diocese of California.

“I affirm each and every one of these candidates, and I am pleased with the wide diversity they offer this diocese,” the Rt. Rev. J. Jon Bruno, bishop of the Diocese of Los Angeles, said in a statement.

The two new assistant bishops are to be chosen in December during the annual convention of the diocese.

The nominations of Ms. Glasspool and Mr. Kirkley came after the search committee of the Episcopal Diocese of Minnesota announced the names of three candidates for bishop, including the Rev. Bonnie Perry, rector of All Saints’ Episcopal Church in Chicago.

Ms. Perry, who has served as vicar and rector of All Saints’ for nearly 17 years, has for the last 22 years been in a relationship with the Rev. Susan Harlow, who is also an Episcopal priest.

“As we continue to discern God’s call,” Ms. Perry said in a statement on Sunday, “I pray that we will bear witness to the Gospel of Jesus Christ that changes people’s lives and proclaims the profound inclusivity and hospitality of God.”’

Ms. Perry, 47, was ordained in 1990 and spent two years serving at various churches in New Jersey before going to Chicago. In 2005, she was one of five nominees for bishop of California.

Saturday was the first day of a two-week petition process which allows for open nominations for the next Episcopal bishop of Minnesota.

A full slate, including both search committee candidates and petition candidates, is to be announced on Sept. 25, and the election of the new bishop is scheduled for Oct. 31, during the annual convention in Minneapolis.

By THE NEW YORK TIMES
http://www.nytimes.com/2009/08/03/us/03bishop.html?hpw

U.S. identifies remains of pilot missing in Persian Gulf War

2009-08-02T19:13:00.000-07:00

Reporting from San Diego -- The remains of a Navy pilot shot down at the onset of the Persian Gulf War -- the first U.S. combat casualty of the 1991 conflict -- have been recovered by Marines in western Iraq and identified by military specialists.

The findings, based on dental records, appear to finally bring to an end the mystery of just what happened to Navy Capt. Michael Scott Speicher.

Then-Defense Secretary Dick Cheney had announced that Speicher was the first U.S. serviceman to die in the war, but the military's inability to locate his body resulted in unceasing speculation and controversy. Over the years, Speicher's official status was changed from "missing in action" to "missing in action/body not recovered" to "missing in action/captured."

Successive presidents, secretaries of Defense and secretaries of the Navy wrestled with the mystery and a paucity of information. Some politicians in Washington expressed exasperation with the military and CIA.

At one point, rumors circulated that the father of two was alive and being held prisoner by Saddam Hussein.

The uncertainty led some of Speicher's friends as well as several powerful politicians to assert that the military had broken its promise to never leave a fallen comrade behind.

Finally, nearly 15 years after the wreckage of Speicher's plane was found in the desert west of Baghdad, Marines got a tip leading them last week to the remains, which had apparently been buried by Bedouin tribesmen.

The remains were flown to Dover Air Force Base in Delaware, where they were identified on Saturday as those of Speicher by specialists at the military mortuary.

"The teeth are a match, both visually and radiographically," the military said in a statement Sunday.

Speicher's family in Jacksonville, Fla., released a statement thanking the Navy for not abandoning the search. "We will be bringing him home," they said.

The family also said they believe the controversy has led the military to be more vigilant about searching for soldiers' bodies: "Although nothing can fill the void left by Capt. Speicher's death, we find some solace in having transformed the search process, so that no serviceman or woman is ever, ever, left behind again."

President Obama called the news about Speicher "a reminder of the selfless service that led him to make the ultimate sacrifice for our freedom."

Former President George H.W. Bush, who was commander in chief during the Persian Gulf War, said, "We already knew he was a hero, one who helped lead our way to a historic victory in the gulf, but now his family and countrymen know -- and history will finally record -- that he was one of the very first patriots to give his life in the liberation of Kuwait."

Speicher, who was known by his middle name, Scott, was 33 when he died. He left behind his wife, Joanne; daughter, Megan, then 3; and son, Michael, 1.

Speicher's father, Wallace, was a Navy pilot during World War II.

Adm. Gary Roughead, chief of naval operations, notified Speicher's family on Saturday. "The Navy will never give up looking for a shipmate, regardless of how long or how difficult that search may be," he said.

Speicher's F/A-18 Hornet was shot down Jan. 17, 1991, the first night of the war, while on a mission over Anbar province.

In 1995, after the receipt of information from a Qatari military official, investigators with the Pentagon and the International Committee of the Red Cross found the wreckage of Speicher's plane. Iraqis handed over a flight suit with the name tag cut out. But no remains were found.

In 2001, outgoing President Clinton said that based on some information, it was possible Speicher "might be alive."

Navy Secretary Gordon England in 2002 said he believed the Iraqi government knew what had happened to Speicher but was refusing to help the U.S.

By Tony Perry
http://www.latimes.com/news/nationworld/world/la-fg-gulf-war-pilot3-2009aug03,0,5653528.story

'Clunkers' Rebates at Risk Unless Senate Acts

2009-08-02T19:10:00.000-07:00

WASHINGTON -- Transportation Secretary Ray LaHood said Sunday that unless the Senate approves $2 billion in additional funding, the Obama administration could be forced to halt as early as Tuesday the "cash for clunkers" program that has become one of the most visible and fast-acting of the government's economic-stimulus programs.

The government program has helped cut stocks of unsold vehicles at many dealerships to their lowest levels in years. When major auto makers report U.S. sales Monday, Ford Motor Co. expects to post its first year-over-year monthly increase since 2007, in part because of the bounce from the program. And Chrysler Group LLC is dropping its offer to double the government rebates as the company's dealers say they are running short of vehicles amid the jump in demand.

U.S. auto sales have been running at an annual pace below 10 million a year since January, a steep drop from the 16 million annual sales levels normal earlier in the decade. That sales collapse has led to tens of thousands of layoffs at auto companies and the manufacturing and service firms that support them.

But the response to the clunkers offer is fueling hopes that the U.S. auto market is slowly turning a corner -- which could give a broader economic boost if car makers and their suppliers start to build more vehicles. Higher sales are also critical to the Obama administration's effort to start selling off the government stakes in General Motors Co. and Chrysler next year.

Still, the uncertainty over whether the government's pump-priming will continue has thrown a cloud over the program's apparent success in stimulating consumer demand. Senate Democratic leaders said Sunday that they hoped to bring a $2 billion extension to the Senate floor this week as the program's original $1 billion in funding runs low.

"We are waiting to see what kind of cooperation we can get from Republicans," said Jim Manley, a spokesman for Senate Majority Leader Harry Reid of Nevada. "We hope to try and get to the bill this week."

A Senate Republican aide said lawmakers want to see evidence that the initial funding for the program will lead to reduced vehicle emissions.

And some senators are opposed to extending the program unless it is changed to compel consumers to buy more fuel-efficient cars than required. Sens. Susan Collins (R., Maine) and Dianne Feinstein (D., Calif.) have said they won't support extension of the program unless it is made more rigorous.

Mr. LaHood said the administration believed the program was working fine as is, and expressed confidence that the Senate would approve the extension before its recess starts at the end of this week. But he made clear that if it failed to do so, the administration would end the clunkers program. The House started its recess Friday after passing a $2 billion funding extension.

The program offers government vouchers toward a new car to consumers who surrender for scrapping an older vehicle rated at 18 miles per gallon or less. To get a $3,500 voucher, the new car must be at least 4 mpg more efficient; a 10 mpg improvement is required for a $4,500 voucher.

In one sign that it is working as intended, Ford sales analyst George Pipas said that among the company's models, the most-traded-in vehicle was the Ford Explorer SUV, and the most popular replacement was the new Ford Focus, a compact car rated at about 27 mpg.

On Sunday, Mr. LaHood seemed unsure how much of the program's original $1 billion budget has been claimed. Initially, he said in an interview on C-SPAN's "The Newsmakers" that the entire $1 billion hadn't been spent. Later in the interview he said the money was exhausted but that the administration would honor deals made through Tuesday.

"What I'm committed to saying this morning is that any deal that is made tomorrow or the next day and is in the pipeline will be reimbursed," Mr. LaHood said.

Later Sunday, a Department of Transportation spokeswoman said: "The program is continuing and we encourage consumers and dealers to participate."

Across the country, dealers said consumers continued to stream into showrooms over the weekend in pursuit of clunker rebates despite the uncertainty about the program.

In Warren, Mich., Carl Galeana said a bigger issue was his inventory, which is running low after the program sparked a surge in sales. "If we had more inventory, we'd be selling more cars," he said. "Demand is huge."

AutoNation Inc., which owns 264 franchises, said it continued to do clunker deals through the weekend. "This program is achieving all the government's goals, so how can you shut it down?" Chief Executive Michael Jackson said. AutoNation sold 3,500 cars through the clunker program in July, up from an earlier estimate of 3,000, he said.

But the program has frustrated some dealers, who say they have hundreds of thousands of dollars of clunker claims outstanding and that the government's cash-for-clunkers Web site won't allow them to submit applications in a timely way.

Mr. LaHood said DOT officials were working with Citigroup Inc., the outside contractor hired to administer the program, to address the backlog in applications. Nina Das, a spokeswoman for Citibank, said: "The DOT is pleased with the Citi partnership in this important effort."

The effort has been beset by other complications. Just six days after the clunkers program launched, it became apparent to DOT officials that they didn't know how much of the $1 billion allocated to the plan had been spent.

And late Thursday, administration officials told lawmakers that the program would be suspended at midnight. The White House reversed course several hours later and insisted the program wouldn't be suspended. On Friday, the White House assured dealers and consumers the program would continue during the weekend.
—Matthew Dolan and Kate Linebaugh in Detroit contributed to this article.

By COREY BOLES
Write to Corey Boles at corey.boles@dowjones.com
http://online.wsj.com/article/SB124922988694299529.html

White House Flags Jobs, Deficit Concerns

2009-08-02T19:09:00.000-07:00

WASHINGTON -- The administration's top economic officials suggested they would consider pushing to extend unemployment benefits that expire later this year, underscoring White House concerns that job creation is likely to lag behind a broader recovery.

Treasury Secretary Timothy Geithner said Sunday that signs are emerging that the economy is starting to turn around, but he cited private economists' predictions that unemployment rates wouldn't start to fall until the second half of next year. He also suggested that the current budget deficit was unsustainable, and both he and Lawrence Summers, the White House's top economic adviser, declined to rule out future tax increases.

Asked whether President Barack Obama could keep his campaign pledge to hold down taxes for those earning less than $250,000 a year, Mr. Geithner didn't respond directly.

"We can't make those judgments yet about what exactly it's going to take" to reduce the deficit, he said on ABC News's "This Week." "People have to understand that we have to bring those deficits down."

The Congressional Budget Office has projected that the federal budget deficit would hit $1.8 trillion for the current fiscal year ending Sept. 30.

The deficit and unemployment, which was 9.5% nationwide in June, have emerged as two of the administration's main challenges, as other parts of the economy appear to be stabilizing. Republicans have seized on these issues to criticize Mr. Obama's handling of the economy, and concerns over the deficit are coloring everything from the Democrats' efforts to pass a costly health-care overhaul to the U.S.'s relationship with China, a major holder of Treasury securities.

White House and Treasury officials said Sunday that Mr. Geithner's comments on taxes didn't reflect a shift in policy. Asked whether the Treasury secretary was "laying the groundwork" for tax increases, Mr. Summers, director of the National Economic Council, said "no, not at all."

Rather, Mr. Summers told CBS News's "Face the Nation" that key to controlling the deficit were elements of the Obama economic program, "the first and more important" one being "substantial reform of the health-care system." But he said the proposed health overhaul needs funding from somewhere. "There's a lot that can happen over time," Mr. Summers said, adding that the administration believes "it's never a good idea to absolutely rule things out, no matter what."

Mr. Obama and Democrats argue that an overhaul of the health system will help reduce inefficiencies and costs, including for federal health programs such as Medicare.

Sen. John McCain (R., Ariz.), appearing on CNN, said that while the government's economic-stimulus package "has had some effect," administration policies amounted to "generational theft" because they added to the deficit.

"If you pump trillions of dollars into the economy, you will see some recovery. But the long-term consequences, I think, are going to be, unfortunately, devastating unless we do something about it," he said.

Christina Romer, head of the Council of Economic Advisers, said she expected gross-domestic-product growth by year's end, but "it will be awhile after that before we see employment actually going up."

With unemployment benefits set to expire for about 1.5 million people by year's end, according to the National Employment Law Project, a pro-labor advocacy group, Ms. Romer told CNN's "State of the Union" that an extension of these benefits was "absolutely on the table."

The joint federal-state unemployment-benefits program typically provides as many as 26 weeks of payments from state insurance funds to workers who lose their jobs. During past recessions, Congress has often extended such coverage, and it has already done so during the current one.

Congress would have to approve any additional extensions -- a move that could get some Republican backing. Sen. Jim DeMint (R., S.C.) said on "Fox News Sunday" that he would "definitely support" extension of aid to the unemployed.

The administration's three economic officials also sought to reinforce the message that Mr. Obama delivered in his weekly radio address: While the administration's economic policies were beginning to show results, long-term economic growth required broad policy changes.

"I...want to make sure that we don't return to an economy where our growth is based on inflated profits and maxed-out credit cards, because that doesn't create a lot of jobs," the president said Saturday.

By JESS BRAVIN
Write to Jess Bravin at jess.bravin@wsj.com
http://online.wsj.com/article/SB124922106615499509.html

Gates: I've received death threats

2009-08-02T19:04:00.000-07:00

(NECN: Chilmark, Mass.) - Harvard Professor Henry Louis Gates joked on Sunday about his arrest by Sgt. James Crowley weeks ago at his Cambridge, Massachusetts home.

"I offered to get his kinds into Harvard, if he doesn't arrest me ever again," Gates joked of his White House meeting with Crowley and President Barack Obama.

In his first public appearance since what was called the 'Beer Summit', Gates spoke at a book signing on Martha's Vineyard.

He also said that he has received death and bomb threats after the incident at his Cambridge home.

"I shut down my public e-mail, because on the one hand we were getting thousand of fan letters, but we were also getting many many crazy, wacko 'You should die, you're a racist', etc.," Gates said.

He said that Harvard officials even suggested that he consider moving.

http://www.necn.com/Boston/New-England/2009/08/02/Gates-Ive-received-death/1249262679.html

July deadliest month for troops in Afghanistan

2009-08-01T01:44:00.000-07:00

A U.S. Marine takes up a fighting position after jumping off a helicopter during the start of Operation Khanjari on July 2 in Afghanistan. Forty U.S. troops were killed in July, by far the heaviest monthly toll in the 8-year-old war.

GENEVA - A U.S. service member was killed as the deadliest month for foreign troops in the Afghanistan war drew to a close, the U.S. military said on Friday, with commanders vowing to continue the fight despite the toll.

The death in southern Afghanistan brought to 40 the number of U.S. troops killed in July, by far the heaviest monthly toll in the 8-year-old war. The worst previous month for U.S. forces was in September 2008, when 26 were killed.

The latest death occurred in a firefight with insurgents in southern Afghanistan on Thursday, the U.S. military said, without giving further details. At least 70 foreign troops have been killed in July.

Britain has suffered its worst battlefield casualties since the 1980s Falklands War, with the 22 troops killed in the month taking its total losses in Afghanistan to 191, 12 more than were killed in the Iraq war.

Casualties spiked after thousands of U.S. and British troops this month launched major operations in southern Helmand province, a Taliban stronghold and the center of Afghanistan's opium production.

"We understood the return of security to these areas would not be achieved without sacrifice," said U.S. Rear Admiral Greg Smith, chief spokesman for U.S. and NATO forces in Afghanistan.

"For some that has come at a high price," he said.

The United Nations also said Friday the number of civilians killed in conflict in Afghanistan jumped 24 percent so far this year, with bombings by insurgent and airstrikes by international forces the biggest single killers.

In a grim assessment of the first half of 2009, the U.N. assistance mission in Afghanistan said the Taliban and other anti-government militants have become more deadly by shifting from ambush attacks to suicide bombings, roadside explosives and targeted assassinations.

It warned that more civilians would likely be killed as insurgents try to battle a troop increase by the administration of President Barack Obama, and seek to destabilize the country before presidential and Provincial Council elections on Aug. 20. The summer is also typically the worst for fighting in Afghanistan.

Insurgent attacks are "frequently undertaken regardless of the impact on civilians in terms of deaths and injuries, or destruction of civilian infrastructure," the 21-page report said, ascribing 595 civilian deaths to the Taliban and other "anti-government elements" over the first six months.

Many of those died in suicide attacks or roadside bombs near "civilian traffic, residential compounds and marketplaces."

The United States and Western powers have become more deadly, too, partly because insurgent groups are taking cover in residential areas or luring U.S.-led forces into unintentionally killing civilians, the U.N. said.

Dangerous ploy
The Taliban and others are "basing themselves in civilian areas so as to deliberately blur the distinction between combatants and civilians, and as part of what appears to be an active policy aimed at drawing a military response to areas where there is a high likelihood that civilians will be killed or injured."

The report said international forces have given high priority to minimizing civilian casualties, but along with Afghan forces have killed 310 civilians. Of those, 200 were killed in 40 airstrikes. The total death toll — including those which couldn't be attributed to either side — of 1,013 civilians is 24 percent higher than in the same period in 2008, and 48 percent higher than in 2007.

The U.N. tally is higher than an Associated Press count of civilian deaths based on reports from Afghan and international officials showing that 453 civilians have been killed in insurgent attacks this year, and 199 civilians died from attacks by Afghan or international forces. An Afghan human rights group says an additional 69 civilians died during a U.S. attack in Farah province in May, but the U.S. disputes those deaths.

http://www.msnbc.msn.com/id/32232388/ns/world_news-south_and_central_asia/

More of Air Force One's New York photo op released

2009-08-01T01:42:00.000-07:00

WASHINGTON (CNN) -- And now, the rejects.

Three months after the White House released a single photograph taken during a photo op of "Air Force One" flying over New York -- a flight that caused panic on the streets below -- the U.S. Air Force on Friday released the remaining 145 photos taken during the flight.

The photographs show the Boeing VC-25 -- a military version of a 747 -- making three passes by the Statue of Liberty, at one point accompanied by an F-16 fighter jet and at another point making a steep bank not usually seen with passenger aircraft. That latter move may have contributed to the chaos below.

The photographs and several lengthy government e-mail chains were released in response to Freedom of Information Act requests by CNN and other news organizations.

The e-mail chains show that the flight's government organizers were aware of many New Yorkers' fears of low-flying aircraft before the April 27 flight, and show a flurry of second-guessing, finger-pointing, damage control and occasional expressions of regret in the hours immediately after the flight.

"Thanks for the heads up on sensitivities in the New York area," an Air Force colonel wrote in an e-mail two days before the flight. "This is an issue that PAG [the Presidential Airlift Group] has also been concerned with. As a result, their coordination has been substantial."

But while the White House, the military and numerous federal and local government agencies coordinated the flight, the federal government demanded secrecy, preparing a news release that was to be distributed only if there were media inquiries.

Those inquiries came during the morning flight, triggering a quick chain of e-mails among government officials.

"We...need to construct some sort of timeline on when folks became aware of it if that is possible," one Air Force official wrote, responding to the public interest.

"I agree we... need to accomplish damage control, but we aren't the POC [point of contact]," the response reads. "Nor do I want to become a belly button for NORAD to push on this one."

Wrote one top Pentagon spokeswoman: "Nothing like having everyone point the finger at someone else so we ALL look like a big bunch of buffoons... can you say Moe, Larry & Curly!??!?!"

In addition to the informal e-mail banter, the documents show the regimented system the Pentagon uses to monitor and respond to breaking news stories.

A U.S. Northern Command document offers this "assessment" of the story: "Last 4 hours: Story reported quickly. Covered by AP, CNN, FOX major news outlets. Local reporting very critical, highlighting 'scare' factor. Local populace very critical of event, due to 9-11 sensitivities."

It continues: "Web site blog comments 'furious' at best. Twitter search reveals 'tweets' regarding two F-16's chasing commercial airliner. Rate of 1 tweet per minute and growing."

"No positive spin is possible. Admit mistake," it concludes.

In another e-mail, USAF Col. Scott M. Turner, commander of the Presidential Airlift Group, was doing just that. "Again, my apologies sir. Real intent here was to honor NYC, not cause mass chaos," it reads.

The next day, the Northern Command's internal memo included depictions of New York's three major tabloids featuring the headlines, "Scare Force One," "Just Plane Stupid!" and "How Dumb Was This!"

The photographs released Friday, meanwhile, show the presidential aircraft making a steep bank, seemingly well beyond the 30-degree maximum for Boeing 747s carrying passengers, according to one airline pilot consulted by CNN. That may have contributed to the anxiety on the ground.

The Pentagon estimated the cost of the flight at $328,835, which includes the Boeing aircraft and the two fighter jets that accompanied it. But, they said, "the hours would have been flown regardless, and the expenses would have been accrued on a different mission."

The VC-25 aircraft is designated "Air Force One" only when the president is aboard. President Obama was not on the plane during the photo op.
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After the incident, Louis Caldera, the director of the White House Military Office responsible for the flyover, resigned.

"I have concluded that the controversy surrounding the Presidential Airlift Group's aerial photo shoot over New York City has made it impossible for me to effectively lead the White House Military Office," Caldera said in a letter to Obama. "Moreover, it has become a distraction to the important work you are doing as president. After much reflection, I believe it is incumbent on me to tender my resignation and step down as director of the White House Military Office."

http://www.cnn.com/2009/POLITICS/07/31/air.force.one/

U.S. Economic Contraction Slowed in Quarter

2009-08-01T01:37:00.000-07:00

The American economy’s long decline leveled off significantly from April through June, the government reported on Friday, crystallizing expectations of a turnaround in the second half of the year.

The nation’s output shrank at an annual pace of 1 percent in the second quarter, after contracting at a rate of 6.4 percent earlier this year. Government spending, helped by the first payments from the administration’s $787 billion stimulus package, propped up activity in the latest quarter and accounted for 20 percent of the country’s output.

But consumer spending, which makes up about 70 percent of overall economic activity, has continued to fall as fearful Americans save more. Many economists express concern about what will happen once government spending lets up if consumers remain worried about losing their jobs and their weakened household finances.

“The most severe part of the decline is behind us,” said Joshua Shapiro, chief United States economist at MFR, an economic consulting firm. “But it’s hard to say how sustainable whatever bounce we might see will be. It depends largely on whether the consumer has the genuine ability to spend, or if it’s all just government cheese being handed out.”

The growing reliance on the government to fuel the economy could put the Obama administration and other Democrats in a difficult position. Many economists say that any recovery could be painfully slow, lasting months if not years, and could stoke dissatisfaction among voters.

Indeed, the report released Friday included revisions that revealed this recession had been deeper than previously believed, and officially cast the downturn as the longest since the Great Depression, at 18 months.

“We’re going from recession to recovery, but at least early on, it’s not going to feel like one,” said the chief economist at Moody’s Economy.com, Mark Zandi. Bright economic spots include a pickup in the stock market, corporate profits and some housing markets, coupled with a slowing pace of job losses.

But employers tend to wait to hire more workers until their businesses strengthen, so the job market may not improve for some time. The threat of sustained double-digit unemployment remains in coming months.

And with about 15 million people already out of work, pressure may mount on government officials to speed up the recovery.

“At some point it becomes Obama’s economy, not Bush’s economy anymore,” said Dean Baker, co-director of the Center for Economic and Policy Research, a liberal research group in Washington. “He made a big mistake in overselling the first stimulus, and then in celebrating all the ‘green shoots.’ That just opens the door for people to say, ‘Where are my green shoots? I still don’t have a job.’ ”

The administration emphasized that the recent economic improvement showed the success of its economic policies, while President Obama successfully lobbied the House for an extension of the “cash-for-clunkers” subsidy, which set off a surge in car sales this week.

“The trajectory is sure a lot better than it was,” said Christina D. Romer, chairwoman of the President’s Council of Economic Advisers. But, she added, “Consumers are going to be less of an engine of growth.”

Consumers cut their spending at an annual rate of 1.2 percent in the second quarter and saved more than 5 percent of their disposable income, a stark turnaround from their free-spending behavior during the housing boom.

Historically, American consumers have not recognized that a recession is over until well after the economy has begun expanding, in part because they focus on job creation. Still, recent improvements in the stock market, as well as the easing pace of job losses, could help consumers feel that they are finally rebuilding their nest eggs.

With a larger cushion, and a little more breathing room, economists say, families may eventually start to feel comfortable spending again.

“I don’t know when it’ll happen, but the savings rate will plateau at some point,” said Greg McBride, a senior financial analyst at Bankrate.com. “Consumers will strike that balance between living within their means but still living life.”

Friday’s report on gross domestic product — a broad gauge of the country’s output — painted a bleaker picture of the recession than earlier estimates had.

The Commerce Department said the economy tumbled downward at an annual rate of 6.4 percent this winter, more than the 5.5 percent previously reported, as the country reeled from the shocks of the financial crisis. It also found economic growth of only 0.4 percent in all of 2008, compared with earlier assessments of 1.1 percent.

Now, even as jobs are vanishing and wages remain flat, many forecasters expect the downturn to level off. Economists say that businesses as diverse as small manufacturers and big automakers are poised to rebuild their depleted inventories, which fell by an annualized $141 billion in the second quarter. That restocking could spur economic growth later this year.

Stock markets yawned at the report, closing mostly higher, but prices of commodities surged as traders bet that demand for raw materials would rise in the coming recovery. The price of crude oil rose $2.51, to nearly $70 a barrel, and investors snapped up copper, gold and other metals.

The Commerce Department’s quarterly G.D.P. assessment provided a tour through a dreary year. The economy withered during each of the last four quarters, its longest string of declines in at least 60 years. Businesses cut their investments and laid off millions of workers. Imports and exports tumbled.

In interviews, small-business owners say that the ground is slowly firming under their feet. Business investment in structures like new factories and office buildings fell at an annual rate of 8.9 percent in the second quarter after declining by more than 40 percent in the previous three months. And investment in equipment and software, which fell 36 percent this winter, dropped a more modest 9 percent in the second quarter.

But many employers who have laid off workers or scaled back say they are not about to increase their spending or add to their staffs.

In Nashville, Jerry Robertson laid off one of his 15 employees, cut his budget for advertising and trade shows and moved into a smaller office space to reduce costs at his company, which helps trucking companies manage their operations. His business is down about 10 percent from last year, and clients are still fading.

“We do see it not declining as fast as it was, but we don’t see any growth,” Mr. Robertson said. “We’re still going down.”

By CATHERINE RAMPELL and JACK HEALY
http://www.nytimes.com/2009/08/01/business/economy/01econ.html?bl&ex=1249272000&en=86b88207a38ece95&ei=5087

Obama, Cabinet meet for mid-year assessment

2009-07-31T21:10:00.000-07:00

WASHINGTON — President Barack Obama, Vice President Joe Biden, senior officials and Cabinet members were gathering away from the White House this weekend to discuss administration progress at the six-month mark and plot a course ahead.

The meetings were scheduled for Blair House, the government guest property across from the White House on Pennsylvania Avenue.

Obama and Biden walked over together on Friday evening, chatting as they went, to join their colleagues for dinner. Obama returned to the White House about four hours later, again strolling across the avenue with his press secretary, Robert Gibbs.

Asked how the meeting went, Obama said: "It went fine."

Several hours of meetings were scheduled for Saturday, though Obama was not expected to attend. The president was departing Saturday morning for a weekend at Camp David. Biden was to deliver remarks to open the second day of meetings.

"It's an opportunity for the president and the vice president, senior White House staff and Cabinet officials all to get together and talk about the agendas, both past and forward," Gibbs said.

The dinner Friday and meetings Saturday were closed to the media.

Gibbs said virtually every president since Dwight D. Eisenhower has conducted a similar assessment.

"It's not a mid-course correction or a report card," he said. "It's just an opportunity for everyone to get together on hopefully a little bit less hectic pace, rather than seeing each other at a meeting for 15 or 30 minutes."

A likely topic of discussion is the economy.

The Commerce Department reported Friday that the economy shrank at a pace of just 1 percent in the second quarter. It was a better showing than economists expected, and the strongest sign yet that the longest recession since World War II is winding down.

Obama attributed the positive performance to the $787 billion economic stimulus plan he pushed through Congress after taking office. He said Friday that "this and other difficult but important steps that we've taken over the last six months have helped us put the brakes on the recession."
Copyright © 2009 The Associated Press. All rights reserved.

By DARLENE SUPERVILLE (AP)
http://www.google.com/hostednews/ap/article/ALeqM5ibHCUwdy5hLJufCl3HKSujLGe2OwD99PQEM80

Familiar Face Reappears for Key Role in Nevada

2009-07-31T19:56:00.000-07:00

LAS VEGAS — President Obama on Friday nominated one of the nine United States attorneys controversially fired by the Bush administration to retake his old job.

The renomination of the former United States attorney, Daniel G. Bogden, to the post for Nevada, came at the urging of Senator Harry Reid, Democrat of Nevada and the majority leader.

Mr. Reid said in a statement that he supported Mr. Bogden because he was “a highly qualified and skilled lawyer who served Nevada well before being wrongly removed from office.” Mr. Reid’s spokesman, Jon Summers, said the senator was “trying to right that wrong.”

The nomination provides an intriguing postscript to a controversy that erupted in 2006 when President George W. Bush, on the advice of Attorney General Alberto R. Gonzales, fired nine United States attorneys. The inspector general of the Justice Department called the firings “unsystematic” and “arbitrary.” Mr. Gonzales resigned in late 2007.

While some of the United States attorneys fired in 2006 complained that they lost their jobs in a political purge because they resisted efforts by Republican lawmakers to encourage or discourage certain prosecutions, no explanation emerged as to why Mr. Bogden specifically had lost his job. As recently as 2005, Mr. Bogden had been praised for his “outstanding work” in a letter to Mr. Gonzales from Mary Beth Buchanan, the director of the Executive Office of United States Attorneys.

Nevada legal and political circles buzzed Friday about the decision. Some Democrats and legal experts were surprised because Mr. Bogden was appointed by President Bush in 2001.

“We just don’t understand, why him?” asked F. Travis Buchanan, president of the Las Vegas chapter of the National Bar Association, an organization of black lawyers that expressed concerns about the lack of diversity in the United States attorney’s office during Mr. Bogden’s tenure. “Who else was considered? If no one else was considered, why wasn’t anyone else considered?”

Mr. Buchanan said his group was drafting a letter to the Senate Judiciary Committee expressing reservations about Mr. Bogden. Mr. Bogden could not be reached for comment on Friday.

Part of Mr. Reid’s calculation may be that the senator faces re-election in 2010 and has sagging approval ratings within the state.

“What he’s trying to do, to the absolute outrage of the liberal base, is to portray himself as a centrist,” said Steve Sebelius, editor of the alternative weekly newspaper Las Vegas CityLife. “The arc of Harry Reid has been toward the center, especially when it comes to election years.”

Senator John Ensign, a Nevada Republican, also said he supported the nomination.

Mr. Bogden’s most significant case was the successful conviction of four former Clark County commissioners in a scandal known as G-Sting because it involved the defendants accepting or facilitating bribes from the owner of a Las Vegas strip club.

The White House also announced three other United States attorney nominees on Friday. They are Deborah K. Gilg for the District of Nebraska, Peter F. Neronha for the District of Rhode Island and Timothy J. Heaphy for the Western District of Virginia.

http://www.nytimes.com/2009/08/01/us/politics/01attorney.html

U.S. Adviser’s Blunt Memo on Iraq: Time ‘to Go Home’

2009-07-31T03:26:00.000-07:00

WASHINGTON — A senior American military adviser in Baghdad has concluded in an unusually blunt memo that Iraqi forces suffer from entrenched deficiencies but are now able to protect the Iraqi government, and that it is time “for the U.S. to declare victory and go home.”

The memo offers a look at tensions that emerged between Iraqi and American military officers at a sensitive moment when American combat troops met a June 30 deadline to withdraw from Iraq’s cities, the first step toward an advisory role. The Iraqi government’s forceful moves to assert authority have concerned some American officers, though senior American officials insisted that cooperation had improved.

Prepared by Col. Timothy R. Reese, an adviser to the Iraqi military’s Baghdad command, the memorandum details Iraqi military weaknesses in scathing language, including corruption, poor management and the inability to resist Shiite political pressure. Extending the American military presence beyond August 2010, he argues, will do little to improve the Iraqis’ military performance while fueling growing resentment of Americans.

“As the old saying goes, ‘Guests, like fish, begin to smell after three days,’ ” Colonel Reese wrote. “Since the signing of the 2009 Security Agreement, we are guests in Iraq, and after six years in Iraq, we now smell bad to the Iraqi nose.”

Those conclusions are not shared by the senior American commander in Iraq, Gen. Ray Odierno, and his recommendation for an accelerated troop withdrawal is at odds with the timetable approved by President Obama.

A spokeswoman for General Odierno said that the memo did not reflect the official stance of the United States military and was not intended for a broad audience, and that some of the problems the memo referred to had been solved since its writing in early July.

Still, the memo opens a rare window into a debate among American military officers about how active the American role should be in Iraq and for how long. While some in the military endorse Colonel Reese’s assessment, other officers say that American forces need to stay in Iraq for the next couple of years as the Iraqis struggle with heightened tensions between the Kurds and Arabs, insurgent attacks in and around Mosul and checking authoritarian tendencies of the Iraqi government.

“We now have an Iraqi government that has gained its balance and thinks it knows how to ride the bike in the race,” Colonel Reese wrote. “And in fact they probably do know how to ride, at least well enough for the road they are on against their current competitors. Our hand on the back of the seat is holding them back and causing resentment. We need to let go before we both tumble to the ground.”

Before deploying to Iraq, Colonel Reese served as the director of the Combat Studies Institute at Fort Leavenworth, Kan., the Army’s premier intellectual center. He was an author of an official Army history of the Iraq war — “On Point II” — that was sharply critical of the lapses in postwar planning.

As an adviser to the Baghdad Operations Command, which is led by an Iraqi general, Abud Qanbar, Colonel Reese drew examples from Baghdad Province, which is less volatile than the area near Mosul in northern Iraq, where the Sunni insurgency is strongest. But he noted that he had read military reports from other regions and that he believed that there were similar dynamics nationwide.

Colonel Reese, who could not be reached for comment, submitted his paper to General Odierno’s command, but copies have circulated among active-duty and retired military officers and been posted on at least one military-oriented Web site.

Colonel Reese’s memo lists a number of problems that have emerged since the withdrawal of American combat troops from Baghdad, completed June 30. They include, he wrote, a “sudden coolness” to American advisers and the “forcible takeover” of a checkpoint in the Green Zone. Iraqi units, he added, are much less willing to conduct joint operations with their American counterparts “to go after targets the U.S. considers high value.”

The Iraqi Ground Forces Command, Colonel Reese wrote, has imposed “unilateral restrictions” on American military operations that “violate the most basic aspects” of the security agreement that governs American and Iraqi military relations.

“The Iraqi legal system in the Rusafa side of Baghdad has demonstrated a recent willingness to release individuals originally detained by the U.S. for attacks on the U.S.,” he added.

A spokeswoman for General Odierno, Lt. Col. Josslyn Aberle, said of the memo: “The e-mail reflects one person’s personal view at the time we were first implementing the Security Agreement post-30 June. Since that time many of the initial issues have been resolved and our partnerships with Iraqi Security Forces and G.O.I. partners now are even stronger than before 30 June.” G.O.I. is the abbreviation for the government of Iraq; the Iraqi Security Forces are sometimes referred to as the I.S.F.

Colonel Reese appears to have anonymously circulated a less detailed version of his memo on a blog called “The Enchanter’s Corner.” The author, listed on the site as “Tim the Enchanter,” is described as an active-duty Army officer serving as an adviser in Iraq who is “passionate about political issues.” That post on Iraq, along with one criticizing President Obama’s health care proposals, has been removed but can be found in cached versions.

Under the plan developed by General Odierno, the vast majority of the approximately 130,000 American forces in Iraq will remain through Iraq’s national elections, which are expected to be held next January. After the elections and the formation of a new Iraqi government, there will be rapid reductions in American forces. By the end of August 2010, the United States would have no more than 50,000 troops in Iraq, which would include six brigades whose primary role would be to advise and train Iraqi troops.

Some experts, like Stephen Biddle, a senior fellow at the Council on Foreign Relations and a former adviser to Gen. David H. Petraeus, have argued that this timetable may be too fast “Renewed violence in Iraq is not inevitable, but it is a serious risk,” Mr. Biddle wrote in a recent paper. “The most effective option for prevention is to go slow in drawing down the U.S. military presence in Iraq. Measures to maximize U.S. leverage on important Iraqi leaders — especially Maliki,” he added, referring to Iraq’s prime minister, Nuri Kamal al-Maliki “— can be helpful in steering Iraqis away from confrontation and violence, but U.S. leverage is a function of U.S. presence.”

During a recent appearance at the United States Institute of Peace, a Washington-based research organization, Mr. Maliki appeared to be contemplating a possible role for American forces after the December 2011 deadline for the removal of all American troops under the security agreement.

But while General Odierno has drawn up detailed plans for a substantial advisory role, Colonel Reese argued in favor of a more limited — and shorter — effort, and recommended that all American forces be withdrawn by August 2010.

“If there ever was a window where the seeds of a professional military culture could have been implanted, it is now long past,” he wrote. “U.S. combat forces will not be here long enough or with sufficient influence to change it. The military culture of the Baathist-Soviet model under Saddam Hussein remains entrenched and will not change. The senior leadership of the I.S.F. is incapable of change in the current environment.”

By MICHAEL R. GORDON
http://www.nytimes.com/2009/07/31/world/middleeast/31adviser.html?partner=rss&emc=rss

Search warrants seek evidence of drug addiction in Michael Jackson

2009-07-31T03:23:00.000-07:00

LOS ANGELES, California (CNN) -- Search warrants filed Thursday in court in Clark County, Nevada, and carried out at properties of Michael Jackson's doctor imply that investigators looking into his death believe the singer was a drug addict.

The warrants, signed by District Judge Timothy Williams and given to CNN by Las Vegas affiliate KTNV, say "there is probable cause to believe" that searches would uncover evidence at the Las Vegas home and office of Dr. Conrad Murray of excessive prescribing, prescribing to an addict, excess treatment or prescribing, unprofessional conduct, prescribing to or treating an addict and manslaughter.

They cite "probable cause to believe" that the premises contained "records, shipping orders, distribution lists, use records relating to the purchase, transfer ordering, delivery and storage of propofol (Diprivan)."

A source told CNN on Monday that the Texas-based cardiologist allegedly gave Jackson the anesthetic propofol -- commonly known by the brand name Diprivan -- in the 24 hours before he died.

A source involved in the investigation into Jackson's death has told CNN that investigators found numerous bottles of prescription drugs in his $100,000-a-month rented mansion in Holmby Hills, California

The items taken from Murray's home included copies of his computer and cell phone hard drives. They were to be turned over to the Los Angeles Police Department, which is leading the investigation into Jackson's death last month at age 50.

Murray is the central focus of a federal investigation into the singer's death, a law enforcement official told CNN on Wednesday.

Authorities have subpoenaed the records of various doctors who have treated Jackson over the years, but "Dr. [Conrad] Murray is the only one we're looking at," the federal law enforcement official said.

The disclosures were among several developments Wednesday in a story that continues to gather steam more than a month after the death of the pop icon on June 25.

Other recent developments:

• Jackson's father, Joe, acknowledged that a 25-year-old Norwegian performer is Jackson's son -- even as the man himself denied the relationship in various news reports.

• Jackson's estate is worth at least $200 million, a source with knowledge of the estate's dealings told CNN.

Murray and the drug investigation

Despite the comment from the federal law enforcement official, Murray's lawyer does not think an arrest is imminent because autopsy results into Jackson's death are pending.

Police have interviewed Murray twice since Jackson's death. Murray's lawyer, Ed Chernoff, said his client is ready to talk to investigators again, but a meeting has not been scheduled.

Murray has consistently denied he prescribed or administered anything that could have killed Jackson.

On Tuesday, investigators searched Murray's home and office in Las Vegas, Nevada.

Chernoff said he won't comment on "rumors, innuendo or unnamed sources."

Meanwhile, Murray failed to make a payment of $15,000 on his $1.65 million home in January and has racked up debt since.

If he does not make a payment by mid-August, he will lose his home to foreclosure, a spokeswoman confirmed.

"He was to be paid $150,000 a month by Michael Jackson," the spokeswoman said. "He was not [paid] by AEG, the tour promoter, or Jackson, for the two months he worked for them. So he's low on money."

Murray has been beset by financial difficulties since graduating from medical school.

He filed for Chapter 7 bankruptcy protection in 1992 and accumulated $44,663 in state tax liens in Arizona and California from 1993 until 2003, according to court documents.

He has also has been hit with several judgments related to unpaid bills, child support payments and defaults on education loans.

On Wednesday, CNN learned Murray was arrested on a charge of domestic violence disorderly conduct in Tucson, Arizona, in 1994.

Murray's then-girlfriend accused him of having an affair and threw something at him, Tucson law enforcement officials said. Murray allegedly pushed the woman down.

The doctor was acquitted five months after the incident.

Joe Jackson: Jackson had another son

In an interview with the Web site NewsOne, Jackson's father, Joe, said the singer had another son, a 25-year-old Norwegian performer, Omer Bhatti.

"Yes, I knew he had another son. Yes, I did," Joe Jackson said. "He looks like a Jackson, he acts like a Jackson, he can dance like a Jackson. This boy is a fantastic dancer. As a matter of fact, he teaches dancing."

At Jackson's memorial service this month, Bhatti was seated in the front row between the pop star's father and sister.

CNN has been unable to confirm the relationship. And Bhatti has told various media outlets that he and Jackson were close friends.

Battle brews over Jackson's will

Jackson's estate is worth at least $200 million and could amount to much more, an informed source told CNN on Wednesday.

Earlier this month, a Los Angeles Superior Court judge granted control of Jackson's assets to the executors of his will: John Branca, Jackson's longtime personal attorney, and John McClain, a music industry executive and longtime friend.

A third executor, accountant Barry Siegel, recused himself. Jackson's mother, Katherine, now wants the judge to install her in the open slot.

The judge has scheduled a hearing on Monday.

"The question is, will all this get resolved on Monday, when there is a hearing?" said CNN legal analyst Lisa Bloom. "Or will this blow up into a huge dispute between Katherine and the executors?"

http://www.cnn.com/2009/SHOWBIZ/Music/07/30/michael.jackson.wrap/index.html?eref=rss_us

U.S. military scrambles jets to track airplane before it crashes

2009-07-31T03:20:00.000-07:00

(CNN) -- The U.S. military scrambled fighter jets to track a single-engine airplane that flew more than 300 miles past its scheduled destination before crashing in rural West Virginia on Thursday night, the U.S. Northern Command said.

The pilot, the only person aboard, was killed in the crash, CNN affiliate WSAZ reported. He apparently became incapacitated during the flight and flew past his destination, aviation officials told the affiliate.

North American Aerospace Defense Command sent two F-16s to follow the Cirrus SR22 at the request of the Federal Aviation Administration after it overshot Eagle Creek in northwestern Indiana, the scheduled stop on its flight from York, Nebraska.

The FAA lost contact with the plane as it flew by the airport, according to the FAA's Arlene Salac, prompting the agency to contact NORAD.

The two fighter jets eventually overtook the plane and tried without success to make contact with the pilot visually, with flares, and via radio, Salac said. The plane crashed about 8 p.m. -- two hours and one time zone later -- northwest of Henderson, West Virginia.

The aircraft is registered to Sequoia Airways in Avon, Indiana, according to the FAA.

The SR22 is a is a high-performance single-engine, four-seat aircraft. The model is equipped with the Cirrus Airframe Parachute System, which deploys a parachute designed to control the descent of the aircraft to the ground in an emergency.

http://www.cnn.com/2009/US/07/31/west.virginia.plane.crash/index.html?eref=rss_us

'Cash for Clunkers' Runs Out of Gas

2009-07-31T03:18:00.000-07:00

White House officials and lawmakers were studying late Thursday how to keep alive the government's cash-for-clunkers incentive program because of concerns the program's $1 billion budget may have been exhausted after just one week.

Obama administration officials warned congressional leaders Thursday it planned to suspend the program at midnight. But the White House released a statement late Thursday saying that completed deals would be honored and the program is still under review.

A White House official said, "We are working tonight to assess the situation facing what is obviously an incredibly popular program. Auto dealers and consumers should have confidence that all valid [cash-for-clunker] transactions that have taken place to-date will be honored."

Lawmakers are discussing with White House officials where to find funding -- including possibly tapping the government's Troubled Asset Relief Program, or TARP, a congressional aide said.

The clunkers program, which offers rebates of up to $4,500 to consumers who trade in old vehicles and buy new, more fuel-efficient models, began July 24 and sparked a surge in car sales.

"It was an absolute success," said Michael J. Jackson, chief executive of AutoNation Inc., the U.S.'s largest chain of auto dealerships. "There's a very compelling case the government should put more money into it. It's a great stimulus to the economy."

Congress had expected the $1 billion set aside for the rebates to last several months and set up the program to expire Nov. 1.

The speed with which it took off now puts it among the most successful stimulus packages to come out of Washington since the start of the recession. The boom in car sales will give a much-needed bump not just to auto makers and dealers but also local government coffers that collect taxes on car transactions.

But the program's unexpected success also will put Congress and the Obama administration in a bind. With deficits soaring, lawmakers are increasingly reluctant to spend additional billions they don't have.

On the other hand, they are sure to face a consumer and industry backlash if they end a popular program midstream, especially as dealerships across the country are in the middle of a huge advertising campaign to tout the program.

Originally, auto makers, dealers and industry forecasters had been conservative in their estimates about the ability of the clunker program to jump-start U.S. sales, in part because it is limited to cars of a certain age and fuel-efficiency. Industry executives expected it to result in about 250,000 vehicle sales.

But the incentives proved a powerful lure to consumers -- even those who were unable to take advantage of them.

M.G. Marsh, a 74-year-old retiree, went to trade in her 1988 Mazda 626 in Midland, Mich., but found the car's fuel-economy was rated one mile per gallon above the 18 mpg limit the program allows. She decided to buy anyway, even without the $4,500 rebate, purchasing a Mercury Milan for $18,000 after trading in her Mazda for just $850. "I needed to get a new car," Ms. Marsh said.

The auto industry has seen programs like this in the past that jogged car buyers into action. When car sales plunged after the terrorist attacks of Sept. 11, 2001, General Motors offered 0% financing in a campaign known as "Keep America Rolling," and it helped restore consumer confidence.

This time around, "a lot of consumers were hungry to shop," said Jesse Toprak, executive director of industry analysis for Edmunds.com, a car-information service. "A program like this gives consumers who were on the fence an excuse to get out there."

Before questions were raised Thursday about the program's future, auto-industry analysts started to raise their estimates of the program's impact.

Gary Dilts, senior vice president of global automotive for J.D. Power & Associates, had just upped his forecasting on the program's ability to draw in additional buyers who wouldn't already be shopping for a new vehicle. He estimated Thursday that as many as 110,000 new sales could be attributed to the program. That was up from an earlier estimate of as high as 40,000 that J.D. Power forecast before the program's launch late last week.

Ford Motor Co. said more than one million unique visitors have checked out the car maker's clunker Web site. Almost 750,000 have clicked on a similar site launched by GM.

"There has been a kind of halo effect," giving consumers a reason to return to car showrooms, said Brett D. Hoselton, senior automotive analyst at KeyBanc Capital Markets. He added that the seasonally adjusted annualized selling rate of vehicles in the U.S. will be higher than expected in both July and August as a result of the clunkers program.

But dealers around the country had begun refraining from making additional clunker deals on concern the funds would run out. "We feel that we're much closer to exhausting that $1 billion than anyone thought," John McEleny, president of the National Auto Dealers Association, said in a telephone interview Wednesday.

Mr. McEleney said his conclusion is based on the results of an informal email poll of NADA members asking how many clunker deals they had already submitted to the National Highway Traffic Safety Administration, the program's administrator, and how many others they had that were still to be processed.

Mr. McEleney added he personally will at least temporarily stop accepting clunker deals on Friday at the dealerships he owns until he is sure the program has enough money to pay for the incentives.

Wayne "Coach" Sink, 73, of Northridge, Calif., was unable to convince his wife to buy a new car until a call from a dealer at Galpin Motors in Southern California Thursday morning. "They told her it looked like the money was running out of cash-for-clunkers," said Mr. Sink, a retired football and baseball coach.

Using the program, he said he was able to turn in his 1997 Cadillac DeVille sedan with 92,000 miles for a new Ford Escape hybrid. The Sinks saved the full $4,500 through the government clunkers program, paying about $27,000 after the rebate, he said.

Adam Lee, owner of Lee Auto Group in southern Maine, had stopped accepting clunkers at four of his dealerships because he was concerned the funds would run out. Mr. Lee said his firm accepted 100 clunker trades and is owed $450,000 from the government, none of which has been disbursed.
—Andrew Grossman, Kate Linebaugh and Alex P. Kellogg contributed to this article.

Write to Matthew Dolan at matthew.dolan@wsj.com, Corey Boles at corey.boles@dowjones.com and Josh Mitchell at joshua.mitchell@dowjones.com

By MATTHEW DOLAN, COREY BOLES and JOSH MITCHELL
http://online.wsj.com/article/SB124898886526095011.html#mod=whats_news_free?mod=igoogle_wsj_gadgv1

Former Enron chief Skilling to be resentenced

2009-07-30T05:44:00.000-07:00

(CNN) -- Former Enron Corp. chief Jeffrey Skilling, convicted three years ago of fraud, is scheduled to be resentenced Thursday after a federal appeals court vacated his 24-year sentence earlier this year.

A three-judge panel of the U.S. Court of Appeals in New Orleans, Louisiana, affirmed Skilling's conviction in January but dumped the sentence handed down by U.S. District Court Judge Sim Lake in Houston, Texas.

Skilling was sentenced to 24 years and 4 months in jail for deceiving investors and employees about Enron's fiscal health. The appeals court found that Lake was wrong in saying Skilling had endangered a financial institution -- a finding that prompted Lake to impose a harsher sentence.

The appeals court's action lowers the guideline range to between 188 months and 235 months in prison, according to Cliff Stricklin, a former prosecutor in the Enron case and an attorney with the Denver law firm of Holme, Roberts & Owen.

"If I were a betting man, I would say Judge Lake would sentence him to the low end of the guideline range and Skilling would get 15 1/2 years," said Stricklin.

Stricklin added it's remotely possible Lake could impose the same sentence he did originally. The judge has this leeway because the U.S. Supreme Court made the guidelines voluntary in January 2005.

"If he were to do that, it certainly would be appealed again, and it could come back down again and I think no one wants that in the process, except maybe Skilling," said Stricklin.

Stricklin predicted Skilling's attorney, Daniel Petrocelli, will try and pull out all the stops to get a significantly shorter sentence for his client.

"He will try and get in as much evidence as he possibly can, anything with hopes to persuade the judge to go below the sentencing guidelines. I just don't see Judge Lake letting that happen though," said Stricklin.

Skilling, 55, is being held in a low-security prison in Englewood, Colorado. Enron's bankruptcy in 2001 eliminated more than 5,000 jobs and $1 billion in employee retirement funds.

By Matt Cherry
CNN
http://www.cnn.com/2009/CRIME/07/29/enron.resentencing/index.html?eref=rss_us

Baby cut from slain mom's womb found alive

2009-07-30T05:06:00.000-07:00

(CNN) -- A baby believed to be ripped from the womb of its mother has been found, Massachusetts police said Wednesday. In addition, authorities have arrested a suspect in connection with the crime.

Police had searched for the baby since Monday, when her mother, Darlene Haynes, was found dead in the closet of her Worcester apartment.

Officers received tips from women who became suspicious of Julie A. Corey, a friend of Haynes who turned up with a newborn girl at the time that Haynes went missing.

Haynes told friends she delivered a baby sometime between July 23 and July 24 at an undisclosed Massachusetts hospital, according to authorities.

Police learned that Corey had moved to New Hampshire with a boyfriend. Police later found Corey and the baby Wednesday afternoon in Plymouth, New Hampshire.

The baby was in fairly good health and was taken to a hospital, Worcester police said.

Corey, 35, was arrested and charged with being a fugitive from justice.

Police discovered Haynes' body Monday, after neighbors complained about a stench.
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Haynes, 23, was found in the closet of a bedroom, wrapped in bedding. Police think she had been dead for several days. She was last seen on July 23, and Corey was one of the last people to see her, authorities said.

A friend of Haynes told CNN affiliate WHDH that she received a text message from Haynes at 11:20 p.m. Thursday that said she was having wine coolers with a friend at her apartment.

http://www.cnn.com/2009/CRIME/07/30/massachusetts.fetus/index.html?eref=rss_us

Got Workers? Dairy Farms Run Low on Labor

2009-07-30T04:47:00.000-07:00

Turlock, Calif.

Jesus Rodriguez, a Mexican who can't read or write, sometimes mixes up the numbers that identify the cows that he milks. But he can easily tell one brawny black-and-white Holstein from another, and discern when they are sick, in heat or just plain moody.

Farmer Ray Souza credits immigrants like Mr. Rodriguez, an employee for nearly 20 years, for saving the U.S. dairy industry. "I haven't had a non-Hispanic want to do this work in 10 years," says Mr. Souza, a descendent of Portuguese immigrants, a group that helped turn California into the nation's largest dairy state.

Dairy farmers from Vermont and New York to Wisconsin and beyond have become increasingly dependent on immigrants, many of them Latin Americans who are in the U.S. illegally. Unlike other agricultural work where laborers are hired for short, seasonal stints, dairy-farm laborers often stick around for years, forging close ties with their employers.

But that has also left dairy farmers vulnerable, as rising unemployment in the U.S. heightens tensions over the hiring of illegal immigrants. Dairy farmers say that without immigrant workers, a labor shortage might force some to shutter their businesses, depriving rural communities in the U.S. of a key economic engine.

Last month, about 100 dairy farmers changed from boots into suits for the day and flew to Washington to make their case to Congress. "We need a stable supply of labor," says farmer Ed Schoen, who milks 180 cows in upstate New York. "The dairy industry's survival depends on it." Amid a plunge in milk prices, "worrying about workers is another layer of stress we don't need," says Mr. Schoen, who is on the board of Dairy Farmers of America, a cooperative that produces one-third of the nation's milk.

But groups that call for a crackdown on illegal immigration say that the farmers want an amnesty that would unfairly disadvantage American workers.

"You'd bring thousands of people who would work in dairy farming and then compete with Americans for jobs in manufacturing, construction and services," says Roy Beck, executive director of NumbersUSA, a national organization that lobbies for immigration reduction. Given the recession, "this is a time when we know it's possible to find Americans to do this work. If you had the right recruiting, pay and working conditions, you could handle this with Americans."

But, in the long term, he adds, "we are going to need a foreign-guest worker program geared toward agriculture."

During the Bush administration, some dairy farmers lost workers to immigration raids. Today, others worry that the loss of workers will continue under more restrictive hiring rules under discussion in Washington.

That served as a wake-up call to the industry to aggressively lobby for changes to the country's immigration laws. "We are losing workers while Congress sits on its hands," says Jerry Kozak, president of the National Milk Producers Federation.

A study commissioned by the dairy industry found that immigrants account for 40% of the dairy labor force and are responsible for nearly two-thirds of U.S. milk production. Despite the poor economy, one-fifth of surveyed dairy farmers said they expected to face a worker shortage this year.

In May, Sen. Dianne Feinstein (D., Calif.) reintroduced the AgJobs bill, bipartisan legislation that would enable dairy farmers to legalize their current immigrant work force. The bill's fate may hinge on passage of a comprehensive bill to overhaul immigration.

The dairy industry in California's San Joaquin Valley used to be dominated by Portuguese and Dutch immigrants and their descendents. "Now Hispanic immigrants are the ones who do this work," says Mr. Souza, standing in front of the red barn that his grandfather built. "One day, another group will come."

The U.S. produces about 22 billion gallons of milk annually that amounted to $35 billion in sales at the farm level last year. Retail dairy product sales -- including milk, cheese and yogurt -- totaled $100 billion.

Latin Americans have been heading to the U.S. for decades, but the demographic shift in the dairy labor force is relatively new. In dairy states like Vermont and Wisconsin, farmers began hiring Mexicans and Central Americans in the late 1990s, when family-owned farms began to bolster production to compete with large dairy farms. Increasing the size of their herds and adding extra milking shifts required more work hands.

Latin American immigrants often were eager to secure year-round, full-time work, rather than the itinerant jobs that they would be able to land elsewhere in the agricultural sector. Many also hail from rural areas where many families raise cows.

"Working with farm animals is second nature" to Latin Americans, says Mike McCloskey, co-owner and general manager of Fair Oaks Farms, which has a herd of 12,000 cows, a restaurant and a store in Indiana. His immigrant workers are in the barns "when it's minus 10 degrees and when it's 95 degrees and 95% humidity," he says.

The high turnover and low reliability of local workers posed major problems for dairy farms that wished to grow, according to Tom Maloney, who studies agricultural labor at Cornell University.

"In the mid-'90s, I saw dairy managers who were afraid to expand their businesses because they couldn't find dependable help. Then, some dairies began to hire Latino immigrants, and found they were reliable and had a tremendous work ethic," says Mr. Maloney, a senior extension associate in the Department of Applied Economics & Management. "Now they can't imagine operating without them."

Dairy farmers in Europe have begun to use robotic milkers to reduce dependence on manual labor. But due to the high capital investment required, adoption in the U.S. is likely to be slow, Mr. Maloney says.

Phil Martin, an agricultural economist at the University of California, Davis, believes if labor gets much more expensive in the dairy sector, those higher wages could spur investment in technology -- "although it's not clear at what wage," he says. Currently, the average hourly wage for dairy workers in California, for example, is $11.38. Even though minimum wage is lower, he says, "I would suspect a whole lot of 18-year-olds prefer to work at McDonald's for minimum wage than milk cows."

On Mr. Souza's 250-acre farm, people occasionally drop by looking for work. "Once Americans get the job description, they lose interest real quick," he says. So six out of the eight employees are Mexicans. They deliver calves, milk cows and scrape manure.

Under the sweltering sun recently, Mexican Ubaldo Polido followed a nutritionist's chart as he measured out rations of fodder, grain and alfalfa hay for the herd. Another Mexican worker, hammer in hand, fixed wooden pens that hold newborn calves.

Milker Salvador Reynoso, whose shift had ended at 4:30 that morning, smiles when asked about his job. "I like the animals; I like the convenience of just walking to work," he says.

By MIRIAM JORDAN
Write to Miriam Jordan at miriam.jordan@wsj.com
http://online.wsj.com/article/SB124890678343891639.html

Support Slips for Health Plan

2009-07-30T04:43:00.000-07:00

WASHINGTON -- Support for President Barack Obama's health-care effort has declined over the past five weeks, particularly among those who already have insurance, a Wall Street Journal/NBC News poll found, amid prolonged debate over costs and quality of care.

In mid-June, respondents were evenly divided when asked whether they thought Mr. Obama's health plan was a good or bad idea. In the new poll, conducted July 24-27, 42% called it a bad idea while 36% said it was a good idea.

Among those with private insurance, the proportion calling the plan a bad idea rose to 47% from 37%.

Declining popularity of the health-care overhaul reflects rising anxiety over the federal budget deficit and congressional debate over the most contentious aspects of the legislation, including how to pay for it. The poll also shows concern over the role of government in determining personal medical decisions.

Trying to regain momentum, Mr. Obama is shifting his pitch to new consumer-protection rules for insurance companies, part of a bid to win over Americans who already have coverage.

David Axelrod, one of the president's top advisers, acknowledged that the White House's months-long focus on controlling medical costs hasn't worked. "Consumer protections are a lot more tangible," he said.

On Wednesday, Democratic leaders in the House reached accord with conservative party members to move their bill through the last of three committees, although the full House won't vote on the measure until at least September. "Failure is not an option," said California Democratic Rep. Henry Waxman.

The White House is eager to show progress and build public support before Congress breaks for summer, when opponents plan to continue their campaign. "If this bill hangs out there over the August recess my guess is it will get shredded," House Minority Leader John Boehner (R., Ohio), said.

In the Journal poll, only two in 10 people said the quality of their own care would improve under the Obama plan; just 15% of those with private insurance thought it would. Twice as many overall, and three times as many with private coverage, predicted their own care would get worse.

"You can't pass a substantial health reform unless privately insured people see there's a benefit for them," said Bill McInturff, a Republican pollster who conducts the poll with Democrat Peter D. Hart.

Support for former President Bill Clinton's health plan hovered in similar territory in 1994 on its way to defeat. But the Clinton plan never made it as far in Congress as the Obama effort has this year. Indeed, the poll showed strong support among respondents for ideas common to all of the pieces of health-care legislation being considered by Congress.

When given several details of the proposal, 56% said they favored the plan compared with 38% who oppose it.

The description given to poll respondents didn't include a public-insurance plan, which divides the public, nor specifics about what income levels might be taxed to fund the plan.

The poll had a margin of error of 3.1 percentage points for the overall sample.

Mr. Obama has focused sharply on cost control for businesses and Americans who have seen premiums rise faster than wages.

White House officials believed this would give those with insurance a stake in the debate.

But those efforts have been hurt by the debate in Washington, which has been dominated by the $1 trillion, 10-year price tag for covering the uninsured. That makes it hard to persuade people that the bill will lead to reduced costs, said Mr. Axelrod.

"People are properly skeptical about any proposals out of Washington that speak to cost because they've been singed by past experience," said the senior Obama adviser.

At a town hall meeting in Raleigh, N.C., Wednesday, the president outlined a series of policies, many of which the insurance industry has agreed to accept.

The president said, for example, he wants rules that would require insurers to cover people with pre-existing conditions, cap out-of-pocket expenses, bar insurers from dropping people who become seriously ill, ban annual or lifetime coverage caps, and allow adults to stay on their parents' plans through age 26.

"If you've got health insurance, then the reform we're proposing will also help you because it will provide you more stability and more security," Mr. Obama said.

On the question of how to pay for the measure, the poll found only one idea with majority support: a surtax on the rich, the approach taken in the bill moving through the House, but which isn't expected in the Senate version.

Public support for fining businesses that don't offer insurance dropped from last month, with half of those polled now in favor. Only four in 10 liked the idea of taxing insurance companies that offer particularly generous health plans, an idea that has gained currency in the Senate Finance Committee.

The poll found that Mr. Obama's overall ratings have fallen amid worries over the economy, with the decline due almost entirely to dwindling support by Republicans. His score is solid by historical standards but no longer at the high-flying levels of his early weeks.

Overall, Mr. Obama's ratings fell on a series of measures. His job approval now stands at 53%, down from a high of 61% in April. That is three points higher than President George W. Bush had in June 2001, following a contentious election victory.

The proportion of people who said it was very or fairly likely that Mr. Obama would bring "real change" dropped to 51% from 61% in February. The share of those who said he could be trusted to keep his word fell to 48% this month from 58% in April.

Mr. Hart, the Democratic pollster, said rising concerns over employment and the economy explained Mr. Obama's falling ratings.

"He seems embroiled in so many of the issues of the day without much sense of relief on the economic front," he said.

The poll also found a rising sense of partisanship. More than three in 10 surveyed said the current Congress has been more partisan and divided than in the past, compared with just 11% who said it has been less partisan.

In February, people were more likely to blame Republicans by a two-to-one margin. This month, they were divided over who to blame, with most saying both parties were at fault.

On other issues, the poll found:

Strong support for Sonia Sotomayor, Mr. Obama's nominee for the U.S. Supreme Court. Forty-four percent of people said they strongly or somewhat supported her confirmation with 30% opposed.

Falling support for the economic stimulus plan, with 34% in favor, down from 44% in February; 43% now say it is a bad idea.

Two-thirds of people said they knew enough about the controversy surrounding the arrest of Harvard professor Henry Louis Gates Jr. to form an opinion. Of them, about one in three said both Mr. Gates and the police officer were equally at fault, 27% said Mr. Gates was more at fault and 11% said the officer was more to blame.

By LAURA MECKLER

—Jonathan Weisman in Raleigh, N.C., contributed to this article
Write to Laura Meckler at laura.meckler@wsj.com
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Guidelines Aim to Help Struggling Borrowers

2009-07-30T04:40:00.000-07:00

The Obama administration plans to announce Thursday new guidelines designed to help struggling homeowners with Federal Housing Administration-insured mortgages.

The guidelines implement changes enacted by Congress in May to bring the FHA's loan-modification program more in line with the White House's foreclosure-prevention plan. The Obama plan, announced in February, provides financial incentives for mortgage companies to reduce loan payments to affordable levels.

The FHA doesn't have an estimate of how many borrowers are likely to be helped by the new program, said a spokeswoman for the Department of Housing and Urban Development, which is announcing the guidelines. Some 14.2% of FHA loans are at least 30-days past due and not yet in foreclosure, according to LPS Applied Analytics.

FHA Commissioner David Stevens said the changes "offer borrowers an opportunity to stay in their homes, make payments that are manageable and defer [payment of] the money owed to a later time when, hopefully, home values have improved."

Like the broader Obama program, the FHA plan seeks to reduce mortgage-related payments to 31% of monthly income. But it gets there in a different way, by focusing on changes in the principal amount rather than the interest rate.

Under the FHA plan, mortgage servicers can reduce the amount of principal on which the borrower must make loan payments by as much as 30% to get monthly payments to affordable levels. The borrower makes the reduced payments for the life of the loan, but is responsible for paying off the full loan amount when the home is sold or the loan is refinanced. This approach is designed to fit guidelines set by Congress, FHA officials said.

The need to bolster the FHA program was one of the many issues discussed at Tuesday's meeting between Obama administration officials and executives from 25 mortgage companies who were summoned to Washington this week to discuss efforts to improve and speed up implementation of the administration's housing rescue plan.

Under the new guidelines, FHA borrowers can receive a loan modification after they have missed one loan payment, rather than waiting until they are at least three payments late, as in the past. This is different from the Obama program, which allows borrowers who are at risk of default to get help, even if they are current on their loan. The FHA can't offer similar help to at-risk borrowers, officials said, because it would run afoul of contracts with investors who buy GNMA securities, bonds made up of FHA and other government-backed loans.

Mortgage servicers will receive incentive fees of as much as $1,250 for each successful modification. FHA officials said they expect the approach to save the government money by reducing foreclosure-related losses on loans the government insures.

By RUTH SIMON
Write to Ruth Simon at ruth.simon@wsj.com
http://online.wsj.com/article/SB124891434984092191.html

Congress to toughen airline standards

2009-07-29T01:05:00.000-07:00

WASHINGTON — Safety standards for airlines and pilots would be dramatically toughened in legislation scheduled to be introduced Wednesday in Congress.

Prompted by the crash last February near Buffalo that has raised questions about pilot qualifications, training and fatigue, the "Airline Safety and Pilot Training Improvement Act of 2009" aims to find the most successful safety programs and mandate them for all airlines, said Rep. Jerry Costello, D-Ill., chairman of the House Aviation Subcommittee.

The bill would add tough new certification requirements for entry-level commercial pilots, require additional emergency training, improve availability of pilot records and mandate stricter rules to minimize pilot fatigue.

"Our bill is a serious effort to consolidate what we know industry-wide about aviation safety to improve safety performance going forward," Costello said in a statement.

The bill would:

• Require that all airline pilots obtain an Airline Transport Pilot license, which is currently only needed by captains. Pilots must have a minimum of 1,500 flight hours to obtain the license. Co-pilots may now be hired at airlines with as little as about 200 hours, though most begin airline work with more experience.

• Mandate that the Federal Aviation Administration (FAA) within 90 days set up a new database of pilot records so that airlines will have access to more information before they hire someone for the cockpit. The captain of the jet that crashed near Buffalo had failed several FAA-mandated tests of his piloting skills, but his airline did not know about all of them when it hired him.

• Direct the FAA within one year to rewrite the rules for how long pilots can work. Several attempts to rewrite the rules to make piloting less prone to fatigue have failed in recent decades. FAA Administrator Randy Babbitt also has vowed to update the rules.

• Require airlines and travel websites when they sell tickets to disclose the name of the carrier operating the flight. About half of all flights are operated by regional airlines working under contract to major carriers, but those regionals almost never sell tickets directly to passengers. Most of the regional flights are flown with the name of the major carrier painted on their aircraft.

• Set up numerous studies and task forces to examine how best to train pilots, minimize pilot fatigue and run a safe airline.

The Air Transport Association, which represents large carriers, issued a statement saying that it would prefer that current efforts to improve safety begun earlier this year by Transportation Secretary Ray LaHood be allowed to work before Congress passes legislation.

"We believe in that process, and we believe it should be allowed to proceed to a successful conclusion," said ATA President James May.

The Regional Airline Association said it welcomes changes that improve safety. Several parts of the bill are already contained in the association's safety initiative, it said in a statement.

The crash Feb. 12 of a Colgan Air turboprop, which killed 50 people, has raised numerous safety issues. A National Transportation Safety Board investigation has found that neither pilot may have gotten a full night's sleep. The pilots also reacted improperly to an emergency, raising questions about how well they were trained
By Alan Levin, USA TODAY
http://www.usatoday.com/news/washington/2009-07-29-rwairsafe_N.htm?csp=34

Aid group questions security firm billing

2009-07-29T01:04:00.000-07:00

WASHINGTON — Government auditors are challenging $14 million in payments for security services made by the U.S. foreign aid contractor whose Iraq jobs program was suspended after two outside reviews raised questions about possible misspending.

An audit found that Sabre International, a security firm founded by former British special forces soldiers, had failed to justify bills it submitted to International Relief and Development (IRD), said Dona Dinkler, chief of staff for USAID's inspector general.

IRD paid Sabre with money from the jobs program and another grant funded by American taxpayers.

"A major portion of the $14 million in questioned costs deal with billed labor that was not substantiated by any documentation, such as timesheets or daily logs," said Dinkler, of the U.S. Agency for International Development.

IRD will have a chance to contest the findings. "IRD responded to this report by conducting its own investigation, and has shared its findings with appropriate government officials," IRD said in a statement that declined further comment. "All protective services that Sabre were contracted to perform were performed," said Alex Breingan, Sabre's executive manager, in an e-mail, adding that IRD is working with government officials to provide documentation.

The payments to Sabre were made through two grant programs run by IRD, a Virginia-based non-profit that is one of USAID's largest foreign aid contractors.

One was the $644 million Community Stabilization Program, a country-wide jobs program designed to tamp down the insurgency in Iraq. The other was a $92 million program for small infrastructure repairs and democracy promotion in Baghdad.

USA TODAY reported Monday that USAID earlier this month suspended IRD's Iraq jobs program after two outside reviews raised questions. A March 2008 audit by the inspector general found evidence of fraud and money siphoned to insurgents.

More recently, allegations surfaced in the northern city of Mosul that led USAID to suspend the program.

The latest audit was undertaken for the inspector general by the Defense Contract Audit Agency. The inspector general requested it in the wake of its March 2008 findings.

Dinkler declined to release the DCAA audit, saying that Inspector General Donald Gambatesa was reviewing whether to make it public.
By Ken Dilanian, USA TODAY
http://www.usatoday.com/news/washington/2009-07-28-iraqfraud_N.htm?csp=34

Lobbyists battle over drug sales

2009-07-29T01:03:00.000-07:00

WASHINGTON — As Congress struggles with a massive health care overhaul, several lobbying powerhouses — including the pharmaceutical industry and the nation's largest advocacy group for retirees — are locked in a contentious fight over the future of biotechnology drugs.

Both sides have spent heavily to sway lawmakers in the debate over how long to keep the expensive drugs exempt from generic competition. President Obama is pushing for seven years of exclusivity as he looks to trim costs to help pay for his health care plan — five years less than what the industry wants.

PHARMACEUTICALS: Industry donates to drug plan foes

"If you extend that 12 years, obviously it's better for (drugmakers') bottom line," Obama said Friday. "But it also means you're keeping important drugs off the market and driving up those costs further."

The pharmaceutical industry counters that a longer period of exclusivity is needed to recover its investments in "biologic drugs," which are made from living organisms and used to treat cancer, multiple sclerosis and other serious diseases

"We understand that it's important to save money in our health care system, but it's also important to save lives," said Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America. He said the group has spent "several million" on ads promoting longer exclusivity rights.

He said a shorter period of market exclusivity "will chase off investors and drive research and development overseas." Johnson noted that drug companies have agreed to shoulder $80 billion of the health plan's cost in part by lowering prices of drugs for seniors purchased through Medicare.

The Biotechnology Industry Association, which also backs at least 12 years of exclusivity, recently spent $300,000 on advertising.

On the other side, the AARP spent nearly $90,000 in May and July to press its case in advertisements targeting selected lawmakers, spokesman James Dau said. The AARP is part of a broad coalition that includes generic-drug makers, consumer groups and labor unions.

The newspaper and airwave battles represent just a slice of the spending.

A report out Tuesday from the watchdog group Common Cause found that large drug companies and their associations have spent $238 million to lobby Congress and federal agencies since 2007.

Records show that the groups backing greater competition from generic copies also lobby heavily. The AARP, which represents 40 million older Americans, spent nearly $57 billion on lobbying during the same period, according to data compiled by the non-partisan Center for Responsive Politics.

This month, a Senate committee approved 12 years of exclusivity. Attention shifts to the House, where a companion, 12-year bill sponsored by Rep. Anna Eshoo, D-Calif., has 139 co-sponsors — compared with 14 lawmakers who back a competing measure that would allow generic competition after five years. Eshoo said she is working to incorporate her plan into the larger health care bill the House Energy and Commerce panel will consider when Congress returns in September.

Opponents of the 12-year period, such as Sen. Sherrod Brown, D-Ohio, said they plan to wage a fight on the Senate floor to remove the provision from the health care package.

Mark Merritt, who heads the Pharmaceutical Care Management Association, said the battle is a test of "Washington's real capacity for change." His association, which represents companies that manage drug benefit programs for employers, supports five years of exclusivity.

"If Washington is unable to get real reform in biologics, it's a terrible bellwether for health care reform," Merritt said.
By Fredreka Schouten, USA TODAY
http://www.usatoday.com/money/industries/health/drugs/2009-07-28-insidebiologics_N.htm?csp=34

NTSB plan aims to shield planes from bird risks

2009-07-29T01:01:00.000-07:00

WASHINGTON — A fatal 2008 crash in Oklahoma City in which a corporate jet struck a large pelican underscores how the nation's commercial planes are not strong enough to withstand impacts from growing populations of large birds, accident investigators said Tuesday.

The National Transportation Safety Board (NTSB) issued four new recommendations designed to strengthen planes, give pilots better guidance on how to avoid a catastrophic impact with birds, and better track birds around airports.

The actions stemmed from a March 4, 2008, crash in Oklahoma City that killed three businessmen and two pilots aboard a Cessna Citation 500 corporate jet. The NTSB ruled that the jet struck one or more American white pelicans at about 3,000 feet altitude shortly after takeoff. The impact crushed the plane's wing.

The case is the latest this year to highlight the danger that birds pose to aviation, including airliners. In what has become known as the "Miracle on the Hudson," a US Airways jet struck a flock of Canada geese above New York City in January. The impact crippled its engines and forced it to splashdown in the Hudson River, where everyone aboard escaped.

The pelican that the Oklahoma City jet struck was likely twice as large as the average goose. White pelicans weigh up to 20 pounds. Commercial jets — including everything from small business aircraft to massive wide-body jets — must be capable of withstanding an impact with birds ranging in size from only 4 to 8 pounds. The populations of nearly all species of large birds have grown dramatically in recent decades.

A committee of industry representatives, U.S. aviation regulators and foreign regulators spent 10 years trying up update the rules, but gave up in 2003 after failing to reach a consensus, said John O'Callaghan, an NTSB investigator.

"I think that's ridiculous," said Debbie Hersman, an NTSB board member who was sworn in as chairman after the hearing. "That's a tremendous waste of time and expertise."

The NTSB also uncovered other problems in the crash. The small airport for private planes where the jet took off, Wiley Post Airport, had not assessed the threat from nearby wildlife. Such assessments were required, the NTSB said.

Though it had nothing to do with the crash, investigators found that the charter flight to take businessmen to Minnesota was illegal because the charter company was authorized to fly only helicopters.

Also, the owner of the jet, another businessman, had not kept adequate logs and maintenance records, the NTSB said.
By Alan Levin, USA TODAY
http://www.usatoday.com/news/nation/2009-07-28-birdstrike_N.htm?csp=34

Napolitano to Unveil New Antiterror Plans

2009-07-29T00:59:00.000-07:00

WASHINGTON -- Homeland Security Secretary Janet Napolitano is expected to outline Wednesday the Obama administration's domestic approach to preventing terrorist attacks -- a strategy that will rely in large measure on refining and expanding initiatives launched under President George W. Bush.

How to keep the U.S. safe and foil terrorists are charged issues that took a central role in last year's presidential campaign, when then-Sen. Barack Obama criticized the Bush administration's tactics. But Ms. Napolitano, in an interview this week, signaled that the Obama administration isn't contemplating a wholesale revision of the agencies or programs created under Mr. Bush to further antiterrorism efforts.

One element of Ms. Napolitano's approach, for example, will be the expansion of a pilot program started during the Bush administration to train police to report such suspicious behavior as the theft of keys from a facility that keeps radiological waste.

It is part of a much broader effort to significantly increase cooperation between her agency and state and local governments across the nation. Her aides say this is one area where her efforts will significantly exceed those of her predecessors in the Bush administration.

Ms. Napolitano also will call for deeper civic involvement and awareness to prevent attacks. She is also expected to discuss efforts to work more closely with foreign governments, from sharing airline-passenger data to intelligence about potential plots.

"We live in a world now where no one department of government can be held to be the sole repository of protecting security," Ms. Napolitano said in an interview Monday night. "There is a role to be played at every level."

But Ms. Napolitano, in a scheduled speech Wednesday to the Council on Foreign Relations in New York, is expected to emphasize the Obama administration's concern for civil liberties, a nod to voters and rights groups who supported Mr. Obama in part because they objected to elements of the Bush administration antiterror policy.

Following the speech, Ms. Napolitano will head to Ground Zero, her first visit to the site of the Sept. 11, 2001, attacks that brought down the World Trade Center towers, killing more than 2,600 people.

In an interview this week about her strategy, it was clear Ms. Napolitano's ideas aren't revolutionary, nor do they represent a sharp break from policies of the past. She isn't seeking another reorganization of the government, or even another reorganization of her department, which is the nation's third-largest with more than 200,000 employees.

Instead, she will emphasize the need to fill the sometimes large and critical information-sharing gaps that still exist among bureaucracies -- from those within her own department, to others on the federal level, down to states and local governments and the private sector. "There is a system out there," she said. "It needs to be perfected."

A key component of the integration efforts is a national network of roughly 70 so-called intelligence-fusion centers. They bring federal, state and local officials under the same roof to "fuse" terrorism-related intelligence.

During an intelligence briefing Monday at the U.S. Coast Guard's Puget Sound Joint Harbor Operations Center, which is in Seattle, Ms. Napolitano pressed officials from participating agencies to name a tangible benefit from the fusion centers in terms of disrupting a specific plot, which they were unable to do. But in an interview later, she said she believes the centers are valuable and will push plans to get intelligence professionals from Washington working at all the sites.

Some of the themes Ms. Napolitano will emphasize Wednesday also echo the findings of a private report released last year called "Homeland Security 3.0."

"While things are quiet, she does actually have an opportunity to do some forceful leadership and get things done," said James Carafano, the report's co-author. "It's much harder the day after a big terrorist attack, because then everyone wants to be in charge."

By CAM SIMPSON
Write to Cam Simpson at cam.simpson@wsj.com
http://online.wsj.com/article/SB124882460649888397.html#mod=whats_news_free?mod=igoogle_wsj_gadgv1

Plan to Tax Insurers Stirs Interest in House

2009-07-29T00:57:00.000-07:00

WASHINGTON -- Senior House Democrats, seeking a health bill acceptable to rank-and-file lawmakers, are warming to a plan to tax insurers that sell high-end health policies.

So far the idea has attracted more support in the Senate, where the Finance Committee is weighing a proposed levy on insurance companies offering individual plans valued at more than a certain limit, likely $25,000 or higher. The insurers would have to pay an excise tax on such policies, and the cost would likely be passed on to employers. While the structure isn't clear, the tax would likely fall on the portion of any policy exceeding the mandated limit.

Adding the proposed tax -- which would raise as much as $180 billion over ten years, according to people familiar with the plan -- would allow the House to shrink the direct surtax on wealthy households included in the current version of its bill. That might widen support among wary Democrats.

Robert Zirkelbach, a spokesman for America's Health Insurance Plans, said taxing insurers "is the wrong approach at the wrong time. New taxes on health-care coverage will make coverage less affordable."

Senate Finance Chairman Max Baucus (D., Mont.) struggled Tuesday to nail down final details of a bipartisan bill that could come with a 10-year price tag below the roughly $1 trillion bill envisioned in the House.

While no deal is in hand, some central points of the Baucus bill, which has been negotiated with three committee Republicans, are becoming clear. In addition to taxing high-value health policies, the legislation would expand coverage by creating a network of nonprofit cooperatives.

Unlike a bill that has passed two committees in the House, it wouldn't mandate that companies provide coverage to their workers. But it would require companies to pick up at least part of the cost of government subsidies if employees wind up needing them, said people familiar with Senate negotiations.

These people said the talks have moved into a new phase, in which would-be Republican supporters are weighing whether to sign on publicly. In return, Republicans are looking for President Barack Obama to provide cover by speaking in support of the bipartisan package. They also want assurance from Senate Democratic leaders that Republican priorities will be protected as the measure moves forward.

While not giving details, Mr. Baucus said he hoped to produce a bill in the "not too distant future."

The Finance Committee deliberations are being closely watched in the House, where Democratic leaders struggled Tuesday to help the House Energy and Commerce Committee resume deliberations on the bill. White House Chief of Staff Rahm Emanuel led negotiations in the House speaker's office with moderate Democrats who have stalled action. But it was unclear when the panel would reconvene.

So far, the House hasn't prepared its own proposal to tax health plans. But House Majority Leader Steny Hoyer (D., Md.) said Tuesday that taxing the most generous health policies would be a "reasonable alternative that I think is good health-care policy and good tax policy." He added that "it's gold-plated...nobody is talking about taxing average family benefits."

In a separate interview, House Majority Whip James Clyburn (D., S.C.) said he has never been a fan of the surtax, and suggested taxing high-end health plans "would be a better way." He added, "I know there are some people who have problems with that, but, hell, those people aren't going to be for anything we do."

In addition to raising revenue, many health-care experts say such a tax could help curb long-term health costs, by creating a disincentive for plans that encourage unnecessary tests and procedures. Maine Sen. Olympia Snowe, one of three Republicans Sen. Baucus hopes will buy into a bipartisan package, said she was supportive of the idea, and made clear the proposal was "on the table."

The money raised by the tax would help provide support for lower-income Americans to buy coverage. Some 71% of Americans employed by private industry had access to employer-sponsored health benefits in March 2009. But just a quarter of the lowest wage earners -- those whose hourly wages put them in the bottom 10% -- had such access, the Bureau of Labor Statistics said Tuesday.
—Janet Adamy and Sara Murray contributed to this article.

By GREG HITT and NAFTALI BENDAVID
Write to Greg Hitt at greg.hitt@wsj.com and Naftali Bendavid at naftali.bendavid@wsj.com
http://online.wsj.com/article/SB124882354845988319.html#mod=whats_news_free?mod=igoogle_wsj_gadgv1

Sotomayor Moves Closer to High Court

2009-07-29T00:56:00.000-07:00

WASHINGTON -- A divided Senate Judiciary Committee approved Sonia Sotomayor's Supreme Court nomination on Tuesday, effectively ensuring she will be confirmed by the full Senate before it leaves for summer recess next week.

With the backing of virtually all 60 Senate Democrats and independents, along with a few Republicans, Judge Sotomayor would join the court a month ahead of its next argument, a special Sept. 9 session to consider striking down limits on corporate political expenditures.

Most Republicans, after initial hesitancy over opposing the first Hispanic nominee to the high court, are lining up behind their Senate leaders, who have cast Judge Sotomayor as a threat to conservative positions.

Only one Judiciary Committee Republican, Sen. Lindsey Graham of South Carolina, joined the 12 Democrats on the committee to vote for Judge Sotomayor. The six other Republicans said they feared Judge Sotomayor would skew her rulings to favor racial and ethnic minorities, refuse to overturn an 1886 Supreme Court decision upholding state weapons restrictions, and fail to block redevelopment programs and environmental regulations that impinge on property owners.

Sen. Charles Grassley (R., Iowa) said he doubted Judge Sotomayor understood either "the rights given to Americans under the Constitution" or "the proper role of a judge in our system of checks and balances."

At hearings this month, Judge Sotomayor, a 17-year veteran on federal trial and appellate courts in New York, summarized her judicial philosophy as "fidelity to the law," and denied that lectures in which she mused about the possible influence of a judge's race or sex on decision-making reflected a radical method of legal interpretation.

Mr. Grassley said he questioned "the reliability of statements made at a formal hearing where the nominee is clearly prepared to answer questions, as compared to statements that were made over the years in any unguarded manner."

Sen. Sheldon Whitehouse (D., R.I.) accused the Republicans of portraying their own political views on disputed issues as if they were settled law.

Republicans were trying "to define justice in America" as aligned with conservative policies, he said. Republicans are entitled to their opinions about gun rights and other issues, but not "to define that point of view as a judicial norm against which any other point of view is to be seen as an aberration," Mr. Whitehouse said.

The committee's ranking Republican, Alabama Sen. Jeff Sessions, returned to the three cases that opponents say disqualify Judge Sotomayor. In one case -- reversed last month by the Supreme Court -- she voted to affirm a Connecticut city's decision to throw out a firefighter promotional exam because too few blacks scored high enough to advance. Another upheld a state ban on a martial-arts weapon. A third rejected a property owner's complaint against eminent-domain proceedings.

Mr. Sessions said these cases "deserved to be treated with great thoughtfulness and care; yet in each instance, her decisions were unacceptably short, and their only consistency was that the result favored a liberal, pro-government ideology against the individuals asserting their constitutional rights."

Sen. Ben Cardin (D., Md.) retorted with a string of different Sotomayor decisions he said showed she saw the Constitution "as a timeless document able to protect individual rights against the abuses of power, applying these protections to contemporary challenges," including expansive readings of the First Amendment and the Voting Rights Act.

In her testimony, Judge Sotomayor followed the conventional strategy for judicial nominees -- citing the chance an issue could come before the court as a reason to say almost nothing about her legal thinking.

Several senators said they wanted to re-examine the conduct of confirmation hearings. "It is reasonable for us to ask them to speak more openly, about past Supreme Court decisions and how they would decide cases that are close calls, what reasoning they would use and what factors they would consider," said Sen. Herb Kohl (D., Wis.).

By JESS BRAVIN
Write to Jess Bravin at jess.bravin@wsj.com
http://online.wsj.com/article/SB124879689597487171.html#mod=whats_news_free?mod=igoogle_wsj_gadgv1

In a Savings Shocker, the Government Discovers That Paper Has Two Sides

2009-07-29T00:54:00.000-07:00

WASHINGTON -- With the budget deficit soaring toward $2 trillion, the Department of Justice has figured out how to play its part: double-sided photocopying.

There are other acts of national sacrifice. The Forest Service will no longer repaint its new, white vehicles green immediately upon purchase. The Army will start packing more soldiers onto R&R flights. The Navy will delete unused email accounts.

Three months ago, President Barack Obama ordered his cabinet secretaries to find $100 million in budget cuts for the current fiscal year to emphasize the point that he, too, was serious about belt-tightening. They responded with $102 million. That is 0.006% of the estimated federal deficit.

The list of 77 spending cuts, which the White House is calling "the $100 million savings challenge," reflects the vastness of government -- and its vast inefficiency. Hundreds of millions of dollars in savings were found simply by casting around for areas to trim.

Still, the reductions barely scratch the surface. "Some of these cuts are so small they would be a rounding error of a rounding error in the federal budget," said Brian Riedl, a federal budget expert at the conservative Heritage Foundation. They also show how "unbelievably outdated" the government is, he said.

"I mean, emailing around the daily press clips instead of printing them out and distributing them? That should not have been necessitated by a presidential order."

The Air Force has proposed replacing its specially formulated jet fuel with commercial aviation fuel, which it will top up with some military additives. That will save nearly $52 million next year, when the program begins.

The Office of Thrift Supervision, a division of the Treasury, identified unused phone lines costing $320,000.

By increasing the number of soldiers traveling on each airplane chartered for rest-and-relaxation leave, the Army will save $18 million in the next few months. The Navy will save $5 million a year by deleting inactive Internet accounts to configure their computer networks more cheaply.

The Justice Department estimates it can save $573,000 through fiscal 2010 by setting up its printers and copiers to use both sides of the paper. By emailing some documents instead of printing them out, the Department of Homeland Security will save $318,000.

Both Homeland Security and the National Highway Traffic Safety Administration have pledged to take the same step that has sent the newspaper industry into a tailspin: They will start getting their news online free, rather than renew their subscriptions. Homeland Security will save $47,160, or 0.0000026% of the deficit.

The Coast Guard realized that maintenance schedules for its 1,800 small boats assumed they were for recreational use such as water-skiing or bass-fishing. By adjusting maintenance schedules to reflect what the Coast Guard actually does, the agency discovered it can save $2 million a year.

The Federal Emergency Management Agency is going to save $3.8 million by refurbishing and reusing or selling its emergency trailers -- like the ones provided to people displaced by hurricanes -- instead of ditching them.

Only one cabinet office proposed actually eliminating a program. The Department of Labor says it will disband the nearly 40-year-old Employment Standards Administration. With it goes an assistant secretary of labor, two deputy assistants and an administrative office.

A Labor Department official downplayed the move. The ESA's main activities (enforcing workplace regulation and workers' rights rules) are alive and well, the official said. They will just have a few less bosses to report to.

The Bureau of Reclamation's office in Boise, Idaho, is getting rid of its Beechcraft King Air 200 airplane. It wasn't a tough call, says Bruce Cassidy, program manager for property and office services. The glamorous, airborne inspections of the west's vast water projects -- a staple of Bureau of Reclamation life since 1956 -- is giving way to more the mundane life of the office jockey. Instead of flying engineers out to the Grand Coulee Dam in Washington State, staffers use videoconferencing gear and computer monitoring to keep tabs on the facility.

Besides, the bureau's office in Boulder City, Nev., was looking to upgrade an old aircraft of its own. So it got Boise's hand-me-down Beechcraft.

White House budget office spokesman Ken Baer said no one is suggesting the $100-million exercise will close the budget gap. The cost-cutting effort wasn't a one-off program. This summer, the budget office told each cabinet department to devise a 2011 budget with zero growth, and another with a 5% cut. Before the 2011 budget proposal comes out early next year, the budget office will again go scouting for cost cuts and inefficiencies.

On Wednesday, the White House budget office will release three sets of guides to press federal agencies to realize $40 billion in savings through procurement and contract-policy changes.

"The fact that it may seem that there's a lot of savings that is easily attainable proves a point," he said. "There's a lot of change in Washington that has to happen to make sure taxpayer dollars are used effectively and efficiently."

Republicans weren't impressed. If the administration produces $100 million in savings every 98 days for the rest of Mr. Obama's term, the savings will total $1.5 billion, or three days of interest on the federal debt, said Don Stewart, spokesman for Senate Minority Leader Mitch McConnell.

"These savings tends to be in thousands, tens of thousands and millions," said Rep. Paul Ryan of Wisconsin, the ranking Republican on the House Budget Committee. "Our fiscal challenges are in the thousands of billions."

By JONATHAN WEISMAN
Write to Jonathan Weisman at jonathan.weisman@wsj.com
http://online.wsj.com/article/SB124882436513388423.html#mod=whats_news_free?mod=igoogle_wsj_gadgv1

First lady to honor health clinic funded by federal stimulus

2009-07-27T12:54:00.000-07:00

WASHINGTON (CNN) -- On a sunny day in March, about 25 contractors clustered in a dusty former grocery store in Bowling Green, Virginia. Construction was slow, and they hoped this new project -- a health care center funded by stimulus dollars -- could help steer their struggling businesses back toward stability.

Four months later, and three weeks behind schedule because of electrical problems, first lady Michelle Obama on Monday will help cut the ribbon on the health center and declare the project a stimulus success story.

The Caroline Family Practice was one of 126 proposed clinics to receive stimulus funds from Washington to both create jobs and emphasize preventive care. The clinic will provide low-income Virginians with inexpensive medical, dental and mental health care.

When CNN visited the site in March, Rod Manifold, who heads the umbrella nonprofit Central Virginia Health Services, said the clinic would serve 3,000 to 4,000 people and create as many as 30 long-term jobs. It should also relieve crowding at a burdened health center nearby.

Manifold received a $1.3 million stimulus check from the Department of Health and Human Services in March and had 120 days to turn a vacant supermarket into an operating clinic. And he said his government contacts were understanding about the short construction delay.

"They don't slap you around too much. They push you hard, and they want you to do it," he said. "That is always a challenge to us to try to get it done and operational."

The construction job went to a Richmond, Virginia-based contractor with employees who live in the area.

Soon, similar construction should be under way across the country. While visiting another health clinic last month, Obama announced another $851 million in stimulus funds to build or renovate 1,500 health centers nationwide.

One challenge Manifold sees in the future: continuing to fund the clinic.

When the stimulus money stops flowing two years from now, the health clinics will need to find alternate sources of funding to remain in operation.

http://www.cnn.com/2009/POLITICS/07/27/michelle.obama.stimulus/index.html?eref=rss_us

Police: Woman killed her infant, ate part of brain

2009-07-27T12:49:00.000-07:00

SAN ANTONIO (AP) — San Antonio police say a woman accused of beheading her 3-week-old infant son used a knife and two swords in the attack and ate some of the child's body parts.

San Antonio Police Chief William McManus told reporters Monday that Otty Sanchez's attack on her son, Scott Wesley Buchholtz-Sanchez, was "too heinous" to fully discuss.

But he says Sanchez ate part of the newborn's brain and bit off three of his toes before stabbing herself twice.

Police say the 33-year-old Sanchez told officers who were called to her house early Sunday that she killed her son at the devil's request.

Sanchez is charged with capital murder and is being held on $1 million bail. She is recovering from her wounds at a hospital.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

http://www.usatoday.com/news/nation/2009-07-27-baby-killed_N.htm?csp=34

GOP Sen. Sessions to vote against Sotomayor

2009-07-27T12:42:00.000-07:00

WASHINGTON (AP) — The senior Republican on the Senate Judiciary Committee said Monday he'll vote against Supreme Court nominee Sonia Sotomayor, siding with his party's leaders against the judge who's on a fast track to becoming the first Hispanic justice.

Sen. Jeff Sessions, R-Ala., weighed in on President Obama's first high court choice the day before his panel is scheduled to vote on her nomination. Her confirmation by the full Senate — with at least a handful of GOP votes — is virtually certain by next week.

Sessions accused Sotomayor of trying to "rebrand" her judicial approach during her confirmation hearings. He said he didn't believe she has the "deep-rooted convictions necessary to resist the siren call of judicial activism" when she joins the nation's highest court.

SESSIONS: Senator outlines his case for USA TODAY

He cited her rulings on property and gun rights, as well as a much-discussed rejection of a reverse discrimination claim by white firefighters, as examples of decisions that violated the Constitution and reflected "liberal political thought."

Most conservative Republicans are lining up against Sotomayor, but a handful of GOP senators are siding with majority Democrats to back her.

Sen. Mike Johanns, R-Neb., also announced Monday he would vote against Sotomayor, saying he was concerned she wouldn't be able to set aside her biases and rule impartially. In a statement released by his office, Johanns said he was particularly troubled about Sotomayor's stance on gun rights.

Sessions announced his decision in an opinion piece published in Monday's editions of USA TODAY.

http://www.usatoday.com/news/washington/judicial/2009-07-27-sessions-sotomayor_N.htm?csp=34

5-year-old survivor of wrong-way N.Y. crash critical

2009-07-27T12:39:00.000-07:00

MOUNT PLEASANT, N.Y. — A 5-year-old boy who lost his mother, his sister and three cousins in a fiery wrong-way crash on the Taconic State Parkway in Westchester County, N.Y., Sunday that also killed three others is recovering in critical condition Monday, police said.

Diane Schuler, 36, of West Babylon was driving two of her own children and three of her nieces home in a minivan about 1:30 p.m. Sunday when she entered the northbound Taconic going the wrong way, causing what amounts to the worst crash in Westchester County in 75 years.

Police will release more details at an 11 a.m. news conference Monday.

The people killed in the other car from Yonkers, N.Y., were Guy Bastardi, 49, and his 81-year-old father, Michael Bastardi, and a friend Daniel Longo, police said.

The accident occurred near Mount Pleasant, N.Y., when Schuler's minivan crashed head-on into an SUV carrying the three people from Yonkers.

IND MORE STORIES IN: New York | Chevrolet | Westchester County | Valhalla | Yonkers | Taconic State Parkway

The minivan then careened into a third vehicle, causing injuries to two people that were not life-threatening.

The impact of the crash and the fire that engulfed the minivan killed the mother, and four children under 10 years old. But fast-acting firefighters rescued the 5-year-old boy, Brian Schuler, from the burning car.

"I've been with the state police for 24 years and I've never investigated anything so horrific," state police investigator Joseph Becerra said.

It was also the second wrong-way accident on the Taconic Sunday. A two-car crash in Kent, N.Y., earlier in the day left five people hospitalized.

By Rob Ryser, The Journal News
http://www.usatoday.com/news/nation/2009-07-26-NYC-crash_N.htm?csp=34

Obama Seeks Broader Ties With China

2009-07-27T12:36:00.000-07:00

WASHINGTON -- U.S. President Barack Obama called Monday for deeper U.S. engagement with China, saying both countries can benefit by coordinating their responses to the economic crisis and working together to address climate change.

In remarks prepared for delivery at the start of the U.S.-China Strategic and Economic Dialogue, Mr. Obama said the link between Washington and Beijing will shape the 21st century, making it as important as any bilateral relationship in the world. "That is the responsibility we bear," he said. (See Obama's full remarks)

The two-day meeting at Washington's Ronald Reagan Building is focused on a host of thorny issues, from the financial meltdown to North Korean and Iran's nuclear ambitions. U.S. Secretary of State Hillary Clinton and U.S. Treasury Secretary Tim Geithner are heading the U.S. side. State Councilor Dai Bingguo and Vice Premier Wang Qishan are representing China.

"The United States and China share mutual interests," Mr. Obama said. "If we advance those interests through cooperation, our people will benefit, and the world will be better off -- because our ability to partner with each other is a prerequisite for progress on many of the most pressing global challenges."

The session comes against a backdrop of a soaring U.S. deficit and concerns on Wall Street that the appetite for U.S. debt overseas could eventually evaporate. China is the largest foreign holder of U.S. government securities.

Messrs. Geithner and Wang both spoke of hopeful signs that the global economy was beginning to emerge from its worst financial crisis since the Great Depression, according to the Associated Press.

Mr. Geithner said that the so far successful efforts of the two economic superpowers to move quickly to deal with the downturns with massive stimulus programs marked a historic turning point in the relationship of the two nations.

Speaking through a translator, Mr. Wang said that "at present the world economy is at a critical moment of moving out of crisis and toward recovery."

Under the Bush administration, the dialogue with China was narrower, focused solely on economic issues. In broadening the effort to also include "strategic" issues, the White House is acknowledging the complexity of U.S. ties with China. At the same time though, it is likely reducing the likelihood that the meeting, which meets just once a year, can achieve concrete results.

Mr. Obama said the U.S. and China can deepen cooperation to promote financial stability through transparency and regulatory reform. He said the two countries also can seek "free and fair trade" and seek a conclusion to the long-stalled Doha trade talks that is "ambitious and balanced."

"We can update international institutions so that growing economies like China play a greater role that matches their greater responsibility," Mr. Obama said. "And as Americans save more and Chinese are able to spend more, we can put growth on a more sustainable foundation -- because just as China has benefited from substantial investment and profitable exports, China can also be an enormous market for American goods."

On energy, Mr. Obama said the U.S. and China -- the world's largest energy consumers and biggest greenhouse gas emitters -- need to work toward clean energy solutions.

"Common sense calls upon us to act," he said, adding that both countries should work together on a global warming strategy at December's U.N. climate-change conference in Copenhagen.

Mr. Obama, however, acknowledged that the U.S. and China don't agree on every issue, such as human rights and respect for religion.

"But that only makes dialogue more important -- so that we can know each other better, and communicate our concerns with candor," he said.

Mr. Obama conceded that people in China and the U.S. are skeptical of each other.

"Some in China think that America will try to contain China's ambitions; some in America think that there is something to fear in a rising China. I take a different view," he said. "I believe in a future where China is a strong, prosperous and successful member of the community of nations; a future when our nations are partners out of necessity, but also out of opportunity. This future is not fixed, but it is a destination that can be reached if we pursue a sustained dialogue like the one that you will commence today, and act on what we hear and what we learn."
—The Associated Press contributed to this article.

By HENRY J. PULIZZI
Write to Henry J. Pulizzi at henry.pulizzi@dowjones.com
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Body found in Grand Canyon park believed to be missing hiker

2009-07-26T19:24:00.000-07:00

(CNN) -- Search teams combing the Grand Canyon National Park in Arizona found a body on Saturday believed to be that of a missing 20-year-old hiker, the National Park Service said.

Bryce Gillies, a student at Northern Arizona University, left last Saturday for his backpacking trip through the Deer Creek-Thunder River area of the park, and said he would return on Monday. A search effort was launched on Tuesday after he was reported missing.

Some 50 National Park Service volunteers and staffers from Grand Canyon and nearby parks joined in the search. One search team found a body in the Bonita Creek area on Saturday at 9:30 a.m. (7:30 a.m. ET) that "has been presumptively identified" as Gillies, according to NPS.

"The body will be recovered by helicopter via long-line operation and transferred to the Coconino County Medical Examiner," NPS said.

It is the second death this month at Grand Canyon National Park, a world-famous landmark that receives about 5 million visitors yearly.

A California man drove his car over the edge of canyon's South Rim, plunging some 600 feet into the ravine. His July 13 death was ruled a suicide.

More than 100 hikers have died at the park between 1925 and 2006, half of them fatal falls, according to Michael Ghiglieri and Thomas Myers, authors of "Over the Edge: Death in Grand Canyon."

http://www.cnn.com/2009/US/07/25/grand.canyon.hiker.death/index.html?eref=rss_us

Police: 8 killed in highway crash outside New York

2009-07-26T19:22:00.000-07:00

NEW YORK (CNN) -- A three-vehicle crash north of New York killed eight people, including four children, state police said on Sunday.

A fifth child is being treated for injuries suffered in the crash near Pleasantville, about 30 miles north of New York. Police initially reported no survivors.

The crash happened when a minivan carrying the five children and one adult was heading the wrong way on a northbound lane of the Taconic State Parkway, police said. It crashed head-on into an SUV carrying three adults.

The minivan then careened into a third vehicle before rolling over and bursting into flames, state police said.

The two adults in the third vehicle were being treated for minor injuries, police said.

http://www.cnn.com/2009/US/07/26/new.york.fatal.crash/index.html?eref=rss_us

Report: Suspects in border agent's killing arrested in Mexico

2009-07-26T19:17:00.000-07:00

(CNN) -- Mexican authorities on Saturday arrested four men in connection with last week's shooting death of a U.S. Border Patrol agent in San Diego County, California, Mexico's state-run news agency Notimex reported.

Mexican federal police identified the men as human smugglers, and said they were in the act of transporting 21 immigrants when they were detained in the northwest state of Baja California, Notimex said.

At a news conference, federal police identified two of the suspects as brothers Jose Eugenio Quintero Ruiz, 49, and Jose Evodio Quintero Ruiz, 43. The other two arrestees were taxi drivers Antonio Badallares Zepeda, 57 and Jose Alfredo Camacho Penuela, 34, Notimex reported.

Border Patrol Agent Robert Rosas was shot and killed Thursday night while responding to a potential incursion into the United States in the Campo area in San Diego County, U.S. authorities said.

The Mexican federal police did not offer specific evidence of the suspects' role in the killing, but said intelligence reports indicated the group was responsible for kidnappings, rapes and murders of several people who tried to cross to the United States, Notimex said. The men were wanted by American authorities, police said.

Notimex said that during his interrogation, Jose Eugenio Quintero told investigators the shooter was Ernesto Parra Valenzuela, a man arrested the day before by local police in Tecate, Mexico.

Rosas, who is survived by his wife and two young children, had been a border agent for three years.

Rosas was the ninth Border Patrol agent to be killed while on duty since 2006, according to the agency's Web site.

Two agents died in a vehicle wreck in 2006, and four died in 2007, including two who died in vehicle wrecks, a third who drowned and a fourth who suffered a heart attack while pursuing undocumented immigrants.

Two agents died on duty last year, the Border Patrol said. One died in a single-vehicle wreck; another was struck and killed by a vehicle driven by a suspected smuggler, according to the agency's Web site.

http://www.cnn.com/2009/CRIME/07/26/mexico.us.border.patrol/index.html?eref=rss_us

Ex-boxing champ Vernon Forrest shot to death

2009-07-26T19:15:00.000-07:00

ATLANTA, Georgia (CNN) -- Former boxing champion Vernon Forrest is dead after being shot multiple times in a neighborhood southwest of downtown Atlanta, officials said Sunday.

An Atlanta police spokeswoman said it appeared that Forrest, 38, had been robbed, which led to a confrontation in which he was shot several times in the back.

Police had no suspects as of midday Sunday, said the spokeswoman, Sgt. Lisa Keyes.

Mark Guilbeau, senior investigator with the Fulton County Medical Examiner's office in Atlanta, said an autopsy will be conducted Sunday, and results are expected by afternoon.

Forrest was the International Boxing Federation welterweight champion in 2001, the World Boxing Council welterweight champion in 2002-2003, and the WBC light welterweight champion in 2007-2008 and 2008-2009, according to the BoxRec Web site.

He was named the World Boxing Hall of Fame fighter of the year in 2002, according to BoxRec.

http://www.cnn.com/2009/CRIME/07/26/boxer.killed/index.html?eref=rss_us

Bone found in cemetery storage area leads to probe

2009-07-26T19:13:00.000-07:00

CHICAGO, Illinois (CNN) -- Authorities will investigate an Illinois cemetery after a bone found on the ground there was determined to be human, a sheriff's spokesman said Saturday.

On Friday, a worker dropping off vaults at Mt. Glenwood Cemetery, in Glenwood, Illinois, noticed a bone lying on the ground, Cook County sheriff's office spokesman Steve Patterson said in an e-mail.

The bone was located in an area where vaults, old headstones and other cemetery materials are stored, Patterson said.

The worker contacted authorities and the bone was taken to the Cook County Medical Examiner's office, which determined that it was human, Patterson said.

"Based on that information, the sheriff's police will now start an investigation, which will include interviewing those working at the cemetery, among others," he wrote.

"I don't know whether this is a sign of a greater problem or if there is a valid reason why this bone was found where it was."

The discovery comes days after three people filed a lawsuit against the cemetery alleging "unauthorized tampering with grave sites, including the apparent removal of a headstone," according to a court document posted on the Chicago Tribune's Web site.

Attempts to reach the cemetery for comment were not successful.

Patterson acknowledged the lawsuit, which was filed in the Cook County Circuit Court on Monday, but said he did not "know if there is a correlation between the civil suit and this bone."

He said there was no reason for authorities to close the cemetery.

Additional details on the bone were not immediately available.

Earlier this month, authorities said workers at Burr Oak Cemetery in Alsip, Illinois, dug up hundreds of graves and resold them.

http://www.cnn.com/2009/CRIME/07/25/illinois.cemetery.bone/index.html?eref=rss_us

Obama Scrambles to Defuse Race Flap

2009-07-25T22:49:00.000-07:00

WASHINGTON -- President Barack Obama tried to step back from the contretemps over the arrest of African-American scholar Henry Louis Gates Jr., saying he "could have calibrated" his words differently when he said police had "acted stupidly" in handling the situation.

The president's highly unusual appearance at press secretary Robert Gibbs's daily briefing came just hours after Massachusetts police unions demanded that Mr. Obama apologize for implying racial bias may have been a factor when the Harvard professor was arrested at his home in Cambridge, Mass. Mr. Obama personally telephoned the arresting officer, Sgt. James Crowley, who in turn suggested that he, Mr. Gates and the president have a beer at the White House.

The president then called Mr. Gates and suggested the professor join the president and the policeman at the White House.

"We may put that together," Mr. Obama said, adding that Officer Crowley also asked for help getting the media off his lawn.

The racial firestorm surrounding the country's first African-American president came as a shock to the White House, which had spent the prior two days dismissing it as a media creation.

Mr. Obama and his youthful black political allies, such as Massachusetts Gov. Deval Patrick, have spent their careers avoiding racial controversy and attempting -- with much success -- to redefine racial politics. But both men have been swept into the Gates controversy by words that highlight how deep the divide between blacks and whites remains on some issues, especially the actions of police.

Mr. Obama, in coming close to apologizing, conceded that the hard feelings on both sides were real and revealing. "The fact that it has garnered so much attention, I think, is a testimony to the fact that these are issues that are still very sensitive here in America," he said.

The July 16 incident erupted after a neighbor told police she thought someone was breaking into Mr. Gates's home. Mr. Gates, who had just returned from a trip, explained to Sgt. Crowley that it was his residence and subsequently accused police of racism and continued to berate the officer while following him outside. After warning the professor, Sgt. Crowley arrested him for disorderly conduct and took him into custody for several hours.

The president's handling of the matter was reminiscent of the last time racial divisions threatened him politically. Last spring, then-Sen. Obama laid low for days as the racially charged speeches of his former pastor, Jeremiah Wright, scorched his presidential candidacy. Once he moved, Mr. Obama sought to turn the issue into a "teachable moment," a term he again used Friday, with a March 2008 speech in Philadelphia on race and the deep hurt on both sides of the divide.

Since his inauguration, he has downplayed his African-American identity, waiting until last week to address a largely black organization. That speech to the NAACP held the pointed message that African-Americans had "no excuses" for failure.

Police officials all but forced the president to jump back into the matter Friday, holding a news conference in Massachusetts to say that he and Mr. Patrick insensitively shot from the hip when they suggested bias had a role in Mr. Gates's arrest. Sgt. Crowley was at the news conference Friday, along with at least 20 other officers and lawyers showing support for him.

"The president should make an apology to all law-enforcement personnel," said Steve Killian, president of the Cambridge Police Patrol Officers Association.

To many African-Americans -- including Mr. Obama -- his comments stated the obvious: That a man shouldn't be arrested in his own home after proving he belongs there, regardless of any anger he expresses toward police.

The Cambridge police department has dropped all charges against Mr. Gates; he has demanded an apology from Sgt. Crowley, who has refused. The president reiterated that he still believes "pulling Mr. Gates out of his home to the station" was an overreaction.

Clear to all sides are the political ramifications of the flap. Both the National Republican Senatorial Committee and the National Republican Congressional Committee have used it to try to drive a wedge between the president and conservative Democrats in Congress, and to cast him as hostile to law-enforcement officers -- a politically damaging label Democrats have long been tarred with.

And Mr. Obama said the controversy is swamping his efforts to drum up support for his health-care overhaul.

The president himself acknowledged that the way he portrayed the incident inflamed tensions. When Mr. Obama was asked about the Gates arrest at a Wednesday night news conference about health care, he initially said he didn't have all the facts. At that point, the president should have stopped, said Alan McDonald, counsel to one of the Cambridge police unions.

One of those facts was that police said it looked like someone tried to break into Mr. Gates's house while he was away. Another was that Sgt. Crowley had taught a racial-profiling class at a police academy for the past five years.

In saying police acted "stupidly," the president "used the right adjective but directed it to the wrong party," said Dennis O'Connor, president of the union that represents Sgt. Crowley.

But Mr. Obama took sides. At his Wednesday briefing, he said: "I think it's fair to say, No. 1, any of us would be pretty angry; No. 2, that the Cambridge police acted stupidly in arresting somebody when there was already proof that they were in their own home."

Mr. Patrick went further, calling the arrest "every black man's nightmare and a reality for many black men."

That decision to jump in runs counter to the care both men have taken in their political careers. The question is, were they motivated by their race and personal experiences? Mr. Obama, the son of an African man and a white woman, wrote in great depth about his struggles with his racial identity in his memoir, "Dreams From My Father," starting with his grandmother's fear of a black man at a bus stop.

Kenneth Edmonds, chief of staff to Rep. Jesse L. Jackson Jr., and a fellow South Side Chicago African-American, said the president's outburst Wednesday came not because of his race but because of his professional background. He is a constitutional lawyer, steeped in complex legal issues, who as an Illinois state senator worked on racial profiling. He knows Mr. Gates personally, and as a Harvard law graduate he knew the setting of the confrontation, an affluent neighborhood just off Harvard Square.

"He had the knowledge and confidence that he could address this issue very carefully," Mr. Edmonds said.

But Mr. Obama alluded to the depth of blacks' feelings when he said, "because of our history, because of the difficulties of the past, you know, African-Americans are sensitive to these issues. And even when you've got a police officer who has a fine track record on racial sensitivity, interactions between police officers and the African-American community can sometimes be fraught with misunderstanding."

By JONATHAN WEISMAN and SIMMI AUJLA
Write to Jonathan Weisman at jonathan.weisman@wsj.com and Simmi Aujla at simmi.aujla@wsj.com
http://online.wsj.com/article/SB124844815302279253.html

Obama Seeks Backing From Small Business on Health Reform

2009-07-25T22:48:00.000-07:00

WASHINGTON – The Obama White House will seek to shore up support for its health-care overhaul this weekend by reaching out to millions of small-business owners and employees.

With public doubts about reform on the rise, President Barack Obama will focus his Saturday address on the advantages of reform for small business. White House officials also will invite feedback and questions on health care through LinkedIn, a social networking service that counts 12 million small-business owners and employees among its members, according to the White House.

The top White House economist, Christy Romer, also will hold a live online video chat on Wednesday.

In advance of those events, the White House Council of Economic Advisers, which Ms. Romer chairs, released a report Saturday morning addressing the advantages it sees for small businesses from overhauling the health-care system.

It counts among the benefits reduced costs of health care coverage – the report estimated that small businesses pay as much as 18% more than big businesses – and expanded access to coverage, through creation of insurance exchanges.

The report also noted that certain small businesses would qualify for tax credits for offering health care. The House Democrats' draft bill, for example, would allow a firm with eight employees that paid $20,000 per worker in wages and $8,000 per worker in health insurance premiums would qualify for a total tax credit of $32,000, the report says.

The White House report sought to counter claims by critics – including Republicans – that the Democratic plans would hurt small businesses. "What we found is the exact opposite," Ms. Romer said in a conference call with reporters. "The current system is really working very poorly" for small businesses.

Republicans responded skeptically. "There's a reason why almost every employer and small business group is opposed to the Democrats' government takeover of health care, and that's because it would impose new job-killing taxes during a recession," said Antonia Ferrier, a spokeswoman for House Republican Leader John Boehner of Ohio. "No report can change that."

Republicans have criticized several features of the health-care overhaul, such as coverage mandates for larger businesses and an optional government-run health care plan. Lately, they've focused their ire on a proposed surtax on high-income taxpayers to help pay for expanded access. That would likely hit a number of entrepreneurs, executives and professionals who effectively pay tax on their business profits at individual rates.

By JOHN D. MCKINNON
Write to John D. McKinnon at john.mckinnon@wsj.com
http://online.wsj.com/article/SB124848776710780855.html

California Lawmakers Pass Budget Plan

2009-07-25T22:46:00.000-07:00

SACRAMENTO, Calif. -- California's legislature on Friday approved a deal to close a $24 billion budget shortfall, agreeing to a spending plan that relies on sharp cuts in education and health care along with one-time accounting fixes that may only offer brief relief to battered state finances.

"This saves the state from financial ruin and from drowning in a financial abyss," said Gov. Arnold Schwarzenegger. He said he would sign the budget by Monday.

The budget deal would bring some immediate relief to California's near-empty coffers. It would allow the state to approach Wall Street to obtain its annual short-term loans. And it would open the door for officials to stop paying creditors with the IOUs they have been issuing since July 2.

How soon that could happen was unknown, said Controller John Chiang, the state's top accountant. He said Friday that his office must get data from the governor and conduct a stress test to determine whether the budget provides sufficient revenue to stop the IOUs. The process would take at least a week and a half.

Even then, there are no guarantees the IOUs would stop right away. "If you've been out of a job, and you have mortgage bills, utility bills and credit-card bills and you suddenly get hired for a job, it doesn't immediately put cash in your pockets to pay for all of those bills," Mr. Chiang said.

Early Friday afternoon, passage by the Assembly had appeared to be in doubt, with Republicans opposing part of the plan requiring California to pay schools in future years the billions of dollars the state is cutting this year.

Mr. Schwarzenegger had wanted a $26 billion solution, with $24 billion to close the budget gap plus a $2 billion reserve fund. But lawmakers negotiated down to $24 billion.

The plan's $16 billion in spending cuts would compound the state's economic woes, economists say. By January 2010, joblessness would likely rise and consumption decline as hundreds of thousands of teachers, prison guards and other public-sector employees get furloughed and laid off, they say.

The plan would close the shortfall in a $92 billion general-fund budget through June 2010. The $16 billion in spending cuts include $8 billion from education and $1 billion each from salaries, prisons and health care.

In addition, the plan would take nearly $4 billion of local-government funds that have to be repaid, and use other one-time solutions and accounting gimmicks that would be impossible or difficult to replicate in the future.

Some public agencies have already made cuts. This month, more than 200,000 state workers began taking a 14% pay cut with their three-day-a-month furloughs. The two state university systems are also furloughing administration and faculty while boosting fees and class sizes.

Despite the budget's passage, the governor acknowledged the state's financial woes aren't over. Some economists predict an additional $5 billion to $10 billion shortfall will arise this fiscal year.

By STU WOO
Write to Stu Woo at Stu.Woo@wsj.com
http://online.wsj.com/article/SB124844175762978995.html

Biden Says Weakened Russia Will Bend to U.S.

2009-07-25T01:24:00.000-07:00

WASHINGTON -- Vice President Joe Biden said in an interview that Russia's economy is "withering," and suggested the trend will force the country to make accommodations to the West on a wide range of national-security issues, including loosening its grip on former Soviet republics and shrinking its vast nuclear arsenal.

Mr. Biden said he believes Russia's economic problems are part of a series of developments that have contributed to a significant rethinking by Moscow of its international self-interest. The geographical proximity of the emerging nuclear programs in Iran and North Korea is also likely to make Russia more cooperative with the U.S. in blocking their growth, he said.

But in the interview, at the end of a four-day trip to Ukraine and Georgia, Mr. Biden said domestic troubles are the most important factor driving Russia's new global outlook. "I think we vastly underestimate the hand that we hold," he said.

"Russia has to make some very difficult, calculated decisions," Mr. Biden said. "They have a shrinking population base, they have a withering economy, they have a banking sector and structure that is not likely to be able to withstand the next 15 years, they're in a situation where the world is changing before them and they're clinging to something in the past that is not sustainable."

Mr. Biden's remarks were the most pointed to date by a senior administration official on why the Obama administration believes its "reset" with Russia is likely to succeed, while previous efforts to engage Moscow by the Clinton and Bush administrations ended with little progress.

The remarks also are among the administration's most critical of Russia's current role in the world, and come just weeks after President Barack Obama insisted that the U.S. seeks a "strong, peaceful and prosperous Russia" in an address at his high-profile July summit in Moscow with Russian President Dmitry Medvedev.

Natalya Timakova, a spokeswoman for Mr. Medvedev, declined to comment on Mr. Biden's remarks. Ms. Timakova acknowledged that the Russian government is currently looking at many of the issues he raised -- including economic challenges, the banking sector and the country's shrinking population.

Excerpts: Biden on Eastern Europe

“I can see Putin sitting in Moscow saying, 'Jesus Christ, Iran gets the nuclear weapon, who goes first?' Moscow, not Washington.” Read more interview excerpts

Despite Russia's economic and geopolitical difficulties, Mr. Biden said, Moscow could become more belligerent in the short term unless the U.S. continues to treat Russia as a major player on the international stage. He said Russian leaders are gradually beginning to grasp their diminished global role, but that the U.S. should be cautious not to overplay its advantage.

"It won't work if we go in and say: 'Hey, you need us, man; belly up to the bar and pay your dues,' " he said. "It is never smart to embarrass an individual or a country when they're dealing with significant loss of face. My dad used to put it another way: Never put another man in a corner where the only way out is over you."

Since the end of the Cold War, consecutive U.S. administrations have tried to re-engage with Moscow on a range of foreign-policy issues, in the belief that the two countries had increasingly common national-security interests. After initial charm offensives, however, both the Clinton and Bush administrations' efforts were stymied.

Mr. Biden's remarks illustrate the extent to which the Obama administration believes the balance of power is shifting toward Washington, giving the White House a new opening to leverage its strategic advantages to persuade Moscow to reduce Russia's nuclear arsenal, loosen its grip on emerging democracies on its border, and cooperate on Iran and North Korea.

"It's a very difficult thing to deal with, loss of empire," Mr. Biden said. "This country, Russia, is in a very different circumstance than it has been any time in the last 40 years, or longer."

Specifically, he said, economic troubles played a central role in Moscow's strong desire to restart nuclear-reduction talks. He noted that Russia can no longer afford to maintain an arsenal that, while much smaller than Cold War levels, is still one of the two largest in the world by far. "All of sudden, did they have an epiphany and say: 'Hey man, we don't want to threaten our neighbors?' No," Mr. Biden said. "They can't sustain it."

He also argued that Russia's domestic struggles have made it less able to influence events in its so-called near abroad -- the former Soviet republics that, to varying degrees, are seeking increased independence from Moscow.

Russia maintains thousands of troops in the northern Georgian provinces of Abkhazia and South Ossetia, and has shut off gas flows into Ukraine twice in the last three years. Despite such shows of power, Mr. Biden said, even a close Russian protectorate such as Belarus has shown signs of bucking Moscow recently.

Mr. Biden said Moscow's efforts to strong-arm former Soviet republics through use of its energy resources have backfired. He noted that Russia's running dispute with Ukraine has galvanized European efforts to build a new pipeline through Turkey and southern Europe, known as Nabucco, that would bypass Russia.

"Their actions relative to essentially blackmailing a country and a continent on natural gas, what did it produce?" he said. "You've now got an agreement that no one thought they could have."
—Alan Cullison in Moscow contributed to this article.

By PETER SPIEGEL
Write to Peter Spiegel at peter.spiegel@wsj.com
http://online.wsj.com/article/SB124848246032580581.html

Republicans Claim Criticisms on Health Bill Are Being Censured

2009-07-25T01:22:00.000-07:00

As the health-care debate heats up, House Republicans say some of their criticisms are being censored by Democrats. Democrats on Friday were downplaying the dispute while they try to negotiate a resolution.

The scuffle started earlier this week, when Republican members said that Democratic staff on the House Franking Commission were blocking their plan to send a chart to constituents that spoofs the health-care legislation’s complexities. The chart depicts a dizzying array of bureaucratic boxes through which health care decisions would flow.

Republicans planned to send the chart in a franked newsletter – a mailing that lawmakers can send to their constituents for free. But House rules prohibit franked mail from being overtly partisan or political. It’s up to the Franking Commission to approve mailings before they can be sent out.

According to written objections raised by staffers, the chart was inaccurate in a number of respects. But a Republican spokeswoman, Salley Collins, said the GOP believes it’s being unfairly censored for the substance of its views.

A spokesman for the Democrats, Kyle Anderson, said he wouldn’t comment in detail on the Republican characterizations. He said that there are ongoing discussions between Democratic and Republican leaders of the commission, and Democrats have offered an “extremely reasonable” compromise. He added that Democrats are “committed to continued good faith discussions,” and that debating the Republicans’ charge wouldn’t contribute to that.

John D. McKinnon reports:
http://blogs.wsj.com/washwire/2009/07/24/republicans-claim-criticisms-on-health-bill-are-being-censured/?mod=rss_WSJBlog?mod=washwire

Was it Columnist Profiling?

2009-07-25T01:20:00.000-07:00

As part of the White House effort to keep his health-reform initiative alive, Rahm Emanuel, the president’s chief of staff, invited a handful of Washington columnists to talk this afternoon on the patio outside his office –- at almost the same time that President Barack Obama was talking to other reporters about his comments on the dispute between the Cambridge Police Department and Harvard’s Henry Louis Gates Jr., the African American scholar.

Among the columnists invited was David Brooks of the New York Times. The other pundits sailed through security at the White House checkpoint. Not Brooks.

The problem, it turns out, was that he had been listed in the computers as “Brooks David.” The error was fixed, and Brooks arrived at the session a few minutes after his colleagues. “This,” he joked to the assembly, “is how they treat Jewish men in America.”

http://blogs.wsj.com/washwire/2009/07/24/was-it-columnist-profiling/?mod=rss_WSJBlog?mod=washwire

Obama's Health Expert Gets Political

2009-07-24T01:23:00.000-07:00

WASHINGTON -- President Barack Obama's health-care plan is in jeopardy because of serious concerns that costs will spin out of control. As much as anyone, it's White House budget director Peter Orszag's job to save it.

Mr. Orszag is the administration's point man for controlling health-care spending. So when the director of the Congressional Budget Office, which Mr. Orszag used to run, testified eight days ago that none of the health plans pending on Capitol Hill would control long-term spending, Mr. Orszag knew that meant trouble.

The wonkish economist likes to say he doesn't have a "license to practice politics." But with problems brewing, the technocrat sprang into the thick of the political haggling.

The next day, a Friday, he sent a letter to Capitol Hill detailing a proposal he had been more quietly pitching for weeks -- creating a new agency with power to cut spending and implement changes in Medicare, the giant health program for the elderly. He also attached proposed legislative language. It was the most specific that the White House, which has tried to articulate principles and leave details to lawmakers, has been on any aspect of the legislation.

Mr. Orszag then visited rebellious conservative Democrats to try to persuade them the Medicare proposal would address their concerns over spiraling health-care spending.

Last Saturday he went to Camp David. While his two children played basketball and tennis with other administration kids, Mr. Orszag reviewed the situation with the president and prepared to appear on two Sunday-morning talk shows. "There are those who are advocating delay just as a desperation move to try to kill this," he said on CNN.

After his TV appearances, he went straight to the Senate Finance Committee, where he spent three hours with committee aides brainstorming about how to pay for the trillion-dollar legislation. At one point, they flipped through the tax code, looking for ideas.

As one of the administration's key conduits to Capitol Hill on health care, Mr. Orszag, 40 years old, is laboring with a White House team to get the initiative back on track. In the Senate, he faces an impasse over how to pay for the bill without increasing the deficit. In the House, members worry whether the bill will reduce health-care spending over the long term.

It is up to Mr. Orszag to help the president deliver on two bold promises: to provide near-universal health care without adding to a budget deficit already at record levels, and to reduce health-care costs for regular Americans and businesses. Those promises have Mr. Orszag on a quest to whittle down health-care costs currently borne by the federal government and to find ways to change how medicine is practiced.

But the history of medical cost control, like the push for universal health care, has been fraught with trouble. It's much harder to cut spending than increase it -- as Congress demonstrated when it created, then expanded, the Children's Health Insurance Program, and when it added prescription-drug coverage to Medicare.

Since taking office, Mr. Obama has emphasized controlling costs more than extending coverage to the uninsured. In part, he is trying to appeal to the majority of Americans who already have insurance. At a White House summit in March, Mr. Obama spoke 18 sentences about the need to cuts costs, and two about the uninsured.

Whether the White House can overcome sustained Republican opposition to the health-care initiative, coupled with brewing Democratic unease over costs, will help determine what kind of momentum Mr. Obama can carry out of his first year in office.

"Success breeds success, and failure does the same," says former Senate Majority Leader Tom Daschle, who was Mr. Obama's first choice to be health secretary before he withdrew from consideration. "To fail on this would really be a terrible blow to the agenda."

The battle heated up in June, when Mr. Orszag visited Capitol Hill to discuss health care with a small group of House Democrats. The meeting started well, with one lawmaker after another echoing his message that spending controls were critical to any health-care overhaul, according to two administration officials.

Then one member said her top priority was winning higher payments for oxygen suppliers, the officials say. Mr. Orszag was taken aback. Officials had been trying for years to cut payments to suppliers of oxygen and other medical equipment, which critics say are inflated. Yet when a new competitive bidding process was set to take effect last year, industry supporters in Congress were able to delay the plan. They are still fighting to block changes.

"One of the reasons we currently have such disjointed and skewed incentives is that we have an excessively political process," Mr. Orszag said in an interview.

But administration's critics say the issue isn't politics, but rather the administration's mixing together of two policy goals: curbing health spending and expanding the government safety net.

Last month, after Libertarian writer Virginia Postrel, in a blog posting, called a White House health-savings report "remarkably disingenuous," Mr. Orszag got her on the phone. Ms. Postrel had written that the administration could improve Medicare payment policies without applying the savings to covering the uninsured.

In public, Mr. Orszag often makes the case that there is a moral imperative to cover the uninsured. But over the phone, he told Ms. Postrel that, politically, it's impossible to do it any other way. Ms. Postrel wrote on her blog that Mr. Orszag said that the powerful senior group AARP wouldn't accept Medicare cuts unless the money went toward expanded coverage.

Mr. Orszag got his first White House job at age 24, under President Bill Clinton, after collecting degrees from Princeton and the London School of Economics. He went on to a string of policy-oriented jobs, including academic and think-tank posts, developing an expertise in Social Security.

Around 2003, during debate over Social Security's financial problems, he noticed that experts always said health care was a much bigger threat to the budget. "It was, 'Eh, we don't know what to do [about health care] so let's talk about Social Security,' " he recalls.

For his own health care, he was relying on a doctor sent by his life-insurance company. As an economist, he figured that the insurer had a financial incentive to be sure he was healthy. "I figured they'd be really rigorous," he says.

But a friend pointed out various things the checkups skipped, such as cholesterol testing. It turned out that Mr. Orszag, then in his mid-30s, had dangerously high cholesterol. He changed his diet and began running, eventually competing in marathons. He also started studying up on health policy.

In 2007, he became director of the Congressional Budget Office, the official scorekeeper for proposals affecting the federal budget. He produced a 221-page CBO book with 115 options for cutting health-care costs. He deflated the optimistic arguments that many, including presidential candidate Barack Obama, were making about how ideas such as better health-information technology could save billions of dollars.

At the CBO, his focus on health-care costs drew some criticism. Last year, when he was still the organization's director, he called Andrew Biggs of the conservative American Enterprise Institute into his office to dispute a paper Mr. Biggs had written. Mr. Biggs argued -- and still does -- that the aging population, not health care, is the biggest driver of the federal deficit.

"It's like you're going to the principal's office," Mr. Biggs says. Mr. Orszag accused him of impugning the integrity of CBO's professional staff, Mr. Biggs says. "I'm wary about tangling with him," Mr. Biggs says. "He's very, very aggressive, and he's very, very bright."

Even within the White House, there's been disagreement about how deep the cuts in federal health-care spending should go, according to several administration officials.

The economic team argued that the administration had to propose significant cuts to show the White House is serious about the deficit. The health team worried that cuts could go too deep for the health-care industry to absorb without harming care, and might be too politically tough for Congress to accept. In meetings among the president's top advisers, the economists, including Mr. Orszag, for the most part won out.

Mr. Obama proposed $622 billion in cuts to federal health-care spending. But, as the health team predicted, Congress hasn't been willing to cut that deeply. The pending legislation includes some cuts in payments to health insurers, hospitals, drug makers and others.

The White House, for example, has proposed shaving $177 billion from payments to health insurers under Medicare managed-care plans, which allow seniors to obtain Medicare coverage outside the government-run program. The proposed cuts match the extra cost to the government of the privately managed coverage.

Congress already has tried unsuccessfully to cut such payments -- dubbed overpayments by some outside experts. The effort has faced opposition from lawmakers such as Iowa Sen. Charles Grassley, the top Republican on the Finance Committee.

At a March hearing, when Mr. Grassley raised concerns about the impact of cuts, Mr. Orszag responded: "I very firmly believe that capitalism is not founded on excessively high subsidies to private firms. That is what this system delivers right now."

Sen. Grassley shot back: "Well, you're going to take half of my time lecturing me on capitalism." He later asked for extra time "because I was lectured on capitalism, and I studied that in economics."

"No more lectures," Mr. Orszag promised.

Mr. Orszag believes that the idea he pitched in his letter to House Speaker Nancy Pelosi last Friday -- a new agency with power to cut spending and implement changes in Medicare -- is the single-most important thing Congress can do to control health-care spending.

The Medicare Payment Advisory Commission, created by Congress in 1997, has recommended more than $200 billion in cost cuts in the last year alone that lawmakers have ignored. Mr. Orszag wants to reconstitute the commission as an independent agency whose recommendations would automatically take effect -- unless Congress expressly stops them.

Not everyone in the administration agreed with him. Some at the Department of Health and Human Services worried about losing power to the new agency, and Mr. Orszag called HHS Secretary Kathleen Sebelius to talk through her concerns, administration officials say.

At a meeting of the Senate Finance Committee in late June, several senators objected to the loss of congressional power under the plan. "We're elected to make the hard decisions," Maine Republican Sen. Olympia Snowe told her colleagues, according to people at the meeting.

Similar objections have cropped up in the House this week. Mr. Orszag's proposal last Friday ignited a heated debate among House Democrats. Hospitals and doctor groups are already lobbying against the proposal.

Mr. Orszag's ambitions extend beyond "scorable" spending cuts -- reductions in federal spending that can offset the cost of expanding health-care coverage. The administration, he says, also is looking for ways to curb costs borne directly by individuals and businesses. To that end, Mr. Orszag wants to change the way medicine is delivered.

One idea is to change incentives so doctors focus more on delivering better care, not more treatments. The administration has proposed financial penalties for hospitals that frequently readmit patients, a sign they weren't properly treated in the first place. Mr. Orszag calls such ideas game-changers.

"If all you did was the game-changing transformational stuff, you would be taking a risk that it wouldn't pay off," he says. "And if all you did was the blunter 'scorable' savings, it won't be sustainable, and you're not getting at the inefficiencies. So it makes sense to do both."

By LAURA MECKLER
Write to Laura Meckler at laura.meckler@wsj.com
http://online.wsj.com/article/SB124839406488477649.html

Senate Won't Hit August Deadline

2009-07-24T01:21:00.000-07:00

The Senate's top Democrat on Thursday conceded that the chamber won't pass a health overhaul by August, giving the White House another setback as it presses its ambitious health agenda.

Lawmakers have been racing to meet a deadline of passing a health bill before they leave for their August recess, with strong prodding from President Barack Obama. But in the Senate Finance Committee, the only group trying to craft a bipartisan bill, senators remain deadlocked over key details of their plan, particularly how to pay for it.

Senate Majority Leader Harry Reid of Nevada said senators will press ahead with a bipartisan bill until they go on break in two weeks, and pick up when they return from the monthlong recess in September.

Mr. Obama, speaking in the Cleveland suburb of Shaker Heights, Ohio, told the audience he no longer sees political disaster if the House and Senate fail to produce health bills before August. As long as he sees "folks working diligently and consistently," Mr. Obama said, he is comfortable with the missed deadline.

"...I want [the bill] done by the end of this year. I want it done by the fall," he said Thursday.

The year-end deadline for a final bill passage has always been part of Mr. Obama's equation, but until recently, he was also citing an interim deadline of August for each chamber of Congress to pass its own bill. That way, it would be harder for opponents to pick apart the legislation over the monthlong break, and the hard work of reconciling the two approaches could begin immediately upon their return. Now, the president and his allies hope he can use the bully pulpit to keep up momentum while Congress is out of town.

"Reform may be coming too soon for some in Washington, but it's not soon enough for the American people. We can get this done," Mr. Obama said.

In recent days, Republicans have put the president on the defensive, saying the legislation being discussed in Congress fails to curb growing health spending, one of the president's key goals.

"Despite what President Obama claims, the bill he is promoting today will make health care even more expensive," House Republican leader John Boehner of Ohio said Thursday.

In a friendly audience in a Democratic stretch of a swing state, Mr. Obama faced some skepticism. His first questioner, Medicare-certified home-care provider Norma Goodman, suggested he planned to slash reimbursement rates, something he denied. Even 14-year-old incoming high-school freshman Parker Smith asked if he was pushing too much, too fast.

Democrats, too, are expressing concern that the bills don't keep down health costs. Nine Senate Democrats on Thursday sent a letter to Senate Finance Chairman Max Baucus (D., Mont.) saying that too little focus has been given to the issue.

Meanwhile, the president's remarks at a prime-time news conference Wednesday drew criticism from ear, nose and throat doctors. Mr. Obama said doctors sometimes perform procedures because they are lucrative, not because they are the best for the patient, and he cited tonsillectomies as one type of surgery prone to skewed incentives.

The American Academy of Otolaryngology -- Head and Neck Surgery disputed the example, saying a tonsillectomy is often cheaper than prolonged treatment for an infected throat.

On Capitol Hill, the Senate delay came as little surprise as Senate Democrats and Republicans have been struggling for weeks to hammer out an agreement over the details of a bill that would provide near-universal insurance coverage to Americans. Mr. Reid said senators decided to extend the timeline at the urging of Republicans, who wanted more time to assemble the bill.

"It's better to have a product that is based on quality and thoughtfulness rather than to jam something through," Mr. Reid said. Some employer groups that have shown concern about the bill, including one representing retailers, applauded the decision to tap the brakes. The senior citizens group AARP, which has largely supported Democrats' health-overhaul plans, expressed disappointment.

House Speaker Nancy Pelosi (D., Calif.) on Thursday indicated that the House remains on schedule to pass its health bill before it goes on break, scheduled to start at the end of next week.

White House Chief of Staff Rahm Emanuel on Thursday met with House Democrats from the fiscally conservative "Blue Dog" coalition, which is delaying the bill's passage over concerns about spending. Ms. Pelosi said leaders are close to working out their disagreements, and she shrugged off concerns about delays. "I am not afraid of August," she said. "It is a month."

Members of the Senate Finance Committee are still trying to reach an agreement on how to pay for the legislation, which is expected to cost about $1 trillion over a decade. In a meeting on Thursday, senators from states with big urban areas expressed concern that proposed Medicare payment cuts could have a disproportionate impact on those areas, which tend to have higher Medicare spending, one aide said.
—Corey Boles contributed to this article.
By JANET ADAMY in Washington and JONATHAN WEISMAN in Shaker Heights, Ohio
Write to Janet Adamy at janet.adamy@wsj.com and Jonathan Weisman at jonathan.weisman@wsj.com
http://online.wsj.com/article/SB124836322431276113.html

Obama to Unveil Guidelines for New Education Fund

2009-07-24T01:17:00.000-07:00

Aiming to spark a new round of change in the nation's schools, President Obama is expected to tell states on Friday what they need to do to qualify for part of a $5 billion pool of new federal funding.

Created as part of the $100 billion stimulus fund targeted for education earlier this year, the so-called "race to the top fund" was designed to fuel innovation in the classroom. Of the related funding, $4.35 billion will be distributed to states and $650 million will be reserved for school districts and nonprofit groups.

Amid deep recession-related cuts in education budgets, many states are already scrambling to make policy changes to help them qualify for the grants. Arne Duncan, the U.S. Secretary of Education, said 46 states are cooperating on creating a common academic standard for their public schools and seven states have lifted limits on the number of charter schools that can operate within their boundaries.

"This is about challenging the status quo," he said in an interview Thursday, adding that the funds are also designed to bring "unprecedented resources to children at a time of desperate need."

The first round of grants from the fund is expected to be awarded early next year and only a few states are likely to land them, administration officials say.

According to the related regulations that the president is scheduled to unveil at the Department of Education on Friday, states will not be eligible for the funds at all if they have any legal or regulatory barrier preventing the use of student achievement data from being used to evaluate teachers and principals.

States will also be judged on how well they work with other states in developing common academic standards. Currently, under the federal No Child Left Behind law, states are free to set their own standards for what students should learn. They vary widely and, in many cases, scores on state achievement tests appear out of sync with national test results.

States applying for the grants will also asked to show that they are paying teachers based on performance, intervening faster to turn around their lowest-performing schools, authorizing more charter schools and closing achievement gaps such as those between white students and their black and Latino peers.

Mr. Duncan said states unwilling to make such changes won't get the new funds. "They will lose out," he said.

Gene Wilhoit, executive director of the Council of Chief State School Officers, a professional group of top education officials in the states, said the regulations are pretty much in line with what educators have been expecting but added that they look "for pretty aggressive action on the part of the states" applying for the funds.

By ROBERT TOMSHO
Write to Robert Tomsho at rob.tomsho@wsj.com
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Fed Unveils Rules to Protect Borrowers

2009-07-24T01:14:00.000-07:00

WASHINGTON -- The Federal Reserve on Thursday proposed sweeping new consumer protections for mortgages and home-equity loans.

The proposals seek to overhaul the timing and content of disclosures to consumers, and to ban controversial side payments to mortgage brokers for steering customers to higher-cost loans.

Fed staff, which drafted the proposals, based the new disclosures on extensive consumer testing. "I think the general thrust of this is to make more intelligent shoppers of households, have them make better decisions," Fed Vice Chairman Donald Kohn said at a public meeting Thursday with other Fed officials.

The moves come as the Fed defends its consumer-protection record. The Obama administration and key congressional Democrats want to remove the Fed's consumer-protection authority and place it with a newly proposed regulatory agency. It is unclear what would happen to the new Fed rules under such an agency.

The Fed has come under fire for failing to act until 2008 to rein in lending practices in the mortgage industry -- authority it has had since 1994. Critics also say it dragged its feet on tightening credit-card rules. The Fed placed new restrictions on the industry late last year.

Under the new Fed proposals, consumers would receive more streamlined cost disclosures after applying for a mortgage loan. Buyers also would be presented with a one-page document, in question-and-answer format, warning about risky loan features such as negative amortization and balloon payments associated with adjustable-rate mortgages, or ARMs.

The Fed is also proposing that lenders provide clearer information on how borrower payments might change under ARMs. And it wants to revise how the annual percentage rate, or APR, is calculated in disclosures to reflect several routine costs that are passed on from the lender to the borrower, such as title insurance.

Fed Senior Counsel Kathleen Ryan said the change could lower costs for consumers by encouraging lenders to put downward pressure on such third-party fees.

The Fed proposal would effectively ban the side payments known as "yield spread premiums" by prohibiting payments to mortgage brokers or loan officers based on the loan's interest rate or other terms. It also would bar steering consumers to higher-cost or riskier loans in order to increase the broker's or loan officer's compensation.

The Fed had earlier proposed beefing up disclosures so that consumers would be aware of mortgage brokers' conflicts of interest. But Fed staff found through consumer testing that the disclosures added confusion. "We concluded disclosures would not be an effective remedy in this case," Ms. Ryan said in response to Fed Chairman Ben Bernanke's question about why the earlier proposal had been shelved.

The Fed is also seeking to replace a stack of generic information given to home-equity loan applicants with a one-page document giving clear information about the risks of such loans. Within three days of receiving an application, lenders would have to furnish consumers with tailored cost information that would enable the consumers to shop for better deals.

Currently, consumers don't receive information about the APR or the credit amount of the loan until after the account is open, Fed staff attorney Lorna Neill said. "This is too late to use this information to shop around," she said.

The public will have 120 days to comment on both the mortgage and home-equity loan proposals before the new rules are finalized.

A spokesman for the National Association of Mortgage Brokers said his group was reviewing the proposal.

By JESSICA HOLZER
Write to Jessica Holzer at jessica.holzer@dowjones.com
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An Apple for Your Teacher

2009-07-22T19:20:00.000-07:00

By ANNE MARIE CHAKER

It’s shaping up to be a grim year for the Spokane Public School district in Washington state. Like so many others, it is making deep cuts in everything from teaching staff to school supplies this coming school year. But there’s one bright spot for the district: The amount of federal dollars to incorporate technology in the classroom—and to train teachers to use it—is expected to double to about $160,000 from the previous year.

At the same time school districts around the nation are bracing for a round of severe belt-tightening as a result of strained state and local budgets, they’re also getting a significant bump in federal funding to make their classrooms more tech-savvy, which they hope will help improve student performance.

The only problem: Districts are prohibited from using the money for any other purpose—which can mean that they have to cut staff and other programs while spending lavishly on computers.

The Enhancing Education Through Technology program was authorized in 2002 as part of the Bush-era No Child Left Behind law. But the level of funding steadily declined to $267.5 million in 2008 from $700.5 million six years earlier—a 62% drop. The economic-stimulus package signed into law by President Barack Obama in February restored $650 million in funding to the program, to be used over the course of the next two school years. States are expected to receive those funds this week to distribute to their school districts.

That money will help places like North Kansas City, Mo. Starting in the fall, the district is distributing “mini note” devices—small laptops with 10-inch screens—to each of its 5,600 high-school students. At the same time, it is “retooling” its teachers, says Janet Herdman, executive director of technology for the district. This year, 90 high-school teachers will receive comprehensive technology training provided by the district over the course of the school year. The goal: for all 400 high-school teachers to be trained over the next four years.

Many districts receiving these funds are looking beyond simply equipping classrooms with the latest gadgetry, such as Smart Boards and video equipment, in favor of rethinking the way education is delivered. In some tech-equipped schools, teachers are playing a less-dominant role in the classroom, group work and problem-solving are emphasized, and technology is infused into every lesson, whether that means dissecting a frog with a software program or predicting the weather using real-time information.

Ms. Herdman envisions such a transformation in North Kansas City. “It’s no longer going to be ‘Turn to page 10 and look at this,’ ” she says. “It’s more collaborative work, the learning style is inquiry-based, and the teacher is guiding, facilitating learning rather than lecturing. It’s about teaching the curriculum using technology as your vehicle.”

Kevin Welner, who directs the Education and the Public Interest Center at the University of Colorado at Boulder, sees some merit in the push to better equip classrooms. But, he says, “if you’re at a more local level trying to find ways to simply keep from laying off staff, the luxury of investing in new technologies is more a want than a need.”

Education spending was a big winner in the stimulus package, which provided a $98.2 billion shot in the arm not only for classroom technology, but also for everything from school renovations to educating students with special needs. Yet local officials say it’s still not nearly enough to make up for several years of cutbacks.
Reduced State Funding

Spokane, for instance, has seen its state funding reduced over the past seven years, which has resulted in significant cuts in both teaching staff and education programs. The extra money for technology, education officials say, comes at a time when districts are struggling to maintain basic programs.

“There’s a disconnect,” says Randi Weingarten, president of the American Federation of Teachers, the nation’s second-largest teachers’ union. “People are facing huge cuts in their core programs. Technology can’t substitute for music or art programs.”

Indeed, some school officials are chafing against the tough spending mandates. ”The money is wonderful, but the restrictions and requirements for its use have been limiting,” says North Kansas City Superintendent Todd White. “My wish is that the Department of Education and Congress would have allowed us some wider boundaries to utilize these funds more effectively to gain student achievement.”

In Florida, for example, the Putnam County School District is expecting to receive an $88,000 bump from the federal government towards education technology—on top of the $42,000 already budgeted for 2009-10. That comes as the district is cutting back on everything from teachers to energy costs. Even with $3.5 million in stimulus funds—which Superintendent Tom Townsend says will be used almost entirely to rehire teachers—the district is still down more than 150 employees from last year.
Tech Is ‘Core’

Even so, Mr. Townsend still views technology as “core, and necessary to keeping our students engaged,” adding that, if anything, the funding for it should be higher.

Some districts that have already committed to this model for several years have noted the impact that a change in approach has on everything from test scores to the rate of high-school graduates attending college.

Six years ago, the Greene County Schools in North Carolina began a “one-to-one laptop” program, funded largely through a $600,000 grant from a North Carolina foundation that distributes tobacco-settlement funds for economic development. The program paid for laptops to students—including one for each student in grades six through 12—and a widespread teacher-training effort to make lessons and curriculum much more technology-based. Since then, the college-going rate among Greene Central High School students increased to 94% in the most recent school year, from 26% when the program was introduced, says Pat MacNeill, the district’s assistant superintendent, and dropout and teen-pregnancy rates have fallen.

Dr. MacNeill credits these advances in large part to the technology program, which she says has made the students “more engaged, more active in their learning” and made school “more purposeful and relevant to them.”

While the shift to a more tech-focused classroom has been gaining momentum in the past couple of years, the number of schools that are throwing out textbooks in favor of laptops is still in the minority, says Mary Ann Wolf, executive director of the State Educational Technology Directors Association in Washington. “We know there are programs like this in every single state and that some schools and districts are really beginning to maximize the potential of technology, but we still have a long way to go,” she says. “The stimulus money will help to spark this innovation and accelerate this change.”

She and many others also point out that offering technology in the classroom can help bridge the gap between students from different socioeconomic backgrounds. Science teacher Aimee Teeple, of Floydada High School in Texas, says that after technology was introduced in her district, there was no longer a chasm between those projects made by students who had access to all the materials they wanted and those from less-advantaged students. “With the computers, the projects are more at the same level,” she says.

Since the Floydada district launched its technology program in the 2004-05 school year, state standardized test scores have risen remarkably: Sixth-graders taught with laptops the first year saw their reading and math scores rise 27% and 15%, respectively, by eighth grade, says District Superintendent Jerry Vaughn. Though these results may be at least partly due to other factors, they have prompted the district to extend its “technology immersion program” into the high school.

Floydada High School English teacher Anne Carthel says the laptops have altered teaching practices. “We went from using them more for simply emailing and tracking student grades to now making it absolutely part of everything we did,” she says. One project, for instance, involves teaming up with the history class for a “decades project” in which students have to conceive, write and produce a short film that incorporates research about what happened in an assigned decade.

“That project alone hits so many different objectives,” says Ms. Carthel, from research to writing skills. And because it sparks so much creative energy, the learning “is more meaningful to the kids.”

Titus Miller, 18 years old, recalls when laptops and technology entered his junior-high classroom. “It was like a whole different school,” recalls the Floydada High School graduate. As the years followed, “the classes became way more interactive and way more fun.”

He plans to enroll at West Texas A&M University in the fall and hopes to major in mechanical engineering.
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Obama Stresses Urgency of Health Overhaul

2009-07-22T19:17:00.000-07:00

By JONATHAN WEISMAN

WASHINGTON -- President Barack Obama, facing doubts about his economic and health-care policies, used a prime-time news conference Wednesday night to try to convince skeptical Americans that everyone has a stake in a national health plan.

"This is not just about the 47 million Americans who have no health insurance," he said. "Reform is about every American who has ever feared that they may lose their coverage if they become too sick, or lose their job, or change their job. It's about every small business that has been forced to lay off employees or cut back on their coverage because it became too expensive. And it's about the fact that the biggest driving force behind our federal deficit is the skyrocketing cost of Medicare and Medicaid."

At a perilous moment in his presidency, Mr. Obama hopes to regain momentum on his ambitious domestic agenda. The message will be twofold, White House aides say: The Obama administration has brought the economy back from the brink of depression, but the next step, a national health-care plan, can't wait.

How effectively the president delivers those two messages -- and the delivery's impact on public opinion and a skittish Congress -- will have major implications for the rest of his year, and perhaps for his presidency.

"This is a big one," James Carville, a Democratic strategist in close contact with White House Chief of Staff Rahm Emanuel, said of the health-care fight. "They're not playing this down. They're not saying, if we lose this, we've got more of our agenda coming down the line."

Mr. Obama tried to frame the terms of debate as action versus inaction, with his opponents embracing an untenable status quo.

"If we do not control these costs, we will not be able to control our deficit," he said. "If we do not reform health care, your premiums and out-of-pocket costs will continue to skyrocket. If we do not act, 14,000 Americans will continue to lose their health insurance every single day. These are the consequences of inaction. These are the stakes of the debate we're having right now."

Republican leaders have rejected those terms. Senate Minority Leader Mitch McConnell (R, Ky.) said on Capitol Hill Wednesday that Republicans are for a health care overhaul as well, just not Mr. Obama's version. But the GOP leadership's case has been made more difficult by recent statements by other Republicans, such as South Carolina Sen. Jim DeMint's charge that a defeat on health care would "break" the Democratic president.

And Mr. Obama has been playing off that comment ever since.

"This isn't about me," he said. "I have great health insurance, and so does every Member of Congress. This debate is about the letters I read when I sit in the Oval Office every day, and the stories I hear at town hall meetings…This debate is not a game for these Americans, and they cannot afford to wait for reform any longer."

White House budget director Peter Orszag previewed the president's themes in a speech Wednesday afternoon at the Council on Foreign Relations in New York.

"Simply, and to a degree that we had not experienced in more than half a century, we needed to bring the economy back from the brink," Mr. Orszag said in prepared remarks. "This has clearly been no ordinary recession. So, we acted -- and acted quickly."

On the health-care debate roiling Washington, Mr. Orszag added, "Health care reform -- for all its ups and downs in the press -- is further along than it's been in decades with an array of allies that was once unthinkable."

Mr. Obama's news conference -- scheduled to start at 8 p.m. EDT and the fourth of his presidency in prime-time -- came with pressures he has not yet felt in such a setting. While his personal popularity remains formidable, recent polling shows increasing uncertainty about his policies, especially on the economy and health care.

A CNN "poll of polls" released Wednesday showed his approval rating on health care slipping below 50%. According to the tally of recent national polls, 47% approve of the way he is handling health-care policy; 44% disapprove.

Republicans, sensing a growing weakness, have ramped up their attacks and are challenging Mr. Obama on fronts foreign and domestic. At the six-month mark of his presidency, the GOP is pressing him for a change of tack.

"Americans want the president and Congress to support the private sector to help the economy get back on track, without tidal waves of spending, debt, and new taxes," Senate Minority Whip Jon Kyl (R., Ariz.) said on the Senate floor Wednesday. "They want real health-care reform without a government takeover. And they want the president to lead us in this dangerous world, acknowledging the harsh reality that not every rogue regime will respond to smooth talk."

The White House appears determined to shore up Mr. Obama's image on the economy. Republicans have been battering his performance, portraying the $787 billion stimulus passed in February as a colossal waste of money with nothing to show for it. Unemployment continues to tick upward, while payrolls continue to fall.

Mr. Orszag on Wednesday and White House National Economic Council Director Lawrence Summers last week said the economy's performance in recent months should be measured against the free fall the president inherited in January. The economy declined at an annualized rate of more than 6% in the final three months of 2008. In that quarter alone, household net worth fell by about $5 trillion, Mr. Orszag said.

The economy shed 1.7 million jobs in the last three months of 2008, the largest decline since the end of World War II but a figure surpassed in the first three months of 2009, when 2.1 million jobs were lost.

"It is no exaggeration to say that the economy was in the midst of a severe collapse," Mr. Orszag said.

But even White House officials concede the jobs issue continues to confound them. The bailouts on Wall Street stabilized the financial sector and lifted the stock market. The stimulus package has halted the rapid slide in the gross domestic product. Goldman Sachs economists estimate that the stimulus will add about three percentage points to GDP growth between April and September of this year.

But job losses continue. Mr. Orszag said the unemployment rate, at 9.5%, is one to 1.5 percentage points higher than it should be given the broader state of the economy.

Republicans continued their attacks Wednesday ahead of the president's appearance. House Minority Leader John Boehner (R., Ohio) took issue with the contention that the White House had already saved the economy from disaster.

"The 11.1% unemployment rate that we have in Ohio, I'm sure those people are looking up today wondering, wait a minute, the president is going to say we rescued the economy? I don't think so," he said on the House floor. "Not only has the stimulus not worked and the economy not been rescued, the president continues to promote policies that will create more unemployment in America."

Write to Jonathan Weisman at jonathan.weisman@wsj.com
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With 'Med Pot' Raids Halted, Selling Grass Grows Greener

2009-07-22T19:12:00.000-07:00

By JUSTIN SCHECK and STU WOO

LAKE FOREST, Calif. -- Sellers of marijuana as a medicine here don't fret about raids any more. They've stopped stressing over where to hide their stash or how to move it unseen.

Now their concerns involve the state Board of Equalization, which collects sales tax and requires a retailer ID number. Or city planning offices, which insist that staircases comply with the Americans With Disabilities Act. Then there is marketing strategy, which can mean paying to be a "featured dispensary" on a Web site for pot smokers.

After years in the shadows, medical marijuana in California is aspiring to crack the commercial mainstream.

"I want to do everything I can to run this as a legitimate business," says Jan Werner, 55 years old, who invested in a pot store in a shopping mall after 36 years as a car salesman.

State voters decreed back in 1996 that Californians had a right to marijuana for any illness -- from cancer to anorexia to any other condition it might help. But supplying "med pot" remained risky. The ballot measure didn't specify who could sell it or how. The state provided few guidelines, leaving local governments to impose a patchwork of restrictions. Above all, because pot possession remained illegal under U.S. law, sellers had to worry about federal raids.

But in February, the Justice Department said it would adhere to President Barack Obama's campaign statement that federal agents no longer would target med-pot dealers who comply with state law. Since then, vendors who had kept a low profile have begun to expand, and entrepreneurs who had avoided cannabis have begun to invest.

Some now are using traditional business practices like political lobbying and supply-chain consolidation. Others are seeking capital or offering investment banking for pot purveyors. In Oakland, a school offers courses such as "Cannabusiness 102" and calls itself Oaksterdam University, after the pot-friendly Dutch city. As shops proliferate, there are even signs the nascent industry could be heading for another familiar business phenomenon: the bubble.

Medical use of pot now is legal in 13 states. It is also facing some resistance. New Hampshire's Democratic governor, John Lynch, vetoed a med-pot bill this month, citing inadequate safeguards. Los Angeles, which passed a moratorium on new dispensaries in 2007, is trying to close a loophole that has led to an explosion of new ones.

John Lovell, a lobbyist for the California Peace Officers' Association, objects to "the notion that marijuana is safe and can be used for any and all purposes to heal any and all ailments," adding: "There are 34 different elements in marijuana smoke that are shared with tobacco." He and others also complain about the ease with which patients can get pot recommendations from certain doctors.

Still, at a time of deep recession, the med-pot business is attracting career switchers. Mr. Werner was the sales manager of a Chrysler dealership, and dismayed with the collapse of car sales. He had a doctor's recommendation to smoke pot, for pain from a spinal condition. One day a car-dealer friend, Bill Shofner, who also had a pot recommendation (for migraines) suggested: Why not become pot vendors?

Each invested $40,000. Following state guidelines, they set up as a nonprofit, called Lake Forest Community Collective, from which they would draw salaries.

It is on the second floor of a strip mall in the Los Angeles suburb of Lake Forest that also houses Mexican restaurants and a Peet's Coffee shop. A customer first encounters a brightly lit front room with a security window and an Obama poster, then is buzzed into a vestibule with an ATM. Beyond that is a spotless room with glass cases displaying pot in pill bottles.

Scribbled on a board are prices, from $10 to $25 a gram, for different strains: Sour Diesel, Purple Urkel, Bubba Hash. Sour Diesel is popular, says a volunteer, and "really potent."

This still is a far cry from, say, Amsterdam, where pot remains illegal but authorities are so tolerant that pot is available in coffeehouses.

In California, pot sales, legal and illegal, are estimated to total $14 billion a year. Medical marijuana makes up maybe an eighth of that, says Dale Gieringer, director of the state's chapter of the National Organization for the Reform of Marijuana Laws. He estimates the state has three million pot smokers, including 350,000 with doctors' recommendations.

The state taxes med-pot sales, and on Tuesday, the city of Oakland added its own special tax.

In Lake Forest, Messrs. Werner and Shofner pay about $4,000 for a pound of marijuana, retailing it for about $6,000. They don't break even yet, the two say.

The business is a little like selling cars in one way, Mr. Shofner says: The longer they hold their stock, the less it is worth. Aging marijuana loses both potency and weight.

Med-pot sellers say they generally avoid marijuana from Mexican cartels; the risks are higher and the quality is lower. Messrs. Werner and Shofner say they at first bought largely from far-northern California, where clandestine growers also supply the underground market.

For reasons of cost and consistency, they have been taking fuller control of the supply chain. A few months ago they gave money to members of their collective for grow lamps and other equipment, and now they get much of their supply from them. "It's like McDonald's" making deals with potato farmers, Mr. Werner says.

Some vendors are toying with another familiar business model: vertical integration. In pot, that means growing as well as dealing. This was a risky approach when a federal raid could cost an owner his pot, his computers and maybe even his liberty. Now, one Los Angeles-area med-pot vendor says he has acquired land in Northern California and begun to grow his own.

Mr. Werner and his partner recently decided to expand. They signed leases for two new outlets.

They also have lost their wariness of advertising. The proliferation of dealers makes promotion essential. The two now pay several hundred dollars a month for ads on Web sites like Weedmaps.com, which helps people find medical pot.

Justin Hartfield, who started Weedmaps, says it has grown quickly to about $20,000 in monthly revenue, half from ads.

The rest comes from referring people to doctors who recommend pot. Mr. Hartfield bills the doctors $20 for each patient he sends them. The American Medical Association ethics code says payment for referrals is unethical. Mr. Hartfield says the doctors are keenly aware of the ethics issue and consider their payments not to be fees for referral but "advertising fees that change every month."

Shane Stuart, 23, says he used to buy weed from street dealers but in February saw an online ad for a pot-friendly doctor. He realized then, he says, that medical marijuana was becoming more mainstream and having a pot ID card wouldn't hurt him with employers. He came away from a $200 doctor visit with a note recommending pot for pain from a hyperextended knee.

Mr. Hartfield, the Weedmaps impresario, has a doctor's recommendation for marijuana "to ease my anxiety and help with my insomnia." Mr. Hartfield says the med-pot system is really just a way of legalizing marijuana for anyone who wants to smoke. He says his anxiety/insomnia isn't really serious enough to require treatment. "I'm fine. I don't really have it," he says. "The medical system is a total farce. I'm an example of that. It just needs to be legal."

Med-pot advocates say marijuana can ease chronic pain, spur appetite in anorexics or chemotherapy patients, and relieve eyeball pressure in glaucoma patients. The law voters approved in 1996 listed several conditions that might be helped but said so long as a doctor recommended pot, all "seriously ill Californians" had a right to it for "any...illness for which marijuana provides relief."

David Allen, a former Mississippi heart surgeon, last month opened a general practice in Sacramento and listed himself on a Web site as a pot-friendly doctor. Marijuana, says Dr. Allen, 57, "helps the common conditions that affect every human being -- for instance, anxiety, depression, insomnia and anorexia" -- and can relieve certain arthritis symptoms and muscle-spasm conditions.

Still, he says, many of his patients are people who already used pot but just wanted a doctor's recommendation to avoid legal trouble. "If I was to deny them, I would put them at more risk, and I'd be hurting society by doing this as well," he says. "Cannabis is safer than aspirin."

Dr. Allen smokes pot for insomnia, anxiety and stress. He says he quit heart surgery because what he does now is more lucrative. He says he doesn't pay for referrals, a practice he considers unethical.

As the business matures, ancillary ventures are springing up. In Oakland, OD Media manages advertising and branding for about a dozen pot clients. An Oakland lawyer, James Anthony, and three partners have started a firm called Harborside Management Associates to give dealers business advice. A pot activist named Richard Cowan has opened what he envisions as an investment bank for pot-related businesses, called General Marijuana.

Mr. Cowan is also chief operating officer of Cannabis Science Inc., which is trying to market a pot lozenge for nonsmokers. It was founded by Steve Kubby, a longtime medical-marijuana advocate who a decade ago was acquitted of a pot-growing charge but briefly jailed for having illegal mushrooms in his home. Mr. Kubby says there is "no more alternative culture" at the company, which went public in March and has hired a former pharmaceutical-industry scientist to try to win Food and Drug Administration approval for the lozenge. Mr. Kubby left as CEO this month in a dispute with the board.

Part of the opposition medical marijuana continues to face is rooted in concern that unsavory characters from the illegal-drugs business will get involved. The city attorney of Lake Forest, where Messrs. Werner and Shofner have their store, recently sent a letter to the landlords of pot dispensaries asking them to evict tenants. Mr. Shofner says he reached a settlement with his landlord to stay.

To defend their interests, some pot proprietors are hiring lobbyists. Messrs. Shofner and Werner pay consulting fees to Ryan Michaels, a political organizer with an expertise in med-pot compliance issues.

There are signs medical pot's increasing business legitimacy is crowding the market. A 20-mile stretch of Ventura Boulevard in the San Fernando Valley now has close to 100 places to buy. "So many dispensaries have come along, the prices are dropping," says one operator, Calvin Frye. Two years ago, his least expensive pot was about $60 for an eighth of an ounce. Now it is $45.

Across the country, a med-pot bill is working its way through New York's state legislature. If it makes it, entrepreneurs are getting ready.

Larry Lodi, a 49-year-old Little League umpire from Long Island, spent two days at Oaksterdam University in May, learning the fine points of cultivation and distribution. Mr. Lodi envisions a business that would link the growers and the sellers of medical marijuana. "I want to be the middleman," he says.

Write to Justin Scheck at justin.scheck@wsj.com and Stu Woo at Stu.Woo@wsj.com
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Charges dropped against black Harvard professor

2009-07-22T04:25:00.000-07:00

BOSTON (Reuters) - Authorities in Cambridge, Massachusetts on Tuesday dropped disorderly conduct charges against a preeminent black scholar stemming from an incident that drew fresh attention to police treatment of minorities in the United States.

Harvard University professor Henry Louis Gates was arrested at his home in the Boston suburb of Cambridge last Thursday by a white police officer after a woman called police to report that a man was trying to force his way into the house.

Gates, 58, had merely experienced difficulty opening his own front door after returning from a trip to China, according to his lawyer. But police said Gates exhibited "loud and tumultuous behavior," including accusing police of racism.

A statement on the Cambridge police department's Web site said, "The City of Cambridge, the Cambridge Police Department, and Professor Gates acknowledge that the incident of July 16, 2009 was regrettable and unfortunate."

"This incident should not be viewed as one that demeans the character and reputation of Professor Gates or the character of the Cambridge Police Department," the statement said, adding that the charges were dropped.

Gates is the director of Harvard's W.E.B. Du Bois Institute for African & African American Research and is one of the most prominent black scholars in the United States.

The incident renewed a debate over "racial profiling" and whether police in the United States treat blacks and other minorities differently than whites -- even after the election of the first black U.S. president in Barack Obama.

"I'm outraged that this could happen to me in my own home but I'm outraged that it could happen to any individual," Gates said in an interview with the Washington Post.

Gates, who is seeking an apology, called the incident "deeply painful and traumatic," and told the newspaper he would use it as the basis for a documentary on "racial profiling."

A statement from his lawyer, Charles Ogletree, released on Monday said Gates had been unable to enter his damaged front door after returning home from a trip to China. Ogletree, also a Harvard professor, said Gates managed to enter the house through the rear door, and his driver carried in his luggage.

After police arrived at the house, Ogletree said, Gates showed his Harvard identification and driver's license, and asked the policeman for his name and badge number. The police officer walked away, and when Gates followed him to the porch, he was arrested, Ogletree's statement said.

A police report said Gates initially refused to provide identification and after the officer explained he was investigating a reported break-in, shouted "this is what happens to black men in America."

The report said Gates made threats against the policeman, then followed the officer outside and yelled at him. He was then arrested.

(Reporting by Jason Szep and JoAnne Allen; Editing by Stacey Joyce and Will Dunham)

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Obama: health plan "closer than ever" but needs work

2009-07-22T04:20:00.000-07:00

WASHINGTON (Reuters) - President Barack Obama said on Tuesday U.S. healthcare reform was "closer than ever," but fought to keep some fellow Democrats from deserting his chief policy initiative amid worries about its $1 trillion cost.

Several key Democrats joined Republicans in Congress in suggesting a slower timetable for overhauling the $2.5 trillion industry, which could push passage back from Obama's October deadline but still lock in changes before lawmakers turn their focus to the 2010 mid-term elections.

Although Senate Majority Leader Harry Reid said he would keep urging the chamber to act before its monthlong August recess, he told reporters, "The goal is not deadlines, the goal is comprehensive healthcare reform."

In the House of Representatives, Democrat Louise Slaughter, who chairs the House Rules Committee that guides bills to the floor, told reporters that leaders still planned to bring a healthcare bill to a vote next week.

She added they might also be prepared to stay in session beyond the July 31 recess to keep working toward a deal.

The Democratic-led House has run into problems over funding for the $1 trillion, 10-year overhaul plan.

The plan working its way through Congress seeks to set up a government-run health insurance program to compete with private insurers, expand coverage to most of the 46 million uninsured, and hold down soaring healthcare costs that are rising faster than inflation.

Obama on Tuesday repeated his pledge the reforms must not worsen the government's debt -- a limitation that has been hard for congressional leaders to observe.

House Democratic leader Steny Hoyer said problems came from all directions, not just the "Blue Dog" group of fiscally conservative Democrats that raised public concerns over cost.

"I want to make it very clear that there's progressives, Blue Dogs and everybody in between who have expressed concerns and we're working on that," he said.

Obama met at the White House with some Blue Dogs --so named out of a sense liberals had choked them "blue" -- over their concerns the new healthcare system would not save money for consumers or the government and would worsen the already burgeoning federal debt.

"Before we consider any kind of new revenue, they (voters) want us to squeeze every ounce of savings that we can out of the current system. That's what we're demanding," Representative Mike Ross told reporters after the meeting.

Ross is on the House Energy and Commerce Committee that canceled Tuesday's drafting session in order to hear out fiscal conservatives about what they need to vote for the bill. The bloc is large enough that it could scuttle the plan.

Committee Chairman Henry Waxman told reporters Obama stressed "his great, strong, firm commitment" that healthcare reform not add to the federal deficit.

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Palo Alto budgets $50K for new fountain after sculpture falls through

2009-07-22T04:14:00.000-07:00

Palo Alto is prepared to spend $50,000 for a new fountain on California Avenue after public outcry stalled a proposal for a much more expensive sculpture on the site.

The city's public art commission settled on the figure last week after researching how much neighboring cities have spent on similar fountain projects, said Linda Craighead, director of the city's arts division.

As it did with a sculpture project in Mitchell Park, the city will ask local artists for proposals on the fountain design, then let residents vote on the one they like best. The public art commission will draw on feedback from area merchants and members of the public in laying out the ground rules for the contest. The city expects to issue a formal request for proposals in August, Craighead said.

The city last year commissioned a work by noted sculptor Bruce Beasley for the site and was prepared to pay $185,000. But residents flooded City Hall with e-mails protesting the decision. Many said they would miss the old fountain, while some complained about the cost of the proposed artwork.

Officials maintain the old fountain has to go, which has been heavily damaged over the years. But the city council agreed last fall that a new fountain by a less prominent artist, presumably at lower cost, would be preferable to the Beasley proposal. It gave the public art commission the task of finding a replacement.

The commission decided $50,000 would be enough to land a

worthy work. The money will come from the city's public art budget, which accumulates at about $50,000 per year. The public art commission decides how to spend that money and does not need council approval for a project of this size, Craighead said.

Meanwhile, a Beasley piece — an arch-shaped sculpture expected to cost $280,000 — is slated for the new Mitchell Park Library, with the money coming from the city's 2008 library bond measure.

E-mail Will Oremus at woremus@dailynewsgroup.com.

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