Assignment: Ask a question that you need assistance with and answer a question submitted by another student for each chapter in Unit IV.

Assignment: Ask a question that you need assistance with and answer a question submitted by another student for each chapter in Unit IV.

Assignment: Ask a question that you need assistance with and answer a question submitted by another student for each chapter in Unit IV.

Assignment: Ask a question that you need assistance with and answer a question submitted by another student for each chapter in Unit IV.

Assignment: Ask a question that you need assistance with and answer a question submitted by another student for each chapter in Unit IV.

Republican Senator Cites Policy Disagreements As Congress Prepares to Vote on Stimulus Plan

By Anne E. Kornblut and Michael D. Shear
Washington Post Staff Writers
Friday, February 13, 2009

Saying he “made a mistake,” Republican Sen. Judd Gregg withdrew yesterday as the nominee for commerce secretary, dealing a fresh blow to President Obama’s quest to fill out his Cabinet and dramatically undercutting his efforts to forge a new bipartisanship in the capital.

Gregg said that he had simply lacked foresight and that he shouldered the burden of the decision entirely. “I should have focused sooner and more effectively on the implications of being in the Cabinet versus myself as an individual doing my job,” he said at a news conference on Capitol Hill.

He cited concerns about Obama’s economic recovery plan and the administration’s intent to have the next census director report to senior White House officials as well as the commerce secretary.

The timing of Gregg’s communication with the White House about his decision was murky through much of the day, as the president’s aides scrambled to revise their sometimes conflicting statements about when Obama was notified. Returning to Washington from Springfield, Ill., Obama told reporters on Air Force One that he learned just yesterday of Gregg’s decision. He later clarified that he had spoken with the senator from New Hampshire a day earlier but “wasn’t sure whether he’d made a final decision.”

The episode underscored how burdensome Cabinet selection has become for the new administration, which has watched nearly half a dozen of its top appointees withdraw or face embarrassing scrutiny over the past several weeks. The slip-ups have caused the White House to revamp its vetting process and have slowed down confirmations for nominees already in the pipeline.

And now Obama is left with two key openings — at the departments of Commerce and Health and Human Services — and more questions about his personnel choices.

Gregg’s withdrawal comes as Congress prepares for final passage of a $789 billion stimulus package; Obama previously got no Republican votes for the legislation in the House and only three in the Senate.

Senior Obama officials portrayed the latest personnel debacle as reflecting badly on Gregg alone, insisting they are still on course to change the tone in Washington and implement the president’s policies. But aides acknowledged that it is now clear that Obama has not been rewarded for reaching across the aisle, and they said he feels no imperative to replace Gregg with another Republican.

Gregg’s confirmation would have given Obama more Republican Cabinet members than any Democratic president in history. Obama himself wasted no time making clear that Gregg was responsible for first seeking, and then rejecting, the position, despite efforts to accommodate him.

“It comes as something of a surprise, because the truth, you know, Mr. Gregg approached us with interest and seemed enthusiastic,” Obama said in an interview yesterday with the State Journal-Register in Springfield. “But ultimately, I think, we’re going to just keep on making efforts to build the kind of bipartisan consensus around important issues that I think the American people are looking for.”

Though the news came as a shock to the political establishment, White House officials said they had an inkling of Gregg’s unease. Chief of Staff Rahm Emanuel said Gregg called him Monday to say he was having second thoughts. Obama met with Gregg privately at the White House on Wednesday, according to Emanuel, and the three-term senator said he was leaning toward dropping out.

Gregg made the decision public yesterday afternoon, becoming the second Commerce Department nominee in two months to withdraw from consideration.

“It’s better we discover it now than later,” Emanuel told reporters last night. Asked what had motivated Gregg, the chief of staff replied: “I’m not going to play psychologist or get into his head.” Gregg and administration officials alike said there had been no vetting issues involved.

The timing was unfortunate for Obama, who had sought to focus on promoting his economic recovery plan yesterday, as well as to celebrate the 200th birthday of Abraham Lincoln, whose spirit of unity Obama has claimed as his own.

As the news unfolded, Obama was on his way to a dinner in Lincoln’s honor in Springfield. White House officials rushed to contain the fallout, pointing to Gregg’s seemingly peculiar decision to accept a job that would, by definition, require him to adhere to the positions that he later claimed drove him away. Administration officials rejected the idea that the size of the economic stimulus package, or other Democratic policies, had alienated Gregg.

In his statement, Gregg said that “on issues such as the stimulus package and the Census there are irresolvable conflicts for me. Prior to accepting this post, we had discussed these and other potential differences, but unfortunately we did not adequately focus on these concerns.”

“I think what ended Judd Gregg’s hope of and desire of being the commerce secretary wasn’t anything any Democrat said or did, but what Republicans said and did,” a senior administration official said, speaking on the condition of anonymity. Democratic officials said they believed Gregg would have potentially faced rough questioning from Republicans during his confirmation hearings as they worked to find the GOP’s footing as an opposition party.

The withdrawal raised new questions about whom Obama can safely choose for the commerce spot. A senior official said the president was not quite back at ground zero in the selection process. Still, there were no obvious alternatives.

After losing New Mexico Gov. Bill Richardson (D) and then Gregg, Obama could turn to Symantec chief John Thompson, a Silicon Valley executive. But as a wealthy businessman, Thompson could have complicated finances, a situation Obama might want to avoid after the tax problems that have plagued other nominees.

Tax issues felled his pick to lead Health and Human Services, former senator Thomas A. Daschle (D-S.D.), and he has yet to announce a replacement.

Asked whether Obama had suffered a blow in his efforts to recruit Republicans, White House press secretary Robert Gibbs said he had not. “I’m standing in East Peoria with Ray LaHood,” Gibbs said by phone, referring to the Republican transportation secretary.

Nonetheless, Gregg’s withdrawal sharpened the already palpable sense in Washington that Obama’s promise of a new era of bipartisanship is seriously faltering. Just days after his historic inauguration, Obama held an unprecedented pair of closed-door meetings with Republicans on Capitol Hill — meetings that, despite the kind words from GOP lawmakers that followed, yielded no results measured in votes.

By the time the president’s stimulus package passed the Senate this week, all but three GOP members of Congress were lined up against it, complaining furiously that Obama and his allies were forcing a bloated, liberal bill down their throats.

“Despite our repeated attempts to work with President Obama and the Democrat Majority, Speaker Pelosi has refused to meet with us, or even include us in key negotiations, choosing instead to stick with a pork-filled bill that even members of her own party do not support,” said a statement from Rep. Eric Cantor (R-Va.), the minority whip.

Obama and his top aides tried furiously all week to rebut that cha rge. In his prime-time news conference Monday, the president said his efforts at bipartisanship were “designed to try to build up some trust over time.”

Staff writers Alec MacGillis and Michael A. Fletcher contributed to this report.

WASHINGTON — House and Senate leaders on Wednesday struck a deal on a $789 billion economic stimulus bill after little more than 24 hours of rapid-fire negotiations with the Obama administration, clearing the way for final Congressional action later this week.

The package of spending increases and tax relief, intended to spur an economic recovery and create jobs by putting money back in the pockets of consumers and companies, ended up smaller than either the House or Senate had proposed.

Many Democrats would have preferred a larger bill, but agreed to pare back, including cuts to favored education and health programs, to win three crucial Republican votes in the Senate.

“Legislation is the art of compromise, consensus building, and that’s what we did,” the Senate majority leader, Harry Reid of Nevada, said in announcing the accord.

The House was poised for a final vote as early as Friday, with the Senate to follow, clearing the way for President Obama to sign the bill by Monday. The White House is considering a prime-time bill signing ceremony, and on Wednesday asked the television networks if they would air the event.

In a statement, the president thanked Congress for agreeing to a measure that he said would save or create 3.6 million jobs.

“I’m grateful,” Mr. Obama said, “for moving it along with the urgency that this moment demands.”

The deal reflected a calculated gamble by Mr. Obama in the first weeks of his term. To win Republican votes, the final stimulus package is considerably leaner than what many economists say is now needed to jolt the economy, given its grave condition.

But it is unclear if Mr. Obama will be able to claim credit for bringing change to Washington by winning bipartisan support for his first major piece of legislation. Not a single House Republican voted for the bill when it came to the floor two weeks ago, and despite many compromises in the Senate, only three Republicans came on board.

The final bill includes $507 billion in spending programs and $282 billion in tax relief, including a scaled-back version of Mr. Obama’s middle-class tax cut proposal, which would give credits of up to $400 for individuals and $800 for families within certain income limits. It will also provide a one-time payment of $250 to recipients of Social Security and government disability support.

House Democrats, angry over some cuts, particularly for school construction, initially balked at the deal and delayed a final meeting on Wednesday between House and Senate negotiators.

Democratic officials said Speaker Nancy Pelosi felt that Mr. Reid went too far by announcing a deal before it was vetted by her office and discussed by House members in an emergency caucus meeting, setting off the last-minute flare-up.

Ms. Pelosi said at a news conference that the delay helped House Democrats win some final concessions, including an agreement to let states use some money in a fiscal stabilization fund for school renovations. “There is no question that one of our overriding priorities in the House was a very strong commitment to school construction,” she said. “That’s still in the bill.”

But they soon relented and the meeting got under way in a packed Lyndon B. Johnson Room on the Senate side of the Capitol.

Despite the show of pique, for Democrats the stimulus bill is the most prominent display yet that they now fully control Washington. Their ability to push the package forward represented a turnabout from years of losing battles under President George W. Bush. For Republicans, it underscored the limits of their diminished ranks.

Even trimmed to $789 billion, the recovery measure will be the most expansive unleashing of the government’s fiscal firepower in the face of a recession since World War II.

And yet it seemed almost trifling compared with the $2.5 trillion rescue plan for the financial system — a combination of loans to banks and incentives to bring private capital into the banking system — announced on Tuesday by Treasury Secretary Timothy F. Geithner.

Although the final legislative language was not immediately available, lawmakers said the bill contained more than $150 billion in public works projects for transportation, energy and technology, and $87 billion to help states meet rising Medicaid costs.

Despite intense lobbying by governors around the country, the final deal slashed $25 billion from a proposed state fiscal stabilization fund, eliminated a $16 billion line item for school construction and sharply curtailed spending to provide health insurance for the unemployed.

In driving down the total cost — from $838 billion for the Senate stimulus bill and $820 billion for the House-passed measure — lawmakers also reduced the Senate’s proposed tax incentives for buyers of homes and cars, which hold big public appeal.

The final agreement retained a $70 billion tax break to spare millions of middle-income Americans from paying the alternative minimum tax in 2009. Some Democrats decried the provision as a costly addition that would not lift the economy and that Congress would have approved, regardless of the recession.

After huddling in Ms. Pelosi’s office on Tuesday until nearly midnight, top White House officials and Congressional leaders had all but ironed out the differences between the House and Senate versions of the stimulus by noon on Wednesday.

Even before the last touches were put to the bill, some angry Democrats said that Mr. Obama and Congressional leaders had been too quick to give up on Democratic priorities. “I am not happy with it,” said Senator Tom Harkin, Democrat of Iowa. “You are not looking at a happy camper. I mean they took a lot of stuff out of education. They took it out of health, school construction and they put it more into tax issues.”

Mr. Harkin said he was particularly frustrated by the money being spent on fixing the alternative minimum tax. “It’s about 9 percent of the whole bill,” he said, “Why is it in there? It has nothing to do with stimulus. It has nothing to do with recovery.”

But even as Congressional leaders and top White House officials went through the package with a carving knife, it was clear that the three Republicans who agreed to support the bill in the Senate wielded extraordinary power, and along with conservative Democrats, had put a firm stamp on the stimulus package.

For instance, negotiators opted to keep many of the Senate’s reduced spending provisions, but they were careful to maintain an additional $6.5 billion for medical research that was inserted at the insistence of Senator Arlen Specter, Republican of Pennsylvania, who is a cancer survivor. He was one of the three Republican supporters of the recovery package.

“I think it is an important component of putting America back on its feet,” Mr. Specter said, though he added that it was still a difficult vote “in view of the large deficit and national debt.”

The Senate bill came together only after a bipartisan group of centrist senators, led by Susan Collins, Republican of Maine, and Ben Nelson, Democrat of Nebraska, reached a deal to trim the cost of the package to $838 billion from more than $920 billion.

“These aren’t easy times, obviously for America,” said Senator Olympia J. Snowe, Republican of Maine, who was also a member of that group. “Given the gravity of the circumstances economically, I thought it was important to be part of a process that could yield a consensus-based solution.”

But the majority of Republicans continued to criticize the stimulus measure on Wednesday as a bloated and ill-designed spending bonanza by Democrats on favored projects that would not help lift the economy out of recession but would permanently expand the federal government and plunge future generations of Americans deep into debt.

“Yesterday the Senate cast one of the most expensive votes in history,” said the Republican leader, Senator Mitch McConnell of Kentucky. “Americans are wondering how we’re going to pay for all this.”

Indeed, the formal House-Senate conference meeting, usually an elaborate parliamentary ritual with reams of legislative paperwork strewn across cluttered conference tables, instead served mostly as a live, televised forum for some of the most powerful Democrats and Republicans in Congress to trade barbs.

Senator Charles E. Grassley, Republican of Iowa, complained that despite Mr. Obama’s call for bipartisan cooperation, Republicans had largely been shut out. “We didn’t have a chance to negotiate,” Mr. Grassley said.

Robert Pear, Kate Phillips and Jeff Zeleny contributed reporting.

Unclear which party will get first chance to form government

Israel’s foreign minister and Kadima Party leader Tzipi Livni reacts during an election night rally in Tel Aviv on Tuesday.

No clear winner

Israel voters cast their ballots for the 120-seat parliament Tuesday. Nearly complete results show the leading parties will be:

Kadima: 28 seats

Likud: 27 seats

Yisrael Beitenu: 16 seats

Labor: 13 seats

JERUSALEM – Israeli voters on Tuesday delivered a split decision in national elections, sparking competing claims by backers of opposition leader Benjamin Netanyahu and Foreign Minister Tzipi Livni over who will be the next prime minister.

Voters appeared to give Livni’s Kadima Party, which favors negotiations with the Palestinians, a slight and unexpected edge over Netanyahu’s Likud, which has been critical of peace talks, according to nearly complete returns and exit polls.

But the overall shift in Israel’s parliament, the Knesset, was sharply to the right. That could make it difficult for Livni to build the coalition she would need to govern, particularly if she intends to pursue U.S.-backed talks aimed at creating a Palestinian state.

Both candidates claimed victory, and the political jockeying was expected to intensify in the coming days. It will fall to President Shimon Peres to decide who gets first crack at forming a government – a tricky task in Israel’s fractious political culture. Traditionally, the president chooses the party that receives the most seats in the 120-member Israeli parliament, but he is not obligated to do so. Peres will now consult with all the parties to determine who has the best chance of creating a stable government.

The question of who will lead Israel could linger for weeks or more at a time when the nation faces threats from Hamas in Gaza, Hezbollah in Lebanon and an Iranian government with nuclear ambitions.

Netanyahu, prime minister during the late 1990s, delivered a victory speech just after midnight in which he told cheering supporters in Tel Aviv that “the people of Israel have spoken clearly and sharply. The national camp, headed by the Likud, has won a clear victory.”

Netanyahu signaled he intended to lead a coalition of parties that, like his own, take a hawkish stance toward Iran and believe that the creation of a Palestinian state would present a threat to Israeli security.

Livni, who would be Israel’s first female prime minister since Golda Meir led the country more than three decades ago, served as lead negotiator during last year’s unsuccessful negotiations with the Palestinians. Livni has favored continued efforts toward reaching a deal.

“Today the nation chose Kadima,” an energetic Livni declared to a crowd of backers, who serenaded her with chants of “the next prime minister.”

Livni said she would attempt to form a national unity government that includes parties across the political spectrum.

With votes from more than 90 percent of polling stations counted, Kadima had won an estimated 28 seats in the 120-member Israeli parliament. Netanyahu’s Likud garnered 27. Ultra-nationalist leader Avigdor Lieberman was projected to place third, with 16 seats. Defense Minister Ehud Barak, head of the center-left Labor Party that once dominated Israeli politics, was forecast to drop to fourth at 13 seats.

WASHINGTON — The White House plan to rescue the nation’s financial system, announced on Tuesday by Timothy F. Geithner, the Treasury secretary, is far bigger than anyone predicted and envisions a far greater government role in markets and banks than at any time since the 1930s.

Administration officials committed to flood the financial system with as much as $2.5 trillion — $350 billion of that coming from the bailout fund and the rest from private investors and the Federal Reserve, making use of its ability to print money.

Mindful of previous financial crises at home and abroad that became protracted because governments moved too slowly, Mr. Geithner pointedly criticized the Bush administration for not acting boldly and quickly enough.

But the initial assessment of the plan from the markets, lawmakers and economists was brutally negative, in large part because they expected more details.

Basic questions about how the various parts of the program would work, especially those involving the unsellable mortgages that banks are holding and preventing home foreclosures, were left for another day. Some Wall Street experts criticized the plan for relying too heavily on the same vague solutions proposed by the Bush administration.

The stock market, propped up for weeks on the expectation that Washington would finally deliver a comprehensive rescue plan, dipped almost as soon as Mr. Geithner began speaking in the morning. The Dow Jones industrial average fell 382 points, or 4.6 percent, by the time the market closed. Yields on Treasury bills dropped, indicating a flight from stocks to the safety of government bonds. Asian markets slipped more narrowly.

While traveling in Fort Myers, Fla., President Obama welcomed the news that the Senate voted 61-37 to approve its $838 billion economic stimulus bill Tuesday, but dismissed the market reaction to his bank rescue plan.

“Wall Street, I think, is hoping for an easy out on this thing and there is no easy out,” Mr. Obama said in an interview with ABC News.

Many of the vital details of the program remain unsettled and are the subject of an intense behind-the-scenes debate.

The president himself had built up expectations that the plan would get ahead of the crisis — and not lurch from pillar to post as the Bush administration did last year, often in partnership with the New York Federal Reserve under its then-president, Mr. Geithner.

A central piece of the plan — and the one item that investors most craved information about — would create one or more so-called bad banks that would rely on taxpayer and private money to purchase and hold banks’ bad assets. But the administration provided the least amount of details about this part of the plan.

Another centerpiece of the plan would stretch the last $350 billion that the Treasury has for the bailout by relying on the Federal Reserve’s ability to create money, in effect, out of thin air. The Fed’s money will enable the government to become involved in the management of markets and banks in ways not seen since the Great Depression.

In the credit markets, for instance, the administration and the Fed are proposing to expand a lending program that would spend as much as $1 trillion to make up for the $1.2 trillion decline between 2006 and last year in the issuance of securities backed primarily by consumer loans.

The plan’s third major component would give banks new helpings of capital with which to lend. Banks that receive new government assistance will have to cut the salaries and perks of their executives and sharply limit dividends and corporate acquisitions.

They will also have to make public more information about their lending practices. A Treasury fact sheet said that banks would have to state monthly how many new loans they make, but stopped short of ordering banks to issue new loans or requiring them to account in detail for the federal money.

Mr. Obama, in the ABC News interview, suggested that banks would be required to reveal more about their mortgage holdings.

“Essentially what you’ve got are a set of banks that have not been as transparent as we need to be in terms of what their books look like. And we’re going to have to hold out the Band-Aid a little bit and go ahead and just be clear about some of the losses that have been made because until we do that, we’re not going to be able to attract private capital into the marketplace.”

The day was the first big test of Mr. Geithner as Treasury secretary, who has one of the toughest sells in America: convincing lawmakers and taxpayers that they should again bail out the very banks whose mistakes contributed to the loss of more than three million jobs and caused acute financial pain.

It was clear during the hours he spent before the cameras and lawmakers that he was well-spoken and thoughtful. But his career until now had played out behind the scenes as a civil servant and a central banker. He occasionally lapsed into financial jargon and struggled to connect to a broader public audience.

As the day wore on, Mr. Geithner faced growing skepticism from Democratic and Republican lawmakers, many of them channeling deep voter disgust with the way the government has handled the bailout over the last nine months.

Even Democrats who are supportive of the administration said that it had failed to provide more information about how it would be spending the remaining money in the bailout program.

“We need more details from Treasury on how exactly it plans to remove bad assets while protecting the taxpayer,” said Senator John Kerry, the Massachusetts Democrat who is a senior member of the Senate Finance Committee. “We have zombie banks that are weighed down because their liabilities exceed their assets. Without a precise mechanism for addressing toxic assets, it will be difficult to increase lending.”

The pessimism seemed to indicate that Mr. Geithner missed the mark with one of his shorter-term goals — to quickly instill confidence that the Obama administration has a coherent approach to the banking crisis and that the transparency and oversight of the new program will differ markedly from the Bush administration’s management of the first $350 billion that Congress authorized last year for the Troubled Asset Relief Program, or TARP.

“The spectacle of huge amounts of taxpayer money being provided to the same institutions that helped cause the crisis, with limited transparency and oversight, added to the public distrust,” the Treasury secretary said, in a clear swipe at the Bush administration.

“We will have to try things we’ve never tried before. We will make mistakes. We will go through periods in which things get worse and progress is uneven or interrupted,” Mr. Geithner said.

Representative Barney Frank, the Massachusetts Democrat who heads the House Financial Services Committee, criticized the Obama administration for not putting out more details and said it should commit more than $50 billion to avert home foreclosures.

“The secretary said the administration would present details of their foreclosure reduction plan in a few weeks, which is too much time,” Mr. Frank said.

Appearing on Tuesday afternoon before the Senate banking committee, Mr. Geithner vowed to move quickly to provide more details. But Republicans were skeptical.

“Is there a concrete plan here?” Richard Shelby of Alabama, the senior Republican on the committee, asked Mr. Geithner point blank, after noting that Mr. Geithner had been part of the leadership involved in last year’s bailout efforts. “What is different about the process that you are offering here to devise your plan such that we should have confidence that it is well thought out?”

There was also withering criticism from Wall Street. Ethan Harris, co-head of United States economics research at Barclays Capital, said the program was “shock and uh.” He said the Treasury made a “tactical mistake” by building up expectations about a plan before it had much to announce.

“What’s striking is that these are not new issues that they are facing,” Mr. Harris said. “These are the same issues that the Treasury faced last fall — how do we price the assets? The fact that it’s so been so difficult to figure out the answer may tell you something about whether it’s worth doing or not.”

Mr. Harris warned that setting up a so-called bad bank would be very expensive, as Mr. Geithner himself acknowledged when he set the goal of creating a fund that would reach $1 trillion. Frank Pallotta, a former managing director at Morgan Stanley and a veteran mortgage trader, said the gap was so wide between what banks were valuing their assets and what investors were willing to pay that the government would attract investors to buy only if it provided a subsidy of one form or another.

“Right now, the banks aren’t selling anything,” said Mr. Pallotta, now a consultant to both buyers and sellers of distressed mortgages. “You have Chase thinking that its assets are worth 75 cents on the dollar, and Joe Hedge Fund who thinks they are only worth 45 or 25. There is a huge gap, and the government has to find out if there is some middle point where they can get in.”

Mr. Pallotta said he did not fault the Treasury for failing to offer specifics yet, but he said it could not delay for long. “If we don’t hear in the next 30 days about how this thing will flesh out, then I would be upset.”

Jeff Zeleny contributed reporting from Fort Myers, Fla.

Cal Thomas is a columnist for Tribune Media Services.

David S. Broder is a columnist for the Washington Post. His e-mail address is davidbroder@washpost.com.

Trudy Rubin is a columnist for the Philadelphia Inquirer. Her e-mail address is trubin@phillynews.com.

Beth Thew is secretary-treasurer of the Spokane Regional Labor Council, AFL-CIO.

Charles Krauthammer is a columnist for the Washington Post Writers Troup. His e-mail address is letters@charleskrauthammer.com.

WASHINGTON — Senate Democrats reached an agreement with Republican moderates on Friday to pare a huge economic recovery measure, clearing the way for approval of a package that President Obama said was urgently needed in light of mounting job losses.

The deal, announced on the Senate floor, was a result of two days of tense negotiations and political theater. Mr. Obama dispatched his chief of staff to Capitol Hill to help conclude the talks and reassure senators in his own party, and he called three key Republicans to applaud them for their patriotism.

Earlier, when it looked as if a vote might take place Friday night, officials said, a government plane was dispatched to Florida to bring back Senator Edward M. Kennedy, a Massachusetts Democrat who has brain cancer.

The fine print was not immediately available, and the numbers were shifting. But in essence, the Democratic leadership and two centrist Republicans announced they had struck a deal on about $110 billion in cuts to the roughly $900 billion legislation — a deal expected to provide at least the 60 votes needed to send the bill out of the Senate and into negotiations with the House, which has passed its own version.

The pact, which is expected to be approved in the next few days, was concluded just hours after the Labor Department announced that 598,000 jobs were lost in January. The contraction in jobs is already steeper than in any other recession since at least the early 1980s. And economists warn that several more shoes are about to drop, a message that added urgency to the Senate deliberations.

As the negotiations were under way, lawmakers said it was time to stop quibbling about the exact parameters of the legislation — which mixes safety-net spending, tax cuts and a huge infusion of dollars into federal programs — and to begin work toward a final agreement that could be sent to Mr. Obama next week.

“Our country can’t wait another day for another approach,” said Senator Ben Nelson, a Nebraska Democrat who is a leader of the bipartisan coalition that worked out the agreement.

The details were negotiated at an afternoon meeting in the office of the Senate majority leader, Harry Reid of Nevada, involving Mr. Reid, other top Democrats and two Republicans, Susan Collins of Maine and Arlen Specter of Pennsylvania. After they came to terms, the senators brought in the White House chief of staff, Rahm Emanuel, for assurance that the deal was acceptable to the administration. Mr. Emanuel signaled it was.

“With today’s unemployment numbers reaching more than 3.6 million workers,” Mr. Emanuel said after the session, “delay and failure were not an option.”

Mr. Obama called Ms. Collins and Mr. Specter, as well as Senator Olympia J. Snowe of Maine, another Republican expected to support the deal, to acknowledge they were acting against pressure from their party and, one official said, to thank them for their patriotism in helping advance the bill at a critical time.

Earlier in the day, Mr. Obama urged Congress to act expeditiously. “It is inexcusable and irresponsible for any of us to get bogged down in distraction, delay or politics as usual while millions of Americans are being put out of work,” said Mr. Obama, who has recently shown less patience for Republican resistance to the bill.

Most Senate Republicans remained opposed to the measure, criticizing it as a case study in excessive spending that would do little to lift the economy. Some conservatives indicated Friday night that they would push for time to study the new legislation before any final vote.

“We want to stimulate the economy, not mortgage the future of our children and grandchildren by the kind of fiscally profligate spending embodied in this legislation,” said Senator John McCain of Arizona, the defeated Republican presidential nominee, who has emerged as a chief opponent of the proposal.

Republicans were clearly irritated at the outcome and faulted those involved in working out the bargain. “When you say this was the best we could do, I disagree with you,” Senator Lindsey Graham of South Carolina said on the floor. “This not remotely close to what we could have done if we had sat down in a true bipartisan fashion and found a better way.”

The Senate’s proposed cuts took aim at an array of popular spending programs that critics said should not be part of a fiscal recovery bill, even if they represent laudable policy goals, because they would not deliver a quick enough jolt to the economy.

Even Mr. Obama’s signature tax cut for middle-class Americans was scaled back as part of the deal. Under the new plan, tax credits of up to $500 for individuals and $1,000 for couples would begin to phase out at lower income levels than first proposed, saving the government $2 billion.

The biggest cut, roughly $40 billion in aid to states, was likely to spur a fierce fight in negotiations with the House over the final bill. Many states, hit hard by the recession, face wrenching cuts in services and layoffs of public employees as they struggle to comply with laws requiring them to balance their budgets.

When debate began this week, the price tag on the Senate version of the stimulus bill was roughly $884 billion, but it grew to more than $900 billion as senators added provisions including tax breaks totaling $30 billion for purchases of homes and cars.

Lawmakers said that by poring over the 736-page bill they had excised about $110 billion, bringing the total cost to about $780 billion — $40 billion less than the stimulus bill approved by the House last week. Because of consumer tax breaks and spending for health research that had been added in the Senate, the new total for the measure could be about $820 billion. But even the senators behind the compromise were uncertain of the number.

In addition to the large cut in state aid, the Senate agreement would cut nearly $20 billion proposed for school construction; $8 billion to refurbish federal buildings and make them more energy efficient; $1 billion for the early childhood program Head Start; and $2 billion from a plan to expand broadband data networks in rural and underserved areas.

The administration had initially hoped that it could win the support of as many as 80 senators, but that goal disappeared after House Republicans voted unanimously against the measure. As questions were raised about the total spending, getting even three or four Republican senators to sign on became difficult.

Ms. Collins said she believed the changes had significantly improved the measure. Mr. Specter said that while he still had reservations, he had come to accept Mr. Obama’s push to enact the economic plan by mid-February. “I believe we do have to act,” Mr. Specter said, “and under the circumstances this is the best we can do.”

But several other Republicans who had taken part in the talks said they could not support the compromise.

“Unfortunately, there was too much in the Democratic counterproposal that was not stimulative,” said Senator George V. Voinovich of Ohio, “and that did not provide the jump-start our economy so desperately needs.”

The Senate Republican leader, Mitch McConnell of Kentucky, said most Republicans remained unconvinced that the package would reinvigorate the economy.

“You have to balance the likelihood of success versus the crushing debt that we’re levying on the backs of our children, our grandchildren and, yes, their children,” Mr. McConnell said.

Mr. Reid urged Republicans to get behind the plan. “This is a critical day for this new Congress and our country,” he said. “Faced with this grave and growing economic crisis, Republicans must decide today whether they will join the president and Congressional Democrats on that road to recovery.”

HHS Pick Built Connections Over Decades

By Ceci Connolly
Washington Post Staff Writer
Tuesday, February 3, 2009

As he battles this week to save his nomination to be secretary of health and human services, one thing is certain: No one in Washington has a better-positioned network of allies in the Obama administration than Thomas A. Daschle.

Over three decades on Capitol Hill, including 10 years as the Senate Democratic leader, Daschle has nurtured one of the largest, most experienced talent pools in the city. His charges guided Barack Obama from his first days in the Senate, through the presidential race and into the White House. Daschle’s tentacles, moreover, stretch far beyond the agency Obama picked him to lead, reaching across the entire administration from the upper echelons of the White House to mid-level departmental positions to Obama’s kitchen cabinet.

The network is being tapped this week as Daschle and his allies scramble to explain why he did not pay more than $100,000 in back taxes, primarily for the use of a car and driver for three years. After a 75-minute closed-door meeting yesterday with the Senate Finance Committee, he emerged ashen-faced and apologetic. His confirmation vote has been postponed until at least the middle of next week.

Republicans remained noncommittal yesterday, weighing the costs and benefits of perhaps killing the nomination of a former colleague and close personal friend of the president. Democrats rose to Daschle’s defense, including, most notably, the man who would be without much of his top staff were it not for Daschle.

Asked yesterday morning whether he stands by Daschle, Obama said firmly: “Absolutely.”

If he weathers the tax controversy, Daschle is likely to be one of the best-connected Cabinet secretaries in the administration, if not history.

At least a dozen Daschle alumni are stepping into the highest positions of the federal government. Already, Obama and Vice President Biden have tapped Daschle veterans to manage their staffs, guide foreign policy and craft public relations strategy. In addition to the new HHS chief of staff, the chiefs of staff to Biden, the National Security Council and Treasury Secretary Timothy F. Geithner all worked for Daschle. His allies oversaw Obama’s transition team — including vetting Daschle himself — and one serves as the president’s personal lawyer.

“This is notable for the breadth and scope and number,” said Chris Jennings, who was the Clinton administration point man on health care and knows the challenges of navigating the White House bureaucracy.

As news broke over the weekend that Daschle had made several tax errors, many of those former colleagues and aides helped mount a defense, praising his integrity on talk shows, in news releases and in whispered asides. Not a single lawmaker has called for him to withdraw.

But the real potency of the network will come if Daschle is confirmed, said Ross K. Baker, a political scientist at Rutgers University. With such well-placed, trusted advisers, he would be in a position to promote his priorities and shape policy well beyond the contours of his department.

“The fact that he has eyes and ears in the White House, rather than way down in the HHS bureaucracy, is really an advantage,” Baker said. He likened Daschle’s sphere of influence to the broad power that Henry Kissinger held as secretary of state in the Nixon administration.

“Geography is determinant of influence,” he said. “To have people proximate to the president is a real advantage.”

Like Daschle, Secretary of State Hillary Rodham Clinton can lay claim to an impressive network of insiders, developed during her husband’s eight years in the Oval Office and her eight in the Senate. Many have worked for Daschle as well. But the Clinton coalition has become fractured and she carries the lingering scars of a contentious fight with Obama in the Democratic presidential primaries.

By contrast, Daschle and Obama share an uncommon bond, forged during the 2004 campaign. Many — including aides to Daschle — had expected him to seek the White House. But the South Dakotan lost a nasty reelection fight, and the young Illinois legislator burst onto the national scene and into the U.S. Senate.

“Tom was the first guy to go with Obama” in the pre-presidential campaign season, said Frederick H. Graefe, a Washington lobbyist and one of Daschle’s oldest friends. “He told him, ‘Run now, don’t wait, don’t make the mistake I made. I’ll give you everybody I have — the campaign team, the personal staff, leadership staff, fundraising lists — lock, stock and barrel.’ ”

“It was a ready-made team,” Graefe added.

As a Senate leader with authority over not just his personal staff but several policy and campaign committees as well, Daschle employed more than 100 people at any given time. From 1994 to 2005, even more than the Clinton White House, “the University of Daschle” was the place to learn the inner workings of governing, Baker said.

More than half a dozen Daschle veterans hold high-ranking White House positions, most notably Pete Rouse, who was his chief of staff and is now senior adviser to the president, and Phil Schiliro, Obama’s legislative liaison.

Daschle-ites are also taking positions at the Agriculture Department and the Democratic National Committee. Some of his closest allies are among Obama’s most trusted outside advisers, a select group whose influence comes not from a title but from a personal bond. They include John D. Podesta, the Center for American Progress president who masterminded Obama’s transition; lawyer Robert Bauer; and political consultant Anita Dunn.

“The spokes of the wheel all lead to Pete Rouse,” said Dunn, who has deep ties to both men. “When Pete went to work for Barack, what Barack got — and I don’t think he realized it — was the only network in Democratic circles that from both a policy and political perspective came close to the Clinton network.”

Rouse got his start in Washington in the early 1970s when he and Daschle were young aides to then-Sen. James Abourezk (D-S.D.). In 1986, he began an 18-year stint with Daschle.

When Daschle lost in 2004, he encouraged his team to sign on with Obama. Rouse agreed and eventually recruited many of Obama’s top aides, including Schiliro and the husband-and-wife team Dan Pfeiffer and Sarah Feinberg.

If confirmed, Daschle will be “HHS secretary plus,” said Dunn, referring to the additional role as head of the new White House Office of Health Reform, which has a small but well-situated office in the basement of the West Wing.

If Daschle were working at HHS headquarters, his “embeds,” as Dunn calls them, could provide “an extraordinary level of information and access that most Cabinet secretaries don’t have.”

“It’s a matter of him not having to go in and forge relationships,” she said. “Daschle gets to deal directly with people he knows and is comfortable with.”

If as HHS secretary he wanted to tweak health tax policy, his longtime chief of staff, Mark Childress, would need only pick up the phone and call former colleague Mark Patterson, Geithner’s chief of staff. If there were an international health issue to resolve, Childress could contact Daschle alums Mark Lippert at the NSC and Denis McDonough on the White House staff.

And if Daschle needed assistance from Biden, he could turn to Ron Klain, the vice president’s chief of staff, who oversaw the Senate Democratic Leadership Committee for Daschle in 1995. Biden was making calls on Daschle’s behalf yesterday.

The Daschle hires that Obama has made are the “cream of the crop” of the Democratic establishment, Jennings said.

“People outside the Daschle orbit recognize his friendship with and influence with President Obama,” he said. “It’s the cumulative perceptions of his respect and influence within the administration and his former staff. Whether it’s an accurate perception or not, perception is reality in Washington.”

Staff writers Paul Kane and Joe Stephens and research editor Alice Crites contributed to this report.

UPDATE

Daschle Ends Bid for Post; Obama Concedes Mistake

WASHINGTON — Tom Daschle withdrew his nomination as secretary of health and human services on Tuesday after weathering four days of scrutiny over unpaid taxes, prompting President Obama to concede having “screwed up” in undermining his own ethical standards by pushing the appointment.

“I’ve got to own up to my mistake, which is that ultimately it’s important for this administration to send a message that there aren’t two sets of rules,” Mr. Obama said in an interview with NBC News. “You know, one for prominent people and one for ordinary folks who have to pay their taxes.”

Mr. Daschle, a closer confidant to Mr. Obama than any other cabinet nominee, had offered to step down over the weekend, but officials close to both men said Mr. Obama had urged him to fight for confirmation.

Mr. Daschle went to Capitol Hill on Monday to keep his confirmation on track, but by Tuesday morning, with the pressure showing no signs of easing, he told the president that he believed he had become a distraction and too wounded to be effective.

It was the rockiest day yet for the new White House. Two hours before Mr. Daschle withdrew, Mr. Obama’s nominee to be the chief White House performance officer, Nancy Killefer, pulled her name from consideration because of unpaid payroll taxes for a household employee.

The developments distracted attention from Mr. Obama’s effort to push his economic stimulus plan through the Senate and complicated the initiative that Mr. Daschle was to have led, his plan for overhauling the health care system.

The nominees’ tax problems also gave Republicans a new argument against Mr. Obama and his party as the economic debate proceeds: that Democrats are cavalier about taxing other people because they do not abide by the tax laws themselves.

In evening interviews on broadcast and cable television networks, Mr. Obama said he took responsibility for the errors. “And so I’m frustrated with myself, with our team,” he told NBC, “but ultimately my job is to get this thing back on track because what we need to focus on is a deteriorating economy and getting people back to work.”

He added, “I’m here on television saying I screwed up and that’s part of the era of responsibility.”

Mr. Daschle delivered the news in a call on Tuesday morning to Mr. Obama, who was in his study, just off the Oval Office. He also stepped down from his position as White House heath czar, a job with a West Wing office.

Mr. Daschle said Monday that his failure to pay $128,000 in taxes for the use of a friend’s chauffer and car service was “completely inadvertent.”

Declining an interview request on Tuesday afternoon, Mr. Daschle said in a brief statement distributed by the White House that he would not have been able to lead an overhaul of the nation’s health care system “with the full faith of the Congress and the American people.”

“I am not that leader,” Mr. Daschle said, “and will not be a distraction.”

The withdrawals by the two advisers represent the highest-level political casualties of the young administration and raised fresh questions about the vetting procedures for officials already selected and scores of positions that remain open.

Senate Republicans signaled their intention to step up scrutiny of all appointees. Treasury Secretary Timothy F. Geithner was confirmed last week after apologizing and weathering weeks of criticism for late payment of $34,000 in income taxes.

Both Mr. Daschle and Ms. Killefer pulled out on their own accord, officials said, after their tax returns were scrutinized by the Senate Finance Committee. On the campaign trail, Mr. Obama often expressed frustration to aides about the practice of cutting loose advisers at the first sign of political trouble.

“They both decided and recognized that their nominations would distract from the important goals and the critical agenda that the president put forward,” Robert Gibbs, the White House press secretary, said Tuesday.

Asked repeatedly whether the White House had quietly urged Mr. Daschle to step aside to quell the controversy, Mr. Gibbs said, “He did not get a signal.”

Among the people mentioned as possible candidates for the job of health secretary are Gov. Kathleen Sebelius of Kansas, a former state insurance commissioner; former Gov. John A. Kitzhaber of Oregon, a doctor; and Gov. Jennifer M. Granholm of Michigan. All are Democrats.

In the Senate, Democrats were caught by surprise by Mr. Daschle’s decision, particularly after his appearance at the Finance Committee on Monday, as well as several indications that he could win confirmation.

But Republicans were intensifying their criticism of his tax failings, and Senator Harry Reid of Nevada, the majority leader, said Mr. Daschle told him in a phone call on Tuesday morning that he believed the nomination was getting too much attention.

Senator Richard J. Durbin of Illinois, the No. 2 Democrat in the Senate, said Mr. Daschle, the former Senate majority leader, had done “the honorable thing to spare his family, the president and his colleagues in the Senate from a tough political battle that would lie ahead.”

Mr. Durbin added, “I think he would have prevailed in the end, but it would have taken a while, and there would have been some suffering.”

The day had been scripted by advisers to turn the page on the tax controversy and refocus on the economy. In a rare move, television anchors for five broadcast and cable networks had been invited to interview Mr. Obama about the urgency of passing the economic recovery plan, a decision that magnified the troubles at the White House by giving them increased prominence on the evening news.

He delivered almost precisely the same mea culpa to each of the anchors as they cycled through the Oval Office.

Hours earlier, as his advisers huddled in the West Wing to shape a strategy for responding to the dizzying turn of events, Mr. Obama and his wife, Michelle, made an unscheduled stop at a public school not far away.

“We were just tired of being in the White House,” Mr. Obama told second graders at Capital City Public Charter School.

Senator John Kerry, Democrat of Massachusetts, who sits on the Finance Committee, said he believed Mr. Daschle should not have withdrawn his name.

“I believe that when the smoke clears and the frenzy has ended, no one will believe that this unwitting mistake should have erased 30 years of selfless public service and remarkable legislative skill and expertise on health care,” Mr. Kerry said.

In the case of Ms. Killefer, administration officials said she had failed to pay more than a year’s worth of unemployment taxes on household help.

The District of Columbia filed a $946.69 tax lien on her home in 2005 for failure to pay the tax. That was disclosed to the Senate Finance Committee, but officials said her tax records were being further scrutinized.

“I recognize that your agenda and the duties facing your chief performance officer are urgent,” Ms. Killefer wrote in a letter to Mr. Obama on Tuesday.

“I have also come to realize in the current environment that my personal tax issue of D.C. unemployment tax could be used to create exactly the kind of distraction and delay those duties must avoid.”

Ms. Killefer, head of the Washington office of the consulting firm McKinsey & Company, was named to the new position on Jan. 7. In the announcement, Mr. Obama said she would help “restore the American people’s confidence in their government.”

He said at the time that her role would be to scour the budget for wasteful or inefficient spending.

Robert Pear and Carl Hulse contributing reporting.

BAGHDAD — Iraqis across the country voted Saturday in provincial elections that will help shape their future, but regardless of the outcome it is clear that the Americans are already drifting offstage — and that most Iraqis are ready to see them go.

The signs of mutual disengagement are everywhere. In the days leading up to the elections, it was possible to drive safely from near the Turkish border in the north to Baghdad and on south to Basra, just a few miles from the Persian Gulf — without seeing an American convoy. In the Green Zone — once host to the American occupation government, and now the seat of the Iraqi government — the primary PX is set to close, and the Americans have retreated to their vast, garrisoned new embassy compound. Iraqi soldiers now handle all Green Zone checkpoints.

American helicopters and drones may be in the sky, but Iraqi boots are on the ground. The Americans are already worried about securing the road to Kuwait because soon they will have to start hauling out much of the infrastructure they have built on bases across Iraq.

The end of an era comes not in a single moment, but looking back it has become evident that the mood has changed, power has shifted, the world is not the same.

In the United States, many Americans view the war as already over, even though more than 140,000 American soldiers remain on Iraqi soil.

President Obama has made it plain that Iraq is not his war; he wants to focus on Afghanistan. In an economic crisis, there is simply not enough money for the country to keep spending hundreds of millions of dollars a day in Iraq.

Any arguments that remain in Washington about the shape and timing of the troop withdrawal this year seem almost moot here, given how much Iraqis want to show they can govern on their own and how much Americans want to hand over responsibility to the Iraqis so they can meet withdrawal deadlines.

This is not to suggest that the war is over. In two provinces, Nineveh and Diyala, counterinsurgency operations are still under way, and the military is tracking signs of activity by Sunni extremist groups in the troubled areas surrounding Baghdad. For now, the rest of the country is mostly calm. The provincial elections will test political stability: whether Iraqis can begin to resolve still festering sectarian and ethnic tensions through the ballot box. The formal process of disengagement started in earnest in November, when the Iraqi Parliament approved a new security agreement with the Americans that sealed the date of departure, by the end of 2011, and almost immediately changed the balance of power.

The outlook of Iraqi citizens has changed as well. They are more confident that their problems are their own, and that the Americans cannot fix them and often have only made matters worse.

“The American military presence brought nothing to our streets but destruction and chaos,” said Omar al-Dulaimi, 57, a government employee who lives near the Um al-Khoura mosque, one of the largest Sunni places of worship in the capital. “We had nothing from them but tension and confusion. It’s much better for us and for them if they stay in their bases now.”

That resentment of the American presence boiled over in 2007 after Blackwater Security guards opened fire on Iraqi civilians in Nisour Square, killing 17 of them and wounding more than 30. That episode, which was widely publicized in Iraq and abroad, crystallized Iraqi loathing and resentment of what they saw as Americans’ casual disregard for Iraqi lives — and their own powerlessness to hold the Americans to account.

Such anger helped embolden Iraqis to drive a tough bargain on the security agreement, which cemented their sense that they were, at last, seizing control of their own destiny. The Iraqi resolve surprised the Americans, who in the end were forced to accept a hard deadline for departure, give up immunity for contractors like Blackwater and give Iraqis explicit authority over all military operations in the country.

Now, for both sides there is the feeling that something has changed and that whatever happens next, Iraq will not return to the way it was.

“We’re going through transition in Iraq at the same time we’re going through transition in our forces here,” said Gen. Ray Odierno, the commanding general for Iraq. “They will elect new provincial governments. I believe 75 percent to 80 percent of the provincial governments will change, and oh, by the way, we’ll begin to reduce our troops’ size.”

The shifts are subtle, often unspoken. The American military role now has less to do with protecting Iraqis and more with giving them the psychological reassurance that they can handle what comes their way. The Americans no longer tell the Iraqis what to do, and the Iraqis, especially Iraqi Army officers, no longer look to the Americans for approval. At least that is the case in areas where the fighting has stopped; less so in areas like Mosul where American military might is still required to keep violence at bay.

When General Odierno stopped to inspect a polling center in rural Medaen, south of Baghdad, on Wednesday, his conversation with the Iraqi Army general who oversees the area was respectful, a little formal: two military men exchanging information. It was not exactly a conversation between equals; each knew that the other was from a different world, each knew the Americans have superior arms and training, and each offered the other his observations.

“I see less Sunni-Shia issues than I do a lot of other issues here,” General Odierno said.

Gen. Qassim al-Maliki nodded. “We have a lot of Shia voting this time,” he said. “We didn’t have a lot in the last election,” he said.

As the American military slowly steps back, the diplomats and the civilians are emerging from the wings. Certainly, this is far from a normal diplomatic relationship. Iraqis entering any area close to the Americans are still subject to multiple humiliating searches and interminable waits. American diplomats cannot yet leave the embassy; they live like virtual prisoners, every movement beyond its gates an armed undertaking. But it is possible for Americans and Iraqis to talk about issues other than sheer survival.

Iraqis, too, are beginning to explore a different kind of relationship, one that no longer looks to the Americans only for protection. Prime Minister Nuri Kamal al-Maliki has agreed to finance a substantial scholarship program to send Iraqis to the United States and British Commonwealth countries for study, in an effort to create a better educated professional class. Still, the American era in Iraq is nowhere near a final act. If this were an opera, it would be just past midway in the libretto. While both sides are disconnecting, neither can let go entirely.

The Iraqis need the Americans not just to dampen terrorist activities within the country but to protect them from predatory neighbors. Syria and Iran have interfered here since the invasion, and while the Iraqis are often uncomfortable with how the Americans have reined in these powers, they are reluctant to stop them because they fear their neighbors more.

When American forces pursued insurgents over the Iraqi border into Syria in late October, it was an international incident. Iraq was embarrassed in front of the Arab world. Such incidents are likely to recur and could become much more fraught.

For the United States, Iraq remains a strategic prize close to the Middle East flash points of Israel, Lebanon and Syria as well as Iran and the oil-rich Persian Gulf countries. It is not by chance that the Central Intelligence Agency has its largest station in the world in Baghdad.

It is inescapable that the United States exerts more influence here than in any other oil-producing country — and will be intent on continuing to do so. Iraq will be eager to demonstrate its independence; the United States will have to rely on levers other than a huge and continuing military presence. This promises considerable tension as each side redefines its relationship.

The elections on Saturday were a step toward a peaceful approach to settling disagreements among factions about the shape of the country. If new governments are seated from north to south and east to west, the United States and Iraq can begin the next act in earnest.

If all goes well, “The United States will not need big troops here,” said Jawad al-Bolani, the interior minister, a secular Shiite. “The Americans need to look at something besides security. Iraq needs America to start a new chapter.”

Riyadh Mohammed contributed reporting from Baghdad.

By PHILIP ELLIOTT

WASHINGTON (AP)

Republican Sen. Judd Gregg of New Hampshire said Friday that he’s being considered by President Barack Obama for a Cabinet appointment as head of the Commerce Department. Senior Democrats said the New Hampshire senator is among those at the top of a list for the job, although they emphasized that no move was imminent. They spoke on condition of anonymity because no decision has been made and they were not authorized to discuss the administration’s thinking. “I am aware that my name is one of those being considered by the White House for secretary of commerce, and am honored to be considered, along with others, for the position,” Gregg said in a statement. “Beyond that there is nothing more I can say at this time.” A Capitol Hill leadership aide said Thursday evening that Obama had talked with his party’s leaders about the move to appoint Gregg, which could put Democrats within reach of a 60-person, filibuster-proof majority in the Senate if New Hampshire Gov. John Lynch were to name a fellow Democrat. Democrats hold a 56-41 majority in the 100-member Senate, and two independents caucus with them. The Senate seat from Minnesota remains undecided, with Sen. Norm Coleman and challenger Al Franken in a close, court-based contest. Gregg has said he plans to run for re-election in 2010. He was the GOP’s chief negotiator for the $700 billion bailout of the financial industry, a plan unpopular with many Republicans. New Hampshire has been trending toward the Democrats, although independents remain a major force in the “Live Free or Die” state. Obama’s first choice to run the Commerce Department, New Mexico Gov. Bill Richardson, dropped out of consideration amid a grand jury investigation over how state contracts were issued to political donors. White House officials insisted Thursday that no decision had been made. It was also not clear if Lynch — popular, but for many fellow Democrats frustratingly moderate at times — would pick someone out of party loyalty. During the state’s first-in-the-nation presidential primary, Lynch made positive statements about Republican John McCain and attended one of his signature town halls. He also named GOP star Kelly Ayotte his attorney general as part of a centrist governing style that delivered him re-election with 70 percent of the vote. A member of a New Hampshire political family and a policy wonk, Gregg rose through the Senate ranks to serve as chairman of the powerful Budget Committee and the Appropriations subcommittee that funds homeland security. Now in the minority, he is the ranking Republican member on the Budget Committee but still has large sway in the GOP’s response to Obama’s legislative agenda.

Gregg to Be Nominated Tuesday for Commerce Job

By Anne E. Kornblut and Shailagh Murray
President Obama will nominate Sen. Judd Gregg (R-N.H.) tomorrow for commerce secretary, a White House official said tonight.

The nomination is the last for Obama’s Cabinet. New Mexico Gov. Bill Richardson (D) was nominated Dec. 3 to head the Commerce Department, but he withdrew his name from consideration a month later because of a federal investigation involving state government contracts.

Gregg appears willing to take the Commerce job, but he announced one condition today: His replacement in the Senate had to be a Republican.

“I have made it clear to the Senate leadership on both sides of the aisle and to the Governor that I would not leave the Senate if I felt my departure would cause a change in the makeup of the Senate,” Gregg said in a statement.

Over the weekend, White House officials said that Gregg was the leading candidate for the Commerce.

Senate Republicans said they were somewhat mystified by Gregg’s potential move. As the ranking GOP senator on the Budget Committee, Gregg could play a potentially pivotal role in budget and entitlement reform, potentially the most challenging items on Obama’s ambitious to-do list. But if Gregg takes the Cabinet slot, he would likely be replaced as ranking member by Sen. Jeff Sessions (R-Ala.), one of the most conservative members of the Senate with a highly partisan track record.

Robert Gibbs, the White House press secretary, declined to answer questions about Gregg during his daily briefing. “Obviously the president has great respect for Senator Gregg. I’m not going to get into personnel announcements before we are there,” Gibbs said. “And as it relates to picking senators in states that need new senators, I think you can rest reasonably assured that this administration has had nothing and wants nothing to do with that going forward. And I would bold and underline that.”

Lynch is widely expected to appoint a Republican to replace Gregg, someone who could be a caretaker in the seat until the next election, in 2010. But Lynch has not officially said so. In a statement on Monday, Lynch said: “We are in the midst of a national economic crisis, and it calls for cooperation on all of our parts. We all need to work together to do what is in the best interest of our country and our state. I have had conversations with Senator Gregg, the White House and the U.S. Senate leadership. Senator Gregg has said he would not resign his seat in the U.S. Senate if it changed the balance in the Senate. Based on my discussions, it is clear the White House and Senate leadership understand this as well.”

Lynch continued: “It is important that President Obama be able to select the advisers he feels are necessary to help him address the challenges facing our nation.”