Stimulus bill to sign by Obama today

WASHINGTON – President Barack Obama is ready to sign into law the most sweeping economic package in decades, a rescue plan meant to reinvigorate job creation, consumer spending and public optimism. Add the bill to an ever-growing deficit.

Capping the biggest victory of his month-old administration, Obama will sign the economic legislation Tuesday in Denver.

The setting, the Denver Museum of Nature & Science, is meant to underscore the investments the new law will make in "green" energy-related jobs. It also allows Obama to get away from Washington, where the bill's passage was a mostly partisan affair, and be among people who may benefit from the huge government intervention.

The flailing economy continues to dominate Obama's time.

Tuesday is also when General Motors Corp. and Chrysler LLC, which are living off a combined $13.4 billion in federal bailout loans, are due to hand in plans to Obama's government about how they can remain viable.

And on Wednesday in Arizona, Obama will unveil another part of his economic recovery effort — a plan to help millions of homeowners fend off foreclosure.

But first comes the $787 billion economic stimulus bill, which tries to attack the nation's economic free fall on multiple fronts.

It pumps money into infrastructure projects, health care, renewable energy development and conservation, with twin goals of short-term job production and longer-term economic viability.

There's a $400 tax break for most individual workers and $800 for couples, including those who do not earn enough to pay income taxes. It dishes out tens of billions of dollars to states so they can head off deep cuts and layoffs. It provides financial incentives for people to start buying again, from first homes to new cars.

And it provides help to poor people and laid-off workers, with increased unemployment benefits and food stamps, and subsides for health insurance.

What is not expected to do is change the nation's economic fortunes quickly. So part of the White House's goal has been managing expectations.

Presidential spokesman Robert Gibbs said over the long holiday weekend that "things have not yet bottomed out. They are probably going to get worse before they improve. But this is a big step forward toward making that improvement and putting people back to work."

The unemployment rate is now at 7.6 percent, the highest in more than 16 years. Analysts warn the economy will remain feeble through 2009.

Republican lawmakers, meanwhile, largely balked at the economic package. It drew no GOP votes in the House and only three in the Senate, albeit vital ones. Many Republicans said it was short on cutting taxes and the spending measures didn't target the vast sums of money well enough toward short-term job creation, which was the major goal of the bill.

But with the economy shedding jobs, there was widespread consensus in Washington for some sort of stimulus, and fast.

Yet the government's action comes at a cost down the line.

Many private economists are forecasting that the budget deficit for the current year will hit $1.6 trillion, including the stimulus spending. That's about three times last year's shortfall, and such year-to-year deficits contribute toward a mounting national debt.

US Bankers got anger

WASHINGTON - Washington versus Wall Street.

The gaping divide between the nation's political and financial capitals showed starkly Wednesday when lawmakers hammered eight of Wall Street's most influential chief executives about how they have so far spent billions of taxpayer money.

Angry Congressmen wanted to know why their constituents cannot get loans for cars, homes and businesses even though the banks received $160 billion so far to help thaw frozen credit.

"I urge you going forward to be ungrudgingly cooperative," said Rep. Barney Frank, chairman of the panel, as the hearing opened. "There has to be a sense of the American people that you understand their anger ... and that you're willing to make some sacrifices to get this working."

The bankers insisted they have been lending. "Make no mistake: We are still lending," said Bank of America Corp. Chief Executive Kenneth Lewis.

The panel's top Republican, Spencer Bachus of Alabama, said the bankers and Congress will have to do their part to sway people by "winning back their trust and their confidence."

"Both our firm and our industry have far to go to regain the trust of taxpayers, investors and public officials," John J. Mack, head of Morgan Stanley, told the House Financial Institutions Committee.

Added JP Morgan Chase & Co.'s Jamie Dimon: "We stand ready to do our part going forward."

Sitting in a row at a long table, the CEOs were met with deep skepticism from lawmakers who aggressively quizzed them on how they have used the money.

Repeatedly, lawmakers were scornful and treated the financial heavyweights almost like naughty schoolchildren, ordering them to raise their hands to indicate their responses to blanket questions about their own use of perks and any policy changes made since accepting the bailout money.

At one point, under questioning from Rep. Dennis Moore, D-Kan., the CEOs went down the line disclosing how much bailout money their institutions received last year and how much they personally made. Their salaries ranged from $600,000 to $1.5 million annually, without bonuses.

In general, the eight top bankers appearing before the panel were contrite and conceded they have work to do to win over a bitter public and an exasperated Congress. They had little choice but to acknowledge as much, given intense anger and anxiety as the troubled financial system continues to spiral downward in an ever-worsening recession.

Taxpayers are furious with big banks that benefited from the federal bailout designed to get credit moving again, but which also spent lavishly on executive bonuses, company retreats and office redecorating. Lawmakers also are feeling the heat for signing off on the bailout package plan last year.

Republicans and Democrats alike have been smarting over the implementation of the financial package, which started under President Bush and now is in the hands of the Obama administration. The lingering suspicions present one of President Barack Obama's biggest obstacles as he attempts the dual challenge of prodding the financial sector to ease credit while aiming to create jobs with an economic stimulus package.

Frank also asked banks to impose a moratorium on mortgage foreclosures until Treasury Secretary Timothy Geithner comes up with a systemwide mortgage modification.

Bankers are hardly sympathetic figures to Congress.

The initial spending of the bailout money was secretive, lacking strict requirements that the banks account publicly for how they were using it. Banks weren't helped by reports that Wall Street firms doled out more than $18 billion in bonuses to their employees last year or that Goldman Sachs and Wells Fargo had planned conferences in Las Vegas. Goldman Sachs moved its three-day event to San Francisco; Wells Fargo canceled its employee recognition retreat.

Blagojevich: Ill. officials are drunks, adulterers

Former governor lashes out at the lawmakers who ousted him

CHICAGO - Ousted Gov. Rod Blagojevich is lashing out at the Illinois lawmakers who removed him from office, calling them drunkards and adulterers who don't know how to do their jobs.

Blagojevich's former colleagues and close associates are laughing off the latest comments as those of a desperate man — but he could make people nervous if he starts naming names as federal prosecutors prepare to indict him on corruption charges.

"At some point he's going to realize how much trouble he's in and the way the federal sentencing works now, the best way to reduce your own sentence is to cooperate against someone else," said Chicago defense attorney John Beal.

'Phoniness and hypocrisy'
Blagojevich, impeached and ousted last month in the wake of federal corruption charges, seems open to spilling in a book at least some of what he saw during his two terms in the state's highest office.

"I've got my crayons ready, I'm ready to write it. I'd like to tell those stories," Blagojevich said during a Wednesday interview on WLS Radio's "The Don and Roma Morning Show."

Blagojevich said he wants to point out "the phoniness and hypocrisy" of the politicians who run state government.

"A bunch of them are cheating on their spouses, a lot of them drink in excess, very few of them know what's going on, they just take their marching orders from legislative leaders," Blagojevich said.

As salacious as Blagojevich's comments may be, what ultimately will matter is whether he can tell prosecutors about illegality in state government, Beal said.

"Feeding them a lot of gossip doesn't get you anywhere," he said.

'We're watching a guy destroy himself'
Lawmakers brushed off Blagojevich's latest remarks.

"We're watching a guy destroy himself in front of our eyes," said Democratic state Rep. John D'Amico of Chicago.

Blagojevich, who toured national media outlets to defend himself instead of attending the start of his impeachment trial last month, was in New York City again Wednesday for a live appearance on Fox News with talk show host Sean Hannity.

Hannity told Blagojevich that interviewers have been too easy on him.

The once-powerful Chicago Democrat warmed up on the morning airwaves in his hometown.

He unleashed biting criticism of everyone from Chicago Mayor Richard Daley and Illinois House Speaker Michael Madigan to state lawmakers who hold other government jobs and Illinois Senate President John Cullerton for driving a Jaguar and working in what Blagojevich called a "politically connected" law firm.

Cullerton didn't want to talk about Blagojevich on his way into Senate chambers Wednesday in Springfield and hadn't heard what the governor had to say.

"He doesn't want to engage in a public sound bite battle between a guy who used to be governor, who doesn't have a lot else to do right now, clearly," Cullerton spokesman Toby Trimmer said.

Peanut butter outbreak prompts tighter food safety

WASHINGTON – They say nothing is more wholesome than peanut butter, but the government may soon ask companies that make the gooey treat to prove it.

The salmonella outbreak is starting to change the way the government oversees the safety of peanut butter and other foods, health officials tell Congress.

Dr. Stephen Sundlof of the Food and Drug Administration told lawmakers Wednesday that agency inspectors will start to routinely collect samples for bacterial testing whenever they go into a facility. Currently that's done only if officials suspect a problem.

"We are changing that now as a result of this (outbreak)," Sundlof, head of the FDA's food safety center, told the House Energy and Commerce investigations subcommittee. The panel is looking for ways to prevent another outbreak like the one that has sickened some 600 people and is being linked to nine deaths. More than 1,900 products have been recalled.

Peanut butter may also be singled out for special attention. Sundlof said the government is weighing whether to designate it as a high-risk food. That means producers would be required to follow written food safety plans to prevent contamination.

Producers of juice and seafood already must take such precautions. Asked if they would be appropriate for peanut butter, Sundlof responded, "I believe so."

Consumer advocates say such plans should be required for all food companies, not just some. In the case of peanuts, the plans would include proper roasting to kill salmonella, keeping finished products away from raw peanuts, and making sure the factory roof doesn't leak — since salmonella thrives in moisture.

At Wednesday's hearing, the owner of the peanut company at the heart of the massive salmonella recall refused to answer the lawmakers' questions — or any others — about the bacteria-tainted products he defiantly told employees to ship to manufacturers of cookies, crackers and ice cream.

"Turn them loose," Stewart Parnell had told his plant manager in an internal e-mail disclosed at the House hearing. The e-mail referred to products that once were deemed contaminated but were cleared in a second test last year. Food safety experts say such products should be dumped, not shipped.

Summoned by congressional subpoena, the owner of Peanut Corp. of America repeatedly invoked his right not to incriminate himself.

Parnell sat stiffly, his hands folded in his lap at the witness table, as Rep. Greg Walden, R-Ore., held up a clear jar of his company's products wrapped in crime-scene tape and asked if he would eat them.

"Mr. Chairman and members of the committee, on advice of my counsel, I respectfully decline to answer your questions based on the protections afforded me under the U.S. Constitution," Parnell responded.

After he repeated the statement several times, lawmakers dismissed him from the hearing.

Shortly after Parnell's appearance, a lab tester told the panel that the company discovered salmonella at its Blakely, Ga., plant as far back as 2006. FDA officials told lawmakers more federal inspections could have helped prevent the outbreak.

"We appear to have a total systemic breakdown," said Rep. Bart Stupak, D-Mich., chairman of the committee's investigations subcommittee.

A federal criminal investigation is under way.

The House panel released e-mails obtained by its investigators showing Parnell ordered products identified with salmonella to be shipped and quoting his complaints that tests discovering the contaminated food were "costing us huge $$$$$."

In mid-January, after the national outbreak was tied to his company, Parnell told FDA officials that he and his company "desperately at least need to turn the raw peanuts on our floor into money."

In a separate message to his employees, Parnell insisted that the outbreak did not start at his plant, calling that a misunderstanding by the media and public health officials. "No salmonella has been found anywhere else in our products, or in our plants, or in any unopened containers of our product," he said in a Jan. 12 e-mail.

In another exchange, Parnell complained to a worker after being notified that salmonella had been found in more products.

"I go thru this about once a week," he wrote in a June 2008 e-mail. "I will hold my breath ... again."

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On the Net:

FDA's salmonella page: http://tinyurl.com/8srctw

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Obama: This doesn't work, I lose

FT. MYERS, Fla. – Three weeks after being sworn in, President Barack Obama acknowledged in plain terms Tuesday that his prospects for winning a second term may depend on the whether he can revive the nation’s plummeting economy.
“I’m not going to make any excuses,” Obama said at a town hall meeting here, in perhaps the most pivotal political state in America. “If stuff hasn’t worked, if people don’t feel like I’ve led the country in the right direction then you’ll have a new president.”
Despite his frank admission, Obama used the question-and-answer session, his second in two days, to brace Americans for a long recovery, frequently going off script at the start of what is sure to be a long campaign of expectation-setting.
“But I do think the American people understand that these are some, really big tough problems and it’s going to take some time for us to get ourselves out,” he said, after conceding his political fate was on the line. “I have great faith in the American people and their faith and wisdom.”
Obama’s appearance on Florida’s Gulf Coast came as the Senate approved the $838 billion stimulus package. Obama announced the measure had passed, repeating “that’s good news” four times consecutively, and prompted standing applause from a friendly audience in the hard-hit city, which suffered one of the nation’s worst foreclosure rates last year.
Speaking before an animated crowd of about 1,500 that greeted him with his “Yes We Can” campaign chant, Obama won himself perhaps more political leeway than he’ll ultimately enjoy.
“Americans I’ve met understand that even with this plan our economy will likely be measured in years, not weeks or months,” he assured.
At this, somebody in the crowd yelled “eight’ and the audience burst out in cheers in anticipation of the new president serving two full terms.
Obama, striding across a stage behind twin signs reading “Making America Work,” sought to buy himself some time by lavishing praise on the citizenry.
“You’ve got common sense, you understand that it took us a long time to get into this fix, we’re not going to get out of it over night,” he said. “But what you don’t have patience for is just listening to a bunch of bickering in Washington with nothing getting done.”
To isolate the congressional Republicans who have almost unanimously opposed his stimulus package so far, Obama held up his introducer at the town hall: Florida’s Republican Gov. Charlie Crist.
Crist did his part, urging passage of the stimulus package and, as is his signature, touting the merit of doing so without regard to party.
“This issue of helping our country is about helping our country,” said Crist, who ditched a meeting of former Florida governors in Tallahassee to appear with the president. “This is not about partisan politics. This is about rising above that, helping America and reigniting our economy.”
And Obama returned the favor.
“The thing about governors is they understand our economic crisis in a way that maybe sometimes folks a little more removed don't understand. They're on the front lines dealing with the economy every single day,” the president said.
“Governor Crist shares my conviction that creating jobs and turning this economy around is a mission that transcends party. And when the town is burning, you don't check party labels. Everybody needs to grab a hose, and that's what Charlie Crist is doing right here today.”
Two up-and-coming members of Congress from Florida, who flew on Air Force One with Obama, were optimistic in brief interviews after the town hall that there would be an evident economic recovery heading into next year’s mid-term elections.
But they acknowledged, like Obama, that as the majority party they would be judged on their results.
“I think that we will make slow but steady progress,” said Rep. Debbie Wasserman Schultz, a member of the House Appropriations Committee and vice-chair of the Democrat’s House campaign committee. “It will be measurable. Our first test will be the 2010 elections and when our members sand for re-election. We’re going to see in those results a reflection about how people feel about the job we’re doing.”
Still, she pointed to polling which she said underlines Obama’s case that Americans “realize this is going to take a while.”
“Yes, we are trying to make people understand that there is no magic pill that’s going to transform things tomorrow.”
Rep. Kendrick Meek, who has already announced his intention to run for Florida’s open Senate seat next year, said Obama is merely speaking the truth.
“It is going to take time,” Meek said. “We’re fighting and working our way out of this mess right now.”
But when money starts flowing to state and local projects this year and people start taking advantage of tax incentives he promised “you’ll see some progress.”

Obama says stimulus vital to avoid 'catastrophe'

WASHINGTON – President Barack Obama, pressuring lawmakers to urgently approve a massive economic recovery bill, criticized Republicans who have balked at the legislation Monday night and said, "I can't afford to see Congress play the usual political games." Obama used the first prime-time news conference of his presidency to warn that a failure to act swiftly and boldly "could turn a crisis into a catastrophe."

With the nation falling deeper into a long and painful recession, Obama defended his program against Republican criticism that it is loaded with pork-barrel spending and will not create jobs.

"The plan is not perfect," the president said. "No plan is. I can't tell you for sure that everything in this plan will work exactly as we hope, but I can tell you with complete confidence that a failure to act will only deepen this crisis as well as the pain felt by millions of Americans."

Obama addressed the nation from the East Room of the White House in a news conference that lasted almost exactly one hour. He hit repeatedly at the themes he has emphasized in recent weeks, including at a town hall meeting to promote his plan earlier in the day in Elkhart, Ind.

When the stimulus bill passed the House last month, not a single Republican voted for it. On Monday an $838 billion version of the legislation cleared a crucial test vote in the Senate by a 61-36 margin, with all but three Republican senators opposing it.

Obama said he had made a deliberate effort to reach out to the GOP, putting three Republicans into his Cabinet, and "as I continue to make these overtures, over time, hopefully that will be reciprocated."

"So my bottom line when it comes to the recovery package is: send me a bill that creates or saves 4 million jobs."

Obama acknowledged the difficulty of mending political divisions between Republicans and Democrats.

"Old habits are hard to break," he said. "We're coming off an election, and people sort of want to test the limits of what they can get. There's a lot of jockeying in this town and who's up and who's down, testing for the next election."

Obama said the federal government was the only power that could save the nation at a time of crisis, with huge spending outlays and tax cuts.

"At this particular moment, with the private sector so weakened by this recession, the federal government is the only entity left with the resources to jolt our economy back to life," he said.

Rejecting criticism that the emphasis on federal action was too great, he said that 90 percent of the jobs created by the plan would be in the private sector, rebuilding crumbling roads, bridges and other aging infrastructure.

"The plan that ultimately emerges from Congress must be big enough and bold enough to meet the size of the economic challenge we face right now," Obama said.

Again and again, he stressed that the economy is in dire straits.

"This is not your ordinary, run of the mill recession," he said. Obama said the United States aims to avoid the kind of economic pain that Japan endured in the 1990s — the "lost decade" when that nation showed no economic growth.

"My bottom line is to make sure that we are saving or creating 4 million jobs," he said, and that homeowners facing foreclosure receive some relief.

While Obama focused on the economy in the opening minutes of the news conference, he also faced questions on foreign policy. He was asked how his administration would deal with Iran, a nation accused by the United States of supporting terrorism and pursuing nuclear weapons.

The president said his administration was reviewing its policy toward Iran "looking at places where we can have constructive dialogue." He also said it was time for Iran to change its behavior.

"My expectation is in the coming months we will be looking for openings that can be created where we can start sitting across the table face to face," Obama said.

He said that Iran must understand that funding terrorist organizations and pursuing nuclear weapons are unacceptable.

Obama tried to brace the U.S. for tougher sacrifices ahead in Afghanistan, where he said the national government is limited and terrorists still find places to hide and hinder coalition efforts.

An estimated 33,000 U.S. troops currently are in Afghanistan, and the Pentagon is expected to almost double that presence. So just as Obama is planning to pull troops out of Iraq, he is sending more into Afghanistan.

"I do not have a timetable for how long that's going to take," he said. "What I know is I'm not going to allow al-Qaida and (Osama) bin Laden to operate with impunity, planning attacks."

U.S. stock futures fall; uncertainty on "bad bank" plan

HONG KONG (Reuters) – U.S. stock futures fell on Tuesday on uncertainty about a White House financial rescue package after a CNBC report of an altered form of a "bad bank" plan to buy toxic assets from commercial banks.

Investors were waiting for a speech later by U.S. Treasury Secretary Timothy Geithner in which he is expected to unveil details about the plan.

CNBC initially reported the "bad bank" aspect was being dropped, but later updated its report to say a new form of the plan will essentially combine public and private resources to take bad assets off banks' books.

Funding for the rescue plan is unlikely to exceed the $350 billion currently available under the Troubled Asset Relief Program (TARP), CNBC reported, citing a source familiar with the plan.

"Depending on what Geithner announces, you are still going to have a prolonged discussion about it in Congress. There's not going to be any easy passage," said Lorraine Tan, director of research, Asia for Standard & Poor's in Singapore.

"If something is announced and people aren't convinced about how well it's going to work, it doesn't provide clarity to the situation."

S&P 500 futures were down 1.1 percent, Dow futures down 0.9 percent and Nasdaq futures off 1.1 percent.

Obama faces tough week; stimulus, bailout on tap

WASHINGTON – President Barack Obama plunges into a difficult test of his leadership this week, struggling to get a divided Congress to agree on his economic recovery package while pitching a new plan to ease loans to consumers and businesses.
The Senate's $827 billion stimulus legislation seems assured narrow passage by Tuesday. Harder work for Obama and the Democrats comes in the days ahead, when the House and Senate attempt to reconcile differences in their two versions.
Obama and Democratic Party leaders had hoped to have a bill ready for the president's signature by Feb. 16 — a deadline that grows more challenging by the day.
At the Treasury Department, Secretary Timothy Geithner delayed the unveiling of a new bailout framework for financial institutions from Monday to Tuesday to let the administration focus on the Senate legislation.
Geithner is considering steps to broaden the use of a new lending facility at the Federal Reserve, provide government guarantees to help banks deal with their troubled assets, and continue direct infusion of capital into banks in exchange for securities and tougher accountability rules.
For Obama, the economy has become a two-front engagement, with one effort aimed at creating or saving jobs and the other at unfreezing the credit markets. Amid the urgency created by nearly 600,000 new unemployed workers last month and new bank failures, Obama's economic prescriptions are coming under critical scrutiny by both Congress and the American public.
The House and Senate bills are about $7 billion apart in cost and overlap in numerous ways. But the Senate bill has a greater emphasis on tax cuts, while the House bill devotes more money to states, local governments and schools.
Lawrence Summers, Obama's top economic adviser, signaled the struggle ahead as he made the rounds of Sunday morning talk shows. "There are crucial areas, support for higher education, that are things that are in the House bill that are very, very important to the president," he said on ABC.
Rep. Barney Frank of Massachusetts, the Democratic chairman of the House Financial Services Committee, warned that reductions in state spending in the Senate bill would hurt local communities.
"To get any Republicans at all, you had to adopt a cut that's going to mean policemen and firemen are going to be laid off," he said.
Sen. John Ensign of Nevada, a member of the Senate Republican leadership, dismissed Frank's complaint as "fear-mongering."
The Senate bill is finely tuned. With only two or three Republicans on board, it is guaranteed, at most, 61 votes; the bill needs 60 votes to advance and avoid procedural hurdles. Any change in the balance struck by the Senate bill could doom it.
Sen. John McCain, R-Ariz., a vocal critic of the stimulus bill, complained that Republicans won't be involved in the final negotiations. "That's the way the Bush administration, when we Republicans were in charge — that's the way we did business," he said. "But I thought we were going to have change."
Obama will take his case to the American people at 8 p.m. EST Monday with his first prime-time news conference. He'll also participate in town hall-style meetings in cities suffering particularly hard times — Elkhart, Ind., on Monday and Fort Myers, Fla., on Tuesday.
The House and Senate are scheduled to go on recess next week, but congressional leaders have said they will not leave until the bill is completed.
The bank bailout proposal that Geithner will announce Tuesday also carries policy and political risks. Congress approved a $700 billion bailout for the financial sector last fall. But since then, lawmakers from both parties have been critical of how the Bush administration spent the first half of the money.
The Senate grudgingly agreed to give Obama access to the second half of the fund, but only after Obama promised to impose tougher conditions and to devote at least $50 billion of the fund to reducing mortgage foreclosures.
Officials said Geithner will not ask for more money for the program at this point. Instead, his plan is likely to include various approaches to loosening credit and helping banks deal with troubled, mortgage-backed assets.
"We are going to solve it by being as effective and strategic as we possibly can in the use of public money so as to catalyze and spur private investment," Summers said Sunday. He appeared to be describing one plan under consideration that that would have the government put up seed money to attract private-sector buyers to take on some of the banks' troubled assets.
Other options, cited by industry and congressional officials:
_Continuing to stress government purchases of bank stock as a way to bolster banks' balance sheets and try to get them to resume more normal lending. The money would come with more strings attached than in the past. "Institutions that get assistance will have to participate in loan modifications and meet other standards that we set," Geithner told House Democrats at a party retreat in Williamsburg, Va., on Saturday, according to notes taken by party officials.
_Expanding the use of the Term Asset-Backed Securities Loan Facility, a new program the Federal Reserve is developing, beyond supporting consumer loans to other types of lending. The Fed on Friday announced new terms and conditions for the facility and said a starting date would be announced later this month.
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AP Economics Writer Martin Crutsinger contributed to this report.

Senators reach deal to cut stimulus bill to $780B

WASHINGTON – With job losses soaring nationwide, Senate Democrats reached agreement with key Republicans Friday night on an economic stimulus measure at the heart of President Barack Obama's plan for reviving the economy.
"The American people want us to work together. They don't want to see us dividing along partisan lines on the most serious crisis confronting our country," said Sen. Susan Collins of Maine, one of two GOP senators who signaled support for the bill.
Officials put the cost of the measure at $780 billion in tax cuts and new spending combined. No details were immediately available, and there appeared to be some confusion among senators about the price tag.
The agreement capped a tense day of backroom negotiations in which Senate Majority Leader Harry Reid, joined by White House chief of staff Rahm Emanuel, sought to attract the support of enough Republicans to give the measure the needed 60-vote majority.
In addition to Collins, Sen. Arlen Specter, R-Pa., said he would vote for the bill.
Officials said Sen. Edward M. Kennedy's vote would probably be needed for passage, too. The Massachusetts Democrat, battling a brain tumor, has been in Florida in recent days and has not been in the Capitol since suffering a seizure on Inauguration Day more than two weeks ago. The senator's office did not comment.
At $780 billion, the legislation would be smaller than the measure that cleared the House on a party-line vote last week. It also would mean a sharp cut from the bill that has been the subject of Senate debate for a week. That measure stood at $937 billion.
Beyond the numbers, though, any agreement would mark a victory for the new president and would keep Democratic leaders on track to fulfill their promise of delivering him a bill to sign by the end of next week.

Obama weighing 23-month Iraq withdrawal option

WASHINGTON – The White House is considering at least two troop withdrawal options as it weighs a new Iraq strategy — one that would preserve President Barack Obama's campaign pledge to get all combat brigades out within 16 months and a second that would stretch it to 23 months, two officials said Friday.
A third, in-between option of 19 months is also being weighed, according to the officials, neither of whom would discuss the sensitive topic without being granted anonymity. One of the officials said the main focus appears to be on the 16-month and 23-month options; 23 months would run to the end of 2010.
Under either timeline, the U.S. would hope to leave behind a number of brigades that would be redesigned and reconfigured as multipurpose units to provide training and advising for Iraqi security forces, one official said. These brigades would be considered noncombat outfits and their presence would have to be agreed in advance by the Iraqi government, which under a deal signed late last year insisted that all U.S. forces — not just combat brigades — be out of Iraq by the end of 2011.
The concept of the stay-behind training and advising brigades has been well developed, the official said, although the details such as their size and composition are in an early stage of being sorted out.
At the White House's request, top military officials recently offered an assessment of the risks associated with the 16-, 19- and 23-month withdrawal timetables, without saying which is preferred. Obama's top two defense advisers, Defense Secretary Robert Gates and Joint Chiefs Chairman Adm. Mike Mullen, have not yet provided a formal recommendation to the president on a timetable, an official said.
It is possible that Obama will ask for similar assessments of other withdrawal timetables before deciding on a way ahead.
McClatchy Newspapers was first to report Friday that the White House had received risk assessments associated with 16-, 19- and 23-month drawdown options. McClatchy also reported that Obama was likely to announce his strategy for Iraq by mid-March.
Obama must weigh a number of risks in deciding how fast to pull out the 14 combat brigades that are now in Iraq, including the political risk associated with abandoning his campaign pledge to get out within 16 months.
The calculation is complex and tied to other concerns: relieving stress on war-weary troops and their families; tradeoffs in escalating the war in Afghanistan, and being ready for popup crises elsewhere.
The pace and sequencing of a troop pullout will have implications for preserving recent gains in reducing violence in Iraq. An erosion of security could in turn halt progress toward political reconciliation, raising once again the prospect of widespread sectarian warfare and a new crisis for Obama.
Also at issue is how to ensure proper protection for U.S. civilians, such as State Department members of military-civilian teams supporting Iraqi economic and political rebuilding, as the U.S. military presence shrinks. That civilian work, including the role of international non-governmental groups, will arguably grow in importance as the Iraqis focus less on fighting insurgents and more on building national unity.
The fact that Obama did not immediately order his generals to begin withdrawing — as some might have expected, given his emphasis during the campaign on refocusing the U.S. military on Afghanistan — is evidence that he recognized, even before assuming office Jan. 20, the dangers of a precipitous withdrawal.
During Obama's first meeting with the Joint Chiefs of Staff at the Pentagon last week, he did not mention a 16-month timeline, according to officials who were present.
U.S. military commanders in Iraq — and some senior military leaders in the Pentagon — still wonder whether the Iraqi security forces will be ready this year to handle what remains of the insurgency without substantial U.S. combat assistance. If they are not, and if a U.S. pullout accelerates, what will happen?
That question may be most important in northern Iraq, where the insurgency is still viable in the Tigris River city of Mosul and where ethnic tensions between Arabs and Kurds are high around the city of Kirkuk.
Maj. Gen. Robert Caslen, the senior U.S. commander in northern Iraq, told the AP it is too early to know how long U.S. forces will be required there, noting that conditions are fluid.
"The north provides a unique set of issues that requires the services of each and every (U.S. military) unit to its fullest extent," Caslen said. "And as long as the AQI (al-Qaida in Iraq) insurgency remains buried in places like Mosul" and until ethnic disputes are resolved in places like Kirkuk, "we will continue to be needed in this area in order to maintain the same level of risk."

Can Obama Keep IT Jobs in the U.S.?

Corporate America's drive to cut costs by moving jobs offshore has hit Robert Poulk hard. A veteran of the defense, aerospace, and computer industries, Poulk never had trouble finding work -- until 2003. That year, his job as a senior troubleshooter for a major software manufacturer was moved offshore to Bangalore, India. During a yearlong period of unemployment, Poulk sent out five to seven resumes a week and got only four responses. Eventually, he was hired by a temp agency and assigned a job at his old company, which he asked not be identified, where he now works as a contractor for about 30% less money and no benefits.

Related Quotes

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HCKT	2.78	0.00

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Having tapped his savings to make mortgage payments during his period of unemployment, Poulk is now concerned he won't have enough money for retirement. "I'm still waiting for the new prosperity that globalization was supposed to bring," he says.

Poulk's hopes, and those of other U.S. workers whose jobs have been shipped overseas, now rest with President Barack Obama, who has pledged to keep more jobs in the U.S. On Jan. 16, just days before his inauguration, Obama told workers in Ohio, "We're not looking to create just any kind of jobs here; we're looking to create good jobs that pay well and can't be shipped overseas."

Tax Credits Aren't Enough

Keeping jobs within U.S. borders proved a tall order for Obama's predecessor and may be comparably vexing for the current Administration. Poulk's job was part of an early wave of IT jobs headed offshore, but the trend has only accelerated since 2003. U.S. corporations will move at least 140,000 jobs offshore in 2009 and 2010, and more than 50% of those jobs will be in IT, according to a December 2008 report by the Hackett Group (NasdaqGM:HCKT - News), a global strategic advisory firm that specializes in outsourcing. By 2010, about 25% of all IT jobs at the world's largest companies by market value will have been moved offshore, according to Hackett.

Obama initially proposed a $3,000 tax credit this year and next for every net new job created. Still, outsourcing executives say that's not enough of a financial incentive to keep jobs in the U.S. "An average salary for a software developer in the U.S. is $75,000 and it's $8,000 in India," says Mary Jo Morris, president of World Sourcing Services for Computer Sciences Corp. (NYSE:CSC - News).

Ultimately that tax credit proposal was shelved and other tax cuts aimed at creating jobs were included in the $819 billion economic stimulus package, known as the American Recovery and Reinvestment Act, that passed the House on Jan. 28.

Spending on Health, Broadband, Power Grid

Also included in the legislation are several initiatives aimed at creating jobs through spending. For starters, $20 billion in the stimulus package is directed at health information technology and the building of an infrastructure to promote the electronic exchange of health records. That investment will create or retain 86,820 jobs for one year in high-paying industries such as computer hardware manufacturing, software, and IT services, according to the Information Technology & Innovation Foundation, a nonpartisan think tank focused on public policies to advance technological innovation.

The stimulus act also includes another $6 billion to improve broadband Internet access in the U.S. That amount would create or retain 29,892 direct telecom jobs for a year and 8,304 capital equipment jobs, according to the Information Technology & Innovation Foundation. Finally, $11 billion in funds that will go to modernizing the power grid in the U.S. will create or retain 64,509 direct and indirect IT jobs for a year, according to the foundation. "IT did pretty well. There's a real focus on digital infrastructures, there's real money there," says Robert Atkinson, president of the Information Technology and Innovation Foundation. "It basically affirmed the commitment that the country's building out IT networks is important to our future."

Even if the spending doesn't prompt companies to create jobs in house, it may give them extra incentive to choose to send work to domestic firms rather than those outside the U.S., says Jagdish Dalal, managing director of thought leadership at the International Association of Outsourcing Professionals, an industry group of outsourcing leaders from Fortune 500 companies and other organizations. That's because it takes some time to set up an offshore model and the work in this stimulus package is designed to happen immediately. This will ultimately be a challenge for offshore outsourcing destinations like India and China, he says.

Honoring Obligations

That would likely be welcome news to U.S. IT professionals like Robert Poulk. "My hope is that this new Administration can steer the government back to governing for the greater good," he says, "and that it can prevent the engines of commerce from ignoring their obligation to the system whose rules allowed them to flourish in the first place."

Stimulus Could Pass Senate Tomorrow

WASHINGTON - Senate moderates worked to cut tens of billions of dollars from the economic stimulus bill Thursday but fell short of taking a vote on the legislation even as the government spit out grim new jobless figures and President Barack Obama warned of more bad news to come.
"The time for talk is over. The time for action is now," said Obama. He implored lawmakers in both parties to "rise to this moment" and send him legislation to begin fixing the worst economic crisis in decades.
Obama added he would "love to see additional improvements" in the bill, a gesture to the moderates from both parties at work on trying to trim the $920 billion price tag.

But with the Senate plodding through a fourth day of debate, earlier talk of a large, bipartisan vote for the legislation was fading. Just before 9 p.m. Thursday night, it was announced there would be no vote before Friday."As I have explained to people in that group, they cannot hold the president of the United States hostage," said Majority Leader Harry Reid, D-Nev. "If they think they're going to rewrite this bill and Barack Obama is going to walk away from what he is trying to do for the American people, they've got another thought coming."
Republicans countered that neither the president nor Democratic congressional leaders have been willing to seek common ground on the first major bill of the new administration.
"We're not having meaningful negotiations. ... It's a bad way to start," said Sen. John McCain of Arizona, who was Obama's opponent in last fall's presidential campaign.
In an Associated Press interview, he said Obama "gave the Democrats the leeway to basically shut out Republicans starting with the House and now here in the Senate, and I don't think that's good."
McCain's penchant for working across party lines has irritated fellow Republicans in the past, but he was not taking part in bipartisan talks on trimming the stimulus bill.
Nearly 20 senators from both parties met twice during the day and reviewed a list of possible cuts totaling nearly $80 billion. They included elimination of at least $40 billion in aid to the states, which have budget crises of their own, as well as $1.4 billion ticketed for the National Science Foundation.

There was no sign the group of self-appointed compromisers had agreed to support the reductions, but even if they had the numbers were far short of what some were looking for.
"The president made a strong case for a proposal that would be in the neighborhood of $800 billion," said Sen. Susan Collins, R-Maine, who met with Obama at the White House on Wednesday.
The legislation is a blend of federal spending and tax cuts that supporters say can create or preserve at least 3 million jobs. They cite the tax cuts for lower-income workers, as well as more money for jobless benefits, worker training, food stamps, health care, education and public works projects such as highways and mass transit.

Critics contend the bill is bloated with spending for items that won't create jobs, such as smoking prevention programs or efforts to combat a future pandemic flu outbreak.
And while polls show Obama is popular and the public supports recovery legislation, Republicans have maneuvered in the past several days to identify and ridicule relatively small items in the bill.
Whatever the public relations battle, Republicans have tried without success so far to reduce spending in the measure and were ready with additional attempts during the day.
The legislation is a key early test for Obama, who has been in office just two weeks and has made economic recovery his top priority.
His warnings have become increasingly dire, and in remarks to employees at the Department of Energy, he said, "Today, we learned that last week the number of new unemployment claims jumped — jumped to 626,000. Tomorrow, we're expecting another dismal jobs report on top of the 2.6 million jobs that we lost last year. We've lost 500,000 jobs each month for the last two months."

Obama admin. seeks treaty to cut US, Russia nukes

WASHINGTON – The Obama administration, reversing the Bush administration's limited interest in nuclear disarmament, is gearing up for early negotiations with Russia on a new treaty that would sharply reduce stockpiles of nuclear warheads.
Secretary of State Hillary Rodham Clinton has notified Congress and her staff that she intends to get started quickly on talks with the Russians, who have voiced interest in recent weeks in settling on a new treaty calling for cutbacks in arsenals on both sides.
The 1991 Strategic Arms Reduction Treaty expires at the end of the year. It limited the United States and Russia to 6,000 nuclear warheads each. The American stockpile is believed to be about 2,300 warheads, and the Russians' even lower.
Clinton's spokesman, Robert Wood, said the new administration was serious about negotiating reductions in nuclear weapons. A replacement treaty for START "will be put on a fast track," Wood said.
President Barack Obama said during the campaign that he would seek verifiable reductions in all U.S. and Russian nuclear weapons. Clinton told Congress last month that deep reductions were the goal.
Clinton has told her staff she intends to get started quickly on talks with the Russians, said an administration official who spoke on condition of anonymity because he was not authorized to speak about the subject.
Some key arms control posts in the new administration have not been filled, however, and that might slow preparations for talks.
"I can't give you a time frame when we will be able to complete a review," Wood said in an interview Thursday. In that vein, he said, the administration was "clearly committed to reducing the numbers" but has not decided how deep to slash.
Internal talks on what position the U.S. should take in overall disarmament have begun within the State Department and with the White House, said officials aware of the discussions. Those discussions are expected to accelerate when the key posts are filled, said the officials, who asked for anonymity because they were not authorized to talk publicly.
While the officials said they hoped the nomination process and Senate confirmation would not take long they did not know when the administration would be ready for talks with the Russians.
Daryl Kimball, executive director of the private Arms Control Association, said "it appears that reductions down to 1,000 warheads are possible." That would be a cut of more than 50 percent on the U.S. side.
In 2002, President George W. Bush and Russian leader Vladimir Putin agreed on a treaty that sets as a target 1,700 to 2,000 deployed strategic warheads by 2012.

AP alleges copyright infringement of Obama image

NEW YORK – On buttons, posters and Web sites, the image was everywhere during last year's presidential campaign: A pensive Barack Obama looking upward, as if to the future, splashed in a Warholesque red, white and blue and underlined with the caption HOPE.

Designed by Shepard Fairey, a Los-Angeles based street artist, the image has led to sales of hundreds of thousands of posters and stickers, has become so much in demand that copies signed by Fairey have been purchased for thousands of dollars on eBay.

The image, Fairey has acknowledged, is based on an Associated Press photograph, taken in April 2006 by Manny Garcia on assignment for the AP at the National Press Club in Washington.

The AP says it owns the copyright, and wants credit and compensation. Fairey disagrees.

"The Associated Press has determined that the photograph used in the poster is an AP photo and that its use required permission," the AP's director of media relations, Paul Colford, said in a statement.

"AP safeguards its assets and looks at these events on a case-by-case basis. We have reached out to Mr. Fairey's attorney and are in discussions. We hope for an amicable solution."

"We believe fair use protects Shepard's right to do what he did here," says Fairey's attorney, Anthony Falzone, executive director of the Fair Use Project at Stanford University and a lecturer at the Stanford Law School. "It wouldn't be appropriate to comment beyond that at this time because we are in discussions about this with the AP."

Fair use is a legal concept that allows exceptions to copyright law, based on, among other factors, how much of the original is used, what the new work is used for and how the original is affected by the new work.

A longtime rebel with a history of breaking rules, Fairey has said he found the photograph using Google Images. He released the image on his Web site shortly after he created it, in early 2008, and made thousands of posters for the street.

As it caught on, supporters began downloading the image and distributing it at campaign events, while blogs and other Internet sites picked it up. Fairey has said that he did not receive any of the money raised.

A former Obama campaign official said they were well aware of the image based on the picture taken by Garcia, a temporary hire no longer with the AP, but never licensed it or used it officially. The Obama official asked not to be identified because no one was authorized anymore to speak on behalf of the campaign.

The image's fame did not end with the election.

It will be included this month at a Fairey exhibit at the Institute of Contemporary Art in Boston and a mixed-media stenciled collage version has been added to the permanent collection of the National Portrait Gallery in Washington.

"The continued use of the poster, regardless of whether it is for galleries or other distribution, is part of the discussion AP is having with Mr. Fairey's representative," Colford said.

A New York Times book on the election, just published by Penguin Group (USA), includes the image. A Vermont-based publisher, Chelsea Green, also used it — credited solely to Fairey_ as the cover for Robert Kuttner's "Obama's Challenge," an economic manifesto released in September. Chelsea Green president Margo Baldwin said that Fairey did not ask for money, only that the publisher make a donation to the National Endowment for the Arts.

"It's a wonderful piece of art, but I wish he had been more careful about the licensing of it," said Baldwin, who added that Chelsea Green gave $2,500 to the NEA.

Fairey also used the AP photograph for an image designed specially for the Obama inaugural committee, which charged anywhere from $100 for a poster to $500 for a poster signed by the artist.

Fairey has said that he first designed the image a year ago after he was encouraged by the Obama campaign to come up with some kind of artwork. Last spring, he showed a letter to The Washington Post that came from the candidate.

"Dear Shepard," the letter reads. "I would like to thank you for using your talent in support of my campaign. The political messages involved in your work have encouraged Americans to believe they can help change the status quo. Your images have a profound effect on people, whether seen in a gallery or on a stop sign."

At first, Obama's team just encouraged him to make an image, Fairey has said. But soon after he created it, a worker involved in the campaign asked if Fairey could make an image from a photo to which the campaign had rights.

"I donated an image to them, which they used. It was the one that said "Change" underneath it. And then later on I did another one that said "Vote" underneath it, that had Obama smiling," he said in a December 2008 interview with an underground photography Web site.

Home-buyers tax cut raises cost of stimulus bill

WASHINGTON – Historically huge to begin with, economic stimulus legislation is growing larger by the day in the Senate, where the addition of a new tax break for homebuyers sent the price tag well past $900 billion.

"It is time to fix housing first," Sen. Johnny Isakson, R-Ga., said Wednesday night as the Senate agreed without controversy to add the new tax break to the stimulus measure, at an estimated cost of nearly $19 billion.

The tax break was the most notable attempt to date to add help for the crippled housing industry and gave Republicans a victory as they work to remake the legislation more to their liking.

Democratic leaders hope for Senate passage of the legislation by Friday at the latest, although prospects appear to hinge on crafting a series of spending reductions that would make the bill more palatable to centrists in both parties.

Three swing-vote senators met with President Barack Obama at the White House on Wednesday to discuss possible cutbacks, but they declined to discuss details of their talks. Obama has made the legislation a cornerstone of his recovery plan.

For their part, Senate Republicans signaled they would persist in their efforts to reduce spending in the measure, to add tax cuts and reduce the cost of mortgages for millions of homeowners.

Officials figures were unavailable, but it appeared that the measure carried a price tag of more than $920 billion, making it bigger than the financial industry bailout that passed last year and as large as any measure in memory.

Despite bipartisan concerns about the cost, Republicans failed in a series of attempts on Wednesday to cut back the bill's size.

The most sweeping proposal, advanced by Sen. Jim DeMint, R-S.C., would have eliminated all the spending and replaced it with a series of tax cuts. It was defeated 61-36.

Democrats also upheld a so-called Buy American provision that requires projects financed by the measure to be built with domestically produced iron and steel.

But with Obama voicing concern about the provision, the requirement was changed to specify that U.S. international trade agreements not to be violated.

Additionally, Democrats turned back an attempt to strip out a provision that Obama has said was essential. It would provide a tax cut of up to $1,000 for working couples, including those who do not make enough to pay income taxes.

Isakson said the new tax break for homebuyers was intended to help revive the housing industry, which has virtually collapsed in the wake of a credit crisis that began last fall.

The proposal would allow a tax credit of 10 percent of the value of new or existing residences, up to a $15,000 limit. Current law provides for a $7,500 tax break but only for first-time homebuyers.

Isakson's office said the proposal would cost the government an estimated $19 billion.

The provision was the second tax cut approved in as many days targeted to individual industries. On Tuesday, the Senate voted to give a break to consumers who buy new cars.

The House approved its own version of the bill last week.

Cheney warns of new attacks

Former Vice President Dick Cheney warned that there is a “high probability” that terrorists will attempt a catastrophic nuclear or biological attack in coming years, and said he fears the Obama administration’s policies will make it more likely the attempt will succeed.

In an interview Tuesday with Politico, Cheney unyieldingly defended the Bush administration’s support for the Guantanamo Bay prison and coercive interrogation of terrorism suspects.

And he asserted that President Obama will either backtrack on his stated intentions to end those policies or put the country at risk in ways more severe than most Americans — and, he charged, many members of Obama’s own team — understand.

“When we get people who are more concerned about reading the rights to an Al Qaeda terrorist than they are with protecting the United States against people who are absolutely committed to do anything they can to kill Americans, then I worry,” Cheney said.

Protecting the country’s security is “a tough, mean, dirty, nasty business,” he said. “These are evil people. And we’re not going to win this fight by turning the other cheek.”

Citing intelligence reports, Cheney said at least 61 of the inmates who were released from Guantanamo during the Bush administration — “that’s about 11 or 12 percent” — have “gone back into the business of being terrorists.”

The 200 or so inmates still there, he claimed, are “the hard core” whose “recidivism rate would be much higher.” (Lawyers for Guantanamo detainees have strongly disputed the recidivism figures, asserting that the Pentagon data have inconsistencies and omissions.) Cheney called Guantanamo a “first-class program,” and “a necessary facility” that is operated legally and with better food and treatment than the jails in inmates' native countries.

But he said he worried that “instead of sitting down and carefully evaluating the policies,” Obama officials are unwisely following “campaign rhetoric” and preparing to release terrorism suspects or afford them legal protections granted to more conventional defendants in crime cases.

The choice, he alleged, reflects a naive mindset among the new team in Washington: “The United States needs to be not so much loved as it needs to be respected. Sometimes, that requires us to take actions that generate controversy. I’m not at all sure that that’s what the Obama administration believes.”

The dire portrait Cheney painted of the country’s security situation was made even grimmer by his comments agreeing with analysts who believe this recession may be a once-in-a-century disaster.
“It’s unlike anything I’ve ever seen,” Cheney said. “The combination of the financial crisis that started last year, coupled now with, obviously, a major recession, I think we’re a long way from having solved these problems.”

The interview, less than two weeks after the Bush administration ceded power to Obama, found the man who is arguably the most controversial — and almost surely the most influential — vice president in U.S. history in a self-vindicating mood.

He expressed confidence that files will some day be publicly accessible offering specific evidence that waterboarding and other policies he promoted — over sharp internal dissent from colleagues and harsh public criticism — were directly responsible for averting new Sept. 11-style attacks.

Not content to wait for a historical verdict, Cheney said he is set to plunge into his own memoirs, feeling liberated to describe behind-the-scenes roles over several decades in government now that the “statute of limitations has expired” on many of the most sensitive episodes.

His comments made unmistakable that Cheney — likely more than former President Bush, who has not yet given post-White House interviews — is willing and even eager to spar with the new administration and its supporters over the issues he cares most about.

His standing in this public debate is beset by contradictions. Cheney for years has had intimate access to the sort of highly classified national security intelligence that Obama and his teams are only recently seeing.

But many of the top Democratic legal and national security players have long viewed Cheney as a man who became unhinged by his fears, responsible for major misjudgments in Iraq and Afghanistan, willing to bend or break legal precedents and constitutional principles to advance his aims. Polls show he is one of the most unpopular people in national life.

In the interview, Cheney revealed no doubts about his own course — and many about the new administration’s.

“If it hadn’t been for what we did — with respect to the terrorist surveillance program, or enhanced interrogation techniques for high-value detainees, the Patriot Act, and so forth — then we would have been attacked again,” he said. “Those policies we put in place, in my opinion, were absolutely crucial to getting us through the last seven-plus years without a major-casualty attack on the U.S.”

Cheney said “the ultimate threat to the country” is “a 9/11-type event where the terrorists are armed with something much more dangerous than an airline ticket and a box cutter – a nuclear weapon or a biological agent of some kind” that is deployed in the middle of an American city.

“That’s the one that would involve the deaths of perhaps hundreds of thousands of people, and the one you have to spend a hell of a lot of time guarding against,” he said.

“I think there’s a high probability of such an attempt. Whether or not they can pull it off depends whether or not we keep in place policies that have allowed us to defeat all further attempts, since 9/11, to launch mass-casualty attacks against the United States.”

If Cheney’s language was dramatic, the setting for the comments was almost bizarrely pedestrian. His office is in a non-descript suburban office building in McLean, Va., in a suite that could just as easily house a dental clinic. The office is across the hall from a quick-copy store. The door is marked by nothing except a paper sign, held up by tape, saying the unit is occupied by the General Services Administration.

At several points, Cheney resisted singling out Obama personally for criticism, at one point saying he wants to give him a break after just two weeks in office. He said he admires Obama’s choice to keep Defense Secretary Robert Gates on the job.

But if he treated Obama gingerly, Cheney was eager to engage in the broader philosophical debate he was accustomed to with Democrats and even many in his own party about the right way to navigate a dangerous planet. He said he fears the people populating Obama’s ranks put too much faith in negotiation, persuasion, and good intentions.

“I think there are some who probably actually believe that if we just go talk nice to these folks, everything’s going to be okay,” he said.

He said his own experience tempers his belief in diplomacy.

“I think they’re optimistic. All new administrations are optimistic. We were,” he said.

“They may be able, in some cases, to make progress diplomatically that we weren’t,” Cheney said. “But, on the other hand, I think they’re likely to find — just as we did — that lots of times the diplomacy doesn’t work. Or diplomacy doesn’t work without there being an implied threat of something more serious if it fails.”

As examples of the dangerous world he sees — and one he predicted Obama and aides would find “sobering” — were Russia’s backsliding into authoritarianism and away from democracy, and the ongoing showdowns over the nuclear intentions of Iran and North Korea.

But it was the choice over Guantanamo that most dominated Cheney’s comments.

“If you release the hard-core Al Qaeda terrorists that are held at Guantanamo, I think they go back into the business of trying to kill more Americans and mount further mass-casualty attacks,” he said. “If you turn ’em loose and they go kill more Americans, who’s responsible for that?”

Of one alternative — moving prisoners to the U.S. prisons — Cheney said he has heard from few members of Congress eager for Guantanamo transfers to their home-state prisons, and asked: “Is that really a good idea to take hardened Al Qaeda terrorists who’ve already killed thousands of Americans and put ’em in San Quentin or some other prison facility where they can spread their venom even more widely than it already is?”

While Cheney’s words were dire, his own mood was relaxed, even loquacious. He was not on crutches — much less the wheelchair he rode to Obama’s Inauguration — from an injury while moving a box of books into his new home.

Suddenly a man of leisure, Cheney has a Kindle, Amazon’s wireless reading device, and said he used it recently to read James M. McPherson’s new “Tried by War: Abraham Lincoln as Commander in Chief.”

About a week ago, he had a phone conversation with former President George W. Bush, the first time the two had talked since they appeared together at a rally at Andrews Air Force Base just after Obama’s swearing-in.

“He’s fine,” Cheney said. “We had a pleasant chat on the phone. It was a private, personal conversation – not about policy. We’re both citizens – civilians.”

Other highlights of the 90-minute interview:

* What Cheney called “the trillion-dollar so-called stimulus bill”: “It looks to me like there’s a lot of stuff in there that has nothing to do with stimulus – it’s a sort of a wish list of a lot of my congressional Democratic friends,” he said.

* The potential consequences of $1 trillion in deficit stimulus spending: “It’s huge, obviously – potentially huge. You worry about what ultimately happens to inflation. You worry about what’s going to happen to the ability of the government to borrow money. … I’m nervous.”

* Whether the Bush administration should have done more about the economy: “We did worry about it, to some extent. … I don’t think anybody actually foresaw something of this size and dimension occurring. It’s also global. We only control part of the world economy – a very important part.”

* On the chance of progress in the Israeli-Palestinian peace process in the foreseeable future: “I think it’s unlikely.”

After leaving office, Cheney and his wife, Lynne, went first to his home in Wyoming, then returned to Washington to enjoy their grandchildren. He’s working on a book about his career, which has included stints as a House member, White House chief of staff and secretary of Defense.

His daughter, Liz Cheney, the former principal deputy assistant secretary of state for near eastern affairs, supervised the interview and at one point was looking for a tape recorder.

“I’m not a very good press aide,” she joshed.

Cheney found one on his own. “See, you don’t need staff,” she said.

President Obama signs kids' health insurance bill

WASHINGTON – President Barack Obama signed a bill Wednesday extending health coverage to 4 million uninsured children, a much-needed win a day after he lost his nominee to lead his drive for sweeping health care reform. "This is good. This is good," a smiling Obama said as he entered the East Room for the packed, ebullient signing ceremony.
The bill went to the White House fresh from passage in the Democratic-controlled House, on a vote of 290-135. Forty Republicans joined in approval.
The bill calls for spending an additional $32.8 billion on the State Children's Health Insurance Program, known as SCHIP, which now enrolls an estimated 7 million children. Lawmakers generated that revenue by raising the federal tobacco tax.
Obama said adding 4 million children to the program was a key step toward his promise of universal health care coverage for all.
"We fulfill one of the highest responsibilities that we have, to ensure the health and well-being of our nation's children," the president said before a cheering audience of families, lawmakers and interest groups. "Providing coverage to 11 million children is a downpayment on my commitment to cover every single American."
Republicans criticized the cost of the legislation. They also said it will mean an estimated 2.4 million children who otherwise would have access to private insurance will join the State Children's Health Insurance Program instead.
"The Democrats continue to push their government-run health care agenda — universal coverage, as they call it," said Rep. Pete Sessions, R-Texas.
The bill's passages has long been a top priority of Democratic lawmakers. In late 2007, President George W. Bush twice vetoed similar bills. The Senate passed the same bill last week. Obama made it a top priority in his first 100 days and one step in his push for universal coverage by the end of his first term.
"President Obama and Congress are demonstrating that change has come to Washington, and we are moving forward to improve the quality of life for American families struggling during these hard times," said Rep. Charles Rangel, D-N.Y., chairman of the House Ways and Means Committee.
House passage came a day after Obama's choice for health secretary, Tom Daschle, withdrew his nomination, citing the distraction of his delinquent tax payments.
SCHIP was created more than a decade ago to help children in families with incomes too high to qualify for Medicaid but too low to afford private coverage.
Federal money for the program was set to expire March 31, barring action by Congress. To cover the increase in spending, the bill would boost the federal excise tax on a pack of cigarettes by 62 cents, to $1.01 a pack.
Opponents of the bill complained that the tobacco tax increase hits the poor the hardest, because they are more likely to smoke than wealthier people. Many also took exception to expanding the program and Medicaid to children of newly arrived legal immigrants.
Republicans said they supported SCHIP and providing additional money for the program. However, they argued that Democrats were taking the program beyond its original intent and were encouraging states to cover middle-class families who otherwise could get private insurance.
"This debate is about, do we want a children's health insurance program that covers every child in America with state and federal dollars regardless of their ability to pay?" said Rep. Joe Barton, R-Texas. "Do we want to freeze out the private sector for health insurance?"
But supporters said that ensuring children had access to adequate health care was a matter of priorities. Rep. Frank Pallone, D-N.J., said an estimated 4 million people have lost employer-sponsored insurance in the past year.
"Do they keep their families' health insurance or do they put food on the table at night? During this economic recession, these kinds of decisions are unfortunately becoming more common," Pallone said.
The National Alliance for Hispanic Health estimated that more than one-third of the children added to the program will be Hispanics who currently have no health insurance.
Health officials project that there are about 9 million uninsured children in the U.S.
Scores of interest groups threw their support behind expanding SCHIP, including those representing insurers, hospitals and doctors. The American Cancer Society predicted that the tax increase would reduce youth smoking by about 7 percent and overall cigarette consumption by 4 percent.
"The expansion of the SCHIP program will provide millions of uninsured children with critical health care coverage and carry the added health benefit of encouraging millions of people to give up their deadly smoking habit," said John R. Seffrin, national chief executive officer of the American Cancer Society.