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THE NEW TERM: CONTINUATION OF REVOLVING DOOR..AT IRS?.  LEAST OPEN ADMINISTRATION EVER?  READ MORE HERE"But perhaps the most memorable image from the House floor was provided by Nancy Pelosi, the House Democratic leader, who appeared incredulous and furious throughout the speech..."

Issues and events from the first term carry over...

Six years in

News of a non-technical nature about early stage of Obama administration here.

  1. NEWS;  Significance of Election 2014, according to NYTIMES columnist;
  2. How about the Fed?
  3. Changes second term;  Washington POST column on this subject;  someone say "post?'
  4. To the fore:  Housing.
  5. Previous term...

HUD Sec'y proposed;  Donovan, an architect by training, we think, to OMB - is this good or bad for housing?  But it appears to be linked.

San Antonio Mayor to Lead H.U.D.
MAY 17, 2014

WASHINGTON — President Obama intends to choose Mayor Julián Castro of San Antonio as the secretary of housing and urban development in a cabinet reshuffling, according to Democrats informed about the plans.

Mr. Castro, who has often been mentioned as a potential vice-presidential candidate for the Democrats, would take the place of Shaun Donovan, who would move to head the Office of Management and Budget. That job is being vacated by Sylvia Mathews Burwell, whom Mr. Obama has nominated as secretary of health and human services.

Mr. Castro, 39, won national attention as the keynote speaker at the 2012 Democratic National Convention, and he and his twin brother, Representative Joaquin Castro, have become popular speakers on the party’s fund-raising circuit.

Mr. Obama approached Mr. Castro after the 2012 election about serving as transportation secretary, but Mr. Castro indicated that he preferred to stay in San Antonio.

Mr. Castro’s decision to join the administration comes amid speculation that he would like to be considered for vice president in 2016. The thinking among many Democrats is that by taking an executive position in Washington, he would bolster his résumé after serving as mayor of the nation’s seventh-largest city since 2009.

The San Antonio Express-News first reported that the Mr. Castro had been offered a cabinet post, but did not say which position it was.

Where the Buck Stops, Some See a Bystander

October 29, 2013

WASHINGTON — President Obama finds himself under fire on two disparate fronts these days, both for the botched rollout of his signature health care program and for the secret spying on allied heads of state. In both instances, his explanation roughly boils down to this: I didn’t know.

As a practical matter, no president can be aware of everything going on in the sprawling government he theoretically manages. But as a matter of politics, Mr. Obama’s plea of ignorance may do less to deflect blame than to prompt new questions about just how much in charge he really is.

In recent days, the president’s health and human services secretary said that despite internal concerns and a failed test run Mr. Obama was not told about serious problems with the new program’s website until it was rolled out this month. Other officials said the president was not aware that the National Security Agency was tapping the phone of Chancellor Angela Merkel of Germany and other friendly leaders until this summer, although intelligence officials said Tuesday that others in the White House had known.

Opposition lawmakers and pundits have seized on the White House explanations to accuse Mr. Obama of being a “bystander president,” as the Republican National Committee put it. Even some Democrats are scratching their heads at the seeming detachment from significant matters. MSNBC’s “Morning Joe” ran a montage of clips showing Mr. Obama or his aides disclaiming presidential knowledge of various issues as well as a graphic titled “Implausible Deniability.”

“It seems to me there’s a pattern here — with any bad news coming out of the administration, the excuse is the president just didn’t know about it,” said Representative Adam Kinzinger, Republican of Illinois.

“There’s a point at which the I-didn’t-know excuse really violates the idea of the buck stops here,” he added. “We want to have a feeling that the president ultimately takes responsibility. The American people want to know they have a president who’s in control and in charge.”

Democrats were less likely to blame the president but suggested that he was ill served if other officials did not keep him fully abreast. “If people really knew there were to be problems, I was a little surprised that people at the highest levels weren’t aware,” Patrick Griffin, who was a top White House official under President Bill Clinton, said of the health care program.

As for the N.S.A. surveillance, Senator Dianne Feinstein of California, the Democrat who leads the Senate Intelligence Committee, put it sharply in a statement she released earlier this week. “It is my understanding that President Obama was not aware Chancellor Merkel’s communications were being collected since 2002,” she said. “That is a big problem.”

Aides dismissed suggestions that Mr. Obama did not pay enough attention in either of these areas. On the spying program, they said the president was deeply immersed in details of the nation’s surveillance practices but was focused on those areas that constituted the major threats to the United States. He had no reason to suspect that Ms. Merkel or other leaders of close allies were being tapped, nor did he think to grill anyone about it because that was not a high priority, they said.

On health care, aides said that Mr. Obama had been fixated on details of the law’s carrying out and that advisers did not withhold information but were likewise surprised by the scope of the problems.

“From the moment the health care bill was signed into law the president was very focused on making sure it was implemented correctly,” said Dan Pfeiffer, a senior White House adviser. “In just about every meeting, he pushed the team on whether the website was going to work. Unfortunately, it did not, and he’s very frustrated.”

Mr. Pfeiffer insisted that the president wants to hear what he needs to hear and would not accept advisers’ keeping negative information from him. “He’ll know if you don’t tell him the bad news he needs to hear, and that’s the quickest way to be on the outside looking in,” Mr. Pfeiffer said.

The challenge for any president is keeping on top of a vast array of issues, any one of which could blow up at any given time. Harry S. Truman spoke for many of his successors when he said that “the pressures and complexities of the presidency have grown to a state where they are almost too much for one man to endure.” And that was decades before metadata technology came along.

A famous question posed by Senator Howard Baker of Tennessee in a far different context — What did the president know and when did he know it? — has been a staple of political controversies in the 40 years since Watergate. Jimmy Carter was accused of being too immersed in details, including who would use the White House tennis courts, while Ronald Reagan was criticized for being too hands off, particularly when he insisted that he did not know about details of the Iran-contra operation.

Accusations that Mr. Obama is removed from the details of his programs are somewhat surprising given the reputation the president developed early in his administration for intense, consuming interest in the particulars. Before ordering more troops to Afghanistan, for instance, Mr. Obama conducted what amounted to an exhaustive three-month series of seminars on the region.

But on other issues, he has seemed uninvolved at significant junctures. He has said he learned from news reports about Operation Fast and Furious, a botched federal investigation into gun smuggling that allowed weapons to fall into criminals’ hands.

His staff knew about an investigation into the targeting of conservative groups by the Internal Revenue Service, but did not tell him until it was becoming public. Likewise, aides said the president was unaware of a Justice Department decision to secretly obtain reporters’ phone logs in a leak case.

Still, those cases underscore the difficult choices in what to tell a president. Aides determined that it would be inappropriate, not to mention politically risky, for the president to have advance knowledge of the I.R.S. investigation. A president, they said, should not be involved in such investigations or law enforcement cases because if he were it could politicize them.

John Tuck, who was a White House aide under Reagan, said he was not as bothered as other Republicans about Mr. Obama’s not knowing about the problems with the health care system in advance. “I would never put the finger on somebody saying he should have known or might have known,” Mr. Tuck said. “What difference does it make if he knew or he didn’t know?”

But in any White House, he said, the typical pattern is to try to insulate the president from responsibility for bad news. “If you had a good story, you brought it to the White House,” he said. “If you had a bad story, you put it out to the department that was responsible for it.”

Ten years later, this stamp would be 46 cents...

Postal Service Halts Push to Limit Saturday Service
April 10, 2013

WASHINGTON — The Postal Service on Wednesday backed away from its plan to stop Saturday mail delivery, and criticized Congress for taking the cost-cutting proposal off the table.

In a statement, the Postal Service’s Board of Governors said it had come to the decision Tuesday after Congress passed a measure in March requiring it to continue delivering mail six days a week.

“The board believes that Congress has left it with no choice but to delay this implementation at this time,” the Postal Service said.

Congress included the requirement in legislation it passed to keep the government financed through September, the latest salvo in the power struggle between the Postal Service and lawmakers over solving the agency’s financial woes.

The Postal Service announced in February its intention to end Saturday mail delivery beginning in August as part of a plan to save about $2 billion a year, prompting an outcry from lawmakers, postal unions and some business leaders.

Representative Gerald E. Connolly, Democrat of Virginia, a critic of the proposal, said the Postal Service’s decision validated his argument that it could not act without Congressional approval.

“The U.S.P.S. finally admitted it had no legal justification to circumvent existing law and unilaterally implement a change in delivery service that many believe will not only disrupt mail service, but also exacerbate U.S.P.S. revenue losses and contribute to the decline of this constitutionally mandated service to all Americans,” he said in a statement.

Mr. Connolly had requested a report on the issue from the Government Accountability Office, a nonpartisan investigative arm of Congress, which responded in March by saying that the Postal Service could not make changes without Congress’s blessing because of a measure passed last year.

Faced with a decline in mail volume and a 2006 law requiring sizable contributions to a health fund for future retirees, the Postal Service has been weighing options to save money and move toward financial stability.

FAA to close towers at Brainard, Tweed, other Connecticut airports
Ana Radelat, CT MIRROR
March 6, 2013

Washington - The Federal Aviation Administration has notified six Connecticut airports that it will close their control towers effective April 7 due to federal budget cuts.  The shuttering of air towers at Hartford's Brainard Airport, Stratford's Igor I. Sikorsky Airport, Tweed-New Haven Regional Airport, Danbury Municipal Airport, Waterbury-Oxford Airport and Groton-New London Airport will not close those facilities.  But it will leave only one Connecticut airport, Hartford's Bradley International, with an operating air traffic control tower after April 7.

Pilots flying into the state's other airports will have to navigate by sight.  The "see and avoid" method of flying could pose dangers, said John Ricci, airport manager at Igor I. Sikorsky Airport.

"It would certainly impair safety to a certain degree," he said. "Pilots would have to operate a little bit more cautiously."

The Connecticut airports are losing their air control towers because The FAA has had to find $627 million in savings in its $16 billion budget since automatic spending cuts, known as sequestration, took effect last week.  The FAA decided to target airports that have fewer than 150,000  operations,  or airplane landings, a year.  About 170  airports across the nation will be affected.

The airports losing their towers in Connecticut have from 70,000 to 85,000 operations a year.  They also have from five to eight air traffic controllers working seven days a week, 24 hours a day.

Michael Safranek, assistant airport administrator at Danbury Municipal Airport, said without help from the airports six controllers,  planes will have to look out for each other and cede the right of way "much like cars at a four-way stop."

"There's no question there will be an impact," he said.

None of Connecticut's smaller airports, with the exception of the one in New Haven, host commercial airlines. Air traffic at the smaller airports is largely from private planes and charters. Some host flying schools and have helipads.  Oxford First Selectman George Temple said the facilities are an important part of the community and often used by large aircraft.  He pointed out that last year, Tenzin Gyataso, the 14th Dalai Lama and spiritual leader of Tibet, flew into the Waterbury-Oxford Airport before heading to an event at Western Connecticut State University.

"This is a mistake," Temple said of the tower closures. "But the federal government has made them before."

The American Association of Airport Executives was part of a coalition that included pilots and local officials lobbying the FAA to keep the towers open.  The coalition also ran a public relations campaign to provoke protests against the closures.  In a memo to members late last month, AAAE President Spencer Dickerson said "the message to the media must be simple."

"Closing our tower will jeopardize aviation safety and cost jobs in our communities," his memo said.

The air traffic controllers at Connecticut's smaller airports are not federal employees, but contract workers for a company called Midwest Air Traffic Control that is headquartered in Kansas.  But the FAA has also notified the majority of the 47,000 federal air traffic controllers and other employees this week that they will be furloughed, or placed for days on leave without pay.  Those furloughs , combined with expected forced leaves of Transportation Security Administration employees, could result in delayed flights and long lines at airports.

But Bradley International spokesman John Wallace said the airport officials were not advised by the FAA of the furlough plans and he does not know how they will impact operations.

Hearings on tap in Senate... and a few  ideas, other opinions, on new cabinet choices

L-R:  Mary Jo White to SEC, Senator John Kerry now officialy Sec'y of State, John Brennan, to C.I.A., Jack Lew, now to Treasury, former Senator Chuck Hagel to Defense Dept...Gina McCarthy, EPA

Obama Fund-Raiser Said to Be Cabinet Candidate
February 7, 2013

WASHINGTON — Penny Pritzker, an heiress to the Hyatt hotel fortune, is a leading candidate to become President Obama’s next commerce secretary as the president slowly moves to complete his second-term economic team.

Ms. Pritzker, who led the groundbreaking fund-raising effort for Mr. Obama’s first presidential campaign, withdrew from consideration for the same position in 2008, with some people suggesting that her family’s immense wealth might complicate her nomination at a time of deep financial crisis.

Now, however, people familiar with the president’s thinking, who declined to be named because no announcement had been made, said he may yet turn to Ms. Pritzker to lead the Commerce Department and join the administration’s effort to recharge the still sluggish economy. She would succeed Rebecca M. Blank, who has been acting secretary since John Bryson resigned last year, citing health reasons.

A formal announcement of who will lead the department is still weeks away, a White House official said, and Mr. Obama could still choose someone else. In the meantime, the president is also searching for replacements in other crucial agencies and departments. The official declined to be named discussing personnel issues.

The economic team is to be led by Jack Lew, the former chief of staff whom Mr. Obama nominated to be Treasury secretary. The Senate has not yet considered confirming Mr. Lew’s appointment.

Sylvia Mathews Burwell, the president of the Walmart Foundation and a former budget official for President Bill Clinton, is viewed as the leading candidate to become director of the Office of Management and Budget, replacing Jeffrey Zients, who is running the department as its deputy director.

Mr. Zients is viewed as a top contender to become the United States trade representative. Ron Kirk, the current trade representative, announced last month that he was leaving the administration.

In the coming weeks, the president must also fill the top spots at the Departments of Labor, Transportation and Energy, as well as the Environmental Protection Agency.

If Mr. Obama chooses Ms. Pritzker — a close personal friend — to lead the Commerce Department, it could elevate the post after four years in which a series of secretaries and acting replacements largely failed to play a central role in the president’s economic deliberations.

By contrast, Ms. Pritzker would enter as a close confidante of Mr. Obama’s. A fellow Chicagoan, Ms. Pritzker’s tireless fund-raising efforts in 2007 made it possible for Mr. Obama to compete against Hillary Rodham Clinton in the long series of Democratic primaries.

By connecting Mr. Obama to a vast network of bankers and business executives, Ms. Pritzker helped raise nearly $750 million for Mr. Obama’s 2008 campaign. But her personal fortune and her family’s hotel chain made her a target for criticism, including some from organized labor, which has long accused Hyatt of providing poor working conditions for housekeepers.

During the 2012 campaign, Ms. Pritzker played a less prominent role, raising money for the campaign but not leading the effort.

At Commerce, Ms. Pritzker could provide the president with a new way to reach out to the business community, which has sometimes been skeptical of his administration’s policies. Ms. Pritzker has degrees in law and business from Stanford.

As a woman, she would also help increase the diversity in his second-term cabinet after the departures of several women and minorities. Mr. Obama chose white men to serve at the State Department, the Pentagon, the Central Intelligence Agency and as his chief of staff.

Senate Republicans boycott vote on EPA nominee
By Valerie Volcovici
May 9, 2013

WASHINGTON (Reuters) - Republican lawmakers on Thursday boycotted a confirmation vote on President Barack Obama's pick to lead the Environmental Protection Agency, saying they were "completely unsatisfied" with answers provided by Gina McCarthy on several topics.

David Vitter of Louisiana, the ranking Republican on the committee, told reporters the action did not have to do with McCarthy's qualifications but with her refusal to answer questions about transparency within the agency.

All eight Republicans on the Senate Committee on Environment and Public Works boycotted the scheduled vote on McCarthy's nomination to be EPA administrator after a request to delay the meeting was turned down.

Under committee rules, even with a majority of the Democratic-led panel present, support from at least two Republicans was needed for the vote to go ahead.

In a statement, the lawmakers said that they had made "five very reasonable and basic requests in conjunction with the nomination of Gina McCarthy, which focus on openness and transparency."

"While you have allowed EPA adequate time to fully respond before any mark-up on the nomination, EPA has stonewalled on four of the five categories," they said in a letter to committee chairwoman Barbara Boxer, a California Democrat, who had denied the request to postpone the nomination vote.

In recent weeks the Republicans submitted over 1,000 questions to the nominee, who is currently the EPA's top air quality official, on topics ranging from the agency's "inconsistent" email practices and policies to its approach to economic analysis.

"Our whole focus has been these five key transparency and openness requests ... That's the only thing I talked to Gina McCarthy about at our meeting on March 20," Vitter said.

Democrat Tom Carper of Delaware, who has worked with McCarthy as chairman of the subcommittee on clean air and nuclear safety, called the Republican actions "unacceptable."

"Gina is well-suited to take the helm of the EPA and lead it in an inclusive manner, having served both Republican and Democratic governors as well as a Democratic President," Carper said in a statement.

McCarthy was a state environmental official in Connecticut and Massachusetts before joining the EPA in 2009. She was the top environmental enforcer for Mitt Romney, the 2012 Republican presidential nominee, when he was governor of Massachusetts.

Her nomination in early March was applauded by many environmental groups as well as business and industry groups such as the American Petroleum Institute.

Carper said McCarthy had gone "above and beyond the requirements of a nominee" in answering over 1,000 questions and meeting with almost half the 100-member Senate.

Wyoming Republican John Barasso said the delay in McCarthy's nomination did not pose an operational problem for the agency, saying acting administrator Bob Perciasepe was "more than qualified" to run the EPA in the meantime.


Presently in the Obama Administration...
(l) FORMER CTDEP (2004-2009) COMMISSIONER'; (r), hot link to overlap of CT Open Space grant timeline.

Sources: Obama Leans Toward Ex-Conn. Official For Top EPA Job - confirmed!
The Hartford Courant
By JEFF MASON, Reuters
7:56 PM EST, February 2, 2013

WASHINGTON —President Barack Obama is leaning toward choosing Gina McCarthy, a top official in charge of air quality at the U.S. Environmental Protection Agency, to run the EPA in his second term, according to two sources familiar with the matter.

McCarthy, who is now the assistant administrator for the EPA Office of Air and Radiation, ran the Connecticut Department of Environmental Protection from 2004 to 2009. Whoever is appointed to the EPA job would lead Obama's push for measures to fight climate change.

McCarthy would replace Lisa Jackson, who said in December she planned to step down as EPA chief.

A final decision has not been made, and one source cautioned that Bob Perciasepe, Jackson's deputy, was still in the mix for the administrator post.

An announcement could still be a couple weeks away.

A Boston native, McCarthy came to Washington after serving as the top environmental regulator in Massachusetts and Connecticut under Democratic and Republican governors. Former Massachusetts Governor Michael Dukakis, a Democrat, appointed her chair of a council to oversee a review of a proposed hazardous waste incinerator in the Boston area in 1990.

She later served as an environmental policy adviser to then-Massachusetts Governor Mitt Romney, and launched the state's first Climate Protection Action Plan. Romney was Obama's Republican opponent in the 2012 presidential election.

In 2004, McCarthy was appointed to head Connecticut's Department of Environmental Protection under then-Governor Jodi Rell, also a Republican. She helped lead the state into a carbon cap-and-trade system for Northeastern states, known as the Regional Greenhouse Gas Initiative. She left to join the EPA under Obama in 2009.

Her no-nonsense style could be an asset in dealing with Congress if Obama embarks on ambitious new measures to tackle climate change, which he signaled in his inaugural address.

"She's about the most frank high-level public servant you've ever met," said one former colleague, speaking on condition of anonymity.

"She's a good manager, she picks stuff up fast, and she's ... certainly not afraid of a battle. So if they are anticipating a very combative Congress, Gina can certainly hold her own."

McCarthy would bring more gender equality to Obama's revamped Cabinet. The president has faced criticism for appointing white men to vacancies at the departments of state, defense and treasury.

Asked for reaction, a White House spokesman said he did not have any personnel announcements to make.

Copyright © 2013, Reuters.

Secret Service Chief to Step Down This Month
February 1, 2013

WASHINGTON (AP) — The head of the Secret Service is stepping down after 30 years with the agency.

A Secret Service spokesman says Mark Sullivan will retire effective Feb. 23. His replacement hasn't been announced.

Sullivan joined the Secret Service in 1983 after three years as a special agent in the inspector general's office at the Department of Housing and Urban Development. He was appointed director in 2006.  Sullivan could have retired from government nearly 10 years ago but chose to stay on for what turned out to be a turbulent period for the service.

Last year, in testimony before Congress, Sullivan apologized for the conduct of Secret Service employees caught up on a prostitution scandal in Colombia.

Former lawmaker Giffords to visit Newtown on Friday

Chicago Tribune
7:07 p.m. CST, January 3, 2013

(Reuters) - Former Representative Gabrielle Giffords, who survived a mass shooting in her Arizona district two years ago, plans to visit Newtown, Connecticut, the site of last month's deadly elementary school massacre, the Connecticut lieutenant governor's office said Thursday.

Giffords plans to attend a private event at a local home on Friday, Steven Jensen, spokesman for Lieutenant Governor Nancy Wyman, said in an email. The event will have no media access and Giffords' plans are still developing and may change.

Giffords retired from Congress last year to focus on her recovery from the January 2011 shooting in Tucson that left six dead and 12 others wounded.

Giffords, shot in the head in the attack, has become a symbol for proponents of stricter gun control in the national debate about the right to bear arms, which has grown louder since the December 14 attack in Newtown.

Giffords' planned visit would be three weeks to the day since 20-year-old Adam Lanza burst into Sandy Hook Elementary School in rural Newtown, about 70 miles northeast of New York City, and killed 20 first graders and six school staff members.

Before the attack, Lanza killed his mother, Nancy Lanza, in their home about 5 miles from the school. Lanza took his own life as police arrived at the Sandy Hook school.

On Thursday, the more than 400 children who escaped without physical harm returned to school for the first time since the assault. (Reporting by Dan Burns; Editing by Lisa Shumaker)

Biden to Lead Administration Effort to Develop Response to Shootings
December 19, 2012, 6:00 am

8:07 a.m. | Updated President Obama has ordered Vice President Joseph R. Biden Jr. to lead an interagency group to develop a multifaceted response to last week’s mass shooting at a Connecticut school, a White House official said.

Mr. Obama will appear in the White House briefing room alongside Mr. Biden at 11:45 a.m. on Wednesday to announce the assignment but an aide said they will not announce any major policy decisions. Instead, the aide said the president will lay out a process for developing new policies.

The president promised during a speech at a memorial service in Newtown, Conn., on Sunday to “use whatever power this office holds” to prevent more tragedies like the one in which a gunman killed 27 people last Friday, including 20 children. He offered no specific prescriptions; aides have since said that he is looking at tighter gun regulations including a ban on assault weapons and possibly on high-capacity ammunition clips.

But they said he also wants to examine other factors, including the mental health system, education and possibly cultural dynamics, not just gun legislation. “He wants to expand the conversation beyond those specific areas of legislation to look at other ways we can address this problem,” Jay Carney, the White House press secretary, said on Tuesday.

As a senator, Mr. Biden was one of the leading advocates of crime legislation in 1994 that included a ban on assault weapons. The ban generated a furious backlash among gun rights advocates who helped bring down the Democratic Congress in midterm elections later that year. The ban then expired in 2004 with barely a protest as Democrats remained skittish about the issue.

While Mr. Biden has often boasted of his role in passing the original assault weapon ban, Senator Dianne Feinstein, Democrat of California, recalled that he was initially skeptical that it was even possible when she tried to attach it to his crime bill back in the early 1990s.

“When I told Joe Biden, who was chairman of the Judiciary Committee, that I was going to move this as an amendment on the crime bill, he laughed at me,” she recalled on NBC’s “Meet the Press” on Sunday. “He said, ‘You’re new here. Wait till you learn.’” In the end, she passed the bill despite Mr. Biden’s doubts and it was signed by President Bill Clinton.

Mr. Obama met Monday with Mr. Biden and three cabinet officials, Attorney General Eric H. Holder Jr., Arne Duncan, the education secretary, and Kathleen Sebelius, the health and human services secretary, to discuss possible responses to the Newtown killings.

White House officials have cautioned against expecting immediate action, saying it may take weeks to develop a plan. Rather than trickle out a series of small proposals, the officials said they were leaning toward putting together a holistic approach that would address multiple factors involved in mass shootings.

Did not get the job.

LaHood to Leave Transportation Department

January 29, 2013, 10:42 am

Ray LaHood, the former Republican congressman from Illinois who has run the nation’s Transportation Department under President Obama, will not serve a second term, he told department employees in a letter on Tuesday.

“I’ve told President Obama, and I’ve told many of you, that this is the best job I’ve ever had. I’m grateful to have the opportunity to work with all of you,” Mr. LaHood wrote. He cited the department’s efforts to curb distracted driving and to increase the efficiency of automobiles by raising emissions standards.

As transportation secretary, Mr. LaHood was at the center of efforts to reduce fatigue among pilots and called for greater investment in high-speed rail. He also pushed for large fines against Toyota for safety problems and for a new transportation bill in Congress.

“We have made great progress in improving the safety of our transit systems, pipelines, and highways, and in reducing roadway fatalities to historic lows,” he said. “We have strengthened consumer protections with new regulations on buses, trucks, and airlines.”

Mr. LaHood’s decision makes him the latest in a series of members of the president’s original cabinet to announce their departure in the last several weeks.

In a statement, Mr. Obama praised Mr. LaHood, the sole Republican to serve in his first-term cabinet, as a public servant who has been more interested in practical solutions than in partisan politics.

“Years ago, we were drawn together by a shared belief that those of us in public service owe an allegiance not to party or faction, but to the people we were elected to represent,” the president wrote. “And Ray has never wavered in that belief.”

Several people have been mentioned as possible replacements for Mr. LaHood at the Transportation Department. Among them: Antonio Villaraigosa, the Democratic mayor of Los Angeles; Ed Rendell, the former governor of Pennsylvania; Debbie Hersman, the chairwoman of the National Transportation Safety Board; and Jennifer Granholm, the former Democratic governor of Michigan.

Cabinet Diversity Poses a Question for Obama
December 11, 2012, 8:56 am

It has been 15 years since a white man served as secretary of state or secretary of labor.

Yet no woman or minority member has ever led the Pentagon, the Central Intelligence Agency or the Treasury Department. The White House chief of staff has also always been a white man.

As President Obama ponders how to shuffle his cabinet for a second term, he faces decisions that could continue these patterns - in which some cabinet jobs remain the domain of white men, while others endure as bastions of diversity - or that could break them.

Attention so far has focused on the possibility that Susan E. Rice, the ambassador to the United Nations, would become secretary of state, succeeding Hillary Rodham Clinton. Mrs. Clinton followed Condoleezza Rice, Colin L. Powell and Madeleine K. Albright, with Warren Christopher, who stepped down in 1997, being the last white man to serve as America's top diplomat.

President Bill Clinton's nomination of Ms. Albright in 1997 broke the mold of what an American secretary of state should look like. And it established a pattern that succeeding presidents have been eager to follow.

Fred I. Greenstein, an emeritus professor of politics at Princeton University, offered the academic theory of "path dependence" as one possible explanation. The theory argues that earlier decisions by leaders often guide the decisions of their successors, he said.

"You get in a kind of rhythm of doing the same thing," Mr. Greenstein said.

That theory might also help explain the tendency for presidents to nominate women as labor secretary. In the last 25 years, one man and six women have occupied that post. Hilda L. Solis, a former congresswoman from California, is the current labor secretary.

(The first woman to serve in a president's cabinet was Frances Perkins, the labor secretary for 12 years under President Franklin D. Roosevelt. Ms. Perkins was followed by 14 consecutive men; only one man, Robert B. Reich, has held the post since 1987.)

The theory of path dependence could also be why some cabinet jobs have continued to draw from a smaller demographic pool.

The most frequently mentioned candidate to follow Timothy F. Geithner as treasury secretary is Jacob J. Lew, the White House chief of staff. Were Mr. Lew to move across the street, the possibilities to succeed him include Denis R. McDonough, the deputy national security adviser, and Ronald A. Klain, a former chief of staff to Vice President Joseph R. Biden Jr.

But Mr. Obama also has options for the Treasury and Defense Departments, the C.I.A. and the chief of staff that would break with precedent.

He is reportedly considering Michèle A. Flournoy to take over at the Pentagon after serving as the under secretary for defense. Lael Brainard, the Treasury under secretary for international affairs, is considered a contender to become secretary, although that is considered more likely later on in Mr. Obama's second term.

The president could tap Nancy-Ann Deparle, his deputy chief of staff, to be the chief of staff. And if Attorney General Eric H. Holder Jr. leaves this year, Mr. Obama might shift Janet Napolitano, the secretary of homeland security, to the Justice Department, which would make her the country's second female attorney general after Janet Reno.

Also on the list of possible successors for Mr. Holder: Preet Bharara, the United States attorney in Manhattan, who would be the cabinet's first Indian-American, and Deval Patrick, the governor of Massachusetts. Mr. Patrick dined with Mr. Obama right after the election, though he has said that "under no circumstances" would he take an administration job.

"It's certainly a concern," Marcia Greenberger, the co-president of the National Women's Law Center, said of the lack of diversity in some cabinet jobs. "It is important that minorities and women just become natural candidates for these positions."

The rest of the cabinet has a more diverse history, though white men dominated for decades. Women and minority members have led the Departments of Health and Human Services, Agriculture, Transportation, Energy and Education. They have also served as trade representative and administrator of the Environmental Protection Agency.

Norman Y. Mineta, a former congressman from California, became the first Asian-American in the cabinet in 2000 when Mr. Clinton appointed him commerce secretary. Lauro F. Cavazos, a former education secretary, became the first Hispanic American cabinet member in 1988.

Mr. Obama might also make history by nominating the first openly gay cabinet member. John Berry, the director of the president's Office of Personnel Management, is said to be a candidate for interior secretary when Ken Salazar departs. And Fred P. Hochberg, the chairman and president of the Export-Import Bank, could get the nod as commerce secretary.

If Mr. Obama does break the pattern with one of these positions, he could end up changing the way future presidents look at candidates to lead those agencies.

It was not that long ago that secretary of state seemed an unlikely symbol of workplace diversity.

Obama’s New Cabinet

November 26, 2012

Elisse B. Walter?

Is that really whom President Obama named on Monday to be the new chairwoman of the Securities and Exchange Commission? A woman who has been at the S.E.C. for the last four years? And, to boot, someone practically joined at the hip with her predecessor, Mary Schapiro? Say it ain’t so, Mr. President.

No doubt, Commissioner Walter is a fine public servant. What she is not, however, is a fresh face with new ideas. And isn’t that half the point of second-term appointments? They give a president a chance to name cabinet or agency directors who can breathe new life into their departments. Second-term appointments are presidential do-overs.

Take, for instance, Timothy Geithner, the soon-to-be-departing Treasury secretary. All things considered, Geithner wasn’t a bad secretary. In no small part because of him, America’s banks are far better capitalized — and hence safer — than their European counterparts. But you always had the sense that his heart lay more with the bankers he was overseeing than the homeowners who needed help.

That is why our nominee to replace Geithner is his bête noire, Sheila Bair. As the chairwoman of the Federal Deposit Insurance Corporation, a job she held until July 2011, she fought against bank bailouts while pushing for mortgage modifications. Her new book, “Bull By the Horns,” is mostly her inside account of the financial crisis. But she also offers a series of sensible policy suggestions. Wouldn’t you like a Treasury secretary who believes that interest on debt should not be tax deductible — whether for large financial institutions or home mortgages? I sure would.

Let’s move next to the State Department, where an exhausted Hillary Clinton is ready to step down. She has been, without question, Obama’s finest appointment. She was also his riskiest. The current favorite for the job, Susan Rice, the United Nations ambassador, is a safe choice, but she doesn’t have the breadth that the job requires. Who does? How about Bill Clinton? Seriously.

The president’s worst cabinet appointment, on the other hand, has been Eric Holder Jr. at the Department of Justice. Under him, the department got prosecutorial scalps by going after the small fry while letting big guys like Angelo Mozilo, the former chief executive of Countrywide, off the hook. Holder has also been tone-deaf in dealing with the Republicans in Congress. Our nominee is a man with a reputation for cleaning up messes: Ken Feinberg, a lawyer who now specializes in victim compensation programs. A former special counsel to the Senate Judiciary Committee, he knows the territory. A master negotiator, he knows how to bridge divides. And his sense of fair play is exactly what this Justice Department most needs.

Department of Defense? David Petraeus. After disclosing an affair with Paula Broadwell and resigning as C.I.A. chief, Petraeus is currently doing his stint in purgatory. The Defense Department in Obama’s second term is going to need someone who can cut its budget without hurting its mission — and who can reform the most entrenched bureaucracy in Washington. The military brass will run bureaucratic circles around any defense secretary who doesn’t know their tricks. Petraeus can stand up to them.

The current secretary of energy, Steven Chu, is a scientist. A far better choice is a committed environmentalist who also understands the importance of making intelligent energy choices. We know just such a man: Fred Krupp of the Environmental Defense Fund. Unlike most environmental groups, the defense fund supports using hydraulic fracturing — fracking — to drill for natural gas. He is on record as saying that there are enormous climate benefits to using natural gas — so long as methane leakage can be minimized. At the Energy Department, Krupp would be in a position to help make sure that happens.

With rumors that Arne Duncan may step down as secretary of Education, we nominate Randi Weingarten to replace him. Risky? You bet. But as the president of the American Federation of Teachers, Weingarten has long claimed to support education reform, so long as it is done with the nation’s teachers instead of at their expense. Making Weingarten the next education secretary would give her the chance to put her money where her mouth is.

Which brings us back to the S.E.C. In The Times’s account of Walter’s promotion, it said that the White House might well offer up a new nominee in the future. We know the right man for the job: Sean Berkowitz. Berkowitz, who, in full disclosure, is a friend, led the Enron task force and prosecuted Enron’s top two executives, Jeffrey Skilling and Kenneth Lay. So he knows how to nail the bad guys, which has been a problem for the current S.E.C.

Since 2007, he has been the global chairman of litigation for Latham & Watkins, one of the nation’s largest law firms. Oh, and one other thing, Mr. President.

He’s from Chicago.

Fiscal cliff looming, Himes returns to Washington

By ROBERT KOCH, Hour Staff Writer
November 11, 2012 10:02 am

NORWALK -- Upon returning to Washington, D.C., this week, newly re-elected Congressman Jim Himes and other lawmakers will face one of the most politically charged budgetary dilemmas of their time.

The 'fiscal cliff' -- set to occur in January -- is the one-two punch of expiring Bush-era tax cuts and across-the-board spending cuts to the Pentagon and domestic programs that could total $800 billion next year, based on Congressional Budget Office estimates. Economists say stepping off the cliff will push the economy back into recession.

Himes, the Greenwich Democrat whom voters elected to a third two-year term last Tuesday, believes the fiscal cliff will be averted, although the details may not be resolved until next year.

"Washington understands how severe the consequences of the fiscal cliff are," said Himes, D-4, on Friday. "When I saw House Speaker (John) Boehner speak two days ago, I thought he was conciliatory and traced the outlines of a deal."

But "I think it will be rocky road," he added.

Himes said he anticipates a "lot of gamesmanship" as the Dec. 31 deadline nears. Still, he said he expects that President Barack Obama and Congressional leaders will reach an agreement for rank-and-file lawmakers to consider.

If that occurs, members of the lame duck Congress would set up a process to avert the automatic cuts. In January, the newly seated Congress would then work out the details such as changes to the nation's tax code and addressing Medicare.

"A process gets set up in the lame duck Congress that puts off the automatic hammer, and then the new Congress does the negotiations around the actual substance of the tax code and Medicare," Himes said.

Ahead of critical negotiations, Obama said Friday he won't accept any approach to federal deficit reduction that doesn't ask the wealthy to pay more in taxes. Boehner, R-Ohio, said he remains unwilling to raise tax rates on upper-income earners.

The potential partisan battle comes after the Nov. 6 elections in which Democrats held onto the presidency and control of the U.S. Senate, while Republicans under Boehner will remain the majority in the U.S. House of Representatives.

U.S. Sen. Richard M. Blumenthal, D-Conn., said lawmakers must work to avoid the automatic cuts, which in his opinion would imperil the nation's defense as well as economic recovery.

"We need to make cuts, but they should be smart cuts not just across-the-board slashes," Blumenthal said. And "there has to be some revenue increases, for example, by cutting the loopholes or tax breaks that encourage companies to send jobs overseas, or subsidies for big oil, or for big farm companies that are paid not to produce crops."

Blumenthal indicated that he would support a combination of spending cuts and revenue increases provided the emphasis is on middle-class Americans.

"I think lowering or keeping tax cuts in place for the middle class and asking the wealthy to pay a little more is the right approach," Blumenthal said. "I'm very hopeful that we will … reach a solution that is balanced, bipartisan and beneficial for our economy."

Obama will hold a news conference Wednesday, his first since being re-elected to a second term.

White House press secretary Jay Carney said Obama will take questions from reporters on a variety of topics in the White House East Room. The news conference will take place two days before Obama meets with Congressional leaders Nov. 16 on the fiscal cliff.

-- The Associated Press contributed to this report

Burn Down the Suburbs?
By Stanley Kurtz, National Review
August 1, 2012 4:00 A.M.

President Obama is not a fan of America’s suburbs. Indeed, he intends to abolish them. With suburban voters set to be the swing constituency of the 2012 election, the administration’s plans for this segment of the electorate deserve scrutiny. Obama is a longtime supporter of “regionalism,” the idea that the suburbs should be folded into the cities, merging schools, housing, transportation, and above all taxation. To this end, the president has already put programs in place designed to push the country toward a sweeping social transformation in a possible second term. The goal: income equalization via a massive redistribution of suburban tax money to the cities.

Obama’s plans to undercut the political and economic independence of America’s suburbs reach back decades. The community organizers who trained him in the mid-1980s blamed the plight of cities on taxpayer “flight” to suburbia. Beginning in the mid-1990s, Obama’s mentors at the Gamaliel Foundation (a community-organizing network Obama helped found) formally dedicated their efforts to the budding fight against suburban “sprawl.” From his positions on the boards of a couple of left-leaning Chicago foundations, Obama channeled substantial financial support to these efforts. On entering politics, he served as a dedicated ally of his mentors’ anti-suburban activism.

The alliance endures. One of Obama’s original trainers, Mike Kruglik, has hived off a new organization called Building One America, which continues Gamaliel’s anti-suburban crusade under another name. Kruglik and his close allies, David Rusk and Myron Orfield, intellectual leaders of the “anti-sprawl” movement, have been quietly working with the Obama administration for years on an ambitious program of social reform.

In July of 2011, Kruglik’s Building One America held a conference at the White House. Orfield and Rusk made presentations, and afterwards Kruglik personally met with the president in the Oval Office. The ultimate goal of the movement led by Kruglik, Rusk, and Orfield is quite literally to abolish the suburbs. Knowing that this could never happen through outright annexation by nearby cities, they’ve developed ways to coax suburbs to slowly forfeit their independence.

One approach is to force suburban residents into densely packed cities by blocking development on the outskirts of metropolitan areas, and by discouraging driving with a blizzard of taxes, fees, and regulations. Step two is to move the poor out of cities by imposing low-income-housing quotas on development in middle-class suburbs. Step three is to export the controversial “regional tax-base sharing” scheme currently in place in the Minneapolis–St. Paul area to the rest of the country. Under this program, a portion of suburban tax money flows into a common regional pot, which is then effectively redistributed to urban, and a few less well-off “inner-ring” suburban, municipalities.

The Obama administration, stocked with “regionalist” appointees, has been advancing this ambitious plan quietly for the past four years. Efforts to discourage driving and to press development into densely packed cities are justified by reference to fears of global warming. Leaders of the crusade against “sprawl” very consciously use environmental concerns as a cover for their redistributive schemes.

The centerpiece of the Obama administration’s anti-suburban plans is a little-known and seemingly modest program called the Sustainable Communities Initiative. The “regional planning grants” funded under this initiative — many of them in battleground states like Florida, Virginia, and Ohio — are set to recommend redistributive policies, as well as transportation and development plans, designed to undercut America’s suburbs. Few have noticed this because the program’s goals are muffled in the impenetrable jargon of “sustainability,” while its recommendations are to be unveiled only in a possible second Obama term.

Obama’s former community-organizing mentors and colleagues want the administration to condition future federal aid on state adherence to the recommendations served up by these anti-suburban planning commissions. That would quickly turn an apparently modest set of regional-planning grants into a lever for sweeping social change.

In light of Obama’s unbroken history of collaboration with his organizing mentors on this anti-suburban project, and his proven willingness to impose ambitious policy agendas on the country through heavy-handed regulation, this project seems likely to advance.

A second and equally ambitious facet of Obama’s anti-suburban blueprint involves the work of Kruglik’s Building One America. Traditionally, Alinskyite community organizers mobilize leftist church groups. Kruglik’s group goes a step further by organizing not only the religious left but politicians from relatively less-well-off inner-ring suburbs. The goal is to build coalitions between urban and inner-ring suburban state legislators, in a bid to force regional tax-base sharing on middle-class suburbanites. That is how the practice came to Minnesota.

The July 2011 White House conference, gathering inner-ring suburban politicians for presentations by Rusk and Orfield, was an effort to place the prestige of the Obama administration behind Kruglik’s organizing efforts. A multi-state battle over regional tax-base “sharing,” abetted by the president, would usher in divisive class warfare on a scale likely to dwarf the puny efforts of Occupy Wall Street.

Obama’s little-known plans to undermine the political and economic autonomy of America’s suburbs constitute a policy initiative similar in ambition to health-care reform, the stimulus, or “cap-and-trade.” Obama’s anti-suburban plans also supply the missing link that explains his administration’s overall policy architecture.

Since the failure of Lyndon Johnson’s War on Poverty and the collapse of federal urban policy, leftist theorists of community organizing have advocated a series of moves designed to quietly redistribute tax money to the cities. Health-care reform and federal infrastructure spending (as in the stimulus) are backed by organizers as the best ways to reconstitute an urban policy without directly calling it that. A campaign against suburban “sprawl” under the guise of environmentalism is the next move. Open calls for suburban tax-base “sharing” are the final and most controversial link in the chain of a reconstituted and redistributive urban policy. President Obama is following this plan.

Middle-class suburban supporters of the president take note. It isn’t just the pocketbooks of the “1 percent” he’s after; it’s yours.

Big Banks are not as happy with Obama as they once were - another hedge?

It's a deal: Obama, Congress will avert default

DAVID ESPO, AP Special Correspondent
Updated 10:01 p.m., Sunday, July 31, 2011

WASHINGTON (AP) — Ending a perilous stalemate, President Barack Obama and congressional leaders announced historic agreement Sunday night on emergency legislation to avert the nation's first-ever financial default. The dramatic resolution lifted a cloud that had threatened the still-fragile economic recovery and rattled global markets.

The agreement would slice at least $2.4 trillion from federal spending over a decade, a steep price for many Democrats, too little for many Republicans.

The deal, with scant time remaining before Tuesday's deadline for paying government bills, "will allow us to avoid default and end the crisis that Washington imposed on the rest of America," Obama said.

Not just America. World markets showed their relief immediately. Japan's benchmark Nikkei index, opening Monday morning — at 8 p.m. Sunday on America's East Coast — was up 1.7 percent in early trading. On Wall Street, U.S. stock futures surged.

Default, Obama said at the White House, "would have had a devastating effect on our economy."

House Speaker John Boehner telephoned Obama at mid-evening to say the agreement had been struck, then immediately began pitching the deal to his fractious rank and file.

"It isn't the greatest deal in the world, but it shows how much we've changed the terms of the debate in this town," he said on a conference call, according to GOP officials. He added the agreement was "all spending cuts. The White House bid to raise taxes has been shut down."

No votes were scheduled in either house of Congress before Monday, to give rank and file lawmakers time to review the package.

Without legislation in place by Tuesday, the Treasury would not be able to pay all its bills, raising the threat of a default that administration officials say could inflict catastrophic damage on the economy.

If approved, though, a compromise would presumably preserve America's sterling credit rating, reassure investors in financial markets across the globe and possibly reverse the losses that spread across Wall Street in recent days as the threat of a default grew.

Even word of an impending deal earlier in the day by Senate Republican Leader Mitch McConnell of Kentucky sent U.S. stock future upward.

Pending final passage, the agreement marked a dramatic reach across party lines that played out over six months and several rounds of negotiating, interspersed by periods of intense partisanship.

"Sometimes it seems our two sides disagree on almost everything," Senate Majority Leader Harry Reid said in floor remarks.

"But in the end, reasonable people were able to agree on this: The United States could not take the chance of defaulting on our debt, risking a United States financial collapse and a world-wide depression."

Across the weeks, Boehner emerged as Obama's principal Republican antagonist in a new contentious era of divided government, yet struggled to corral his own rank and file at times.

At the end, though, McConnell and Vice President Joe Biden provided a negotiating channel to get the deal completed, including a last-minute standoff over the impact of spending cuts on the Pentagon budget.

Netanyahu at White House after Obama challenge
By ERICA WERNER, Associated Press
20 May 2011

WASHINGTON – President Barack Obama and Israeli Prime Minister Benjamin Netanyahu were sharply at odds over terms for Middle East peace ahead of a highly anticipated Oval Office meeting Friday.

In a speech Thursday on U.S. policy in the Mideast, Obama for the first time endorsed the Palestinians' demand that their eventual state be based on borders that existed before the 1967 Six Day War in which Israel forces occupied east Jerusalem, the West Bank and Gaza.

From Jerusalem, Netanyahu dismissed the position as "indefensible," saying it would leave major Jewish settlements outside Israel. Then he boarded a plane for his long-scheduled visit to Washington, vowing to seek clarifications in his meeting with Obama at the White House. He arrived in Washington early Friday.

The encounter will pit a president deeply frustrated with a peace effort in shambles against an Israeli leader confronted by a Palestinian government he says he cannot do business with. International pressure is growing on both to answer the demands of the Palestinian people as the revolts sweeping the Arab world crest against Israel itself. Palestinian protesters emboldened by the winds of change marched on the Jewish state's borders this week and at least 15 people were killed.

Against that backdrop, Obama is aiming "to try to convince Netanyahu and the Israelis that there's a greater urgency in reaching agreement with the Palestinians because of the dramatic changes under way in the region and greater diplomatic pressures and efforts to isolate Israel and delegitimize its existence," said Haim Malka, deputy director of the Middle East program at the Center for Strategic and International Studies.

"So he was speaking to both the Israelis and the Palestinians and trying to urge them to move forward and conveying a sense of urgency and risk in the status quo," Malka said.

Netanyahu's tough response to Obama's speech "expresses disappointment at the absence of central items that Israel had demanded, primarily the (Palestinian) refugees," a senior Israeli official, speaking on condition of anonymity because he was not free to discuss U.S. policy on the record, told reporters traveling with the prime minister.

The official said Netanyahu was disappointed the speech did not address the Palestinian demand to repatriate to Israel millions of Palestinians, most descendants of people who were driven from or fled homes in the war over the Jewish state's 1948 creation.

"There is a feeling that Washington does not understand the reality, Washington does not understand what we face," the official said.

Obama's stance on the 1967 borders was not a major policy change, since the U.S — along with the international community and even past Israeli governments — previously endorsed an agreement building on the 1967 lines.

But it was the first time he'd explicitly endorsed those borders as a starting point, a position Netanyahu rejects. Obama said Israel can never be a truly peaceful Jewish state if it insists on "permanent occupation." But he did say the 1967 borders should be accompanied by land swaps agreed to by both sides, which could accommodate existing Jewish settlements.

Obama was unsparing, too, in his words for the Palestinian leadership, repudiating its pursuit of unilateral statehood through the United Nations and questioning its alliance with a Hamas faction bent on Israel's destruction. It was not immediately clear, however, whether Obama's statement on the 1967 borders as the basis for negotiations — something the Palestinians have long sought — would be sufficient to persuade the Palestinians to drop their quest for U.N. recognition.

Obama's blunt attempt to steer the peace effort was a major change in tactics from a president who has avoided imposing any U.S. plan but is now running out of patience and reasons to be subtle. Seeking to shake up a dynamic of mutual blame for the stalled peace talks, Obama pushed both sides to accept his starting point — borders for Palestine, security for Israel — and get back to solving a stalemate "that has grinded on and on and on."

"The international community is tired of an endless process that never produces an outcome," the president said Thursday at the State Department. "At a time when the people of the Middle East and North Africa are casting off the burdens of the past, the drive for a lasting peace that ends the conflict and resolves all claims is more urgent than ever."

That doesn't mean resolution is anywhere in sight.

Ahead of his trip to Washington, Netanyahu delivered a speech to his parliament in which he made clear his opposition to talks with a newly constituted Palestinian government that shares power between the mainstream Palestinian Fatah faction led by Mahmoud Abbas and the radical Hamas movement that rules Gaza. He also made a series of demands that the Palestinians — and especially Hamas — are not likely to meet. Among them were dropping their claim to east Jerusalem, their would-be capital, and recognizing Israel as the Jewish homeland.

Palestinians, for their part, refuse to negotiate while Israel continues to expand Jewish enclaves in the West Bank and east Jerusalem, which the Palestinians want to be part of an eventual state. Israel refuses to freeze settlement construction, saying the matter should be resolved through negotiations.

With talks at a standstill, the Palestinians are planning to unilaterally take their bid for statehood to the United Nations in September, a step Obama rejected Thursday, saying, "Symbolic actions to isolate Israel at the United Nations in September won't create an independent state."

But Obama had no solution to the question of Hamas, and no blueprint for how to solve enormous conflicts over the status of Jerusalem and the fate of Palestinian refugees. The border issue, he conceded, was just a start.

Netanyahu: 1967 borders can't be defended
19 May 2011

JERUSALEM – Israel's prime minister has rejected a key aspect of President Barack Obama's policy speech, saying that a return to his country's 1967 borders would spell disaster for the Jewish state.

In a statement released late Thursday, Benjamin Netanyahu called the 1967 lines "indefensible."

The tough stand could set the stage for a tense meeting Friday when Netanyahu goes to the White House.

In his speech, Obama said a future Palestinian state must be based in territories captured by Israel in the 1967 Mideast war, with minor adjustments reached through negotiations.

Netanyahu said such a withdrawal would jeopardize Israel's security and leave major West Bank settlements outside Israeli borders.

Obama tells Israel: Go back to 1967 borders
Ben Feller, AP White House Correspondent
Published 05/19/2011 12:00 AM
Updated 05/19/2011 01:20 PM

WASHINGTON — Trying to advance debate in the explosive Middle East, President Barack Obama on Thursday endorsed a key Palestinian demand for the borders of its future state and prodded Israel to accept that it can never have a truly peaceful nation that is based on "permanent occupation."

Obama's urging that a Palestinian state be based on 1967 borders — those that existed before the Six Day War in which Israel occupied East Jerusalem, the West Bank and Gaza — was a significant shift in U.S. policy and seemed certain to anger Israel.

Israel has said an endorsement of the 1967 borders would prejudge negotiations. Obama will meet at the White House on Friday with Israeli President Benjamin Netanyahu.


After Bin Laden: A Stronger America
2 May 2011

President Obama walked down an empty corridor to the East Room of the White House on Sunday night to announce the killing of Osama bin Laden. It was like he was walking out of a forgotten dream. Remember that quest we began nearly 10 years ago? Remember "dead or alive"?

Obama spoke quickly, recalling the trauma of 9/11 and the unity. "We went to war against al-Qaeda," he said - waking a memory. That's right. That's the enemy.

Al-Qaeda is vague and formless and dispersed. The U.S. never waged such a war against such an enemy before. "We went to war against al-Qaeda," Obama said, and with nearly 10 years of struggle under our belts we realize now what a weighty declaration that is.

He spoke of "tireless work" over many years all around the world. But he also took credit - in the form of a half-hinted mystery story that will trickle out over hours and days and years and decades. Among other things, Obama's announcement of bin Laden's death will surely be the opening lines of a great historical drama.

"Shortly after taking office, " Obama said, he told CIA Director Leon Panetta to make bin Laden Job One. By last August, the CIA had "a possible lead." A world of excitement in three words - "it took many months to run this lead to ground."

By now you could feel the clock ticking on justice. Bin Laden's time was running out. "Finally last month" … "today at my direction" … "killed Osama bin Laden and took custody of his body."

The fact that "no Americans were harmed" closed the loop in cinematic perfection. The world will greet the killing of bin Laden with a mixture of delight, fatigue and cynical objection. Even at home, some may ask how much it matters.

Sure, bin Laden was alive, but he wasn't doing much damage - not compared to the parade of horrors he unfolded in the late 1990s and, worst of all, on Sept. 11, 2001. Why does it matter that he's gone?

It matters because the U.S. put a marker down. "Dead or alive," in the words of President George W. Bush, when the smell of smoke was still acrid in the nostrils of the nation. This was cowboy rhetoric, the critics later said - but when the President said it, nearly everyone in the country was feeling pretty damn cowboy.

It matters because it took a long time. How many distractions have blown past our gaze since bin Laden was Public Enemy No. 1? From the invasion of Iraq to the bombing of Libya; from Somali pirates to the rise of China; from Pelosi to Boehner - the public gaze whipped back and forth like eyeballs at a tennis match. But this tells us that the U.S. can set a goal and reach it.

It matters because people had begun to doubt whether American power was truly power; and to ask whether its day was past. In that equation, Osama bin Laden was a unsettling factor, even though his own power was diminished. As long as he was free, the U.S. was failing. It was that simple.

Remember bin Laden's own mathematics: "When people see a strong horse and a weak horse, by nature, they will like the strong horse," he said in the aftermath of his attack on the U.S. As long as he was out there, people would see a strong horse.

It matters because the more we learn about bin Laden's story, the better we understand how hard it is to find one human being on a planet of 6 or 7 billion human beings. This was not an easy thing. It's not surprising that it took 10 years.

Most of all, it matters because we have other big, difficult, long-range problems to solve, and we were running out of role models. The fact that this country can still fix a bulls-eye on a difficult target and stay on it for a long, frustrating decade - and win when no one expects it - is big stuff.

Maybe that weak horse isn't so weak after all. Maybe that weak horse is built for the long run.

That was the note President Obama sounded at the end of his speech. "America can do whatever we set our mind to. That is the story of our history."

He continued: We can do these things not just because of our wealth or our power, but because of who we are: one nation, under God, indivisible, with liberty and justice for all."

Then he turned and walked back down the empty corridor, a stronger President of a stronger nation.

Connecticut's new DC lobbyist plans to 'ramp up' state's presence
Deirdre Shesgreen, CT MIRROR
March 2, 2011

WASHINGTON--The state of Connecticut has had a lobbyist in Washington for years. But she hasn't exactly had a high-profile on Capitol Hill.

"I very briefly met a woman who was [former Gov. Jodi] Rell's person, but I never got to know her at all," said Rep. Jim Himes, D-4th District. "There was very little interaction between the delegation and [Connecticut's Washington] office."

Gov. Dannel Malloy hopes to change that. On Wednesday, he tapped a new advocate to head the state's D.C. office, Dan DeSimone. In an interview, the 40-year-old Washington native said he has a very clear mandate from Connecticut's governor.

"One is to really ramp up the operations of the Washington office," DeSimone said, "to have the presence of the Washington office working not just with the delegation, but with congressional leadership and especially with the Administration."

The goal, he said, is "to really make sure that Connecticut, as a donor state, begins to close that gap" between what its residents pay in federal taxes and what the state gets back in federal aid.

Malloy said in his announcement that DeSimone, whose salary will be $105,000, has the right mix of professional experience and political know-how for the job. "His expertise will help Connecticut aggressively re-position itself and ensure we are taking every opportunity to make Connecticut strong again," he said.

Malloy's office has signaled that for now, DeSimone will be a one-man operation. But they've left open the possibility of hiring outside firms to help with targeted advocacy efforts, DeSimone said.

He will officially start on March 14, working from Connecticut's current D.C. office, just a few blocks from the U.S. Capitol. He comes to the job well-versed in state-federal advocacy, as he spent the last two years heading the state of Oregon's Washington office.

In that job, he worked on everything from the stimulus bill to transportation issues, trying to make sure Oregon benefited, in terms of policy and dollars, from decisions made in Washington.

DeSimone, a rail-thin father of three (including a 2 ½ week old baby), has politics in his DNA. His mother was a former aide to Sen. Paul Douglas, the Illinois Democrat and civil-rights crusader. His father, Daniel V. DeSimone, led the federal Office of Invention and Innovation, and authored the 1971 report calling on the U.S. to move to the metric system.

The youngest of three, Dan DeSimone said he's the only one of his siblings who caught the political "bug" from his parents and stayed in Washington. Just out of college, he took a low-level job as a congressional aide with then-Rep. Jill Long, a Democrat from Indiana, and eventually became her legislative aide for budget, tax, and other issues.

Long was swept out in the 1994 Republican revolution, and DeSimone too. He's worked in a variety of political and policy jobs since, including a stint as the top lobbyist for the National Association for State Treasurers.

But it's his job as Oregon's lobbyist that has the most relevance now as he prepares to work for Malloy's office. DeSimone noted that the congressional delegations are similar--small and almost all Democratic.

To be sure, his biggest challenge will probably not be learning a new region or new political faces.

"It's the economic climate," said Julie Williams, the current director of Connecticut's Washington office. Williams, hired eight years ago by then-Gov. John Rowland, is now winding down her tenure.

She defended the state's Washington advocacy efforts under the previous GOP governors. She said Rell just had "different priorities" in Washington than Malloy, who she said wants to be "really aggressive" when it comes to federal funding.

Williams said the crop of new governors elected last year seem to be divided into two camps when it comes to Washington: those who are pulling away and even rejecting federal funds, and those who are doubling their efforts to get their piece of a shrinking pie.

Malloy falls into the latter camp. "I will not hide the fact that I intend to be a player in Washington in these very difficult times," Malloy said last week during a visit to D.C. for a meeting of the National Governors' Association. "I hope to have people scouring every part of the budget to see where we can get money."

He's taking that stance even as the main focus in Congress is on cutting the federal budget, with aid to states a key target. Plus, lawmakers in both chambers have sworn off earmarks, the special funding provisions that allow lawmakers to channel federal dollars to home-state projects.

"The environment's going to be ugly, but we should still fight for our share," said Himes.

Himes and others in the delegation said they were cheered by Malloy's aggressive approach.

"I've met more times with Dan Malloy in two months than I did with the previous governor in 4 years," said Rep. Chris Murphy, D-5th District. "I'm ecstatic at the focus that Governor Malloy has put on selling Connecticut in Washington."

Rep. Joe Courtney, D-2nd District, said it was "very realistic" for Malloy to try to get more money from Washington despite the fiscal belt-tightening.

"It's true that this is a time of retrenchment and control of the Congress is now divided," Courtney said. "But that doesn't mean that individual programs' spending decisions still don't have a lot of latitude... So I think it would be a mistake to view this place as closed for business."

DeSimone said there's no question that a key part of his job will be making Connecticut's case with the Executive Branch, seeking grant opportunities and the like. In Congress, he conceded, "it's going to be a lot of defense."

Shutdown’s ‘essential’ question: Which workers are indispensable?
By Sean Lengell, The Washington Times
9:00 p.m., Thursday, February 24, 2011

As Washington and the nation brace for a possible government shutdown next week, federal agencies are scrambling to determine how many "essential" workers will stay on the job.

In Oklahoma, a federal employees union has notified the government that it wants its civilian workers at a military base deemed essential, given that the country is fighting two wars. In the District of Columbia, Delegate Eleanor Holmes Norton has crafted legislation to make sure a shutdown won't halt city services.  Across the government, bureaucrats are trying to decide just who qualifies as essential personnel, earning the right to continue working even as the rest of the government gets furloughed.

During the most recent federal shutdowns, some agencies kept more than half their staffs on the job.  The federal government is funded through March 4, and congressional Democrats and Republicans have failed to reach an agreement on an extension.  The standoff raises echoes of the 1995-96 government shutdown that cost newly ascendant congressional Republicans dearly.

However, the public of 2011 is closely divided on who is trying to avoid a government shutdown.

According to a Gallup poll taken Tuesday and released Thursday, Republicans have an edge — albeit a statistically insignificant one — over President Obama and congressional Democrats on the matter of which party is "doing the better job in the current efforts to agree on a new federal budget."

Among the 1,004 adults surveyed, 42 percent said Republicans are doing better, compared with 39 percent for Democrats, though that edge is within the poll's error margin of 4 percentage points.  If a deal isn't struck by the deadline, thousands of government employees throughout the nation — including National Park Service rangers and Washington bureaucrats — could be told to stay home.  Essential services such as air traffic control and overseas combat would continue in full operating mode, but just what else is "essential" is a matter of debate.

The American Federation of Government Employees has asked the government to exclude its civilian workers at Oklahoma's Tinker Air Force Base from any furloughs resulting from a shutdown, saying its members are vital to national security.

"The difference between the government shutdown of 1995-96 and now is that our country is fighting in two wars," said AFGE Local 916 Legislative Director R. Bryan Jackson. "The mission for all Tinker employees is to maintain war-fighter readiness. We cannot let a funding issue jeopardize the safety of the men and women fighting overseas."

The Defense Department, like other agencies, did not comment specifically on how many of its personnel would continue working worldwide during a shutdown. But a spokesman said the department would "do everything we have to do to continue to support the deployed troops."

"The department must also continue many other operations necessary for the safety of human life and protection of property," said spokeswoman Cmdr. Kathleen Kesler. "These types of activities will be 'exempt' from cessation. All other activities would need to be shut down in an orderly and deliberate fashion."

In the nation's capital, Mrs. Norton on Thursday submitted a bill to House and Senate leaders to allow the District to spend its local taxpayer-raised funds if the federal government shuts down.  Mrs. Norton said most members of Congress are "completely unaware" that the D.C. government would shut down if the federal government closes. D.C. workers would be affected because the city's affairs are administered under federal authority.

"We are sure there is no congressional intention to close down the District's local government because of congressional disagreement over the federal budget," the Democrat said.

Mrs. Norton said she and city leaders are looking into other ways to keep the D.C. government operating in the event of a federal shutdown.

"This is not the District's fight, and there is nothing the District could do to resolve a disagreement over federal spending," she said.

The federal government was shut down for five days in late 1995 and 21 days in 1995 and early 1996. On Jan. 2, 1996, the estimate of furloughed federal employees was 284,000. Another 475,000 federal employees, rated "essential," continued to work in a nonpayment status.

Federal agencies are required to submit plans to the White House Office of Management and Budget (OMB) regarding how they would operate under a shutdown, including the number of employees to be retained. Although OMB hasn't released details of those plans, agency contingency plans from 1995 give an indication as to what could be expected.  In a 1995 report prepared by the U.S. Government Accountability Office, the Commerce, Justice and State departments collectively were set to retain 63.8 percent of their workers, with 36.2 percent subjected to furloughs.

The report also showed 52.7 percent of Interior Department workers would stay on the job, while the Health and Human Services Department would keep 42.4 percent of its workers active.  A whopping 78.1 percent of employees collectively would be retained from the Veterans Affairs and Housing and Urban Development departments, as well as independent regulatory agencies, the 1995 report said.

The Obama administration says it's hopeful a shutdown can be averted but is preparing for the worst.

"We're confident that we can find the common ground that we need to find in order to avoid a government shutdown, and that [congressional] leaders in both parties agree that that's what we need to do," White House press secretary Jay Carney told reporters Thursday.

The White House has said some recent retirees may not receive their Social Security payments if operations shut down.  Mr. Carney added that such a move would hurt the nation's fragile economy.

"The broader point is that the uncertainty created by this, the number of consequences that could unfold if this does happen, would create the kind of environment that would be harmful to the economy overall," he said.

One agency that wouldn't be affected by a shutdown is the Postal Service, which is a self-sufficient entity of the U.S. government that doesn't directly receive taxpayer dollars.

© Copyright 2011 The Washington Times, LLC. Click here for reprint permission.

WHO HAS LEFT SO FAR (Oct. 2010)?
The Executive Branch is the new President's first responsibility...Treasury building looks like Supreme Court!

There are three branches of government in the United States of America...Executive Branch (White House); Legislative Branch (Congress ); Judicial Branch (Supreme Court)

EXECUTIVE BRANCH:  The Cabinet and links to the department webpages

The rest of the team...and their webpages.   LOTS OF CHANGES HERE, TOO

OBAMA CABINET:  Other offices, too (some still open);  As it was being assembled, news reports and "teams" concept played out, some had problems with taxes;  and that story is here. Or just click on picture of Cabinet Officers below and go directly to their story.

The Cabinet:  Watch for changes as confirmations come in in 2013.

Attorney General
Health and Human Services
Housing and Urban Development
Veterans Affairs
United Nations Representative

Plus (click here for photos): Highlight on Health Care :  Medicare and Medicade Office recess appointment story - warning: opinion not necessarily that of this website

U.S. Trade Representative
Office of Management and the Budget (O.M.B.)
Environmental Protection Agency (E.P.A.)
Federal Communications Commission (F.C.C.)
Federal Trade Commission (F.T.C.)
Drug Control
Food and Drug Administration (F.D.A.)
Security and Exchange Commission (S.E.C.)
Commodities Futures Trading Commission
Small Business Administration
National Security Advisor (center)
Solicitor General
Surgeon General

New posts: 

Dodging a health-care fight
Last Updated: 5:03 AM, July 8, 2010
Posted: 1:07 AM, July 8, 2010

On Tuesday, the Obama ad ministration decided to do something rather peculiar, somewhat shocking and politically fascinating: It circumvented the process by which the Senate advises and consents on executive-branch nominees.

The move, which seems unprecedented in subtle but important ways, promises increased chaos in Washington -- but also hope on health care.

President Obama wants a distinguished doctor named Donald Berwick to head up the office that administers Medicare and Medicaid -- two of the most expensive programs in the federal government. Ordinarily, the nomination would have gone through the process known as "confirmation," with a hearing before the Senate Finance Committee followed by a full vote of all 99 senators. (One seat is vacant due to the death of West Virginia's Robert Byrd.)

Instead, Obama decided to invoke his constitutional authority to appoint Berwick (and two other officials of lesser moment) to his post without having to be confirmed by the Senate. This is possible only when Congress is not in session, as is the case right now, and it's called a "recess appointment." It is designed to be temporary; it is valid only until that session of the Congress adjourns, which in this case will come at year's end.

Past presidents have resorted to recess appointments when they believe a nominee's appointment has been subjected to unjust political and ideological gamesmanship. And the White House said it was resorting to the recess appointment because of Republican recalcitrance.

"Many Republicans in Congress have made it clear in recent weeks that they were going to stall the nomination as long as they could, solely to score political points," Communications Director Dan Pfeiffer said on the White House blog Tuesday.

That was astoundingly untrue. The only way Republicans, who have 41 votes in the Senate compared to 58 for the Democrats, could have "stalled" the nomination would have been to organize a filibuster, and that would happen only when the nomination came to the Senate floor.

They couldn't have blocked a favorable vote on Berwick's nomination from the Senate Finance Committee, which has 13 Democrats and 10 Republicans.

As ABC's Jake Tapper reported yesterday, "Republicans were not delaying or stalling Berwick's nomination. Indeed, they were eager for his hearing, hoping to assail Berwick's past statements about health-

care rationing and his praise for the British health-care system."

Democrats in charge of the Senate could have scheduled hearings at any time since the administration sent his nomination to the Capitol in April. But, Tapper reported, "neither Senate Majority Leader Harry Reid (D-Nev.) nor Sen. Max Baucus (D-Mont.), the chair of the Senate Finance Committee, were eager" to hold them.

That's what makes the administration's decision unprecedented in my nearly 30 years of closely following politics: I can't recall a preemptive decision to make a recess appointment ab sent a controversy, ugly political battle or contentious confirmation hearing.

And that's especially true when there's no indication there will be an effort to filibuster, which Democrats would likely have been able to override. (Berwick's credentials as a Harvard muckety-muck would have given the two Maine Republican moderate senators more than enough leeway to let him pass.)

So what's going on here?

First, it appears Obama likes to muscle things through. It makes him feel like he's cutting through the nonsense and getting things done.

This unorthodox and questionable move is of a piece with his administration's bullying of Chrysler creditors last year --

insisting, in contravention of eight centuries of common law, that the contracts those creditors signed with Chrysler should simply be ignored so as to get the United Auto Workers the deal it wanted.

But procedure, precedent and tradition exist for good reason; ignoring and undermining them blazes a path to political disorder.

Second, this is as glaring an admission as there is that Obama and his people know they've lost the public on health care. Rather than using these hearings to bolster popular support for the landmark legislation they rammed through in the spring, they can't bear to submit to public questioning about it.

By running away from this fight, Obama is signaling that the possibility of repealing the health-care monstrosity before it really begins to sink its teeth into the American system by 2014 is very real indeed.

United States of Czars
NYTIMES "week in review" staff borrowed this from...
Associated Press
May 25, 2009, 5:01 am

Today’s idea: Czars, czars — everywhere we have government czars. But of course, the term doesn’t quite describe technocrats who do little more than convey the aura of can-do urgent reform.

Nicholas II of Russia: Now there was a czar.Politics | Let’s see, there’s the energy czar, the border czar, the regulatory czar, the green czar, the car czar, the tech czar, the Guantánamo closure czar, the TARP czar, the stimulus czar …

Yes, “President Barack Obama is taking the practice of naming czars to new heights.” writes Katherine Mengu-Ward in Reason magazine — 18 by her count, in fewer than 100 days.

To be fair, the term “czar” is often just media shorthand for all the high-level brainiac specialization that the President feels needs to be focused pronto on the nation’s challenges. But what’s behind this activist, “best and the brightest” impulse?

“The appeal of the czar rests on the belief that if we could just figure out the right smart, competent, well-intentioned person to put charge, everything would go more smoothly,” Mengu-Ward writes. Which might be true if a czar were truly a czar instead of simply an impressive technocrat hemmed in by the usual forces, she adds.

“Rather than solving the problems they are appointed to grapple with,” she writes, “czars tend to wind up building or restructuring bureaucratic agencies, issuing a bunch of suggestions that may or may not be considered given the political climate, and then taking the blame when the problem isn’t solved by the end of their stint as a czar.”

Still, the term works for headline writers: It’s a four-letter word.

Safe Schools Czar
Manufacturing Czar from the union side...Green Czar out because he signed (although now decries), a pro-nonbelief 9-11 petition (no photo) - oops!
Regulatory Czar
White House coordinator for energy and climate (picture of Carol Browner)
Maybe not a new post, but an important one!
White House Office of Health Reform (Tom Daschle) - oops!  He is now a Kitchen Cabinet Czar (our term).
And more appointees to new and old spots...

Fox in the chicken coop?  And we don't mean FOXnews!
White House Names Manufacturing Adviser
By Derrick Henry
September 6, 2009, 11:37 pm

President Obama has named Ron Bloom as the administration’s senior counselor for manufacturing policy, the White House said Sunday night. The announcement came ahead of Mr. Obama’s planned remarks at the A.F.L.-C.I.O.’s annual Labor Day picnic in Cincinnati.

Since February, Mr. Bloom has been a senior adviser to Treasury Secretary Timothy F. Geithner. He sits on the president’s automotive industry task force. The White House said Mr. Bloom would continue that position and would expand his role to coordinate the administration’s manufacturing policy with the Commerce, Treasury, Energy and Labor departments.

The White House said Mr. Bloom would work with the National Economic Council to help lead policy development and strategic planning for “the president’s agenda to revitalize the manufacturing sector.”

“Ron has the knowledge and experience necessary to lead the way in creating the good-paying manufacturing jobs of the future,” Mr. Obama said in a statement released Sunday night. He cited the first expansion in the country’s manufacturing sector in 18 months as an early sign of economic recovery and part of his reasoning in naming Mr. Bloom to his new position.

The Institute for Supply Management’s survey of factories and industry had been edging higher this spring, as the pace of economic declines began to level off. In August, the group’s manufacturing index turned positive, rising to 52.9, from 48.9 in July.

A reading above 50 indicates expansion and growth; a number below 50 means economic contraction.

Before he joined the Treasury Department, Mr. Bloom was a special assistant to the president of the United Steelworkers union. Before that, he was a founding partner in Keilin and Bloom, an investment banking firm.

Mr. Bloom is traveling to Cincinnati with Mr. Obama, who is expected to talk at the picnic about Mr. Bloom’s position as well as the health care issue. Organized labor is an important constituency for Mr. Obama.

On Wednesday, Mr. Obama is scheduled to deliver a speech to Congress and the nation about his efforts to overhaul health care.

New post for ex-"green czar" - revising the tax code?

Embattled Obama Adviser Resigns
By JOHN M. BRODER , New York Times News Service
Published on 9/7/2009

Washington - White House officials on Sunday tersely accepted the resignation of Van Jones, the administration's special adviser for environmental jobs, after a number of his past statements became fodder for conservative critics and Republican officials.

Jones, a controversial and charismatic community organizer and “green jobs” advocate from the San Francisco Bay Area, signed a petition in 2004 questioning whether President George W. Bush's administration had allowed the terrorist attacks of September 2001 to provide a pretext for war in the Middle East.

He also used a vulgarity to refer to Republicans just before being appointed to his White House post early this year, and he has publicly supported Mumia Abu-Jamal, who is on death row for the murder of a Philadelphia police officer.

Jones was a relatively minor figure in the administration, in charge of a small White House program advocating for jobs in energy-efficient industries. But he threatened to become a significant distraction as President Barack Obama is planning a prime-time address on health care to a joint session of Congress on Wednesday night in an effort to regain traction on the issue.

Jones' hiring and departure raised questions about the quality of the White House personnel vetting process and the proliferation of so-called policy czars who are not subject to Senate confirmation or legislative oversight.

The Obama administration entered office promising the most thorough scrutiny ever of candidates for senior jobs, including an extensive questionnaire and time-consuming background checks that have left many senior posts vacant for months. But the process seems to have missed Jones' most inflammatory comments and associations, as well as the tax problems that scuttled the nominations of former Sen. Tom Daschle to two top health policy posts and Nancy Killefer as chief performance officer.

A White House official suggested that Jones' post was not seen as senior enough to warrant the full vetting given other officials. The official spoke on condition of anonymity because the authorized White House account was delivered by administration officials in televised interviews on Sunday.

The Radicalization of Obama's 'Green Czar'
Van Jones was arrested in San Francisco in 1992 for participating in a demonstration following the acquittal of four LA police officers accused of beating Rodney King.
Friday, September 04, 2009

The political radicalization of Van Jones, President Obama's "green jobs" adviser, dates back to 1992, when he and hundreds of others took their anger to the streets of San Francisco in the infamous Rodney King protests.

Jones, a Yale Law School student who was working in the Bay Area as an intern, was part of a mob that stormed the city following the acquittal in Los Angeles of four white police officers who had been charged with beating King, who is black, after a car chase.

In an essay he wrote soon after the rioting and republished in The Huffington Post in May 2007, Jones said he "just marched around and chanted slogans" as other protesters set trash cans afire, smashed car windows and threw rocks at passing motorists. But he clearly reveled in the protest.

"Our moment had finally come! We were righteous, fired up, weren't takin' no more!" Jones wrote. "We were one thousand strong on Market Street, with the Bay Bridge shut down in rush hour traffic and the grounds around the state building swarming with angry mobs! Our rallying cry was for justice; our demand was that the System be changed!"

Jones continued, "Yes, the Great Revolutionary Moment had at long last come. And the time, clearly, was ours! So we stole stuff. Y'know, stole stuff. Radios, tennis shoes. Well, not everybody, of course."

Days after he wrote the essay, Jones was arrested along with hundreds of participants in a "peaceful protest" march.

Charges against him ultimately were dropped, and he says he received a "small" settlement.

"I was arrested simply for being a police observer," he later said.

Jones, in the piece he wrote for The Huffington Post, said his essay "captures the pain, frustration and aspirations of a much younger person. But I think it speaks well to the thought process of many young activists at the time."

"But the incident deepened my disaffection with the system and accelerated my political radicalization," he wrote. "The political agenda I articulated for myself and my generation in this essay remains largely undone and incomplete."

Indeed, Jones' "disaffection with the system" appeared to continue. In a June 2008 speech to the National Conference for Media Reform, Jones blasted a proposed prison in Memphis that he compared to a "huge slave ship on dry land."

"You don't have to call somebody the n-word if you can call them a felon," Jones said in the speech, which can be seen on YouTube . "The fight against this new Jim Crow, this punishment industry, where for-profit prison companies are now being traded on the stock exchange ... that struggle is being met as it was 40 years ago."

In his 2007 reflection on the aftermath of King's beating, Jones said he was among those who chanted "no justice, no peace" during the "understandable, unavoidable, even necessary" riots.

"These riots were not revolution; without revolutionary values and revolutionary organization, they were merely sharp outcroppings of the systemic chaos that social injustice breeds," Jones wrote. "But flashpoints of rage can never substitute for radical social vision or grassroots coordination."

Jones, the founder of Green for All, which focuses on creating environmentally friendly jobs in poor areas, continues to be a focus of President Obama's critics after video surfaced of him referring to Republicans as "assholes" and it was revealed that he once joined the "9/11 truther" movement, which contended that the Sept. 11, 2001, terror attacks might have been an inside job by the Bush administration.

In 2004 Jones signed a statement calling for then-New York Attorney General Eliot Spitzer and others to launch an investigation into evidence that suggests "people within the current administration may indeed have deliberately allowed 9/11 to happen, perhaps as a pretext for war."

The statement asked a series of critical questions hinting at Bush administration involvement in the attacks and called for "deeper inquiry." It was also signed by former Georgia Rep. Cynthia McKinney and Code Pink co-founder Jodie Evans.

Jones distanced himself from the position on Thursday, saying, "In recent days some in the news media have reported on past statements I made before I joined the administration -- some of which were made years ago. If I have offended anyone with statements I made in the past, I apologize. As for the petition [9/11 statement] that was circulated today, I do not agree with this statement and it certainly does not reflect my views now or ever."

An aide to Jones told FOX News he "did not carefully review the language in the petition." The aide did not say when Jones signed the petition or when he became aware of the controversy.

Thursday's apology followed Jones' mea culpa on Wednesday, when he expressed his remorse for "offensive words" he uttered in February, when he called Republicans "assholes." He said those remarks "do not reflect the views of this administration" and its bipartisan aims.

White House Press Secretary Robert Gibbs limited his remarks about Jones on Friday, saying only that he "continues to work in this administration." As to the Sept. 11 conspiracy theorists, Gibbs said, "It's not something the president agrees with."

At least one congressman, U.S. Rep. Mike Pence, R-Ind., has called for Jones' resignation.

Democratic strategist and FOX News contributor Bob Beckel predicted that Jones would be out of a job by Labor Day, and he wondered how Jones got the "czar" post in the first place.

"He's got every right in the world to be a self-avowed communist, but the Secret Service would no more allow a self-avowed communist into the White House as they would Charlie Manson, so that's what I don't get," Beckel said.

"There's something more in here about the breakdown of the system. Yes, it broke down with the Obama administration, but it also broke down with those people who are responsible for doing the background check," he added.

FIRST TERM TEST, FOR THE MOST PART:  Have you been paying attention to the news re:  sub-cabinet spots?
Appointments at lesser than Cabinet status, but really, really important!  And stories that went along with the appointments.

Which ones gone now?

Which ones changed jobs, moving up?

Brain trust above, in on photo (or separate link in those cases):
Sub-cabinet appointments of importance: S.E.C., Federal Reserve Board seat, Commodities Futures Trading Commission, Small Business Administration, head of the FCC, Director - Office of Science and Technology, NOAA. Then we have the appointees with Doctorates (besides Dr. Chu of Energy) Co-Chair, Council of Advisors on Science and Technology (and a Nobel Prize winner), genome man.  C.I.A. Director Panetta?  (Note the trench coat!)  Solicitor General Elena Kagan (Harvard Law School Dean).  Climate Change Envoy (from State Department) Stern (any relation to this one?).  And most recently, appointment of Commissioner Liebowitz of the F.T.C. as its Chair.  And here is the Drug Czar (Seattle Police Chief);  CT DEP Commissioner to Washington!  And the FDA chief, from N.Y.C., and CT's own DEP Commissioner to EPA staff position.  C.D.C. head also from N.Y.C.  Dr. Benjamin (Regina, from Alabama) named Surgeon General;  Manufacturing Czar and departed "green" czar story.  F.E.R.C. gets new chief, too!  (a group with power over L.I.S.!

Power grid chief touts electric-car payback

By Steve Gelsi, MarketWatch

Sept. 24, 2009, 11:02 a.m. EDT

NEW YORK (MarketWatch) -- U.S. power grid chief Jon Wellinghoff is touting the long-term cost savings of electric cars, saying the vehicles could earn $1,500 a year in paybacks for their owners when their batteries are connected to the power grid.

While electric cars planned for U.S. market in the next few years will likely carry heftier price tags than many gas-powered cars, Wellinghoff agued at an investor conference this week that owners of plug-in vehicles will benefit from much lower costs for filling up, cutting down the long term cost of operation.

On top of saving at least $3 or $4 a gallon on gasoline, Wellinghoff, chairman of the Federal Energy Regulatory Commission, said grid operators and power companies could reimburse car owners for the battery storage offered by the roughly 22 hours a day that electric cars would be connected to the nation's power system.

"Plug-in hybrids could help stabilize the grid and make money for their owners," said Wellinghoff, who spoke at Knight Capital Group's "Electrifying Transportation" conference for institutional investors on Wednesday.

Wellinghoff, a lawyer who specializes in energy issues before becoming FERC chairman earlier this year, cited positive moves into green energy under President Barack Obama, who addressed climate change in a major United Nations speech this week. Obama elevated Wellinghoff to the FERC chairmanship.

The Obama administration awarded a $529 million government loan to Fisker Automotive to build electric cars earlier this week. Tesla Automotive and others have also received hundreds of millions of dollars under government stimulus programs.

On the heels of other government subsidies, lithium-ion battery maker A123 Systems Inc. drew strong interest in its initial public offering on Thursday. See full story.

While the electric car industry remains in its infancy today, proponents of plug-in vehicles expect millions of models on the road in the next 10 years that could collectively add to the nation's power storage capabilities.

Sharing the main points of his chapter in the book "Plug-In Electric Vehicles," edited by David Sandalow, Wellinghoff said growth of solar and wind energy in the U.S. will create a greater need for storage capacity on the grid to smooth out surges in power.

Electric car batteries could help take up the storage slack, along with flywheel systems.

Wellinghoff was joined at the conference by Knight Capital CEO Tom Joyce, who said he drove an electric-powered Tesla before the meeting and it was "possibly the coolest car I've ever been in."

Other speakers included venture capitalists Chelsea Sexton of VantagePoint Venture Partners and Dhiraj Malkani of RockPort Capital.

Speakers at the conference were bullish on investments in the electric-car sector.

Sexton said electric cars are "cool, fast and fun" and that gasoline hybrid cars have managed to capture about 3% of the car market.

Malkani said most U.S. consumers adopted quickly to cell phones and GPS systems and that electric vehicles will offer the benefit of avoiding gas stations and fueling at home. "We all could be pleasantly surprised," Malkani said.

Alabama Physician Chosen as Surgeon General
By Gardiner Harris
July 13, 2009, 11:11 am

President Barack Obama has selected Dr. Regina Benjamin, an Alabama family physician, as the U.S. surgeon general, two administration officials said on Monday.

Mr. Obama will announce his selection officially at a Rose Garden ceremony at 11:40 a.m.

An African-American, Dr. Benjamin is nationally known for establishing a rural health clinic in Bayou La Batre, Ala. — a small, medically underserved shrimping village along the Gulf Coast. Hurricana Katrina destroyed the clinic in 2005, and then when it was rebuilt, the clinic burned down on the eve of re-opening.

In 2002, she became the president of the Alabama Medical Association, making her the first African-American woman to be president of a state medical society in the United States. In September, she was one of 25 recipients of the $500,000 “genius awards,” awarded by the John D. and Catherine T. MacArthur Foundation.

She completed her residency in family medicine at the Medical Center of Central Georgia. She is a graduate of Xavier University, Morehouse School of Medicine and the University of Alabama School of Medicine.

The titular head of the U.S. Public Health Service, the surgeon general is a largely ceremonial post used by numerous administrations to communicate important health messages to the public. The office itself has only a handful of staff and must rely for research and support on the National Institutes of Health and the Centers for Disease Control and Prevention.

But the uniform of the surgeon general invests its wearer with credibility in the public’s eyes and has often led the wearer to distance themselves from the political priorities of the administration.

Nominated to replace Gensler.
Then CFTC Chair. Gary Gensler illustrating the game of chicken being played with the economy (r).

Obama to Nominate Massad as CFTC Chairman Gensler Successor
Bloomberg News
By Silla Brush - Nov 12, 2013 4:28 PM ET

Timothy Massad, the Treasury Department official responsible for overseeing the U.S. rescue of banks and automakers after the credit crisis, will be nominated to head the country’s top derivatives regulator.

President Barack Obama chose Massad, 57, to succeed Gary Gensler as chairman of the Commodity Futures Trading Commission, an agency with expansive new authority under the 2010 Dodd-Frank Act. His nomination requires Senate confirmation...full story here.

The Little Agency That Could
November 15, 2013

One of the big criticisms of the original team of financial regulators brought in by President Obama is that too many of them had worked in Bill Clinton’s Treasury Department. That, of course, was the Treasury Department run by Robert Rubin and then by Lawrence Summers — an agency with a bias toward deregulation. Those regulators had supported the elimination of Glass-Steagall, the 1930s law that separated investment banks from commercial banks, and were disinclined to regulate derivatives, “those financial weapons of mass destruction,” as Warren Buffett liked to call them.

One of those old Rubin hands was Gary Gensler. An 18-year veteran of Goldman Sachs, Gensler had been the assistant secretary of financial markets under Rubin, and then later undersecretary for domestic finance, and he shared his boss’s deregulatory bias.

When President Obama was picking his regulatory team, he chose Gensler to be the chairman of the Commodities Futures Trading Commission. Now, Gensler is about to leave that post. And if people once doubted how tough he would be as a regulator, there is no doubt now: he may well be the single best appointment Obama made.

When he came into office, the C.F.T.C.’s job was to regulate the futures market. It was a small agency, with fewer than 700 employees. Then came the Dodd-Frank reform law, which gave the commission enormous new responsibilities. It was charged with writing dozens of rules to regulate derivatives, and to oversee a $400 trillion market. “I hadn’t realized how much authority was delegated to regulators,” he said. But he embraced the challenge. Derivative trades had always been conducted in the shadows; Gensler brought them into the light.

“Today there is the modern version of a ticker tape, with the price and volume of every transaction,” he says. “There is transparency in the market. That is what I’m most proud of.” One of the scariest aspects of the financial crisis was that the government had no idea, for instance, that A.I.G. held a giant portfolio of credit default swaps that were poised to blow up the financial system.

Thanks to the trading commission’s new rules, the government now has a good feel for the derivatives market. And the added transparency has also had the effect of lowering prices, which is what inevitably happens when all the market participants can see what is being bought and sold. Although the banking industry pushed back hard against some of the new rules, Gensler says that there was nothing radical about the new transparency. “Adam Smith wrote that the community at large benefits when you can make information and access free.”

If regulating the derivatives market were all Gensler had done, it would have been plenty. But the C.F.T.C. was also the agency that cracked the Libor scandal. A few months after being sworn in, in May of 2009, he saw an article about Libor — the interest rate banks charge to each other for interbank lending — that piqued his curiosity. “I asked our head of enforcement — should we look into this?” The result, three years later, was the unveiling of an enormous scandal involving traders at more than a dozen financial institutions.

“I remember thinking that if it’s true” — that the Libor rate was being manipulated by traders — “that is a really bad thing,” he told me. “It is completely central to the C.F.T.C. Two-thirds of the swaps market is pegged to the Libor rate.”

“It took 20 months before we had actionable evidence,” Gensler recalled. “For two and a half years, I was constantly challenging the staff: ‘How do we bring this case? How do we get it into the public arena?’ ”

That finally happened last year, when Barclays agreed to pay a fine of $450 million for manipulating the Libor rate. Subsequently, the C.F.T.C. has settled with five other financial institutions. A handful of traders have been indicted.

Just as important, in Gensler’s view, regulators have started talking about finding ways to replace Libor. Many regulators now believe that the Libor rates, even in the best case, are little more than a guess. After all, banks don’t really borrow from each other — not without collateral — so they don’t really use the Libor rate. With so many financial vehicles pegged to the Libor rate, it is important that it be a number people can have faith in.

As we neared the end of our talk, Gensler circled back again to the size of the agency. Despite all its new responsibilities, the C.F.T.C. was never given additional resources by Congress. Its budget has stayed largely flat. “We had to shrink 41 positions because of sequestration,” he said. “We only have 36 more people than we had 20 years ago.”

“The president put a lot of faith in this little agency,” said Gensler. Not to mention the man who ran it.

Appeals court dismisses suit over new CFTC rule
21 Jan. 2012

WASHINGTON (Reuters) - An appeals court has dismissed a lawsuit by the financial industry challenging new federal regulations aimed at cracking down on speculation in commodities markets, a move that will likely delay a decision over whether the rules pass muster.

The Securities Industry and Financial Markets Association and the International Swaps and Derivatives Association in December filed challenges to the regulations adopted last year by the Commodity Futures Trading Commission.

The U.S. Court of Appeals for the District of Columbia Circuit dismissed the lawsuit saying that the case must first be heard by a lower court, an argument advanced by the CFTC.

"There is no express congressional authorization of direct appellate review applicable to the petition for review in this case," the three-judge panel said in a brief order issued late on Friday.

They said that federal laws provided for appellate review for other agency action but not the challenged regulation.

The CFTC voted 3-2 in October to set "position limits" on the number of commodity futures and swaps contracts that a trader could hold. It has been decried by traders as a politically motivated effort to cap prices that will make markets less liquid and more volatile.

The two trade groups sued to block the new rules arguing that the CFTC exceeded its authority and that the regulations were not adequately justified.

The CFTC had argued that the case should first be heard by the U.S. District Court for the District of Columbia. Once that court hears the case, whatever decision reached there can be challenged at the appeals court, a lengthier process.

The industry groups already have filed a challenge at the district court, but it was put on hold pending a decision by the appeals court on whether it would hear the case.

Representatives for the industry and the CFTC were not immediately available for comment.

Still Writing, Regulators Delay Rules
June 15, 2011

Regulators overseeing financial reform are delaying many of the planned changes in the immense market for complex securities known as derivatives because they are running drastically behind schedule in writing their new rules.

The Securities and Exchange Commission said on Wednesday that market participants would not have to comply with many aspects of derivatives reform scheduled to take effect in mid-July. It declined to specify how long the delay would be in the equity derivatives it oversees.

The announcement follows a similar statement on Tuesday from the Commodity Futures Trading Commission, although that agency imposed a year-end deadline for many of the changes in the derivatives it oversees.

The idea of changing the deadline had been divisive at the commodities commission. The two Republicans on the five-commissioner board had wanted to create an extension without a deadline. The Democrats, however, wanted a specific date to keep some pressure on the group to complete the rule writing, according to three participants in the meeting.

The commissioners ultimately agreed unanimously on the extension, but the dispute illustrates the political divide that has been brewing in Washington for months as regulators work to roll out hundreds of rules required by the Dodd-Frank financial reform legislation of last summer.

Though the Dodd-Frank measure was passed with bipartisan support, it has come under fierce criticism from many Republicans as well as some Democrats with financial constituents, who have urged regulators to slow the rule writing. Republicans are also trying to shave financing from agencies like the Securities and Exchange Commission and the Commodity Futures Trading Commission, which now have a larger workload in writing and enforcing scores of new rules.

Gary Gensler, the Democratic chairman of the trading commission, testified in Congress on Wednesday about the agency’s limited resources. In an interview, he pointed out that the derivatives market is seven times the size of the futures market, which his agency has long overseen.

“This agency has been asked to take on a very expanded mission,” he said. The decision this week to push back the derivatives deadline, he added, “was not about delay. It was just giving the market the certainty while we’re completing the rules.”

Regulators have missed more than two dozen deadlines for new Dodd-Frank rules, which cover a swath of topics, be it consumer protections in mortgage lending, bank responsibilities for dealing with city governments, or future resolution powers for troubled financial institutions. The legislation was the government’s main response to the financial crisis, and it is supposed to rein in Wall Street and reduce the kind of risk that led to the market implosion three years ago.

Observers say that the two delays this week make sense: with regulators so behind schedule, putting some of the rules into effect could be problematic. Still, regulatory experts warned that delays could be dangerous.

“Sounds like common sense to me,” said James J. Angel, a professor at the McDonough School of Business at Georgetown. “The regulators have this tsunami of work dumped on them, and it’s important to get it right.”

Still, he said, it is unclear whether the banks calling for a slowdown have legitimate concerns.

“You don’t know whether they’re just whining because they’re trying to get a few more pennies or if this is really Armageddon to them,” he said.

At hearings, bank officials have urged regulators to move slowly, saying that the rules will be better if created with greater care and consideration. The industry also has warned against what its officials call the “big bang” approach, under which many rules would take effect at once.

One difficulty is that many rules are related, and some rules drive others. Nowhere is this more true than in the derivatives market, where financial insurance contracts are written to protect against many different risks.

For instance, the rules to impose position limits in some commodities derivatives, like oil contracts, may depend in part on how much money financial players hold in different investments. But the commodities commission has been unable to demand all the data on these holdings — and the banks have not been volunteering — until it has written certain other rules and passed the one-year mark on the law.

The law specified that some derivatives rules would go into effect next month, no matter the status of rule writing, and those are what both financial commissions voted to delay this week.

At the commodities commission, Democrats and Republicans agreed that the July deadline for many rules was untenable because its staffers had not even finished defining terms like “swaps dealer” — an entity that buys and sells a type of derivative.

Jill Sommers, one of the Republican commissioners at the commodities regulator, said in an interview that she absolutely wants the rules to go into effect. But the commission needs to take its time, she said. “We didn’t want a date,” Ms. Sommers said. “We’re trying to makes sure we don’t miss anything. I think we need to be very deliberate.”

One of her opponents in the meeting was Bart Chilton, a Democrat. He said in an e-mail on Wednesday that he worried that having no deadline would take away much needed urgency. “We should be putting the hammer down and making up for lost time,” he wrote. “That means doing what the agency has done: given us a time certain — the end of the year — in which to complete our work.”

The commission has three Democrats, but one, Michael Dunn, has his term expiring this summer. He can stay on beyond that date, but if he chooses to leave, a successor is sure to face fierce confirmation questions in the Senate, where lawmakers are heavily divided on the new rules.

Ex-Physicist Leads Flash Crash Inquiry

WASHINGTON — As a doctoral candidate in physics at Princeton two decades ago, Gregg E. Berman spent a year and a half in a laboratory searching through subatomic data for an elusive particle called the heavy neutrino.

Now, from his small office at the Securities and Exchange Commission here, the former physicist is busy completing a similarly painstaking task, supervising a team of more than 20 investigators who have spent the last five months scrutinizing reams of stock-trading data and hundreds of interview transcripts in an effort to figure out why stock prices went into free fall for 20 terrifying minutes on May 6.

Their long-awaited report on the so-called flash crash, in partnership with the Commodity Futures Trading Commission, is due to be published in the next two weeks.

Mr. Berman, 44, will not say exactly what will be in the report, but he says that it will not simply restate what regulators have already said — that markets were volatile because of worries over the debt crisis in Europe, causing some computerized trading programs to stop trading, and finally causing computers on other exchanges to misread the pullback as a rapid bidding down of stock prices.

Instead, he says, the report will zero in on a specific sequence of events that preceded the crash. He says it will tell a clear story about what happened in the markets on that stomach-churning day, beyond simply pointing a finger at the perils of the kind of high-speed computer trading that dominates today’s markets.

“The report will clearly demonstrate how market conditions and events prior to the flash crash led to the extreme price moves,” he said.

When pressed, he added, notably, that he had found no evidence of a deliberate attempt by anybody to disrupt markets.

The implications of the report are not merely academic. Ordinary investors, shaken by the brief stock plunge and the lack of an official explanation, have withdrawn money from stock mutual funds every week since the crash. Market analysts say investors want to be reassured about the integrity of the nation’s markets so they can be confident that a nose dive will not happen again.

The Berman report will not be the final word on the matter. Its findings will be used by a group of advisers to the S.E.C. and the commodity futures commission, which will make policy recommendations.

Still, some analysts question whether the report can deliver a simple answer that will satisfy everyone eager for reassurance.

“What everybody would love to hear from the S.E.C. is XYZ trader blew up the market and made a gazillion dollars and is now in jail,” said Larry Tabb, chief executive of the Tabb Group, a specialist on the markets. “The answer, I think, is much more complicated and nuanced and has to do with a lot of different things. I am not sure that everybody outside the industry is going to have the patience to understand that.”

Mr. Berman acknowledges that his team’s explanation will involve a number of things happening at once. It may strike many people as painfully complex, but that is an undeniable result of the byzantine nature of today’s disparate electronic markets and the many players who take part in them.

The report’s conclusions will involve “market participants doing very different things and for very, very different reasons,” he said.

Central to all of this is the fact that stock trading is no longer centralized but instead takes place on dozens of exchanges, all with varying policies and procedures. For example, the New York Stock Exchange has circuit breakers that prevent stocks from rising or falling so quickly that they disrupt the broader market.

Trading was slowed on several listings on that exchange on May 6, while other markets kept trading lower. That lack of coordination created confusion during the flash crash. Since then, the S.E.C. has extended circuit breakers for individual stocks across all markets.

In investigating the crash, Mr. Berman says he finds himself in a position similar to his physics work 20 years ago, when he was collecting huge amounts of data and comparing the competing views of many laboratories on a question dividing particle physics — whether the neutrino, one of the least known and most common elementary particles, actually had mass.

Today he finds himself in familiar territory, sifting through huge amounts of messy and disjointed data, and at the same time reading blogs and e-mails from a wide range of observers, each with a theory about what happened on May 6.

Despite his formal training as a physicist, Mr. Berman is no stranger to stock markets. After academia, he spent 16 years on Wall Street, first devising algorithmic trading strategies for hedge funds, then working for RiskMetrics Group, where he created software and dispensed risk-management advice to asset managers, banks and hedge funds.

Having worked with hedge funds and high-frequency traders, Mr. Berman came to his current job a year ago with practical market knowledge and a familiarity with the world of stock trading. Several prominent market players say they found Mr. Berman’s rare combination of experiences refreshing — and reassuring.

“He had a sense that actions in markets provoke reactions and they are done for reasons, benign or not benign,” said Frank Hatheway, chief economist at Nasdaq, one of the exchanges that provided data for the inquiry.

Even though Mr. Berman’s Wall Street background was paramount, S.E.C. officials said his measured communication skills were also important. They have helped him in the complex task of coordinating the commission’s cross-divisional flash crash investigation team and presenting a clear narrative about what happened.

“He can analyze the data in a way that tells a story,” said Robert W. Cook, Mr. Berman’s boss and the director of the S.E.C.’s trading and markets division.

The investigation has had two prongs. One strategy has been to collect all kinds of market data from May 6 and analyze it for patterns.

“They must be completely awash with data on their spreadsheets, a trove of data,” said Lawrence Leibowitz, chief operating officer of NYSE Euronext, another exchange that provided information for the investigation. “We sent them over raw data with analysis on top of it.”

The second line of investigation has involved “many dozens” of interviews with people involved in the markets on May 6, including market makers, the exchanges, high-frequency traders, banks and fund managers, to ask what they did on May 6 and why.

More than one interviewee was surprised to find Mr. Berman and 10 more S.E.C. officials on one conference call to discuss the crash — their number was a sign of how badly the commission, after a few difficult years, wants to get this investigation right.

“Many market participants told us, ‘We’re not quite sure what happened over all, but this is what my firm saw and the actions we took,’ ” Mr. Berman said. “It was like ‘C.S.I.’ We wanted to interview everyone around.”

Mr. Berman said the level of detail gleaned from his investigation will help provide the explanation for what occurred on May 6, even if it may not deliver the simple answer that many people would like.

“This level of fact proved to be very, very telling,” he said. “We started to build up a complete picture.”

Regulator faults Wall Street banks on derivatives
By MARCY GORDON, AP Business Writer
March 11, 2010

WASHINGTON – Wall Street banks are seeking exemptions to proposed new financial derivatives rules that could shield more than half the trades that should be subject to disclosure, a federal regulator said Thursday.

The chairman of the Commodity Futures Trading Commission, Gary Gensler, criticized Wall Street's stance on proposed new oversight for the shadowy $600 trillion derivatives market. Derivatives have been blamed for hastening the 2008 financial crisis.

Gensler told a financial industry gathering that Wall Street has not been "enthusiastic" about the proposed new regulations now before Congress...full story here.

SEC, CFTC mull joint enforcement squad: sources
October 15, 2009
WASHINGTON (Reuters) – U.S. securities and futures regulators are considering creating a joint enforcement squad to investigate and root out fraud in the markets, two sources familiar with the matter said on Thursday.

The new squad would be made up of staff from the Securities and Exchange Commission and the Commodity Futures Trading Commission, who would come together to coordinate and manage joint investigations, the sources said.

The "task force" is one of the recommendations being considered by SEC and CFTC commissioners in an effort to end a turf fight over market jurisdiction.

The Obama administration has pressured the agencies to resolve long-standing conflicts and come up with recommendations for Congress to align their rules.

The recommendations are expected to be released on Thursday upon receiving the approvals of the SEC and CFTC commissioners.

Others being considered include the creation of a joint training program that may go beyond training for enforcement staff, one source said. The sources requested anonymity because the recommendations have not been made public.

Regulatory disputes have consumed the SEC and CFTC resources and created uncertainty in the marketplace as to how products will be regulated and laws enforced.

Regulatory lapses has been blamed for the global credit crisis and economic fallout, triggering calls for a sweeping overhaul of the country's financial regulatory system and intensifying demands for the agencies to stop fighting.

CFTC Poised to Move Aggressively on Position Limits

July 28, 2009, Filed at 3:14 p.m. ET

WASHINGTON (Reuters) - The Commodity Futures Trading Commission will consider "every option" to clampdown on excessive speculation in energy markets, the head of the agency said on Tuesday.

The CFTC, regulator of U.S. futures markets, is reviewing how to limit how many futures contracts can he held, so-called position limits, and if some traders should be allowed to exceed those limits.  The agency held its first hearing on Tuesday to study proposed changes. Meetings continue on Wednesday and August 5.

"I believe we must seriously consider setting strict position limits in the energy markets," said CFTC Chairman Gary Gensler. "Every option must be on the table."

Officials from the IntercontinentalExchange Inc, or ICE, and the Chicago Mercantile Exchange, the world's largest exchange, urged the CFTC to beware of potential unintended consequences of efforts to curb speculation.  The exchanges said the CFTC risks increasing volatility, distorting pricing functions and pushing traders to less regulated offshore markets.

"While well intentioned, these measures often fail to achieve their desired objectives or, worse yet, lead to unintended consequences ... that would otherwise be discovered in properly operating markets," said Jeffrey Sprecher, chief executive of ICE.

Gensler said several questions remain that the CFTC must still answer, including what the position limits should be; who should set them, the CFTC or the exchange; and if exemptions should be allowed for traders to manage purely financial risk, rather than accepting the delivery of the actual commodity.

Several commissioners warned the CFTC must be cautious. But, at the same time, Commissioner Bart Chilton said the "unprecedented volatility" over the past year had increased the urgency for the CFTC to make changes. "Whatever manner the agency proceeds, 'going slow' is not an option," he said.

U.S. futures markets said supply-and-demand factors, not speculation, were responsible for the increased volatility.  Sprecher of ICE complained the position limits, currently set by ICE rival CME Group Inc, lack transparency. He said ICE supports having the CFTC take over that authority. 

Craig Donohue, the head of CME, countered ICE on setting rules for the market. "To say you are dependent on our limits is ridiculous. Adopt your own limits," he said.

During this testimony, Donohue said the CME has the authority to administer position limits and hedge exemptions for energy commodities. He supported a hard limit regime, including single-month and all-month combined limits, to complement the existing measures that are in place.

"We're trying to address the perception issues out there even though I think it's been abundantly clear that there is no evidence" of speculation driving up oil prices, said Donohue.

Currently, exchanges try to prevent manipulation and congestion by imposing limits on energy products in the last three trading days before a contract expires. The exchanges have accountability levels that trigger additional oversight tools, if a position exceeds a certain size.

Gensler estimated 70 parties exceeded accountability levels on the four major energy contracts during the last year.  To protect against market manipulation, the CFTC sets limits on the amount of contracts each investor can hold in some agricultural commodities. But the futures exchanges set limits for energy products such as oil futures.  The move to toughen oversight marks a turnaround for the CFTC, whose hands-off approach toward regulation drew criticism last year when commodity prices rocketed to record highs.

"We and our consumers cannot continue down the same path," said Sean Cota, testifying on behalf of the Petroleum Marketers Association of America. "It is time for a concerted effort toward meaningful reform to restore stability and confidence in these markets."

With a number of anti-speculation bills pending in Congress, the CFTC's actions have been praised by some lawmakers, especially Democrats.

CFTC May Restrict Trades Over Wheat Price Concerns
Filed at 6:32 p.m. ET
July 21, 2009

WASHINGTON (AP) -- Federal regulators are ''seriously considering'' restrictions in the wheat futures market being urged by lawmakers concerned over speculation they say has artificially inflated prices, hampering risk management by farmers and grain processors.

A yearlong investigation by the investigative panel of the Senate Homeland Security and Governmental Affairs Committee found that the disconnect between the wheat futures and cash markets can mean higher prices for consumers. Several senators have called on the Commodity Futures Trading Commission to restrict the volume of index trading in the wheat futures market on the Chicago Board of Trade.

The agency ''is seriously considering this recommendation ... (and) will continue to closely monitor the performance of the wheat futures contract,'' CFTC Chairman Gary Gensler told the Senate subcommittee at a hearing Tuesday.

Panel chairman Sen. Carl Levin, D-Mich., said such a review ''is badly needed.'' Several other members of the committee, representing farm states, voiced concern about the impact of market problems on wheat producers in those states.

But an official of the company that operates the Chicago Board of Trade, where wheat futures are traded, opposed such constraints and disputed the Senate probe's findings.

Charles Carey, vice chairman of CBOT owner CME Group Inc., said new restrictions on index trading ''are more likely to be harmful to the functioning of our markets than helpful.''

Commodity indexes are made up of futures contracts for delivery in different months. Commodity index traders sell financial instruments whose values rise and fall along with the value of the index on which they are based.

Commodity index traders buy wheat futures to help offset their risk from selling the instruments to third parties. That pumps billions of dollars into the market and lifts demand and prices for wheat futures, the Senate investigation found. The trend has been especially pronounced since 2005.

The trading volume in wheat futures has created a large gap between prices in the futures and spot, or cash, markets. It has prevented the normal convergence between the two at the time when the futures contract expires and delivery is due, the subcommittee's report found.

Speculation in the wheat futures market has disrupted normal price patterns and hurt the ability of farmers, grain processors and others to hedge against risk, according to the report released last month.

In his testimony prepared for the hearing, Carey said the Senate report's findings ''are based on faulty economic analysis and a misunderstanding of basic market economics.''

Carey agreed that there is lack of convergence between wheat spot and futures prices -- which he said the exchange is committed to solve. However, he rejected the notion that such ''temporary order imbalances'' have a lasting effect on prices.

The CBOT has been working to resolve the problem and is prepared to make further changes to the wheat futures contract if needed, Carey said. The exchange already has added new delivery points and increased the storage fee, he noted.

Some analysts and lawmakers also blame the surge in popularity of commodity index funds for artificially boosting the prices of oil, gasoline, corn and other commodities.

The CFTC also announced Tuesday that it will hold the first of three public hearings next week to gather views on whether the government should impose limits on the number of futures contracts in oil and other energy commodities held by speculative traders.

The possible CFTC action take on added significance as Congress crafts sweeping new rules for financial markets.

CFTC Asks Authority Over OTC Market, Dealers

Filed at 5:35 p.m. ET
June 4, 2009

WASHINGTON (Reuters) - The U.S. regulator of the futures industry proposed a package of reforms for the first comprehensive regulation of over-the-counter derivatives and the dealers who handle the exotic instruments on Thursday.

Derivatives such as credit default swaps were blamed for amplifying last fall's economic crisis. Trading runs in the trillions of dollars for derivatives, contracts whose value is based on the price for another item.

"Many of these (reforms) will require statutory changes, of course," said Gary Gensler, chairman of the Commodity Futures Trading Commission, at a Senate hearing. For the second time this week, he said broad reform is urgent this year.

"Such reforms must comprehensively regulate both derivative dealers and the markets in which derivatives trade."

His package expanded on a May 13 outline by the Obama administration to require standardized OTC derivatives to go through clearinghouses and move standardized derivatives onto public exchanges. Reporting and record-keeping rules would apply to standard and customized contracts to assure fair trading.

Gensler said the federal regulation must apply to all dealers and all types of derivatives. He suggested two sets of rules: one covering markets, including regulated exchanges, electronic trading and clearinghouses, and the other governing dealers. The plan includes position limits on holdings.

"These two regimes should apply no matter which type of firm, method of trading or type of derivative swap is involved," Gensler told the Senate Agriculture Committee, which oversees the CFTC and writes futures market law.

Agriculture Committee chairman Tom Harkin is sponsoring a bill to move all OTC derivatives onto regulated exchanges in order to increase liquidity, reduce risk and make terms of trade public. U.S. Sen. Saxby Chambliss of Georgia said banning OTC derivatives "is unrealistic" and the wrong answer to the financial crisis.

Two trade groups, the Business Roundtable and the U.S. Chamber of Commerce, said in a letter to Senate leaders that OTC derivatives were a vital tool. They said the administration's May 13 plan "is a positive catalyst" for reform.

"There's got to be some fundamental change in the way we do things. We'll be developing this legislation sometime this year, probably not until this fall," Harkin said at the end of the hearing.

Under the CFTC proposal, dealers would be subject to capital requirements, initial margining requirements, business conduct rules, and reporting and record-keeping rules. The CFTC would have power to set position limits, including aggregate limits, on OTC derivatives that affect prices on futures exchanges.

"We should require that all derivatives that can be moved into central clearing be required to be cleared through central clearing houses and brought on to regulated exchanges or regulated electronic trading systems," said the CFTC chairman.

Regulators would monitor contracts to make sure dealers do not try wrongly to label a derivative as customized.

The CFTC and the Securities and Exchange Commission would share regulatory duties for the OTC system, Gensler said.

"Position limits should be applied consistently across all trading platforms and exemptions should be limited and well-defined," said Gensler. The CFTC is reviewing exemptions now in force.

"The term OTC derivative should be defined and CFTC should be given clear authority over all such instruments," said Gensler in discussing changes in law.

Editorial: New Rules for Derivatives
May 15, 2009

President Obama’s new proposal to regulate derivatives would go a long way toward reining in the complex products and reckless practices that have been a big factor in the financial crisis. But it would not go far enough. In apparent deference to those who have made major profits from unfettered derivatives trading, the proposal stops shy of creating a fully transparent market.

Transparency is the best way to avoid a repeat of the disaster triggered in recent years by these unregulated financial products, which are supposed to help investors manage risks, like the possibility of default or of interest-rate swings. As the financial bubble burst mid-decade, many of these derivatives didn’t work as advertised. Rather than reduce risk, they created or amplified it, to the point — as in the case of the American International Group — that the failure of one party to various derivatives contracts threatened to topple the entire system.

Worse still, the debacle caught regulators flat-footed — and taxpayers have been paying for bailouts ever since. The tab for A.I.G. alone, so far, is some $180 billion, and there are trillions of dollars more for which taxpayers are on the hook. Derivatives are not entirely to blame for the fiasco, but they are implicated in much of it.

The administration’s proposal rightly seeks to repeal much of a law from 2000, the Commodity Futures Modernization Act. It put derivatives beyond the reach of federal regulators. It calls for certain derivative trades, though not all, to be handled through clearinghouses. It also requires that derivatives be backed by collateral, ensuring that a trader is able to make good if called upon to pay up. It would allow federal regulators to police the market for fraud and manipulation — basic safeguards missing from current law.

In a far-reaching change, the proposal also would subject participants in the derivatives market to capital requirements and to record-keeping and reporting requirements. These would allow regulators to track their activities, presumably intervening as necessary to avert systemwide problems.

For all that, the proposal pulls its punches. It does not call for trading derivatives on fully regulated exchanges, the most visible and reliable way of reining them in. It also makes a distinction between standardized and customized derivatives and proposes a lighter regulatory touch for the custom variety. That could open the door to gaming the new system, a door that would be shut if all derivative contracts were traded on exchanges. In some important respects, it appears to give regulators the discretion, though not the duty, to police markets more closely.

The proposal also seems to invite tension between the Securities and Exchange Commission and the Commodity Futures Trading Commission, the main regulators that would oversee derivatives. Regulatory jurisdiction must be clarified if the new rules are to have any teeth.

Another tension is that, in carrying out the new rules, President Obama’s nominee to lead the Commodity Futures Trading Commission, Gary Gensler, has a credibility problem. During the Clinton administration, Mr. Gensler — along with Lawrence Summers, Mr. Obama’s top economic adviser — championed derivatives’ deregulation. That caused two senators to place a hold on his confirmation, even though Mr. Gensler supported greater regulation during his confirmation hearing. They released the hold on Thursday only after the new regulatory proposal was made public.

The Obama proposal starts off in the right direction. It is up to Congress to shore up its protections and provide regulators with the resources and political support they would need to carry out their new mandate.

New York City Official Is Obama Pick for C.D.C.
May 15, 2009

WASHINGTON — President Obama will announce on Friday that he has chosen Dr. Thomas R. Frieden, the New York City health commissioner, as the next director of the Centers for Disease Control and Prevention, administration officials said Thursday.

Dr. Frieden, a 48-year-old infectious disease specialist, has cut a high and sometimes contentious profile in his seven years as New York’s top health official under Mayor Michael R. Bloomberg. He led the crusade to ban smoking in restaurants and bars, pushed to make H.I.V. testing a routine part of medical exams, and defended a program that passes out more than 35 million condoms a year.

At the C.D.C., he will inherit a host of immediate and long-term problems, including a looming decision about whether and how to produce a swine flu vaccine. Health experts say the agency must resolve serious morale and organizational issues even as the administration struggles to overhaul the nation’s health care system.

“I think the administration selected Tom Frieden because he can take public health to a new place,” said Jeffrey Levi, executive director of Trust for America’s Health, a nonprofit public health advocacy organization. “He’s a transformational leader.”

Dr. Frieden is expected to take office next month. With his appointment, which does not require Senate confirmation, New York City will have former commissioners in two of the nation’s most visible health positions; Dr. Margaret A. Hamburg, who held the job in the 1990s, is nearing confirmation as commissioner of the Food and Drug Administration.

Dr. Frieden has long been expected to be Mr. Obama’s choice, and although he is widely admired in the public health community, some C.D.C. veterans began lobbying in recent weeks on behalf of the agency’s acting director, Dr. Richard E. Besser.

Dr. Besser has been the government’s chief scientific spokesman during the swine flu epidemic, winning rave reviews for his confident performance. He will return to his post as head of the agency’s coordinating office for terrorism preparedness and emergency response.

Dr. Frieden has won positive reviews himself for his televised swine flu updates, and he will take some of his own advantages to his new role, including his long and close relationship with Dr. Hamburg.

The two worked together for years in New York City and were critical players in an effective campaign to stop a growing epidemic of drug-resistant tuberculosis infections. Dr. Frieden and Dr. Hamburg will play important roles in how the government decides to fight swine flu next fall if the virus returns with a vengeance.

Their relationship will also be tested in the effort to improve the safety of the nation’s food supply, in which both agencies play crucial parts. Mr. Obama has made food safety a top health priority; a government working group that includes the food and drug agency, the Department of Agriculture and other agencies is already at work on the problem; and Congress has proposed a variety of legislative fixes.

Any changes are likely to affect the disease centers, which play a central role in monitoring and solving outbreaks of food-related illnesses.

Also facing Dr. Frieden will be a set of decisions about how to organize the agency. Dr. Julie L. Gerberding, who left in January as the agency’s director, undertook a reorganization that lasted years and has been widely criticized as overly bureaucratic and the cause of a raft of top staff departures. But still another administrative overhaul would create its own set of headaches.

“Morale is the weakest thing at the agency right now,” said Dr. James M. Hughes, former director of the C.D.C.’s National Center for Infectious Diseases. “He has to really listen to people, and I think there are too many bureaucratic layers.”

Like other federal agencies, the disease centers added thousands of contract employees during the Bush administration. Deciding which functions are best fulfilled by contractors and which should be brought back inside the agency is another delicate problem for Dr. Frieden.

“Health care reform also needs to be on his plate,” said Dr. Jeffrey P. Koplan, who served as the centers’ director from 1998 to 2002. “There is a huge opportunity there to improve public health, and it’s one in which any C.D.C. director will want to be a player.”

However he decides these questions, Dr. Frieden is bound to kick up controversy, say those who know him.

“I found he’s willing to challenge the status quo in an effort to make a difference,” said Dennis deLeon, president of the Latino Commission on AIDS in New York City.

Dr. Frieden has a history of focusing on health threats that endanger large numbers of people, sometimes at the expense of more popular causes. This put him in marked opposition to the Bush administration, which spent more than $50 billion on bioterrorism initiatives and paid far less attention to problems like smoking.

Dr. Alfred Sommer, emeritus dean of the Johns Hopkins Bloomberg School of Public Health, who was on the team that recommended Dr. Frieden as New York’s health chief in 2002, recalled interviewing him shortly after the Sept. 11 attacks. Dr. Frieden had flown to New York from India, where he was living and working on tuberculosis control.

Before he left India, he was asked about his top priority, Dr. Sommer said. “Oh, well, that’s easy, Al,” Dr. Sommer recalled him replying. “Tobacco. Tobacco is killing more people, and that’s my top priority.”

“Tom, I don’t disagree that tobacco is a real scourge, but have you heard of 9/11?” Dr. Sommer said he countered.

“Of course I know about that, but bioterrorists are not going to kill more New Yorkers than tobacco is,” Dr. Frieden said.

Obama taps McCarthy for EPA post 
By Judy Benson   
Published on 3/13/2009

State Department of Environmental Protection Commissioner Gina McCarthy, known for her accessible, pragmatic and plainspoken leadership in her four years heading the agency, has been nominated by President Barack Obama for a key post at the Environmental Protection Agency.

McCarthy, 54, has been chosen to be the assistant administrator for air and radiation at the EPA, a post in which she will oversee initiatives to reduce air pollution and combat climate change, among other areas. She was named late Thursday afternoon along with three other nominees for key administration posts.

During her time at the DEP, McCarthy launched initiatives such as “No Child Left Inside,” intended to encourage children and families to spend more time enjoying the outdoors; and those aimed at fostering better stewardship of the land, addressing climate change, and the role of individuals in environmental quality, among others. In a statement, said said she is honored to be nominated and “would be thrilled” to work for EPA Administrator Lisa Jackson.

”Much work needs to be done to address the nation's air pollution and climate change challenges and I would very much like to play a part in shaping these efforts,” she said. She also thanked Gov. M. Jodi Rell for choosing her to head the DEP and said efforts by the governor and DEP staff have “put Connecticut on the map as an environmental leader, pushing the envelope on so many issues of regional, national and international concern.”

A native of Massachusetts who maintains a home in Canton, Mass., and another in Hartford, McCarthy spent 25 years at various environmental posts in that state before coming to Connecticut to head the DEP. She and her husband have three children. During her time at the DEP, McCarthy was one of the state's most visible commissioners, attending many local and statewide events. Most recently, she attended an event in Stonington last month celebrating the addition of the Crowley family property to the Barn Island Wildlife Management Area.

DEP spokesman Dennis Schain said the timing of congressional confirmation hearings is not yet known. McCar-thy will remain as DEP commissioner until the confirmation and approval process is completed, he said.

The Obama administration has been in contact with McCarthy about the nomination “going back several weeks,” he said. She told DEP staff she was being considered for the EPA post several weeks ago.

During her career in Massachusetts, McCarthy worked for both Democratic and Republican administrations. Now, after four years in the Republican administration of Gov. M. Jodi Rell, McCarthy will work for a Democratic one.

Rell issued a statement late Thursday afternoon calling McCarthy “a public servant with tremendous talent and passion” who did “an outstanding job for the citizens of Connecticut.

”Her leadership on climate issues is nationally respected, so it comes as no surprise that the Obama administration would reach out to Commissioner McCarthy,” Rell said. “While we certainly would hate to lose her in Connecticut, it is reassuring to know she would be working to preserve and improve the environment for all Americans.” 

Former New York Health Commissioner Picked to Lead F.D.A.
March 12, 2009

WASHINGTON — President Obama intends to nominate Dr. Margaret A. Hamburg, a former New York City health commissioner, to lead the Food and Drug Administration, sidestepping a battle between drug safety advocates and the drug industry, according to people briefed on the decision.

The administration is likely to announce the decision this week, these people said. Dr. Joshua Sharfstein, the health commissioner of Baltimore, who led the Obama administration’s transition team for the F.D.A., will become Dr. Hamburg’s chief deputy, these people said.

Dr. Hamburg, 53, succeeds Dr. Andrew C. von Eschenbach, who led the beleaguered agency from 2005 until last January and often had to deflect critics who accused the Bush administration of letting politics play too forceful a role in science policy.

Her selection, first reported Wednesday on the The Wall Street Journal’s Web site, was hailed by top public health officials and experts.

“Peggy has a deep commitment to the public health and, while she appreciates the vital role of industry, will surely focus on what is best for the public,” said Dr. Harvey V. Fineberg, president of the Institute of Medicine, the medical arm of the National Academy of Sciences.

Dr. Hamburg, who was appointed by Mayor David N. Dinkins as acting commissioner in 1991 and became commissioner the following year, was one of the few top officials asked to remain when Mayor Rudolph W. Giuliani took office in 1994. She was best known for developing a tuberculosis control program that produced sharp declines in the incidence of the disease in New York. Under her tenure, child immunization rates rose in the city.

She left New York in 1997 to become assistant secretary for planning and evaluation at the Department of Health and Human Services, where she created a bioterrorism initiative and led planning for pandemic flu response.

That background makes her a more obvious candidate to lead the Centers for Disease Control and Prevention than the F.D.A.

Indeed, the Obama administration considered experts more steeped in the kind of drug safety issues that the food and drug agency confronts daily, including Dr. Steven E. Nissen, a cardiologist from the Cleveland Clinic, and Dr. Robert M. Califf, a cardiologist from Duke University.

But Dr. Nissen and Dr. Califf would have been divisive candidates, with rival supporting camps. Dr. Hamburg’s selection avoids the usual debate between industry and consumer advocates.

“She has the personal skills to collaborate with the pharmaceutical industry and the science community in a way that isn’t confrontational,” said Dr. Georges C. Benjamin, executive director of the American Public Health Association.

Jeffrey Levi, executive director of Trust for America’s Health, a nonprofit public health organization, said Dr. Hamburg had revived a demoralized and cash-starved agency in New York and could do the same at the F.D.A., which faces similar problems.

“Right now,” he said, “the F.D.A. needs a strong leader with a clear sense of mission who can fight for the resources that the agency needs and do it in a bipartisan manner.”

Dr. Hamburg is the daughter of Dr. David A. Hamburg, a former president of the Institute of Medicine and a longtime force in public health. She has two teenage children and serves on the board of the Sidwell Friends School.

Mr. Dinkins recalled that Dr. Hamburg forced him to take a tuberculosis test after he spoke at a disaster scene with someone who later tested positive for the disease.

“She took care of me like a newborn,” he said. “She’s the kind of person you figure can do almost anything.”

Seattle Police Chief Selected as Drug Czar
By David Stout
J. Scott Applewhite/Associated Press
March 11, 2009, 1:35 pm

Vice President Biden announced that Seattle Police Chief R. Gil Kerlikowske will head the Office of National Drug Control Policy.
R. Gil Kerlikowske, the police chief of Seattle, was chosen on Wednesday to be the White House “drug czar,” signaling a shift in emphasis from arrest and prosecution to intervention and treatment.

The selection of Mr. Kerlikowske, which had been expected, was announced by Vice President Joseph R. Biden Jr., who said Mr. Kerlikowske understands that “combating drugs requires a comprehensive approach that includes enforcement, prevention and treatment.”

If confirmed by the Senate, Mr. Kerlikowske, 59, will become director of the Office of National Drug Control Policy, as the drug czar is formally known. “The success of our efforts to reduce the flow of drugs is largely dependent on our ability to reduce demand for them,” Mr. Kerlikowske said in a ceremony at the Eisenhower Executive Office Building.

“Our nation’s drug problem is one of human suffering,” Mr. Kerlikowske said. “And as a police officer, but also in my own family, I have experienced the effects that drugs can have on our youth, our families and our communities.” Mr. Kerlikowske’s stepson, Jeffrey Kerlikowske, 39, has had several drug-related brushes with the law.

The nominee said that illicit drug use is “an incredibly complex problem,” requiring cooperation among prosecutors, treatment providers and others. “I am absolutely committed to this task,” he said.
Mr. Kerlikowske has been Seattle police chief since 2000. He was previously the police chief in Buffalo and in Fort Myers and Port St. Lucie in Florida.

“Gil Kerlikowske is the perfect person for this job,” John F. Timoney, the police chief of Miami and former first deputy commissioner in New York City, said in a statement released by the White House.

When John P. Walters was drug czar under President George W. Bush, the office focused on tough enforcement of drug laws and on the use of marijuana and other drugs by young people. While not against leniency for first-time drug users, Mr. Walters disdained what he called the “therapy-only lobby” in Washington, and said that prison sentences, combined with therapy, were crucial in reducing drug use.

Obama to Nominate Jon Leibowitz as FTC Chairman
Filed at 2:34 p.m. ET
February 27, 2009

WASHINGTON (AP) -- President Barack Obama is choosing a member of the Federal Trade Commission to become its chairman.

The White House said Friday that Obama intends to nominate commissioner Jon Leibowitz to lead the agency.

Leibowitz is the only Democrat among the five commissioners responsible for policing the business industry for anticompetitive practices and enforcing consumer protection laws. A lawyer, Leibowitz became a commissioner in September 2004.

The commission currently has one vacancy.

Before joining the FTC, Leibowitz was vice president of congressional affairs for the Motion Picture Association of America.

US Officials: Clinton to Name Climate Change Envoy

Filed at 10:12 a.m. ET
January 26, 2009

WASHINGTON (AP) -- U.S. officials say Secretary of State Hillary Rodham Clinton plans to name a special envoy for climate change.

Clinton has picked Todd Stern, a former White House assistant who was the chief U.S. negotiator at the Kyoto Protocol talks in her husband's administration, the officials said Monday. They spoke on condition of anonymity ahead of a planned midday State Department ceremony where Clinton will announce the appointment.

Stern served in the Clinton administration from 1993 to 2001, first in the White House, where he worked on the Kyoto Protocol and coordinated the president's Initiative on Global Climate Change and then at Treasury, where he was a senior adviser to the secretary

Source: Obama to Name Sunstein His Regulatory Czar

Filed at 9:59 p.m. ET
January 16, 2009

WASHINGTON (AP) -- President-elect Barack Obama has tapped legal scholar Cass Sunstein as his administration's regulatory czar, a Democratic source said Friday.

Obama hired the Harvard law professor to run the White House's Office of Information and Regulatory Affairs, the administration's central approver of rules that has say over environmental policy, workplace safety issues and federal health care policies. All major agencies' rules will pass across Sunstein's desk, giving him great influence in the new administration.

His appointment was disclosed by a Democratic source who spoke on the condition of anonymnity to discuss personnel decisions.

Sunstein's office would be the main place Obama's new administration would look to reverse executive orders issued by President George W. Bush, who leaves office Tuesday. Obama aides and advisers have their eyes on Bush's policies on stem cell research and reproductive rights, but advisers have combed Bush's record and found more than 200 rules they would like to see reversed.

Independent and advocacy groups have been lobbying Obama aides aggressively to move quickly on the policies, perhaps as early as his first full day in office, Jan. 21.

Sunstein could be the face of that effort. He's a much-quoted expert on regulation and has testified about Supreme Court nominees; Harvard touted him as the most cited law professor in the country when officials hired him last year.

Harvard Law Dean Elena Kagan -- who is set to become Obama's solicitor general -- called him the ''pre-eminent legal scholar of our time'' and an ''individual superstar'' in her February 2008 announcement that he would join the faculty. Aside from a short stint at the Justice Department, he has never worked in government.

Sunstein previously taught at the University of Chicago, where Obama also taught law part time.

He is married to Samantha Power, a Pulitzer Prize-winning foreign policy adviser who was forced to resign from the campaign when she called Hillary Rodham Clinton, who was then an Obama rival, ''a monster.'' Power has since rejoined Obama's circle, helping his transition team assess the State Department that Clinton would lead as secretary.

Sunstein earned two degrees from Harvard and clerked for Supreme Court Justice Thurgood Marshall. He also advised constitution writers in Poland, South Africa and Russia.

Obama to Tap Tech Adviser as FCC Chief Article

JANUARY 13, 2009

WASHINGTON -- President-elect Barack Obama intends to nominate his technology adviser, Julius Genachowski, to head the Federal Communications Commission, a Democratic source close to the Obama transition team said.

Mr. Genachowski, 46 years old, is a former Harvard Law School classmate of Mr. Obama. He previously worked at the FCC during the Clinton administration. More recently, he co-founded LaunchBox Digital, a Washington, D.C.-based venture capital firm. He worked at Barry Diller's IAC/InterActive Corp. in various executive positions for eight years after leaving the FCC.

Mr. Genachowski couldn't be reached for comment. A spokeswoman for the Obama transition team declined to comment.

During the campaign, Mr. Genachowski served as the top technology adviser to Mr. Obama, putting together a detailed technology and innovation plan that expressed support for open Internet or "net neutrality" protections; media-ownership rules that encourage more diversity; and expansion of affordable broadband access across the country.

Obama's Advisers

See who else is expected to join the administration.

An early supporter of the president-elect, Mr. Genachowski also served as a bundler for the campaign, raising more than $500,000 in donations.

If confirmed, Mr. Genachowski will take over an agency that has had rocky relations with Congress and major companies in the telecommunications industry under current FCC Chairman Kevin Martin. The agency may also still be coping with the U.S.'s transition to digital-only television, which is scheduled to take place Feb. 17 but could be pushed back to the summer.

While at IAC, Mr. Genachowski served several roles at the media and e-commerce conglomerate, first as general counsel and later as head of business development and part of the top core of executives.

—Shira Ovide contributed to this article.

Obama confuses Harvard lawyer for tech guy
By Paul Boutin, 5:00 PM on Thu Nov 6 2008, 6,099 views

I'm from MIT, so I'm hardwired to hate on Harvard Law grad Julius Genachowski, the so-called technology guy newly named to our Internet President's transition team. His company, LaunchBox, helps Web and mobile entrepreneurs pitch their ideas to get seed funding. That makes him a Paul Graham wannabe to me. He spent eight years working for Barry Diller at IAC as general counsel. Is that a plus or a minus?

To be fair, Genachowski is said to be a clear thinker, and he hasn't yet locked up Barry O's slot for America's CTO. Insider gossip says he's eyeing the FCC instead, where he previously served under Reed Hundt. Fine with me — Genachowski is a lawyer who I'm sure can grasp net neutrality. But if this turns out to be Obama's idea of a technologist, I'm going home to cling bitterly to my guns and religion.

Obama to Select Genachowski to Lead F.C.C.
By Stephen Labaton
January 13, 2009, 8:59 am

President-elect Barack Obama intends to nominate Julius Genachowski , an adviser on technology issues and longtime friend, to become the next chairman of the Federal Communications Commission, advisers to Mr. Obama said.

Mr. Genachowski, 46, was a major fund-raiser for the Obama campaign who also played a leading role in the campaign’s highly successful online strategy. He remains very close to Mr. Obama—both men went to Columbia College and Harvard Law School and the two served together on the Harvard Law Review. They also were basketball buddies.

During the campaign, Mr. Genachowski shaped many of Mr. Obama’s telecom policies. He advocated an open Internet in the debate over so-called “net neutrality,’’ and media-ownership rules that promote a diversity of voices on the airwaves.

People involved in the transition said that Mr. Genachowski was a top candidate for both the chairmanship and a new White House position overseeing technology issues that has not been fully defined yet.

If confirmed, one of his first challenges at the commission will be what to do about the problems plaguing the conversion to digital television. The Obama transition team has asked Congress to delay the conversion, set for Feb. 17, because millions of viewers have been unable to obtain coupons to pay for converter boxes that would enable their sets to receive signals once all broadcasters lose their analog signal. (The conversion will not affect viewers who subscribe to cable or satellite television services.)

The chairmanship of the F.C.C. has played a more expansive role in regulating the economy, particularly with the rise of the Internet and wireless communications over the last 20 years. Now, as the new administration plans to make the expansion of broadband and Internet services a significant part of its stimulus package, Mr. Genachowski, with his close ties to Mr. Obama, could wind up with an even bigger role than his predecessors in shaping economic policy.

After graduating from law school, Mr. Genachowski clerked for federal appeals court judge Abner J. Mikva after Mr. Obama turned down the same job. Mr. Genachowski then clerked for Supreme Court Justice David H. Souter. He was chief counsel to Reed Hundt, a chairman of the Federal Communications Commission, during the Clinton administration. He then worked for eight years as a senior executive at Barry Diller’s IAC/Interactive Corporation. He also founded an investment and advisory firm for digital media companies and co-founded the country’s first commercial “green’’ bank.

Panetta to Be Named C.I.A. Director
By Carl Hulse AND Mark Mazzetti
January 5, 2009, 2:30 pm

Leon E. Panetta, the former congressman and White House chief of staff. (Kevin Wolf/Associated Press)President-elect Barack Obama has selected Leon E. Panetta, the former congressman and White House chief of staff, to take over the Central Intelligence Agency, an organization that Mr. Obama criticized during the campaign for using interrogation methods he decried as torture, Democratic officials said Monday.

Mr. Panetta has a reputation in Washington as a competent manager with strong background in budget issues, but has little hands-on intelligence experience. If confirmed by the Senate, he will take control of the agency most directly responsible for hunting senior Al Qaeda leaders around the globe, but one that has been buffeted since the Sept. 11 attacks by leadership changes and morale problems.  Given his background, Mr. Panetta is a somewhat unusual choice to lead the C.I.A., an agency that has been unwelcoming to previous directors perceived as outsiders, such as Stansfield M. Turner and John M. Deutch. But his selection points up the difficulty Mr. Obama had in finding a C.I.A. director with no connection to controversial counterterrorism programs of the Bush era...full story here.

See Jane’s Big Carbon Footprint:  Before they boss us around, shouldn’t Obama’s science team act like they believe in global warming?
National Review
By David Freddoso
December 22, 2008, 7:00 a.m.

What’s your carbon footprint? Next year, it will probably be much smaller than that of Jane Lubchenco. The renowned climate-change crusader and professor of marine biology is Obama’s choice for administrator of the National Oceanic and Atmospheric Administration (NOAA).

National Review Online has obtained an e-mail from Lubchenco’s husband, Oregon State University professor Bruce Menge, suggesting that the couple will contribute mightily to global warming next year after she takes the job by making frequent cross-country plane trips.

In the e-mail, Menge is enthusiastic about the appointment, but he also mentions the “the hardships it will impose on us and our academic family.” Their solution? “The plan is for her to be in WDC and me to remain in Oregon at OSU, with frequent weekend trips back and forth,” Menge writes. For the record: A single roundtrip between Portland, Ore., and Washington, D.C., emits just under a ton of carbon, and a bit more than a ton if there is a layover in between. The roundtrip from the university to the airport is another 185 miles by car.

One could end there by acknowledging how understandable this is — after all, conservatives are not the only ones who place greater stock in familial bliss and human comfort than in fears of climate change and the alleged havoc it will wreak. Even a liberal marine biologist who has written extensively on the effect of global warming on marine life is not willing to let such truths inconvenience or harm her family.

But Menge also writes of the appointment that “this opportunity could have major positive impacts on fisheries management, marine reserves, and PISCO’s future among many other things.” PISCO is the Partnership for Interdisciplinary Studies of Coastal Oceans, the very research program under which Menge and Lubchenco currently work as principal investigators at Oregon State University.

Most of PISCO’s funding is private, but some of it comes from NOAA, according to the project’s website, suggesting that Menge is correct. Even if it is all in the interest of science, it is a valid question whether it would be right for a NOAA administrator to use her government position to advance her husband’s academic research. It is a question Lubchenco may face before she takes that carbon-heavy flight to Washington for her confirmation hearing.

4 Top Science Advisers Are Named by Obama

December 21, 2008

WASHINGTON — In his selection of four top scientific advisers, President-elect Barack Obama has signaled what are likely to be significant changes in policies governing global warming, ocean protections and stem cell research.

“It’s time we once again put science at the top of our agenda and worked to restore America’s place as the world leader in science and technology,” Mr. Obama said in a radio address on Saturday, when he announced the appointments.

John P. Holdren, a physicist and environmental policy professor at Harvard, will serve as the president’s science adviser as director of the White House Office of Science and Technology. Jane Lubchenco, a marine biologist from Oregon State University, will lead the National Oceanic and Atmospheric Administration, which overseas ocean and atmospheric studies and performs much of the government’s research on global warming.

Dr. Holdren will also be a co-chairman the President’s Council of Advisers on Science and Technology along with the Nobel Prize-winning cancer research Dr. Harold Varmus, a former director of the National Institutes of Health, and Eric S. Lander, a genomic researcher.

“Whether it’s the science to slow global warming; the technology to protect our troops and confront bioterror and weapons of mass destruction; the research to find life-saving cures; or the innovations to remake our industries and create 21st century jobs — today more than ever, science holds the key to our survival as a planet and our security and prosperity as a nation,” Mr. Obama said.

Like Steven Chu, the energy secretary-designate, Drs. Holdren and Lubchenco advocate mandatory limits on greenhouse gas emissions, which the Bush administration opposed. Both served as president of the American Association for the Advancement of Science. Dr. Holdren said last year that the world needed to undertake “a massive effort to slow the pace of global climatic disruption before intolerable consequences become inevitable.”

Dr. Lubchenco has documented enormous dead zones in oceans that have resulted from climate change and has advocated placing vast ocean areas off-limits to fishing and mineral exploitation. In an e-mail message on Saturday, she wrote: “NOAA will play a central role in addressing pressing challenges of our time — stabilizing the climate, restoring ocean health and coastal vitality. Jobs and a healthy environment go hand in hand — and both are enabled by good science.”

Dr. Varmus is president of Memorial Sloan-Kettering Cancer Center in New York. Dr. Lander is a professor of biology at M.I.T. and helped lead the effort to sequence the human genome.

Obama Appoints Climate Change Experts
Filed at 8:02 a.m. ET

December 20, 2008

WASHINGTON (AP) -- President-elect Barack Obama on Saturday named Harvard physicist John Holdren and marine biologist Jane Lubchenco to top science posts, signaling a change from Bush administration policies on global warming that were criticized for putting politics over science.

Both Holdren and Lubchenco are leading experts on climate change who have advocated forceful government response. Holdren will become Obama's science adviser as director of the White House Office of Science and Technology Policy; Lubchenco will lead the National Oceanic and Atmospheric Administration, which oversees ocean and atmospheric studies and does much of the government's research on global warming.

Holdren also will direct the president's Council of Advisers on Science and Technology. Joining him as co-chairs will be Nobel Prize-winning scientist Harold Varmus, a former director of the National Institutes of Health, and Massachusetts Institute of Technology professor Eric Lander, a specialist in human genome research.

''From landing on the moon, to sequencing the human genome, to inventing the Internet, America has been the first to cross that new frontier because we had leaders who paved the way,'' Obama said in announcing his selections in his weekly radio address. ''Leaders who not only invested in our scientists, but who respected the integrity of the scientific process.''

''Because the truth is that promoting science isn't just about providing resources -- it's about protecting free and open inquiry. It's about ensuring that facts and evidence are never twisted or obscured by politics or ideology,'' he said. ''I could not have a better team to guide me in this work.''

In their posts, the four scientists will confront challenges in global warming after years of inaction by the Bush administration, which opposed mandatory cuts of greenhouse gas pollution. Last year, former Surgeon General Richard Carmona testified to Congress that top Bush administration officials often dismissed global warming as a ''liberal cause'' and sought to play down public health reports out of political considerations.

Since 1993, summer Arctic sea ice has lost the equivalent of Alaska, California and Texas, and global warming is accelerating. The amount of carbon dioxide in Earth's atmosphere has already pushed past the level some scientists say is safe.

Holdren, 64, is a former president of the American Association for the Advancement of Science in Washington who has pushed for more urgent action on global warming. As Obama's top science adviser, he would manage about 40 Ph.D-level experts who help shape and communicate science and technology policy.

Colleagues say the post is well-suited for Holdren, who at Harvard went from battling the spread of nuclear weapons to tackling the threat of global warming. He's an award-laden scientist comfortable in many different fields.

''Global warming is a misnomer. It implies something gradual, something uniform, something quite possibly benign, and what we're experiencing is none of those,'' Holdren said a year ago in a speech at Harvard. ''There is already widespread harm ... occurring from climate change. This is not just a problem for our children and our grandchildren.''

Lubchenco, an Oregon State University professor specializing in overfishing and climate change, will be the first woman to head NOAA. A member of the Pew Oceans Commission, Lubchenco has recommended steps to overcome crippling damage to the world's oceans from overfishing and pollution and has expressed optimism for change once President George W. Bush leaves office.

''The Bush administration has not been respectful of the science,'' she said earlier this year. ''But I think that's not true of Republicans in general. I know it's not. I am very much looking forward to a new administration that does respect scientific information and that considers it very seriously in making environmental policies.''

Varmus, who was a co-recipient of the Nobel Prize for his research on the causes of cancer, served as National Institutes of Health director during the Clinton administration. A former medical professor at the University of California, San Francisco, he helped found the Ralph Lauren Center for Cancer Care and Prevention and chairs a scientific board at the Bill and Melinda Gates Foundation.

Lander, who teaches at both MIT and Harvard, founded the Whitehead Institute-MIT Center for Genome Research in 1990, which became part of the Broad Institute in 2003. A leading researcher in the Human Genome Project, he and his colleagues are using the findings to explore the molecular mechanisms behind human disease.

In his radio address, Obama said he planned early next year to more closely address the issue of engaging the nation's technology community to ''harness technology and innovation to create jobs, enhance America's competitiveness and advance our national priorities.''

''It's time we once again put science at the top of our agenda and worked to restore America's place as the world leader in science and technology,'' he said.

Obama's Cabinet Lineup Is Set; White House advisers may see enhanced role 
By New York Times News Service    
Published on 12/20/2008 
Washington - President-elect Barack Obama finished building a Cabinet of prominent and strong-willed players on Friday, but he is putting together a governing structure that will concentrate more decision-making over his top domestic priorities in the White House.

With new offices in the White House to coordinate health care, urban policy and energy initiatives, Obama has signaled that he intends to keep real power over domestic issues close at hand. The collective moves shift the political center of gravity farther away from the Cabinet, a trend that has accelerated under presidents of both parties.

At the same time, Obama's reorganization suggests a willingness to tolerate, and even encourage, competing power centers within his administration, but it is unclear how that will work in practice. Not only is he creating new positions with authority over key areas, he is filling his West Wing with people of stature equal to or even greater than the members of his Cabinet, including two former Cabinet officers and a former Senate majority leader.

David Axelrod, Obama's senior adviser, said issues like health care and energy “are so fundamental to our ability to right the economy in the long term that he knows he's going to have to drive a lot of that,” adding, “and he wants a high-powered staff in the White House to help him do that.”

While there may be some push-and-pull between the White House and Cabinet departments, Axelrod said the president-elect had emphasized during job interviews his insistence on cohesion. “He encourages debate,” Axelrod said. “He doesn't tolerate factionalism.”

The revamped arrangement indicates a shift in priorities away from those of President Bush, who spent much of his tenure fashioning a new national security apparatus in a time of war and terrorist threats. Obama's transition team is even considering undoing some of what Bush built in terms of security structures in the White House.

Obama completed his Cabinet choices on Friday before heading off for nearly two weeks of vacation in Hawaii, where he grew up. At a news conference in Chicago, he confirmed he would nominate Rep. Hilda L. Solis of California as labor secretary, Rep. Ray LaHood of Illinois as transportation secretary and former Mayor Ron Kirk of Dallas as U.S. trade representative.

He also announced that he would make Karen Mills, a venture capitalist from Maine, the head of the Small Business Administration.

With that, Obama has finished selecting his core team faster than any president-elect in decades. In trying to balance various constituencies and backgrounds, he assembled a 15-member Cabinet that includes six current or former members of Congress, three current or former governors and two Republicans.

Note to New S.E.C. Chief: The Clock Is Ticking
April 13, 2013

AFTER receiving unanimous support from the United States Senate, Mary Jo White was confirmed last week as the new head of the Securities and Exchange Commission. At her swearing-in, she praised S.E.C. officials for “vigorously enforcing the securities laws.”

Doubts remain, however, about how potent the S.E.C.’s enforcement has been, especially in the aftermath of the mortgage mania. So Ms. White has some work to do.

She surely has a long list of ideas for her S.E.C. stewardship. Here’s hoping that one priority is to determine, and ramp up, investigations and whistle-blower complaints that are approaching their five-year statute of limitations. For a lot of cases involving questionable practices and disclosures arising from the mortgage bust of 2008, time is running out.

A February ruling by the Supreme Court made this crystal clear. In a case called Gabelli v. S.E.C., the court ruled that the commission has no more than five years from the occurrence of a fraud to file enforcement actions. It cannot wait until it uncovers a violation to start that clock.

How many S.E.C. cases are up against that five-year limit? Outsiders have no way of knowing. But one whistle-blower complaint involving potentially misleading disclosures by SunTrust Banks, a regional bank holding company in Atlanta, serves as an example. Filed with the S.E.C. more than a year ago by a former SunTrust employee, it appears to be languishing even though time’s a-wasting.

The SunTrust whistle-blower complaint, which I reviewed, contends that company financial filings of recent years misrepresented the bank’s exposure to risky no-documentation mortgages that it underwrote from 2006 to 2008. Many were sold to Fannie Mae and Freddie Mac, the taxpayer-backed mortgage finance giants.

Shareholders have not been aware, the complaint says, that many mortgages SunTrust was selling to Fannie and Freddie in this period were so-called liar loans, with little to no documentation of borrowers’ income or assets. The bank maintained that it had little exposure to low-documentation loans, the complaint says.

As with many whistle-blower complaints, the person filing this matter asked not to be identified. Aegis J. Frumento, a lawyer at Stern Tannenbaum & Bell who represents the whistle-blower, said the plaintiff is an experienced mortgage underwriter at SunTrust who was disturbed by dubious practices at the bank.

Michael McCoy, a SunTrust spokesman, declined to comment on the whistle-blower’s allegations, saying the bank was unaware of the complaint. He said in a statement that the bank’s policy was to use Fannie’s and Freddie’s guidelines when underwriting loans that would be sold to them. Nevertheless, the complaint details how it says some SunTrust mortgage sales representatives manipulated an automated loan underwriting system to gain Fannie’s and Freddie’s approval for mortgages that did not meet those companies’ standards. These loans, sold mostly to Fannie, were called Agency Shortcut mortgages.

SunTrust sales representatives entered fabricated income and asset figures into the bank’s exclusive version of Fannie Mae’s Desktop Underwriting system, the complaint says. Fake numbers, it says, would generate automatic approvals for unqualified borrowers, “at the same time preventing underwriters from exercising proper oversight.”

That oversight was thwarted because once the system’s approvals kicked in, the complaint contends, underwriters in SunTrust’s due diligence department could not stop the loans from being sold to Fannie or Freddie. There was no turning off the assembly line.

The complaint contains several internal SunTrust documents to support its allegations. One is a promotional piece for sales reps that explains the Agency Shortcut mortgage. “It’s a SISA (Stated Income/Stated Asset) at full doc pricing,” it says. Translation: undocumented loans carried the same interest rate as a fully documented version.

Because of fabrications, the complaint says, Fannie Mae’s system recognized these loans as fully documented. But according to the complaint, the Agency Shortcut mortgage waived property inspections and did not require the borrower to sign the document that allows the Internal Revenue Service to provide a prospective lender with a borrower’s income. In addition, borrowers of these loans could have a debt-to-income ratio of up to 64.99 percent, an onerous level.

SunTrust terminated the Agency Shortcut program in April 2008, the complaint says. Two months before, Fannie Mae limited the number of times a sales rep could enter information on a single borrower, according to the complaint. This might have been in recognition that its underwriting system was being gamed by repeated efforts to gain a loan approval.

The complaint contends that SunTrust originated “tens of billions of dollars” in Agency Shortcut mortgages. It is unclear how many of these loans landed at Fannie or Freddie; Suntrust’s financial filings say the bank sold $98.6 billion in total loans to Fannie and Freddie during the three years ended 2008.

Support for the whistle-blower’s descriptions of lax lending at SunTrust seems apparent from the boatload of loans sold to Fannie and Freddie during the mortgage mania that the bank has had to buy back. Such repurchases are typically done with loans that failed to meet standards — like borrower quality — or other characteristics promised to the purchasers at the time of the sale.

Over the last three calendar years, according to its financial statements, SunTrust has repurchased $2.235 billion of mortgages, the bulk from Fannie. Fannie requests these repurchases, and documents show that Suntrust’s constituted the fifth-largest amount among lenders at the end of 2012. It ranked not far below the much larger JPMorgan Chase.

And at the end of 2012, SunTrust said it had $655 million in repurchase requests outstanding. Mr. McCoy, the spokesman, said the bank’s buybacks reflected its heavy concentration of lending in Georgia and Florida during the bubble.

“We sold a higher percentage of loans to Fannie Mae than did some of our competitors,” he said, “so it also stands to reason that our demands from Fannie Mae could be higher than some peers.” The loan types that included the Agency Shortcut have accounted for just 20 percent of the bank’s buybacks, he said.

It is unclear, of course, what might come of this whistle-blower complaint. The S.E.C. declined to comment.

The statute-of-limitations clock, meanwhile, is ticking. “I’m sure the S.E.C. takes the Gabelli decision seriously,” Mr. Frumento said. “The logic of the ruling is that the S.E.C. is supposed to know when there have been securities law violations because that’s their job. I think the S.E.C. may end up being too late to file a lot of cases that it is now sitting on. But not this one, yet.”

Elisse Walter, to temporarily succeed Schapiro.
SEC official Walter chosen to lead agency
Chairman Shapiro stepping down after stormy tenure at top

By MARCY GORDON AP Business Writer
Article published Nov 27, 2012

Washington - President Barack Obama has chosen Elisse Walter, one of five members of the Securities and Exchange Commission, to head the agency. Chairman Mary Schapiro will leave next month after a tumultuous tenure in which she helped lead the government's regulatory response to the financial crisis.

Walter will take over at a critical time for the SEC, which is finalizing new rules in response to the 2008 crisis. She can serve through 2013 without Senate approval because she's already been confirmed to the commission.  Obama will need to nominate a permanent successor before Walter's term ends in December 2013. News reports have suggested that Mary John Miller, a top Treasury Department official, might be a potential candidate.

Walter, 62, a Democrat, was appointed to the SEC in 2008 by President George W. Bush. Earlier, she was a senior official at the Financial Industry Regulatory Authority, the securities industry's self-policing organization. She served under Schapiro at FINRA, who led that group before becoming SEC chairman in January 2009.

"I'm confident that Elisse's years of experience will serve her well in her new position," Obama said in a statement.

Walter is likely to follow the path Schapiro established at the SEC, experts suggested.

At FINRA, Walter was Schapiro's "right-hand person," said James Cox, a Duke University law professor and expert on securities law. And as an SEC commissioner, Walter consistently voted with Schapiro on rule makings and other initiatives.

Cox said he wasn't surprised that both of Obama's choices to lead the SEC have come from an industry self-regulatory organization.

The Obama administration "is not an eager regulator of the securities markets," he said.

Still, Schapiro's challenges have probably been the most difficult any SEC chairman has faced, said John Coffee, a professor of securities law at Columbia University.  Schapiro took office after the Bernard Madoff Ponzi scheme and the financial crisis had eroded public and congressional confidence in the SEC. Since then, the agency has struggled with budgetary shortfalls.

"The Madoff scandal made Congress reluctant to fully fund the agency," Coffee said.

Coffee said he thought Walter's leadership of the SEC would closely resemble Schapiro's.

Schapiro "has to be commended for working incredibly hard and against high odds" to maintain the agency's budget, Coffee added. Still, the agency is "underfunded and overworked, and that's not about to change."
Schapiro will leave the SEC on Dec. 14. She was appointed by Obama in the midst of the worst financial crisis since the Great Depression. She also took over after the agency failed to detect the Madoff scheme.

Schapiro, 57, is credited with helping reshape the SEC after it was accused of failing to detect reckless investments by many of Wall Street's largest financial institutions before the crisis. And she led an agency that brought civil charges against the nation's largest banks.

In a statement Monday, Obama said, "The SEC is stronger and our financial system is safer and better able to serve the American people - thanks in large part to Mary's hard work."

But critics argued that Schapiro failed to act aggressively to charge leading individuals at those banks who may have contributed to the crisis. Consumer advocates questioned Schapiro's appointment because she had led FINRA.

Under Schapiro, the SEC reached its largest settlement ever with a financial institution. Goldman Sachs & Co. agreed in July 2010 to pay $550 million to settle civil fraud charges that it misled investors about mortgage securities before the housing market collapsed in 2007. Similar settlements followed with Citigroup Inc., JPMorgan Chase & Co. and others.

Schapiro, Head of S.E.C., Announces Departure
November 26, 2012, 10:15 am

Mary L. Schapiro, who overhauled the Securities and Exchange Commission after the financial crisis, announced Monday that she was stepping down as chairwoman of the agency.

In recent days, the S.E.C. informed the White House and Treasury Department that Ms. Schapiro planned to leave Dec. 14, becoming the first major departure from the Obama administration's team of financial regulators. Ms. Schapiro will also relinquish her position as one of the five members of the agency's commission, the group that oversees Wall Street and the broader financial markets.

"It has been an incredibly rewarding experience to work with so many dedicated S.E.C. staff who strive every day to protect investors and ensure our markets operate with integrity," Ms. Schapiro said in a statement. "Over the past four years we have brought a record number of enforcement actions, engaged in one of the busiest rule-making periods, and gained greater authority from Congress to better fulfill our mission."

The move, which follows a bruising four-year tenure, was widely telegraphed. Ms. Schapiro, 57, has confided in staff members for more than a year that she was exhausted and hoped to leave after the November elections.

In 2008, President Obama nominated Ms. Schapiro, a political independent, to head the S.E.C. at a time when extreme economic turmoil had shaken investor confidence in the country's securities regulators.

The agency was faulted for its lax oversight of brokerage firms like Lehman Brothers, which failed in 2008 and contributed to the worst economic downturn since the Great Depression. Just weeks before Ms. Schapiro started as chairwoman, the Wall Street investor Bernard L. Madoff was accused of running a large Ponzi scheme, further damaging the credibility of regulators like the S.E.C., which missed crucial warning signs about the fraud.

Ms. Schapiro, a lifelong regulator who previously ran the Commodity Futures Trading Commission and the Financial Industry Regulatory Authority, quickly gained a reputation as a consensus builder determined to repair the agency's reputation. A tireless preparer and self-described pragmatist, Ms. Schapiro overhauled the agency's management ranks, revived the enforcement unit and secured more money and technology at a time when other agencies were being asked to cut back. She also helped craft new rules for Wall Street oversight, as part of the Dodd-Frank regulatory overhaul.

"The S.E.C. came back from the brink," said Harvey L. Pitt, a former chairman of the agency under President George W. Bush. "I give her enormous credit for that."

Consumer advocates and other critics, however, say she failed to grab the bully pulpit at a time the country needed a vocal critic of Wall Street. Since the financial crisis, the agency brought few enforcement cases against the Wall Street executives at the center of the crisis.

The S.E.C. notes it has brought a record number of cases over the last two years. While no top banking executives have been charged, the agency has filed actions against 129 people and firms tied to the crisis.

There is no clear successor to Ms. Schapiro. Mary J. Miller, a senior Treasury Department official, is under consideration for the job, a person briefed on the matter said. Sallie L. Krawcheck, a former top executive at Citigroup and Bank of America, is also in the running, according to people with knowledge of the matter.

The agency's enforcement chief, Robert Khuzami, is a long-shot contender. Elisse B. Walter, a commissioner at the S.E.C., may step in to serve as interim chairwoman until a new one is confirmed.

As for Ms. Schapiro, few expect her to follow her predecessors and move into private legal practice, where she would defend the banks she has spent years regulating. Instead, they say she is more likely to seek out a position at a university or research group.

SEC boss: Agency examining companies
By MARCY GORDON, AP Business Writer Marcy Gordon, Ap Business Writer 33 mins ago

WASHINGTON – The head of the Securities and Exchange Commission confirmed Wednesday the agency is investigating several companies' actions in the run-up to the financial crisis of 2008.

SEC Chairman Mary Schapiro said "it would be safe to assume" that the agency is looking very closely at the conduct of a number of firms during this time. She did not name the companies.

Schapiro spoke in testimony to a House Appropriations subcommittee weighing the agency's request for about $1.3 billion for the budget year starting Oct. 1, a 12 percent increase from the current year.

Lawmakers want to know if the sort of accounting gimmick recently uncovered that was used by the collapsed investment firm Lehman Brothers to mask billions in debt was widely deployed on Wall Street.

The SEC's review of the Lehman Brothers disaster "has taken us down a path where we're looking broadly," Schapiro told reporters following her testimony.

The implosion of Lehman Brothers Holdings Inc. into the biggest bankruptcy in U.S. history in September 2008 precipitated the financial meltdown that plunged the economy into the most severe recession since the 1930s.

After saddling itself with tens of billions of troubled assets that couldn't easily be sold, Lehman masked $50 billion in debt and its perilous financial condition by using the so-called Repo 105 accounting gimmick, an examiner appointed by the bankruptcy court found in an extensive report issued last week.

"This cannot be tolerated again," said Rep. Jose Serrano, D-N.Y., chairman of the appropriations panel.

The Lehman collapse "could be an even greater tragedy" than the multibillion-dollar swindle by money manager Bernard Madoff, Serrano suggested, because it ignited a chain of events that threw millions of Americans out of work and brought hardship.

Questions have been raised about the supervision of Lehman by the SEC and the Federal Reserve in the months before its collapse.

"The culture of the agency is changing. It doesn't happen overnight," Schapiro told the lawmakers.

In the meltdown's wake, the SEC and the Justice Department launched wide-ranging investigations of companies across the financial services industry, believed to include insurer American International Group Inc. and mortgage giants Fannie Mae and Freddie Mac as well as Lehman. A year and a half after the financial crisis struck, charges haven't yet come in most of the probes.

The autopsy of Lehman issued last week by bankruptcy examiner Anton Valukas could serve as a valuable road map to the two agencies in their investigations, experts say.

Schapiro said Wednesday the report raised "some very interesting points" and would be "helpful."

SEC reins in short sellers with new restrictions
By Rachelle Younglai
Feb. 25, 2010

WASHINGTON (Reuters) – U.S. securities regulators adopted a new rule to restrict short selling more than a year after the financial crisis provoked cries to rein in investors who bet on a stock's decline.

The Securities and Exchange Commission voted 3-2 on Wednesday to approve a rule designed to put the brakes on a stock that is falling precipitously.  The new rule attempts to bridge the divide between those who argued a market-wide curb was needed to protect stocks from short sellers and others who said that restrictions would hurt market liquidity.

"The commission was cognizant of the benefits that short selling can provide to the markets," SEC Chairman Mary Schapiro said at a public agency meeting.

However, Schapiro said the SEC was also concerned that excessive downward pressure, accompanied by fear of unconstrained short selling, can destabilize markets and undermine investor confidence.  The SEC's actions drew a quick rebuke from famed short seller James Chanos, who said the new rule will harm investors' interests through higher transaction costs and missed opportunities.  Under the SEC's rule, if a stock fell by more than 10 percent in a day, a curb would kick in, allowing short selling only above the national best bid.

That restriction would last for the day the stock dropped and the day after.

Short-sellers bet on a stock's decline. In a short-sale, an investor borrows stock and sells it in the hope that its price will drop. When it does, the seller profits by buying back the stock at the lower price and returning the borrowed shares.


During the worst of the financial crisis, lawmakers and companies begged the SEC to clamp down on the short-sellers and said the uptick rule should be reinstated.

First adopted after the 1929 market crash, the uptick rule allowed shorting only if the last sale price was higher than the previous price. But the SEC abolished it in 2007 after concluding that it was no longer effective in modern markets.

The two Republican commissioners, Kathleen Casey and Troy Paredes, dissented and said there was no firm foundation for adopting the new short sale rule.  Paredes said there was no way to know whether implementation of the rule would boost investor confidence. "Human psychology is difficult to predict," he said.

Casey suggested that those who have been clamoring for the old uptick rule will not be satisfied until the SEC reinstated the Depression-era rule.  Casey and Paredes both raised concerns over potential compliance costs that are estimated to be in the billions of dollars. Paredes questioned the logic behind the 10 percent threshold and said there was no empirical data or analysis to support this.

The new SEC rule goes into effect 60 days after it is published in the government's official federal register. The market will then have six months to comply with requirements.

SEC Chief Backs 'Systemic Risk Council' Idea

Filed at 9:23 a.m. ET

May 8, 2009

WASHINGTON (AP) -- The head of the Securities and Exchange Commission favors a new proposal for federal regulators sharing oversight of companies that pose financial risks to the economy.

SEC Chairman Mary Schapiro said she's ''inclined toward'' the idea floated this week by the head of the Federal Deposit Insurance Corp. for a new ''systemic risk council'' to monitor large institutions against financial threats. The council would include the Treasury Department, Federal Reserve, FDIC and SEC.

Congress is working to craft an overhaul of U.S. financial rules to prevent a repeat of the crisis that plunged markets worldwide into distress.

Speaking to the Investment Company Institute, the mutual fund industry's biggest trade group, Schapiro says she is concerned about an ''excessive concentration of power'' over financial risk in a single agency.

SEC Chief Says New Short-Selling Rules a Priority
Filed at 11:32 a.m. ET

May 5, 2009

WASHINGTON (AP) -- The head of the Securities and Exchange Commission said Tuesday she is making the issue of new rules restricting short-selling a priority as the agency hears from an array of interests about ways to limit trades that bet against a stock.

Investors and lawmakers have been clamoring for the SEC to put new brakes on trading moves they say worsened the market's downturn.

''I have made it a priority to evaluate the issue of short-selling regulation, and ensure that any future policies in this area are the result of a deliberate and thoughtful process,'' SEC Chairman Mary Schapiro said at the start of a public ''round-table'' meeting organized by the agency.

Schapiro has said the SEC must evaluate the costs and benefits of new restrictions.

Representatives of companies including General Electric Co., Credit Suisse, JPMorgan Chase & Co., Charles Schwab Corp. and Fidelity Investments, as well as the New York Stock Exchange, the Nasdaq Stock Market and several universities are participating in the forum.

One option the SEC has advanced is restoring a Depression-era rule that prohibits short sellers from making their trades until a stock ticks at least one penny above its previous trading price. The goal of the so-called uptick rule is to prevent selling sprees that feed upon themselves -- actions that battered the stocks of banks and other companies over the last year.

Another approach would ban short-selling for the rest of the trading session in a stock that declines by 10 percent or more.

Schapiro and the other four SEC commissioners voted unanimously last month to put forward five alternative short-selling plans. They could settle on one and formally approve it sometime after the 60-day public comment period that began in early April.

Short-selling involves borrowing a company's shares, selling them, then buying them back when the stock falls and returning them to the lender. The short seller pockets the difference in price.

Many financial and some other company stocks were targeted by short sellers in the market turmoil that began in mid-2008. GE was among 870 U.S. companies, mostly financial institutions, whose stock was subject to an unprecedented ban against all short-selling put in effect by the SEC last fall. The ban remained in place for several weeks until Congress enacted the $700 billion financial bailout plan.

Short-selling is legal and widely used on Wall Street. But as the market has plunged, investors and lawmakers have pressed the SEC to reinstate the uptick rule. They say its absence since mid-2007 fanned market volatility, prompting bands of hedge funds and other investors to target weak companies with an avalanche of short-selling.

Although many in the public blame short-selling for enflaming market volatility over the past 18 months, Schapiro has noted there is no ''specific empirical evidence'' that the absence of the uptick rule fueled it. Schapiro has acknowledged the SEC's difficult task in striking a balance between stemming market abuses to bolster investors' confidence and stifling the legitimate benefits of short-selling.

Proponents of short-selling say it can make markets more efficient, bring in more capital and raise warning signs about weak or badly managed companies. Professional short sellers and some analysts also have warned that restricting short-selling could distort edgy markets.

But companies and regulators maintain that the practice widened the scope of the financial crisis and contributed to the collapse in value last fall of many bank stocks and the demise of Lehman Brothers.

Another option floated by the SEC, is a ''circuit breaker'' for stock prices. That approach, in three variations, either bans short-selling outright for the rest of the trading session in a stock that declines 10 percent or more, or restricts short-selling of the stock for the rest of the session based on its previous sale price or highest bid.

The fifth alternative, known as an upbid rule, would allow short sellers to come in only at a price above the highest current bid for the stock.

SEC Chief Speeding Penalty Process for Violations

Filed at 1:12 p.m. ET
February 6, 2009

WASHINGTON (AP) -- The new head of the Securities and Exchange Commission is ending a practice that she said had slowed the agency's enforcement efforts against corporate wrongdoing.

In her first public address as SEC chairman, Mary Schapiro said Friday that she was ending a two-year policy requiring agency enforcement attorneys to get approval from the commissioners before negotiating fines and penalties with companies accused of violations.

That practice ''just sends the wrong message'' and has caused delays, Schapiro said. It is among the steps she said she is taking to revitalize the SEC's enforcement efforts and bolster investor protection.

But the private sector also has to do its part to help restore investor confidence, she told a gathering of securities lawyers and SEC staff members.

''There needs to be a new era of responsibility on Wall Street and throughout our markets to ensure that wrongs don't occur in the first place,'' Schapiro said. ''The sooner that Wall Street works to repair its own problems, the sooner investors will once again find the confidence to invest in what should be the finest markets in the world.''

Schapiro, named by President Barack Obama in December to head the SEC, took the agency's helm at a time when it is being called on to help restore investor confidence shattered by the worst financial crisis in more than 70 years. The SEC has faced heavy and unrelenting criticism over its failure to discover the $50 billion Ponzi scheme allegedly run by money manager Bernard Madoff -- despite credible allegations against him being brought to the agency over the course of a decade.

Five high-ranking SEC officials, including the agency's enforcement director Linda Thomsen, received a tongue-lashing from lawmakers this week who accused them of impeding their inquiry into the SEC's breakdown over the Madoff affair.

It was a far friendlier reception Friday for officials such as Thomsen, who cited a list of recent high-profile enforcement cases by the agency.

Schapiro's announcement that the more formal approval process for penalties is being shelved drew applause from the audience. She outlined other steps to speed enforcement efforts at the agency. Those include changes to the process for issuing subpoenas in investigations, and improvements in the handling of tips and whistleblower complaints regarding fraudulent activity.

''Anything you do to quicken the process should be good for investors,'' Larry Ellsworth, an attorney at Jenner & Block who formerly worked in the SEC's enforcement trial division, said during a break in the conference.

Schapiro also said she will work to improve the effectiveness of the SEC's process for inspecting brokerage and investment firms.

The agency likely will take further action to address the conflicts of interest among the big credit-rating agencies and to give shareholders a greater say in who sits on company boards. A new investor advisory committee will be formed to gather views from parties outside the traditional power corridors of Wall Street and Washington, Schapiro said.

Asked about speculation that current rules requiring banks to mark down assets could be suspended as a form of relief in the financial crisis, Schapiro noted the SEC had recently recommended the so-called ''mark-to-market'' accounting requirements be retained with only possible revisions ''around the margins.''

The accounting standard requires banks to carry assets, such as mortgage-backed securities, on their books at how they are valued currently. Critics contend that has made the financial crisis worse by forcing banks to slash the value of assets depressed because of market conditions.

Schapiro announced separately Friday that David Becker, who had been the SEC's general counsel from 2000 to mid-2002, is returning to the agency in that position and as senior policy director. Becker has been in private law practice.

Regulators on defensive over Madoff 
By MARCY GORDON, AP Business Writer 
Posted on Jan 27, 4:39 PM EST

WASHINGTON (AP) -- Government and industry regulators were put sharply on the defensive Tuesday at a Senate hearing over their failure to uncover the more than a decade-long, multibillion-dollar fraud scheme allegedly carried out under their noses by Bernard Madoff.

With charities and residents in their states ruined by losses from Madoff, members of the Senate Banking Committee demanded answers and accountability. They were scarcely satisfied with explanations given by two high-ranking officials of the Securities and Exchange Commission and the interim CEO of the securities industry's self-policing organization.

And they said the Madoff affair clearly showed the need for an overhaul of the patchwork system governing regulation of the financial markets - something the new Congress appears to be moving toward.

"Madoff's fraud was so immense and obvious, and took place over such a long period of time, it is simply inexplicable how the SEC missed it," declared Sen. Charles Schumer, D-N.Y. "It's as if there was a giant elephant standing next to the SEC in a rather small room for 25 years, and the SEC never noticed the elephant or even the smell of peanuts on its breath."

Schumer wants the SEC to get more funding from Congress to hire 100 new enforcement staff members and to move its inspections office from Washington headquarters to Wall Street.

The Banking Committee chairman, Sen. Christopher Dodd, D-Conn., demanded of SEC Enforcement Director Linda Thomsen and the other regulators, "What's happened here?"

"We want some action very quickly in this area," Dodd told them, saying he spoke for the whole committee. He asked the regulators to report to the committee every three months on progress they were making in improving their processes for detecting fraud.

Thomsen said the SEC is committed to finding ways to bolster fraud detection after its breakdown in the Madoff case. While the agency needs to improve its internal processes for pursuing cases, she said the SEC also needs authority to regulate parts of the financial system that escape oversight and more funding to carry out more investigations.

"... If we had more resources, we could clearly do more," Thomsen testified.

Thomsen faced grilling along with Lori Richards, who heads the SEC's inspections division, and Stephen Luparello, the interim chief executive of the Financial Industry Regulatory Authority. FINRA, the industry regulator, was headed until last month by Mary Schapiro, President Barack Obama's new SEC chairman.

Luparello was quick to say that Madoff carried out the scheme through his investment business and FINRA, the industry regulator, was empowered to inspect only the brokerage operation. He also said the SEC didn't share with FINRA the tips it received from outsiders on Madoff's operation.

The hearing provided a fresh volley of criticism of the SEC over its failure to discover the $50 billion Ponzi scheme allegedly run by Madoff, the prominent Wall Street figure and money manager now fallen into disgrace - despite credible allegations against him that were brought to the agency over the course of a decade. Against the backdrop of the worst financial crisis since the 1930s, the SEC also is accused of contributing to that disaster with lax oversight of Wall Street and the markets.

Shortly before senators began questioning the regulators on Capitol Hill, Schapiro was sworn in at SEC headquarters. She pledged commitment "to reinvigorating a financial regulatory system that must protect investors and vigorously enforce the rules."

"We will work to deepen the SEC's commitment to transparency, accountability and disclosure while always keeping the needs and concerns of investors front and center," Schapiro said.

Christopher Cox, then the SEC chairman, last month pinned the blame on the agency's career staff for the failure since at least 1999 to detect what Madoff was doing. He ordered the SEC's inspector general, H. David Kotz, to determine what went wrong. Kotz told a House hearing recently that he was expanding the inquiry to examine the operations of the divisions led by Thomsen, who has been the enforcement chief since mid-2005, and Richards, who has held that position since mid-1995.

Kotz has also been examining the relationship between a former SEC attorney, Eric Swanson, and Madoff's niece, Shana, who are now married. As an SEC attorney, Swanson was part of a team that examined Madoff's brokerage operation in 1999 and 2004. Neither review resulted in any action against Madoff, a former chairman of the Nasdaq Stock Market who was a member of SEC advisory committees.

Lawmakers say Madoff's alleged fraud, which caused massive damage to investors large and small around the world and may be the largest pyramid scam in history, reflects deep, systemic problems at the SEC.

Six weeks after Madoff's arrest in New York, thousands of victims who lost money investing with him have been identified - including ordinary people and Hollywood celebrities - as well as big hedge funds, international banks and charities in the U.S., Europe and Asia.

S.E.C. Choice Is Sued Over a Merger of Regulators
January 12, 2009

WASHINGTON — Mary L. Schapiro, who appears this week at a confirmation hearing on her selection to head the Securities and Exchange Commission, has been accused in two lawsuits of making misleading statements to quickly complete a merger of regulatory organizations that resulted in a 57 percent raise in her pay.

The merger involved the regulatory units of the New York Stock Exchange and the NASD two years ago. Ms. Schapiro was then head of the NASD, and she spent months traveling the country to persuade its 5,100 members to support it. The merger created a new self-regulatory organization, the Financial Industry Regulatory Authority, or Finra, where Ms. Schapiro is the chief executive. The Securities and Exchange Commission relies on Finra to police Wall Street.

Among the misstatements that she is accused of making is that the Internal Revenue Service had prohibited the NASD from paying each member more than $35,000 as part of the merger deal. Although an NASD proxy statement issued while the deal was pending said that the I.R.S. would not permit the organization to give more compensation to members, the I.R.S. did not actually issue a ruling on the matter until March 2007, long after the deal closed and three months after the members voted to approve it.

Lawyers representing Ms. Schapiro, Finra and other senior executives have fought vigorously to keep the I.R.S. ruling — and court references to details of that ruling — under seal. Last January, a federal judge in New York denied a request by The New York Times to unseal the ruling and other documents in the case.

Ms. Schapiro’s lawyer has denied the lawsuits’ allegations and, in a recent interview said that the second suit, filed shortly after her selection, is an opportunistic effort to pressure the defendants to settle. The first, dismissed by a federal district judge in New York, is on appeal.

At the S.E.C., Ms. Schapiro would be leading a government regulator that has been battered by setbacks, including its failure to uncover the apparent long-running fraud at Bernard L. Madoff Investment Securities. A recent report by the S.E.C.’s own inspector general said the agency had failed to adequately police the markets and regulate Wall Street’s largest investment banks. Congressional critics have said that the S.E.C.’s shortcomings contributed to the financial crisis.

The strongest proponents of the merger that created Finra were the more than 200 firms that were members of both the NASD and the New York Stock Exchange. The merger significantly lowered their regulatory expenses, but many of the smaller members were concerned about what benefits they might receive from it.

In an effort to get enough votes from the smaller firms, NASD offered each member $35,000, for a total of about $178 million, and a smaller commitment to reduce future assessments.

Executives said that amount was derived from a calculation of efficiencies from the consolidation of the organizations. NASD listed its total outstanding equity in an annual report of more than $1.6 billion. NASD officials, including Ms. Schapiro, said at the time that the organization could not make a greater payment because the I.R.S. had opposed it because the NASD is a nonprofit organization.

The lawsuits challenge that assertion, saying that evidence that remains sealed undermines the NASD’s description of the I.R.S. ruling. Also sealed is an independent fairness opinion on the merger by the investment bank Houlihan Lokey Howard and Zukin Financial Advisors.

“Our cases raise questions about the transparency, truthfulness and candor of the NASD and its leadership in a major financial transaction with its own members,” said Jonathan W. Cuneo, the lead lawyer in both cases for the member firms. “It’s certainly ironic that the case involves the NASD, which is charged with policing those values in others.”

Defense lawyers said in court papers and an interview that no material misrepresentations were made. They assert that the top executives of the organization, as regulators, are entitled to absolute immunity from lawsuits. They say that the members of the NASD were not entitled to greater compensation because they do not have the same rights as shareholders of a corporation.

“These lawsuits are meritless, and the second suit is just a dressed-up version of the first one that was rejected by a federal judge,” said F. Joseph Warin, a lawyer representing Finra and Ms. Schapiro. “The lawyers are the same, and the arguments are virtually identical. The second suit was filed days after Ms. Schapiro was nominated to become chairman of the S.E.C. It looks to me like a desperate effort to leverage Mary’s nomination to squeeze money out of Finra before her confirmation vote — a last-second Hail Mary pass.”

Mr. Cuneo said that the second lawsuit was in the works long before the announcement of Ms. Schapiro’s appointment and that its filing had nothing to do with her selection.

Herb Perone, a spokesman at Finra, said that following the customary practice of presidential appointees, Ms. Schapiro would not comment about the case while her confirmation proceedings were pending. The Senate banking committee is to consider her appointment on Thursday.

Lawyers involved in the proceeding say they have not been asked about the lawsuits by either the Obama transition team or the Senate banking committee.

An official at the Obama transition said that the lawsuit had been examined during the vetting process and that Ms. Schapiro would not have been selected if the lawsuit were viewed as a problem.

Kate Szostak, a spokeswoman for the Senate banking committee, said it would be examining Ms. Schapiro’s record as a regulator, including Finra’s supervision of the Madoff firm and her role in the merger of the NASD and the New York Stock Exchange. Ms. Schapiro has extensive regulatory experience. She served for six years as a commissioner at the S.E.C. before becoming chairwoman of the Commodity Futures Trading Commission in 1994. She arrived at the NASD in 1996 to be president of its regulatory arm.

Both lawsuits were filed as class actions on behalf of most of the members of Finra. The first was filed by Standard Investment Chartered. Federal District Judge Shirley Wohl Kram of New York dismissed that suit a year later without addressing the underlying allegations. Judge Kram’s dismissal has been appealed to the United States Court of Appeals for the Second Circuit, in New York.

A second lawsuit by Benchmark Financial Services, was filed three weeks ago in federal district court in New York. Benchmark was founded by Edward A. H. Siedle, a former lawyer at the S.E.C. who investigates pension fraud and other financial abuses. Mr. Siedle has been a plaintiff against other companies over the years and sued the NASD in 2002 after it blocked him from publishing a book about disciplinary proceedings against member firms.

“This case is about a corporate transaction effectuated by deception,” the complaint in the latest case said. “The officer defendants stood to gain substantially by the transaction, in terms of enormously higher compensation and benefits, vastly elevated prestige and powers resulting from the virtual monopoly regulatory authority created by the transaction, and the higher degree of control over the board of the consolidated entity.”

After the merger was completed, Ms. Schapiro’s total compensation rose to more than $3.1 million, from almost $2 million. The pay package, while not outsize by Wall Street standards, is large for a nonprofit organization. Other top executives at the new entity received pay increases of around 20 percent after the merger was completed.

SEC's Enforcement Accountant to Leave Next Month

Filed at 4:01 p.m. ET

December 30, 2008

WASHINGTON (AP) -- The top accountant in the Securities and Exchange Commission's enforcement branch is leaving for a private sector job next month, in what could herald a wave of departures from the embattled agency.

The SEC said Tuesday that Susan Markel, chief accountant in the agency's division of enforcement, is taking a job in the corporate investigations practice of AlixPartners LLP, a turnaround consulting firm.  Her departure comes as President-elect Barack Obama's SEC chairman-designate, Mary Schapiro, is likely to face tremendous pressure to bring sweeping changes to the agency, said James Cox, a Duke University law professor and securities law expert.

The SEC has come under fire for failing to detect signs that major Wall Street firms were in trouble. It also has been criticized for ignoring allegations brought to SEC staff about Wall Street money manager Bernard Madoff's businesses. Madoff has been accused of engaging in a massive fraud that may end up costing investors $50 billion.

With the SEC under intense scrutiny from the incoming administration and lawmakers a Capitol Hill, more high-level staff changes could be in the works, Cox said.  For current staffers, it is often better ''to leave on your own accord than to face the awkwardness of being asked to leave,'' he said.

Markel has been at the SEC since 1994, working on the agency's inquiries into Xerox Corp., Cendant, WorldCom and Cardinal Health Inc.

Linda Chatman Thomsen, director of the SEC's Division of Enforcement, praised Markel saying in a statement that ''her instincts are superb and her investigative abilities are unparalleled''

Obama has promised a tougher regulatory and enforcement approach after he takes office on Jan. 20.

''Instead of appointing people with disdain for regulation, I will ensure that our regulatory agencies are led by individuals who are ready and willing to enforce the law,'' Obama said earlier this month.

Meanwhile, the SEC also said Tuesday it obtained a court order to halt an alleged Ponzi scheme that collected more than $23 million from Haitian-American investors.  The SEC said investors in the scheme were promised a 100 percent return on their investments within 90 days. In reality, the Florida-based operator of the alleged fraud had lost at least $18 million over the past year and siphoned off at least $3.8 million for personal use, the SEC said in court documents.

Daniel Sutherland for The New York Times
In Nantucket, Mass., sits one of Frank Avellino’s homes. His dealings with Bernard L. Madoff, which began decades ago, are drawing scrutiny in the wake of the government’s Madoff investigation.

’92 Ponzi Case Missed Signals About Madoff
January 17, 2009

Seventeen years ago, federal investigators questioned for the first time whether Bernard L. Madoff was connected to a Ponzi scheme. Their inquiry centered on Frank Avellino, an accountant who had been funneling investors to Mr. Madoff since the 1960s.  The investigators did not get far. Within days, Mr. Avellino agreed to return to investors the money he and his partner had raised and to pay a small fine to the Securities and Exchange Commission. The inquiry petered out, and Mr. Avellino — represented in the case by Ira Lee Sorkin, the same lawyer who now represents Mr. Madoff — kept sending money to Mr. Madoff...full story here.

Obama Names Regulator Schapiro to Lead SEC
Filed at 10:53 a.m. ET
December 18, 2008

CHICAGO (Reuters) - President-elect Barack Obama on Thursday named longtime financial industry regulator Mary Schapiro to head the Securities and Exchange Commission amid calls for reform of the agency in the wake of a massive investment fraud scandal.

Obama also named Georgetown University law professor Daniel Tarullo to fill one of two vacancies on the seven-seat Federal Reserve Board, which is battling to ease a credit crisis and fend off a deepening recession.

And he picked former Treasury official Gary Gensler to head the Commodities Futures Trading Commission, which regulates the U.S. commodity futures and options market.

N E W    A D M I N I S T R A T I O N   N E W S

District Welcomes Obama as One of the Capital’s Own
January 3, 2009

WASHINGTON — Presidents come and go from this city. Hosting inaugurations is nothing new. But for residents here, over 92 percent of whom voted for President-elect Barack Obama, his inauguration this month is special.  The day ushers in hopes and expectations for a president who speaks to local residents and brings with it the excitement of a predominantly black city welcoming the nation’s first black president.  With the inauguration scheduled for the day after the Martin Luther King Jr. holiday weekend, the timing also strikes a chord for a city that was racked by riots after Dr. King’s assassination.

“For D.C., this inauguration is less like hosting a visiting official and more like throwing a homecoming party for a family member,” said Ronald Walters, professor of government and politics at the University of Maryland.

He added that normally, the inauguration is an exclusive black-tie affair. “This time,” he said, “it feels like the city has taken ownership of what is becoming a people’s party.”

At Ben’s Chili Bowl, one of the city’s oldest and most famous restaurants, the inauguration offers a certain historical reconciliation.

“It took about 40 years,” said Kamal Ali, the owner and son of the restaurant’s founder, Ben Ali. “But in terms of race relations, the celebration that day will bring this neighborhood, this city, full circle.”

In April 1968, four days of race riots after the King assassination left 12 people dead here. Huge swaths of what was then called Black Broadway for its concentration of black-owned clubs and theaters were destroyed. Ben’s Chili Bowl was one of the only restaurants along U Street that was not burned or ransacked.

“What happened here along U Street on election night when Obama won was the exact inverse of those race riots,” said Mr. Ali, recounting how on Nov. 4 the streets filled with racially diverse crowds who were initially kept out of traffic by a large and somewhat jittery police force. Eventually, the police opted to close down the area and let the partiers celebrate freely, he said.  Across the Anacostia River, in one of the city’s poorest sections, Thomas Thorton, 82, sat waiting for a bus.

“For us, for this side of the river, the inauguration is personal,” he said, standing in front of the hilltop Washington View Apartments, not far from the home of the abolitionist Frederick Douglass.

Mr. Obama’s message of renewed possibility resonates in Washington, he said, because this city, like few others, embodies extremes within inner-city and black America.  Washington has some of the highest incarceration and infant mortality rates in the country, yet it also has one of the largest populations of college-educated and upper-income African- Americans of any large city.

“It’s one day when all the folks in this city really can really come together and share something,” Mr. Thorton said of the inauguration. “We can think about how much has changed.”

Washington’s mayor, Adrian M. Fenty, reflects that change.  In choosing Mr. Fenty two years ago, residents here bucked the candidate selected by the party machine and opted instead for a younger, more liberal bi-racial candidate who relied on a populist message and a massive grass-roots effort to straddle the city’s racial and class divides.

“Voters are not looking for categories,” said Mr. Fenty, who, like Mr. Obama, is the child of a black father and a white mother. “They’re looking for results.”

Mr. Fenty added that the city was especially hopeful that Mr. Obama would help deliver voting rights for the city’s nearly 600,000 residents, who have no voting representation in Congress.  More than any prior presidential candidate, Mr. Obama has supported changing that, and with a Democratic majority in Congress, there is a real chance the city could win those rights.  Mr. Fenty said that early in Mr. Obama’s candidacy, he told Mr. Obama that he wanted to support him but that voting rights was one issue Mr. Obama needed to get firmly behind.

“He promised he would,” Mr. Fenty said.

In an early test of Mr. Obama’s commitment to follow through on that promise, the City Council last month sent him a letter asking him to put district license plates that bear the phrase “Taxation Without Representation” on the presidential motorcade. President Bill Clinton used the plates. President Bush did not, opting for different district plates without the phrase.  Asked if she thought this inauguration would be different than previous ones, Alice Mukabane, the co-owner of Safari DC, a Kenyan restaurant on Georgia Avenue, laughed.

“Of course, and not because of race,” she said.

Behind her a collection of posters and photographs of Barack and Michelle Obama hung on a wall in an area she calls the “Obama Corner.”

“Obama came from a home with just one parent,” Ms. Mukabane said. “He worked as a community organizer. He has ties to inner-city Chicago. He can relate to real people like those who live here.”

Like so many tourists, foreign dignitaries and Capitol Hill staffers, presidents are transients here. To them, the city consists only of an eight-block radius around the White House. Beyond that is hostile territory.  The hope among residents, however, is that Mr. Obama, already at ease in big cities from his years in Chicago, will get out more than Mr. Bush, who rarely ventured beyond official Washington.

“This city considers Obama as one of our own, and I think that will show on inauguration,” Ms. Mukabane said. “But after the inauguration, we’re also hoping he will see the city as his own.”

From the ceiling of her restaurant hung a large white banner filled with well-wishes written by customers. Four squares remained empty, reserved for the first family’s signatures.

Aretha Franklin to Participate in Inaugural Ceremony
By Katharine Q. Seelye
December 17, 2008, 1:02 pm

Aretha Franklin and Dr. Rick Warren, an evangelical minister of the Saddleback Church, are among the select group of people who will participate in Barack Obama’s inaugural swearing-in ceremony on Jan. 20.

Mr. Obama has also chosen Elizabeth Alexander, an African-American poet at Yale University, and some of the world’s premier musicians, including Itzhak Perlman and Yo-Yo Ma, to share the podium with him.

In honoring the civil rights movement, Mr. Obama has asked the Rev. Dr. Joseph E. Lowery, dean of the civil rights movement and co-founder with the Rev. Dr. Martin Luther King, Jr. of the Southern Christian Leadership Conference, to deliver the benediction.

The inaugural program, which begins about 10 a.m. on the West Front of the Capitol, is an historic ritual that is both an intensely personal statement by the new president and a way for him to set the tone of his new administration.

The program was announced today by the Joint Congressional Committee on Inaugural Ceremonies, chaired by Senator Dianne Feinstein, Democrat of California.

The program opens with musical selections by the United States Marine Band, followed by the San Francisco Boys Chorus and the San Francisco Girls Chorus. Ms. Feinstein will call the gathering to order about 11:30 and deliver opening remarks.

Dr. Warren, author of “The Purpose Driven Life,” will deliver the invocation. He will be followed by Aretha Franklin, the Queen of Soul, who sang “Someday We’ll All Be Free” and “Respect” at a concert for Bill Clinton in 1993, but not at the inaugural ceremony.

Justice John Paul Stevens will then administer the oath of office to Vice President-elect Joseph R. Biden, Jr.

John Williams, the composer whose music was heard at Mr. Obama’s victory party on election night in Grant Park, will compose a new piece to be played for the incoming president.

His new piece will be played by Mr. Perlman on violin, Mr. Ma on cello, Gabriela Montero on piano and Anthony McGill on clarinet. (Usually at this juncture in previous inaugurations an operatic soloist performs.)

Chief Justice John G. Roberts will administer the oath of office will then be administered to President-elect Obama.

At that point, Mr. Obama will deliver his inaugural address.

He will be followed by Ms. Alexander, who will read a poem, and Dr. Lowery’s benediction...

The ceremony will close with the United States Navy Band “Sea Chanters” singing the National Anthem...

Every four year the government issues this report (for the incoming President...)
COMING SOON...CLICK ON WHITE HOUSE (immediately below) to hear brief statement about prospects for "change."  Presidents do lunch (below, right).

Is this related?
Obama Team Urges Delay in Digital TV Transition
Filed at 2:51 p.m. ET

January 8, 2009
WASHINGTON (AP) -- President-elect Barack Obama is urging Congress to postpone the Feb. 17 switch from analog to digital television broadcasting.

In a letter to key lawmakers, transition team co-chair John Podesta warned Thursday that too many Americans who rely on analog TV sets to pick up over-the-air broadcasts won't be ready.

The incoming administration is pushing for a delay in part because the Commerce Department has run out of money for the coupons that subsidize digital TV converter boxes for consumers. People who don't have cable or satellite TV or a new TV with a digital tuner will need the converter boxes to keep their analog TVs working.

Obama officials are also concerned that the government is not giving consumers enough help with the TV transition.

Presidents Past, Present and Future
By The New York Times
January 7, 2009, 12:31 pm

President-elect Barack Obama met in the Oval Office today with President Bush and three former occupants of the White House: former Presidents Bill Clinton, George H.W. Bush and Jimmy Carter.

Mr. Obama called the meeting an “extraordinary gathering” and thanked President Bush for hosting the group.

“All the gentlemen here understand both the pressures and possibilities of this office, and for me to have the opportunity to get advice, good counsel and fellowship with these individuals is extraordinary and I’m very grateful to all of them. But again thank you, Mr. President, for hosting.”

This is it now for President Obama would like to do what about this kind of "boot"?  How about our image in non-Muslim world?

Obama wants to 'reboot America's image

By JENNIFER LOVEN, AP White House Correspondent 
Posted on Dec 10, 11:45 AM EST

WASHINGTON (AP) -- President-elect Barack Obama says he will try to "reboot America's image" among the world's Muslims and will follow tradition by using his entire name - Barack Hussein Obama - in his swearing-in ceremony.

The U.S. image globally has taken a deep hit during President George W. Bush's two terms in office, primarily because of opposition to the U.S.-led invasion of Iraq, harsh interrogation of prisoners, the indefinite detention of terrorist suspects at Guantanamo Bay, Cuba, and mistreatment of inmates at the Abu Ghraib prison in Iraq.

Obama promised during his campaign that one of his top priorities would be to work to repair America's reputation worldwide, and that one element of that effort would be a speech delivered in a Muslim capital.

He pledged anew to give such a speech, though he declined to say whether it would happen during his first year in office.

"It's something I intend to follow through on," Obama said in an interview published Wednesday in the Chicago Tribune and the Los Angeles Times. "We've got a unique opportunity to reboot America's image around the world and also in the Muslim world in particular. So we need to take advantage of that."

Obama said his message would be twofold: that his administration will be unyielding in stamping out terrorist extremism but also "unrelenting in our desire to create a relationship of mutual respect and partnership with countries."

"I think the world is ready for that message," he said in the interview, conducted Tuesday.

During the campaign, Obama repeatedly faced questions about whether he is a Muslim, particularly in whisper campaigns that noted his middle name, that his father is Kenyan, and that he lived for a time as a child in Indonesia. Obama is a practicing Christian.

Asked if he would drop his middle name during his inauguration on Jan. 20, the president-elect said he would not.

"The tradition is that they use all three names and I will follow the tradition, not trying to make a statement on way or another," he said.

Obama also talked about the spiritual support he sought during his White House bid, particularly since he and his family left Chicago's Trinity United Church of Christ after inflammatory comments by its pastor, the Rev. Jeremiah Wright, became a campaign issue.

Obama said he set up a "sort of prayer circle across the country" of pastors who would pray for him every morning on a conference call. Obama said he sometimes joined the call, which involved leaders from various Christian denominations and other religious faiths.

"I'm not even sure that all of them voted for me," Obama said. "But they were willing to pray for me, and that's something that was wonderful."

On other topics:

-Obama would not put a timetable on issues important to organized labor, what he called his promise to "put an end to the kinds of barriers and roadblocks that are in the way of workers legitimately coming together in order to form a union and bargain collectively." Among other things, he has promised support for a card-check system for unions trying to organize a new workplace and for adding labor and environmental protections to the North American Free Trade Agreement. "I don't want to anticipate right now what sequences will be on these issues," Obama said.

-The man about to be the nation's first black president said he will make enforcing civil rights laws and making the criminal justice system color-blind top priorities for his administration. The Justice Department's Civil Rights Division "over the last eight years has had a lot of problems and really declining morale," he said.

-Obama said he, his wife Michelle and their two young daughters will make frequent visits during his presidency back to their home in Chicago, perhaps as often as every six weeks. "My Kennebunkport is on the South Side of Chicago," he said. "Our friends are here. Our family is here. And so we are going to try to come back here as often as possible."

Obama Unveils Team to Tackle ‘Historic’ Crisis

November 25, 2008

CHICAGO — With the financial crisis looming as a priority of his term, President-elect Barack Obama sought to put his imprint on efforts to stem the turmoil as he introduced his economic team on Monday, nominating Timothy F. Geithner as Treasury secretary and Lawrence H. Summers to head the White House Economic Council.

By naming a team deeply experienced in dealing with financial crises — Mr. Geithner was heavily involved over the weekend in the efforts to stabilize Citigroup — Mr. Obama underscored his determination to assure Americans and foreign investors that he would aggressively step into a leadership vacuum in Washington during the transition.

Moreover, by pledging that his economic team would begin work “today” on recommendations to help middle-class families as well as the financial markets, the president-elect sought to convey an impression of continuity and coordination, so that his administration can “hit the ground running.”

The president-elect also announced that he had chosen Christina D. Romer to head his Council of Economic Advisers and Melody Barnes as director of his White House Domestic Policy Council. Ms. Romer is an economics professor at the University of California, Berkeley, while Ms. Barnes is a longtime aide to Senator Edward M. Kennedy of Massachusetts.

The recent economic news, capped by the Citigroup effort, “has made it even more clear that we are facing an economic crisis of historic proportions,” Mr. Obama said at a news conference. He listed the drop in new home purchases, the surge in unemployment claims to an 18-year high and the likelihood of up to a million further job losses in the coming year.

“While we can’t underestimate the challenges we face,” he said, “we also can’t underestimate our capacity to overcome them to summon that spirit of determination and optimism that has always defined us, and move forward in a new direction to create new jobs, reform our financial system and fuel long-term economic growth.”

Responding to questions, Mr. Obama said that the struggling automobile industry could not be allowed “simply to vanish,” but that the companies should not get “a blank check” from taxpayers. And he said he was surprised that the auto companies’ chief executives were not better prepared with specific recovery proposals in their appearances last week on Capitol Hill. He also all but promised that the tax cuts pushed through Congress by President Bush would be repealed, or at least not renewed when they are scheduled to expire in 2010.

In an effort to inject confidence into the quavering financial markets, Mr. Obama made certain that his first formal cabinet announcement dealt with the economy, not, as is often the case, with national security or diplomacy.

In announcing the nominations of Mr. Geithner, president of the Federal Reserve Bank in New York, and Mr. Summers, a Harvard economist, Mr. Obama sent a signal that he was set to pursue aggressive, yet centrist policies, in devising moves to help jump-start the economy. He stretched his economic announcement into a two-day affair, planning another news conference on Tuesday to present the rest of his team.

The televised news conference, which came shortly after President Bush made brief remarks at the Treasury Department with Secretary Henry M. Paulson Jr., created a stark image of the transfer of power that is under way in Washington. Mr. Obama and his new team arrived in a room of dozens of reporters, while Mr. Bush stood nearly alone on the steps of the Treasury Department.

“This is a tough situation for America,” Mr. Bush said, adding that he had spoken to Mr. Paulson by phone Sunday while returning from an economic summit meeting in Peru. He said that he would keep Mr. Obama and his team informed of any major decisions, and added that Mr. Paulson was working in “close cooperation” with the Obama team.

Mr. Bush spoke to Mr. Obama on Monday about the rescue plan for Citigroup. Mr. Obama said he had also spoken Monday to Ben S. Bernanke, the chairman of the Federal Reserve.

“The truth is, we do not have a minute to waste,” Mr. Obama said. “These extraordinary stresses on our financial system require extraordinary policy responses.”

But he also sought to emphasize the sort of continuity that the markets can find comforting, vowing to “honor the public commitments made by the current administration.” He said his economic team would consult regularly with Congress and the current administration during the transition. Earlier in the day he spoke to President Bush about Citigroup.

Mr. Geithner worked through the weekend on the plan to stabilize Citigroup. Earlier, he was deeply involved in the bailout of American International Group. So he is intimately familiar with the developing crisis — and the controversial efforts so far to stanch it.

Mr. Obama has said repeatedly that there is “only one president at a time,” but the markets’ apparent concerns at the specter of a do-nothing transition — with neither President Bush nor Mr. Obama seeming to aggressively steer recovery efforts — has forced him into a more active role.

The Dow Jones industrial average soared Friday by nearly 500 points on word of the Geithner appointment and markets were up again by more than 200 points at midday Monday.

Obama Proposes New Economic Stimulus Plan
November 23, 2008

CHICAGO — President-elect Barack Obama on Saturday proposed an economic recovery plan designed to create or salvage 2.5 million jobs over the next two years, calling for “a plan big enough to meet the challenges we face.”

Mr. Obama, speaking in the weekly Democratic radio address, said he had directed his advisers to put together a two-year stimulus plan intended to jumpstart the economy and ease the financial crisis in the United States. The plan is larger than any initiatives he proposed during the presidential campaign.

“There are no quick or easy fixes to this crisis, which has been many years in the making, and it’s likely to get worse before it gets better,” Mr. Obama said. “But January 20th is our chance to begin anew, with a new direction, new ideas, and new reforms that will create jobs and fuel long-term economic growth.”

Mr. Obama said he would outline specific details of the proposal in the coming weeks, offering only a broad sketch of the plan on Saturday. He said the two-year effort would put Americans back to work through infrastructure and energy projects.

“These aren’t just steps to pull ourselves out of this immediate crisis, these are the long-term investments in our economic future that have been ignored for far too long,” Mr. Obama said. “And they represent an early down payment on the type of reform my administration will bring to Washington.”

For the second week in a row, Mr. Obama also recorded the radio address on video, which will be placed on YouTube to increase the audience. When he is sworn into office, he also intends to distribute his weekly radio address on the Internet.  In the address, Mr. Obama praised Congress for passing a provision to extend unemployment benefits, but said an economic stimulus plan was urgently needed and would be among the first orders of business when he becomes president.

“I know that passing this plan won’t be easy,” Mr. Obama said. “I will need and seek support from Republicans and Democrats, and I’ll be welcome to ideas and suggestions from both sides of the aisle.”

The message from the president-elect was, in effect, competing with President Bush’s weekly radio address, yet their approaches were different.  Mr. Obama did not mention the controversial proposal to rescue the auto industry. Mr. Bush, who is traveling in Peru, made that the centerpiece of his message and criticized Democratic leaders for adjourning without reaching agreement.

“If the automakers are willing to make the hard decisions needed to become viable, they should be able to receive the funds Congress already allotted to them for other purposes,” Mr. Bush said. “This is a critical issue for our economy and our country.”

Our question - with this concept, where does the telephone booth Superman always used come in?

Captain of each of the teams is President-Elect Obama?  Do responsibilities cross over departments by "dotted line" depending on the crisis or issue...then what?

IN-THE-IN BETWEEN-MONTHS...PLANNED-NEXT-CABINET:  Photo gallary from Hartford Courant; (?) = name mentioned in NYTIMES

Jim McGovern of Massachusetts(?) - nope.
  Former Governor Tom Vilsack

Agriculture Dept. Nominee to Push Food for Poor
Filed at 11:01 a.m. ET

January 14, 2009

WASHINGTON (AP) -- President-elect Barack Obama's nominee for secretary of agriculture said Wednesday that if he is confirmed he will work to boost the economies of farm communities, promote nutritious foods and help poor families put meals on the table.

Former Iowa Gov. Tom Vilsack, who has won wide support from farm groups and farm-state members of Congress, told the panel that the Agriculture Department faces ''historic challenges,'' mostly brought on by economic woes.

''Farmers and ranchers experience volatile markets while credit tightens,'' Vilsack said. ''Small towns and rural communities continue to lose people and jobs while critical infrastructure crumbles. These towns and communities find it increasingly difficult to keep pace with the ever-changing national and global economy.''

If confirmed, Vilsack would oversee the nation's nutrition programs, including food stamps, which make up a large part of the department's budget. Those programs are facing increased need in recent months as the economy has stumbled.

Despite problems in rural communities, the agricultural sector has fared better than many industries in recent years as the demand for renewable fuels has helped fuel record crop prices. But those prices have dropped in recent months.

''All of these are serious challenges that require a compelling new vision for the department,'' Vilsack said.

The farm-friendly panel has had few qualms with Vilsack, who was chief executive of one of the country's largest crop-producing states for eight years. The Democratic chairman of the panel is Iowa Sen. Tom Harkin, one of Vilsack's biggest supporters.

Vilsack has been friendly with corporate agriculture and was a mainstream choice for the post. But his nomination disappointed some activists who would like to overhaul the way the government's agricultural programs are run.

One of Vilsack's first priorities as secretary would likely be putting a $290 billion farm bill, enacted last year, into place. President George W. Bush, backed by fiscal conservatives, said the bill was wasteful and too costly. He vetoed the bill but Congress, with Obama's support, overrode the veto.

Vilsack has been a champion of corn-based ethanol, a central part of his short-lived campaign for president in 2007, and endorsed tax breaks for the ethanol industry. Renewable fuels policy, along with subsidies for that industry, is expected to be a top issue for the incoming secretary.

The former governor also made an overture to a growing number of food groups that have pushed for government support of more locally grown, environmentally friendly and nutritious foods, saying he will seek to work ''with those who seek programs and practices that lead to more nutritious food produced in a sustainable way.''

Vilsack is expected to push Obama's pledge to trim some wasteful farm subsidies, a position that Harkin and many other Midwestern members have endorsed. Southern lawmakers have long blocked lowering subsidy limits, however, as Southern rice and cotton crops require more investment.

The top Republican on the panel, Sen. Saxby Chambliss of Georgia, has said he hopes that Vilsack will listen to concerns from all parts of the country in his tenure at Agriculture but has otherwise voiced no objections to his nomination, saying at the hearing that he hopes it moves quickly.

Obama picks Vilsack, Salazar for Cabinet 
Posted on Dec 17, 6:37 AM EST

CHICAGO (AP) -- Barack Obama is on a pre-holiday roll to fill his Cabinet, with two more nominations in former Iowa Gov. Tom Vilsack for agriculture secretary and Colorado Sen. Ken Salazar to lead the Interior Department.

Obama was appearing with his latest picks Wednesday, his third news conference in as many days to announce Cabinet appointments. Transition officials said more announcements were likely this week, before Obama planned to head to Hawaii for Christmas vacation with his family.

Democratic officials familiar with the selection process discussed Obama's plans with The Associated Press, speaking on condition of anonymity because a formal announcement had not yet been made.

Vilsack will be the fourth former opponent of Obama in the campaign for the 2008 Democratic presidential nomination to join his administration. Others include Vice President-elect Joe Biden, Sen. Hillary Rodham Clinton, who has been tapped for secretary of state, and New Mexico Gov. Bill Richardson, selected to head the Commerce Department.

Vilsack announced his presidential candidacy in late 2006, positioning himself as a Washington outsider with heartland appeal, but he dropped out before the primaries because he had trouble raising money. He endorsed Clinton and campaigned actively for her in the long primary campaign against Obama. After Obama defeated Clinton, Vilsack endorsed him.

First elected governor in 1998, Vilsack, 58, carved out a reputation as a political centrist. He balanced Iowa's budget and resisted raising taxes, but was willing to spend on such priorities as education and health. He argued that pushing alternative energy sources was key to bolstering rural sections of the nation that are struggling economically and with vanishing populations.

Salazar will head a department that oversees oil and gas drilling on public lands and manages the nation's parks and wildlife refuges. Salazar is expected to try to balance the protection of natural resources while tapping the nation's energy potential - an approach Obama has said he wants.

Salazar co-sponsored a bill in Congress to create a new land conservation system under the Interior Department's Bureau of Land Management for permanently protecting 26 million acres of national monuments, wilderness areas and wild and scenic rivers. The legislation died during the lame-duck session of Congress after the November election.

The Colorado senator opposed drilling in Alaska's Arctic National Wildlife Refuge and objected to the Bush administration's efforts to lease Western lands for oil shale development. It will be up to the Obama administration whether to go ahead with leasing.

If Salazar is confirmed as interior secretary, Colorado Gov. Bill Ritter, a Democrat, will name a replacement to serve out the final two years of Salazar's term. Before being elected to the Senate in 2004, Salazar was Colorado's attorney general. He also headed the state's Natural Resources Department from 1990-1994.

Attorney General
Eric Holder, 2nd at Justice during Clinton Administration
, announces his retirement from the Cabinet in September 2014...who will follow?


Who should prosecute the sitting powers that be in Ferguson, MO. if a Federal Case emerges? Read about President Obama's choice...

U.S. Is a ‘Nation of Cowards’ on Race, Says Holder
By Bernie Becker
February 18, 2009, 2:03 pm
Attorney General Eric H. Holder Jr. told Justice Department employees that “this nation has still not come to grips with its racial past.”

In a speech marking Black History Month, Attorney General Eric H. Holder Jr. on Wednesday labeled the United States “essentially a nation of cowards” when it comes to race relations.

Mr. Holder, the first black attorney general, told Justice Department employees that “this nation has still not come to grips with its racial past” and suggested Black History Month could be used to spark more candid discussion of racial issues.

“This will be, at first, a process that is both awkward and painful, but the rewards are, I believe, potentially great,” Mr. Holder said. “The alternative is to allow to continue the polite, restrained mixing that now passes as meaningful interaction but that in reality accomplishes very little.”

Mr. Holder noted that increased dialogue would help advance what should be “nuanced, principled and spirited” debate on topics such as affirmative action.

Holder Sworn In as Attorney General
Filed at 10:33 a.m. ET
February 3, 2009

WASHINGTON (AP) -- Eric Holder, sworn in Tuesday as attorney general, promised a clean break with the past policies of the Bush administration, saying the Justice Department will be ''no place for political favoritism.''

''I am determined to ensure that this shall be a new day for the dedicated career professionals that I am so honored to call my colleagues,'' Holder told various employees and dignitaries gathered for the ceremony. He said he was committed to remaking the department ''into what it once was and what is always should be.''

Vice President Joe Biden administered the oath to President Barack Obama's pick for the nation's top law enforcement officer, the first African-American to hold the post.

Biden said the department, under Holder, would return to a past standard of ''no politics, no ideology. Only a clear assessment of facts and law.''

Hundreds of department employees packed the hallways and stairways to welcome Holder. To loud cheers and applause, he pledged to remake the department by ''taking it back to what it once was and always has to be.''

Holder was confirmed Monday evening by a 75-21 Senate vote, with all the opposition coming from Republicans.

Holder takes over a department wracked by Bush administration scandals over politically motivated hirings and firings. He has pledged to restore its reputation.

For starters, the new attorney general will learn the secrets of the Office of Legal Counsel, whose lawyers justified the use of controversial interrogation tactics and even declined to provide Bush administration documents to internal Justice Department investigators.

Holder also will play a major role in the future of terrorism detainees.

Obama, in a major policy shift, signed an executive order to close the U.S. detention center at Guantanamo Bay, Cuba, within a year. He also created a special task force to review detainee policy; Holder and Defense Secretary Robert Gates will serve as co-chairs.

That panel will look at options for apprehension, detention, trial, transfer or release of detainees and report to the president within 180 days.

Holder promised senators he would review why career prosecutors in Washington decided not to prosecute the former head of the department's Civil Rights Division. An inspector general's report last month found that Bradley Schlozman, the former head of the division, misled lawmakers about whether he politicized hiring decisions.

Another key question facing Holder is whether to reverse former President George W. Bush's order that three of his former top aides -- Karl Rove, Harriet Miers and Josh Bolten -- should not testify before Congress about firings of U.S. attorneys. Rove and Miers were former aides when Bush gave his order.

If Obama reverses Bush's policy, it would create a new legal issue: whether a former president's order against testifying would still be valid.

The Bush administration's warrantless surveillance program is certain to come under Holder's scrutiny.

After a lengthy and heated debate that pitted privacy and civil liberties concerns against the desire to prevent terrorist attacks, Congress last year eased the rules under which the government could wiretap American phone and computer lines to listen for terrorists and spies.

Holder promised one senator that he would re-examine a ruling by former Attorney General Michael Mukasey that immigrants facing deportation do not have a right to government-provided lawyers. Holder said he understands the desire to expedite immigration court proceedings, but added that the Constitution also requires that proceedings be fair.

Holder's chief supporter, Sen. Patrick Leahy, D-Vt., said the confirmation was a fulfillment of Martin Luther King's dream that everyone would be judged by the content of their character.

''Come on the right side of history,'' said Leahy, chairman of the Senate Judiciary Committee.

A Public Servant’s Private Stint Clouds His Cabinet Prospects
January 11, 2009

WASHINGTON — Chiquita was facing the prospect of federal charges for paying protection money to Colombian terrorists to safeguard its banana crops, and the company needed help. It turned to Eric Holder, an elite Washington lawyer well versed in the ways of the Justice Department.

“We were in an extraordinarily difficult position,” James E. Thompson, the general counsel for Chiquita, recalled in an interview. As a former prosecutor, Mr. Holder “carries a level of credibility with him, and that’s a valuable commodity,” he said.

Mr. Holder, now President-elect Barack Obama’s pick for attorney general, made his name publicly during a quarter-century in government service, first as a corruption prosecutor, then as a judge, and finally as the second-ranking official in the Clinton Justice Department. But it is as a power lawyer in Washington over the last eight years — billing up to a reported $1,000 an hour as a partner at the blue-chip firm of Covington & Burling — that Mr. Holder, 57, has made his wealth, as well as a reputation as a legal fixer for clients in crisis.

The Senate Judiciary Committee is to begin confirmation hearings on Mr. Holder on Thursday and if he is confirmed he will take over at the Justice Department with perhaps the most extensive private practice of any attorney general in modern times. Colleagues and admirers see his impressive range of work as a sign of a lawyer who has seen the law from all sides.  But some Republicans plan to press Mr. Holder about what they view as the potential conflicts of interest posed by his client list and how he would go about deciding whether to bow out of issues that come before him involving past clients, staff members said. Others question how his corporate ties will affect his work at the Justice Department.

“We’ve had eight years of an administration that turned a blind eye to corporate criminals,” said Terry Collingworth, a Washington lawyer who is suing Chiquita over the Colombian protection money and is facing Mr. Holder in the case. “We need someone with his level of experience and cachet to clean up the Justice Department. Yet I do have a concern and I sure hope that he doesn’t carry over his corporate defense practice into his approach to the job and how he handles these types of cases.”

When the National Football League was facing a legal and public-relations disaster in 2007 over a dogfighting scandal involving the Falcons quarterback Michael Vick, it turned to Mr. Holder to help navigate the maelstrom and represent the league. The pharmaceutical giant Merck, tapped him as its lawyer in a Medicaid overbilling case that ended in a $671 million civil settlement. And Rod R. Blagojevich, the now-impeached governor of Illinois, picked him, albeit briefly, to investigate a controversy over a casino development and possible ties to organized crime.

Already, Mr. Holder’s brief association with Mr. Blagojevich has drawn scrutiny from Republicans, who are waging a more spirited campaign against Mr. Holder’s nomination than many had anticipated. Until now, most of the scrutiny has focused on controversies during the nominee’s time as deputy attorney general at the end of the Clinton administration, particularly his role in the pardon of the fugitive financier Marc Rich. 

Link to a story we saved from the Wall Street Journal from folks remember things exactly the way they saw them in 2001?

In responding to written questions from the Senate Judiciary Committee, Mr. Holder made no mention of a 2004 announcement in which Mr. Blagojevich introduced him as a “special investigator” under a $300,000 contract with the state.

The appointment fell through, and Mr. Holder’s aides said his failure to mention the episode had been an oversight that was soon corrected. But some Republicans said they were troubled by the omission. Three Republican senators on the Judiciary Committee — Tom Coburn of Oklahoma, John Cornyn of Texas and Charles E. Grassley of Iowa — sent the governor’s office a Freedom of Information Act request last week seeking documents on the aborted agreement.

Senator Arlen Specter of Pennsylvania, the ranking Republican on the Judiciary Committee, sharply questioned Mr. Holder’s character and political independence in a speech last week on the Senate floor. Mr. Specter told reporters Friday that he wanted to see more information about Mr. Holder’s private practice, to assess whether he was up to the job of attorney general.

“Covington & Burling is a very prominent, prestigious firm,” Mr. Specter said. He said Republican investigators had not yet found anything untoward in Mr. Holder’s private practice, but added, “We’re looking through all his records.”

Mr. Holder’s record in private practice has received much less attention than his earlier work at the Justice Department, particularly his role in Mr. Clinton’s 2001 pardon of Mr. Rich. Mr. Holder is being scrutinized as well over his role in other Clinton-era controversies, including clemency granted by Mr. Clinton for 16 members of a militant Puerto Rican nationalist group and the Justice Department’s refusal to appoint an independent counsel to examine possible campaign finance abuses by the White House.

With Senate Republicans challenging Mr. Holder’s nomination, a string of well-known lawyers from both parties have come to his defense with testimonials in recent days, citing both his record at the Justice Department and in private practice as evidence of his strong qualifications. In a letter of support to the Judiciary Committee last Wednesday Louis J. Freeh, who was director of the Federal Bureau of Investigation before becoming general counsel of MBNA America Bank, told of hiring Mr. Holder as the trial counsel on a complicated case that he won for Mr. Freeh’s company.

“I could have engaged any lawyer in America to represent our bank,” Mr. Freeh wrote. He said, “I chose Eric” because of “his excellent legal skills, complete integrity, sense of fairness, courage and, most importantly, my confidence that he would provide me with his independent judgment without fear or favor.”

Those skills have paid off handsomely for Mr. Holder and his law firm. He has done extensive pro bono work for crime victims, inmates who say they were wrongly convicted and others, and he is well known in Washington for his charitable work and deep roots in the community. At the same time, he has entered a group of A-list lawyers in the capital who reportedly earn $800 to $1,000 an hour. (Covington & Burling would not comment on Mr. Holder’s fees.)

Last spring, when Mr. Holder was traveling extensively to campaign for Mr. Obama, he joked to The American Lawyer magazine, “I hope the management committee is going to be real understanding when they see my billable hours this year.”

Not that the absences appear to have hurt his bottom line. In his disclosure statement to the Judiciary Committee, Mr. Holder said he expected to earn more than $2.5 million from the law firm in 2008, from $2.15 million the year before. That total includes an expected separation payment of $1.3 million to be paid upon his resignation from the firm, if he is confirmed as attorney general.  Kathryn King, a spokeswoman for Covington & Burling, said the separation agreement was a result of a standard procedure at the firm. “The methodology has been established and applied by our firm for many years and was in place well before the parties knew that Mr. Holder was being considered for a federal appointment,” she said.

For all his recent prominence as a lawyer in private practice, friends say that Mr. Holder has been itching to return to the place where he first made his name.

“Eric truly loved his days at the Department of Justice,” said Billy Martin, a prominent Washington lawyer and longtime friend of Mr. Holder’s who worked opposite him as Mr. Vick’s defense lawyer in the dogfighting prosecution. “He was very good at being a public servant in a position of leadership, and I think he missed it.”

Obama team fills top Justice Department posts
Hartford Courant
By Josh Meyer, Washington Bureau
1:39 PM EST, January 5, 2009


President-elect Barack Obama has named four former Clinton administration officials as part of his new team at the Justice Department, including David Ogden as deputy attorney general and Harvard Law School Dean Elena Kagan as solicitor general, the White House's lawyer before the Supreme Court.

Kagan, the first female dean at Harvard Law, reportedly met Obama when the two worked on the University of Chicago Law School faculty in the 1990s. Ogden is heading Obama's Justice Department transition team, and his deputy on the team, Tom Perelli, was tapped Monday to be as associate attorney general. Obama also nominated Dawn Johnsen to be assistant attorney general for the Office of Legal Counsel.

There was no mention of whether Obama and his nominee for attorney general, Eric Holder, intend to replace those heading the key posts at the Justice Department's Civil, Criminal and National Security Divisions that oversee most of its high-profile prosecutions.

"These individuals bring the integrity, depth of experience and tenacity that the Department of Justice demands in these uncertain times," Obama said in a statement released by the transition team in Chicago. ``I have the fullest confidence that they will ensure that the Department of Justice once again fulfills its highest purpose: to uphold the Constitution and protect the American people. I look forward to working with them in the months and years ahead."

Holder's confirmation hearing is set for Jan. 15 before the Senate Judiciary Committee. And while there were early indications that he would be confirmed swiftly and with little if any opposition, Holder has more recently come under fire for his role in some controversial pardons and commutations of prison sentences issued by President Bill Clinton.

``The new attorney general, the department, and the nation will be well-served by this leadership team," Sen. Patrick Leahy (D-Vt.), chairman of the Senate Judiciary Committee, said in a statement about Obama's picks.

``Just as Senators on both sides of the aisle moved quickly in the last Congress to confirm nominees for the top positions at the Justice Department that were emptied by scandals, the Judiciary Committee will move forward promptly with confirmation proceedings for these nominees, beginning with Mr. Holder's hearing on Jan. 15," Leahy said.

``The need to have the new leadership team at the department up and running without delay could not be greater in light of the department's vital missions and the unprecedented politicization that has weakened morale throughout the department and dealt a blow to the country's confidence in the nation's top law-enforcement agency."

Ogden is currently a partner at Wilmer Cutler Pickering Hale and Dorr and serves as the Department of Justice Agency Review lead for the Obama-Biden Transition Project. He was nominated by Clinton, and served as assistant attorney general overseeing the Civil Division from 1999 until 2001. Before that, he served as chief of staff to Atty. Gen. Janet Reno and as counselor to the attorney general, associate deputy attorney general and as deputy general counsel at the Department of Defense's Office of Legal Counsel.

Ogden also was a partner at Jenner and Block in Washington, D.C., worked at the law firm of Ennis Friedman & Bersoff and clerked for Supreme Court Justice Harry Blackmun from 1982-1983. He received his BA in English literature from the University of Pennsylvania in 1976, summa cum laude, and his law degree from Harvard Law School in 1981, magna cum laude, where he also served on the Harvard Law Review.

Kagan has been teaching law at Harvard since leaving the Clinton administration in 1999, becoming a professor in 2001 and dean in 2003. She has taught administrative law, constitutional law, civil procedure, and seminars on issues involving the separation of powers.

From 1995 to 1999, Kagan served in the White House, first as associate counsel to the president and then as deputy assistant to the president for domestic policy and deputy director of the Domestic Policy Council. In those positions she played a key role in the executive branch's formulation, advocacy, and implementation of law and policy in areas ranging from education to crime to public health.

Kagan also taught at the University of Chicago Law School, and clerked for Supreme Court Justice Thurgood Marshall. She then worked as an associate in the Washington law firm of Williams & Connolly from 1989 to 1991. Kagan received her bachelor's degree from Princeton in 1981 (summa cum laude)and attended Harvard Law School, where she was supervising editor of the Harvard Law Review, graduating magna cum laude in 1986.

Perrelli, currently managing partner of Jenner & Block's Washington office, was counsel to Atty. Gen. Reno from 1997 to 1999, supervising a variety of civil matters at the Department of Justice. He later became deputy assistant attorney general, supervising the Federal Programs Branch of the Civil Division. Perrelli also graduated from Harvard Law School, magna cum laude, in 1991, where he was managing editor of the Harvard Law Review.

Johnsen, tapped for the Office of Legal Counsel, is currently a law professor at the Indiana University School of Law, Bloomington, where she teaches and writes about issues of constitutional law. She served in the Justice Department's Office of Legal Counsel as the acting assistant attorney general heading that office from 1997 to 1998 and as a deputy assistant attorney general before that. She received a BA from Yale University in 1983 and a JD from Yale Law School in 1986.

The Next Attorney General
NYTIMES Editorial
December 3, 2008

If he is confirmed by the Senate as attorney general, Eric Holder, President-elect Barack Obama’s choice for the job, will inherit a Justice Department that has been mired in scandal and that has seriously lost its way in critical areas. Under President Bush, the department has been used to defend the indefensible, like indefinite detention and torture of prisoners, and to undermine rather than protect Americans’ cherished rights. Mr. Holder could be an exemplary choice to face this daunting agenda, but he must answer serious questions before the Senate votes on his confirmation.

Mr. Holder, who would be the first African-American attorney general, has a particularly good record of public service for this job. He has been a United States attorney for the District of Columbia, a prosecutor in the Justice Department’s public integrity section and a deputy attorney general under President Bill Clinton.

He has been outspoken on the most critical issue facing the department: restoring the rule of law. In a speech in June, he described the Bush administration’s anti-terrorism policies as “excessive and unlawful.” And he has called for closing the prison in Guantánamo Bay, Cuba.

But senators should ask Mr. Holder to square those views with comments he made after the Sept. 11 attacks when he defended the Bush administration’s prisoner policies by declaring that “you can think of these people as combatants and we are in the middle of a war.”

Americans need to know that Mr. Holder does not believe that detainees can be held indefinitely without being brought before a judge — and that he would stand up for the Constitution when times are tough.

There are other aspects of Mr. Holder’s record that are of concern, starting with his role in Mr. Clinton’s pardon of Marc Rich, a billionaire financier who had fled the country rather than face federal tax-evasion charges whose ex-wife, Denise Rich, had contributed heavily to the Clinton presidential library and the Democratic Party.

The Senate needs to probe that serious lapse in judgment closely to seek assurances that Mr. Holder will be unyielding about keeping political influence out of the Justice Department, which was shamefully politicized under Alberto Gonzales.

In addition to signing off on torture memos and depriving detainees of basic rights, the Bush Justice Department adopted legal positions that greatly expanded executive power. These policies must be quickly undone. The next attorney general also will have to get to the bottom of the department’s disgraceful record of politicized hiring and firing. The attorney general will need to ensure that the investigation of the firings of United States attorneys for what appear to be partisan reasons is thorough and credible, and that witnesses who have been defying subpoenas, including Karl Rove and Harriet Miers, the former White House counsel, testify under oath.

There already are people — mainly Republicans — who say investigating these matters would be divisive. But the department’s integrity cannot be restored until the truth comes out and any wrongdoers are punished.

Many parts of the Justice Department must be pointed in a new direction. In the Bush years, the voting rights section worked against voting rights. The civil rights division too often sat idly by, or supported the wrong side, when rights were infringed. The antitrust division all but abandoned its responsibility to protect the public from the harm of monopoly power.

The attorney general is the nation’s top law enforcement official. The Senate must make sure that Mr. Holder is committed to the right kind of change in that job.

Pardon Is Back in Focus for the Justice Nominee

December 2, 2008

WASHINGTON — In the much praised career of Eric H. Holder Jr., President-elect Barack Obama’s choice to be attorney general, there is one notable blemish: Mr. Holder’s complicated role in the 2001 pardon of Marc Rich, a billionaire financier who had fled the country rather than face federal tax evasion charges.

Mr. Holder’s supporters portray him as having been a relatively uninvolved bystander caught in a Clinton-era controversy, the remarkable granting of a last-minute pardon by President Bill Clinton to a fugitive from justice. But interviews and an examination of Congressional records show that Mr. Holder, who at the time of the pardon was the deputy attorney general, was more deeply involved in the Rich pardon than his supporters acknowledge.

Mr. Holder had more than a half-dozen contacts with Mr. Rich’s lawyers over 15 months, including phone calls, e-mail and memorandums that helped keep alive Mr. Rich’s prospects for a legal resolution to his case. And Mr. Holder’s final opinion on the matter — a recommendation to the White House on the eve of the pardon that he was “neutral, leaning toward” favorable — helped ensure that Mr. Clinton signed the pardon despite objections from other senior staff members, participants said.

At the same time, Mr. Holder was not the sinister deal maker that his critics made him out to be. He let himself be drawn into the case by politically influential advocates, the review of the case shows, bypassing the usual Justice Department channels for reviewing pardon applications and infuriating prosecutors in New York who had brought the initial charges against Mr. Rich and his business partner.

Most perplexing to Justice Department allies was that Mr. Holder, by his own admission, involved himself in the discussions without a full briefing from his own prosecutors about the facts of the case, according to an associate of Mr. Holder who spoke on condition of anonymity.

Reid Weingarten, a lawyer for Mr. Holder, said that Mr. Holder had done nothing improper in his handling of the Rich matter and that conversations about it were routine and largely insignificant, in part because he assumed that Mr. Rich’s lawyer, Jack Quinn, was going through normal pardon channels.

“Mr. Holder assumed that this was all being handled in the normal course,” Mr. Weingarten said. He added that “there’s no question that Quinn played him, and it was astute by Quinn because he did catch Eric unawares.”

By all accounts, Mr. Holder’s role in the affair represents the biggest misstep of his career, and Mr. Obama’s aides focused on the issue before Mr. Holder was selected. Republicans on the Senate Judiciary Committee were consulted to gauge whether the pardon will prove an insurmountable hurdle.

Some Republicans in Congress are eager to revisit the Rich pardon, which was investigated at length in 2001 both by Congress and by a grand jury amid a public clamor that was fueled by hefty donations that Mr. Rich’s former wife had made to Mr. Clinton’s presidential library and to Democratic causes. Critics of the pardon also seized on reports from American intelligence officials that Mr. Rich’s oil-and-commodities company had done business with Iran, Iraq and other so-called rogue states.

“Marc Rich was a fugitive for nearly two decades, wanted by the federal government for fraud and tax evasion,” Representative Lamar Smith of Texas, the ranking Republican on the House Judiciary Committee, said Monday after the nomination was announced. “If a Republican official had engaged in this kind of activity, he would never receive Senate confirmation.”

Senator Arlen Specter of Pennsylvania, the ranking Republican on the Judiciary Committee, said in an interview on Monday that Mr. Holder’s role in the Rich pardon would be “a big question” at his Senate confirmation hearing.

A longtime prosecutor and a former judge, Mr. Holder remains a popular figure at the Justice Department eight years after he left, and his supporters insist he was made the “fall guy” for a controversy mainly of Mr. Clinton’s making.

Both Republican and Democratic admirers say Mr. Holder’s handing of the Rich affair, which he has acknowledged was flawed, should be balanced against the bulk of his law enforcement career.

“There’s no way you can have a high-profile job in Washington like the deputy attorney general without attracting some kind of controversy,” Larry Thompson, who succeeded Mr. Holder in that post in the Bush administration, said before Monday’s announcement. “That matter has been fully investigated, and it should be put behind him.”

Janet Reno, the former attorney general who was Mr. Holder’s boss, attributes the episode in part to the fast pace of pardon requests at the end of the Clinton administration. “There wasn’t much time to vet anybody,” Ms. Reno said in an interview.

But for Mr. Holder, his role in the Rich issue actually began more than two years before the end of the Clinton administration, almost by happenstance. At a corporate dinner in November 1998, Mr. Holder was seated at a table with a public-relations executive named Gershon Kekst, who had been trying to help Mr. Rich resolve his legal troubles.

When Mr. Kekst learned that his dinner companion was the deputy attorney general, he proceeded to bring up the case of an unnamed acquaintance who had been “improperly indicted by an overzealous prosecutor,” according to the Congressional inquiry.

A person in that situation, Mr. Holder advised, should “hire a lawyer who knows the process, he comes to me, we work it out.” Mr. Kekst wanted to know if Mr. Holder could suggest a lawyer. Mr. Holder pointed to a former White House counsel sitting nearby. “There’s Jack Quinn,” he said. “He’s a perfect example.”

Months later, Mr. Rich’s advisers settled on Mr. Quinn to lead the legal efforts, which stemmed from Mr. Rich’s indictment in 1983 on charges that he evaded taxes on tens of millions of dollars in revenue. At the time, it was the biggest tax fraud case in American history. He fled to Switzerland while the investigation against him was pending.

Mr. Quinn and his legal team sought to make the case that Mr. Rich and his partner, Pincus Green, had been wrongly prosecuted by the office of Rudolph W. Giuliani, who was the United States attorney in Manhattan at the time of the indictment, and that the charges against them should best have been treated as a civil matter, not a criminal one.

One of the first people Mr. Quinn contacted was Mr. Holder, his former colleague. Mr. Quinn wanted his help in interceding with prosecutors in Manhattan, and the two men had several conversations about the topic beginning in October 1999.

Federal prosecutors in the Southern District of New York were unwilling to negotiate with Mr. Rich’s lawyers while he remained a fugitive. Mr. Holder told Mr. Quinn in one phone call in November 1999 that he believed the prosecutors’ refusal to meet with the Rich lawyer was “ridiculous,” according to notes by Mr. Quinn obtained by House government reform committee investigators as part of a three-volume report on Mr. Clinton’s pardons.

In February 2000, Mr. Quinn sent Mr. Holder a memorandum entitled “Why D.O.J. Should Review the Marc Rich Indictment.” About a month later, Mr. Holder spoke with Mr. Quinn again and told him that “we’re all sympathetic” and that the legal “equities” in the issue were “on your side.” Pressed to explain the remark when he appeared before Congress a year later, Mr. Holder said that he meant only that he thought it was “unreasonable” for prosecutors in Manhattan not to meet with Mr. Rich’s lawyers and that he was not intending to assess the merits of the case.

By the fall of 2000, efforts to re-open the criminal case were dead, and Mr. Rich’s lawyers had moved on to the idea of a pardon.

Again, Mr. Quinn turned to Mr. Holder. On Nov. 21, 2000, at the close of a meeting on a separate topic, Mr. Quinn took Mr. Holder aside, told him he was planning on filing a lengthy pardon petition with the White House and asked whether the White House should contact Mr. Holder for his opinion, according to Mr. Quinn’s account. (Mr. Holder said he did not remember the conversation but did not dispute the account.)

In a separate e-mail message that Mr. Quinn sent three days before that to other members of the Rich team, under the topic “Eric,” he wrote: “Spoke to him last evening. Says to go straight to W.H. Also says timing is good.”

For the next months, Mr. Rich’s team pressed ahead with the pardon, soliciting foreign leaders from Spain, Israel and elsewhere to speak to the White House about Mr. Rich’s philanthropic work.

Still, many White House officials remained opposed to the idea because of the precedent it would set to pardon a fugitive. Prosecutors in New York would “howl,” Mr. Holder told Mr. Quinn.

On Jan. 19, 2001, Mr. Quinn called Mr. Holder and let him know that the White House would be contacting him for his recommendation on the pardon, which he said was receiving “serious consideration.” Mr. Holder told him that he did not have a personal problem with the pardon, and Mr. Quinn quickly passed on the gist of the conversation to the White House.

A few minutes later, Mr. Holder got a call from Beth Nolan, the White House counsel, who had opposed the pardon idea and was now surprised to hear that Mr. Holder apparently felt differently.

Mr. Holder, according to Ms. Nolan’s testimony, told her that if the Israelis were in fact pushing for the pardon, he would find that “persuasive” and would be “neutral leaning toward” favorable.

Mr. Holder told Congressional investigators that he assumed the pardon was going to be rejected and that his comments were not intended to push it through. “I was ‘neutral’ because I didn’t have a basis to make a determination,” he testified.

But investigators for the House government reform committee, in a final report in 2002, concluded that Mr. Holder’s input on Jan. 19, 2001, had a “significant impact” in giving the Justice Department’s imprimatur, even though no formal review was conducted by the department’s pardon office, which normally reviews all clemency applications. The next day, Mr. Clinton signed the pardon, setting off the final scandal of his terms.

After Mr. Clinton left office, a federal grand jury investigation was eventually closed with a finding that no criminal wrongdoing had occurred.

Holder Is Poised to Scale New Heights
December 1, 2008

Nine-year-old Eric Holder sat in the basement of his family’s house in Queens, enraptured by the inaugural words of the fresh-faced president from Massachusetts. The broadcast on the tiny television set faded in and out, muffled by the steady roar of jetliners at nearby La Guardia Airport, but John F. Kennedy’s call for hope and change was enough to stir the boy’s desire to serve.

By ninth grade, Ricky, as he was known to his friends, was standing before his peers in the auditorium making his case for student body president. In high school, towering above his classmates and teachers at 6 feet 3 inches tall, he passionately debated how to rid African-Americans of their second-class status.

Now, four decades later, Eric Himpton Holder Jr., 57, the Bronx-born son of Miriam, an Episcopal church secretary from New Jersey, and Eric Sr., a real estate broker from Barbados, is expected to be nominated on Monday by President-elect Barack Obama to become the attorney general of the United States. He would be the first black person to do so.

“I didn’t have any idea what I would be when I grew up,” Mr. Holder said in an interview last week, his first public comments since reports of his selection emerged in November. Attorney general, he added, was “not on the radar.”

Growing up in East Elmhurst, Queens, Mr. Holder lived in two worlds. There was the neighborhood kid, a basketball addict who drew smiles from girls and once cut class to watch the Mets. Then there was the overachiever, a history scholar who buried himself in books and newspapers and was plucked from his local public elementary school to attend a program for gifted students at another school.

“I had this dual existence,” he said. “I wanted to hang. I was still one of the guys. I tried to convince them that I was still cool.”

In his classes, he was one of only a few black students, but even as sit-ins and freedom rides in the South roiled the debate on civil rights, school life remained mostly free of racial tension. His classmates were more concerned with who was free to play softball after school than the color of anyone’s skin, he said.

It was not until he started middle school in 1963, when clashes over integration at the University of Alabama captured the national spotlight and President Kennedy was assassinated, that he grew conscious of the racial complexities of American society, he said.

“That clicked the switch in me,” Mr. Holder said. He began to read book after book on World War II and biographies of public servants, drawing inspiration from the story of redemption he saw in “The Autobiography of Malcolm X.”

He soon sought leadership roles himself. As a ninth grader running for student body president on the Patriot Party ticket, he cut up and rearranged magazine ads into “Vote for Holder” insignia.

His victory showed him that his intellectual gifts and witty, down-to-earth demeanor could propel him to high places, his classmates said.

That same year, his high score on a grueling city test earned him a seat at Stuyvesant High School, where the prom was sometimes canceled because of a lack of interest and students had a penchant for reciting class rankings (Mr. Holder graduated 363rd in a class of 721 boys).

“We didn’t know if a black student was going to get admitted,” recalled his younger brother, William Holder, a retired Port Authority police lieutenant. “When he got in, it was huge.”

At Stuyvesant, whose students were primarily white and Jewish, Mr. Holder said his first year was one of the most difficult periods of his life, as he adjusted to a hefty workload and an hour-and-a-half commute. When the stress of taking biology and chemistry at the same time grew overwhelming, he turned to his mother for advice. She told him to stick it out, he said.

It was a refrain Mr. Holder had heard before. His parents made clear the importance of education and told their children they could achieve anything. “We weren’t taught limits,” his brother said.

Eric Sr., who is no longer alive, and Miriam Holder kept a close watch on their two children. They knew at whose house they could be found on any given night. On Sundays, if the children tried to feign illness to get out of going to church, it took only the rumble of their father marching down the hallway to rouse them, William Holder said.

At Stuyvesant, Eric joined the Afro-American Society and became co-captain of the basketball team, the Peglegs, helping to lead his peers to 2 wins and 12 losses. “When you’re on a team that doesn’t win very much, you can either get angry at teammates or bond,” said Paul Grayson, a former Pegleg who is now a Manhattan accountant. “He bonded.”

Mr. Holder’s years at Stuyvesant progressed as opposition to the Vietnam War escalated, but though he opposed the war, he did not actively protest it.

When he arrived at Columbia in 1969 as a boyish-looking freshman, he was recruited by upperclassmen to help take over the R.O.T.C. office. Armed with pillowcases and sheets, he joined several dozen students and christened the office as a student center named for Malcolm X.

Steven Sims, a close college friend, said, “It was very galvanizing because, for many of us, it allowed us to further develop and embrace our black consciousness.”

In school, Mr. Holder said, he chose to major in American history as a means to explore his own heritage and to use as a prism through which to examine current events.

Longing to escape the elite world at Columbia, he spent Saturdays taking underprivileged teenagers around New York City. He tried to expose the poor and predominantly black children living near campus to the cosmopolitan richness that had informed his own worldview.

“It just seemed incumbent on me, and many of us, that as students of color, we had to be engaged in this community of color that surrounded our campus,” he said.

Some weekends, a group of friends would pile into his 1971 blue Plymouth Duster and head to East Elmhurst for home-cooked meals — macaroni, fish cakes, pepper pot soup. At night, they went to parties or to women’s colleges in search of dates.

Still, Mr. Holder’s behavior hewed to his parents’ principles. “Even in our wildest moments,” Mr. Sims said, “you didn’t want to embarrass Mother Holder.”

Mr. Holder’s attraction to public service pleased his parents. “He was always interested in being able to maybe change things, help those folks that needed it,” said Ms. Holder, 84.

As history unfolded around him — the shootings of students at Kent State and Jackson State — Mr. Holder saw the law as an instrument of change. “The law inevitably is wound up with some great political movements, social movements,” he said. “I wanted to be a part of that.”

He attended law school at Columbia, becoming a role model to black students pursuing public service, his classmates said. He clerked for the NAACP Legal Defense and Educational Fund and joined the Justice Department after graduation, working his way up to deputy attorney general under Bill Clinton.

But he always made time for basketball, the game that had grounded him since his days on the cracked courts in East Elmhurst, where, his friends said, he received jealous glances for his good aim and easy dunk.

“When I was on that court, that was it,” he said. “I loved the competition.”

Mr. Holder said he took with him many of the lessons he learned on the court — the art of preparation, discipline and hard work. But as he is about to ascend to the top of the American legal system, there is one opponent he has yet to take on: his future boss, Mr. Obama, himself a devotee of pickup basketball.

Mr. Holder said the soon-to-be president had an advantage in age (Mr. Obama is 10 years younger). And Mr. Holder’s knees are not what they used to be. Still, he said, he is skeptical of Mr. Obama’s chances: “I’m not sure he’s ready for my New York game.”

A Pardon to Remember
November 22, 2008

WHEN President Bill Clinton pardoned a billionaire fugitive from justice on his last day in office, even usually loyal Democrats were dismayed. Representative Henry Waxman of California called it “bad precedent” and “an end run around the judicial process.” He said it appeared to set a double standard for the wealthy and powerful.

The billionaire was Marc Rich, a commodities trader, and his pardon is a subject of discussion again because Eric Holder, Mr. Clinton’s deputy attorney general at the time and a key figure in the clemency process, is reported to be Barack Obama’s choice for attorney general. In the years since the Rich pardon, Mr. Holder has said he “never devoted a great deal of time to this matter.” He also told an interviewer that, in hindsight, he wished that the Justice Department had been “more fully informed” about the case. As someone who helped cover the story for The Washington Post, I think the issue is far more complicated and deserves more scrutiny if Mr. Holder is to become our top law-enforcement official.

A little history first. In 1983, Marc Rich was indicted along with his partner, Pincus Green, and their companies on 65 counts of defrauding the I.R.S., mail fraud, tax evasion, racketeering, defrauding the Treasury and trading with the enemy. (The last of these was for an oil deal with Iran while it held American hostages.) On hearing that they were about to be prosecuted, they fled to Switzerland. For the next 17 years, Mr. Rich ducked extradition requests as well as attempts by federal marshals to arrest him in France, England, Finland and elsewhere.

Mr. Rich’s lawyers tried repeatedly to reach a deal with federal prosecutors in New York that would keep him out of jail if he returned. Though his companies pleaded guilty and paid $200 million in fines and other penalties, Mr. Rich insisted that the case against him was weak. The prosecutors offered to drop the racketeering charges and to let Mr. Rich free on bail (without a passport) if he would return. Mr. Rich refused.

The story of how the fugitive came to be pardoned by President Clinton was the subject of a painstaking study by the House Government Reform Committee. While the committee’s report is the subject of some controversy — its Republican chairman, Dan Burton of Indiana, was accused of partisanship — the staff that compiled the documentation was thoroughly professional. All the citations and facts that follow are supported by testimony before the committee or its staff’s documentary evidence.

In 1999, Mr. Rich hired Jack Quinn, who had been Mr. Clinton’s White House counsel from 1995 to 1996, to help him advance his cause. The Rich team was still hoping to strike a deal with federal prosecutors in New York, who were in charge of the case. An e-mail message to Mr. Rich from one of his New York lawyers said that Mr. Quinn felt “he could convince Eric that it made sense to listen to the professors and that he could convince Eric to encourage Mary Jo to do the same.” The “professors” were two tax experts paid more than $96,000 for a study based solely on statements provided them by the Rich legal team; “Mary Jo” was Mary Jo White, the United States attorney in New York.

Mr. Holder was not unsympathetic. He told Mr. Quinn in November of 1999 that he considered the New York prosecutor’s persistent refusal of a meeting “ridiculous” and that “the equities” were on Mr. Rich’s side. Mr. Holder told Mr. Quinn to write a letter to Ms. White with a copy to him, and promised to call her when it arrived. Mr. Holder then called Ms. White personally and, after that conversation, told Mr. Quinn she “didn’t sound like her guard was up.” But New York stood firm.

On Nov. 18, 2000, Mr. Quinn told Mr. Holder that Mr. Rich was going to go for a pardon, a step his team had been contemplating for months. After the conversation, Mr. Quinn told colleagues that Mr. Holder had advised him to “go straight to” the White House and that the “timing is good.” On Dec. 11, just over a month before Mr. Clinton was to leave office, Mr. Quinn delivered the pardon papers to the White House. “The greatest danger lies with the lawyers,” Mr. Quinn wrote in an e-mail message to an aide to Mr. Rich, referring to the prosecutors in New York. “I have worked them hard and I am hopeful that E. Holder will be helpful to us.”

Under the rules governing pardon petitions — rules that were approved by Mr. Holder’s office — the views of United States attorneys “are given considerable weight” because of the “valuable insights” they have. And yet Mr. Holder did not consult Ms. White and her colleagues about the Rich pardon petition; they did not know of it until it had been granted.

Then, on Jan. 19, 2001, Mr. Holder delivered his pardon assessment to the White House, telling Beth Nolan, the White House counsel, that he was “neutral leaning favorable” on the Rich pardon. His decision, he added, was influenced by the support of Ehud Barak, the Israeli prime minister.

The people in the United States attorney’s office in New York weren’t the only ones surprised by Mr. Holder’s decision. Deborah Smolover, his top deputy for pardon cases, did not find out about the pardon for Mr. Rich until the White House called to inform her of it after midnight on Jan. 20. (Mr. Green won a pardon, too.) After the pardon was signed, Mr. Quinn has testified, Mr. Holder called him to commend him on “a very good job.” Mr. Holder also asked Mr. Quinn to consider hiring two former aides, one of whom had already contacted Mr. Quinn on Jan. 2 “at Holder’s suggestion.”

The precedent against pardons for fugitives was set more than 200 years ago by President John Adams. The charge, brought in 1799, was murder on the high seas against a ship’s captain who was clearly trying to put down a mutiny. But the mutineers made it back to the States, ready to testify against the captain, while his supporters were still at sea. The captain was afraid to return. Asked to approve a nolle prosequi (a notice that prosecution won’t be pursued, a procedure then treated as part of the pardon power), the president consulted his cabinet, which concluded that a trial should come first and a pardon, if justified, after that. Clemency, wrote Secretary of War James McHenry, should be exercised only with “great caution and on the fullest information.”

Mr. Holder never came close to meeting that standard. He had the last word at Justice on clemency petitions and he saw to it that he had the only word. He brokered one of the most unjustifiable pardons that an American president has ever granted.


Following next is John Bryson, Energy Executive, Director of Walt Disney.  Former Governor of  Washington, Hon. Gary Locke, latest name for Commerce post.   Senator Gregg of New Hampshire thinks it over and withdraws, too.   Gov. Bill Richardson, candidate for the Democratic nomination last year, original Commerce Secretary designee, withdraws.  Pritzger to get a second chance?

Froman, Pritzker in line for trade and commerce posts: sources
By Jeff Mason
Fri Apr 26, 2013 11:41am EDT

(Reuters) - President Barack Obama is close to choosing White House deputy national security adviser Mike Froman to be the next U.S. trade representative, sources familiar with the situation told Reuters on Friday.

After a long vetting process, Chicago businesswoman and Obama fundraiser Penny Pritzker is still in line to be nominated as commerce secretary, the sources said.

The White House declined to comment

The two trade jobs are among the final positions Obama has to fill in his second-term cabinet. Both require confirmation by the Senate.

Froman was an early front runner for USTR but sources told Reuters earlier this year he preferred to stay in his current White House job, which includes the trade portfolio along with energy, development, and other international economic issues.

Jeff Zients, the long-time acting White House budget director, then became a top contender for the post, but Obama asked him to stay at the budget office.

Froman played an instrumental role in negotiations that led to congressional approval of the South Korea, Colombia and Panama trade pacts during Obama's third year in office.

He is well-known in diplomatic circles for his work as Obama's right-hand man or "sherpa" in the G8, G20, and other international forums.

Froman would replace former U.S. Trade Representative Ron Kirk, who stepped down last month.

Pritzker, the 271st richest American according to Forbes magazine, was Obama's national finance chair in 2008 and his campaign co-chair in 2012. Her personal fortune is worth an estimated $1.85 billion, putting her at the pinnacle of the top 1 percent of American households.

The Stanford University-trained lawyer and business woman is on the board of the Hyatt Hotel Corp, which her uncle Jay Pritzker founded in 1957, two years before she was born.

Pritzker was in the running to be commerce secretary in Obama's first term but bowed out.

She could face questions during a Senate confirmation process over the Pritzker family's reputation for sheltering income to avoid taxes, Hyatt's battle with a labor union and the 2001 failure of Superior Bank, which was half-owned by the Pritzker family.

Current acting Commerce Secretary Rebecca Blank said in March she planned to become chancellor at the University of Wisconsin-Madison in July.

Former Commerce Secretary John Bryson resigned for health reasons last year.

Obama to Name Bryson Commerce Secretary
The Caucus - The Politics and Government blog of The New York Times
May 31, 2011, 11:41 am

President Obama will name a California utility and energy executive, John E. Bryson, as his second secretary of commerce in a Rose Garden announcement on Tuesday afternoon, ending a search for an executive to add a business outlook to his economic team.

Mr. Bryson was chairman and chief executive of Edison International, parent company of Southern California Edison and Edison Mission Group, for nearly two decades until 2008. If confirmed by the Senate, he would replace Gary Locke, a former governor of Washington who is Mr. Obama’s choice to be ambassador to China now that Jon M. Huntsman Jr. has left to weigh a Republican presidential candidacy.

“I am pleased to nominate John Bryson to be our nation’s secretary of commerce, as he understands what it takes for America to succeed in a 21st century global economy,” Mr. Obama said in a statement. “John will be an important part of my economic team, working with the business community, fostering growth and helping open up new markets abroad to promote jobs and opportunities here at home.”

According to his biography released by the White House, Mr. Bryson is also a director of several major corporations, including Boeing, Walt Disney and Coda Automotive, and is a senior adviser to Kohlberg Kravis Roberts. He is chairman of the board of BrightSource Energy, the Public Policy Institute of California and the Keck School of Medicine of the University of Southern California Board of Overseers. He also serves as co-chairman of the Pacific Council on International Policy.

He is a trustee of the California Institute of Technology, a director of the California Endowment and the W. M. Keck Foundation, and serves on the advisory board of Deutsche Bank Americas. Previously Mr. Bryson served on educational, energy and environmental boards, including as a trustee of Stanford University, a member of a United Nations advisory group on energy and climate change, and head of California’s Public Utilities Commission and its State Water Resources Control Board. Early in his career, Mr. Bryson was a founder of the national environmental group the Natural Resources Defense Council.

Among those Mr. Obama was said to be interested in for the commerce job was Eric Schmidt, chairman of Google.

Democrats Vow Swift Passage of Obama’s Ambitious Agenda
February 26, 2009

WASHINGTON — Senate Democratic leaders pledged Wednesday to move quickly to enact the ambitious policy agenda outlined by President Obama in his speech before Congress on Tuesday night, with Senator Harry Reid, the majority leader, saying he hoped to achieve a health care overhaul this year.

“By the end of this year, I want to do something significant dealing with health care,” Mr. Reid, a Nevada Democrat, told reporters as he and fellow Democrats hailed what they saw as a successful address by the new president.

In the aftermath of Mr. Obama’s first speech to a joint session, Mr. Reid and fellow members of the Democratic leadership also called on Republicans in Congress to join them in pursuing the president’s initiatives not only on health care but on energy, education and stabilizing the economy and housing markets.

Senator Charles E. Schumer of New York, the No. 3 Senate Democrat, said Republicans cannot praise Mr. Obama, who retains a high level of popularity in the early days of his presidency, but then continue to attack his policy proposals.

“Our Republican colleagues have tried to act like they’re cheering for the quarterback, and then nitpick his play calling,” Mr. Schumer said. “Well, President Obama and his agenda are one and the same. You can’t separate the man from the agenda.”

In an interview on National Public Radio Wednesday morning, Representative Eric Cantor of Virginia, the second-ranking Republican in the House who helped engineer united party opposition to Mr. Obama’s economic stimulus plan, said his colleagues remain willing to work with the president on policy goals they share.

“That debate is behind us,” Mr. Cantor said of the stimulus fight. “We’ve got to go forward. We have to tackle these very difficult situations, starting with our banking system. We’ve got to get credit flowing again. The president was very definite in his commitment to make sure that happens, and I believe that we will have some ability to work together to produce results.”

Mr. Reid’s commitment to a health care overhaul this year could be considered ambitious, given the difficulty Congress has had in the past in taking on the complex issue of how to deliver affordable health care to most Americans combined with the partisanship that has gripped the House and Senate.

In addition, Senator Edward M. Kennedy, the Massachusetts Democrat who heads the Health, Education, Labor and Pensions Committee, is absent from Washington most of the time because he is receiving treatment for brain cancer.

But Mr. Reid said significant progress has been already been made in meetings among lawmakers and staff members, and he maintained that the schedule could be met.

“I think we’re doing quite well,” he said. “I’m satisfied with our progress on this.”

In the next few weeks, Mr. Reid said he would like to push forward with energy legislation, which has broad Democratic support, to clear the way for the climate change bill sought by the new administration. He also dismissed criticism that the federal government was engaged in a spending spree at a time when Mr. Obama was also talking about reducing the deficit during his term.

He said lawmakers “recognize that we’re going to have to spend some money to get out of this hole,” adding, “This isn’t the time to talk about balancing the budget.”

At the White House Mr. Obama, Vice President Joseph R. Biden Jr. and their top aides continued on Wednesday to emphasize the need for moving ahead briskly with the $787 billion stimulus package that Congress recently approved and promised both to rush money through the federal bureaucracy and to exercise as much control as possible so that haste does not lead to wasteful spending.

Mr. Biden, still beaming at the president’s description of him the night before as the tough enforcer of efficiency, introduced himself at a staff meeting as “the guy to don’t mess with” and urged everybody involved in the stimulus program to make sure that the money is “actually getting out there and working.”

The twin message — spend it fast, but spend it smartly — is crucial to the Administration’s attempt to make it easier to win Congressional passage of the rest of their program this year and to avoid the pitfalls of waste, fraud and abuse that could derail progress.

On Thursday, the White House is to begin presenting details of its spending proposals for the fiscal year that begins in October, and in the next few weeks Congress must pass omnibus spending legislation to keep this year’s programs running for the next several months.

Mr. Obama, officially naming former Gov. Gary Locke of Washington his latest choice to head the Commerce Department — after his two earlier nominees fell by the wayside — said the task of the department was, like that of the rest of the government, “to help create conditions in which our workers can prosper, our businesses can thrive and our economy can grow.”

Former Governor Locke Is Latest Choice for Commerce
By Peter Baker

February 23, 2009, 5:33 pm

WASHINGTON – President Obama has settled on former Gov. Gary Locke of Washington state as his top choice for commerce secretary as he tries for a third time to fill a cabinet position that has bedeviled his administration, a White House official said Monday.

The official described Mr. Locke as the “likely” nominee, a formulation the Obama team has used in the past for a candidate on the verge of being nominated pending final vetting checks.

Mr. Locke would be the third choice for the Commerce Department after Gov. Bill Richardson of New Mexico dropped out because of a federal investigation into state contracting and Senator Judd Gregg, a Republican from New Hampshire, withdrew his nomination citing philosophical differences with the president.

Mr. Locke’s election in 1996 made him the first Chinese American governor in the United States and he served two terms before stepping down after the 2004 election, citing a desire to spend more time with his family. Born into an immigrant family living in public housing, Mr. Locke, 59, made it to Yale University and served as a prosecutor, state legislator and King County executive before his election as governor.

Judd Gregg Withdraws as Commerce Nominee

February 12, 2009

WASHINGTON — President Obama’s choice for commerce secretary, Senator Judd Gregg, withdrew his nomination on Thursday, saying there were “irresolvable conflicts” between him and the administration.

“It has become apparent during this process that this will not work for me as I have found that on issues such as the stimulus package and the Census there are irresolvable conflicts for me,” Mr. Gregg said in a statement. “Prior to accepting this post, we had discussed these and other potential differences, but unfortunately we did not adequately focus on these concerns. We are functioning from a different set of views on many critical items of policy.”

At a Washington news conference soon after his statement was issued, Mr. Gregg said it had become clear that he had made a mistake in accepting the president’s offer to join the cabinet. “That was my mistake, not his,” the senator said, adding that he admired President Obama and the team he has assembled.

“Bottom line,” he concluded, “this is simply a bridge too far for me.”

Mr. Gregg said that the Census had been “only a slight issue” in his decision to withdraw. Nevertheless, the Census has been a big issue between Republicans and Democrats for years, and Mr. Gregg has been involved in the dispute. A decade ago, he resisted efforts by President Bill Clinton to increase financing for the 2000 Census.The abrupt withdrawal comes one week after Mr. Gregg was selected to be the third Republican member of the Obama cabinet. And he is the second nominee for commerce secretary to withdraw.

Moments after the stunning announcement, Robert Gibbs, the White House press secretary, issued a statement that Mr. Gregg had “reached out to the president and offered his name for secretary of commerce.”

“He was very clear throughout the interviewing process that despite past disagreements about policies, he would support, embrace, and move forward with the President’s agenda,” Mr. Gibbs said. “Once it became clear after his nomination that Senator Gregg was not going to be supporting some of President Obama’s key economic priorities, it became necessary for Senator Gregg and the Obama administration to part ways.”

Although Mr. Gregg, a Republican of New Hampshire, had not resigned his Senate seat, he has been away from the Senate floor this week — presumably preparing for his confirmation hearings — and he did not vote on the administration’s $789 billion economic stimulus plan agreed on by the House and Senate.

Last Tuesday during a brief ceremony at the White House, Mr. Gregg stood Mr. Obama as the president touted his nominee as a fiscal conservative who could help “shore up our financial system and revitalize our economy.”

The president selected Mr. Gregg exactly two months after he nominated his first choice for commerce secretary, Gov. Bill Richardson of New Mexico, who withdrew from consideration because of a federal investigation into state contracts. It was the first of several controversies surrounding the president’s top nominees.

In announcing his withdrawal, Mr. Gregg released a statement through his Senate office. The surprising move was not announced by the White House, although aides said the president had been informed of Mr. Gregg’s decision.

“Obviously the President requires a team that is fully supportive of all his initiatives,” Mr. Gregg said in a statement. “I greatly admire President Obama and know our country will benefit from his leadership, but at this time I must withdraw my name from consideration for this position.”

He added: “As a further matter of clarification, nothing about the vetting process played any role in this decision. I will continue to represent the people of New Hampshire in the United States Senate.”

The once-a-decade Census has enormous implications, both social and political. It is used to distribute federal money to states and cities based on population, and it is used to redraw Congressional districts — determining how many seats in the House of Representatives that growing states like California and Florida will pick up at the expense of states whose populations are relatively stagnant.

The Commerce Department under the Clinton administration wanted to use statistical sampling in the 2000 to arrive at population figures on which Congressional districting would be based. Republicans resisted furiously, arguing that only a true head count was proper. Political analysts believed that statistical sampling would help Democrats by adding more urban and minority people to the totals.

In early 1999, the Supreme Court ruled that the 2000 census had to be done by traditional head count as far as redistricting was concerned, but that sampling could be used for other purposes, like the distribution of federal money.

In recent days, Republicans have been upset by suspicions that the Obama White House might try to assert more direct control over the Census, a prospect they find troubling, given that the president’s chief of staff, Rahm Emanuel, is a former Democratic Congressman from Chicago.

Mr. Gregg’s withdrawal was the latest blow for the White House, which has seen three cabinet nominees withdraw from consideration. In addition to the withdrawal of Mr. Richardson, former Senator Tom Daschle took his name from consideration to lead the Health and Human Services Department last week amid questions about his tax returns.

David Stout contributed reporting.

Former Gregg Staffer Caught Up in Corruption Probe
Filed at 2:22 p.m. ET
February 4, 2009

WASHINGTON (AP) -- A former congressional aide to Commerce Secretary-nominee Judd Gregg has been caught up in a long-running investigation into a Capitol Hill lobbying scandal.

A person familiar with the case confirmed Wednesday that ''Staffer F'' in court documents is Kevin Koonce, who worked as legislative director in Gregg's Senate office from 2002-04. The person spoke on condition of anonymity because the case is still under investigation.

Staffer F was cited in a guilty plea last week by Todd Boulanger, a former deputy to disgraced lobbyist Jack Abramoff. In federal court, Boulanger admitted he plied the staffer with front-row tickets to a hockey game, meals and drinks and other tickets to a baseball game, and in exchange received favors in spending legislation.

The total value of the gifts Staffer F took from Boulanger exceeded $10,000, court papers said.

The biographical details about Staffer F contained in court documents -- his job title at the time in the Senate office -- correspond to Koonce's.

Koonce has not been charged with any crime. He now works at a private firm, Sorini Samet & Associates LLP.

After several attempts by The Associated Press to reach him, Koonce replied to an e-mail Wednesday, saying only that he was on personal leave.

A spokesman for President Barack Obama, who on Tuesday appointed Sen. Gregg, R-N.H., to serve as Commerce secretary, declined to comment. Gregg's spokeswoman, Andrea Wuebker, had no immediate comment.

Abramoff, once a top GOP lobbyist, is now in prison and has cooperated with the Justice Department to help convict more than a dozen people, including former Rep. Bob Ney, R-Ohio, former Deputy Interior Secretary J. Steven Griles, and a number of former lobbyists and Capitol Hill aides.

Boulanger was the most recent ex-lobbyist to fall, pleading guilty Friday to lavishing a number of congressional staffers with gifts similar to those he gave Staffer F, including an all-expense-paid trip to the World Series.

As part of the plea documents, prosecutors said Staffer F tried to help insert spending measures and add other amendments to legislation for Boulanger's clients. Later, the staffer asked Boulanger if he could ''score some hockey tickets,'' and Boulanger got him front-row seats.

Boulanger later got the staffer box tickets to see the Baltimore Orioles, but Staffer F wanted more.

''Could you make sure there's beer this time,'' he wrote in an e-mail. I ''mean, the red sox, crab cakes, and fillet mignon's were nice but ... haha.''

Later, Boulanger sent an e-mail to Abramoff expressing confidence that the senator for whom the staffer worked would give them a favor. ''Easy money,'' Boulanger wrote, adding that the aide ''practically lives in our various suites. We are shady.''

According to his biography on the Web site of Sorini Samet & Associates, Koonce was a negotiator for the U.S. trade representative prior to working for Gregg. Koonce also worked for six years as a legislative assistant to former Sen. Jesse Helms, R-N.C., in the 1990s. Koonce graduated from Denison University and received a law degree from Catholic University.

NOTE:  Tom Daschle withdrew from HHS posts
Gregg Nominated for Commerce Post

February 4, 2009

WASHINGTON — As the White House grappled with fresh revelations about tax problems among its political appointees, President Obama on Tuesday nominated Senator Judd Gregg, Republican of New Hampshire, to help “shore up our financial system and revitalize our economy” by serving as commerce secretary.

“With the stakes this high, we cannot afford to get trapped in the same old partisan gridlock,” Mr. Obama said as he named the third Republican nominee to his cabinet. He added, “Judd is a master of reaching across the aisle to get things done.”

The president made the announcement exactly two months after he nominated his first choice for commerce secretary, Gov. Bill Richardson of New Mexico. He withdrew his name from consideration because of a federal investigation into state contracts, the first of several controversies surrounding the president’s top nominees.

As Mr. Obama stood in the Grand Foyer of the White House with Mr. Gregg, the president’s nominee for chief White House performance officer withdrew her name from consideration, citing concerns over unpaid unemployment taxes in the District of Columbia. The nominee, Nancy Killefer, said her confirmation would create a “distraction” and delay the urgent agenda facing the administration.

Mr. Obama declined to take questions from reporters about Ms. Killefer or Tom Daschle, the president’s choice for Health and Human Services Secretary, who is fighting through tax concerns of his own. A senior administration official said on Tuesday that the president remains committed to seeing that Mr. Daschle is confirmed.

The president is seeking to advance his economic recovery plan through the Senate, dispatching his top advisers to Capitol Hill to answer questions and make changes to the legislation. Mr. Obama is taking the unusual step of inviting the top anchors from the five broadcast and cable television networks to the Oval Office on Tuesday afternoon to speak about the urgency of his proposal.

“By now, our economic crisis is well known, and our economy’s shrinking, unemployment rolls are growing, businesses and families can’t get credit, and small businesses can’t secure the loans they need to create jobs and get their products to market,” Mr. Obama said Tuesday. “Now’s the time for Washington to act with the same sense of urgency that Americans all across the country feel every single day.”

In naming Mr. Gregg to the post of Commerce Secretary, which requires Senate confirmation, the president is seeking to win more bipartisan support for the plan. Mr. Obama said that Mr. Gregg would be a key member of his economic team.

“Judd is famous or infamous, depending on your perspective, on Capitol Hill, for his strict fiscal discipline,” Mr. Obama said. “It’s not that he enjoys saying no, although if it’s directed at your bill, you might feel that way. It’s that he shares my deep-seated commitment to guaranteeing that our children inherit a future they can afford.”

The president added: “Clearly Judd and I don’t agree on every issue, most notably who should have won the election. But we do agree on the urgent need to get American businesses and families back on their feet.”

Mr. Gregg, who is in the middle of his third Senate term, said he agreed to answer the president’s call to serve because of the enormity of the nation’s economic crisis.

“This is not a time for partisanship,” Mr. Gregg said. “This is not a time when we should stand in our ideological corners and shout at each other. This is a time to govern and govern well.”

Part of the agreement of nominating Mr. Gregg pertained to who would fill his Senate seat. The Democratic governor of New Hampshire, John Lynch, agreed to appoint a Republican to succeed Mr. Gregg. Advisers to Mr. Lynch said Tuesday that he would name Bonnie Newman, a Republican fixture in New Hampshire who has served in the administrations of Presidents Ronald Reagan and George H.W. Bush.

“I also want to thank the governor of New Hampshire for his courtesy and courage in being willing to make this possible through the agreement that we have relative to my successor in the Senate,” Mr. Gregg said.

Obama Names Judd Gregg Commerce Secretary
Filed at 11:21 a.m. ET

February 3, 2009

WASHINGTON (AP) -- President Barack Obama has nominated Republican Sen. Judd Gregg to be Commerce secretary. Obama announced the nomination at the White House.

If confirmed, Gregg would be the third Republican in the Democrat's Cabinet, joining Defense Secretary Robert Gates and Transportation Secretary Ray LaHood.

It was the last open spot in the senior ranks of the Obama administration.

Obama initially had tapped New Mexico Gov. Bill Richardson for the Commerce job, but he withdrew his nomination amid a grand jury investigation into a state contract awarded to his political donors.

New Hampshire Gov. John Lynch, a Democrat, will appoint a Senate successor. Officials in the state say he will tap Bonnie Newman.

GOP Leader: Sen. Gregg Departure Won't Shift Power
Filed at 10:58 a.m. ET

February 1, 2009

WASHINGTON (AP) -- No change in the Senate's balance of power if New Hampshire Republican Judd Gregg leaves to become commerce secretary.

That's the word from the Senate's top Republican, Mitch McConnell. He says Gregg has assured fellow GOP senators of that.  McConnell says Gregg has promised he would be replaced by someone who would affiliate with other Republicans in the Senate.

McConnell's comments suggest Gregg has negotiated a deal that would allow New Hampshire's Democratic governor to name either a Republican or Republican-leaning replacement. That would leave Senate Democrats short of a 60-member, fillibuster-proof majority.

Officials say Obama is set to make Gregg his third Republican Cabinet official as early as Monday.

McConnell spoke on CBS' ''Face the Nation.''

Obama Ready to Pick Republican Senator for Commerce Post
February 1, 2009 - another day early...

WASHINGTON — The White House on Saturday confirmed the widespread speculation that President Obama is set to pick Senator Judd Gregg, Republican of New Hampshire, as his nominee for commerce secretary.

“Senator Gregg is now the leading candidate for commerce and a pick that could come as early as Monday,” a senior administration official said, speaking on condition of anonymity because a formal announcement has not yet been made.

Mr. Gregg’s name has been circulated for several days as Mr. Obama tries to replace his previous nominee for commerce secretary, Gov. Bill Richardson of New Mexico, who withdrew amid revelations that a grand jury is investigating how he awarded state government contracts. Mr. Gregg himself said on Friday that he was under consideration.

If the senator accepts and is confirmed, he would be the third Republican appointee in Mr. Obama’s cabinet, after Secretary of Defense Robert M. Gates, who also served under former President George W. Bush, and Transportation Secretary Ray LaHood, a former Republican congressman from Mr. Obama’s home state of Illinois.

Mr. Gregg’s selection could also open the door to a significant shift in the balance of power in Congress. There are currently 58 Democrats in the Senate; the number would rise to 59 if Al Franken of Minnesota is seated after the court challenge to his race is completed.

If Gov. John Lynch of New Hampshire, a Democrat, replaced Mr. Gregg with a member of his own party, that would put the Democratic majority at 60 — a magic number in the Senate, because 60 is the number of votes needed to control the legislative agenda and block a Republican filibuster.

But there are no guarantees that Mr. Lynch will pick a Democrat: New Hampshire is a state that prizes its political independence, and Mr. Lynch is a moderate. Some analysts say the governor could turn to a well-regarded Republican — the name of Warren Rudman, a former senator from New Hampshire, has been mentioned — to serve as a kind of “caretaker senator” to fill out the remainder of Mr. Gregg’s term, which expires at the end of 2010.

Mr. Gregg was not particularly close to Mr. Obama when they were senators together. But the New Hampshire senator did have a close relationship with Mr. Obama’s predecessor, former President George W. Bush, a friendship stretching back two decades to when Mr. Gregg’s father, Hugh Gregg, a former New Hampshire governor, worked to help elect Mr. Bush’s father, the first President Bush.

But Mr. Gregg has been complementing Mr. Obama of late. Earlier this week, the senator was quoted as calling the president a “tour de force.”

NYTIMES Sunday, January 4, 2009 - Update | 2:28 p.m.

Gov. Bill Richardson of New Mexico confirmed in a statement released Sunday afternoon that he has withdrawn his name as the commerce secretary nominee, citing a pending “investigation of a company that has done business with New Mexico state government.”

Mr. Richardson says in the statement that he and his administration “have acted properly in all matters,” but that the “ongoing investigation also would have forced an untenable delay in the confirmation process.”

On Dec. 19, The Times published an article stating that a federal grand jury in New Mexico was looking into accusations that Governor Richardson’s administration gave lucrative contracts to a California financier because he contributed heavily to the governor’s political action committees.

The article, citing a person familiar with the grand jury proceedings, stated that since August, federal investigators have been examining how CDR Financial Products Inc., of Beverly Hills, Calif., got two consulting contracts in 2004 worth about $1.4 million to advise the state on a large bond issue for building infrastructure, one of Mr. Richardson’s initiatives.

The investigation was first reported in The Albuquerque Journal...

Official: Richardson to Be Commerce Secretary
Filed at 10:38 a.m. ET
November 23, 2008

NEW YORK (AP) -- A Democratic official says President-elect Barack Obama will name New Mexico Gov. Bill Richardson as commerce secretary.  The official says Obama plans to announce Richardson's selection after Thanksgiving. The official spoke on condition of anonymity because the official was not authorized to speak publicly about the negotiations.  Richardson was energy secretary and U.N. ambassador under President Bill Clinton. Richardson would be the most visible Hispanic named to Obama's Cabinet.  Richardson dropped out of the Democratic presidential contest in January and endorsed Obama.

Penny Pritzker, national finance chair. for Obama

Obama advisers push oil pipelines for jobs
House has acted on ideas in report
The Washington Times
By Dave Boyer
Tuesday, January 17, 2012

President Obama's jobs council endorsed a wide range of pro-growth proposals Tuesday that includes building oil pipelines and expanding drilling in the U.S., steps that House Republicans promptly noted are being blocked by Senate Democrats.

"The Road Map to Renewal" submitted to Mr. Obama by his team of industry leaders embraces more domestic production of fossil fuels. The report doesn't specifically mention the Canada-to-Texas Keystone XL oil pipeline on which the Obama administration has delayed a decision, but it does advocate building more domestic pipelines.

"Policies that facilitate the safe, thoughtful and timely development of pipeline, transmission and distribution projects are necessary to facilitate the delivery of America's fuel and electricity and maintain the reliability of our nation's energy system," the report says.

White House press secretary Jay Carney said the report wasn't referring to Keystone, which environmental groups are pressuring the administration to reject.

"The jobs council wasn't talking about Keystone specifically," Mr. Carney said. "The jobs council was talking about the importance of expanding domestic oil and gas production, a goal this president shares."

House Speaker John A. Boehner, Ohio Republican, said the presidential jobs council's recommendations for expanding domestic energy production, cutting government red tape and overhauling business taxes are exactly the policies passed by the House in the past year. Most of those bills have stalled in the Senate.

Late last year, GOP lawmakers approved legislation forcing the administration to make a decision on the Keystone pipeline, which could create 20,000 jobs, by the end of February.

"Nearly 30 House-passed job bills are awaiting action in the Senate, most of which address the recommendations made today," Mr. Boehner said. "With American small businesses still suffering from the misguided policies implemented by the president, there is no excuse for these pro-growth bills to collect dust any longer."

Among the council's other recommendations that Republican lawmakers have supported:

• Lower corporate tax rates to "internationally competitive levels" while eliminating deductions and loopholes.

• Streamline government rules and regulations to reduce the financial burdens on businesses.

• Take more aggressive action to promote American manufacturing.

• Adopt an "all in" strategy on energy to reduce reliance on foreign oil and move toward cleaner fuel sources.

At a meeting at the White House on Tuesday morning, Mr. Obama cautioned that Congress might block the council's legislative proposals to create jobs this year.

"I want you to know that obviously this year is an election year, and so getting Congress focused on some of these issues may be difficult," said Mr. Obama, adding that he would keep pursuing some recommendations "administratively."

The president's regulatory czar, Cass Sunstein, reported to the council that the administration's efforts to cut needless rules and regulations in its first three years are resulting in a much greater benefit to industry than the same period during the administration of President George W. Bush.

"The bulk of regulatory costs in the last five years have been from the previous administration," Mr. Sunstein said.

Last week, U.S. Chamber of Commerce President Thomas J. Donohue said an "avalanche" of new regulations, including more than 200 in the works at the Environmental Protection Agency and 447 rules from the Dodd-Frank financial overhaul, caused "a big drag on our economy."

A review of the Obama administration's first 33 months found that the number of significant federal rules, defined as those costing industry more than $100 million, rose to 129, compared with 90 under Mr. Bush during the same time frame.

Council member Brian Roberts, CEO of Comcast Corp. and a wealthy donor who hosted Mr. Obama at his home on Martha's Vineyard last summer, told the president he must do a better job of convincing the public that he has succeeded at cutting red tape.

"Brian, that's music to my ears," Mr. Obama said. "The gap between perception and practice on this is probably greater than any other area."

Other members of the jobs council include Steve Case, former chairman of AOL; Jeffrey R. Immelt, chairman and CEO of General Electric Co.; Kenneth I. Chenault, chairman and CEO of American Express Co.; Ellen Kullman, chairman and CEO of DuPont Co.; Paul S. Otellini, president and CEO of Intel Corp.; Penny Pritzker, chairwoman of Pritzker Realty Group; Sheryl Sandberg, chief operating officer of Facebook; Laura D. Tyson, a former Clinton administration official on the faculty of the University of California, Berkeley; and Robert Wolf, president of UBS Investment Bank.

Several council members are big-money donors to Mr. Obama's re-election campaign. Ms. Pritzker served as national finance chairwoman for the Obama campaign in 2008. She and Mr. Wolfe are "bundlers" who have raised at least $2.7 million for Mr. Obama in 2008 and this election cycle.

The president congratulated the council, which he appointed a year ago, for its hard work.

"This has not been a show council," Mr. Obama said. "This has been a work council."

The panel has generated dozens of mostly modest proposals since its inception. Mr. Obama has acted or begun to act on 33 of 35 recommendations that can be accomplished by executive action. Another 17 proposals would require congressional action.

© Copyright 2012 The Washington Times, LLC. Click here for reprint permission.

Obama Fund-Raiser Knocks Down Cabinet Rumors
November 21, 2008

WASHINGTON — When Barack Obama was looking for an entree into Chicago’s elite business community, he had the perfect door-opener: Penny S. Pritzker, a billionaire from one of the city’s dynasties.

Ms. Pritzker, 49, went on to become the Obama presidential campaign’s national finance chairwoman, raising record-breaking sums. And after Mr. Obama won the election, she was widely reported to be a leading contender for commerce secretary.

But the same business holdings and connections that made Ms. Pritzker so vital to Mr. Obama’s ability to raise campaign money also came under sharp scrutiny. On Thursday, she released a statement declaring that she would not be a candidate for the job.

“I think I can best serve our nation in my current capacity: building businesses, creating jobs and working to strengthen our economy,” Ms. Pritzker said. “It has been my great privilege to serve in the Obama campaign. I look forward to helping our new president in every way possible and am excited about the future under his leadership.”

Ms. Pritzker is one of three cousins who manage their family’s fortune, which includes Hyatt hotels, casinos and other ventures. She oversees a chain of luxury retirement communities, an airport parking company, a realty group and the credit-rating agency TransUnion.

The talk of a cabinet post, which would require Senate confirmation, had cast a spotlight on her secretive family’s empire and her past business dealings, including episodes that might prove politically embarrassing.

Earlier in her career, Ms. Pritzker was involved in running and overseeing Superior Bank, in a Chicago suburb, which focused on bundling subprime mortgages into securities, the practice that later helped set off the current financial crisis. The institution collapsed in 2001.

Moreover, Ms. Pritzker’s family is renowned for finding ways to avoid paying taxes on its wealth. The Pritzkers were pioneers in using tax loopholes to shelter their holdings from the Internal Revenue Service, and many of their dealings have never been made public.

It was not clear why she put out the statement on Thursday, but some news outlets, including The New York Times, reported late Wednesday night that she was in the final stages of being vetted. An Obama transition spokesman said Thursday that those accounts were incorrect.

Burt Ely, a banking consultant who testified at a 2001 Senate committee hearing about the failure of Superior Bank, said it had never made sense for Ms. Pritzker to become a nominee. “The confirmation hearing could have been quite ugly for all that would have been dredged up about Superior as well as possibly other Pritzker dealings,” Mr. Ely said Thursday.

In 1988, the Pritzker family and another wealthy investor took over a failing savings and loan and turned it into Superior Bank. Ms. Pritzker was its chairwoman from 1991 to 1994, after which she sat on the board of the bank’s holding company.

In 1993, the bank began a strategy of concentrating on packaging subprime mortgages into securities. At first, the bank flourished. But regulators later discovered accounting irregularities that overstated the value of its assets. The bank was forced to write down huge losses, leaving it without adequate capital in the spring of 2001.

In May 2001, Ms. Pritzker wrote a letter to bank employees assuring them that her family would put more cash in to save the bank, and declaring that “our commitment to subprime lending has never been stronger.” But the Pritzker family did not carry out the plan, and the bank was shut down in July 2001.

A 2002 report by the inspector general of the Federal Deposit Insurance Corporation concluded that “the failure of Superior Bank was directly attributable to bank management and the board of directors ignoring sound risk management principles and failing to adequately oversee Superior operations.”

The Pritzkers agreed in 2001 to pay the F.D.I.C. $460 million over 15 years to cover claims by depositors. Still, more than 1,400 depositors who had more than $100,000 in their savings accounts — the maximum the government then insured — were left short about $10 million, said Clint Krislov, a lawyer for several of them. “Why the Pritzkers wouldn’t do the right thing and just make these people whole for the small amount of money that it would take, I still cannot understand,” he said.

In a written response to questions by The Times on Thursday, Ms. Pritzker said, “I sincerely regret the closing of Superior Bank.” She said that she did not personally own any of the bank, but that her trusts had contributed to the “large amount of money” that her family paid to the F.D.I.C.

The Pritzker clan’s fortune traces back to a Chicago law firm run by Ms. Pritzker’s grandfather, who bought up property during the Depression and became an investor. His sons expanded the empire, establishing the Hyatt chain.

The family also increased its wealth by exploiting loopholes in the tax code, including setting up a series of offshore trusts that sheltered their assets from taxes.

The I.R.S. fought several battles with the Pritzkers over the arrangements. But the agency was hindered by foreign bank secrecy laws that concealed what the Pritzkers owned.

In 2002, a few cracks appeared in the wall of secrecy when two young Pritzker heirs filed a lawsuit claiming their older relatives had looted their trusts. The litigation revealed that the family was worth at least $15 billion, that it was held in some 950 trusts, and that they were trying to split it up among 11 heirs by 2011.

One Democrat familiar with the transition said Thursday that Ms. Pritzker initially believed she could weather questions about Superior Bank, but her family resisted because their assets are so entangled.

The transition team’s vetting form, which she never filled out, required disclosing all property owned in the past decade, including “held in trust” or “held in combination with others.”
Pritzker Withdraws From Cabinet Consideration
By Brian Knowlton
November 20, 2008, 2:08 pm

Penny Pritzker, the Chicago businesswoman, longtime friend of Barack Obama’s, and national finance chairman of his presidential campaign, has withdrawn from consideration as commerce secretary.

Ms. Pritzker issued the following statement on Thursday: “Speculation has grown that I am a candidate for secretary of commerce. I am not. I think I can best serve our nation in my current capacity: building businesses, creating jobs and working to strengthen our economy. It has been my great privilege to serve in the Obama campaign.”

Ms. Pritzker was a chief architect of Mr. Obama’s record-breaking fund-raising efforts, and speculation had grown in recent days that she would be offered the commerce post.

But some of her vast business dealings – her family’s financial empire includes the Hyatt hotel chain and many other ventures — seemed likely to raise obstacles to any confirmation process. Among other things, she helped run and oversee an Illinois bank involved in turning subprime loans into securities. The bank collapsed after regulators discovered accounting irregularities

PROPOSED and confirmed...reported resigned 11-24-14, who's next?


Robert Gates leaves, Leon Panetta (l) in.

EXCLUSIVE: Obama wants Bush war team to stay
Washington Times
Bill Gertz (Contact)
Tuesday, December 23, 2008


Defense Secretary Robert M. Gates is asking many of the Bush administration's 250 Pentagon political appointees to remain on the job until the incoming Obama administration finds replacements -- a move designed to prevent a leadership vacuum with U.S. troops engaged in wars in Iraq and Afghanistan.

The unusual request by Mr. Gates, whom President-elect Barack Obama has asked to continue in his Cabinet post, ensures that key policy positions will not be left to "acting" subordinates as typically occurs when political appointees are directed to resign during a presidential transition.

"I have received authorization from the president-elect's transition team to extend a number of Department of Defense political appointees an invitation to voluntarily remain in their current positions until replaced," Mr. Gates said in a Friday e-mail.

The chance to stay is "available to all willing political appointees with the exception of those who are contacted individually and told otherwise," he said.

Geoff Morrell, Pentagon press secretary, confirmed that Mr. Gates wants to retain temporarily most political appointees, saying nearly all of the service secretaries and undersecretaries will remain until Senate confirmation of their successors, which can take months. He declined to identify who will be asked to leave.

"It is his top priority to ensure a smooth transition," said Mr. Morrell, who is also staying on.

Other federal agencies, including state, justice and homeland security are not keeping political appointees.

The Pentagon was scheduled to notify those it would ask to leave at the close of business Monday. At least three officials were notified Monday in an e-mail that they had to vacate their offices by Jan. 20. Deputy of Defense Secretary Gordon England and Undersecretary of Defense for Policy Eric S. Edelman already have announced that they plan to depart by Jan. 20.  Two senior officials expected to stay are John Young, undersecretary of defense for acquisition, technology and logistics, and James R. Clapper, undersecretary of defense for intelligence.

Mr. Gates said he could not provide "more clarity and guidance" on how long those who wish to become holdovers will be allowed to stay.

"To the extent you are willing and in a position to continue to serve, I am deeply appreciative," Mr. Gates said in the e-mail. "However, I encourage you to continue to prudently plan for the transition from DOD employment, as the pace of personnel decisions by the incoming administration is likely to accelerate."

About 40 Pentagon positions require Senate confirmation, including the undersecretaries, assistant secretaries and some deputies. The rest do not require a formal presidential nomination and Senate approval and can be made by the defense secretary.  Senate confirmation in some cases can take months and require hearings. In other cases, nominees can be approved within a few weeks of nomination.

The secretary said he appreciated the appointees' willingness to continue "in the interest of providing continuity for this department and for its critical mission to the nation in a time of war," and he promised to thank each appointee personally in January.

"But I still want to take advantage of this note to thank you collectively for all you have done for our country. I wish you and yours happy holidays," he said.

The note was signed "Bob Gates" and sent by Mr. Gates' chief of staff, Robert Rangel.

FROM THE I-BBC:  US Defence Secretary Robert Gates is reported to have agreed to remain in charge of the Pentagon when Barack Obama takes office, at least for the first year of his administration.  

Robert Gates, 65, is a former director of the CIA and was appointed Defence Secretary by President Bush in 2006. He has promoted the military surge in Iraq that has been credited with stemming violence there.  Mr Obama opposed the surge but both men are agreed on a greater focus on Afghanistan.  Mr Gates is seen as a moderate and is widely respected among both Democrats and Republicans in Congress.

His appointment would also fulfil Mr Obama's pledge to include a Republican in his Cabinet.

SECURITY TEAM:  Secretary of Defense, State and National Security Advisor heading this up...including, so far...Susan Rice to NSA, familiar face to UN

We sincerely hope that Ms. Power exercises power, if confirmed.  The NYTIMES piece here.

Obama choice helped Fannie block oversight
National security adviser tied to discrediting of probe
By Jim McElhatton, The Washington Times
8:58 p.m., Wednesday, October 13, 2010

Years before Fannie Mae foundered amid a massive accounting scandal, President Obama's choice for national security adviser oversaw an office inside the mortgage giant that orchestrated a negative publicity blitz to fight attempts by Congress to increase government oversight, records show.

Thomas E. Donilon, who won the job as national security adviser this month, worked as a registered lobbyist for Fannie Mae from 1999 to 2005 at a time the company's officials insisted finances were sound. He also earned more than $1.8 million in bonuses before the government took over the troubled company in the wake of an accounting scandal.

Vice President Joseph R. Biden Jr. and Mr. Obama, who railed against lobbyists on the campaign trail, hailed Mr. Donilon's appointment last week, but made no mention of his time as a registered lobbyist.

Mr. Donilon's work came under scrutiny in a 2006 report by the Office of Federal Housing Enterprise Oversight (OFHEO), which found that Fannie Mae lobbyists - working in an office overseen by Mr. Donilon - parlayed their ties to members of Congress to try to discredit federal regulators looking into the finances of the company.

"Thus, Fannie Mae succeeded in creating a large volume of negative publicity about the OFHEO examination report, in an effort to distract attention from its multibillion-dollar accounting errors," the OFHEO report concluded.

In addition, the report noted that the publicity campaign, which included leaking nonpublic information, was conceived and executed by Fannie Mae's government and industry relations department, but was still "well known" to Mr. Donilon and other senior executives.

Mr. Donilon was never accused of being complicit in accounting irregularities that prompted federal regulators to seek more than $100 million paid out to Fannie Mae's former chairman and chief executive, Franklin D. Raines, along with two other executives.

Still, Mr. Donilon was sued in federal court and later dropped from a pair of shareholder lawsuits filed by retirement plans that accused Fannie Mae executives of earning millions of dollars in salary, bonuses and stock compensation based on improper financial results.

The Washington Times reported on Mr. Donilon's ties to Fannie Mae in 2008, when he was named as an adviser to Mr. Obama's presidential transition team.

At the time, Obama aides noted that as a former official at the State Department, Mr. Donilon was providing valuable input in foreign-affairs issues, but added that he would have no say in housing matters, given his previous work at Fannie Mae.

Obama National Security Adviser Gen Jones 'resigning'
 8 October 2010 Last updated at 11:17 ET

National Security Adviser Gen James Jones is stepping down and will be replaced by his deputy, Tom Donilon.  President Barack Obama is to announce the high-level staff changes at the White House on Friday, officials said.  Gen Jones's announcement had been widely expected as Mr Obama nears two years in the White House.

It follows news of the departure of several other senior White House advisers, including political staff and top economic adviser Larry Summers.  Gen Jones, a former Marine Corps general, is the first high-level member of Mr Obama's national security team to depart.

In recent weeks, Mr Obama's chief of staff Rahm Emanuel left to run for mayor of Chicago and senior political adviser David Axelrod departed to begin planning the president's 2012 re-election bid.Mr Summers, Mr Obama's top economic adviser, announced last month he would leave at the end of the year to return to Harvard University.

Staff departures are not unusual at this point in a president's term, nearly halfway through the four years.

Gen Jones is seen as close to the president, while Mr Donilon, a veteran Democratic political hand and former chief of staff to Bill Clinton's Secretary of State Warren Christopher, is not seen as part of Mr Obama's inner circle, analysts say.  A recent book by veteran reporter Bob Woodward of the Washington Post quoted Defence Secretary Robert Gates as saying Mr Donilon would be "a disaster" as a national security adviser.

Gen Jones retired from the Marine Corps in 2007 after more than 40 years, taking a position as the State Department's Special Envoy for Middle East Regional Security.  He was commissioned as a Marine Corps officer in 1967, and was sent to Vietnam. He later served in command and staff positions all over the world.


Kevin Connolly BBC News, Washington

As a 2m-tall, crop-headed military veteran with 40 years' service in the Marine Corps, Gen James Jones had little in common with the slick political professionals who got Mr Obama to the White House. A recent book quoted his descriptions of them as "the water bugs", "the mafia" and "the campaign set".

That may have speeded up his departure, but it was widely known that Gen Jones was preparing to leave his job.

His importance to the White House team may have been limited by the closeness to the president of cabinet ministers like Robert Gates and Hillary Clinton and by the direct line that General David Petraeus can command from Afghanistan.

Nonetheless, this is the latest in a string of high-profile departures including budget director Peter Orszag and White House chief of staff Rahm Emanuel. Some turnover is to be expected two years into the gruelling grind of a presidential term, but if the exodus continues it may create the impression of a team that is growing weaker.

First woman to head major US intelligence agency
By KIMBERLY DOZIER, Associated Press Writer
9 Aug. 2010

FORT BELVOIR, Va. – The United States has had three female secretaries of state — but until now has never had a woman lead one of its 16 major intelligence agencies.

Letitia A. Long, 51, was praised by Defense Secretary Robert Gates, as the right person for the job, as she took up her post as director of the National Geospatial-Intelligence Agency in a ceremony Monday at the agency's half-built, high-tech campus in Springfield, Va.

Long, in turn, saluted what the NGA work force has already accomplished, from aiding troops on the battlefield, to helping draw together intelligence from across the national security spectrum.

"I have never seen an agency as young as the NGA do so much in so little time," she said of the organization, which was established in 1996.

She spoke before several hundred VIPs from the intelligence and special ops community on the roof of a parking garage next to her future offices. The "Jetsons"-style rounded wedge of buildings is rising from a vast construction site at Fort Belvoir. The NGA's staff, now spread among several sites across the Washington metropolitan area, is slated to relocate there by fall 2011.

Long's 32-year career has led to a series of senior management positions: deputy director of Naval Intelligence, deputy undersecretary of defense for intelligence and, most recently, second in command at the Defense Intelligence Agency.

Long's old boss and mentor, James R. Clapper, newly confirmed as director of national intelligence, noted her 32 years of service, with 16 of them often working in agencies under his purview. Clapper warned her that as soon as he is sworn in as DNI, his "meddling" would continue in her next mission.

Long thanked him for "taking a chance on a young executive, way back when," and said she welcomed the meddling to come.

Long represents the vanguard of women in the intelligence community.

Women represent 38 percent of total intelligence work force, according to Wendy Morigi, DNI spokeswoman. In six of the most prominent agencies, 27 percent of senior intelligence positions are held by women.

Long has taken over one of the "top computer geek shops" in the national security world. The NGA synthesizes satellite imagery, using everything from the number of electric lines a city has to the density of the soil, to create three-dimensional, interactive maps of every spot on the planet. They're used by everyone from invading troops gauging whether a country's roads or deserts can handle tank tracks, to oil spill cleanup crews trying to decide where to deploy resources.

Long has the science-and-technology credentials to do it, with a degree in electrical engineering from Virginia Tech, and a masters in mechanical engineering from the Catholic University of America. Together with those high powered jobs, Annapolis-born Long and her husband have raised three daughters.

Rep. Anna Eshoo, D-Calif., said Long's "experience and position make her an important role model for all the women in the intelligence community." Eshoo is a member of the House intelligence committee and a longtime proponent of women in top intelligence roles.

Some of Long's new women staffers at the NGA say her example will surely change how the largely male-dominated work force sees them. However, women in their thirties and forties at these agencies say the climb they face is small compared to Long's fight, against an older generation that hadn't yet witnessed women in combat or a woman come so close to capturing the nomination for U.S. president.

Yet some of those women out in the national security trenches say the fight's far from over.

Intelligence executive Carrie Bachner, a former Air Force officer, worked as the legislative adviser to Charles Allen when he was the Department of Homeland Security's top intelligence official.

That meant she advised him daily on how to deal with the 86 congressional committees responsible for DHS oversight.

Still Bachner says, when she'd walk into a room of intelligence officials or congressional staff with Allen, "they'd automatically ignore me, assuming I was the executive assistant or a note taker until they'd realize, 'Oh, wow, she's the person we're supposed to talk to.'"

Bachner is also Indonesian, which she believes is another reason she is often overlooked.

"I still get it, even though I'm the president of my company," she says. Her firm, Mission Concepts Inc., specializes in information sharing and serves the Pentagon and most of the intelligence agencies. "They are taken aback when I introduce myself. They're looking for the real president, and well, that's me."

And now, when "they" look for the director of the NGA, that will be Letitia Long.

The Adviser at the Heart of National Security
July 9, 2010


SOME of President Obama’s top national security advisers believed late last year that they had reached consensus on an aspect of Afghanistan strategy after meeting with Gen. James L. Jones, the national security adviser.

They should have checked first with Denis McDonough, the National Security Council’s chief of staff. “I don’t think that’s where the president is on that,” Mr. McDonough informed his higher-ups, according to two administration officials.

A couple of months later, when state officials in Florida tried to halt medical evacuation flights from Haiti, Mr. McDonough, on the ground in earthquake-stunned Port-au-Prince, got on his BlackBerry, which is never far from his side. Within a few hours, as other officials tell it, Homeland Security Secretary Janet Napolitano acted to keep the airspace open.

Forget Secretary of State Hillary Rodham Clinton or Defense Secretary Robert M. Gates. When it comes to national security, Mr. Obama’s inner circle is so tight it largely consists of Mr. McDonough, a 40-year-old from Minnesota who is unknown to most Americans but who is so close to the president that his colleagues — including his superiors — often will not make a move on big issues without checking with him first.

“He is the keeper of the president’s flame,” said Cheryl Mills, Mrs. Clinton’s chief of staff. Brian Katulis, a foreign policy expert who is a good friend of Mr. McDonough, said, “When the president needs to pick up the phone and call someone on national security, that someone is Denis.”

When Mr. Obama got word of the Rolling Stone article that would lead to his firing of Gen. Stanley A. McChrystal as the top commander in Afghanistan, Mr. McDonough was one of about a half-dozen people he immediately summoned to the Oval Office.

Mr. McDonough is intensively protective of the president, and is well known for picking up the phone — or his BlackBerry — to take people to task, from reporters to Washington talking heads to other Obama officials who go off message. He spent the entirety of his bike ride home to Takoma Park, Md., from the White House late one recent night arguing on the cellphone with a reporter who he believed had mischaracterized an internal administration debate over Iraq policy.

He has berated some of the Democratic Party’s most distinguished foreign policy dignitaries when they have dared to critique Mr. Obama publicly, leaving a miffed Washington establishment in his wake muttering — off the record, of course — about just who this guy thinks he is.

His e-mail messages are legendary across Washington, and usually appear right after a critique hits the Web. When David Rothkopf, a national security expert and Commerce Department official in the Clinton administration, wrote a column for The Washington Post last August that praised Mrs. Clinton — and notably, not Mr. Obama — as overseeing “profound changes” to American foreign policy, the first e-mail message Mr. Rothkopf received came from you-know-who.

“Interesting choice for a profile,” Mr. McDonough wrote.

“Political figures like to have people who are watching their back,” Mr. Rothkopf said in an interview. “I understand why people are bugged by McDonough; they’re jealous of his access to the president. But the president deserves to have someone like him.”

Mr. McDonough declined to be interviewed for this article.

Mr. Obama arrived in Washington six years ago as a political outsider, a Chicago novice with no historical ties to the Democratic foreign policy establishment. Early on in the presidential campaign, Mr. McDonough signed up with Mr. Obama.

A foreign policy adviser to Senator Tom Daschle before Mr. Daschle’s 2004 election defeat, Mr. McDonough was then at the Center for American Progress, a liberal research organization.

HE was all over the country for Mr. Obama during the campaign. Mr. McDonough shoveled the driveway and sidewalk of a Davenport, Iowa, couple as part of an unsuccessful effort to woo them into caucusing for Mr. Obama instead of Mrs. Clinton. He spent so much time canvassing his assigned precinct that by the night of the Iowa caucuses he was greeting most of the caucusgoers by name, prompting his colleagues to start calling him the town mayor. (Mr. Obama won five of the seven delegates in the precinct.)

Mr. McDonough looks more like a Town & Country cover model than a Washington foreign policy wonk. At 6-foot-3, he weighs himself regularly in the White House doctor’s office to make sure he does not go above 200 pounds.

But early on during the campaign, Mr. McDonough took on the role of Mr. Obama’s foreign policy guru. “Foreign policy was always the high wire for us on the campaign,” one administration official said. President Obama, he said, “trusted Denis to get the job done but not sand down his views.”

After the Democratic debate in South Carolina in 2007, when Mr. Obama called “ridiculous” the notion of not talking to America’s enemies, Mr. McDonough and Mr. Obama mulled the ensuing furor in the candidate’s bare Massachusetts Avenue campaign office. Mr. McDonough, according to a former campaign official, “told the president, ‘You have nothing to walk back on your position. You don’t need lectures on foreign policy from the Democratic foreign policy establishment.’ ”

The bond they forged during the campaign sealed Mr. McDonough’s role as Mr. Obama’s most trusted foreign policy aide in the White House. Today, many of the old Democratic rivals are in the Obama cabinet, deciding Afghanistan, Iraq and Iran policy. And Mr. McDonough is far closer to the president than they are.

AT both the Pentagon and the State Department, officials report being chewed out by Mr. McDonough when he believes they have leaked something before the White House is ready. In recent months, Mr. McDonough has mellowed, his colleagues say. In fact, he began 2010 telling reporters that he was going to make an effort to be nice, and now routinely mentions that he will not blow up during his almost nightly phone calls to dispute articles.

At the White House, Mr. McDonough presses the East Wing to make sure that junior members of the National Security Council staff are invited to receptions and parties.

In an interview, General Jones said he could not recall when Mr. McDonough told him and other officials that their evolving consensus on Afghanistan policy was not where Mr. Obama wanted to go. But “as a generic anecdote, I’m not bothered by that; it’s what I expect him to do,” he said.

“It’s a big asset for all of us to have Denis, who has known the president for so long,” General Jones said. “He knows how he thinks about issues.”

A Concession Wrapped in an Acceptance

December 2, 2008

Presentations of presidential appointees can be important, but they are rarely interesting. Usually, the men and women chosen for top cabinet roles are not well known to the public; if there is drama behind the scenes, most in the audience are blind to it.

That was hardly the case on Monday when President-elect Barack Obama introduced his national security team. Senator Hillary Rodham Clinton’s speech was no ordinary public-service pledge; for plenty of viewers, it was the moment when Mrs. Clinton finally conceded the election for real.

The occasion was solemn, but like a wedding where the parents are divorced, the ceremony was carefully choreographed to avert awkward moments and camouflage past unpleasantness.

When Mr. Obama unveiled his economic team last week, he alone made a speech. In this more delicate selection, it was decided that Mrs. Clinton, his pick for secretary of state, should also speak. But that might look suspect — or too political — unless the five other appointees also said a word, and that, in turn, required a few words from Vice President-elect Joseph R. Biden Jr., who had yet to make public statements of any consequence since the election. (He spoke last, spiritedly, and at some length.)

Not all the staging was designed to address Mrs. Clinton’s sensibilities. She and the five other appointees walked out on stage and stood in line, almost as if at attention, waiting for the president-elect to walk in. He did so briskly, with Mr. Biden at his heels.

Mr. Obama introduced his former rival as “my dear friend,” and promised that his new team would forge “a new dawn of American leadership.”

Mrs. Clinton, who has mostly stayed out of public view since the election, opened on a valedictory note, telling the audience that leaving the Senate would be “very difficult for me.” She attributed her sense of loss, or surrender, to ending her service to her New York constituents, but those who watched her struggle for the Democratic nomination with such ferocity for the past two years were reminded that she was also forswearing her independent campaign identity.

And there was a fleeting flashback to her primary season gamesmanship when she listed representing New York as a foreign policy credential. “You’ve also helped prepare me well for this new role,” she told her Senate constituents. “After all, New Yorkers aren’t afraid to speak their minds and do so in every language.”

Her husband certainly was not letting anyone forget the campaign: as the ceremony was taking place, former President Bill Clinton issued a long statement extolling his wife’s qualifications (“as her husband, I am deeply proud”) and briefly praised Mr. Obama, not for his vision, but for his good sense in choosing Mrs. Clinton.

The topic at hand was national security, and five other appointments were announced, but reporters were mostly interested in exploring how secure Mr. Obama felt about his new secretary of state’s loyalty. A reporter asked Mr. Obama whether there was any lingering internal disagreement given that “some people up there on the stage” had previously attacked his argument that the United States has a right to attack terrorist targets in Pakistan without Pakistani government permission.

“I did not ask for assurances from these individuals that they would agree with me at all times,” Mr. Obama said calmly. “I think they understand and would not be joining this team unless they understood and were prepared to carry out the decisions that have been made by me after full discussion.”

When another reporter asked Mr. Obama about the “evolution” of his views since those times in the campaign when he dismissed Mrs. Clinton’s foreign policy experience as a series of “teas” with foreign leaders, Mr. Obama took it lightly. “Well, I mean, I think — this is fun for the press to try to stir up whatever quotes were generated during the course of the campaign.” he said with a grin. “No, I understand. And you’re having fun, and there’s nothing wrong with that. I’m not — I’m not faulting it.”

Mrs. Clinton had greeted the question somewhat grimly, but as Mr. Obama answered, she slowly unfurled a smile. By the end, she managed to look almost as amused by the question as her new boss was.

Obama Unveils His National Security Team
December 1, 2008

WASHINGTON — President-elect Barack Obama called for “a new dawn of American leadership” on Monday as he formally introduced his national security team, led by Senator Hillary Rodham Clinton as his nominee for secretary of state.

“We will strengthen our capacity to defeat our enemies and support our friends,” Mr. Obama said in Chicago. “We will renew old alliances and forge new and enduring partnerships.”

The new president said he was sticking to his goal of removing American combat troops from Iraq within 16 months, which he called “the right time frame,” and that this would be accomplished with safety for the troops and security for the Iraqi people.

He introduced his team one by one, starting with Senator Clinton, his former bitter rival for the Democratic presidential nomination; then Defense Secretary Robert M. Gates, who will stay on, at least for a time, in the new administration; Gen. James L. Jones, the former NATO commander, to be national security adviser; Gov. Janet Napolitano of Arizona to be secretary of homeland security: Susan E. Rice to be ambassador to the United Nations, and Eric H. Holder Jr. to be attorney general.

All of the nominations had been expected, and the president-elect’s announcement contained no surprises. It did, however, contain some not very thinly veiled criticism of the Bush administration.

“Hillary’s appointment is a sign to friend and foe of the seriousness of my commitment to renew American diplomacy and restore our alliances,” Mr. Obama said, apparently alluding to the effects of President Bush’s Iraq policy — which the president-elect has bitterly criticized — on America’s international relationships.

And when the new president introduced Mr. Holder, he said: “Let me be clear: The attorney general serves the American people, and I have every expectation that Eric will protect our people, uphold the public trust and adhere to our Constitution.”

President Bush’s handling of the Justice Department has often been criticized, with much of the denunciation focused on former Attorney General Alberto R. Gonzales, who was portrayed by many Democrats and some Republicans on Capitol Hill as little more than Mr. Bush’s personal lawyer.

The choice of Senator Clinton to be the country’s top diplomat has drawn the most attention in recent weeks, in part because of the months-long duel between her and Mr. Obama for the nomination that once was viewed as all but certain to go to her. But the bitterness of their contest seemed all but forgotten on Monday.

“Mr. President-elect, thank you for this honor,” Senator Clinton said. “If confirmed, I will give this assignment, your administration and our country my all.”

Barring extraordinary surprises, the confirmation of Mr. Obama’s choices seems assured. For one thing, there is a tradition of giving a new president his own team of Cabinet-level advisers. Then, too, senators from both parties who will vote on whether to confirm the nominees offered warm praise in advance.

“President-elect Obama has chosen a terrific national security team to protect our security and help restore America’s rightful place in the world,” said Senator John Kerry, the Massachusetts Democrat who will become chairman of the Senate Foreign Relations Committee. He promised a “swift and fair confirmation process.”

The foreign relations committee’s leading Republican, Senator Richard G. Lugar of Indiana, described the president-elect’s choices as “excellent” in a Sunday interview on ABC. “I look forward to working with each one of them,” Mr. Lugar said.

FROM THE I-BBC:  General James Jones is a former Marine commandant and commander of US and NATO forces in Europe. 

Gen Jones, 64, has been a critic of some of the Bush administration's war strategy, especially in Afghanistan.  The retired general is a decorated Vietnam veteran and is admired by both Republicans and Democrats on Capitol Hill.   He served as a special Middle East peace adviser for the Bush administration.

National Security Pick: From a Marine to a Mediator
November 29, 2008

WASHINGTON — James L. Jones, a retired four-star general, was among a mostly Republican crowd watching a presidential debate in October when Barack Obama casually mentioned that he got a lot of his advice on foreign policy from General Jones.

“Explain yourself!” some of the Republicans demanded, as General Jones later recalled it.

He did not. A 6-foot-5 Marine Corps commandant with the looks of John Wayne, General Jones is not given to talking about his political bent, be it Republican or Democrat. And yet, he is Mr. Obama’s choice for national security adviser, a job that will make him the main foreign policy sounding board and sage to a president with relatively little foreign policy experience.

The selection of General Jones will elevate another foreign policy moderate to a team that will include Robert M. Gates, a carry-over from the Bush administration, as defense secretary and Hillary Rodham Clinton as secretary of state. By bringing a military man to the White House, Mr. Obama may be trying to cement an early bond with military leaders who regard him with some uneasiness, particularly over his call for rapid troop reductions in Iraq.

But General Jones will also be expected to mediate between rivals, particularly in dealing with Mr. Gates, who has his own power base at the Pentagon, and with Mrs. Clinton, who has told friends that she does not expect the national security adviser to stand between her and the president.

And while other generals, including Colin L. Powell and Brent Scowcroft, have successfully made the transition to national security adviser, the experience has sometimes been rocky, as in the career of John M. Poindexter, a retired admiral who fought an uphill battle during the Reagan administration to mediate between George P. Shultz at the State Department and Caspar W. Weinberger at the Pentagon before finding himself caught up in the Iran-contra affair.

Mr. Obama is expected to announce his national security team on Monday in Chicago, with Mr. Gates at the Pentagon, Mrs. Clinton at the State Department, General Jones at the White House and possibly Adm. Dennis C. Blair, who is retired, as director of national intelligence. What is notable is that none of them have a long history with Mr. Obama, and none are known to be particularly close to him.

Among Mr. Obama’s previous inner circle of foreign policy advisers, both Susan E. Rice and Gregory Craig crossed swords with Mrs. Clinton during the presidential campaign. Ms. Rice may end up as ambassador to the United Nations, but Mr. Craig will become White House counsel. Two others, Anthony Lake, a national security adviser under President Bill Clinton, and Samantha Power, a Harvard scholar and author who left the campaign after she was quoted as making remarks critical of Mrs. Clinton, appear unlikely to end up with top jobs.

At the time of that presidential debate in October, General Jones had spoken only twice to Senator Obama, most recently to brief him on Afghanistan before the candidate made his first trip there. By contrast, he had worked since 1979 with Senator John McCain, the Republican nominee, and regarded him as a friend. On the night of the debate he had just given a speech to a mostly Republican group in Pebble Beach, Calif.

But General Jones has long been respected and admired by both Republicans and Democrats. He is fluent in French, which he once spoke better than he spoke English after living in Paris from age 2 to 17. He played basketball at Georgetown University, served in Vietnam and has received all manner of decorations as a marine, including the Defense Distinguished Service Medal with two oak leaf clusters and the Bronze Star Medal with Combat “V.”

At 64, General Jones bicycles from home to work twice each week, riding the nine miles from McLean, Va., to the offices of the U.S. Chamber of Commerce, two blocks from the White House, where he runs a task force on energy. Friends say he is a fan of Toby Keith, the country-music singer and songwriter.

In selecting General Jones, Mr. Obama has also picked a former supreme allied commander in Europe, a man who, at NATO, had to cajole, prod and bully recalcitrant nations. At NATO, he led the American operation in Kosovo. He served as the Bush administration’s envoy to set up an Israeli-Palestinian security model in the West Bank city of Jenin and has traveled to Afghanistan and Iraq on fact-finding missions for the Pentagon.

He has said the war in Iraq has caused the nation to “take its eye off the ball” in Afghanistan and warned that the consequences of a failure there were just as serious as in Iraq.

“Jones brings the same balance that Scowcroft did to the job,” said David Rothkopf, author of “Running the World: The Inside Story of the National Security Council and the Architects of American Power” (PublicAffairs). “Not only does he know how to work the Washington system,” Mr. Rothkopf said, but “he’s deeply steeped in Afghanistan, which is going to be a central front for us.”

But what is unclear, Mr. Rothkopf said, is how quickly General Jones can develop a close relationship with Mr. Obama and how successfully he, Mrs. Clinton and Mr. Gates can define their roles on issues like Iraq, Afghanistan, Russia and terrorism.

Because of his physical proximity — the national security adviser works in the West Wing of the White House and consults with the president several times a day — General Jones will automatically serve as a counter to the State Department. But a State Department that is at war with the White House is the last thing that General Jones wants, his friends and associates say.

“He’s not the sort of person who is going to be chasing down whether Hillary went through him or not,” said one of General Jones’s friends, who spoke on condition of anonymity. “He doesn’t have that kind of an ego.”

General Jones, friends say, gets along well with Mrs. Clinton and has even hired some of her former staff members to work for him on the energy task force.

General Jones approaches things in a “get it done” fashion, associates say, with a propensity to think tactically. Sometimes, that can rub people the wrong way. When he began working on the security proposal for Jenin, some Israeli military officials grumbled that he thought he knew Israel’s security requirements better than they did. Israelis also worried that he would seek to impose an international force on the ground to maintain security, an idea favored by many in the international community but that still leaves some Israeli hawks queasy.

But things have changed in Jenin, much of it thanks to General Jones, both Israeli and Palestinian officials say. The city that once sent waves of suicide bombers into Israel now has Palestinian security officials who have restored order.

“He was able to force all of the different parts of the U.S. government to work together to make Jenin a model of economic hope, despite a very dreary past, and so far, so good,” said David Makovsky, an analyst with the Washington Institute for Near East Policy. “He brought clarity to a messy situation.”

Eric Holder, Att'y General, also to be a member of the Security Team.

Purifier Deputy John Brennan;  Ret. Adm. Dennis Blair, selected to be national intelligence director by incoming administration, now removed.

From the new anthology Confronting Terror: 9/11 and the Future of American National Security.
National Review
Michael B. Mukasey
September 2, 2011 4:00 A.M.

Notwithstanding the dozens of Islamist plots uncovered in the United States since 9/11, the criminal-law paradigm is again limiting the U.S. response. Abd al-Rahim al-Nashiri, the alleged mastermind of the USS Cole bombing, was supposed to be tried before a military commission at Guantanamo last summer. Instead, on a summer Friday afternoon, the Justice Department filed a brief in another case disclosing that there are no charges pending against al-Nashiri, which is to say the military commission proceedings against him have been halted.

Although the White House promised to disclose the forum in which Khalid Sheikh Mohammed and other 9/11 plotters would be tried, after their initial choice of New York was hooted down, subsequent announcements remained inconsistent for a time.  Faced with legislation that barred the use of federal funds to try Guantanamo detainees in the United States, Attorney General Holder announced reluctantly on April 4, 2011, that KSM and others would be tried by military commission after all. However, in July 2011, he disclosed that a Somali suspect, Ahmed Abdulkadir Warsame, who had been captured abroad and held on naval vessels rather than at Guantanamo, would be brought to the United States and tried in a civilian court. Notably, Warsame, unlike Shahzad and Abdulmutallab, was reportedly debriefed extensively following his capture by the high-value interrogation team promised at the time the CIA interrogation program was abandoned in 2008. The interrogation techniques, however, are still limited by the Army Field Manual.

Moreover, military officials have conceded candidly that we have no detention program; we simply improvise from one capture to the next. It is true that Guantanamo remains open, but it is also true that President Obama remains as committed as ever to closing it. He seems determined to figure out a way to release those detained there despite a growing body of evidence that alumni of Guantanamo have returned to terrorism. A recent example is an interview with Sheikh Abu Sufyan al-Azdi, deputy commander of al-Qaeda in the Arabian Peninsula, a group based in Yemen, published in the October 2010 issue of that organization’s English-language magazine. Abu Sufyan was released from Guantanamo and turned over to the Saudis for participation in their vaunted reeducation program, but made his way to Yemen to resume his jihadi activities. In the interview, he urges Muslims to emulate Nidal Hasan, the Fort Hood shooter, and Abdulmutallab, the airplane bomber.

Abu Sufyan is by no means the first alumnus of Guantanamo to return to the battlefield. In March 2010, the supreme leader of the Afghan Taliban announced that he was promoting mullah Abdul Qayyum Zakir to replace a top deputy captured  by U.S. forces; Zakir had also been in detention at Guantanamo, and was released to the Afghanis. In fact, more than 20 percent of those released from Guantanamo have returned to the battlefield and, of course, those are only the ones we know about because they have been recaptured or killed. How many others remain in the fight is anyone’s guess.

It has become increasingly obvious since 2009 that the administration is resolutely opposed to looking at militant Islamism squarely, whether in its terrorist manifestation or otherwise. For example, in 2010 at the Center for Strategic and International Studies, deputy national security adviser John Brennan said that this talk of a war on terrorism or on terror is highly misleading, because terrorism is simply a tactic and terror is a state of mind. Brennan cautioned against describing our enemies as jihadists because jihad, as he put it, “is a holy struggle, a legitimate tenet of Islam.” And then, just so no one missed the point, he said that jihad actually means something innocuous. It means simply, as he put it, “to purify oneself or one’s community.”

Brennan, by the way, believes that the 20 percent–plus recidivism rate for those released from Guantanamo is not bad because it compares favorably with the rate of U.S. prisons.

Keep America Safe:  Steps to reforming intelligence.
BY Stephen F. Hayes, Weekly Standard
June 7, 2010, Vol. 15, No. 36

Two weeks ago President Obama fired his top intelligence adviser—or at least the man who held the title.

In the six months before Dennis Blair was relieved of his duties as director of national intelligence, there were three attacks on U.S. soil, each one with troubling details. After Fort Hood, we learned that the FBI knew before the attack about email correspondence between the shooter, Major Nidal Malik Hasan, and al Qaeda cleric Anwar al Awlaki and did nothing. We know that the Christmas Day bomber, Umar Farouk Abdulmutallab, stopped talking to his interrogators after he was read his Miranda rights and that, moreover, the interrogation was conducted without the benefit of the dossier the CIA had compiled on Abdulmutallab. And the would-be Times Square bomber, Faisal Shahzad, almost escaped after leaks about his identity appeared in the press. There is much more.

We were told by the administration that the system worked when it had not. We were told that the attackers had no connections to the international jihadist networks when they had many. We were told the high-value interrogation group was operational, and it wasn’t. We were told that 50 minutes was enough to learn everything knowable about a would-be attacker and his al Qaeda connections, a claim that was quickly discarded when he resumed cooperating and the administration wanted to let us know how much additional intelligence he was providing.

So someone had to go. Eric Holder and Janet Napolitano would have been better choices than Blair. But the decision to fire him suggests that the Obama administration has finally recognized that things had to change.

There have been other indications, too. After initially downplaying Faisal Shahzad’s ties to international terrorism, the administration swiftly and decisively corrected itself. Three months after arguing in a letter to Congress that the U.S. government had no choice but to quickly mirandize detained terrorists, Holder said that the administration would work with lawmakers to give interrogators more flexibility in their efforts to obtain intelligence.

These are good signs. But Obama needs to go further.

His first step is to end the investigation of CIA interrogators by the Justice Department. The repercussions have been severe. CIA operators, already risk averse, are today far less willing to take risks in the field out of fear that a wrong decision, even a legal one that produced crucial intelligence, could send them to jail. Obama should also insist that the Justice Department aggressively investigate the alleged exposure of CIA officials by lawyers representing Guantánamo detainees. Photographs of officials were discovered in the cell of Mustafa Ahmed al Hawsawi and were reportedly provided by investigators working for the ACLU and the National Association of Criminal Defense Lawyers. John Rizzo, former CIA general counsel and a 30-year intelligence veteran, said that the breach was far graver than the leak of Valerie Plame’s name.

Another crucial step: Move the day-to-day direction of intelligence policy out of the West Wing. President Obama wanted to nominate John Brennan to run the CIA, but the left protested, pointing to Brennan’s high-ranking positions at the agency during the Bush administration. But as White House “intelligence czar,” Brennan occupies a position of far more influence—proximity to the president is power. Brennan works for the administration; he is not an independent voice on intelligence matters. He has repeatedly shown himself willing to make political arguments in defense of the White House. It was a problem that Blair noted in congressional testimony after the Christmas Day attack. “The political dimension of what ought to me to be a national security issue has been quite high. I don’t think it has been particularly good, I will tell you, from the inside, in terms of us trying to get the right job done to protect the United States.”

Nothing is more important, however, than a rethinking of interrogation policy. Obama ran on a promise to end “torture.” Most everyone understood him to mean “waterboarding,” but Obama has gone much further. By restricting interrogators to the techniques in the Army Field Manual he has chosen to take away valuable interrogation techniques—enhanced means that do not constitute “torture” and that have proven effective. Furthermore most of the interrogations of high-value terrorists captured overseas have been outsourced to liaison services. We are choosing to know less about our enemies.

Finally, the president needs to provide the intelligence community with a clear mission. We are at war. We are fighting the adherents of radical Islam—non-state terrorist groups and the states that support them. This is the central fact of this war, and the president should not be shy about saying so.

While these steps don’t go far enough, they would, without question, make us safer.

—Stephen F. Hayes

US Official: Intelligence Director Resigns
Filed at 12:53 p.m. ET

January 27, 2009

WASHINGTON (AP) -- A U.S. official says National Intelligence Director Michael McConnell has resigned his post.

The official, who asked not to be named because the resignation has not been announced, said Lt. Gen. Ronald L. Burgess, Jr. is temporarily serving as acting national intelligence director.

President Barack Obama has nominated retired Adm. Dennis Blair to be the next intelligence director. He would oversee a budget of nearly $50 billion and a work force of more than 100,000 spread across 16 agencies.

Obama has asked McConnell to serve on the President's Intelligence Advisory Board. McConnell was the nation's second national intelligence director and has served in the job for nearly two years. The position was created in 2004.

From the NYTIMES Dec. 1
...He (President-Elect Obama) will not announce any of the top intelligence appointments on Monday, but the Democrats said they expected him soon to name Adm. Dennis C. Blair, a retired Pacific Fleet commander, as director of national intelligence.
From the DAY Jan. 10, 2009
He (Sen. Ron Wyden, D-Ore.) added there is little appetite in Congress to prosecute government employees who engaged in "enhanced" interrogations authorized by the White House. The Detainee Treatment Act of 2005, which prohibited cruel, inhuman and degrading treatment of prisoners, also called for the protection of those employees from civil lawsuits or criminal prosecutions if they believed in good faith they were acting on lawfully. The bill passed with an overwhelming majority.

Obama pledged Friday that Leon Panetta, his nominee to head the CIA, would be a strong advocate for the agency's interest inside the White House, and his selection for national intelligence director, retired Adm. Dennis Blair, would continue "the good work that is being done..."

Susan Rice, United Nations Representative, on the Security Team as well - that post made Cabinet level for the Obama administration.

Choice for U.N. Backs Strong Action Against Mass Killings
December 1, 2008

CHICAGO — President-elect Barack Obama has chosen his foreign policy adviser, Susan E. Rice, to be ambassador to the United Nations, picking an advocate of “dramatic action” against genocide as he rounds out his national security team, Democrats close to the transition said Sunday.

Mr. Obama intends to announce Ms. Rice’s selection at a news conference here Monday along with his previously reported decisions to nominate Senator Hillary Rodham Clinton for secretary of state, keep Robert M. Gates as defense secretary and appoint Gen. James L. Jones, a retired Marine commandant, his national security adviser, the Democrats said.

The choice of Ms. Rice to represent the United States before the United Nations will make her one of the most visible faces of the Obama administration to the outside world aside from Mrs. Clinton. It will also send to the world organization a prominent and forceful advocate of stronger action, including military force if necessary, to stop mass killings like those in the Darfur region of Sudan in recent years.

To reinforce his intention to work more closely with the United Nations after the tensions of President Bush’s tenure, Mr. Obama plans to restore the ambassador’s post to cabinet rank, as it was under President Bill Clinton, according to Democrats close to the transition.

While the cabinet consists of 15 department heads, a president can give other positions the same rank for the duration of his administration.

“She’s obviously one of Obama’s closest advisers, so it underscores how much of a priority he’s making the position,” said Nancy Soderberg, a senior United States diplomat at the United Nations under Mr. Clinton. “If you look at the last eight years, we obviously need to be more engaged at the U.N. and realistic about what the U.N. can do.”

At Monday’s announcement, the president-elect will also formally unveil his nominations of Eric H. Holder Jr. to be attorney general and Gov. Janet Napolitano of Arizona to be secretary of homeland security, the Democrats said. He will not announce any of the top intelligence appointments on Monday, but the Democrats said they expected him soon to name Adm. Dennis C. Blair, a retired Pacific Fleet commander, as director of national intelligence.

If confirmed, Ms. Rice at 44 would be the second-youngest ambassador to the United Nations. A Rhodes scholar who earned a doctorate in international relations at Oxford University, she joined Mr. Clinton’s National Security Council staff in 1993 before rising to assistant secretary of state for African affairs at age 32. When Mr. Obama decided to run for president, she signed up as one of his top advisers, much to the consternation of the Clinton camp, which resented what it saw as a defection.

As the ambassador at the United Nations, Ms. Rice will have to coordinate with Mrs. Clinton, but will not be in the White House or at State Department headquarters on a daily basis as major policies are formulated. One person close to Mrs. Clinton said the senator did not object to Ms. Rice serving at the United Nations.

Some colleagues from her Clinton and Obama days said Ms. Rice can be blunt and unafraid to “mix it up,” as one put it, on behalf of issues she cares about. Ms. Rice herself acknowledges a certain impatience at times.

Admirers said she is a good listener and able to stand up to strong personalities, including foreign autocrats and militants in volatile regions of the world.

“Susan certainly is tough, and she’s tough in exactly the right way,” said Strobe Talbott, a former deputy secretary of state and now president of the Brookings Institution, where Ms. Rice has worked in recent years. “She’s intellectually tough, she’s tough in her approach to how the policymaking process should work and she will be very effective as a diplomat.”

John R. Bolton, who was one of Mr. Bush’s ambassadors at the United Nations, would not discuss Ms. Rice’s selection, but said it was unwise to elevate the position to the cabinet again.

“One, it overstates the role and importance the U.N. should have in U.S. foreign policy,” Mr. Bolton said. “Second, you shouldn’t have two secretaries in the same department.”

During her first run at the State Department, Ms. Rice was a point person in responding to Al Qaeda’s 1998 bombing of United States Embassies in Kenya and Tanzania. But her most searing experience was visiting Rwanda after the 1994 genocide when she was still on the N.S.C. staff.

As she later described the scene, the hundreds, if not thousands, of decomposing, hacked up bodies that she saw haunted her and fueled a desire to never let it happen again.

“I swore to myself that if I ever faced such a crisis again, I would come down on the side of dramatic action, going down in flames if that was required,” she told The Atlantic Monthly in 2001. She eventually became a sharp critic of the Bush administration’s handling of the Darfur killings and last year testified before Congress on behalf of an American-led bombing campaign or naval blockade to force a recalcitrant Sudanese government to stop the slaughter.

Jerry Fowler, president of the Save Darfur Coalition, praised the pending Rice nomination on Sunday, calling it a powerful sign of the new president’s interest in the issue. The coalition is urging Mr. Obama to begin a “peace surge” of sustained diplomacy to address the continuing problems in Sudan.

“It sends a very strong signal about his approach to the issue of Sudan and Africa in general,” Mr. Fowler said. Ms. Rice will be joining a high-powered team on stage with Mr. Obama on Monday, most notably Mrs. Clinton.

The two rivals from the polarizing battle for the Democratic presidential nomination will seal their reconciliation with Mrs. Clinton’s nomination to head the State Department.

At a time when the country remains engaged in two wars and still faces the threat of international terrorism, Mrs. Clinton will anchor a national security team with more of a centrist character than some of Mr. Obama’s liberal supporters once hoped to see.

Some critics have pointed out that the team represents experience rather than the change Mr. Obama promised. But it also drew praise from across the aisle.

“The triumvirate of Gates, Clinton and Jones to lead Obama’s national security team instills great confidence at home and abroad and further strengthens the growing respect for the president-elect’s courage and ability to exercise sound judgment in selecting the best and the brightest to implement our nation’s security policies,” said Senator John W. Warner of Virginia, a former chairman of the Armed Services Committee.

Janet Napolitano, Homeland Security, resigns to manage the California university system.  "Jay" Johnson nominated (l).
"About Town" notes that one of Governor Napolitano's strengths is that she is from a state where you can see the border with...Mexico, and potential illegal entry into the USA.

Nominee Would Lead ID Program She Opposed
December 2, 2008

WASHINGTON — As governor of Arizona, Janet Napolitano, President-elect Barack Obama’s choice for homeland security secretary, pledged that her state would not cooperate with a major domestic security initiative, the Real ID drivers’ license program.

The program, which she would direct if confirmed as secretary, imposes stringent requirements on states for confirming the identity and legal residency of people who want drivers’ licenses. Ms. Napolitano said the law would impose huge costs on the states without reimbursement from Washington.  In June, she signed into law a bill that forbids Arizona from cooperating with the federal requirements. The state law had no immediate effect, because Arizona already had a federal waiver allowing it to delay enactment until 2009.

Last year, as the chairwoman of the National Governors Association, Ms. Napolitano testified before a Senate committee that the program would cost the states $11 billion. Since then, Congress has appropriated $100 million to meet some of the costs.

Real ID follows the recommendations of the 9/11 Commission; it was passed without hearings or debate, attached to a mostly unrelated bill.  Janice L. Kephart, a staff member for the 9/11 Commission, said, “I’m hoping she will see this program from the federal government side and see it with new eyes.”

A stronger national driver’s license system would help the states improve highway safety by assuring that drivers do not obtain more than one license, Ms. Kephart said, and it could cut Medicare and Medicaid fraud.

Hani Hanjour, the hijacker flew the plane that crashed into the Pentagon on Sept. 11, 2001, had an Arizona license, she said.

The federal government has said that people carrying drivers’ licenses that do not comply with its requirements will not be allowed into federal buildings and will have difficulty boarding planes. The American Civil Liberties Union and some state legislators say that the program amounts to a national identification card, with civil liberties and privacy implications. Ms. Napolitano, however, has mostly focused on the cost. Mr. Obama, as a candidate, did the same.

The rules issued by the Bush administration require each state to verify the authenticity of an applicant’s documents and keep copies, along with digital photos, so the information can be shared with other states. The department issued the regulations so late that nearly all the deadlines fall after Mr. Bush leaves office.

ANSWERS TO MY QUESTION:  (The Obama Administration is turning out to be "team play" - our question--where does each member of the Cabinet get his or her authority?  After all, the "captain" of each of the teams is responsible for their performance...or am I missing something here?  Or is President-Elect Obama the "captain" of each team?)

Clinton to Be Introduced as Part of Obama Security Team
December 1, 2008

CHICAGO — President-elect Barack Obama and Senator Hillary Rodham Clinton on Monday will seal their rapprochement when he announces her nomination as his secretary of state, Democrats close to the process said Sunday.

Mrs. Clinton, once considered the Democratic frontrunner for president, is flying to Chicago to appear together with the man who beat her for the nomination, a person close to Mrs. Clinton said. The sight of them together, as she joins his administration, would have been thought unlikely just weeks ago, but Mr. Obama concluded she would strengthen his team.

At a time when the country remains engaged in two wars and still faces the threat of international terrorism, Mrs. Clinton will anchor a national security team with more of a centrist character than some of Mr. Obama’s liberal supporters once hoped to see. In addition to her, Democrats said, Mr. Obama plans to announce that he is keeping Defense Secretary Robert M. Gates, who has run the Pentagon for the last two years, and will appoint Gen. James L. Jones, a retired Marine commandant, as national security adviser.

Rounding out his national security team, Mr. Obama will name former Deputy Attorney General Eric H. Holder Jr. as his choice for attorney general and Governor Janet Napolitano of Arizona as secretary of homeland security, the Democrats said. Mr. Obama also will nominate Susan E. Rice, his foreign policy adviser and a former assistant secretary of state, as ambassador to the United Nations, a job that will be given cabinet rank, as it had under President Bill Clinton.

The Obama and Clinton teams have been preparing the ground for this announcement for days. Mr. Clinton, who has extensive business and philanthropic interests around the world, agreed to a nine-point plan covering disclosure, vetting and other areas to avoid potential conflicts of interest, including for the first time the release of more than 200,000 donors to his foundation by the end of the year. That goes beyond the requirements of existing law.

The Obama team has planned for a while to unveil the national security team after the Thanksgiving holiday, but the timing took on additional urgency after the terrorist attacks in Mumbai. The attacks, which killed at least 180, including six Americans, offered a stark reminder that for all of Mr. Obama’s focus on fixing the economy, national security can capture a president’s attention at any moment.

Reports of the selections drew praise from a retiring Republican elder. “The triumvirate of Gates, Clinton and Jones to lead Obama’s national security team instills great confidence at home and abroad,” said Senator John W. Warner of Virginia, a former chairman of the Armed Services Committee, “and further strengthens the growing respect for the president-elect’s courage and ability to exercise sound judgment in selecting the best and the brightest to implement our nation’s security policies.”.

While the choices have generated praise across the aisle, some critics have pointed out that the team represents experience rather than the change Mr. Obama promised on the campaign trail. All of his top choices served in either the Clinton or Bush administration.

At a news conference last week, Mr. Obama said he was trying to “combine experience with fresh thinking” an added that “the vision for change comes” from him.


Arne Duncan

Duncan: Smart Is Cooler Than Ever
By Sam Dillon
January 13, 2009, 11:21 am

Arne Duncan, the Chicago schools chief, told the Senate on Tuesday that he would work for “real and meaningful change” in the nation’s schools if confirmed as education secretary, and he said he hoped president-elect Barack Obama’s own example as a model student could inspire millions of American children.

“Never before has being smart been so cool,” Mr. Duncan said.

But Mr. Duncan did little to resolve the curiosities of educators and policymakers about how he and Mr. Obama intend to bring about change in American education, which over the next year is likely to include an attempt to the rewrite the Bush-era No Child Left Behind law, the most important statement of federal policy on public schools.

“I have seen the law’s power and its limitations,” Mr. Duncan said, but he provided no examples of concrete changes he will seek. “I agree with the president-elect that we should neither bury NCLB nor praise it without reservation.”

In a confirmation hearing before the Senate educaiton committee, Mr. Duncan laid out a thoroughly pragmatic and non-ideological educational agenda, vowing to do “anything that works” to raise achievement in public schools.

The Obama Administration intends to expand early childhood programs, foster the opening of more charter schools, improve teacher training and recruitment, and increase access to college for low-income students, Mr. Duncan said.

Mr. Duncan, who is 44, walked a careful line among rival factions of the nation’s educational reform movement, neither fully endorsing nor rejecting those who want to squeeze teachers and administrators harder to raise student achievement, nor a rival faction that contends schools alone are not capable of closing achievement gaps between poor and affluent students without broader federal investments in school-based health clinics and other social programs.

The Senate appeared likely to give quick approval to Mr. Duncan nomination.

“I think you’re the best,” said Senator Lamar Alexander, one of several Republican senators who praised Mr. Duncan’s record as chief executive of the nation’s third largest school district. “I hope I still think that a year from now.”

Sen. Tom Harkin, Democrat of Iowa, chaired the hearing in place of Senator Edward M. Kennedy, the committee chairman.

Obama Names Education Chief
Filed at 3:12 p.m. ET
December 16, 2008

CHICAGO (Reuters) - U.S. President-elect Barack Obama on Tuesday called the high U.S. school dropout rate "economically untenable" and said making U.S. schools more competitive would be a top job of his education secretary.  Saying the road to jobs and growth begins in the classroom, Obama announced Chicago schools chief Arne Duncan -- a longtime basketball partner and friend -- as his choice for education secretary. He charged Duncan with improving America's teachers and schools to help the United States become more competitive.

"If we want to out-compete the world tomorrow, then we're going to have to out-educate the world today," Obama told a news conference at an elementary school.  Obama, who takes office on January 20, noted that the U.S. high school dropout rate is one of the highest in the industrialized world and many young American children cannot even do basic math.

"We can't continue like this," he said. "It's morally unacceptable for our children and economically untenable for America."

After the news conference Obama held a meeting of the key members of his economic team amid continuing bleak news on the U.S. economy, with consumer prices plunging at a record pace and housing starts falling to a new low.  They meet as the Federal Reserve cut its benchmark U.S. interest rate to a range of 0 to 0.25 percent, a record low that underscored the worst economic turmoil since the Great Depression.

In his news conference before the Fed move, Obama warned the central bank's traditional tools for fighting recession were running out.

"We are running out of the traditional ammunition that is used in a recession, which is to lower interest rates. They are getting to be about as low as they can go," he said.  He said other branches of government needed to step up to help. "That's why the economic recovery plan is so absolutely critical," he said.

Obama has promised to create at least 2.5 million jobs by 2011 and launch a major infrastructure improvement drive along with reforming the nation's health care system, but questions over how to pay for it all remain.  Obama is scheduled to hold another in a series of news conferences on Wednesday at which he is expected to formally unveil his pick for interior secretary.


As they introduced Duncan, both Obama and Vice President-elect Joe Biden said the choice for education secretary was the person who could raise standards and help reform schools.

"We have to have an education system that's second to none in the world. That's the only way our children and our nation are going to be able to compete in today's global economy," said Biden.

Duncan has been chief executive of Chicago Public Schools, the nation's third-largest school district, since 2001. The current education secretary, Margaret Spelling, has called Duncan a "visionary" leader and reformer who would be a great choice to run the Department of Education.

"He's championed good charter schools, even when it was controversial. He's shut down failing schools and replaced their entire staffs, even when it was unpopular," Obama said.

Duncan, who was co-captain of Harvard University's basketball team, played professional basketball in Australia after he graduated from the university. He returned to Chicago in 1992 to direct a program to create educational opportunities for inner city children on the city's South Side.  Duncan spearheaded a movement to create smaller, community schools and has been successful at coping with dwindling resources. He favors opening the schools up to the community to get people to invest in them.

"While many issues will demand your attention, I am convinced that no issue, no issue is more pressing than education," Duncan said at the news conference. "Whether it's fighting poverty, strengthening our economy or promoting opportunity, education is the common thread."

Arne Duncan is President-elect Barack Obama’s choice as secretary of education. Mr. Duncan has seven years’ experience as chief executive of the Chicago Public Schools, the nation’s third-largest school district, where he has earned a solid reputation for confronting pressing issues in public education, like how to raise teacher quality, how to transform weak schools and when to shutter those that are irredeemably failing.

He and President-elect Obama have played pickup basketball games together in Chicago since they met in the early 1990s through Michelle Obama’s brother. Mr. Duncan was a co-captain of the basketball team at Harvard. His sports friendship with Mr. Obama evolved into a shared interest in the problems of urban education, and they have visited Chicago schools together to examine questions like how best to train teachers. Mr. Duncan helped shape Mr. Obama’s education program.

He played professional basketball in Australia from 1987 to 1991 (he is 6 foot 5); then, from 1991 to 1998, he directed the Ariel Education Initiative, a philanthropic effort with a small staff that seeks to create better schooling opportunities for poor children on the South Side of Chicago. He was director of magnet schools and deputy chief of staff to the Chicago schools chief, Paul G. Vallas, from 1998 to 2001.

Mr. Duncan, though, has little of the national political experience that education secretaries often need in representing the White House’s educational agenda before Congress and negotiating with the leaders of the 50 state school systems and the myriad interest groups that make up the educational establishment. His expertise in elementary-secondary education is considerable, and his late father was a psychology professor at the University of Chicago, but Mr. Duncan has little professional experience navigating the higher-education landscape.

Mr. Duncan was born on Nov. 6, 1964. He comes from a family of educators: his mother founded and has run a vaunted Chicago tutoring program for 48 years. He graduated magna cum laude from Harvard and sits on the Harvard Board of Overseers. Mr. Duncan tutored Chicago children during a year he took off from studying sociology at Harvard.

Chicago Schools Chief Is Obama’s Education Pick
December 16, 2008

Arne Duncan, the Chicago schools superintendent known for taking tough steps to improve schools while maintaining respectful relations with teachers and their unions, is President-elect Barack Obama’s choice as secretary of education, Democratic officials said Monday.

Mr. Duncan, a 44-year-old Harvard graduate, has raised achievement in the nation’s third-largest school district and often faced the ticklish challenge of shuttering failing schools and replacing ineffective teachers, usually with improved results.  He represents a compromise choice in the debate that has divided Democrats in recent months over the proper course for public-school policy after the Bush years.

In June, rival nationwide groups of educators circulated competing educational manifestos, with one group espousing a get-tough policy based on pushing teachers and administrators harder to raise achievement, and another arguing that schools alone could not close the racial achievement gap and urging new investments in school-based health clinics and other social programs to help poor students learn.

Mr. Duncan was the only big-city superintendent to sign both manifestos.  He argued that the nation’s schools needed to be held accountable for student progress, but also needed major new investments, new talent and new teacher-training efforts.  In straddling the two camps, Mr. Duncan seemed to reflect Mr. Obama’s own impatience with what he has called “tired educational debates.”

In his last major educational speech of the campaign, Mr. Obama said: “It’s been Democrat versus Republican, vouchers versus the status quo, more money versus more reform. There’s partisanship and there’s bickering, but no understanding that both sides have good ideas.”

The rival educational camps swamped the Obama transition in recent weeks with recommendations for the post. The National Education Association, the largest teachers’ union, pressed for several current and former governors who had made schools a priority in their states.  Many former members of Teach for America, the program that sends elite-college graduates to teach in low-income schools, weighed in on behalf of Joel I. Klein, the New York City schools chancellor, and Michelle Rhee, the Washington schools chancellor, both of whom have clashed with the teachers’ unions.

“Obama found the sweet spot with Arne Duncan,” said Susan Traiman, director of educational policy at the Business Roundtable. “Both camps will be O.K. with the pick!”

Mr. Duncan’s acquaintance with Mr. Obama began on the basketball court nearly two decades ago but has flowered since he became the chief executive of the Chicago Public Schools in 2001, and Mr. Obama has used him as a frequent sounding board in discussions of education policy.  The two men have visited a number of Chicago schools together. In October 2005, they visited the Dodge Renaissance Academy, a once-failing elementary school that Mr. Duncan closed and reopened, with a new staff, as a working public school and a teacher training academy.

During the visit, Mr. Obama sat down with school staff members in the library for more than an hour and questioned them at length about arcane instructional issues, Mr. Duncan said in an interview.

“I’ve taken lots of political leaders on school visits, and nobody spends the amount of time, asks the depth of questions, or is more engaged and curious than Barack,” Mr. Duncan said in an August interview.

The Obama transition team has scheduled a news conference for Tuesday at the Dodge Renaissance school.

Mr. Duncan’s background includes playing professional basketball in Australia and intermittently tutoring urban youth, but no formal teaching experience. He helped draft Mr. Obama’s extensive education platform, which called for recruiting thousands of new teachers, encouraging local school districts to adopt performance-based teacher pay initiatives, recruiting and training effective principals, and placing new emphasis on science and mathematics education.

The platform also calls for making major federal investments in early childhood education, which Mr. Obama believes is a more effective use of educational dollars than spending them on remedial programs later.

Mr. Duncan has been working for several years to expand the early childhood opportunities in the Chicago Public Schools, increasing enrollment opportunities for 3- and 4-year-olds by 1,000 places or more each year. Mr. Duncan has worked closely in that effort with Barbara T. Bowman, the Chicago Public Schools’ chief officer for early childhood education, who is the mother of Mr. Obama’s senior adviser, Valerie Jarrett.

Allan R. Odden, a professor of education at the University of Wisconsin, heads a project that is studying how school districts recruit, assign and train their principals and teachers. He said Chicago had made considerable progress under Mr. Duncan.

“He’s gotten the job done in Chicago,” Dr. Odden said. “There’s more to be done, but he’s done a great job of reaching out and recruiting and improving the talent of both teachers and principals.”

During Mr. Duncan’s tenure, the Chicago schools, which in the 1970s and 1980s experienced nine teachers’ strikes in 17 years, has had labor stability, and last week, Randi Weingarten, president of the American Federation of Teachers, praised Mr. Duncan.

As secretary of education, one of Mr. Duncan’s major challenges will be to rebuild the bipartisan consensus that helped President Bush win passage of his No Child Left Behind law in 2001.

An effort to rewrite the law, the most important statement of federal policy toward public schools, collapsed last year in the face of opposition from conservative Republicans angered over the law’s intrusion onto states’ educational prerogatives and Democrats upset with the law’s emphasis on standardized testing.

Mr. Obama has called for a thorough rewrite, but has pledged to defend the accountability provisions in the law that require schools to improve.

Joe Williams, executive director of Democrats for Education Reform, said last week that his group would be delighted to see Mr. Klein or Ms. Rhee appointed, but had sent to the transition team a memorandum recommending Mr. Duncan.

“He is the kind of guy who can work with all sorts of people with different viewpoints, and we like his work in Chicago with charter schools,” Mr. Williams said.

Representative George Miller, the California Democrat who as the chairman of the House Education and Labor Committee will lead any reauthorization effort, called Mr. Duncan “a good choice for school reform and our schoolchildren.”

“He is an experienced and accomplished leader who is open to new ideas for improving our schools,” Mr. Miller said.

Who Will He Choose?
December 5, 2008

As in many other areas, the biggest education debates are happening within the Democratic Party. On the one hand, there are the reformers like Joel Klein and Michelle Rhee, who support merit pay for good teachers, charter schools and tough accountability standards. On the other hand, there are the teachers’ unions and the members of the Ed School establishment, who emphasize greater funding, smaller class sizes and superficial reforms.

During the presidential race, Barack Obama straddled the two camps. One campaign adviser, John Schnur, represented the reform view in the internal discussions. Another, Linda Darling-Hammond, was more likely to represent the establishment view. Their disagreements were collegial (this is Obamaland after all), but substantive.

In public, Obama shifted nimbly from camp to camp while education experts studied his intonations with the intensity of Kremlinologists. Sometimes, he flirted with the union positions. At other times, he practiced dog-whistle politics, sending out reassuring signals that only the reformers could hear.

Each camp was secretly convinced that at the end of the day, Obama would come down on their side. The reformers were cheered when Obama praised a Denver performance pay initiative. The unions could take succor from the fact that though Obama would occasionally talk about merit pay, none of his actual proposals contradicted their positions.

Obama never had to pick a side. That is, until now. There is only one education secretary, and if you hang around these circles, the air is thick with speculation, anticipation, anxiety, hope and misinformation. Every day, new rumors are circulated and new front-runners declared. It’s kind of like being in a Trollope novel as Lord So-and-So figures out to whom he’s going to propose.

You can measure the anxiety in the reformist camp by the level of nervous phone chatter each morning. Weeks ago, Obama announced that Darling-Hammond would lead his transition team and reformist cellphones around the country lit up. Darling-Hammond, a professor at Stanford, is a sharp critic of Teach for America and promotes weaker reforms.

Anxieties cooled, but then one morning a few weeks ago, I got a flurry of phone calls from reform leaders nervous that Obama was about to side against them. I interviewed people in the president-elect’s inner circle and was reassured that the reformers had nothing to worry about. Obama had not gone native.

Obama’s aides point to his long record on merit pay, his sympathy for charter schools and his tendency to highlight his commitment to serious education reform.

But the union lobbying efforts are relentless and in the past week prospects for a reforming education secretary are thought to have dimmed. The candidates before Obama apparently include: Joel Klein, the highly successful New York chancellor who has, nonetheless, been blackballed by the unions; Arne Duncan, the reforming Chicago head who is less controversial; Darling-Hammond herself; and some former governor to be named later, with Darling-Hammond as the deputy secretary.

In some sense, the final option would be the biggest setback for reform. Education is one of those areas where implementation and the details are more important than grand pronouncements. If the deputies and assistants in the secretary’s office are not true reformers, nothing will get done.

The stakes are huge. For the first time in decades, there is real momentum for reform. It’s not only Rhee and Klein — the celebrities — but also superintendents in cities across America who are getting better teachers into the classrooms and producing measurable results. There is an unprecedented political coalition building, among liberals as well as conservatives, for radical reform.

No Child Left Behind is about to be reauthorized. Everyone has reservations about that law, but it is the glaring spotlight that reveals and pierces the complacency at mediocre schools. If accountability standards are watered down, as the establishment wants, then real reform will fade.

This will be a tough call for Obama, because it will mean offending people, but he can either galvanize the cause of reform or demoralize it. It’ll be one of the biggest choices of his presidency.

Many of the reformist hopes now hang on Obama’s friend, Arne Duncan. In Chicago, he’s a successful reformer who has produced impressive results in a huge and historically troubled system. He has the political skills necessary to build a coalition on behalf of No Child Left Behind reauthorization. Because he is close to both Obamas, he will ensure that education doesn’t fall, as it usually does, into the ranks of the second-tier issues.

If Obama picks a reformer like Duncan, Klein or one of the others, he will be picking a fight with the status quo. But there’s never been a better time to have that fight than right now.



New Energy Sec'y thinks the "bridge fuel" is natural gas...Dr. Steven Chu for Energy Sec' above left probably when he received the Nobel Prize?  Policy really made here?

Energy Secretary Ernest Moniz
Bridge to nowhere, Siera Club
Energy Secretary to Depart, as Administration Vacancies Mount
February 1, 2013

Energy Secretary Steven Chu will leave office soon, possibly by the end of this month, he told colleagues in an e-mail this morning, according to Energy Department employees.

His departure had been widely expected, although as late as Thursday afternoon he was refusing to answer questions on the subject. The open slot at the Energy Department adds to a constellation of vacancies at the top of related agencies: the Environmental Protection Agency, the Transportation Department and the Interior Department.

President Obama said in a statement that Dr. Chu “brought to the Energy Department a unique understanding of both the urgent challenge presented by climate change and the tremendous opportunity that clean energy represents for our economy.” The president said that in the four years of Dr. Chu’s tenure, “we have doubled the use of renewable energy, dramatically reduced our dependence on foreign oil, and put our country on a path to win the global race for clean energy jobs.”

He also praised Dr. Chu for expanded support for research into “groundbreaking innovations that could transform our energy future.”

Dr. Chu presided over a $90 billion surge in expenditures in which the Obama administration tried to use the Energy Department to accomplish twin goals: stimulating the economy, and advancing energy efficiency and clean energy production. Dr. Chu said that some of the money would be used to “swing for the fences,” promoting a variety of ventures, of which some were certain to fail. But the successes would more than compensate for the failures, he said, especially in the area of research and development, in which key scientific breakthroughs could nurture whole new industries.

The commercial verdict may not be delivered for some years to come on many of those investments. The initial outlook for the Obama administration’s clean energy programs like wind and sun has been dimmed by the success of an Energy Department initiative of the 1990s, developing a method for drilling horizontally in shale formations and fracturing the rock to liberate natural gas, known as fracking, which cut the price of fossil energy just as the renewable technologies appeared poised to reach price parity.

Dr. Chu, a physicist, is the first cabinet secretary to come into office with a Nobel Prize (an honor he shared in 1997 for his work with supercooled atoms) and the first scientist to lead the department. His 15 predecessors as secretary included a dentist, an admiral from the nuclear Navy, a former electric utility lobbyist and a variety of political figures.

But his scientific stature was such that he escaped the most severe criticism by Republicans when the department faced its biggest attack, over the bankruptcy of Solyndra, an innovative solar equipment company that got a $535 million loan guarantee from the department but declared bankruptcy because the market for its product had collapsed. Republicans accused the White House of cronyism, noting that among Solyndra’s investors were some Obama campaign donors. But Dr. Chu was generally exempted by Republicans, or, at worst, written off as outside his depth in financial matters.

While he had the political skills to manage the Lawrence Berkeley National Laboratory and its 4,000 employees, his job before he was chosen by Mr. Obama to be energy secretary, he also showed a physicist’s penchant for speaking the truth plainly, in a way that people in politics generally avoid.

In September 2008, before Mr. Obama was elected, he told The Wall Street Journal, "Somehow we have to figure out how to boost the price of gasoline to the levels in Europe," a quote that Republicans in Congress have used to criticize him. Three months earlier, in a lecture he gave in Washington on energy, he said that new houses could be made energy-efficient with an investment of an extra $1,000, “but the American consumer would rather have a granite countertop.”

And he demonstrated technical skill almost unheard-of for a cabinet secretary. He was dispatched by Mr. Obama to Houston to take control of some of the federal efforts after the Deepwater Horizon blowout of April 2010. He assembled a team of nuclear physicists to consider the options, and made some key decisions.

Also still uncertain is the fate of a giant infrastructure nurtured by Dr. Chu’s Energy Department for manufacturing batteries for electric cars, because demand for the cars has not reached anticipated levels. Appearing on Thursday at the Washington Auto Show, he indicated that the administration was unlikely to reach its goal of one million electric vehicles on the roads by 2015.

And the more exotic research projects – in advanced batteries, or technologies for making gasoline from plants and trees, or improving on photosynthesis as a way to store the sun’s energy – were always expected to take far longer to pay off.

Meanwhile, despite enthusiasm from Dr. Chu, the department’s efforts to nurture the construction of new nuclear plants have mostly fallen flat; inheriting a $17.5 billion fund for loan guarantees for new nuclear energy plants, and proposing an additional $35 billion, the department never succeeded in making a loan. Following up on a campaign promise by Mr. Obama, his department closed down the effort to open a nuclear waste repository at Yucca Mountain, in Nevada, but did not reach the point of starting a process to find another site. And the department has lagged in its efforts to clean up radioactive wastes left over from decades of nuclear weapons production.

A vocal proponent of efforts to control greenhouse gas emissions, he served in an era when his party could not get a bill through Congress to institute a “cap and trade” system, or any other method, to limit such emissions.

Dr. Chu sent a letter to the department staff early on Friday, focusing on the department’s work on climate change, clean energy and research. He said that he and his wife were eager to return to California, and that he would return to academic work.

Dr. Chu will turn 65 on Feb 28. He told colleagues he would stay in place until the end of the annual “summit” of the Advanced Research Projects Agency-Energy program, known as Arpa-e, an energy version of the better-known Darpa, the Defense Advanced Research Projects Agency.

Energy Secretary Serves Under a Microscope

March 23, 2009

WASHINGTON — As a physicist, Steven Chu has seen atoms suspended in a powerful laser beam and DNA stretched out in a vacuum chamber.

But in his new job as energy secretary, Dr. Chu is observing phenomena he never saw in the science laboratory.

At a recent Senate hearing, for example, he witnessed a junior cabinet member (himself) being systematically dissected by a senior senator (John McCain).

Mr. McCain, Republican of Arizona, was unhappy when Dr. Chu affirmed the Obama administration’s intention to suspend work at a planned nuclear waste site in Nevada. “What’s wrong with Yucca Mountain, Dr. Chu?” he demanded repeatedly as Dr. Chu tried to explain.

“I think we can do a better job,” Dr. Chu finally replied.

For a slight, soft-spoken Nobel laureate, Washington has been an initiation that he has likened to being “dumped in the deep end of the pool.” Dr. Chu, 61, was chairman of Stanford’s physics department and ran a national research laboratory. But in addition to being verbally slapped around by Mr. McCain, he has been forced to backtrack on some ill-informed comments about OPEC and ordered to spend quickly tens of billions of dollars in stimulus money with virtually no top-level help.

Dr. Chu is still mastering skills like ducking a tough question from a reporter and delivering the all-purpose “I’ll get back to you on that.”

He has admitted his naïveté on certain policy questions, like OPEC production quotas, and is still getting used to the scrutiny that comes with a cabinet job.

“I didn’t appreciate how much of a public figure you become,” Dr. Chu said in an interview recently in Milwaukee, where he spent the day talking to scientists about biofuels and touring a home that was being weatherized under a local program.

President Obama has assigned Dr. Chu to carry out some of his central priorities: wean America from dependence on fossil fuels, rebuild the nation’s electrical grid and address the challenges of climate change.

The science part of his job is the most rewarding, Dr. Chu said. On his visit to Milwaukee, he visibly brightened when one University of Wisconsin researcher told him about a local entrepreneur who was turning the waste products from cheesemaking into ethanol, which was then blended with gasoline at a nearby convenience store.

“Does he drop some off at the liquor store on his way?” Dr. Chu asked impishly.

A few hours later, wearing khakis frayed at the cuffs and brown, thick-soled professorial shoes, he dutifully traipsed through the small house that was getting new insulation and appliances to cut the owner’s electric bills. When he emerged, five news cameras were set up on the lawn. But to his relief, most of the questions went to Gov. James E. Doyle of Wisconsin, who had accompanied him on the tour.

Asked later what part of his job he liked the least, Dr. Chu said: “The fact that I’m constantly being told that I have to be careful what I say to the press and in public. I can’t speculate out loud anymore. Everything I say is taken with total seriousness.”

Yet as he takes on one of the toughest policy and management challenges in government, Dr. Chu brings certain assets that none of his peers or predecessors have had: a Nobel Prize, a YouTube following (for his lectures on climate change) and an unofficial theme song (“Dr. Wu” by Steely Dan). He is a major celebrity in Taiwan, where scientific achievement is rewarded with rock star status. He is a member of Academica Sinica, Taiwan’s most distinguished scholarly society, as was his father.

Dr. Chu is struggling to get his arms around one of the most perplexing and intractable bureaucracies in Washington and to efficiently — and carefully — disperse $39 billion in funding from the stimulus package. Most of the department’s top appointed positions, including deputy secretary, remain unfilled, leaving him largely reliant on career staff members to manage 114,000 employees and contractors and a budget that has more than doubled this year. The task at times appears overwhelming, and some in Washington quietly wonder if Dr. Chu is in over his head.

Karen Harbert, president of the Institute for 21st Century Energy at the United States Chamber of Commerce, praised Dr. Chu’s academic credentials, calling him Mr. Science. But she suggested that the main decisions on energy and climate change policy were being made at the White House by a small team led by Carol Browner, the former administrator of the Environmental Protection Agency.

“Is he secretary of energy or secretary of research and development?” Ms. Harbert asked.

Dan Leistikow, the Energy Department’s director of public affairs, said that Dr. Chu was a scientist, not a politician, and should be given a little time to adjust.

“A Nobel scientist is more likely to figure out Washington than a career politician is to figure out how to deal with carbon sequestration,” Mr. Leistikow said.

Dr. Chu came to Washington after serving as director of the Energy Department’s Lawrence Berkeley National Laboratory in California, a civilian research organization with 4,000 employees and a $600 million annual budget. Before that, he was a professor and research scientist at Stanford and Bell Laboratories. He shared the 1997 Nobel in physics for his work on cooling and trapping atoms with laser light.

He comes from a family of academic overachievers. His father emigrated from China to study chemical engineering at the Massachusetts Institute of Technology and retired as a professor at the Polytechnic Institute of Brooklyn. His mother studied economics in China and at M.I.T. One brother, Gilbert, is a professor of medicine and biochemistry at Stanford; the other, Morgan, is a highly regarded intellectual property lawyer in Los Angeles. Dr. Chu once described himself as the academic black sheep of the family.

Morgan Chu said of his brother, “He’s acclimating very well, all things considered.” He added, “He has a wonderful set of skills for the job — an unbending respect for discovering the unvarnished truth and a willingness to challenge established dogma.”

Matt Rogers, an energy expert with McKinsey & Company whom Dr. Chu brought in last month to help speed the pace of Energy Department spending, said it would be a mistake to dismiss Dr. Chu as just a science geek. “He is a kind man; he is a nice man,” Mr. Rogers said. “But he is not a patient man. People are going to have to take a deep breath and realize they’re going to be moving at a much quicker pace than they were used to.”

Dr. Chu said he had been frustrated by the job vacancies and the glacial pace of his department. He is eager, he said, to get on with what he sees as his main task: finding and financing the scientific breakthroughs that will end the nation’s dependence on carbon-based fuels and solve the climate change problem.

Borrowing an analogy from the world of physics, he said that in Washington, Newton’s first law — a body in motion tends to stay in motion — does not apply. “In a bureaucracy, if you start something in motion, it either stops or gets derailed,” he said. “You have to keep applying force.”

He intends to keep applying that force, he said, because it could help solve the world’s energy and climate change problems.

“If we don’t spend this money wisely and invest in new technology that addresses these challenges,” he said, “we will have failed the country. We will have failed the world.”

Energy Nominee Shifts His Stance
January 13, 2009

WASHINGTON — Physics met politics at the confirmation hearing Tuesday for Steven Chu, the Nobel laureate scientist chosen by President-elect Barack Obama to head the Department of Energy, and the physics bent a bit, as Dr. Chu backed away slightly from earlier statements he has made — that gasoline prices should be higher, and that coal was his “nightmare.”

Dr. Chu, whose last job was director of the Lawrence Berkeley National Laboratory, answered an array of questions from the Senate committee on Energy and Natural Resources — about his position on new nuclear reactors (yes, at least for a few plants), offshore drilling (only as part of an energy package) and new coal-burning power plants (a few, until we figure out a better way). He told the lawmakers that “last year’s rapid spike in oil and gasoline prices not only contributed to the recession we are now experiencing, it also put a huge strain on the budgets of families all across America.”

Last September, though, he told The Wall Street Journal, “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” At the hearing, responding to a question about that statement, he said, “What the American family does not want is to pay an increasing fraction of their budget, their precious dollars, for energy costs, both in transportation and keeping their homes warm and lit.”

The answer is efficiency, using less so that even if the price rises, the bill does not, he said.

He also said that coal, which has a wide political constituency, would continue to be used, and that the trick was to convert it to electricity cleanly.

Dr. Chu, who is 60, got a friendly welcome from the committee, but really warmed up when Senator Blanche Lincoln, Democrat of Arkansas, asked him how plants could be turned into substitutes for petroleum.

“Actually, now we’re getting to science, I love this,” he said, to laugher around the room. He said he has supervised research to figure out, “How do you break those plants down into the kind of sugars these little critters, the yeast and bacteria, can actually use.” Gene-altered bacteria have been developed to turn sugar into substitutes for gasoline, diesel and jet fuel, he said.

Several senators reiterated the idea that the energy department faced terrific scientific challenges, and that a Nobel physicist was the appropriate person to head it. Senator Dianne Feinstein, a California Democrat who introduced him to the committee, referred to him as “one of the great brilliant thinkers of his generation.” Around Washington, Dr. Chu draws wide approval for stressing energy efficiency and new technology as approaches to the problems of energy prices and global warming.

But his science-based frankness sometimes contrasts with ordinary energy politics, which are often more centered on narrower economic interests.

For example, in a presentation at Berkeley in April 2007, now preserved on YouTube, he declared, “coal is my worst nightmare,” words previous energy secretaries would be unlikely to utter.

“We have lots of fossil fuel,” he said in that presentation. “That’s really both good and bad news. We won’t run out of energy but there’s enough carbon in the ground to really cook us.”

And he has said frankly that some of the technologies that federal dollars are pursuing would be nice to have, but are not today ready for use, either because they are too expensive to be practical, or not demonstrated to be safe. In this category he puts sequestering the carbon dioxide from power plants, recycling nuclear fuel to reduce its volume and recover unused fuel, and making ethanol from cellulose, which is essentially woody wastes or non-crop plants.

In the course of the hearing, the main mission of the department — making, maintaining and dismantling nuclear weapons, and cleaning up from six decades of nuclear weapon production — got intermittent mention. According to a report on nuclear weapons spending by Stephen I. Schwartz and sponsored by the Carnegie Endowment, the budget for nuclear weapons in 2008 was over $52 billion. Robert Alvarez, who was a policy advisor to the energy secretary in the Clinton administration, said in an interview that the department is spending about 11 times more money on nuclear weapons than on energy conservation.

Dr. Chu faces a variety of conflicting mandates. For example, he said that using more renewable energy is a national priority and thus will require a national electric grid. To help create such a grid, a 2005 law gives the department the authority to designate high-priority corridors, to overrule local objections to new power lines. But Senator Robert Menendez, a Democrat, complained that the department had designated his entire state, New Jersey, as part of a corridor. Mr. Chu promised to investigate.

Another problem is nuclear waste. Dr. Chu repeatedly said that of the carbon-free power generation in this country, 70 percent is nuclear. But Mr. Obama has expressed deep skepticism about the plan to bury nuclear waste at Yucca Mountain, the site near Las Vegas that the government has worked for 20 years to develop. A solution would have to be found, Dr. Chu said, but construction of new plants should resume now, after a hiatus of 30 years, even before the solution is developed.

Today, the NYTIMES suggests the above triumvirate for energy team - Carol Browner (close-up above), Dr. Steven Chu and Lisa Jackson;  Nancy Sutley, for head of Council on Environmental Quality; at right, Sec'y of the Interior Salazar.

Faced many challenges, and for one, came up with an important environmental solution...

The E.P.A. May Get a Boss After all
July 11, 2013

Earlier this week, Senator David Vitter, a Louisiana Republican, said that he would drop his threat of a filibuster and allow an up-or-down vote on Gina McCarthy, President Obama’s nominee to lead the Environmental Protection Agency. This is welcome news, not just for the agency but for the planet. More than any other federal official, Ms. McCarthy will be responsible for carrying out Mr. Obama’s promise to confront the threat of climate change.

Her main weapon will be her authority under the Clean Air Act to regulate emissions from power plants, which account for about 40 percent of America’s emissions of carbon dioxide, the main greenhouse gas. The agency has aggressively sought to control ground-level pollutants like mercury, but regulating atmospheric pollutants from power plants and other stationary sources is uncharted territory. Devising an effective program will require negotiations with industry and state governments, which will be largely responsible for figuring out how to meet the emissions standards she imposes.

Ms. McCarthy, who has spent the last few years in charge of the E.P.A.’s clean air programs, would seem ideally suited to this task. A first-class negotiator, she has occupied important state-level policy jobs under Republican governors in Connecticut and Massachusetts (including Mitt Romney, in his environmentally progressive phase). She has allies in the business community, and even Mr. Vitter did not object to her personally. His complaint was with the agency and what he said was its past failure to provide data to support its regulatory decisions.

Ms. McCarthy must also enforce other contentious laws, including the Clean Water Act. The job has a history of exhausting its occupants, whatever their party. But the chances seem good that with White House backing — always an issue in this job — she will carry it off.

E-mail Scandal at the EPA

By John Fund, National Review
January 5, 2013 4:00 A.M.

The sudden announcement that Lisa Jackson, the controversial head of the Environmental Protection Agency, will be resigning later this month means that the mysterious Richard Windsor will be leaving the building with her.

His is apparently one of several fake names on official EPA e-mail accounts that Jackson used to conduct business while at EPA. Her office claims the name is a combination of her dog’s name and that of the town of East Windsor, N.J., where she once lived.

It’s not uncommon for government officials to have private e-mail accounts. But federal law has set up several barriers to prevent officials from using non-official or secret e-mail addresses to conduct business and then conceal the contents of those accounts from Freedom of Information Act (FOIA) requests. Politico reports that the EPA was supposed to ensure that anyone requesting Jackson’s e-mails under FOIA would also have access to communications from “Richard Windsor.” “But the system is far from foolproof,” it dryly notes.

When the Competitive Enterprise Institute, a free-market group, came up empty on its FOIA requests for Jackson’s e-mails relating to her anti-coal efforts, it was told by an EPA whistleblower that she was using “Richard Windsor” and other aliases to coordinate with outside anti-coal groups and engage in other activity she wouldn’t want to come to light.

After CEI filed suit, the Justice Department last month reluctantly agreed to produce 12,000 “Richard Windsor” e-mails. The first batch is set to be released on January 14. CEI employees told me they expect the e-mails will be heavily redacted to obscure their content, but that House committees headed by Representative Darrell Issa of California and Representative Fred Upton of Michigan will launch probes that will ultimately bring all of the e-mails to light.

Indeed, Representative Upton has written to the EPA demanding to know whether the use of alias e-mail accounts “has in any way affected the transparency of the agency’s activities or the quality or completeness of information provided” to Congress. In response, the office of the EPA’s inspector general has announced that it will investigate to see if “EPA follows applicable laws and regulations when using private and alias e-mail accounts to conduct official business.”

It clearly hasn’t always in the past. In 2000, Clinton EPA administrator Carol Browner responded to a Landmark Legal Foundation FOIA lawsuit by claiming that she didn’t use her government computer for e-mail. But Browner then ordered the hard drive on the computer to be reformatted and all backup tapes destroyed, just hours after a federal judge ordered her agency to preserve all agency e-mails. “EPA vowed it would avoid such problems going forward,” says Chris Horner, a CEI fellow and author of the new book The Liberal War on Transparency. “They clearly haven’t, and neither have other government agencies under Obama, who in 2009 promised us ‘the most honest and transparent administration in history.’”

Horner’s book recounts a series of evasive maneuvers that officials across the entire Obama administration have employed.

When cutting deals to ensure the health-care industry’s support of Obamacare and provide $500 million in green-energy loan guarantees to the now-bankrupt Solyndra solar company, senior administration officials used private e-mail accounts that fell outside federal record-keeping laws. The Solyndra loans were coordinated on 14 separate private e-mail accounts. ABC News reported that Jim Messina, who in 2009 was Obama’s deputy White House chief of staff, coordinated with drug companies a $150 million advertising campaign in support of Obamacare using his private AOL account.

The White House arranged for a privately owned computer server to handle discussions about a controversial United Nations initiative, presumably to ensure that FOIA requests wouldn’t uncover them.

Horner has an affidavit from the government admitting, in defense of its failure to produce certain records from NASA’s climate-change shop, to an elaborate operation involving destruction of the government’s copy of e-mails and other records. On its face, this would seem to violate the federal criminal code. They accomplished this by programming their system to delete e-mails from the government server when they were opened remotely by employees using a private computer; the only remaining traces of the e-mails then existed on the private computer. By denying the government access to search that computer, NASA thereby denied the taxpayer access to records under FOIA.

After some initial attempts at improving FOIA regulations, the Obama administration has decided to embrace secrecy and stonewalling. The Washington Post reported in 2011 that a large number of requests for public records had elicited no material at all from the administration. A National Security Archive survey last year found that “more than 60 percent of federal agencies have failed to update their FOIA regulations” despite directives to do so. The same Barack Obama who as a candidate in 2008 promised that health-care negotiations would be shown on C-SPAN instead cobbled together Obamacare behind closed doors.

Mark Tapscott, the executive editor of the Washington Examiner, has long chronicled how government officials evade laws designed to enhance transparency. He points out that such evasion is rampant because enforcement of FOIA laws rarely occurs. “Nobody in government has ever gone to jail for violating the FOIA,” he points out.

Tapscott is convinced that Lisa Jackson’s sudden departure from EPA had something to do with the burgeoning e-mail scandal on her watch. He considers her resignation a victory for transparency. “She isn’t going to jail, but at least now she won’t be running the EPA under an alias,” he says.

E.P.A. Chief to Step Down, With Climate Still Low Priority

27 December 2012

Lisa P. Jackson is stepping down as administrator of the Environmental Protection Agency after a four-year tenure that began with high hopes of sweeping action to address climate change and other environmental ills but ended with a series of rear-guard actions to defend the agency against challenges from industry, Republicans in Congress and, at times, the Obama White House.

Ms. Jackson, 50, told President Obama shortly after his re-election in November that she wanted to leave the administration early next year. She informed the E.P.A. staff of her decision on Thursday morning and issued a brief statement saying that she was confident “the ship is sailing in the right direction.”

She has not said what she intends to do after leaving government, and no sucessor was immediately named, although it is expected that Robert Perciasepe, the E.P.A. deputy administrator, will take over at least temporarily.

Ms. Jackson’s departure comes as many in the environmental movement are questioning Mr. Obama’s commitment to dealing with climate change and other environmental problems. After his re-election, and a campaign in which global warming was barely mentioned by either candidate, Mr. Obama said that his first priority would be jobs and the economy and that he intended only to foster a “conversation” on climate change in the coming months.

That ambivalence is a far cry from the hopes that accompanied his early months in office, when he identified climate change as one of humanity’s defining challenges. Mr. Obama put the White House’s full lobbying power behind a House cap-and-trade bill that would have limited climate-altering emissions and brought profound changes in how the nation produces and consumes energy.

But after the effort stalled in the Senate, the administration abandoned broad-scale climate change efforts, instead focusing on smaller regulatory actions largely though the Clean Air Act.

White House and E.P.A. officials said Ms. Jackson’s decision to leave government was her own and the timing had been negotiated with the White House.

Mr. Obama praised her in a statement, calling her “an important part of my team.”   Full story here.

E.P.A. Moves Toward Regulating Greenhouse Gases
March 24, 2009

The Environmental Protection Agency has moved to declare that greenhouse gases are pollutants that pose a danger to the public’s health and welfare. That determination, once made final, will pave the way for federal regulation of carbon dioxide, methane and other heat-trapping gases linked to global warming.

In February, the E.P.A.’s administrator, Lisa P. Jackson, hinted strongly in an interview with The New York Times that the agency would take action on the issue before April 2. That date marks the second anniversary of a Supreme Court ruling ordering the agency to determine whether carbon dioxide and other greenhouse gases qualify as pollutants under the Clean Air Act.

The Bush administration stalled in complying with the court order, opting for more study of the issue, although there was wide consensus among E.P.A. experts that such a determination was supported by scientific research.

The agency sent the finding on Friday to the Office of Management and Budget for review, according to a Web site that lists pending federal rules. Once the budget office clears the finding, it can be signed by Ms. Jackson.

The action, known as an endangerment finding, would allow federal regulation of motor vehicle emissions of greenhouse gases. If further action is taken by the E.P.A., it could open the door to regulatory controls over power plants, oil refineries, cement plants and other factories that emit such gases.

Although the agency’s action was widely expected, word that it was headed for the finish line stirred elation among environmental groups and Congressional Democrats and brought dire warnings of regulatory chaos from business groups.

“This finding will officially end the era of denial on global warming,” said Rep. Edward J. Markey, a Massachusetts Democrat who is chairman of a select committee on global warming.

John Walke, a senior lawyer at the Natural Resources Defense Council, welcomed the E.P.A.’s decision as the opening act of a new effort to tackle global warming, one that he hoped would ultimately culminate in federal legislation. “For some period we may have parallel efforts of Environmental Protection Agency pursuing or even adopting regulation while the eventual main show will be in Congress,” he said.

But Bill Kovacs, a specialist on global warming issues with the United States Chamber of Commerce, said that an endangerment finding would automatically provoke a tangle of regulatory requirements for businesses large and small, including, he predicted, small dairy farms whose cattle produce methane gas.

Climate czar left no electronic trail
Washington Times
Jim McElhatton
Wednesday, December 24, 2008

Don't bother looking for any electronic records of Carol Browner's first stint as a federal government executive. The soon-to-be Obama administration climate czar intentionally didn't keep many.

In sworn testimony obtained by The Washington Times, Ms. Browner disclosed that she refused to use e-mail when she served as President Clinton's Environmental Protection Agency chief in the 1990s for fear of leaving a digital trail. She also ordered her government computer hard drive wiped clean of records just before leaving office.

"It was a conscious decision not to use a piece of equipment or to learn how to use a piece of equipment because I didn't want to be in a situation similar to what I had been in Florida," she testified about government computers. The testimony referred to her days as an environmental regulator in Florida, where an e-mail message sent to her surfaced in litigation.

"This is why I made this decision not to use my computer," she said. "I was very careful."

Ms. Browner's sworn statements were gathered in a little-noticed civil case involving the government's obligation to preserve its official records that transpired after Ms. Browner left office in January 2001. The lawsuit examined why EPA officials failed to save electronic records that chronicled the Clinton administration's final actions in office and that were being sought by a conservative legal group under federal open-records laws.

The same day a judge ordered the agency to preserve such records, Ms. Browner asked a staff member that any files on her government computer be erased, prompting allegations of a possible cover-up.

The ensuing investigation ultimately cleared Ms. Browner of any wrongdoing, concluding she was unaware of the judge's order. Her former agency, however, didn't fare as well. It was found in contempt of court for failing to preserve government records at the heart of the case.

While exonerated, Ms. Browner's testimony provided a rare insight into her distaste for keeping historical government records in electronic form. It's an aversion that concerns some government watchdogs as she prepares to take the high-profile job of coordinating President-elect Barack Obama's efforts against global warming.

"Obviously, it's troubling that public officials would avoid doing things because they're afraid the public might see it later," said Mike Surrusco, senior researcher at Common Cause, a nonpartisan group that monitors government ethics and openness.

Charles Davis, executive director of the National Freedom of Information Coalition at the University of Missouri, said avoiding computers and e-mail "seems a little drastic and over the top."

"It's regrettable," Mr. Davis added. "It seems a rejection of the entire inertia of the marketplace to forswear digital communications."

Obama aides declined to say whether Ms. Browner plans to use email or computers in her new job but said she worked to improve transparency during her years at the EPA, where she made decisions on written memos instead of e-mails.

She is hardly the only high-ranking government official to avoid e-mail.

Former Secretary of Defense Donald H. Rumsfeld and current Secretary of Homeland Security Michael Chertoff have opted not to use e-mail on the job, either, according to a 2006 House report. And President Bush has cited personal privacy issues for his decision to forgo e-mail.

In her deposition, Ms. Browner said she instructed her staff to remove her computer when she first took office at the EPA, though she later kept it when told the computer was assigned to her office.

Still, she said she hardly ever used it and relied on her staff to sort through e-mails and print out important messages. In Florida, she said she was overwhelmed by e-mail. She also said during her 2001 deposition that during her years as an environmental regulator in Florida, she once had to provide affidavits after an internal e-mail sent to her surfaced in litigation involving a permitting issue

"I thought, you know what? I don't need this. I don't need to go there again, I don't need to deal with this. I will not use e-mail, and I did not use e-mail."

Just before leaving office, Ms. Browner ordered that the hard drive of her computer be wiped clean, though a group had been seeking a court injunction to preserve her records. She said she wasn't told to keep the computer records intact in connection with the FOIA lawsuit, but wanted to make sure that computer games her son installed on her work computer were removed.

Landmark Legal Foundation's president, Mark R. Levin, who sued the EPA and was among the lawyers at Ms. Browner's deposition, said her answers suggested a "culture of deniability" during her years at the agency.

"She was the most disconnected senior official I have ever come across in government," Mr. Levin said.

Tommy Vietor, a spokesman for the Obama transition team, disputed Mr. Levin's criticism, calling Landmark "a partisan attack group that fought clean-air standards and efforts to get arsenic out of drinking water."

"Carol Browner's record at EPA is marked by her work to increase the public's right to know about toxic chemicals in the air and water, and her efforts to improve the government's responsiveness to environmental issues," he said.

"Both a judge and inspector general report found that Ms. Browner did nothing wrong" by ordering her computer files deleted, Mr. Vietor said.

Meredith Fuchs, general counsel to the nonpartisan National Security Archive, which collects and publishes declassified government records, said government officials have to walk a fine line when it comes to e-mail.

"A lot of these officials look at the record laws as a limitation of what they can do," she said. "But they're doing things on behalf of the public, and there has to be some transparency about what they're doing."

On the other hand, Ms. Fuchs added, "We don't want these people heading big agencies reading e-mail all day."

Hard Task for New Team on Energy and Climate

December 16, 2008

WASHINGTON — The team President-elect Barack Obama introduced on Monday to carry out his energy and environmental policies faces a host of political, economic, diplomatic and scientific challenges that could impede his plans to address global warming and America’s growing dependence on dirty and uncertain sources of energy.

Acknowledging that a succession of presidents and Congresses had failed to make much progress on the issues, Mr. Obama vowed to press ahead despite the faltering economy and suggested that he would invest his political capital in trying to break logjams.

“This time must be different,” Mr. Obama said at a news conference in Chicago. “This will be a leading priority of my presidency and a defining test of our time. We cannot accept complacency, nor accept any more broken promises.”

Shortly after Mr. Obama spoke, transition officials confirmed that he would select Senator Ken Salazar, a first-term Democrat from Colorado, as interior secretary. Mr. Salazar’s appointment will complete the team of environmental and energy officials in the new administration.

The most pressing environmental issue for the incoming team will almost certainly be settling on an effective and politically tenable approach to the intertwined issues of energy security and global warming.

The point person for these issues will be Carol M. Browner, who was named on Monday to the new position of White House coordinator for energy and climate. Ms. Browner, the administrator of the Environmental Protection Agency under President Bill Clinton, will oversee two former aides, Lisa P. Jackson, who was selected as the new agency administrator, and Nancy Sutley, who will be the chairwoman of the White House Council on Environmental Quality. Joining the group will be Steven Chu, a Nobel laureate in physics whom Mr. Obama designated to lead the Energy Department.

Mr. Salazar, a former director of the Colorado Department of Natural Resources and state attorney general, is a farmer and rancher whose family has lived in Colorado for five generations. He is known as a staunch conservationist and an opponent of developing oil shale on public lands.

His appointment will leave a Democratic vacancy in the Senate. Colorado, which voted for Mr. Obama 53 percent to 45 percent, has a Democratic governor, Bill Ritter, who will name a replacement to complete the final two years of Mr. Salazar’s term. Mr. Salazar’s brother John, a congressman, is among potential appointees to fill the Senate seat.

The intense ideological and regional rivalries that have stalled climate change legislation in Congress for years have not suddenly melted away. And even though Mr. Obama promises to give energy legislation a high priority, he first must stabilize an economy that is shedding jobs by the hundreds of thousands each month.

The new team faces political urgency to deliver on promises made by Mr. Obama on the campaign trail. One was his pledge to use a cap-and-trade bill for curbing heat-trapping gases as both the means of shifting investments away from energy sources that cause emissions of such gases and also as the source of the $15 billion a year he promised to invest in advanced energy technology. That figure may be dwarfed by spending on stimulus programs, including so-called green projects like building wind farms and making buildings more energy efficient.

Previous efforts to move a comprehensive climate bill through Congress stalled even without the deepening recession the nation confronts today, said Rafe Pomerance, a negotiator in the Clinton administration on international climate agreements and the president of Clean Air-Cool Planet, a Washington nonprofit group.

Mr. Pomerance said the challenge would be to devise a scientifically rigorous bill that would satisfy lawmakers who fear the costs.

Left unclear on Monday was how the new president’s advisers intend to use the levers of government to get to the “new energy economy” Mr. Obama described. Also uncertain was what relationship they would forge with his powerful economic advisers.

“In policy terms, I think there are big questions about what priority will be given to direct public infrastructure spending versus tax-based incentives versus environmental markets versus direct regulation,” said Paul Bledsoe of the National Commission on Energy Policy, a bipartisan advisory group. “There is still a very profound debate on all of that.”

The diplomatic tension is driven by the steps required to work toward a new global climate treaty, which the United States and nearly all other nations have committed to completing by December 2009. The last round of talks ended last weekend in Poland with few signs of progress on the main goal, limiting emissions of heat-trapping gases without hampering economic development.

It is widely felt that if the United States does not demonstrate concrete domestic steps to curb its emissions from burning fossil fuels, fast-growing developing countries will continue to balk at taking on obligations to cut their emissions. And while Mr. Obama will enjoy a larger Democratic majority than Mr. Clinton did in his two terms, the Senate has long made such steps a prerequisite for its required consent to any climate treaty.

The scientific urgency comes from the unanticipated recent growth in emissions of carbon dioxide in China, India and other countries with fast-expanding economies. This heat-trapping gas is the biggest concern because its long life, once the gas is released, causes it to build in the atmosphere, something like unpaid credit-card debt, as long as reductions are not made.

Additional pressure comes from growing recognition that market forces alone are unlikely to drive the spread of nonpolluting energy technologies fast enough to matter where all the growth in energy use is at its peak, in the rapidly growing countries of Asia and Latin America.

Nathan Lewis, who leads a team at Caltech pursuing ways to greatly improve solar energy technologies, said the appointment of Dr. Chu as energy secretary sent a strong signal that Mr. Obama understood that any program on climate-friendly energy had to have three prongs: increasing efficiency, moving existing nonpolluting energy technologies more quickly into the market, and advancing on the frontiers of energy science in search of radical breakthroughs.

“Energy efficiency cannot be seen as Job 1 and the other stuff Job 2,” Dr. Lewis said. “You’ve got to do them all as Job 1 because they all have to work.”

Dr. Chu has spoken of using coal to generate electricity as an environmental “nightmare,” but he acknowledges that the nation lacks the technology to replace it or clean it up in the near term. Tom Kuhn, president of the Edison Electric Institute, a trade group for utilities, said that any solution to the climate problem must address these costs and provide consumers and electricity producers time to adjust.

“There will be major costs,” Mr. Kuhn said. “It’s a question of trying to mitigate the costs as much as possible.”

John M. Broder reported from Washington, and Andrew C. Revkin from New York.

Mr. Obama’s Green Team
NYTIMES Editorial
December 13, 2008

The League of Conservation Voters, starved for good news after eight years of the Bush administration’s environmental policies, has hailed President-elect Barack Obama’s choices for his top energy and environmental jobs as “a Green Dream Team.” Let’s hope it is.

There is no question what this team must do — mount a strong offensive on climate change, fashion a more efficient energy system, seek out and invest in next-generation, transformative technologies. These are extraordinarily difficult tasks that will face resistance from industry and many in Congress.

Mr. Obama’s advisers fortunately seem united in their concern for the threats facing the planet and unafraid to use the pricing power of the market or the financial power of government to address them.

This effort will also need the full and very public support of the president. So we are heartened by Mr. Obama’s decision to name a senior White House adviser to coordinate energy and environmental policy. His choice, Carol Browner, ran President Bill Clinton’s Environmental Protection Agency and did not shy from bureaucratic combat. She toughened air quality standards despite opposition from Mr. Clinton’s economic advisers.

Mr. Obama’s most intriguing selection may be his choice to run the Energy Department. Steven Chu is a physicist who shared a Nobel Prize in 1997 and the director of the Lawrence Berkeley National Laboratory. He has a sophisticated grasp of the complexities of global warming and a strong belief in fighting it aggressively.

Mr. Chu also has refreshingly unconventional ideas of what it would take to solve the problem. Like others, he would put a price on carbon, preferably through a cap-and-trade program, and supports the various efficiency measures — cleaner cars, greener buildings and a modernized electrical grid — that Mr. Obama is likely to include as part of his economic stimulus package.

What sets him apart is his fierce conviction that innovation is just as important as regulation, and that big energy problems, like climate change and the world’s dependency on fossil fuels, will not be solved without major private and public investment in the development and deployment of nonpolluting technologies.

Mr. Obama appears to have chosen well for other essential posts, naming Lisa Jackson, until recently New Jersey’s top environmental officer, to run the Environmental Protection Agency, and Nancy Sutley, who holds the top environmental post in Los Angeles, to head the White House Council on Environmental Policy.

These are not the passive factotums who have occupied these jobs for most of the Bush years. Both believe in using and strengthening the government’s statutory authority to control greenhouse gases and the ground-level pollutants that cause smog and acid rain.

Admirable appointments would mean little unless Mr. Obama forces these issues to the top of his agenda. Ms. Browner can work from dawn to dusk gathering good ideas, selling them to the cabinet and sending them to Capitol Hill in persuasive legislative packages. But as we’ve learned in the last eight years, nothing happens unless the president wants it to.

Daschle Also to Oversee New Health Reform Office
Filed at 10:58 a.m. ET
December 11, 2008

...Obama's selections on several important environmental positions are also starting to become clearer. Obama intends to round out his environmental and natural resources team with a Nobel Prize-winning physicist and three former Environmental Protection Agency officials from the Clinton administration.

The president-elect has selected Steven Chu for energy secretary, Lisa Jackson for EPA administrator, Carol Browner as his energy ''czar'' and Nancy Sutley to lead the White House Council on Environmental Quality, Democratic officials with knowledge of the decisions said Wednesday.

Obama plans to name the four to the posts in the coming weeks, barring unforeseen developments...

The Democratic officials who disclosed the selections spoke on the condition of anonymity because they were not authorized to reveal names that have not been made public.

Among these posts, Browner's stands out because it's a new White House position.

She is expected to coordinate the various agencies that play a role in energy and environmental policy, especially on issues such as climate change that don't fit nicely in the silos of the federal government. Those agencies could include the EPA and the Transportation, Energy and Interior departments.

Obama has chosen much of his Cabinet and top White House staff. He has only a few key posts left to fill: national intelligence director, the secretaries of housing, labor, education, transportation and agriculture and the U.S. trade representative...

Obama Team Set on Environment
December 11, 2008

WASHINGTON — President-elect Barack Obama has selected his top energy and environmental advisers, including a Nobel Prize-winning physicist and the former head of the Environmental Protection Agency, presidential transition officials said Wednesday.

Collectively, they will have the task of carrying out Mr. Obama’s stated intent to curb global warming emissions drastically while fashioning a more efficient national energy system. And they will be able to work with strong allies in Congress who are interested in developing climate-change legislation, despite fierce economic headwinds that will amplify objections from manufacturers and energy producers.

The officials said Mr. Obama would name Steven Chu, the director of the Lawrence Berkeley National Laboratory, as his energy secretary, and Nancy Sutley, deputy mayor of Los Angeles for energy and environment, as head of the White House Council on Environmental Quality. Mr. Obama also appears ready to name Carol M. Browner, the E.P.A. administrator under President Bill Clinton, as the top White House official on climate and energy policy and Lisa P. Jackson, who until recently was New Jersey’s commissioner of environmental protection, as the head of the E.P.A.

Aides cautioned that while Mr. Obama appeared to favor Ms. Browner for the new White House post, there were still issues to be resolved before the appointment was formalized. Mr. Obama plans to name the environmental team next week in Chicago, aides said.

If named to the White House climate post, Ms. Browner, an acolyte of former Vice President Al Gore, will have forceful support in the new Congress, including Speaker Nancy Pelosi, Representative Henry A. Waxman of California, who will be the new chairman of the House Energy and Commerce Committee, and Senator Barbara Boxer of California, who is returning as chairwoman of the Senate Environment and Public Works Committee. Opposing their efforts will be many Republicans and some Democrats, as well as manufacturers, utilities, oil companies and coal producers who will bear the brunt of the costs of any steps to reduce carbon dioxide emissions, the main culprit in global warming.

In the coming months, the administration will also have to devise a strategy for dealing with global talks to address climate change, which are already under way.

In addition, both Ms. Browner and Ms. Jackson, who have strong reputations for regulating industry, will be under pressure to revisit and overturn many of the clean-air rules and other regulations imposed during the Bush administration over the objections of environmentalists.

Mr. Obama has promised to spend liberally to finance infrastructure projects and support so-called green technologies that will create jobs while benefiting the environment. These officials will work with Mr. Obama’s economic advisers to try to find — and finance — projects that accomplish these goals.

It was not immediately clear how responsibilities for managing climate change, technological innovation and huge energy infrastructure spending will be divided among them.

Dr. Chu will be taking on one of the most challenging jobs in government at the Department of Energy. He will be responsible for the maintenance and development of the nation’s nuclear weapons stockpile, as well as for modernizing the nation’s electrical power delivery system.

He will also play a central role in directing the research and development of alternative energy sources needed to replace fossil fuels in a era of constrained carbon emissions. Mr. Chu shared a Nobel Prize in physics in 1997 for work on supercooled atoms.

At the Lawrence Berkeley laboratory, he has sponsored research into biofuels and solar energy and has been a strong advocate of controlling greenhouse gas emissions.

Scott Segal, director of the Electric Reliability Coordinating Council, an industry group, said he was pleased that Dr. Chu had the technical expertise to realistically assess future energy technologies.

“His experience seems to dovetail perfectly with the president-elect’s commitment to bringing new energy technology to market in a timely fashion,” Mr. Segal said. “An understanding of the art of the possible in energy technology will be critical to the development of a cost-effective climate change policy.”

Although the scope of Ms. Browner’s job at the White House is still under discussion, aides said that if appointed she would coordinate administration policy across departmental lines and advocate for Mr. Obama’s energy and environmental policies on Capitol Hill. It was not clear on Wednesday whether her office would carry the bureaucratic clout of the National Security Council or the National Economic Council.

Before coming to Washington to head Mr. Clinton’s E.P.A., Ms. Browner was Florida’s top environmental officer. Since leaving government at the end of the Clinton administration, she has been a partner in an international consulting business with Madeleine K. Albright, Mr. Clinton’s second-term secretary of state. Among her clients at the Albright Group was a Dubai-based port operator that sought a contract to manage American ports. The deal fell apart amid heated Congressional criticism.

Ms. Browner, a lawyer, is well known in Washington and around the country as a forceful environmental advocate and experienced capital player. She is married to Tom Downey. a former New York congressman.

“She was a really strong administrator in really tough times,” said Dan Becker, director of the Safe Climate Campaign, an environmental group.

Ms. Jackson had been the head of New Jersey’s Department of Environmental Protection since 2006, but in October, Gov. Jon S. Corzine announced that she would become his chief of staff starting this month. She has a master’s degree in chemical engineering from Princeton and spent 16 years at the federal E.P.A. as a top enforcement officer in Washington and New York.

She has led the Obama transition team at E.P.A. and knows the agency inside and out, according to associates.

S. William Becker, executive director of the National Association of Clean Air Agencies, which represents state environmental bodies, said Ms. Jackson was among the most respected state environmental officials.

“Her state experience allows her to know what works and what doesn’t work on the ground,” said Mr. Becker, who is not related to Dan Becker. “I also am glad to see they chose an engineer to run E.P.A. The typical choice is an attorney.”

Ms. Sutley, who will direct the Council on Environmental Quality, is now the top environmental adviser to the mayor of Los Angeles, Antonio R. Villaraigosa. She has years of experience in managing water supplies and water quality in California and has also worked on energy-saving construction rules for the City of Los Angeles.

She was a special assistant to Ms. Browner at the E.P.A.

Jeff Zeleny contributed reporting.

Health and Human Services

Issues in Health Care - New Sub-page!  How big are the problems...sooooo big.

Sebelius Resigns After Troubles Over Health Site
APRIL 10, 2014

WASHINGTON — Kathleen Sebelius, the health and human services secretary, is resigning, ending a stormy five-year tenure marred by the disastrous rollout of President Obama’s signature legislative achievement, the Affordable Care Act.

Mr. Obama accepted Ms. Sebelius’s resignation this week, and on Friday morning, he will nominate Sylvia Mathews Burwell, the director of the Office of Management and Budget, to replace her, officials said.

The departure comes as the Obama administration tries to move beyond its early stumbles in carrying out the law, convince a still-skeptical public of its lasting benefits, and help Democratic incumbents, who face blistering attack ads after supporting the legislation, survive the midterm elections this fall.

Officials said Ms. Sebelius, 65, made the decision to resign and was not forced out. But the frustration at the White House over her performance had become increasingly clear, as administration aides worried that the crippling problems at, the website set up to enroll Americans in insurance exchanges, would result in lasting damage to the president’s legacy.

Even last week, as Mr. Obama triumphantly announced that enrollments in the exchanges had exceeded seven million, she did not appear next to him for the news conference in the Rose Garden.

The president is hoping that Ms. Burwell, 48, a Harvard- and Oxford-educated West Virginia native with a background in economic policy, will bring an intense focus and management acumen to the department. The budget office, which she has overseen since April of last year, is deeply involved in developing and carrying out health care policy.

“The president wants to make sure we have a proven manager and relentless implementer in the job over there, which is why he is going to nominate Sylvia,” said Denis R. McDonough, the White House chief of staff.

Last month, Ms. Sebelius approached Mr. Obama and began a series of conversations about her future, Mr. McDonough said. The secretary told the president that the March 31 deadline for sign-ups under the health care law — and rising enrollment numbers — provided an opportunity for change, and that he would be best served by someone who was not the target of so much political ire, Mr. McDonough said.

“What was clear is that she thought that it was time to transition the leadership to somebody else,” he said. “She’s made clear in other comments publicly that she recognizes that she takes a lot of the incoming. She does hope — all of us hope — that we can get beyond the partisan sniping.”

The resignation is a low point in what had been a remarkable career for Ms. Sebelius, who as governor of Kansas was named by Time magazine as one of the five best governors in the country and was even mentioned as a possible running mate for Mr. Obama in 2008. The two had bonded when Ms. Sebelius endorsed his presidential bid early in 2008, becoming one of the highest-profile Democratic women to back him over Hillary Rodham Clinton, and helping him deliver a big win in the Kansas caucus.

White House officials were quick to point out the many successes during Ms. Sebelius’s tenure: the end to pre-existing conditions as a bar to insurance, the ability for young people to stay on their parents’ insurance, and the reduction in the growth of health care costs. In addition, Ms. Sebelius helped push through mental health parity in insurance plans and worked with the Department of Education to promote early childhood education.

Ms. Sebelius said in an interview on Thursday that she had always known that she would not “be here to turn out the lights in 2017.”

“My balance has always been, when do you make that decision?” she added.

The president had been under pressure for months to fire Ms. Sebelius. But he had resisted, in part because he did not want the Department of Health and Human Services to undergo more upheaval amid all the problems plaguing, and in part because of his general reluctance to publicly rebuke top officials.

In November, Mr. Obama defended the secretary, saying in an interview with NBC News that she “doesn’t write code; yeah, she wasn’t our I.T. person.” As recently as last week, Jay Carney, the White House press secretary, rejected any suggestion that Ms. Sebelius would be fired.

On Thursday, Mr. McDonough praised Ms. Sebelius as “a fierce advocate,” and said she had been “tenacious in her belief” in the president’s health care law. “She’s fearless in her defense of this idea at the heart of the Affordable Care Act,” he said. “The president has commented to me countless times how much he admires that.”

But the Affordable Care Act faces a range of obstacles, political and otherwise, in the months ahead, and Mr. Obama is hoping that Ms. Burwell can smoothly steer the department and bring stability to its operations. In addition to the midterm elections, in which the health care law is the target of a flood of negative ads, the administration is grappling with policy questions: how it will levy the penalty on individuals who lack insurance, how much premiums will increase in the coming year, and how ultimately to administer the requirement that employers provide insurance.

Ms. Sebelius was not Mr. Obama’s first choice to lead the department; he wanted former Senator Tom Daschle in the job, but Mr. Daschle withdrew after acknowledging that he had underpaid his taxes for several years. She was hailed as a gifted political leader in Kansas who could work with legislators of both parties. But those skills were less evident in Washington, and she became a more distant figure within the administration.

In addition to the political battles over the passage and carrying out of the Affordable Care Act, she clashed with conservatives over contraception, and faced frequent calls for her political head by Republicans after the health care website failed to function properly last year.

In hearings on Capitol Hill, Ms. Sebelius sometimes grew rattled under questioning by lawmakers. In one hearing at the end of October, Ms. Sebelius declared that “has never crashed.”

“It is functional,” she added, “but at a very slow speed and very low reliability, and has continued to function.”

She made that statement even as large screens in the hearing room showed a live shot of the website with a page that said: “The system is down at the moment. We are experiencing technical difficulties and hope to have them resolved soon.”

An appearance on “The Daily Show With Jon Stewart” last October went even worse. Mr. Stewart challenged her to “sign up for Obamacare” before he could download every movie ever made. “We’ll see which happens first,” he joked. She struggled to defend the website and the health care law.

The television appearance prompted headlines like “Kathleen Sebelius’s ‘Daily Show’ Disaster” and accusations from Republicans that she was being misleading. Democrats squirmed at her stiff and halting performance, which did little to inspire confidence in the website’s performance — or her own.

But Ms. Sebelius has not been at the center of public attention in recent weeks. Her national television exposure has been limited after the poor public performances, but she has continued to make small appearances and has been active on Twitter to press for people to sign up for insurance. She submitted to another questioning before a Senate committee on Thursday and later acknowledged that the idea of not doing “a hearing every three weeks sounds pretty good to me.”

The president’s choice of Ms. Burwell to lead the Department of Health and Human Services places a relative outsider at the helm of one of the government’s largest bureaucracies. Ms. Burwell has led the president’s budget office since taking over for Jacob J. Lew, who is now the Treasury secretary.

Ms. Sebelius said she hoped — but did not expect — that her departure would represent the beginning of a more cooperative period in Washington to make health care better.

“If I could take something along with me,” she said, it would be “all the animosity. If that could just leave with me, and we could get to a new chapter, that would be terrific.”

ON THE OTHER HAND...ONE-HANDED NOMINEE ABOVE AND...NO "CZARINA" BUT...Director for White House Office for Health Reform.
Former Secretary-designate of Health and Human Services Daschle, "Health Care Czar-to-be," testified before the U.S. Senate January 8th, below;  withdrew February 3rd.     

Daschle Has Ear of White House and Industry
August 23, 2009

WASHINGTON — Six months have passed since the morning when Tom Daschle, a former Senate Democratic leader, under fire for not paying certain taxes, called President Obama in his study off the Oval Office to withdraw his nomination as health secretary and reform czar.

But these days it often seems as if Mr. Daschle never left the picture. With unrivaled ties on both ends of Pennsylvania Avenue, he talks constantly with top White House advisers, many of whom previously worked for him.  He still speaks frequently to the president, who met with him as recently as Friday morning in the Oval Office. And he remains a highly paid policy adviser to hospital, drug, pharmaceutical and other health care industry clients of Alston & Bird, the law and lobbying firm.

Now the White House and Senate Democratic leaders appear to be moving toward a blueprint for overhauling the health system, centered on nonprofit insurance cooperatives, that Mr. Daschle began promoting two months ago as a politically feasible alternative to a more muscular government-run insurance plan.  It is an idea that happens to dovetail with the interests of many Alston & Bird clients, like the insurance giant UnitedHealth and the Tennessee Hospital Association. And it is drawing angry cries of accommodation from more liberal House Democrats bent on including a public insurance plan.

Friends and associates of Mr. Daschle say the interests of Alston & Bird’s clients have no influence on his views. They say he sees no conflict in advising private clients on the one hand and advising the White House on the other, because he offers the same assessment to everyone: Though he has often said that he favors a government-run insurance option, the Senate will not pass it.

“The message I deliver to labor unions and business leaders is the same one I share with doctors, hospitals and insurance companies,” Mr. Daschle wrote in a brief e-mailed statement. “I do not tailor my views to any specific group or client.”

Mr. Daschle is not registered as a lobbyist and recently told U.S. News and World Report that he preferred to describe himself as a “resource” to those in government and industry.

“I’d like to be a resource to my former colleagues, to the extent that I can, to the administration, to the stakeholders and to people interested in just kind of knowing how this is all going to play out,” he said. “I am most comfortable with the word resource.”

White House officials say they appreciate his help. “He is one of a number of people that provides outside advice to the White House, and the president greatly appreciates that advice and Tom’s friendship,” said Dan Pfeiffer, a spokesman for the White House who previously worked for Mr. Daschle. Mr. Pfeiffer added that the former senator was “a recognized expert on health reform who knows more about the legislative process than just about anyone.”

Critics, though, say his ex officio role gives Alston & Bird’s health care clients privileged insights into the policy process. They say Mr. Daschle’s multiple advisory roles illustrate the kind of coziness with the lobbying world that Mr. Obama vowed to end. If he had been confirmed as health secretary, Mr. Daschle would have been subject to strict transparency and ethics rules.

His position, some liberals say, raises at least an appearance of a conflict of interest. “I hope the president can make a decision based on what the country wants, not what a handful of Daschle’s clients want,” said Representative Lynn Woolsey of California, a leader of the progressive caucus.

Clients of Alston & Bird say Mr. Daschle advises them, sometimes indirectly through the firm’s registered lobbyists, about the personalities of his former colleagues, as well as strategies to achieve their policy goals.

“He would tell us, ‘Make sure you present the value proposition of home care with as great detail as you can, so Congress understands that home care is part of the solution rather than a cost to be cut,’ ” said William A. Dombi, a lawyer at the National Association for Home Care and Hospice.

Some of the health overhaul bills would make deep cuts in Medicare payments for home health services, but Mr. Daschle has instead argued for an increase. And though he does not lobby, he took that message to Capitol Hill last month, giving a paid speech at a meeting for Congressional staff convened by a group of home health care equipment concerns.

“My mother’s quality of life is a hundred times better given the fact that she can live at home rather than be institutionalized at 86,” Mr. Daschle told the audience, according to industry newsletters.

Representative Jason Altmire, a Pennsylvania Democrat who spoke alongside Mr. Daschle, praised the former senator but said it was inevitable that his dual roles would draw criticism, especially “given the high profile this president has given to trying to show some distance from the lobbying business.”

Mr. Altmire added, “That makes it even more difficult for him to be involved.”

Mr. Daschle does not shrink from his leading role in the debate. Speaking at a hospital industry conference last week, for example, he accepted billing as “the architect of President Obama’s health care plan.”

Before such industry groups, Mr. Daschle can sometimes cheer on their lobbying efforts, as he did at a meeting on Aug. 8 of chain drugstore executives when he urged them to push lawmakers to raise certain Medicaid reimbursements.

“This is a message that I hope each and every one of you will take to your member of Congress,” he said. “There is no more critical time to do that.”

He both recommends and predicts an incremental approach.

“We are not going to see this happen overnight. It can’t. It is too big a shift in the economy,” Mr. Daschle told a biotechnology trade group in May. If the legislation can begin to “ramp up” coverage for all, health information technology and some cost controls, he said, “we will have succeeded.”

He often enumerates what he considers areas of political momentum as well as points of disagreement, including the government insurance plan. “There is no consensus on whether there ought to be a public option,” he told the drugstore executives.

Last week he told the hospital executives, “There is virtually no support among Republican members for a public option, and that remains an unresolved element of this debate.”

Senate Democratic leaders have recently said they concur it is unlikely to pass.

Mr. Daschle’s friendship with the president goes back to Mr. Obama’s first days in the Senate. An early and important backer of Mr. Obama’s presidential campaign, Mr. Daschle also sent a steady stream of former aides to Mr. Obama’s Senate office and White House staff. Mr. Obama’s senior adviser Pete Rouse was Mr. Daschle’s chief of staff. Jeanne Lambrew, a top White House adviser on health care reform, was a co-author of Mr. Daschle’s 2008 book, “Critical: What We Can Do About the Healthcare Crisis.”

Mr. Daschle’s cabinet nomination was done in by the disclosure that he had failed to pay taxes on the use of a friend’s car and driver while making millions advising Alston & Bird’s clients. After he withdrew his nomination, he threw himself into preparing a bipartisan proposal for health care overhaul with two Republicans who were Senate leaders: Bob Dole, a colleague at Alston & Bird, and Howard H. Baker Jr., now at another law and lobbying firm. Their proposal, released in June, was among the first to spell out the idea of helping states establish health insurance “co-op plans with consumer boards.”

Senator Kent Conrad, Democrat of North Dakota and one of Mr. Daschle’s closest friends, began pitching the idea at about the same time and has become its champion. Mr. Conrad is among six members of the Senate Finance Committee working on their own compromise proposal that aides say looks increasingly like the Daschle-Dole-Baker report.  As a backstop, their plan provided that if state co-ops or other programs failed to meet certain cost and coverage goals in five years, the president could create a public plan on a fast track without threat of a Senate filibuster.

That feature, known as a trigger, was briefly acknowledged as another possible compromise by the White House chief of staff, Rahm Emanuel. Though it was little discussed, Senator Olympia J. Snowe, Republican of Maine and one of the Finance Committee’s group of six, has recently expressed support for the concept, and committee aides say the idea is under consideration.

To address doctors’ fears of lawsuits, Mr. Daschle and his collaborators proposed a “safe harbor” from legal liability for doctors who follow certain rules. Mr. Obama took up the idea in a mid-June speech to the American Medical Association.

After Mr. Daschle left the Oval Office on Friday, a White House spokesman described their meeting as a “quick check-in” on the overhaul process. The spokesman said the two “agreed to stay in touch over the coming weeks and months.”

Obama Pick Gets a 2nd Chance on Health Care

March 2, 2009

TOPEKA, Kan. — In Kansas, Gov. Kathleen Sebelius is known as a Democrat who can deal with Republicans, a necessity in a state where the opposition party dominates both houses of the Legislature.

But on matters of health policy, which she will oversee if she is confirmed as President Obama’s secretary of health and human services, Ms. Sebelius’s efforts to forge bipartisan consensus have rarely succeeded. She recently observed that the greatest frustration of her six years in office had been her inability to persuade lawmakers to raise tobacco taxes for a modest expansion of government health coverage.

Now, with the backing of a Democratic Congress, Ms. Sebelius will have a chance to achieve in Washington what she failed to accomplish in Topeka, and then some. When he announces her nomination on Monday, Mr. Obama will effectively make her the point person for what may become the largest expansion of taxpayer-subsidized health insurance in more than four decades.

Ms. Sebelius, 60, would start the job in midstream. Last week, while she was battling with the Legislature over its desire to allow a pair of coal-fired power plants in western Kansas, Mr. Obama began his effort to revamp American health care by telling Congress that change “will not wait another year.”

Mr. Obama then proposed to raise taxes on the wealthiest Americans to help pay for a $634 billion investment in expanded government health coverage over 10 years. His efforts are complicated by the recession, which is draining the Medicare trust fund more quickly than expected, according to federal officials.

Ms. Sebelius’s nomination comes nearly a month after Mr. Obama’s first choice, former Senator Tom Daschle, withdrew upon revealing that he had owed $128,000 in back taxes and paid it only after being selected. The White House used the time not only to vet Ms. Sebelius, but also to make sure that the two Republican senators from Kansas, Sam Brownback and Pat Roberts, would not oppose her confirmation.

The governor is a Roman Catholic who supports abortion rights, and her vetoes of anti-abortion measures have drawn derision from social conservatives, including a request by the archbishop of Kansas City that she not take communion. Her spokeswoman declined an interview request for the governor, saying her schedule would not permit it.

Ms. Sebelius is said to have a wonkish understanding of health policy, but she has failed to make significant improvements in health coverage or costs during her two terms as governor. Although the proportion of Kansans who are uninsured remains well below the national average — 12.7 percent versus 15.3 percent — it has grown seven times as fast in the state than in the nation during her tenure, according to census figures.

Health insurance premiums in Kansas rank just below the national average and have increased at about the same rate as the nation’s, according to figures compiled by the federal Agency for Healthcare Research and Quality. The same was true during the previous eight years, when Ms. Sebelius served as state insurance commissioner.

In that job, Ms. Sebelius cast herself as a consumer champion by pushing to protect patients from rationed care by health maintenance organizations and rapid discharges by hospitals. She declined campaign contributions from the industry she regulated and, in her boldest move, rejected the 2002 purchase of the state’s largest insurer, Blue Cross and Blue Shield of Kansas, by Anthem Inc., based in Indianapolis.

No other state insurance commissioner had blocked such a sale, but Ms. Sebelius argued that it would result in higher premiums for Kansans. Litigation ensued, and she ultimately was upheld by the State Supreme Court.

“She rode that decision all the way to the governor’s office,” said Sandy Praeger, the current insurance commissioner and a Republican.

Legislators in both parties said that as governor, Ms. Sebelius’s efforts to reach across the aisle had seemed more strategic than instinctually bipartisan. She is skilled at exploiting the divisions between moderate and conservative Republicans, and has successfully forged coalitions with one caucus or the other on redistricting, school financing and the state budget, among other issues.

When she stood for re-election in 2006, she persuaded a former state Republican chairman, Mark Parkinson, to join her ticket as a Democrat (he will succeed her if she is confirmed for the cabinet position).

But when it comes to health care, the governor and the Legislature have been separated by a philosophical gulf, with Ms. Sebelius supporting a larger government role and the Republicans steadfastly resisting it.

“Both her proposals and her accomplishments have been limited to some extent by the political realities of the state that she governs,” said Dr. Robert F. St. Peter, president of the Kansas Health Institute, a research foundation.

In 2004, her second year in office, Ms. Sebelius proposed expanding the state’s low Medicaid thresholds to cover 70,000 of the state’s 300,000 or so uninsured, and to pay for it by raising tobacco taxes. The measure died.

The next year, she issued an executive order creating a new health policy agency that would centralize purchasing and planning in her office. The Legislature blocked the move, and instead created an agency controlled by legislative appointees. Ms. Sebelius went along.

In her 2007 State of the State address, Ms. Sebelius urged lawmakers to “commit ourselves to universal coverage.” Though she said little about how to achieve that, Republicans tarred her as an advocate of “socialized medicine” — or “Hillarycare,” as Melvin Neufeld, who was House speaker at the time, put it.

Ms. Sebelius, a former state representative, called on the Legislature to begin by covering all children up to age 5. Again, she made little headway, though in 2008, an election year, the Republicans expanded eligibility for the State Children’s Health Insurance Program without appropriating any money to do so.

Although she signed the bill, which also made a modest expansion of Medicaid for pregnant women, she called it the session’s biggest disappointment. She had also failed to win approval of a statewide indoor smoking ban.

“It has been something that I find puzzling and troubling and not a lot different from what’s happened in Congress and with the administration,” she said in a December interview with the Kansas Health Institute News Service.

Legislative leaders say Ms. Sebelius presses her case in occasional meetings and news conferences, but rarely cajoles or twists arms.

“I see her in the hall and say hello, and that’s it,” said State Representative Brenda K. Landwehr, a conservative Republican who heads the Health and Human Services Committee. “She’s never asked me to visit with her. I think she’s a very strong individual, that things are either done her way or the highway, with little room for compromise.”

The daughter of an Ohio governor, John Gilligan, and daughter-in-law of a Kansas congressman, Ms. Sebelius herself appears healthy and fit. She and her husband, Gary, a federal magistrate judge, have been married for 34 years and have two sons. She played basketball in college, runs three miles nearly every day and does not smoke. By all accounts, she remains popular in Kansas, scoring a 57 percent approval rating in one January poll.

Because the possibilities for change here have been so narrow, there is little sense of Ms. Sebelius’s views on broad questions like whether Americans should be required to have health insurance or whether, as Mr. Daschle proposed, health policy should be delegated to a board styled after the Federal Reserve.

As secretary, Ms. Sebelius would have considerable influence over government policy on abortion. Although she says she personally opposes abortion, she has consistently defended abortion rights in a state where the anti-abortion movement can be fierce. She has vetoed anti-abortion measures almost every year, including bills that would have required the licensing of abortion clinics and allowed relatives to petition a court to stop a late-term abortion.

Sebelius: No Talks With Obama About Health Post
Filed at 11:58 a.m. ET

February 22, 2009

WASHINGTON (AP) -- Kansas Gov. Kathleen Sebelius says she has had no conversations with President Barack Obama about possibly joining his Cabinet as health secretary.

Sebelius (seh-BEEL'-yuhs) was in Washington on Sunday for the winter meetings of the National Governors Association.

Administration officials have said she is near the top of the list of people being considered to run the Health and Human Service Department. But Sebelius tells The Associated Press that ''there's really nothing to tell'' about the prospects of her getting the job.

The two-term Democratic governor also is deflecting questions about whether she'll run for the Senate next year.

Kansas Governor Seen as Top Choice in Health Post

February 19, 2009

WASHINGTON — Gov. Kathleen Sebelius of Kansas, an early Obama ally with a record of working across party lines, is emerging as the president’s top choice for secretary of health and human services, advisers said Wednesday.  Should she be nominated, Ms. Sebelius would bring eight years of experience as her state’s insurance commissioner as well as six years as a governor running a state Medicaid program.

But with President Obama about to begin a drive to expand health coverage, an issue on which the two parties have deep ideological divisions, her strongest asset in the view of the White House may be her record of navigating partisan politics as a Democrat in one of the country’s most Republican states.

Ms. Sebelius resolved a state budget crisis on Tuesday and plans to be in Washington from Saturday through Tuesday for a meeting of the National Governors’ Association.  Asked about the health and human services job, her spokeswoman, Beth Martino, said the governor was “focused on the economic challenges currently facing Kansas, including our state budget and the impacts of the federal stimulus package.”

Mr. Obama’s first pick for the job, former Senator Tom Daschle, withdrew over his failure to pay $128,000 in taxes until nominated, provoking a storm of criticism and a presidential mea culpa.

With his economic recovery plan signed into law, Mr. Obama plans to turn his attention more to health care next week with a fiscal blueprint that will begin to advance his ideas about covering the uninsured, advisers said. He may also make health care a theme of his prime-time address to a joint session of Congress on Tuesday night, they said.  It remained unclear whether the White House would finish vetting Ms. Sebelius in time to nominate her by next week. Advisers described her as “the leading candidate,” although they said other names were still in discussion and emphasized that no final decision had been made.

After the troubles with Mr. Daschle and other nominees, the White House has intensified its vetting to make sure it thoroughly scrubs its choices before Mr. Obama signs off.

Ms. Sebelius’s family and her administration have both been notably bipartisan. Her father was a Democratic governor of Ohio and her father-in-law was a longtime Republican member of Congress from Kansas. She won her first term with a former Republican businessman as her running mate and a second term with the former Republican state party chairman on her ticket.  Ms. Sebelius became an early supporter of Mr. Obama by endorsing him in January 2008 and was mentioned as a possible vice-presidential nominee. After the election, her name was floated for a variety of possible jobs, including secretary of labor, agriculture or education.

If she becomes health secretary, she will be the fourth woman in the 15-member cabinet, overseeing 65,000 employees and a $700 billion budget. But she is unlikely to also wear the second hat that Mr. Daschle negotiated for himself as White House health czar, a position that could be influential in setting health care policy.

Administration officials said that was a special arrangement for Mr. Daschle, adding that they were still considering what to do about that job.

Should Ms. Sebelius get the cabinet post, she would be replaced as governor by Lt. Gov. Mark Parkinson, the former Republican chairman who switched to the Democratic Party when he ran with Ms. Sebelius in 2006. Mr. Parkinson has said he will not run for governor in 2010.

As Kansas insurance commissioner, Ms. Sebelius helped draft a proposed national bill of rights for patients and blocked the sale of Blue Cross and Blue Shield to an out-of-state company because it would have raised premiums. She served as president of the National Association of Insurance Commissioners and often testified before Congress.

One issue that could draw attention is her stance on abortion. A Roman Catholic who says abortion is wrong, Ms. Sebelius vetoed a bill requiring clinics to report information on why a late-term abortion was performed, drawing the condemnation of the archbishop of Kansas City, Kan.

Health advocates welcomed her candidacy.

“All signs indicate that she would be a terrific choice,” said Representative Pete Stark, Democrat of California and chairman of a major health subcommittee. Ronald F. Pollack, executive director of Families USA, a liberal-leaning consumer group, said Ms. Sebelius “knows health care as well as any governor in the United States.”

A trade group for insurers agreed. Karen M. Ignagni, president of America’s Health Insurance Plans, said Ms. Sebelius would be “a very smart choice” for health secretary.

“She has a good intellect, a big heart and tremendous expertise,” Ms. Ignagni said. “As a blue governor in a red state, she also has lots of experience working across the political aisle.”


Effect and cause link (below)

Daschle Withdraws as Health Nominee
Filed at 12:52 p.m. ET
February 3, 2009

WASHINGTON (AP) -- Tom Daschle has withdrawn his nomination to be Health and Human Services secretary.

That's according to a joint White House statement from President Barack Obama and his former nominee.

Obama said Tuesday he accepted the withdrawal "with sadness and regret."

Daschle has been battling for his nomination since it was disclosed he failed to pay more than $120,000 in taxes.

He said he's withdrawing because he's not a leader who has the full faith of Congress and will be a distraction.

In Daschle’s Tax Woes, a Peek Into Washington

February 2, 2009

WASHINGTON — Tom Daschle, the former Democratic Senate leader, had been voted out of office. His close friend Leo Hindery, a Democratic donor and media mogul, was out of a job too, having just sold his latest company, Yes Networks.

So in early 2005 the two men decided to team up. Mr. Daschle agreed to become the founding chairman of “a world-class executive advisory board” of “industry and regulatory experts” for a new investment firm run by Mr. Hindery, according to a news release announcing its inception and seeking investors. The Daschle-led board, the release said, would help provide a “collective depth of industry knowledge and expertise that will allow us to pursue unique and high-value opportunities.”

In addition to lending the prestige of his name, Mr. Daschle traveled to help raise money from investors for Mr. Hindery’s new venture, said Jenny Backus, a spokeswoman for Mr. Daschle. And in exchange, over the next four years the firm compensated Mr. Daschle with over $2 million, and Mr. Hindery lent Mr. Daschle the use of a chauffeured limousine in Washington.

Ms. Backus said that when Mr. Hindery was not in Washington he lent his car to Mr. Daschle as a favor to a friend.

The partnership has now come back to haunt Mr. Daschle, with the disclosure that he had failed to pay $128,000 in taxes on the car and driver Mr. Hindery’s firm provided him, threatening to derail his confirmation as secretary of health and human services.

Beyond the ramifications for Mr. Daschle’s ascent to the cabinet, the disclosures about Mr. Hindery and the many clients Mr. Daschle advised on public policy offers a new window into how Washington works. It shows how in just four years an influential former senator was able to make $5 million and live a lavish lifestyle by dint of his name, connections and knowledge of the town’s inner workings.

There is no evidence that Mr. Daschle pulled strings for Mr. Hindery. Indeed, Mr. Hindery’s firm appears to have had few interests before the government. But interviews and a review of public documents show that in his work for a Washington law firm, Mr. Daschle did take on an array of clients seeking influence with the government, including concerns involved in Indian gambling, ethanol, health care, telecommunications and federal contracting.

At least one, the nonprofit student loan company EduCap, may pose new problems for Mr. Daschle. The Senate Finance Committee said it was trying to determine whether trips to the Bahamas and the Middle East provided to Mr. Daschle by the company should also have been reported as income.

Ms. Backus said that the trips predated his work for EduCap, that he traveled at the request of a different charity, and that his accountants say he handled the trips appropriately.

Affiliated with the firm Alston & Bird, Mr. Daschle has operated in the gap between the popular understanding and legal definition of a lobbyist. There is no evidence that he directly sought to influence his former colleagues or other government officials in ways that would have required him to register as a lobbyist or could have run afoul of the restrictions on former lobbyists entering the Obama administration. But the rules still left plenty of room for him to advise businesses seeking to influence the government or to profit otherwise from the fame and insights he acquired in public life.

“Did he attempt to influence? Maybe,” said Thomas Susman, an official at the American Bar Association and author of its lobbying manual. “Did he advise others in the business of influencing? Probably. But he wasn’t a lobbyist.”

Ms. Backus said Mr. Daschle provided clients with advice based on years of public service. But she said he also gave the same insights free to the One campaign and the liberal Center for American Progress, as well as to his students at Georgetown University.

Aides to President Obama said on Sunday that they still expected Mr. Daschle to win confirmation. The Senate Finance Committee will meet on Monday to discuss the nomination.

What expertise Mr. Daschle contributed to Mr. Hindery’s firm is hard to determine. The firm, Intermedia, has hired no federal lobbyists and it mainly invests in media businesses — the television program “Soul Train,” for example; cable networks devoted to gospel music or hunting and fishing; and the Christian publisher Thomas Nelson — with few interests before the government.

Mr. Hindery, who sought the chairmanship of the Democratic National Committee in 2000, could not be reached for comment. Other firm executives did not return calls. Former Senator Bob Kerrey, another board member, did not respond to an e-mail message.

Former Senator Slade Gorton, a Washington Republican who also joined the board, said in an interview on Sunday that the other members received $100,000 a year in compensation, mainly for attending quarterly meetings about the state of the firm.

The Senate Finance Committee expects to disclose this week the results of a two-year investigation into the possibility that Mr. Daschle’s client EduCap abused its tax-exempt status by providing lavish entertainment and travel to its officers and their guests, including Mr. Dashcle. Mr. Daschle is an old friend of Catherine B. Reynolds, EduCap’s chief executive.

Another client paying for his policy advice was UnitedHealth, a giant insurance company with many issues pending before the Department of Health and Human Services. About a third of its $81 billion in revenue last year came from federally regulated sales of Medicare Advantage and Medicare supplement and prescription drug plans.

The company boasted in its annual report that “one in five Medicare recipients participates in a UnitedHealth Group Medicare program.” (Mr. Daschle has said he will recuse himself from matters involving former clients.)

Two of the clients Mr. Daschle disclosed involved Indian tribes: the Great Plains Indian Gaming Association, and the law firm Fredericks Peebles & Morgan, which represents Indian tribes in legal and government-relations matters involving gambling, health care and other issues.

Another was Perry Capital, a firm that specialized in handicapping the completion of mergers, many of which required federal approvals.

Several other clients or employers have stakes in federal support for the production of ethanol, an alternative to petroleum popular in farm states but controversial among environmentalists. Mr. Daschle received fees as a director of Prime BioSolutions and the Mascoma Corporation, which are involved in ethanol production, and he sold policy advice to the Governors’ Ethanol Coalition and the Renewable Fuels Association. Other clients were investment companies with stakes in federal environmental policies, and one, Crown Consulting, specialized in work for the Federal Aviation Administration.

Mr. Daschle was also a director of the Mayo Clinic. Although he did not officially lobby for the hospital, he did lend his voice to its cause in at least one notable battle. (As a director, Mr. Daschle received free medical care from the clinic, and for that he paid taxes, his spokeswoman said.)

Over the last few years, the clinic paid several Washington lobbyists to help beat back a $2.5 billion government loan for a company from Mr. Daschle’s home state, South Dakota, that wanted to operate a freight rail line near the clinic’s headquarters in Rochester, Minn.

To much criticism in his home state, Mr. Daschle sided with the clinic, calling it “an American treasure.”

“I don’t think the Mayo Clinic is asking too much,” he told The St. Paul Pioneer Press. The Federal Railroad Administration killed the project last February.

Daschle Knew of Tax Issues Over Car Use Last June

February 1, 2009

WASHINGTON — President Obama’s choice for health secretary, Tom Daschle, was aware as early as last June that he might have to pay back taxes for the use of a car and driver provided by a private equity firm, but did not inform the Obama transition team until weeks after Mr. Obama named him to the health secretary’s post, senior administration officials said Saturday.

As Senate Democrats rushed to save the nomination of Mr. Daschle, their former leader, the White House spent the day trying to explain how he survived its vetting process despite his failure to pay $128,000 in taxes.

The White House would not say when the president himself learned of the tax issue, but said Mr. Obama is standing by his nominee.

“The president believes that nobody is perfect, but that nobody is trying to hide anything,” Robert Gibbs, the president’s press secretary, said in an interview, adding, “I think Senator Daschle rightly is going to have to answer questions, but I think members will be satisfied with the answers that he gives and will understand that he’s the right man for the job.”

At least six leading Democratic senators have come out in support of Mr. Daschle, but the fate of his nomination is unclear. The Senate Finance Committee, which is charged with holding a confirmation hearing on Mr. Daschle’s nomination, will meet behind closed doors Monday to discuss his taxes. After Timothy F. Geithner, Mr. Obama’s Treasury secretary, faced similar issues, some senators may have little appetite for confirming another nominee with tax problems.

“It’s totally shocking,” an aide to a Democratic senator said Saturday. “Why do we have to continue to have the same story over and over again with these nominees?”

Mr. Daschle, who has paid the back taxes with interest, is the latest of Mr. Obama’s cabinet choices who have run into trouble, and the revelations about his finances — which include more than $300,000 in income from health-related companies that he might regulate as secretary — raise questions about the presidential vetting process, as well as Mr. Obama’s ability to keep his pledge to run an administration free of outside influence.

“One of the problems here is what they set up as expectations,” said Martha Joynt Kumar, an expert in presidential transitions at Towson University. “If you have talked about the importance of ethics and set up the kind of rules they did on lobbying, then I think it sets expectations that yours is going to be an administration that is not going to have problems that others might have had.”

Privately, some Democrats on Saturday were scratching their heads at how Mr. Daschle, a Washington insider with a reputation as a sophisticated thinker, could have made such a mistake.

A spokeswoman for Mr. Daschle, Jenny Backus, said Mr. Daschle became concerned last June that he might owe taxes on the car and driver, and instructed his accountant to investigate. Mr. Obama named Mr. Daschle to the health secretary’s post on Dec. 11. But it was not until late December or early January, after the accountant came back to Mr. Daschle with a report on the back taxes owed, that the former senator informed the White House transition team. Ms. Backus said Mr. Daschle did not think to mention it earlier, in part because “he thought his accountant was taking care of it,” and in part because he had no idea the amount owed would be so high.

“He took responsibility for his mistake as soon as he figured it out,” Ms. Backus said. “That’s about all you can do. People who know him and respect him are putting that mistake in context.”

On Capitol Hill, Senate Democrats rallied around Mr. Daschle, a former senator from South Dakota who lost his seat in 2004 while serving as the minority leader. Mr. Daschle is a close ally of the president’s — he marshaled his staff on behalf of the Obama campaign, and at least five former Daschle aides now have top White House jobs — and Democrats vowed to go to bat for him.

“We wish this didn’t happen,” said Senator Charles E. Schumer, a New York Democrat who is on the Finance Committee, “but he’s chosen such quality people that nobody minds taking a bit of an extra step to help get them in.”

But already, Mr. Daschle is becoming the butt of Republican jokes, as was the case at the House Republican retreat this weekend. According to one person who was there, Representative Eric Cantor of Virginia, the party whip, had this to say after hearing the news about Mr. Daschle: “It is easy for the other side to advocate for higher taxes because — you know what? — they don’t pay them.”

When Mr. Obama was elected, official Washington marveled at the speed of his transition and the rigorous vetting process. But Paul C. Light, a professor at New York University who studies the federal bureaucracy, said that “speed may have been the enemy of thoroughness” in the Obama process. The White House, though, insisted that was not the case.

“In terms of the vetting,” Mr. Gibbs said Saturday, “we’re comfortable with the process.”

The information about Mr. Daschle has come to light in different ways. He disclosed some to the transition team, including the taxes owed on the car and driver. The transition team spotted a problem with his charitable tax deductions, and the Senate Finance Committee discovered the failure to pay Medicare tax on the use of the car.

If Mr. Daschle’s confirmation is derailed, it would undoubtedly hurt one of Mr. Obama’s major domestic priorities: revamping the health care system. Mr. Daschle has been asked by the president to serve in a dual role spearheading that effort as the White House “health czar.”

As a politician, Mr. Daschle often struck a populist note, but his financial disclosure report shows that in the last two years, he received $2.1 million from a law firm, Alston & Bird; $2 million in consulting fees from a private equity firm run by a major Democratic fundraiser, Leo Hindery Jr. (which provided him with the car and driver); and at least $220,000 for speeches to health care, pharmaceutical and insurance companies. He also received nearly $100,000 from health-related companies affected by federal regulation.

Mr. Obama has instituted rules requiring former lobbyists in his administration to pledge not to deal with former clients, though he has made exceptions for two nominees, one at the Pentagon and one at the health agency. As a strategic adviser to companies, Mr. Daschle did not have to register as a lobbyist, and is not technically covered by those rules.

“He’s never lobbied, therefore he’s not in violation of the pledge,” Mr. Gibbs said. “The president is comfortable with Senator Daschle’s variety of experiences and backgrounds. It’s why he believes he’s best suited to the efforts to reform our health care system.”

Daschle Pays 3 Years of Tax on Use of Car
January 31, 2009

WASHINGTON — President Obama’s pick for health and human services secretary, Tom Daschle, failed to pay more than $128,000 in taxes, partly for free use of a car and driver that had been provided to him by a prominent businessman and Democratic fund-raiser, administration officials said Friday.

Mr. Daschle, concluding that he owed the taxes, filed amended returns and paid more than $140,000 in back taxes and interest on Jan. 2, the officials said.

The car and driver were provided by Leo Hindery Jr., a media and telecommunications executive who had been chairman of YES, the New York Yankees regional sports network. In 2005, Mr. Hindery founded a private equity firm known as InterMedia Advisors. Mr. Daschle was chairman of InterMedia’s advisory board.

In a financial disclosure statement filed this month with the Office of Government Ethics, Mr. Daschle reported that he had received large amounts of income from InterMedia, including more than $2 million in consulting fees and $182,520 in the form of “company-provided transportation.”

The belated tax payments help explain delays in the confirmation of Mr. Daschle, a former Senate Democratic leader who had been expected to win swift approval. Despite the embarrassing admission, the second for one of Mr. Obama’s cabinet choices, the White House and Democratic senators issued statements on Friday supporting Mr. Daschle.

In an e-mail message, Mr. Daschle referred questions to Jenny Backus, a spokeswoman for the Health and Human Services Department. Ms. Backus said that he had cooperated with the Senate Finance Committee, was answering its questions and expected to be confirmed.

It was not immediately clear whether Mr. Daschle’s tax problems would derail his nomination. The confirmation of Treasury Secretary Timothy F. Geithner was held up only briefly after the disclosure that he had failed to pay more than $34,000 in taxes owed to the federal government.

On Friday, members of the Finance Committee received a report on the vetting of Mr. Daschle, done by members of the committee staff from both parties. The report says that he paid back taxes and interest totaling $32,090 for 2005, $38,507 for 2006 and $69,570 for 2007.

The Finance Committee document said Mr. Daschle had amended his tax returns to show “unreported income from the use of a car service in the amounts of $73,031, $89,129 and $93,096 in 2005, 2006 and 2007, respectively.”

An administration official said Mr. Daschle’s failure to pay the taxes was “a stupid mistake.” But, the official said, Mr. Daschle should not be penalized because he had discovered the tax liability himself, paid up and brought it to the committee’s attention.

The committee report said, “Senator Daschle filed the amended returns voluntarily after Barack Obama announced his intention to nominate the senator to be the secretary of health and human services.”

The committee report said Mr. Daschle had told the committee staff that “in June 2008, something made him think that the car service might be taxable, and he disclosed the arrangement to his accountant.”

“Under Section 132 of the Internal Revenue Code, the value of transportation services provided for personal use must be included in income,” the report said. “Senator Daschle estimated that he used the car and driver 80 percent for personal use and 20 percent for business.”

The car and driver were not Mr. Daschle’s only problems. The Finance Committee said he failed to report consulting income of $83,333 on his 2007 tax return and overstated the deductions to which he was entitled for charitable contributions from 2005 to 2007. In his amended tax returns, he reduced the deductions by $14,963.

Under his consulting arrangement with InterMedia, the report said, Mr. Daschle received $1 million a year, or $83,333 a month. The payment to Mr. Daschle for May 2007 was omitted from the annual statement of income sent to him by InterMedia. Ms. Backus said the omission resulted from “a clerical error by InterMedia.”

The White House and the Senate majority leader, Harry Reid, Democrat of Nevada, affirmed their support for Mr. Daschle.

James P. Manley, a spokesman for Mr. Reid, said: “Senator Daschle will be confirmed as secretary of health and human services. He has a long and distinguished career in public service and is the best person to help reform health care in this country.”

The tax problem is the latest road bump for Mr. Obama’s cabinet selections. His nominee for commerce secretary, Gov. Bill Richardson of New Mexico, withdrew his name amid a federal investigation into state contracting, and Mr. Obama has yet to name a replacement. His designated attorney general, Eric H. Holder Jr., has also not been confirmed.

Mr. Hindery and family members have contributed money to many Democratic candidates, including at least $42,000 to Mr. Daschle from 1997 to 2004.

Mr. Daschle is still waiting for the Finance Committee to hold a hearing on his nomination. Members of the committee staff from both parties have been examining a number of other issues, including his relationship with EduCap, a student loan company.

Some members of the staff have also been asking whether Mr. Daschle should have registered as a lobbyist while working at the law firm Alston & Bird, which itself was registered as a lobbyist for EduCap and for many health care companies.

In his financial disclosure report, Mr. Daschle said he received compensation of more than $5,000 for providing “policy advice” to EduCap. The exact amount was not disclosed.

In reports to the Internal Revenue Service, EduCap says it does business as the Catherine B. Reynolds Foundation. The foundation is the principal underwriter of annual meetings held by the American Academy of Achievement, which has honored Mr. Daschle on several occasions.

In its report, the Finance Committee said its staff was still reviewing “whether travel and entertainment services provided to the Daschles by EduCap Inc., Catherine B. Reynolds Foundation” and the Academy of Achievement “should be reported as income.”

In his financial disclosure statement, Mr. Daschle said he had received $2.1 million in “wages and bonuses” from Alston & Bird and more than $390,000 for speeches to groups like America’s Health Insurance Plans. He also said he had received more than $5,000 for giving “policy advice” to the insurer UnitedHealth.

An aide to Mr. Daschle said he had been preoccupied in recent days with the need to help a brother who was being treated for a brain tumor.

Asked about the delay, Carol Guthrie, a spokeswoman for the Finance Committee, said, “There’s been a lot on the committee’s docket.”

Carl Hulse, Ron Nixon and Sheryl Gay Stolberg contributed reporting, and Kitty Bennett contributed research.

Cuddly Welcome for Mr. Daschle
Editorial, NYTIMES
January 9, 2009
The main thing we learned from Tom Daschle’s confirmation hearing in the Senate on Thursday was that President-elect Barack Obama sure picked the right man to stage manage his health care reforms as secretary of health and human services and as health czar at the White House. The hearing before a Senate health committee was mostly a love-fest as senators from both parties expressed admiration for their former Senate colleague and signaled a willingness to work collaboratively with him on the daunting task of improving the costly, dysfunctional health care system.

Unfortunately, the hearing did not tell us much at all about how the incoming Obama administration intends to pay for its emerging health care programs or how, for all of his smoothness at the hearing, Mr. Daschle will deal with the very real and very big differences his team has with Republicans on this and other vital issues.

Instead, the senators avoided asking such tough questions, and Mr. Daschle bent over backward to reassure Republicans that he would not try to ram anything too unpalatable down their throats. He pledged to cooperate with Congress on an aggressive, open reform effort that would be guided by evidence, not ideology.

When Senator Mike Enzi, the ranking Republican on the committee, asked if Mr. Daschle would share information with members of both parties and respond rapidly to their requests (something the Bush administration rarely did), Mr. Daschle answered unequivocally, “yes.” More telling, when Mr. Enzi asked if Mr. Daschle would discourage the use of budget reconciliation, a process that prevents filibusters and would allow a simple majority to approve health reform legislation, Mr. Daschle again said, “yes.”

That seemed to indicate that the Democrats will be pushing for reforms that can command support from large bipartisan majorities in Congress. Yet the seeds of partisan conflict are already being planted. Mr. Enzi issued a press release warning against expanding insurance coverage through government-run bureaucracies like Medicaid and asserting that any new coverage must come through private health insurance plans.

If he meant that literally, he would have to oppose major elements of the Obama health plans, which envisage expanding existing public programs and probably adding a new public program to compete with private plans. Of course, if the Republicans become too obstinate in blocking major elements they don’t like, Democratic leaders in the Senate could choose to close off debate no matter what Mr. Daschle has recommended.

There were few if any surprises in Mr. Daschle’s broad-brush statements on policy. He wants wider insurance coverage, lower costs, higher quality care, more preventive care, an emphasis on keeping people well, greater use of information technology, more money for community health centers, a stronger Food and Drug Administration and speedier approval of low-cost generic drugs, among other issues.

He gave no indication of how to pay for all this or how to rein in the escalating costs of entitlement programs, and he was not asked such probing questions by a committee that seems certain to recommend his confirmation. Mr. Daschle may face tougher questions at a second confirmation hearing before the Senate Finance Committee, which has jurisdiction over Medicare and Medicaid, but the real struggles will begin when a detailed plan is put forward by the Obama administration.

Sen. Daschle calls for “paradigm shift” during confirmation hearing
OBAMA website
Thursday, January 8, 2009 12:55pm EST / Posted by Dan McSwain

Health and Human Services Secretary-designate Tom Daschle appeared before a Senate confirmation hearing this morning and called for bold changes in the way Americans and their government think about health care.

“I think we need to change the paradigm in this country on health,” Secretary-designate Daschle said. “It starts with that big picture belief. The paradigm needs be changed from illness to wellness.”

Sen. Daschle advocated new approaches to the problems facing American families, noting that his charge in leading HHS will require working across governmental lines to fix ailing health care systems.

He noted the importance of “breaking down stovepipes so that the inter-relationship between these agencies can do a better job of coordinating this effort.”

When rural health care issues were raised, Sec. Daschle spoke passionately about solutions to the unique problems many communities face.  He emphasized the need for expanded broadband Internet access to facilitate a modernized health care information technology system.  President-elect Obama has repeatedly stressed the vital role of increased broadband penetration in improving the quality of a variety services across America, including health care.

We’ll have more on Secretary-designate Daschle and his Transition health care team coming up soon.

Daschle Pledges a Bipartisan Reform of Health Care System
January 9, 2009

WASHINGTON — Former Senator Tom Daschle pledged on Thursday to work with lawmakers of both parties in a grass roots, ideology-free campaign to revamp the nation’s struggling health care system.

“We will be guided by evidence and effectiveness, not by ideology,” Mr. Daschle told the Senate Committee on Health, Education, Labor and Pensions after saying that he wanted “to work with each of you” on ways to improve health care for all Americans.

“When it comes to health care, we really are in it together,” Mr. Daschle said, adding that to do nothing — or too little — about the spiraling costs of health care, the growing legions of the uninsured and substandard medical treatment in some areas is simply unacceptable.

Mr. Daschle, the South Dakota Democrat and former majority leader, said conversations with ordinary citizens and with business leaders had driven home the depth of the problems related to health care. He said he had been struck by findings that General Motors spends more on health care than it does on steel, and that Starbucks spends more on health care than it does on coffee.  Mr. Daschle, who appeared before the Senate panel as projections emerged that the federal government faces trillion dollar-plus budget deficits, said the recent trend of health care spending running far ahead of inflation is “as unsustainable for our national budget as it is for a family budget.”

Mr. Daschle pledged to avoid ideological factors in making policy decisions, and later during a question-answer session promised to give department scientists “the autonomy they need” and insulate them from “factors having nothing to do with science...”

As a former senator with friends on both sides of the aisle, Mr. Daschle was greeted warmly by panel members (“Welcome home,” said Senator Richard Burr, Republican of North Carolina), and his confirmation seems all but assured...

Daschle Also to Oversee New Health Reform Office
Filed at 10:58 a.m. ET
December 11, 2008

WASHINGTON (AP) -- Former Senate Majority Leader Tom Daschle will pull double duty in the Obama administration, where he will serve not only as the Health and Human Services secretary but also oversee a new White House Office of Health Reform.

A Democratic official familiar with the plans -- to be announced Thursday in Chicago -- said the additional appointment makes it clear that Daschle will coordinate efforts within the administration to overhaul the nation's health care system.

''He will be the White House's voice on this critical issue,'' said the official, who was not authorized to speak publicly about the development.

Jeanne Lambrew, who helped Daschle write a book about health care reform, will serve as deputy director of the new White House office. She also worked on health policy at the White House during the Clinton administration and currently serves as a senior fellow at the Center for American Progress, a liberal think tank.

Leaders of health advocacy groups have described Lambrew as one of Daschle's most trusted advisers on health issues. She will oversee planning efforts.

After losing re-election to the Senate in 2004, Daschle, D-S.D., became a public policy adviser and member of the legislative and public policy group at the law and lobbying firm Alston & Bird. Daschle isn't a registered lobbyist. He advised clients on issues including health care, financial services and taxes and trade, according to the firm's Web site.

President-elect Barack Obama's choice of Daschle to head HHS has been known for some time...

Dem Officials: Daschle Accepts HHS Cabinet Post
Filed at 5:14 p.m. ET
November 19, 2008

WASHINGTON (AP) -- Former Senate Majority Leader Tom Daschle has accepted President-elect Barack Obama's offer to be Secretary of Health and Human Services, Democratic officials said Wednesday. The appointment has not been announced, but these officials said the job is Daschle's, barring an unforeseen problem as Obama's team reviews the background of the South Dakota Democrat.

One area of review will include the lobbying connections of his wife, Linda Hall Daschle, who has lobbied mostly on behalf of airline-related companies over the years. The officials spoke on condition of anonymity because they weren't authorized to discuss the matter publicly.

Daschle was a close adviser to Obama throughout the former Illinois senator's White House campaign. He recently wrote a book on his proposals to improve health care, and he is working with former Senate leaders on recommendations to improve the system.

Organizations seeking to expand health coverage were quick to praise the selection.

''Sen. Daschle has a deep commitment to securing high-quality, affordable health care for everyone in our nation,'' said Ron Pollack, executive director of Families USA. ''His new leadership position confirms that the incoming Obama administration has made health care reform a top and early priority for action in 2009.''

After losing re-election to the Senate in 2004, Daschle became a public policy adviser and member of the legislative and public policy group at the law and lobbying firm Alston & Bird. Daschle isn't registered as a lobbyist. He advises clients on issues including health care, financial services and taxes and trade, according to the firm Web site.

Health care interests, including CVS Caremark, the National Association for Home Care and Hospice, Abbott Laboratories and HealthSouth, are among the firm's lobbying clients.

His wife was acting administrator of the Federal Aviation Administration in the Clinton administration. She is one of Washington's top lobbyists. Her lobbying clients over the past year included American Airlines, Lockheed Martin and Boeing, Senate lobbying records show.

Daschle is a senior fellow at the Center for American Progress, a liberal think-tank run by top Obama transition adviser and former Clinton White House chief of staff John Podesta. According to his biography for the think tank, Daschle serves on the advisory boards of Intermedia Partners and the BP America Inc. external advisory council, and on the boards of CB Richard Ellis, Mascoma Corp., Prime BioSolutions, The Freedom Forum, the Mayo Clinic, the Center for American Progress, the LBJ Foundation, and the National Democratic Institute for International Affairs. He is also a member of the Council on Foreign Relations.

Daschle's strong Capitol Hill ties and knowledge of how HHS works mean ''it is a perfect appointment,'' said former Republican Congressman John Porter, who chairs the medical research advocacy group Research!America. ''He'll do an outstanding job.''

Besides health reform, the next HHS secretary will deal with the growing budgetary woes of some of the nation's critical health agencies.

One example: Years of funding that didn't keep up with inflation means the National Institutes of Health has lost 14 percent of its buying power, said Dr. Harold Varmus, NIH's former director and a science adviser to Obama's campaign. That has left promising disease research without money to move forward.

Obama also announced several transition working group leaders, including Daschle, who will oversee the health policy working group. They include former Environmental Protection Agency administrator Carol Browner on energy and environment and former Clinton White House adviser Jim Steinberg and Obama campaign senior foreign policy adviser Susan Rice on national security.

Daschle Nominated to Human Services Cabinet Post
By Helene Cooper
November 19, 2008, 12:30 pm
Update | 12:40 p.m.

CHICAGO ­ - President-elect Barack Obama has offered the nomination of Secretary of Health and Human Services to his close ally Tom Daschle of South Dakota, the former Democratic Senate leader who was an early supporter of Mr. Obama’s run for the presidency.

Senior Obama aides said that Mr. Daschle has accepted the nomination. But an aide to Mr. Obama said that a formal announcement won’t be made until Mr. Obama first settles on his national security and economic teams, and no job offers have been extended in those areas.

Mr. Obama’s transition team announced on Wednesday that Mr. Daschle will also oversee Mr. Obama’s health policy working group.

Mr. Daschle was initially considered for the position of Mr. Obama’s chief of staff, but that job went to Representative Rahm Emanuel of Chicago.

If confirmed, Mr. Daschle could end up being the point man on any efforts to overhaul the country’s health care delivery and insurance system, a tall order, health policy experts say, given the current economic situation.

Homeland Security
Arizona Gov. Janet Napolitano

With Force, Mexican Drug Cartels Get Their Way

March 1, 2009

CIUDAD JUÁREZ, Mexico — Mayor José Reyes Ferriz is supposed to be the one to hire and fire the police chief in this gritty border city that is at the center of Mexico’s drug war. It turns out, though, that real life in Ciudad Juárez does not follow the municipal code.

It was drug traffickers who decided that Chief Roberto Orduña Cruz, a retired army major who had been on the job since May, should go. To make clear their insistence, they vowed to kill a police officer every 48 hours until he resigned.

They first killed Mr. Orduña’s deputy, Operations Director Sacramento Pérez Serrano, together with three of his men. Then another police officer and a prison guard turned up dead. As the body count grew, Mr. Orduña eventually did as the traffickers had demanded, resigning his post on Feb. 20 and fleeing the city.

Replacing Mr. Orduña will also fall outside the mayor’s purview, although this time the criminals will not have a say. With Ciudad Juárez and the surrounding state of Chihuahua under siege by heavily armed drug lords, the federal government last week ordered the deployment of 5,000 soldiers to take over the Juárez Police Department. With the embattled mayor’s full support, the country’s defense secretary will pick the next chief.

Chihuahua, which already has about 2,500 soldiers and federal police on patrol, had almost half the 6,000 drug-related killings in all of Mexico in 2008 and is on pace for an even bloodier 2009. Juárez’s strategic location at the busy El Paso border crossing and its large population of local drug users have prompted a fierce battle among rival cartels for control of the city.

“Day after day, there are so many horrible things taking place there,” said Howard Campbell, an anthropologist at the University of Texas at El Paso who studies Mexico’s drug war. “The cartels are trying to control everything.”

Nothing is surprising in Chihuahua anymore. Gunmen recently shot at one of three cars in Gov. José Reyes Baeza’s motorcade, killing a bodyguard and wounding two agents. The drug cartels routinely collect taxes from business owners, shooting those who refuse to pay up. As for the Juárez mayor, who has made cleaning up the notoriously corrupt police department his focal point, the cartel recently threatened to decapitate him and his family unless he backed off.

The handwritten threat that it issued went further than that. Like many people in Juárez, Mayor Reyes has homes on both sides of the border, splitting his time between El Paso and Juárez. The note threatening him made it clear that the assassins going after him would have no qualms about crossing into the United States to finish off the mayor and his family.

“We took the threat seriously,” said Chris Mears, a spokesman for the El Paso Police Department. “I’m not going to tell you what actions were taken, but we’ve taken actions.”

In an interview in his wood-paneled office overlooking the United States, Mr. Reyes, 46, whose father was mayor in the early 1980s, said he was not going to allow criminals to run the city, despite the inroads they are making. He said he initially opposed his police chief’s decision to resign because he did not want the outlaws to feel empowered. He acceded only as a life-saving gesture, he said.

“I’m not going to give in,” he vowed in an interview, welcoming the arrival of soldiers so that the traffickers will feel the heat even more.

Right now, the Juárez police are no match for the outlaws. Last year, the senior uniformed officer was killed, one of 45 local police officers killed since January 2007, and a former police chief pleaded guilty to charges of smuggling a ton of marijuana from Juárez to El Paso. Mr. Orduña, who lived at the police station to avoid being killed, had replaced another chief who fled to El Paso after receiving threats last year. If the army had not come in, the mayor would no doubt have had a difficult time finding somebody to head the department.

Introducing a nationwide police recruitment campaign, the mayor has raised salaries and benefits enough that he is attracting new recruits to replace the many officers being fired for their links to organized crime.

“I know the dangers and I accept them,” said José Martín Jáuregui López, one of the 289 cadets now being trained at Juárez’s police academy. “There are a lot of people afraid for me: my mom, my relatives. But this is what I want to do.”

As a sign to the traffickers that he was not running from them, Mr. Reyes appeared Friday to be like any other mayor, giving a speech at the opening of a shopping center, signing a memorandum of understanding with a developer, reassuring residents that he would keep loiterers from gathering in front of their homes.

But the bodyguards holding assault rifles who clung close to him made it clear that Juárez remained a city under siege.

“There’s no square inch of the city that has been untouched by the violence,” said Lucinda Vargas, an economist who works by day to remake the city as executive director of Juárez Strategic Plan, but retreats to El Paso at night. “There’s a lot of evidence that Juárez, in a micro sense, is becoming a failed state. But I still think we haven’t failed yet and that we could still rescue ourselves.”

FBI Investigates DC Letter With Powder, Dead Fish
Filed at 1:01 p.m. ET    
February 6, 2009

WASHINGTON (AP) -- FBI officials say they are investigating reports of a letter containing white powder and a dead fish that was sent to a Department of Homeland Security employee in Washington.

FBI Washington Field Office spokeswoman Katherine Schweit says authorities were called Friday to a downtown Washington office building on Vermont Avenue. She says the letter was addressed to a homeland security worker at that location.

It's not clear if the Homeland Security department owns the building or only has offices there.

Schweit says hazardous materials teams are at the scene. She says some nearby streets have been closed while officials investigate.

Shaun Donovan

Watch Obama YouTube announcement here.
U.S. Asks New York Landlords for Vacant Apartments to House Displaced Families

November 11, 2012

City, state and federal officials are trying to assemble a pool of vacant apartments in New York City that could supplement the city’s shelter system in housing hundreds if not thousands of families displaced by storm damage and power outages.  Although many people have clung to their homes despite having neither heat nor hot water, particularly in city housing projects in Coney Island and the Rockaways, officials are worried that another wave of people will seek shelter as temperatures fall and they can no longer bear the cold.

“There’s a huge fear that folks are going to be displaced for the medium and long term,” said Mathew M. Wambua, the city’s housing commissioner. “We feel a real imperative to have something in place when the second surge comes.”

Officials have discussed a variety of ways to accelerate rebuilding, including using modular housing. But meetings in New York last week involving city and state officials focused on creating a clearinghouse that would match displaced families with vacant apartments.

At a meeting in Manhattan on Wednesday evening, Shaun Donovan, the federal Secretary of Housing and Urban Development, told real estate executives, “You really need to help out,” according to one executive who was present. The meeting, real estate executives said, was one element of a White House rebuilding program that President Obama is expected to announce on Thursday in Manhattan for New York, New Jersey and possibly Connecticut.

Developers and landlords expressed a willingness to pitch in, but they also raised some issues that needed to be addressed first. That led to lengthy meetings on Thursday between state and city officials and members of the Real Estate Board of New York, the Rent Stabilization Association and the state Association for Affordable Housing.  They discussed creating a system by which people who apply to the Federal Emergency Management Agency for housing could be matched with landlords who have vacant apartments. The tenants would pay rent directly with a FEMA voucher, or obtain an apartment through an agency like the Red Cross.

In the New York area, FEMA provides about $1,800 a month in rental assistance for up to 18 months. That would cover most housing in Brooklyn and Queens, but developers said it would fall short of covering many units in Manhattan. The need for temporary housing remains, even in Manhattan, where the heating and electrical systems in complexes like Knickerbocker Village on the Lower East Side were swamped with seawater. Electricity was restored to most apartments in that complex until an electrical fire cut power again.

Landlords raised a series of statutory and legal hurdles that would have to be overcome. In apartments that operate under the state’s rent stabilization laws, there is no provision for short-term tenants. Some building owners asked whether the government would indemnify them for apartment damages or legal costs if they were forced to evict a tenant.

“People want to do the right thing,” said Charles Dorego, senior vice president of Glenwood Management, a major Manhattan landlord, who attended the meetings on behalf of the Real Estate Board. “But they don’t want to inherit a pig in a poke. They asked for indemnity, although I don’t see how a government agency can do that.”

By Friday afternoon, officials had developed a proposal that they were beginning to circulate within the real estate industry and hope to unveil soon.  A spokesman for Mr. Donovan said they were on a fast track to devise a creative solution to the housing disaster, but they were not ready to announce any specifics.

It is unclear how many apartments might be included in the pool, given that the city’s vacancy rate is in the low single digits. Some landlords in Brooklyn and Queens called the Rent Stabilization Association on Monday offering apartments for families forced out of their homes. But by Thursday, they said many of those units were now occupied.

Richard LeFrak, whose family owns more than 10,000 apartments in New York and New Jersey, said he had no vacant units, after moving nearly 150 families from their damaged first-floor apartments. His buildings suffered “tens of millions of dollars in damage from the storm,” especially in Sheepshead Bay, Brooklyn, and Jersey City. “We’re so tight now,” Mr. LeFrak said.

King County story - on another matter...
EXCLUSIVE: Records violations dog housing nominee
Washington Times
Jerry Seper
Thursday, May 7, 2009

President Obama's choice for the government's No. 2 housing job is embroiled in the largest fine in U.S. history for "blatant violations" of open records laws after the Washington State Supreme Court chastised his office for withholding documents detailing taxpayer costs for a new professional football stadium in Seattle.

The documents that Ronald Sims' office was found to have kept from the public when he served as King County executive included information about cheaper alternatives to the $430 million Seattle Seahawks stadium, which was built in 2002, according to a Washington Times review of the court records.

Washington's highest court ruled in January that the withheld documents would have allowed voters in a referendum to challenge "the veracity" of King County's request for $300 million in public bonds for the project. The justices found the actions of Mr. Sims' office to be so "egregious" that they scrapped a lower court's order of a $123,780 fine - the largest ever assessed in a public records case - and recommended that the penalty be increased to as much as $825,000.

Mr. Obama nominated Mr. Sims as the top deputy at the Department of Housing and Urban Development (HUD) just three weeks after the court's ruling, which harshly and repeatedly criticized Mr. Sims' office for its conduct during a 12-year legal fight.

If confirmed, Mr. Sims would help manage billions of federal dollars set aside for building, maintaining and operating public housing inside a government agency with a history of misspending and corruption. A Senate committee last week forwarded Mr. Sims' nomination to the full Senate without asking the nominee a single question.

Obama's openness

Government watchdogs said Mr. Sims' nomination conflicts with the president's oft-stated commitment to openness and transparency.

"Mr. Sims should publicly explain his role in violating Washington states public records law by improperly withholding documents related to the Seattle Seahawks stadium," said Melanie Sloan, head of the public watchdog group Citizens for Responsibility and Ethics in Washington. "Given President Obamas commitment to transparency, there can be no place for officials who do not share that value."

Mr. Sims has not been available for comment, his office said. The White House deferred questions to HUD Secretary Shaun Donovan's office, which signaled that the administration stands behind its nominee.

"Secretary Donovan continues to support the nomination of Ron Sims to be HUDs deputy secretary and looks forward to the Senates confirmation," agency spokeswoman Melanie Roussell said.

In a recent impromptu television interview as he left a Senate hearing room, Mr. Sims told WNO-TV that while a public-records lawsuit in the case targeted his office and a court levied a fine, he denied ever withholding any documents. He said flatly that he had no involvement whatsoever in the matter.

"There's nothing in the court record at all involving me personally," Mr. Sims said. "I never was involved in that at all. There's nothing regarding my conduct."

But the court files include an Aug. 27, 1997, letter from Mr. Sims to Seattle businessman Armen Yousoufian, who filed the Public Records Act request for the stadium documents and later sued Mr. Sims' office. The letter, signed by Mr. Sims, shows that the county executive was aware of the matter and took part in the decision on how to respond.

Mr. Sims wrote that he was aware of the requests by Mr. Yousoufian for the documents and apologized for "any misunderstanding" in the delay in making them public. He said it was his intention to be "cooperative and helpful."

"Since our office received your first request for information, we have, along with the Office of Stadium Administration, attempted to provide you with access to all of the information you were seeking," he wrote. "Mr. Yousoufian, my staff and I are more than happy to make available to you any disclosable information."

Records response

In fact, the documents were withheld for several more years until after Mr. Yousoufian sued and won, court records show.

On Jan. 15, the Washington State Supreme Court ruled 6-3 that the refusals by Mr. Sims' office to make the requested documents public constituted "blatant violations of the state Public Records Act." It also said the lower court "abused its discretion" by imposing a $15-a-day penalty in response to the "grossly negligent noncompliance" by Mr. Sims' office. The high court suggested, instead, that under the law, the penalty could be as high as $100 a day, which would increase the fine to $825,000.

State Supreme Court Justice Richard B. Sanders wrote that the actions of Mr. Sims' office were "so egregious" as to warrant a fine at the "high end" of the act's penalty range. He said the unchallenged findings of fact demonstrated that Mr. Sims' office "repeatedly deceived and misinformed" Mr. Yousoufian.

"King County failed to reply to Yousoufians clear request promptly or accurately," Justice Sanders said. "King County either made no explanation of its noncompliance or misrepresented the truth. The potential for public harm was high; the requested records tested the veracity of King Countys assertions regarding a pending referendum on a $300 million public financing scheme."

The justices sent the case back to Superior Court with a recommendation to increase the penalty.

Noting that Mr. Yousoufian wanted documents concerning a then-pending referendum, Justice Sanders said the decision to delay disclosure for years beyond the election day was "without justification." He also said that "with proper diligence and attention," Mr. Sims' office could have responded accurately to the Yousoufian request "within five days."

Recent request

Mr. Sims has been at the center of controversy during much of his term as the top executive of Washington state's largest county. A Virginia-based public watchdog group, Americans for Limited Government, has been urging members of the Senate Banking, Housing and Urban Affairs Committee to question Mr. Sims about the public-records case and other issues during his tenure.

"The least the Senate can do is to hold up Mr. Sims nomination so that members can get to the bottom of this controversy by asking more questions of the nominee - under penalty of perjury," ALG President William Wilson said.

Sen. David Vitter, Louisiana Republican and a member of the Senate Banking, Housing and Urban Affairs Committee, also has raised questions concerning Mr. Sims' involvement in the public records case.

"In response to my questions about this issue, Mr. Sims replied that he wasnt at liberty to comment on the subject," Mr. Vitter said in a statement. The following day, however, he spoke in some detail about Qwest Field in a television interview.

"President Obama has pledged to ensure transparency in his administration, but Mr. Sims responses to me and to the TV crew just dont seem to be in keeping with that promise," he said. "Court records clearly detail his involvement."

Vitter spokesman Joel DiGrado said the senator has not put a hold on the nomination but was looking for his concerns to be addressed.

Mr. Yousoufian, during several telephone interviews, said he filed his initial request for documents in May 1997 when he heard Mr. Sims speak about a referendum election in which voters would decide whether to finance $300 million for a new stadium. The court records show Mr. Sims' office failed to respond to 11 requests for information from Mr. Yousoufian over a two-year period, prompting him to file his lawsuit.

Mr. Yousoufian said he filed the document request because the Kingdome, where the Seahawks played at the time, was near his hotel, University Plaza. He said the stadium brought a lot of business to the hotel, and he wanted the economic-impact studies to determine how a new stadium might affect that business.

Seeking the documents under the state's Public Disclosure Act, the request cited "outside studies" used by Mr. Sims and then-Washington Gov. Gary Locke, now Mr. Obama's secretary of commerce, to lobby voters to support a bond to pay for the new stadium.

Microsoft billionaire Paul Allen offered to purchase the Seahawks if Washington state voters approved a public-financing measure to build Qwest Field. Voters approved a financing package in 1997, and the stadium was completed in 2002. A statewide special election to authorize construction passed with 50.8 percent of the vote.

Mr. Yousoufian said the outside studies supported less costly stadium alternatives that were withheld pending completion of a report that coincided with a construction proposal offered by Mr. Allen and supported by Mr. Sims.

According to Mr. Yousoufian and a review of court records:

• A firm known as CSL found that without a pro sports team in the Kingdome, the facility would carry a $650,000 annual operating loss, $5.2 million annually for earlier roof repairs and an estimated $3 million yearly in capital improvements needed to attract new events. But, it said, with professional football in the dome, it was estimated to operate at a profit ranging from $612,000 to $834,000 for the years 2000 to 2009.

• A report by HOK Sports Facilities Group said that remodeling the Kingdome would cost $197 million, and would add 500,000 square feet of space and better seating. The report also said the Seahawks playing in the dome added $76.2 million in economic activity to King County in 1995 alone, and created 1,388 jobs, 1,264 of which were in Seattle.

Qwest Field cost taxpayers $430 million and some critics, including Mr. Yousoufian, said that if the outside studies had been made public, voters might not have supported the bond measure for the new stadium.

"I'm just a little guy 2,500 miles away trying to shed a little light on this. I was surprised by the Sims nomination since I expected better," Mr. Yousoufian said. "How this could have happened defies explanation."

On April 1, King County appealed the Supreme Court ruling, asking for a rehearing on the grounds that Justice Sanders was prejudiced since he has a public-records lawsuit pending in another Washington state county. The county wants a temporary justice named to rule on the Yousoufian case, although it is not clear how that would change the outcome, because five other justices already have agreed.

Justice Sanders denied any wrongdoing, saying he consulted with the high court's ethics attorney before hearing the Yousoufian case.

Mr. Obama’s Foreclosure Plan
NYTIMES Editorial
February 19, 2009

The anti-foreclosure plan announced by President Obama on Wednesday is a decisive break from the Bush administration’s disastrous protect-the-banks-but-not-the-homeowners policy. The president has promised that it will help as many as nine million American families refinance their mortgages or avoid foreclosure. That’s a good start, but given the dire state of the economy, we fear it still may not be enough.

For two years, while house prices cratered and mortgage defaults soared, the Bush administration stubbornly refused to compel the mortgage industry to clean up the bad loans that had been made so recklessly; it even refused to give banks any incentives to do so. Some two million families lost their homes to foreclosure.

The Obama plan will provide up to $75 billion, mostly from the bank bailout fund, to help lenders and borrowers come to new terms. That could allow up to four million at-risk homeowners stay in their homes.

Most of the money will go for incentive payments to encourage lenders to modify troubled loans and for subsidizing lower interest rates to reduce borrowers’ monthly payments. (After five years, the interest rate will begin to gradually adjust upward again.)

Equally important, Mr. Obama is coupling the incentives to bankers with a big stick — support for a change in the law that would allow bankrupt homeowners who cannot come to new affordable terms with a lender to have their mortgages modified under court protection. Mr. Bush stubbornly opposed that idea, too.

The plan will also provide help for homeowners who may be struggling, but not delinquent, making it easier for them to refinance their loans to lower rates. Loans that are owned or backed by Fannie Mae and Freddie Mac — about half of all mortgages — will be eligible for refinancing even for homeowners who have less than 20 percent equity in their homes.

That will allow up to an estimated five million homeowners to trade their current mortgages for loans with lower rates, making repayments easier and possibly heading off future defaults.

The truly worrisome part of the Obama plan is that it does not forcefully address the fact that some 13.6 million homeowners — and counting — are stuck in mortgages that have balances that are higher than the value of their properties.

Reducing the interest rates on the loans may make their mortgages affordable — for now. But if a family has a setback, like unemployment or illness, even the new lower payment may prove too onerous. Without an equity cushion to fall back on, default and foreclosure may be impossible to avoid. Similarly, if the family has a big expense — for a new roof or new plumbing — it would not make sense to plow more money into a home in which they have no equity. In those circumstances, declaring bankruptcy may be a homeowner’s only option.

Mr. Obama must fight for bankruptcy reform legislation that is expansive enough to accommodate borrowers who cannot make payments for reasons beyond their control. It will be a tough fight. The mortgage industry — which has carefully cultivated friends on both sides of the political aisle — will press for a bill that makes it as difficult as possible for borrowers to seek bankruptcy protection. Mr. Obama must not back down.

New York Housing Chief Picked for Slot in Cabinet

December 13, 2008

WASHINGTON — President-elect Barack Obama has picked the widely respected housing commissioner for New York City, Shaun Donovan, to be the secretary of housing in his cabinet.

Assuming that Mr. Donovan, 42, is confirmed by the Senate to head the Department of Housing and Urban Development, he would be returning to the agency where he worked in the Clinton administration as acting federal housing commissioner and, earlier, as deputy assistant secretary for multifamily housing, overseeing subsidies and properties for about two million families.

Mr. Donovan has experience in all facets of the affordable housing market, having worked in both the nonprofit and private sectors and in academia as a scholar of housing policy. He has even worked as an architect in New York and Italy.

With permission this year from Mayor Michael R. Bloomberg, who hired him in March 2004, Mr. Donovan took a leave of absence to campaign for and advise Mr. Obama’s presidential campaign. Mr. Obama named Mr. Donovan to the housing post on Saturday, in his weekly national radio address.

“Shaun Donovan has been one of the most effective housing commissioners in New York City’s history,” said Senator Charles E. Schumer, Democrat of New York, who had championed Mr. Donovan. “At this time, with the housing crisis raging, he is exactly the kind of person we need as HUD secretary.”

As chief of New York’s Department of Housing Preservation and Development, Mr. Donovan is in charge of the Bloomberg administration’s $7.5 billion New Housing Marketplace Plan to build or preserve 165,000 units for to low- and moderate-income families, housing up to 500,000 residents, by 2013.

Prior to his hiring by Mr. Bloomberg, Mr. Donovan was a managing director at Prudential Mortgage Capital Co., in charge of its portfolio of investments in affordable housing loans, including Fannie Mae and the Federal Housing Administration debt.

He came to Prudential from New York University, where Mr. Donovan had been a visiting scholar doing research on preservation of federally assisted housing. He also has been a researcher at Harvard University’s Joint Center for Housing Studies, and was a consultant to the Millennial Housing Commission, set up by Congress to recommend new ways to encourage production of affordable housing nationwide.

Before his stint at HUD in the 1990s, and after graduation from Harvard with a degree in public administration and architecture, Mr. Donovan worked for a nonprofit lender and developer for affordable properties.

Given his various roles, Mr. Donovan is well known in housing policy circles, and was a leading contender for a senior post at HUD. Some housing experts suggested that he might not get the top job, in part because Hispanic groups were pressing for a Hispanic candidate.

“Shaun is brilliant, really thoughtful and creative, and knowledgeable about a broad range of housing policies in ways that unfortunately is very unusual,” said Barbara Sard, the director of housing policy at the Center on Budget and Policy Priorities, a research and advocacy group.

The housing and credit crises that began in mid-2007 have hurt the affordable housing sector like much else. Before that, Mr. Donovan was considered a national innovator in capitalizing on the strong real estate market to find financing for low-cost housing. He held to a middle ground between free-market forces who opposed government controls and liberal groups that believed only government and nonprofit groups could be counted on to provide housing for the working class.

“I would never believe that the private sector, left to its own devices, is the best possible solution,” he said in 2006. “I’m in government because of the role of government in setting rules and working in partnership with the private sector. On the other hand, there’s no way you could ever get to a scale that can really affect the housing problems in this country without working with the market.”

Under Mr. Donovan, the Bloomberg administration has promoted “inclusionary zoning” that allows developers to build multifamily structures of more density — that is, more units for the space — in return for setting aside a portion of their projects for lower-income residents.

He helped to create a $200 million fund with contributions from the city, seven major foundations and financial institutions, to help nonprofit housing groups and small developers compete for private land sales. Working more closely with HUD than local officials have in the past, he has encouraged the department to help nonprofit groups or tenants take over HUD-assisted apartment buildings that are in foreclosure; typically, the federal government put such properties up for bids.

Representative Raúl M. Grijalva, Democrat of Arizona(?) - nope! 


Ken Salazar gone.  After one year in the public sector smile shrinks - FOI trashed - and what is that salute anyway?

Obama Chooses REI Executive to Lead Interior Dept.
February 6, 2013

WASHINGTON — President Obama has selected Sally Jewell, the chief executive of Recreational Equipment Inc., to lead the Interior Department, White House officials said Wednesday.

If confirmed, Ms. Jewell, a former oil company official and longtime advocate for conservation and outdoor recreation, will take over a department that has been embroiled in controversy over regulation of oil and gas on public lands and waters in the Gulf of Mexico and in the Arctic Ocean. She also will assume responsibility for the stewardship of hundreds of millions of acres of public lands, from the Everglades of Florida to the Cascades of Washington State.

Ms. Jewell, who also worked as a banker, took over REI in 2005, when the company was one of the most successful outdoor outfitters in the country. The company has grown rapidly under her tenure and now boasts roughly $2 billion a year in sales.

She will replace Ken Salazar, who has led the department since the beginning of the Obama administration. Mr. Salazar, a Colorado Democrat, was elected to the Senate in 2004, the same year as Mr. Obama.

Ms. Jewell, a native of the Seattle area and a graduate of the University of Washington with a degree in mechanical engineering, has been a lifelong outdoors enthusiast. As a child she sailed in Puget Sound and camped throughout the Pacific Northwest, according to a 2005 profile in the Seattle Times.

In 2011, she introduced President Obama at the White House conference on “America’s Great Outdoor Initiative,” noting that the $289 billion outdoor-recreation industry is the source of 6.5 million jobs.

She received the 2009 Rachel Carson Award for environmental conservation from the Audubon Society; the 2008 Nonprofit Director of the Year award from the National Association of Corporate Directors, and The Green Globe — Environmental Catalyst Award from King County, Wash., among others.

She is expected to face vigorous questioning during confirmation hearings about her approach to resource development on public lands. Republicans in Congress have criticized the Obama administration for holding back public lands from oil and gas leasing and from imposing overly restrictive regulations on hydraulic fracturing and other extraction methods.

White House aides said that Ms. Jewell’s engineering background and experience as a Mobil Oil executive could help blunt some of that criticism.

Ms. Jewell will also face scrutiny from environmental and conservation advocates who will want to know her approach to preservation of public lands. Just Tuesday, Bruce Babbitt, the interior secretary under President Bill Clinton, criticized Mr. Obama as favoring oil and gas leasing over protection of government-owned lands.

“So far under President Obama, industry has been winning the race as it obtains more and more land for oil and gas,” Mr. Babbitt said. “Over the past four years, the industry has leased more than 6 million acres, compared with only 2.6 million acres permanently protected.”

“This lopsided public land administration in favor of the oil and gas industry cannot continue,” he said.

The Interior Department post has traditionally gone to a politician from the Western United States, like Mr. Salazar and Mr. Babbitt, a former governor of Arizona. Under President George W. Bush Gale A. Norton, a former attorney general of Colorado, and Dirk Kempthorne, a former governor and senator from Idaho, served in the position. Ms. Jewell, if confirmed, would represent a different model, a corporate executive with experience in two of the major missions of the department, resource development and conservation.

Cleanups of Spill and an Agency Test Salazar
June 19, 2010

WASHINGTON — When President Obama boasted in his televised address on Tuesday about his team of leaders fighting the oil spill in the Gulf of Mexico, he spoke glowingly of his energy secretary, his Coast Guard commander, even his Navy secretary.

Then he turned to Ken Salazar, his interior secretary. “When Ken Salazar became my secretary of the interior, one of his very first acts was to clean up the worst of the corruption at this agency,” Mr. Obama said, referring to Mr. Salazar’s oversight of the Minerals Management Service, the agency responsible for regulating offshore drilling. “But it’s now clear that the problem there ran much deeper, and the pace of reform was just too slow.”

Shortly before the speech, the White House announced that Mr. Salazar would be getting a powerful new deputy, Michael R. Bromwich, a veteran investigator and former prosecutor, to supervise the remaking of the minerals service. What was not mentioned was that Mr. Salazar had appointed two aides to do the same job just a month before, and that Mr. Bromwich’s new assignment essentially reversed not only that move but also perhaps Mr. Salazar’s entire overhaul plan for the minerals service.

Mr. Salazar’s job is not in immediate jeopardy, and the president values the work he has done and will continue to do at the Interior Department, said Robert Gibbs, the White House press secretary.

But a senior administration official, who spoke of a delicate personnel matter only on the condition of anonymity said, “The president and the White House are watching very, very closely the pace of reform at Interior to see that progress is being made that truly cleans it up.”

Mr. Salazar is a core member of what some environmentalists called a “green dream team” of environmental advisers appointed by Mr. Obama shortly after his inauguration. Others include Steven Chu, the energy secretary; Lisa P. Jackson, the Environmental Protection Agency administrator; and Carol M. Browner, a White House adviser.

But the Deepwater Horizon disaster and its fallout appear to have shifted the roles of the team members. Mr. Salazar, who started his job billing himself as the “new sheriff in town,” has become noticeably less visible since the minerals agency’s regulatory laxity came under attack, while Dr. Chu and Ms. Browner have moved to the fore. Ms. Jackson has focused closely on issues of air and water quality relating to the spill and has remained largely out of the limelight.

In the first weeks after the oil rig exploded on April 20, Mr. Salazar was one of the administration’s chief spokesmen on the disaster. On May 2, he sat for interviews with four Sunday morning TV talk shows. For weeks, he appeared routinely at hearings on Capitol Hill, often saying of BP that “we have our boot on their neck to make sure they get the job done.”

But in a May 27 news conference, Mr. Obama scolded Mr. Salazar for his cowboy rhetoric and acknowledged his impatience with the pace of change at the minerals service. In his address last week, Mr. Obama singled out Dr. Chu for praise, pointing out that he was a Nobel Prize winner leading a team of scientists and engineers working on the leak.

Meanwhile, criticism of the interior secretary by some environmental advocates has mounted since the spill. A group of scientists and conservation organizations wrote to Mr. Obama last week demanding Mr. Salazar’s resignation, citing what they called his “flawed record on natural resources issues,” including oil drilling, endangered species and coal leasing decisions.

Even former Interior Secretary Bruce Babbitt, who described himself as a friend of Mr. Salazar, said in an interview that the administration’s response to the disaster had been slow and that its reform proposals too tepid.

“The administration took way too long getting its act together and in mounting a coordinated, aggressive response to the spill,” Mr. Babbitt said.

In an interview Wednesday, Mr. Salazar defended his actions and said he continued to have Mr. Obama’s support.

“I feel good about what I’m doing,” he said, “and I’m very confident and I’m very resolute in our ability to get the job done, and I feel very good about my relationship with President Obama.”

Mr. Salazar said that Mr. Bromwich was his choice for the job to overhaul the minerals service, although he said that Mr. Bromwich’s name along with nine others had been given to him by the White House. “It was my decision and my offer,” Mr. Salazar said.

And while he acknowledged that his overhaul of the service had been too slow, he said quicker moves would not have changed the outcome of the spill. “BP is the culprit here,” he said.

Perhaps in response to the criticism, a posse of senators rode to Mr. Salazar’s defense last week in a rescue operation coordinated by the administration.

Senator Richard J. Durbin, a powerful Illinois Democrat, noted in an interview that the president and Mr. Salazar had joined the Senate at the same time.

“There is a special bond there when you come in new to the Senate,” Mr. Durbin said. “You’re making the same mistakes and asking the same naïve questions. They went through that together. They trust one another and like one another.”

The Senate majority leader, Harry Reid of Nevada, said Mr. Salazar was invaluable in lobbying senators during the health care debate and continued to have great support in the Senate.

“I don’t think Ken Salazar has been taken to the woodshed or reprimanded,” Mr. Reid said. “Salazar is someone who is held in high esteem by the White House.”

Several officials painted Mr. Salazar as a tireless worker operating behind the scenes to stop the leaking oil well. “He’s a workhorse,” said Kendra Barkoff, the Interior Department press secretary. “Just because he’s not out there doing TV doesn’t mean he’s not working his tail off.”

Among the defenders was Mr. Salazar’s older brother, Representative. John Salazar, Democrat of Colorado, who said the two of them had been visiting their ailing mother when the rig exploded.

“Ken was on his way back to D.C. the following morning to meet with BP and the other oil companies,” Mr. Salazar said. “That night I called him at 10 and he was still working with them trying to figure out a strategy to best fix this situation.”

He added, “He’s actually enjoying the fight.”

Environmentalists Wary of Obama’s Interior Pick
December 18, 2008

WASHINGTON — President-elect Barack Obama’s choice to lead the Interior Department, Senator Ken Salazar of Colorado, will inherit an agency demoralized by years of scandal, political interference and mismanagement.

He must deal with the sharp tension between those who seek to exploit public lands for energy, minerals and recreation and those who want to preserve the lands. He will be expected to restore scientific integrity to a department where it has repeatedly been compromised. He will be responsible for ending the department’s coziness with the industries it regulates. And he will have to work hard to overcome skepticism among many environmentalists about his views on resource and wildlife issues.

One senior Interior Department executive described the job Mr. Salazar has been chosen for as “the booby prize of the Cabinet.”

As Mr. Obama introduced Mr. Salazar and Tom Vilsack, the former Iowa governor tapped to be secretary of agriculture, at a press conference Wednesday in Chicago, he said their responsibility would be to balance the protection of farms and public lands against the need to find new sources of energy.

“It’s time for a new kind of leadership in Washington that’s committed to using our lands in a responsible way to benefit all our families,” Mr. Obama said. “That means ensuring that even as we are promoting development where it makes sense, we are also fulfilling our obligation to protect our national treasures.”

Mr. Salazar, wearing his customary ten-gallon hat and string tie, said that his job entails helping the nation address climate change through a “moon shot” on energy independence. But that would include not just the development of “green” energy sources like wind power, but also the continued domestic development of coal, oil and natural gas, fossil fuels that generate greenhouse gases when they are burned.

Environmental advocates offered mixed reviews of Mr. Salazar, 53, a first-term Democratic senator who served as head of Colorado’s natural resources department and as the state’s attorney general. Mr. Salazar was not the first choice of environmentalists, who openly pushed the appointment of Representative Raul Grijalva, Democrat of Arizona, who has a strong record as a conservationist.

Oil and mining interests praised Mr. Salazar’s performance as a state official and as a senator, saying that he was not doctrinaire about the use of public lands. “Nothing in his record suggests he’s an ideologue,” said Luke Popovich, spokesman for the National Mining Association. “Here’s a man who understands the issues, is open-minded and can see at least two sides of an issue.”

Mr. Popovich noted approvingly that Mr. Salazar had tried to engineer a deal in the Senate allowing mining companies and others to reclaim abandoned mines without fear of lawsuits. (The legislation is pending.) He has also supported robust research on technology to reduce carbon dioxide emissions from coal-burning power plants, something the coal industry favors.

He also backed a compromise that would let oil companies drill for natural gas in limited parts of the Roan Plateau in northwestern Colorado, a plan that most environmental advocates opposed.

Mr. Salazar is a fifth-generation Coloradan who grew up on a ranch near the New Mexico border. He has been a farmer, lawyer and small-business man as well as a public servant.

Pam Kiely, program director at Environment Colorado, said Mr. Salazar had been a champion of wilderness protection and of strong water quality laws, and had raised questions about the environmental costs of oil shale development, a subject of great controversy in the Mountain West. She said he had not spoken out forcefully against oil and gas development in millions of acres of national forests and roadless areas.

“We hope he continues to play a role in insuring that, as we develop our mineral rights in these incredibly sensitive areas, we require industry to put in place safeguards that protect our health, environment, water and air quality,” Ms. Kiely said.

Marc Smith, executive director of the Independent Petroleum Association of Mountain States, said in a statement that Mr. Salazar understood that energy security can be achieved only by making use of all domestic energy sources, including those found on and under public lands.

“We are pleased that the president-elect has chosen someone who understands that there is a direct connection between federal lands and access to affordable, clean natural gas,” Mr. Smith said.

While industry officials praised his moderation, Mr. Salazar drew harsh criticism from some environmentalists.

“He is a right-of-center Democrat who often favors industry and big agriculture in battles over global warming, fuel efficiency and endangered species,” said Kieran Suckling, executive director of Center for Biological Diversity, which tracks endangered species and habitat issues. “He is very unlikely to bring significant change to the scandal-plagued Department of Interior. It’s a very disappointing choice for a presidency which promised visionary change.”

Daniel R. Patterson, a former Interior official who is now southwest regional director of the Public Employees for Environmental Responsibility, an advocacy group, said that Mr. Salazar has justifiably become the most controversial of Mr. Obama’s cabinet appointees.

“Salazar has a disturbingly weak conservation record, particularly on energy development, global warming, endangered wildlife and protecting scientific integrity,” said Mr. Patterson, who was elected last month to the Arizona House of Representatives from Tucson and who supports fellow Arizonan Mr. Grijalva for the Interior job. “It’s no surprise oil and gas, mining, agribusiness and other polluting industries that have dominated Interior are supporting rancher Salazar — he’s their friend.”

Even as Mr. Salazar navigates the department’s tricky political cross-currents, he must also deal with significant internal management challenges. Members of Congress and outside groups are calling for review of dozens of decisions made under the Bush administration on endangered species and oil and gas leasing. The senior management ranks of the department have been depleted by departures of demoralized career employees.

And the agency’s computer systems are badly in need of repair, after millions of dollars have been spent on systems that have not worked, according to several internal reports.

Hard Task for New Team on Energy and Climate
December 16, 2008

WASHINGTON — The team President-elect Barack Obama introduced on Monday to carry out his energy and environmental policies faces a host of political, economic, diplomatic and scientific challenges that could impede his plans to address global warming and America’s growing dependence on dirty and uncertain sources of energy...

Shortly after Mr. Obama spoke, transition officials confirmed that he would select Senator Ken Salazar, a first-term Democrat from Colorado, as interior secretary. Mr. Salazar’s appointment will complete the team of environmental and energy officials in the new administration.

The most pressing environmental issue for the incoming team will almost certainly be settling on an effective and politically tenable approach to the intertwined issues of energy security and global warming....

Mr. Salazar, a former director of the Colorado Department of Natural Resources and state attorney general, is a farmer and rancher whose family has lived in Colorado for five generations. He is known as a staunch conservationist and an opponent of developing oil shale on public lands.

His appointment will leave a Democratic vacancy in the Senate. Colorado, which voted for Mr. Obama 53 percent to 45 percent, has a Democratic governor, Bill Ritter, who will name a replacement to complete the final two years of Mr. Salazar’s term. Mr. Salazar’s brother John, a congressman, is among potential appointees to fill the Senate seat...

John M. Broder reported from Washington, and Andrew C. Revkin from New York.

Daschle Also to Oversee New Health Reform Office
Filed at 10:58 a.m. ET
December 11, 2008

...Still unclear is whom Obama will tap for interior secretary.

Officials close to the transition said support for John Berry, the director of the National Zoo and a former assistant secretary at the Interior Department, was growing. But these officials also said Arizona Rep. Raul Grijalva and California Rep. Mike Thompson were still in the running...


Hilda Solis

Obama Chooses Labor Secretary and Trade Representative
By Helene Cooper
December 18, 2008, 3:38 pm
CHICAGO — President-elect Barack Obama has completed selections for his cabinet and will nominate Representative Hilda L. Solis, Democrat of California, as his labor secretary and Ron Kirk, a former mayor of Dallas, as his trade representative, transition aides said on Thursday.

Mr. Obama will most likely announce the selections on Friday, at his final news conference before he goes to Hawaii for Christmas break, the aides said. Mr. Obama is also expected to formally announce his nomination of Rep. Ray LaHood, Republican of Illinois, for transportation secretary.

The nominations will cap a flurry of appointments in the past week as Mr. Obama raced to finish his cabinet before the Christmas break.

PROPOSED and confirmed

Secretary of State
Hillary Clinton - announced her departure in second term...John Kerry to be successor.

Senate confirms Clinton as secretary of state 
Published on 1/21/2009   


The Senate has confirmed Hillary Rodham Clinton to become secretary of state.

The Senate vote was overwhelmingly in favor of the former first lady despite lingering concerns by some Republicans that her husband's charitable fundraising overseas could pose a conflict of interest.

Republicans and Democrat alike say her swift confirmation was necessary so that President Barack Obama could begin tackling the major foreign policy issues at hand, including two wars, increased violence in the Middle East and the threat of a nuclear-armed Iran.

Immediately after the vote, Clinton was to be sworn in during a private ceremony at the Capitol.

Senate Panel Backs Clinton as Secretary of State
Filed at 12:04 p.m. ET

January 15, 2009

WASHINGTON (AP) -- The Senate Foreign Relations Committee voted overwhelmingly on Thursday for Hillary Rodham Clinton to become the next secretary of state, with Democrats predicting her leadership would mark a turn from warfare toward diplomacy.

The 16-1 approval by the committee paves the way for a full Senate vote after President-elect Barack Obama takes office on Jan. 20. Clinton is not expected to hit any major roadblocks, with Republicans and Democrats alike praising her acumen on the issues.

But concerns about her husband's charitable fundraising overseas remain. Sen. David Vitter of Louisiana, who was among several Republicans who raised the issue at her confirmation hearing earlier this week, cast the lone opposing vote.

In a statement, Vitter called former President Bill Clinton's foundation a ''multimillion dollar minefield of conflicts of interest.''

''This could produce explosions at any minute, particularly concerning the Middle East where we least need them,'' Vitter said.

Sen. Jim DeMint, R-S.C., said he too remains wary that contributions to the Clinton charity could pose a problem. But, he added, he wouldn't stand in the way of her appointment and noted that Clinton could become one of the nation's best secretaries of state to date.

Her departure from the Senate has been closely watched because it would give New York Gov. David Paterson, a fellow Democrat, the power to appoint her successor. Caroline Kennedy, the scion of a political dynasty, wants the job.

Clinton told the panel earlier this week that the U.S. must elevate the role of foreign policy and diplomacy in handling tough problems.

''America cannot solve the most pressing problems on our own, and the world cannot solve them without America,'' she said. ''The best way to advance America's interest in reducing global threats and seizing global opportunities is to design and implement global solutions. This isn't a philosophical point. This is our reality.''

On Iraq, Clinton said ending the war is a priority. The first step will be moving troops out of cities by June, in line with an agreement already established between the Bush administration and the Iraqi government. The agreement calls for all U.S. troops to be gone by the end of 2011. Obama has said he believes the withdrawal can be accomplished more quickly.

Her testimony invigorated lawmakers, who said they agree that old-fashioned diplomacy must make a comeback in a U.S. agenda dominated by war.

''Our nation needs to put proactively more sandals and sneakers on the ground, in order to prevent having to put boots and bayonets on the ground in the future,'' said Sen. Christopher Bond, R-Mo.

Sen. Richard Lugar of Indiana, the Foreign Relations Committee's top Republican, has proposed that Bill Clinton's foundation reject any overseas contributions and take other steps to improve transparency.

Clinton rejected Lugar's ideas, contending that her agreement to publish an annual list of the foundation's donors and alert ethics officials to potential conflicts of interest already goes above and beyond any ethics regulations.

Bill Clinton's charity, which financed his presidential library in Little Rock, Ark., and efforts in dozens of countries to reduce poverty and treat AIDS, has relied on sizable donations from foreign governments, including Saudi Arabia.

After voting on Clinton's nomination, the Foreign Relations Committee heard testimony from Susan Rice, whom Obama has picked as U.N. ambassador. Rice is considered a shoo-in as well.

Rice: Obama Election Encourages People Worldwide
Filed at 4:44 p.m. ET

December 28, 2008

WASHINGTON (AP) -- Secretary of State Condoleezza Rice says the country is not ''race-blind'' and ''we shouldn't deceive ourselves that we're race-blind,'' but said the election of Barack Obama as the first African-American president was a key moment in history.

''I think all Americans were quite taken with the fact that we were able, after the long history we've been through, that initial birth defect of slavery, that we've elected an African-American,'' Rice said. ''And that's enormously heartening for people in the country, but also people worldwide who still have trouble with differences.''

Rice, who left segregated Alabama to eventually become the first African-American female to be secretary of state, warned that the United States still has problems with race.

''But I do think we've gotten to the place that we don't see a person and say, 'That's a black person, therefore they must be ...' And that's an enormous step forward.''

Rice, who was Bush's national security adviser when the U.S. invaded Iraq and then became secretary of state in Bush's second term, said the opportunities that are available in the United States still draw people from around the world to this country.

''People, even in difficult economic times, still admire, maybe even envy a little bit, the entrepreneurship of this country and its capacity to be productive,'' Rice said. ''But what really draws people to this country is that anybody can come here and go from modest circumstances to extraordinary achievement.''

Americans aren't ''united by nationality,'' she added. ''We're not united by religion. You can be African-American or Mexican-American or Korean-American, and still be American. You can be Jewish or Presbyterian or Muslim or nothing at all, and still be American. But there are very few Americans who don't really believe that it doesn't matter where you came from, it matters where you're going. And that's what unites us, and that's also what people worldwide find so remarkable.''

Rice said she plans to write at least two books when she gets back to Stanford, one about foreign policy and one about her parents.

''I'm where I am today because I had great parents who believed that anything was possible and then who gave me every opportunity to prove that anything was possible,'' she said. ''And I think that's a story that needs to be told, because it's in the context of that last group of parents before segregation ended in Alabama.''

Rice said she isn't ready to think about how history will judge her as secretary of state.

''The legacy will be for historians years down the road. But what I will remember most is that I think we stood for freedom and liberty for everybody, not just for a few,'' she said.

But she is confident in her work in Washington, despite critics who have called the Bush administration one of history's worst.

Rice said the attitude about Bush's handling of Iraq would change for the better ''when the final chapters are written and it's clear that Saddam Hussein's Iraq is gone in favor of an Iraq that is favorable to the future of the Middle East.''

Rice, who golfs, enjoys watching football and plays piano, said she is ready to slow down, saying:

''I'm looking forward to getting up and not having so much of a calendar and reading the newspaper and not thinking I have to do something about what's in it.''

Officials: Obama Set to Introduce Clinton Monday
Filed at 9:30 a.m. ET

November 30, 2008

A deal with Bill Clinton over his post-White House work helped clear the way for Hillary Rodham Clinton to join President-elect Barack Obama's national security team as secretary of state, reshaping a once-bitter rivalry into a high-profile strategic and diplomatic union.

Obama was to be joined by the New York senator at a Chicago news conference Monday, Democratic officials said, where he also planned to announce that Defense Secretary Robert Gates would remain in his job for a year or more and that retired Marine General James M. Jones would serve as national security adviser.  The officials requested anonymity because they were not authorized to speak publicly for the transition team.

To make it possible for his wife to become the top U.S. diplomat, the officials said, former President Clinton agreed:

--to disclose the names of every contributor to his foundation since its inception in 1997 and all contributors going forward.

--to refuse donations from foreign governments to the Clinton Global Initiative, his annual charitable conference.

--to cease holding CGI meetings overseas.

--to volunteer to step away from day-to-day management of the foundation while his wife is secretary of state.

--to submit his speaking schedule to review by the State Department and White House counsel.

--to submit any new sources of income to a similar ethical review.

Bill Clinton's business deals and global charitable endeavors had been to create problems for the former first lady's nomination. But in negotiations with the Obama transition team, the former president agreed to several measures designed to bring transparency to those activities.  The former president long had refused to disclose the identities of contributors to his foundation, saying many gave money on condition that they not be identified.

Obama's choice of Hillary Clinton was an extraordinary gesture of good will after a year in which the two rivals competed for the Democratic nomination in a long, bitter primary battle.  They clashed repeatedly on foreign affairs. Obama criticized Clinton for her vote to authorize the Iraq war. Clinton said Obama lacked the experience to be president and she chided him for saying he would meet with leaders of nations such as Iran and Cuba without conditions.

The bitterness began melting away in June after Clinton ended her campaign and endorsed Obama. She went on to campaign for him in his general election contest against Republican Sen. John McCain.

Advisers said Obama had for several months envisioned Clinton as his top diplomat, and he invited her to Chicago to discuss the job just a week after the Nov. 4 election. The two met privately Nov. 13 in Obama's transition office in downtown Chicago.  Clinton was said to be interested and then to waver, concerned about relinquishing her Senate seat and the political independence it conferred. Those concerns were largely resolved after Obama assured her she would be able to choose a staff and have direct access to him, advisers said.

Remaining in the Senate also may not have been an attractive choice for Clinton. Despite her political celebrity, she is a relatively junior senator without prospects for a leadership position or committee chairmanship anytime soon.

Some Democrats and government insiders have questioned whether Clinton is too independent and politically ambitious to serve Obama as secretary of state. But a senior Obama adviser has said the president-elect had been enthusiastic about naming Clinton to the position from the start, believing she would bring instant stature and credibility to U.S. diplomatic relations and the advantages to her serving far outweigh potential downsides.

Obama Team Repackaging Clinton After Campaign Digs
Filed at 8:27 a.m. ET
November 29, 2008

WASHINGTON (AP) -- It wasn't too long ago that Barack Obama and his advisers were tripping over one another to tear down Hillary Rodham Clinton's foreign policy credentials. She was dismissed as a commander in chief wanna-be who did little more than sip tea and make small talk with foreign leaders during her days as first lady.

''What exactly is this foreign policy experience?'' Obama said mockingly of the New York senator. ''Was she negotiating treaties? Was she handling crises? The answer is no.''

That was in March, when Clinton was Obama's sole remaining rival for the Democratic presidential nomination.  Now, Clinton is on track to become Obama's secretary of state.  And, unsurprisingly, the sniping at her foreign policy credentials is a thing of the past.

Obama adviser William Daley over the weekend said Clinton would be ''a tremendous addition to this administration. Tremendous.''

Senior adviser David Axelrod called Clinton a ''demonstrably able, tough, brilliant person.''

Last spring, though, Clinton was targeted with a steady stream of criticism via conference call, e-mail and campaign-trail digs from the Obama camp, all aimed at shredding her self-portrait as an experienced and confident leader on the international stage. Some of those doing the sniping will be taking up key positions -- most likely along with Clinton -- in the new Obama administration.

Greg Craig, selected to serve as White House counsel in the Obama administration, delivered a withering attack during the primaries on Clinton's claims that she could rightfully share in the credit for some of the foreign policy successes of her husband's presidency.

''She did not sit in on any National Security Council meetings when she was first lady,'' Craig insisted in one conference call. He went on to knock down Clinton's claims to influence in the Northern Ireland peace process, opening borders for refugees during the war in Kosovo, and making a dangerous visit to Bosnia.

''There is no reason to believe ... that she was a key player in foreign policy at any time during the Clinton administration,'' Craig wrote in a campaign memo.

Susan Rice, an Obama adviser who could land a spot in the new administration, mocked the idea that Clinton could lay claim to foreign policy credentials by marriage.

''There is no crisis to be dealt with or managed when you are first lady,'' Rice sniffed last March. ''You don't get that kind of experience by being married to a commander in chief.''

Clinton was only too happy to make light of Obama's own foreign policy credentials, suggesting his biggest selling point was a 2002 speech against going to war with Iraq. ''Many people gave speeches against the war then,'' she said in a February debate.

Robert Gelbard, an adviser to the Obama campaign on foreign policy who worked in the Clinton administration, said in March that Clinton had more involvement in foreign policy than a lot of first ladies, but added that ''her role was limited and I've been surprised at the claims that she had a much greater role.''

Well, never mind about all of that now.

''That was then; this is now,'' said David Gergen, who has served as an adviser to both Republican and Democratic presidents. ''Campaigns are ever thus.''

''Generally speaking,'' Gergen said, ''there is a recognition that campaigns bring a certain amount of hyperbole, and when it's over you try to find the most talented people you can find to work with you.''

Clinton may not have been at the table when her husband made the big decisions, Gergen said, but ''she's been imbibing questions on foreign policy and decision-making since 1992.''

A spokesperson for the Obama transition team declined to comment on the shift in tone.  It also should be said that some of the wounds to Clinton's foreign policy credentials during the primaries were self-inflicted, most famously her inflated account of the drama associated with a visit she made to Bosnia.

''I remember landing under sniper fire,'' she recounted in a speech. ''There was supposed to be some kind of a greeting ceremony at the airport, but instead we just ran with our heads down to get into the vehicles to get to our base.''  ("SNIPER FIRE" coming from Obama-ites?)

Soon enough, video footage surfaced of Clinton's unremarkable airport arrival ceremony, where she was welcomed by dignitaries and posed for photos with children.

Clinton brought up the Bosnia trip to counter Obama's suggestion that her experiences as first lady amounted to having tea at an ambassador's house.

''I don't remember anyone offering me tea,'' she said of the Bosnia visit.

Clinton, in an April debate, blamed her Bosnia gaffe on campaign fatigue. But she did not back away from her claim to broad foreign policy experience as first lady.

''I was not as accurate as I have been in the past,'' she said. ''But I know, too, that being able to rely on my experience of having gone to Bosnia, gone to more than 80 countries, having represented the United States in so many different settings, gives me a tremendous advantage going into this campaign.''

Well, maybe not in the campaign, as it turned out.

But maybe, just perhaps, as secretary of state.

Clinton Decides to Accept Post at State Dept., Confidants Say
November 22, 2008

WASHINGTON — Hillary Rodham Clinton has decided to give up her Senate seat and accept the position of secretary of state, making her the public face around the world for the administration of the man who beat her for the Democratic presidential nomination, two confidants said Friday.

The apparent accord between perhaps the two leading figures in the Democratic Party climaxed a week-long drama that riveted the nation’s capital.

Mrs. Clinton came to her decision after additional discussion with President-elect Barack Obama about the nature of her role and his plans for foreign policy, said one of the confidants, who insisted on anonymity to discuss the situation.

Mr. Obama’s office told reporters on Thursday that the nomination is “on track” but this is the first word from the Clinton camp that she has decided.

“She’s ready,” the confidant said, adding that Mrs. Clinton was reassured after talking again with Mr. Obama because their first meeting in Chicago last week “was so general.” The purpose of the follow-up talk, he noted, was not to extract particular concessions but “just getting comfortable” with the idea of working together.

A second Clinton associate confirmed that her camp believes they have a done deal. Senior Obama advisers said Friday morning that the offer had not been formally accepted and no announcement would be made until after Thanksgiving. But they said they were convinced that the nascent alliance was ready to be sealed.

Mr. Obama and Mrs. Clinton fought the most competitive Democratic nomination battle in modern times, one that polarized their party for months and left bitterness in both camps. But in asking Mrs. Clinton to join his Cabinet, Mr. Obama signaled that he wants to turn a rival into a partner, and she concluded that she could have the most influence by accepting the offer.

The decision followed days of intense vetting and negotiations intended to clear any potential obstacles to her taking the job due to her husband’s global business and philanthropic activities. Lawyers for Mr. Obama and former President Bill Clinton combed through his finances and drew up a set of guidelines for his future activities intended to avoid any appearances of conflict of interest should she take the job.

People close to the vetting said Mr. Clinton turned over the names of 208,000 donors to his foundation and library and agreed to all of the conditions requested by Mr. Obama’s transition team, including restrictions on his future paid speeches and role at his international foundation.

As secretary of state, Mrs. Clinton will have had a powerful platform to travel the world and help repair relations with other countries strained after eight years of President Bush’s policies. But at the same time, she will now have to subordinate her own agenda and ambitions to Mr. Obama’s and sacrifice the independence that comes with a Senate seat and the 18 million votes she collected during their arduous primary battle.


Ray LaHood

Obama Announces Choice for Transportation Secretary
April 29, 2013

WASHINGTON — President Obama announced on Monday that he would nominate Anthony R. Foxx, the Democratic mayor of Charlotte, N.C., to be the next transportation secretary, saying his local government experience would help him manage the nation’s roads, bridges and airports.

Flanked by Mr. Foxx and Ray LaHood, the departing secretary, Mr. Obama said Mr. Foxx was “one of the best mayors that Charlotte has ever seen” and called him “an impressive leader.”

The president also used the opportunity to prod Congress to provide billions of dollars for improving the nation’s transportation infrastructure. He said the administration’s top priority was strengthening the economy and providing more jobs for people.

“One of the best ways we can do that is to put more Americans back to work rebuilding our infrastructure,” Mr. Obama said.

In accepting the nomination, Mr. Foxx praised the president and Mr. LaHood, saying they had earned “the admiration and appreciation of America’s mayors.” He pledged to seek bipartisan solutions to transportation problems.

“There is no such thing as a Democratic or a Republican road, bridge, port, airfield or rail station,” Mr. Foxx said. “We must work together, across party lines, to enhance this nation’s infrastructure.”

The audience for the event included Mr. Foxx’s grandmother. Mr. Obama said during his remarks that she had told him she worked in the White House during the administration of President Harry S. Truman in the 1940s and 1950s.

Mr. Foxx, who is black, would add to the diversity of Mr. Obama’s cabinet after criticism that the president had not done enough to recruit advisers from diverse backgrounds.

Robert L. Darbelnet, the president of the AAA, said in a statement that he was encouraged by the selection of Mr. Foxx.

“We look forward to working with Mayor Foxx once confirmed by the U.S. Senate, and we are hopeful that he will help make transportation a top national priority,” Mr. Darbelnet said. “Mayor Foxx will face many challenges because the nation must address a significant transportation funding shortfall, and there are still too many Americans losing their lives on the nation’s roadways.”

Just three weeks ago, Mr. Foxx announced that he would not seek re-election as mayor this year because he wanted to spend more time with his family, including two children who were born after he joined the Charlotte City Council in 2005. He has served as mayor for nearly four years. “I do not want to be a father who looks back and wishes I had spent more time with them,” he said in a statement on April 5.

Mr. Foxx, who turns 42 on Tuesday, was raised by a single mother and his grandparents. He became the first black student body president at Davidson College and earned a law degree from New York University. He worked as a lawyer for a private firm as well as for the House Judiciary Committee and the Justice Department before returning to Charlotte to begin his career as an elected politician.

He has said that during his four years as mayor, he has turned around an economically afflicted city, adding 13,000 jobs, making Charlotte more hospitable to business and hosting the Democratic National Convention last year.

While Mr. Foxx does not have a transportation background, he worked as mayor to extend a light-rail line, open another runway at the airport, complete a major highway widening, improve a major bridge and bring streetcars back to Charlotte.

He would be the second black member of the cabinet, joining Attorney General Eric H. Holder Jr.

LaHood to Leave Transportation Department
 January 29, 2013, 10:42 am

Ray LaHood, the former Republican congressman from Illinois who has run the nation’s Transportation Department under President Obama, will not serve a second term, he told department employees in a letter on Tuesday.

“I’ve told President Obama, and I’ve told many of you, that this is the best job I’ve ever had. I’m grateful to have the opportunity to work with all of you,” Mr. LaHood wrote. He cited the department’s efforts to curb distracted driving and to increase the efficiency of automobiles by raising emissions standards.

As transportation secretary, Mr. LaHood was at the center of efforts to reduce fatigue among pilots and called for greater investment in high-speed rail. He also pushed for large fines against Toyota for safety problems and for a new transportation bill in Congress.

“We have made great progress in improving the safety of our transit systems, pipelines, and highways, and in reducing roadway fatalities to historic lows,” he said. “We have strengthened consumer protections with new regulations on buses, trucks, and airlines.”

Mr. LaHood’s decision makes him the latest in a series of members of the president’s original cabinet to announce their departure in the last several weeks.

In a statement, Mr. Obama praised Mr. LaHood, the sole Republican to serve in his first-term cabinet, as a public servant who has been more interested in practical solutions than in partisan politics.

“Years ago, we were drawn together by a shared belief that those of us in public service owe an allegiance not to party or faction, but to the people we were elected to represent,” the president wrote. “And Ray has never wavered in that belief.”

Several people have been mentioned as possible replacements for Mr. LaHood at the Transportation Department. Among them: Antonio Villaraigosa, the Democratic mayor of Los Angeles; Ed Rendell, the former governor of Pennsylvania; Debbie Hersman, the chairwoman of the National Transportation Safety Board; and Jennifer Granholm, the former Democratic governor of Michigan.

Gibbs: LaHood Comments on Gas Tax Not Administration Policy
e-Washington Post
By Michael D. Shear

If you want to know what a presidential slap across the face feels like, just ask Transportation Secretary Ray LaHood.

LaHood had told an Associated Press reporter that the transportation department was thinking of changing the way that gas taxes are calculated from a per-gallon measure to a per-miles-driven measure.

Is that the policy of the White House, a reporter asked Press Secretary Robert Gibbs?

"I can weigh in on it and say that it is not and will not be the policy of the Obama administration," Gibbs said, an unusually sharp answer.  The reporter continued, prompting an exchange that made clear that LaHood has received new marching orders from the White House.

Here's the exchange:

QUESTION: So was Secretary LaHood speaking out of turn here? Was he...

GIBBS: I would direct you to Secretary LaHood on that.

QUESTION: Well, we actually interviewed him. So that...

GIBBS: Well, call him back.

Posted at 4:04 PM ET, Feb. 20, 2009

AP Interview: LaHood Eyes Taxing Miles Driven
Filed at 12:54 p.m. ET

February 20, 2009

WASHINGTON (AP) -- Transportation Secretary Ray LaHood says he wants to consider taxing motorists based on how many miles they drive rather than how much gasoline they burn -- an idea that has angered drivers in some states where it has been proposed.

Gasoline taxes that for nearly half a century have paid for the federal share of highway and bridge construction can no longer be counted on to raise enough money to keep the nation's transportation system moving, LaHood said in an interview with The Associated Press.

''We should look at the vehicular miles program where people are actually clocked on the number of miles that they traveled,'' the former Illinois Republican lawmaker said.

Most transportation experts see a vehicle miles traveled tax as a long-term solution, but Congress is being urged to move in that direction now by funding pilot projects.

The idea also is gaining ground in several states. Governors in Idaho and Rhode Island are talking about such programs, and a North Carolina panel suggested in December the state start charging motorists a quarter-cent for every mile as a substitute for the gas tax.

A tentative plan in Massachusetts to use GPS chips in vehicles to charge motorists by the mile has drawn complaints from drivers who say it's an Orwellian intrusion by government into the lives of citizens. Other motorists say it eliminates an incentive to drive more fuel-efficient cars since gas guzzlers will be taxed at the same rate as fuel sippers.

Besides a VMT tax, more tolls for highways and bridges and more government partnerships with business to finance transportation projects are other funding options, LaHood, one of two Republicans in President Barack Obama's Cabinet, said in the interview Thursday.

''What I see this administration doing is this -- thinking outside the box on how we fund our infrastructure in America,'' he said.

LaHood said he firmly opposes raising the federal gasoline tax in the current recession.

The program that funds the federal share of highway projects is part of a surface transportation law that expires Sept. 30. Last fall, Congress made an emergency infusion of $8 billion to make up for a shortfall between gas tax revenues and the amount of money promised to states for their projects. The gap between money raised by the gas tax and the cost of maintaining the nation's highway system and expanding it to accommodate population growth is forecast to continue to widen.

Among the reasons for the gap is a switch to more fuel-efficient cars and a decrease in driving that many transportation experts believe is related to the economic downturn. Electric cars and alternative-fuel vehicles that don't use gasoline are expected to start penetrating the market in greater numbers.

''One of the things I think everyone agrees with around reauthorization of the highway bill is that the highway trust fund is an antiquated system for funding our highways,'' LaHood said. ''It did work to build the interstate system and it was very effective, there's no question about that. But the big question now is, We're into the 21st century and how are we going to take care of our infrastructure needs ... with a highway trust fund that had to be plussed up by $8 billion by Congress last year?''

A blue-ribbon national transportation commission is expected to release a report next week recommending a VMT.

The system would require all cars and trucks be equipped with global satellite positioning technology, a transponder, a clock and other equipment to record how many miles a vehicle was driven, whether it was driven on highways or secondary roads, and even whether it was driven during peak traffic periods or off-peak hours.

The device would tally how much tax motorists owed depending upon their road use. Motorists would pay the amount owed when it was downloaded, probably at gas stations at first, but an alternative eventually would be needed.

Rob Atkinson, chairman of the National Surface Transportation Infrastructure Financing Commission, the agency that is developing future transportation funding options, said moving to a national VMT would take about a decade.

Privacy concerns are based more on perception than any actual risk, Atkinson said. The satellite information would be beamed one way to the car and driving information would be contained within the device on the car, with the amount of the tax due the only information that's downloaded, he said.

The devices also could be programmed to charge higher rates to vehicles that are heavier, like trucks that put more stress on roadways, Atkinson said.

Obama Chooses Labor Secretary and Trade Representative
By Helene Cooper
December 18, 2008, 3:38 pm
CHICAGO — President-elect Barack Obama has completed selections for his cabinet and will nominate Representative Hilda L. Solis, Democrat of California, as his labor secretary and Ron Kirk, a former mayor of Dallas, as his trade representative, transition aides said on Thursday.

Mr. Obama will most likely announce the selections on Friday, at his final news conference before he goes to Hawaii for Christmas break, the aides said. Mr. Obama is also expected to formally announce his nomination of Rep. Ray LaHood, Republican of Illinois, for transportation secretary.

The nominations will cap a flurry of appointments in the past week as Mr. Obama raced to finish his cabinet before the Christmas break.

LaHood, a Republican, Considered for Transportation Slot
By Jeff Zeleny
December 17, 2008, 12:17 pm

CHICAGO – As President-elect Barack Obama works to fill the final positions in his Cabinet, officials familiar with the decision said that a leading contender for Secretary of Transportation is Representative Ray LaHood, who would become a second Republican to join Mr. Obama’s team.

One of the tasks awaiting the transportation secretary is helping to implement the vast public works projects that Mr. Obama has proposed to jumpstart the economy. A member of the Appropriations Committee, Mr. LaHood has experience overseeing - and spending money on - such projects.

Mr. LaHood, who is retiring this year after seven terms in Congress, has represented Peoria and the surrounding area in downstate Illinois. Known for moderate views, Mr. LaHood belonged to the Republican Main Street Partnership, but first rose to prominence when he presided over the House impeachment vote against President Bill Clinton.

Mr. LaHood, 63, was elected to Congress as part of the 1994 class that gave House Republicans the majority for the first time in nearly a half-century. A former state legislator and a senior congressional aide, Mr. LaHood became a leading bipartisan voice in an increasingly polarized Congress.

When the transportation secretary is crossed off his list, Mr. Obama would have only one remaining seat at his table of yet-to-be-named Cabinet nominees: Labor Secretary. He also has yet to name a Director of National Intelligence, a non-Cabinet position, which aides said could be filled this week.

Mr. LaHood, who is a Catholic of Lebanese descent, is close to Mr. Obama and Rahm Emanuel, the incoming White House chief of staff. He was among the group of moderate Republicans who traveled to the White House last year to tell President Bush that he was in danger of losing support from many in his party over the Iraq war.

“It was a tough meeting in terms of people being as frank as they possibly could about their districts and their feelings about where the American people are on the war,” Mr. LaHood said in an interview in May 2007. “It was a no-holds-barred meeting.”


Tim Geithner returns to Mamaroneck

Tim Geithner  announces departure, too.  As well as approximate time of cliff diving.

Our opinion:  the big difference between the Great Depression and now is the election of  1932, Franklin Roosevelt won, but did not take office until, I think, March of 1933.  The stock market fell in 1929, and Herbert Hoover had not done anything to turn around the problem for 4 years.  This time, the stock market is down and values are depressed only fairly why isn't the new  Secretary of the Treasury more forceful and steadier in his leadership of this part of the Obama agenda?  (Please read below)

Erskin Bowles (l) and Allen Simpson (c) and Tim Geithner (r) prior to downgrade

Another look at this issue
Geithner yawned at epic fraud
Last Updated: 11:11 PM, July 15, 2012
Posted: 10:36 PM, July 15, 2012

Tim Geithner had evidence of a financial crime of epic proportion — so he wrote a memo.

That’s about the only way you can sum up the then-New York Fed boss’ actions several years ago, when he was confronted with fairly compelling evidence that banks under his direct supervision were manipulating Libor — a key benchmark of global finance.

The Libor scandal has become pretty big news, with Barclays ousting its CEO and agreeing to pay a large fine even as it cooperates with civil and criminal law-enforcement authorities now investigating other big banks.

But it doesn’t end there: There’s also evidence that top regulators, including Geithner, now Treasury secretary, knew about and largely ignored the mess.

On Friday, the New York Fed released documents that supposedly exonerate Geithner. Selective leaks to friendly news outlets ensured kind first-day coverage, with one headline reading “Geithner tried to curb bank’s rate rigging in 2008.”

But that’s a bizarrely generous read of Geithner’s action (or inaction) on learning that Barclays actually admitted to one of his investigators that it had submitted false data for the computation of Libor, and that other banks were doing the same.

As I wrote last week, the New York Fed has long enjoyed a cozy relationship with the banks under its regulatory umbrella — ignoring even the stuff that brought down the financial system in 2008.

A close associate of former Clinton Treasury Secretary and top Citigroup exec Robert Rubin, Geithner has spent most of his professional life as a federal financial bureaucrat — a member of a community that keeps close ties with the heads of the major banks. Yet even by that standard, his behavior in the Libor scandal is incredible.

Libor, the London Interbank Offered Rate, is set by a UK banking trade group, which uses the big banks’ borrowing costs to compute a single benchmark rate that’s widely used on complex financial products as well as consumer loans.

In other words, rigging Libor is a pretty big deal. Yet Geithner treated it like a parking violation.

In 2007 and 2008, as the banking crisis began to heat up and big investors started demanding higher interest rates when lending to the banks, evidence began to build that banks were submitting falsely low borrowing costs to mask their financial distress.

Barclays was one such bank. Indeed, the New York Fed learned as early as December 2007 that Barclays may have been manipulating Libor — but Geithner’s crew waited until April 2008 to make its initial inquiry, documents show.

That’s when a New York Fed official contacted a trading executive at Barclays — who admitted the dirty deed with very little pressure: “We know that we’re not posting, um, an honest Libor.”

The trader’s rationale: If the bank posted its real borrowing costs, then spiking in the runup to the banking crisis, “It draws, um, unwanted attention on ourselves.”

The trader indicated that other banks were submitting fake info, too. The New York Fed regulator conducting the interview didn’t seem particularly outraged, answering with a simple “OK.”

Maybe the Fed official didn’t want to show her cards, but you’d think that a competent regulator hearing a concession like would get the wheels of justice moving pretty quickly. But not at Tim Geithner’s New York Fed.

Geithner was brought in right after the call — and his response was more of the same. He sent a single e-mail to his counterpart at the Bank of England recommending a handful of ways to address Libor rigging, including how UK regulators “should eliminate incentive to misreport.”

So here you have it: In Geithner’s world, rate-rigging fraud is “misreporting.”

His UK counterpart, Bank of England Governor Mervyn King, didn’t do much better. He e-mailed Geithner that he’d ask the trade group “to include in their consultation document the ideas contained in your note.”

Other than a few followup calls from his staff to traders, that’s about the end of Geithner’s real interest in the matter — until it came to light that the practices were much worse and more pervasive than even the Barclays trader had suggested, and that other big banks directly under the New York Fed’s jurisdiction were manipulating one of the world’s most important financial barometers.

Or, as Geithner put it, “misreporting.”

As the US loses AAA, where is a safe harbour?

The loss of America's AAA credit rating shouts loudly that there is risk in lending to America - which at a time of great stress in financial markets could be very destabilising.

Almost everything in the world - loans, goods, services - is priced in or priced off the dollar.  It is the measuring stick of the world financial system and the global economy.  The dollar has a status in the financial system once occupied by gold.  Also, whenever investors believe that the world is becoming a riskier place, their instinct is to buy US Treasury Bonds, to lend to the US government.

So when the price of US government debt rises and the yield on that debt falls, that typically means investors believe prospects for the global economy have deteriorated.  That event happened last week, when global share prices fell on the back of concerns that the eurozone isn't gripping the problem of investors declining confidence in the ability of Spain and Italy to repay their debts.  Or to put it another way, the risk of the US not repaying all its debts is supposed to be infinitesimally small.

That is why the US losing its AAA rating matters. It is a very loud statement that there has been an appreciable increase in the risk - which might still be tiny, but it exists - that the US might one day struggle to pay back all it owes. Another important certainty in the world of finance has gone.

Of course many will argue - and already have - that the record of ratings agencies such as Standard & Poor's of getting these things right in recent years has been lamentably poor. Think of all the subprime CDO products rated AAA by S&P that turned out to be garbage.  But S&P, Moody's and Fitch (and particularly the first two) still have a privileged official position in the world of finance: they determine what collateral can be taken by central banks from commercial banks, when those central banks lend to commercial banks.

Or to put it another way, it is tricky for governments to dismiss out of hand what the likes of S&P say, because S&P's authority is hardwired into rules set by regulators and state bodies for the functioning of the financial system.  What's more, much of the basis of S&P's downgrading of US credit is not easy for the US government to dispute.

S&P says that "the downgrade reflects our view that the effectiveness, stability and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18".

The fiscal and economic challenges are conspicuous: a substantial and intractable gap between public spending and tax revenues in the US at a time of anaemic economic growth.

And as for a weakening of the stability and predictability in American policymaking? Well, the recent protracted and messy negotiations between the White House and Congress, between Republicans and Democrats, on how to reduce the deficit, as a prerequisite of sanctioning more US borrowing, was seen by most investors (and others) as a model of rancour, mistrust and lousy compromise.  So what's going to be the damage from the loss of the cherished AAA?

That's very difficult to assess.

The US still has its AAA from Fitch and Moody's (though in the case of Moody's, there's a negative outlook). And the US Federal Reserve and bank regulators said that the downgrade won't affect the risk-weighting attached to US sovereign debt for banks - which means that US banks should not be deterred from lending to their government to any great extent.  More important, perhaps, is the attitude of China, America's single largest creditor, which holds at least $1.3 trillion of US government debt and probably rather more, based on official figures.

If today's remarks from the official Chinese news agency Xinhua are any kind of a guide, the Chinese government is rather anxious to protect the value of its apparently wasting dollar assets.  Xinhua said: "China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets...

"International supervision over the issue of US dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country."

In theory there will be a financial cost for the US government and US citizens, whose debt is priced off the interest rate paid by the government. Perhaps an additional half of a percentage point on interest rates, over time, according to some analysts? Perhaps an additional $100bn of interest costs for the US economy, according to the US bank JP Morgan?

These estimates feel a bit like a wet finger held up in a gale swirling in different directions - more hunch than exact science.

Probably the only thing to be said with any confidence is that the downgrade could hardly have come at a worse time, in that conditions in global markets are febrile.  With the integrity of the eurozone, one of the three great economic areas, in some doubt, it is seriously discombobulating for banks, sovereign wealth funds, pension funds, insurers and central banks that the safe harbour of US Treasury Bonds, US government debt, no longer looks quite the comforting refuge in a storm that it once was.

Pressured by White House, Treasury Secretary Is Expected to Stay at Post
August 3, 2011

WASHINGTON — Timothy F. Geithner, the Treasury secretary and dean of President Obama’s economic team, is expected to stay through the president’s term after intense White House pressure, according to officials familiar with the discussions.

But Mr. Geithner has not yet notified the White House of his intentions, and family considerations could still win out, advisers say.

Speculation from Washington to Wall Street has intensified because Mr. Geithner, the only holdover at the center of Mr. Obama’s original economic circle, said a month ago that he would decide on his future after the White House and Congress reached a deal to increase the nation’s debt ceiling. Mr. Obama signed that deal into law on Tuesday.

Mr. Obama and his chief of staff, William M. Daley, have been urging Mr. Geithner to stay, administration officials say, not only for continuity when the economy has weakened and to avoid an all-but-certain confirmation fight in the Senate over a successor, but also because Mr. Obama has developed a close rapport with Mr. Geithner.

Whether the president persuades Mr. Geithner to stay will be a central development for the White House as it girds for a re-election race expected to turn on the economy and the continuing battle of the budget with Republicans.

Mr. Geithner has been considering an exit since early this year, administration officials say. None would speak directly on what Mr. Obama has said to his Treasury secretary because the two men have private meetings alone once a week.

On Monday, after the previous night’s announcement of the debt accord, Mr. Geithner convened advisers to talk about his future agenda, including dealing with the European debt crisis, housing and overhauling the corporate tax code. Aides say they took that as a clue he was staying, only to wonder on Tuesday, when a photographer came in to capture Mr. Geithner watching the final vote for the debt deal, if the photos were intended as a record of Mr. Geithner’s final days.

Especially in recent weeks, the issue has become a running joke, officials say: Mr. Geithner and Mr. Daley tease about the ankle bracelet that the White House makes him wear, or Mr. Geithner asks if Mr. Daley has yet read his resignation letter, to which Mr. Daley answers in unprintable language.

But the pressure from the top on Mr. Geithner was more serious one day about two weeks ago, officials say. Mr. Daley has also told Mr. Geithner’s top lieutenants — Deputy Secretary Neal S. Wolin and Mark A. Patterson, the chief of staff — that he wants them to remain, though Jake Siewert, Mr. Geithner’s counselor, is returning to New York as soon as this week.

Neither Mr. Geithner nor Mr. Daley would comment. “I haven’t made that decision yet,” Mr. Geithner said Tuesday in an interview with ABC. He added, “We’ve got a lot of challenges, president’s got a lot of challenges, and, you know, I got other pressures on me, too.”

Chief among those pressures are his family. Mr. Geithner’s wife and son moved back to New York in June so his son could complete high school there. And Mr. Geithner has been working at a breakneck pace since the early days of the financial crisis in 2007. Formerly president of the Federal Reserve Bank of New York, he has been among the three top stewards of the economy, along with Ben S. Bernanke, the Federal Reserve chairman, and the Bush administration Treasury secretary, Henry M. Paulson.

“He’s had a tough job during a tough time, and I think he’s really slogged through and made some really tough choices,” said Senator Mark Warner, Democrat of Virginia. “I can understand why he might want to cash it in.”

But, he added, “My fear is not only who would you get that would have the experience to grapple with another crisis but also, do we really need a massive confirmation fight?”

From the start, Mr. Geithner’s biggest critics have been on the left. But Jared Bernstein, a former member of the administration’s economic team and a liberal economist close to some of the critics, said: “To the extent people vilify Tim as only caring about banks, they’re way off.  He’s always understood that Main Street depends on credit from Wall Street, and I know for a fact that he advocated the steps we took for that reason, not to preserve anyone’s capital or profits.  I’ve actually heard him say some pretty nasty stuff about those guys.”

The prospects of being drawn into an election-year confirmation brawl could deter some who might be considered as Mr. Geithner’s successor. Among those named by people familiar with administration thinking are Jamie Dimon, the chief executive of JPMorgan Chase; Jeffrey R. Immelt, the chairman of General Electric and of Mr. Obama’s Council on Jobs and Competitiveness; Roger Altman, a deputy Treasury secretary in the Clinton administration; and Erskine Bowles, a former White House chief of staff to President Bill Clinton and co-chairman of Mr. Obama’s fiscal commission in 2010.

Some Democrats say Mr. Bowles might be one of the few people who could surmount the opposition of Senate Republicans, given his good relations with some of them after his work on the bipartisan fiscal commission. “In rational times, absolutely” Mr. Bowles would be confirmed, Mr. Warner said. “But I’m not sure we’re in rational times.”


Top economic adviser to leave White House
By JULIE PACE, Associated Press Write
21 September 2010

rWASHINGTON – President Barack Obama's top economic adviser, Lawrence Summers, plans to leave the White House at the end of the year, a move that comes as the administration struggles to show an anxious public it's making progress on the economy.

While administration officials Tuesday quickly sought to paint the announcement as an expected development, Summers' departure shakes up an economic team that has been under fire for its handling of the recovery. It's also a team already in transition following the recent departures of other high-profile Obama advisers.

In a statement, the president said he is grateful for Summers' service during a time of "great peril for our country."

"While we have much work ahead to repair the damage done by the recession, we are on a better path thanks in no small measure to Larry's wise counsel," Obama said.

Summers will return to Harvard University, a move a senior administration official said was always part of Summers' long-standing plans. The official said the president asked Summers last fall to stay through 2010 in order to see through the passage of financial regulatory legislation and the continued implementation of the economic stimulus package. The official spoke on the condition of anonymity in order to discuss internal White House matters.

Summers is the third high-level member of Obama's economic team to leave in recent months, following the departure of budget director Peter Orszag and Christina Romer, head of the Council of Economic Advisers, both of whom left this summer. Treasury Secretary Timothy Geithner would be the only one of Obama's top-tier economic advisers to remain with the administration should be stay through the end of the year.

Geithner said in a statement that Summers' insights were essential in helping "guide us through the worst economic crisis since the Great Depression."

Summers' departure was first reported Tuesday by Bloomberg News.

With unemployment hovering near double-digits and the public growing increasingly worried about the slow pace of the recovery, Democrats fear the economy could lead to sweeping losses for the party in the midterm elections.

Last month the top House Republican, Rep. John Boehner of Ohio, called on Obama to fire Summers, Geithner and other members of the economic team.

"Never before has the need for a fresh start in Washington been more pressing," Boehner said during a speech in Cleveland.

At the time, the White House dismissed Boehner's calls as politically motivated. But during a town hall Monday, Obama wouldn't rule out changes on the economic team, saying only that he hadn't yet made any determinations on personnel matters.

"This is tough, the work that they do," Obama said. "They've been at it for two years, and they're going to have a whole range of decisions about family that will factor into this as well."

Republicans will interpret Summers' departure as a sign that Obama is rethinking his economic policy. But even some Democrats might quietly rejoice.

Summers, often seen with a Diet Coke in his hand, has a reputation as a brilliant, if occasionally smug, economist. During the debate over overhauling the nation's financial regulations, liberals bristled at Summers' rejection of proposals to place limits on the size of banks. They held him partly responsible for the deregulation of banks that occurred in 1999 while he was treasury secretary under President Bill Clinton.

When he returns to Harvard, he will be going back to his roots. At age 28 he became one of the youngest professors to receive tenure at Harvard. After leaving the Clinton Cabinet in 2001, he returned to Harvard as its new president, where he had a tense relationship with the university faculty. It erupted when he argued that gender differences explained why fewer women pursued math and science careers. He resigned in 2006.

In a statement, Summers said he will miss working with the president and the economic team but looks forward to returning to Harvard to teach and write about the economic fundamentals of job creation.


Isn't he married to the woman who made some rather unpolitically correct comments during the campaign?

Inspector General Will Investigate Obama Admin for Discussing Koch Tax Status
Weekly Standard
BY John McCormack
October 5, 2010 4:28 PM

The inspector general for tax administration at the Treasury Department will investigate the allegation that an Obama administration official may have improperly accessed and discussed private taxpayer information.

At an August 27 press briefing, a senior administration official, who appears to have been Austan Goolsbee, discussed the tax status of Koch Industries--a private company that has come under fire from top Democrats, including President Obama himself, for funding conservative and libertarian political causes.

"In this country we have partnerships, we have S corps, we have LLCs, we have a series of entities that do not pay corporate income tax," said the senior administration official. "Some of which are really giant firms, you know Koch Industries is a multibillion dollar businesses."

A lawyer for Koch Industries objected to the official's decision to single out Koch and asked how the official had knowledge of Koch's tax status. An Obama administration official claimed that the tax information came from publicly available sources.

But on September 24, Republican senators wrote in a letter to the inspector general that they were unsatisfied with this explanation. Senator Chuck Grassley and other Republicans on the Senate Finance Committee requested that the inspector general look into the "very serious allegation that Administration employees may have improperly accessed and disclosed confidential taxpayer information."

The Obama administration official's August 27 "statement that Koch is a pass-through entity implies direct knowledge of Koch’s legal and tax status, which would appear to be a violation of section 6103," the senators wrote in their letter. "Alternatively, if the statement was based on speculation, it raises the question of whether the Administration speculating about any specific taxpayer’s liability is appropriate."

In response to the senators' request, Inspector General J. Russell George writes in a letter today: "As the Inspector General charged with ensuring, among other things, the fair implementation of our Nation's system of tax administration ... I have ordered the commencement of a review into the matters alleged."

"After completing this review," George concludes, "I will advise you of the results to the extent allowable by law."

Top Adviser to Lead Panel on Economy

September 9, 2010

WASHINGTON — President Obama on Friday will promote a longtime economic adviser, Austan D. Goolsbee, to chairman of his Council of Economic Advisers, signaling continuity even as a high unemployment rate has left much of the public dissatisfied with administration policies.

Mr. Obama’s decision to elevate Mr. Goolsbee, a left-of-center economist, to succeed Christina D. Romer, who returned this month to the University of California, Berkeley, is part of a broader flux within the White House economic team, as architects of the government’s response to the worst recession in 80 years begin moving up and out and their roles shift.

Mr. Goolsbee has been serving as a member of the three-person advisory panel since the beginning of the Obama administration.

No other major changes are expected, officials say, reflecting a theme the president sounded on Wednesday in an economic address near Cleveland, that the country should “keep moving forward with policies that are slowly pulling us out.”

Republican leaders in Congress, and a few endangered Democrats seeking to distance themselves from the White House before the midterm elections, have called for Mr. Obama to fire his top advisers, including the Treasury secretary, Timothy F. Geithner. But Mr. Geithner, who did not know Mr. Obama previously, has become one of the president’s most trusted advisers, credited with successfully managing the financial bailout and recovering most of the taxpayers’ money. He is expected to remain for some time.

Asked on PBS’s “NewsHour” this week about the calls for him to be fired, Mr. Geithner quipped, “It’s an old idea. A lot of people have had it, and my wife had it first, I think.” He added, “I’m going to do this as long as the president asks me to do it.”

Similarly, Lawrence H. Summers, the director of the White House National Economic Council, is not expected to leave soon, officials say, despite his history of run-ins with other advisers, and Mr. Obama’s occasional impatience with the policy vetting process that Mr. Summers oversees.

Mr. Obama and the other advisers nonetheless value Mr. Summers’s contributions as a renowned economist and former secretary of the Treasury in the Clinton administration, these officials say.

Yet the other two principals in Mr. Obama’s economic inner circle — Ms. Romer and Peter R. Orszag, his budget director — left in recent weeks, largely for personal reasons, giving Mr. Obama the opening to remake his team. But for both vacancies, Mr. Obama has now picked people from within his administration.

To succeed Mr. Orszag, who left in July, the president nominated Jack Lew, who has been a deputy secretary of state and was a budget director in the Clinton administration. Mr. Lew is not on the job yet but is awaiting confirmation by the Senate.

Because Mr. Goolsbee has been confirmed by the Senate as a member of the Council of Economic Advisers, he does not need approval to become the chairman — not a small consideration at the White House, given how often the president’s nominees become bogged down in partisans skirmishes.

Another factor initially worked against Mr. Goolsbee’s elevation — his sex — and that also played a part in his being passed over for the chairman post at the start of the administration. Ms. Romer was the only woman among Mr. Obama’s top economic advisers, and administration officials considered whether to name a woman to replace her.

Also, at 41, Mr. Goolsbee would be the youngest chairman since Arthur M. Okun held the job from 1968 to 1969 under President Lyndon B. Johnson. (Mr. Okun is known for Okun’s Law, which describes the relationship between changes in employment and changes in output.)

But Mr. Goolsbee, an amateur comic as well as an economist, was a favorite within the White House, where many colleagues felt he had earned the chairmanship. He has tense relations with Mr. Summers, however, after policy disputes in the early crisis-driven debates over the rescues of the financial industry and Chrysler, among other issues.

Mr. Goolsbee, who has a free-market bent, opposed bailing out Chrysler. He did not prevail, but Mr. Obama personally sought his arguments.

The Council of Economic Advisers traditionally provides analysis of the economy and of the potential economic impact of proposed policies. But because the office is largely divorced from politics and located in a building separate from the White House, many past chairmen have had limited influence. Ms. Romer, however, was routinely included in the West Wing deliberations of the last 20 months, and Mr. Goolsbee is likely to be as well.

And unlike Ms. Romer or most past chairmen, Mr. Goolsbee has a previous, friendly relationship with the president. Mr. Goolsbee was an economics professor at the University of Chicago when Mr. Obama taught at its law school. He provided economic advice when Mr. Obama ran for the Senate and for president.

Mr. Goolsbee was at the center of a controversy during the Democratic race for the presidential nomination when it was reported that he had told a Canadian official in Chicago that Mr. Obama’s protectionist campaign talk was “more reflective of political maneuvering than policy” he would support as president. While Mr. Goolsbee denied the account, as an economist he does espouse a free trade philosophy.

Mr. Goolsbee has also been the staff director of the President’s Economic Recovery Advisory Board, a panel of business, labor and academic officials providing outside perspective. As such he worked closely with Paul A. Volcker, the former Federal Reserve chairman, and shared with him a preference for tougher regulation of the financial industry than Mr. Geithner and others espoused.

NOTE:  Of the financial team, bottom right, l to r, #2 and #4 now resigned (mid-2010)
No new recession, let tax cuts die: Geithner
By Glenn Somerville
Sun Jul 25, 11:05 am ET

WASHINGTON (Reuters) – The economy is not likely to slip back into recession but letting tax cuts for the wealthiest Americans expire is necessary to show commitment to cutting budget deficits, Treasury Secretary Timothy Geithner said on Sunday.

In appearances on several Sunday talk shows, Geithner said only 2 to 3 percent of Americans -- those making $250,000 or more a year -- will be affected when tax cuts enacted under former President George W. Bush end on schedule this year.

Republicans want to extend the tax cuts and Democrats are divided but Geithner said reductions for top earners should end.

"We think that's the responsible thing to do because we need to make sure we can show the world that (we're) willing as a country now to start to make some progress bringing down our long-term deficits," he said on ABC's "This Week" program.

Geithner played down fears that a slow-paced recovery might slide into a double-dip recession. He told NBC's "Meet the Press" he did not expect that to happen, although recovery from the deep recession that followed the 2008-2009 financial crisis will be prolonged.


"I think the most likely thing is you'll see an economy that gradually strengthens over the next year or two, you'll see job growth start to come back, investments expanding ... but we've got a long way to go still," Geithner said.

The Obama administration has said it wants to keep tax cuts in place for Americans earning less than $250,000 a year. Some Republicans say letting any of the tax cuts expire is effectively a tax hike that may hurt recovery.

Geithner disagreed, saying it was more important to aim tax cuts at lower-earning Americans and businesses.

"Just letting those tax cuts that only go to 2 percent to 3 percent of Americans, the highest-earning Americans in the country, expire I do not believe it will have a negative effect on growth," he said on ABC.

Geithner said the Obama administration wants Congress to agree on measures to help small businesses, traditionally the main job-creating engine. He said there were signs "critical" private sector hiring was strengthening.

"We want to see it happen at a faster pace but I think most people understand that ... this was a deep crisis," he said. "It's going to take time to repair that damage, take time to grow out of this."

He said the overhaul of U.S. financial rules signed into law last week by President Barack Obama should bolster confidence in the economy by giving consumers new protections and the government more powers to restrain bank risk-taking.

Geithner said no reforms can ward off all future crises but can mitigate the harm. If the reforms that are now law, including powers to wind down troubled financial firms, had been in place before the crisis, the damage to jobs and fortunes would have been less, he said.

On NBC, Geithner said there is work ahead to repair the housing finance system that contributed to the crisis and led to putting mortgage finance giants Fannie Mae and Freddie Mac into government conservatorship.


"We have to bring to Fannie and Freddie, to the GSEs (government-sponsored enterprises) and to the broader housing finance market a better set of policies to make sure we can deliver affordable financing ... without leaving the economy vulnerable to this kind of crisis," he said.

Geithner said some type of government guarantee to make sure people have the ability to borrow to finance a house even may be necessary but said Fannie and Freddie will not be preserved in their current forms.

"We're going to have to bring fundamental change to that market but I think there's going to be a good case for taking a look at preserving or putting in place a carefully designed guarantee so homeowners have the ability borrow ... even in a very difficult recession," he said.

Geithner said it was encouraging China recently ended a peg between its yuan currency and the dollar, which should help correct a trade relationship that enables China to rack up huge surpluses while the United States and others record soaring trade deficits.

"What matters to us and to all of China's trading partners is that they let that currency appreciate," he said. "What matters to us is how fast and how far they let it go."

Analysis: AIG Bonuses New Cloud Over Treasury Boss
Filed at 10:19 a.m. ET
March 18, 2009

WASHINGTON (AP) -- If not distancing itself from Treasury Secretary Timothy Geithner, the White House is placing firmly on his shoulders responsibility for how the government handled the $165 million in bonuses paid to about 400 executives and traders at American International Group Inc.

''Secretary Geithner last week engaged with the CEO of AIG to communicate what we thought were outrageous and unacceptable bonuses,'' White House spokesman Robert Gibbs said Tuesday.

Then he volunteered the answer to a question being asked all over Washington: Did Geithner still enjoy President Barack Obama's confidence, given the whopping bonuses the failed insurance giant paid Friday after receiving taxpayer bailout money?

''The president has complete confidence'' in Geithner, Gibbs said.

Is Obama satisfied that Geithner informed him of the impending bonus payments in a timely fashion?

''Yes, the president is satisfied,'' Gibbs replied.

Those, of course, are statements that wouldn't need to be made if Geithner's status were clear. Not just a president's confidence, but his ''complete confidence'' can be a well-worn political signal that the person allegedly enjoying it should start circulating a resume.

In case anybody missed the point: White House Chief of Staff Rahm Emanuel categorically dismissed to The Associated Press any suggestion that Geithner is in trouble.

AIG is the demonized insurance giant now 80 percent owned by the government after getting $170 billion in federal bailout funds to pay money it owed to U.S. and foreign banks. Geithner told senior White House officials about the bonuses last Thursday and they in turn told Obama the same day, according to a timetable provided by the White House.

Geithner sent a flurry of letters to lawmakers Tuesday night on measures he's taking -- including bringing in Attorney General Eric Holder -- to try to recover as much of the bonuses as possible.

For the time being, Geithner, formerly president of the New York Federal Reserve Bank, remains a key player in the gargantuan task of slowing the worst economic downturn since the 1930s.

But his future could soon be as murky as the economy's. His short tenure has been shaky at a time when the new president and the Democratic-led Congress are trying to project confidence to the markets and the nation.

When asked, Democrats issued statements of support for Geithner that ranged from concise to vague, but none called for his resignation.

Geithner's nomination was dogged at the start by news that he initially failed to pay $34,023 in self-employment taxes earlier in the decade when he worked for the International Monetary Fund. As treasury secretary, Geithner oversees the Internal Revenue Service.

Although he was confirmed -- with a third of the Senate voting against him -- Geithner's rollout of Obama's stimulus package was widely panned for being short on substance and delivered in a televised statement that made him look younger than his 47 years, and more uncertain. The markets tanked.

Not helping his cause was the news this week that Geithner failed to persuade AIG chief executive Edward Liddy to change or cancel plans to pay the bonuses Friday.

Whatever Geithner's culpability in the AIG debacle, Republicans did much to get the speculation going Tuesday by uttering the ''R word,'' resignation.

''I don't know if he should resign over this,'' said Sen. Richard Shelby, R-Ala., the Senate Banking Committee's top Republican.

The White House swiftly hit back, supported by Sen. Chuck Schumer, like Geithner a New Yorker and an early supporter of Geithner's nomination.

''Secretary Geithner is a capable, smart and dedicated leader of the Treasury Department. He is the right person for the job in these challenging times,'' Schumer said in response to a request for comment.

Senate Majority Leader Harry Reid was less concise. Asked how much confidence he had in Geithner, the Nevada Democrat avoided replying directly. Instead, he reframed the premise and suggested a discussion of ''what we have accomplished this Congress'' and issued something short of a blunt endorsement of Geithner's service.

The economic picture, Reid said, revolves around the fortunes of the housing market.

''I feel very comfortable with what the treasury secretary has done, what the housing secretary has done,'' Reid said. ''Housing is the main focus of the problems we have with our economy. That's where it started, and everyone says, until we work out the housing issue, we will never be at the bottom of this economic crisis.''

Geithner, With Few Aides, Is Scrambling

March 9, 2009

WASHINGTON — Rarely have so few people had so little time to prop up so many pillars of the economy as those in the Treasury Department under Timothy F. Geithner.  In the six weeks since Mr. Geithner took over as Treasury secretary, he and a skeleton crew of unofficial senior advisers have been racing to make decisions that will shape the future of the banking, insurance, housing and automobile industries.

But even as he maintains a frenetic pace — unveiling plans, testifying before Congress and negotiating new bailouts with the likes of Citigroup, General Motors and the American International Group — there are signs that events are getting ahead of him.  Administration officials say they are postponing their plan to produce a detailed road map for overhauling the nation’s financial regulatory system by April, in time for the Group of 20 meeting in London. Though officials say they will still develop basic principles in time for the meeting, the plan will not include much detail.

Treasury officials are also still scrambling to decide details of their plan to buy up as much as $1 trillion in toxic assets from the nation’s banks, one month after being widely criticized for presenting a plan that lacked any specifics on how it would work.  Analysts say it is far too early to know if Mr. Geithner and his team will be effective. But some worry that political and financial constraints have made them reluctant to grapple with the full magnitude of the crisis.

Many financial experts estimate that the nation’s banks are holding as much as $2 trillion in troubled assets, most of it tied to mortgages. By contrast, the Treasury has less than $300 billion left in the financial rescue plan that Congress reluctantly approved last year.

To avoid asking Congress for more money, Mr. Geithner has been trying to stretch government money by working with private investors, the Federal Reserve and government-controlled companies like Fannie Mae and Freddie Mac, the mortgage giants. But that has introduced other tough policy issues, many of which remain unresolved.

“Their huge problem is that the American public is not willing to accept large losses for large financial institutions,” said Vincent Reinhart, a former Fed official and senior fellow at the American Enterprise Institute, a conservative research and lobbying organization. “Everything they are doing is about having the smallest possible footprint on the federal budget. They don’t want to engage the Congress and they don’t want to engage the American people in that discussion.”

Compounding the strain on the Treasury, almost all the top posts beneath Mr. Geithner are still vacant. Though he has hired about 50 senior advisers — about half the number he hopes to recruit — the White House has become so worried about potential tax problems and other issues in the backgrounds of candidates that it has nominated only a handful of people.

On Sunday, the White House announced that it would nominate Alan B. Krueger, an economist at Princeton, to be assistant Treasury secretary for economic policy. It will also nominate David S. Cohen to be assistant secretary for policy on terrorist financing and Kim N. Wallace as assistant secretary in charge of Congressional relations.

That still left many positions, including the No. 2 post at Treasury, without even a nominee.

Mr. Geithner, as a result, has been pulled in many directions at once and remains virtually the only public face of the Treasury. He is the sole person who can go before Congress to promote and defend the department’s decisions to provide billions of dollars for General Motors, Chrysler, the nation’s banks or the millions of homeowners facing foreclosure.

“The problem is not with policy development and implementation,” said one senior official who is among the many aides to Mr. Geithner awaiting nomination. “The problem is with getting out there in the world and talking about it. Other than Geithner, there’s nobody else to make the case in public for these policies.”

The Treasury’s staff problems took another turn for the worse in recent days, when the administration’s preferred candidate for the No. 2 spot at Treasury, Annette L. Nazareth, withdrew her name from consideration.

Administration officials said Ms. Nazareth, a former top official at the Securities and Exchange Commission, did not have tax problems. Rather, administration officials were worried that political opponents would seize on her years as an S.E.C. commissioner and, before that, the agency official in charge of overseeing the markets. The S.E.C. has been harshly criticized for its lax enforcement.

To some extent, Mr. Geithner’s staff problems stem from his own failure to pay more than $32,000 in self-employment taxes. That slip-up not only embarrassed the Obama administration, which had prided itself on nominating people with unassailable backgrounds. It also nearly torpedoed his Senate confirmation, and caused White House officials to slow down the background checks for dozens of other nominees.

“Much of this is of Obama’s own making,” said Professor Paul Light, an expert on the White House appointment process who teaches at the Robert F. Wagner School of Public Service at New York University. “We’re now seeing a dramatic pendulum swing. This administration used a lot of political capital for getting some people through, and that created an issue for Republicans and late-night comedians.”

Of the four major federal departments — state, justice, defense and the Treasury — the Treasury has had the fewest nominees even though it is dealing with probably the most significant problems facing the government.

Despite it all, Mr. Geithner, who arrives at the Treasury around 5:30 each morning and exercises in the department gym before starting work, has not appeared daunted.

Seemingly relaxed and unflappable, he has appeared time and again at public events alongside President Obama and Vice President Joseph R. Biden. Last week, he testified about Mr. Obama’s tax proposals before three Congressional committees.

Outside the public eye, Mr. Geithner has been constantly on the move. He played a direct role in discussions about expanding the bailouts for Citigroup and A.I.G., negotiating with both companies while he jumped between public events.

By any normal measure, Treasury officials have been remarkably productive. In the last month alone, Mr. Geithner announced the outlines of a $2.5 trillion bank rescue plan; detailed a $275 billion plan to help homeowners with their mortgages; created a “stress test” to determine whether banks can withstand a serious downturn; and issued restrictions on executive pay at banks that receive federal money.

In addition, Treasury officials have played a central role in fashioning Mr. Obama’s budget — especially the tax portions, which would raise $1 trillion over the next 10 years, mostly through higher taxes on the wealthy and corporations. And Mr. Geithner was central in persuading Congress to free up the second $350 billion for the Treasury’s financial rescue program.

But these are anything but normal times. With the economy plunging into its deepest recession since the early 1980s, the Treasury has been put in charge of vast swaths of the economy, including rescuing the financial system, the housing market and the automobile industry.

The strains are showing. Many top Treasury aides often look haggard and acknowledge they are getting by on only a few hours of sleep a night. They often have to split their attention among wildly different projects.  For example, Gene Sperling, who served as director of President Clinton’s National Economic Council, was closely involved in discussions about the Obama tax plan, as well as the talks about the bank rescue plan and new limits on executive pay.

In carrying out analysis for its bank rescue plan, in particular a proposed “Public-Private Investment Fund” to buy up troubled assets, Treasury officials have leaned on the Federal Reserve and the Federal Deposit Insurance Corporation for help.

To carry out its $75 billion program to modify mortgages for families in danger of losing their homes, the Treasury is relying on Fannie Mae and Freddie Mac, the government-controlled mortgage finance companies.

One of the few areas in which the Treasury has increased its staff is the all-important Office of Financial Stability, which ran the $700 billion financial rescue plan during the Bush administration. But that is because the Bush administration had hired almost 100 staff people by the time of Mr. Obama’s inauguration. Its director, Neel Kashkari, is a Bush holdover.

Geithner Blames Budget Woes on Bush Administration

Filed at 11:55 a.m. ET
March 4, 2009

WASHINGTON (Reuters) - U.S. Treasury Secretary Timothy Geithner on Wednesday blamed soaring budget deficits partly on failure by the former Bush administration to make needed investments in energy security and healthcare.

"We begin our time in office after a long period in which our government was unwilling to make the long-term investments required to meet critical challenges in health care, energy and education," he said in prepared remarks to the Senate Finance Committee.

The Obama administration is projecting a deficit of $1.8 trillion, or 12.3 percent of gross domestic product, in fiscal 2009, which ends September 30. Geithner said $1.3 trillion of that total was inherited from the Bush administration.

Most of his testimony echoed remarks he delivered on Tuesday to the tax-writing House Ways and Means Committee.

Geithner told lawmakers on Tuesday that $43 billion of new investments will be made in clean energy technology, but on Wednesday he boosted that estimate to $65 billion.

Fair Game
The Worst Misstep: Geithner Added to the Doubt
February 15, 2009

TIMOTHY GEITHNER, the brand new Treasury secretary, was panned last week for how he unveiled the Obama administration’s plan to rescue the financial system from the bankers who broke it.

Mr. Geithner was not especially articulate, his critics said, and he provided only an outline of an outline, not the detailed blueprint people anticipated and wanted.

To a degree, one of Mr. Geithner’s biggest problems was not of his own making. His boss, President Obama, had fanned expectations for his debut as Mr. Fix-It, leaving the impression that it would be boffo. It wasn’t.

Why is anyone surprised that Mr. Geithner’s Financial Stability Plan lacked details? We are still in sugar-coating mode — yes, we have a problem, government officials contend. But they can handle it. Don’t you sweat the details, dear taxpayers.

To be sure, Mr. Geithner is in something of a box. If he were to lay out precisely how he plans to save the financial system, he might actually telegraph to the public that the problem is more dire than they suspect. Being vague might be less scary. Unfortunately, market participants have lost their patience with vague. Uncertainty, for investors anyway, can be worse than simply acknowledging genuinely grim circumstances.

Treasury’s fuzziness, of course, also provides an opening for corporate lobbyists to step into the vacuum and bend the program to suit their needs. Taxpayers, on the other hand, don’t have lobbyists arguing on their behalf.

Many of the questions arising from Mr. Geithner’s bailout haiku involve the matter of the so-called stress tests that he said the government would use to analyze the nation’s banks. The tests are to determine which banks have the best shot at survival and therefore merit taxpayer money. No sense throwing taxpayer funds at zombies.

But Mr. Geithner did not detail what his stress tests would measure. “We want their balance sheets cleaner and stronger,” he said. “And we are going to help this process by providing a new program of capital support for those institutions which need it.”

Any measurement of bank health would most likely require answering two questions: What is the equity that the bank has on hand and how much earnings power does the institution have to make it through the economic downturn?

Measuring equity positions at banks today is easy, if unsettling. During the credit boom, banks used excessive amounts of debt to juice their returns. This was especially so at the largest institutions, and it has left many banks in a very deep hole now that they may not have the cash or the earnings power to pay down all that debt.

Identifying banks that have the wherewithal to earn their way out of that hole is far more complex because it involves knowing where the economy will be in six months or a year. If you assume that we will emerge from the recession soon, the stress test might generate one result; a graver economic outlook would produce an entirely different projection of a bank’s potential for survival.

(And let’s face it, do you think the economy is going to rebound anytime soon?)

Let’s consider a hypothetical stress test. Say a bank has $120 in assets of which $100 are loans. That means its tangible equity to assets ratio is 1.2 — a very weak position. If those loans had to be marked down because the market was troubled, reducing their value to $85, the bank would have a negative equity-to-assets position (homeowners who have mortgages that are greater than the market value of their homes know exactly how this feels).

Faced with that situation, anyone trying to determine whether a bank should be saved would then have to assess whether the firm has enough earnings mojo — or an ability to raise more money — in order to wait out the current economic malaise. The longer the malaise lasts, the more earnings potential or extra capital a bank would need to survive.

Private investors are not going to be willing to put money into an institution whose business model is broken and whose profit power is limited. Investors in the stock market have already run their own stress tests on the banks and have found many of them lacking — hence the free fall in the share prices of many banks.

On the bright side, lots of small banks that focused on good, old-fashioned lending are considerably better off than their big and formerly powerful brethren created in the merger mania of the last decade.

So here’s a strong first step: the Treasury Department needs to hire out-of-work bankers to conduct what investors call a “burndown analysis” of banks’ financial positions. This is what private investors do as they go foraging for gems hidden amid the wreckage in the banking system.

A burndown analysis, because it is a worst-case exercise, typically requires very pessimistic estimates for loan performance early on and higher-than-average loss estimates for loans in later years. A bank’s prospects also derive primarily from its deposits, not its loan book, in such an assessment. To reiterate: Any examination of a troubled financial institution needs to determine what its assets are truly worth, how much can it earn and how much capital it needs to operate at a profit.

THERE is no silver bullet to end this crisis, and Mr. Geithner was correct when he said it was going to take time to work our way out of it.

But it will also require transparent, rigorous analysis; candor with the public and investors; and a recognition that lots of debt heaped upon a pile of dubious assets has created a financial nightmare — it’s no more complicated than that.

Worst of all, none of this had to happen. Regulators should have been more vigilant.

After receiving approval from the Seante, the new Sec't of the Treasury shows his sensitivity to ethics rules
Ex-Goldman Lobbyist Now Geithner's Right-Hand Man
Filed at 4:54 p.m. ET

January 28, 2009

WASHINGTON (AP) -- The White House on Wednesday defended Treasury Secretary Timothy Geithner's choice of Mark Patterson -- an ex-lobbyist from Goldman Sachs -- to be his chief of staff.

The selection is at least the third high-profile exception to a policy by President Barack Obama that says no one who has lobbied on a set of issues within the past two years can take a role in his administration that deals with the same subject matter.

White House press secretary Robert Gibbs reiterated his claim that that rule is the ''strongest that any administration in the history of our country has had.''

Until last April, Patterson, a Goldman vice president for government relations, acted as a lobbyist on a wide range of issues that could come under his purview in his new job. Under Obama's restrictions, Patterson would be severely hampered in the new job unless he gets a waiver from the White House on grounds that it is in the public interest.

Patterson's former Wall Street firm has benefited from $10 billion in government bailouts in the current recession.

The issues on which Patterson acted as a lobbyist until last April appear to cover a large swath of his duties at Treasury, according to a lobbying disclosure report filed with Congress last July.

The list included mortgage foreclosure legislation, credit default swaps, bond market liquidity, credit rating agencies and ''general economic conditions.'' Other topics included investment banking issues and over-the counter derivatives, as well as ''all sections'' of the Industrial Bank Holding Company Act of 2007, ''rules on specialists'' and ''financial reform.''

Patterson's appointment follows two other prominent exceptions to Obama's rule covering former lobbyists.

William J. Lynn III, the president's choice to become the Defense Department's No. 2 official, was registered until July as a lobbyist for defense contractor Raytheon. Last week, the president granted a waiver to Lynn.

William Corr, tapped as deputy secretary at the Department of Health and Human Services, lobbied through most of last year as an anti-tobacco advocate, according to public records. Corr has decided to take no part in tobacco matters in the new administration.

Geithner Questioned on Tax Returns
January 14, 2009

WASHINGTON — Timothy F. Geithner, President-elect Barack Obama’s choice for Treasury secretary, failed to pay more than $34,000 in federal taxes over several years early this decade, and also faces questions about the immigration status of a former household employee, suddenly complicating what had seemed to be an easy confirmation process in the Senate.

Mr. Geithner, the president of the Federal Reserve Bank of New York, huddled privately with members of the Senate Finance Committee on Tuesday afternoon to explain that he had paid the back taxes and interest. Senate Democratic leaders quickly released statements of support lest the controversy threaten the nomination.

Two senior Senate Republicans likewise gave endorsements, echoing the argument of Obama transition officials that Mr. Geithner’s failures were innocent mistakes or technicalities.

The Finance Committee chairman, Senator Max Baucus of Montana, a Democrat, tentatively scheduled a hearing on Mr. Geithner’s nomination for Friday, though it would be delayed until next week if any members of the panel objected. Any delay would raise the prospect that Mr. Geithner might not be confirmed in time to take office on Tuesday, when Mr. Obama will be sworn in.

At the least, the flap is a major embarrassment for the man chosen to head the Treasury Department, which oversees the Internal Revenue Service, especially as Mr. Geithner worked at the Treasury under three presidents. And it is the latest of several stumbles by the previously smooth-running Obama transition office — the most serious being the withdrawal of Gov. Bill Richardson of New Mexico as the choice for commerce secretary because of questions over state contracts and political contributions.

In Mr. Geithner’s case, he has paid a total of $43,200 in back taxes and interest for underpayments from 2001 to 2004, according to the Obama transition office. The Finance Committee disclosed that he paid a slightly higher total of $48,268, which includes payments on unrelated tax liabilities the committee uncovered.

The issue involving a former housekeeper of the Geithner family is separate. The woman was in the country legally and was authorized to work when Mr. Geithner and his wife hired her in 2004, but her employment authorization expired three months before she quit working for them. The issue was discovered by the Senate Finance Committee, not by the Obama team, and it came as news to Mr. Geithner, according to a Democrat who was briefed on the situation.

The more serious questions surround the previously unpaid taxes. The bulk of them were detected in 2006 after an audit by the Internal Revenue Service for 2003 and 2004, and Mr. Geithner paid back taxes and interest then for those years.

In November the Obama vetting team found other unpaid taxes for 2001 and 2002, and Mr. Geithner immediately paid those plus interest when the matter was brought to his attention, transition officials said.

The underpayments all involve Mr. Geithner’s income as a senior official at the International Monetary Fund from 2001 to 2003, including a small payment in 2004 after he had left. Mr. Geithner worked there after leaving the Treasury, where he had risen to under secretary for international affairs in the Clinton administration, and before becoming president of the New York Fed, a post that has put him at the center of the economic crisis.

The I.M.F., as an international organization, does not withhold payroll taxes for Social Security and Medicare from its American employees’ paychecks. Those workers are required to pay the roughly 15 percent tax themselves, as if they were self-employed.

However, the I.M.F. does pay its American workers an amount equal to an employer’s half of the payroll taxes, with the expectation that they will use that to pay the I.R.S., and it also gives them quarterly wage statements that include United States tax liabilities.

Mr. Geithner fully paid his state and federal income taxes. In failing to pay his payroll taxes, in effect Mr. Geithner kept the money the I.M.F. had contributed toward his liability. . However, in an e-mail exchange in early 2004 between Mr. Geithner and his accountant, a copy of which was provided to The New York Times, Mr. Geithner was advised that he was exempt from self-employment taxes.

As Obama officials pointed out, and I.R.S. documents attest, the failure to pay Social Security and Medicare taxes is common among Americans who work for international organizations, including foreign embassies. A 2007 I.R.S. notice reported that up to half of such employees incorrectly file their tax returns.

The I.R.S. waived penalties for Mr. Geithner in 2006, according to an account provided by the transition office and the Senate committee. A three-year statute of limitations had precluded the agency from auditing the 2001 and 2002 tax returns.

Mr. Geithner volunteered to amend those returns and pay the taxes and interest, a total of $25,970, after Mr. Obama indicated that he wanted to nominate him for the Treasury job, according to the account. Mr. Obama announced the nomination in Chicago on Nov. 24, three days after the issue had come to Mr. Geithner’s attention.

That chronology raises the question, however, of why Mr. Geithner did not voluntarily correct the earlier nonpayment of self-employment taxes after the 2006 I.R.S. audit identified the problem for 2003 and 2004.

Late Tuesday, Republican and Democratic sources still were predicting that Mr. Geithner would be confirmed. Before the tax disclosures, the toughest questions he was expected to face were over his role in the government’s bailout program for financial institutions.

The Senate Finance Committee has known about the tax matters since Dec. 5, and staff members have subsequently reviewed Mr. Geithner’s tax records and interviewed three of his accountants and an I.M.F. representative.

Mr. Geithner met with committee staff members on Dec. 19 to answer questions about the taxes on his I.M.F. income and about other relatively minor issues the staff had found. Those issues, for which Mr. Geithner recently paid $4,334 in back taxes and $1,232 in interest, include his mistaken claim of the dependent care credit on his income taxes for the costs of sleep-away camps in three years. The Geithners have two teenage children.

After Mr. Geithner’s meeting with the senators on Tuesday, Mr. Obama’s press secretary, Robert Gibbs, issued a statement calling the nominee the “right person to help lead our economic recovery during these challenging times. He’s dedicated his career to our country and served with honor, intelligence and distinction. That service should not be tarnished by honest mistakes, which, upon learning of them, he quickly addressed.”

Senator Harry Reid of Nevada, the Democratic leader, restated his support, as did other Democrats. The senior Republican on the Finance Committee, Senator Charles E. Grassley of Iowa, declined to take a position, but two others from his party rallied to Mr. Geithner.

“I still support him,” Senator Orrin G. Hatch of Utah told Fox News. “He’s a very, very competent guy.”

Senator Judd Gregg of New Hampshire, also on Fox News, called it “a lot to do about nothing.” He said, “I just find it to be really unfortunate, because here is an extraordinarily qualified guy, who we really do want to have in leadership here in Washington..”

Geithner Said to Be Chosen for Treasury Secretary
By Jackie Calmes
November 21, 2008, 4:13 pm

Timothy F. Geithner during a hearing before the House Financial Services Committee in July. (Photo: Alex Wong/Getty Images)
President-elect Barack Obama will name Timothy F. Geithner to be his Treasury Secretary, according to a knowledgeable Democrat, elevating a Treasury veteran who as president of the Federal Reserve Bank of New York has all year been at the center of the worsening economic crisis.

Stocks jumped 300 points as news leaked Friday of the appointment, which Mr. Obama is expected to announce by Monday, along with the rest of his top economic advisers. The market’s rise followed days of steep declines and worsening economic news that spurred the Obama transition offices in Washington and Chicago to expedite announcements about the incoming economic team in hopes of rebuilding confidence in the markets and among the public.

Mr. Geithner, 47, for weeks has been the subject of speculation for the administration’s top economic post, a job that has gained out-sized stature as the economy has weakened and the Treasury secretary has been put in charge of a $700 billion financial bailout program. His chief rival was his former boss at Treasury, Lawrence H. Summers, President Bill Clinton’s final Treasury secretary.

Mr. Summers is likely to be named as an economics adviser as well, two sources familiar with the Obama transition said, with the expectation that eventually he will be named to the Federal Reserve Board, perhaps as successor to Chairman Ben Bernanke.


Adviser Romer resigning as Obama faces pressure on economy
AP, The Washington Times Online Edition
By Ben Feller and Julie Pace
8:57 a.m., Friday, August 6, 2010

WASHINGTON (AP) — Christina Romer, one of President Obama's most pivotal economic advisers, is resigning, a change that comes as the White House struggles to show signs of clear economic gains to a hurting nation.

Mrs. Romer, the head of the Council of Economic Advisers, announced her resignation Thursday, effective Sept. 3. She becomes the second high-level Obama aid to leave this summer, following the resignation of White House Budget Director Peter Orszag.

She will return to her job as a professor of economics at the University of California, Berkeley. The White House cast the decision as an unsurprising one driven by family reasons; in a statement, Mr. Obama said Mrs. Romer has long wanted to return to California, where her son will be starting high school in the fall.

Mrs. Romer has been one of the administration's most prominent voices on the economy, making frequent appearances on television and at White House events to promote Mr. Obama's policies. Her resignation comes as the White House labors to convince the public that the economy is on the right track amid near-double digit unemployment.

Mr. Obama inherited an economic disaster in 2009. Since then, the economy began growing, accelerating in the winter and spring. It spurred some modest hiring but not enough to rapidly reduce the unemployment rate, which is 9.5 percent.

"Christy Romer has provided extraordinary service to me and our country during a time of economic crisis and recovery," Mr. Obama said. "The challenges we faced demanded more of Christy than any of her predecessors, and I greatly valued and appreciated her skill, commitment and wise counsel."

Mrs. Romer's resignation came amid a report that she had been frustrasted that she didn't have as much access to the president as Larry Summers, director of the White House National Economic Council. One administration official, speaking on the condition of anonymity to discuss internal relations at the White House, played down that notion, noting that Mrs. Romer met with the president daily to chart the government's response to the financial meltdown. The official said Mrs. Romer and Mr. Summers often emerged as strong allies.

Mr. Summers said Monday night that Mrs. Romer has been "an extraordinary friend and colleague at the White House," and he looked forward to drawing on her advice in the future.

The official said no decision has been made on who will replace Mrs. Romer as head of the Council of Economic Advisers.

The White House has vigorously defended its interventions — chiefly the $862 billion stimulus bill approved by Congress — as moves that first prevented further freefall and then began turning around the economy.

Mrs. Romer, along with Vice President Joseph R. Biden Jr.'s top economist, Jared Bernstein, wrote in a January 2009 report that the economic stimulus package Mr. Obama was proposing would keep unemployment under 8 percent. Without the stimulus, the report said employment would rise to about 9 percent in 2010. Yet unemployment has surpassed that figure.

Republicans have seized on that point.

On Friday, the government released unemployment numbers for July that showed the unemployment rate remains at 9.5 percent.

Mrs. Romer called her work the "honor of a lifetime". She said: "While I look forward to returning to research and teaching, the opportunity to help shape economic policy these past 20 months, and to work with the other members of the economic team and my colleagues on the CEA, is one I will always cherish."

A person close to Mrs. Romer said she is a top contender to be named president of the Federal Reserve Bank of San Francisco, an appointment that would be made by the regional organization's board of directors. The source spoke on the condition of anonymity because a decision has not been made.

Mr. Orszag announced his resignation in June after a grueling, nonstop sprint as director of the Office of Management and Budget and as a key adviser to Mr. Obama. During his tenure, Congress passed the most expensive economic stimulus program in U.S. history and a massive health care reform bill.

Mr. Orszag oversaw Mr. Obama's first two budgets too. White House press secretary Robert Gibbs said at the time that Mr. Orszag decided to leave before work began on a third.

Obama Picks Volcker to Head New Economic Panel
November 27, 2008

CHICAGO — Paul Volcker, who helped tame runaway inflation in the 1980s during two terms as chairman of the Federal Reserve, has agreed to lead a new White House economic advisory committee, President-elect Barack Obama said on Wednesday. He praised Mr. Volcker as “one of the world’s foremost economic policy experts.”

“Paul has served under both Republicans and Democrats and is held in the highest esteem for his sound and independent judgment,” Mr. Obama said, as the 6-foot 7-inch Mr. Volcker towered nearby. “He has a long and distinguished record of service to our nation, and I am pleased that he has answered the call to serve once again.”

Mr. Obama made the announcement at his third news conference in three days. The public appearances by the president-elect are intended to show Americans that his team is focusing on resolving the financial crisis, which Mr. Obama said Wednesday demands “fresh thinking and bold new ideas from the leading minds across America.”

Mr. Volcker, 81, has been providing Mr. Obama with advice on the economy for months. After briefly considering him for Treasury secretary, Mr. Obama instead asked Mr. Volcker to lead the President’s Economic Recovery Advisory Board, a new panel to be comprised of leading figures from a variety of business sectors. The group is supposed to advise Mr. Obama on how to jump-start the economy and stabilize the financial markets.

Austan Goolsbee, a University of Chicago economist who was a leading economic adviser to the Obama presidential campaign, will lead the staff of the advisory board, the president-elect said, calling him “one of America’s most promising economic minds, known for his path-breaking work on tax policy and industrial organization.”

Mr. Volcker became chairman of the Federal Reserve in August 1979 as President Jimmy Carter was fighting to rein in the inflation caused by the oil shocks of 1973 and 1978. Mr. Volcker, who led the Fed until 1987, often used tactics that were unpopular, like rapid increases in interest rates. Criticized at the time for causing a recession, Mr. Volcker was later praised for the effectiveness of his efforts.

The president-elect’s decision to name Mr. Volcker to a new economic panel was first reported by The Wall Street Journal.

“This board will provide that fresh perspective to me and my administration, with an infusion of ideas from across the country and from all sectors of our economy, input that will be informed by members’ firsthand observations of how our efforts are impacting the daily lives of our families,” the president-elect said. He said he would announce other members of the board in the coming weeks, and that he wanted the panel to be “candid and unsparing” in its assessments.

In a brief question-answer session, Mr. Obama said his call for new ways of thinking should not be interpreted as a reflection of frustration and disappointment with the Bush administration’s recent economic-recovery efforts.

Rather, Mr. Obama said, his proposals reflect frustration over “eight years in which middle-class wages have gone down or, in real terms, their family incomes have been reduced.”

“It speaks to my frustration about all the families that I’ve met over the last two years who have lost their health insurance, or their pensions are in danger, young people who can’t afford to go to college,” the president-elect said.

“It expresses frustration about our inability to tackle some of the long-term problems that we’ve been facing, and have been talking about for decades, whether it’s health care, energy, an education system that’s been slipping behind in critical areas like math or science,” he said, “and, most of all, I think, frustration with the incapacity of Washington to take bold, clear, decisive steps to deal with our economic problems.”

Responding to a question about the holiday shopping season, which many retailers predict will be a dismal one, the president-elect said, “What we don’t want to do is get caught up in a spiral, where people pull back from the economy, businesses then pull back, jobs are reduced, and we get into a downward spiral.”

“What we want to do is to be sober, to be clear, to recognize that we’ve got some real adjustments that have to be made,” Mr. Obama said. “That’s true with — in individual businesses. It’s true in terms of individual family budgets. It’s also true for the economy as a whole.

“But we continue to have the best workers in the world. We continue to have the most innovation in the world. We continue to be in possession of extraordinary resources that, if we harness properly, will get this economy moving over the next couple of years but also over the next two decades or three decades.”

Obama Names Romer to Lead Council of Economic Advisers
By Jackie Calmes
November 24, 2008, 9:19 am

President-elect Barack Obama will fill the last of four top economic jobs in his administration—chairman of the Council of Economic Advisers—with Christina Romer, a well-regarded economist at the University of California at Berkeley who was a supporter of his presidential candidacy.

Mr. Obama had long been expected to name the chief economics adviser to his campaign, economist Austan Goolsbee of the University of Chicago, to be C.E.A. director. But when the president-elect chose men for the three other senior economic posts—Treasury secretary, White House adviser and budget director—he and his advisers began looking for a woman for the C.E.A.

Mrs. Romer has been a prolific author of economics tracts on tax policies especially, many with her husband, economist David Romer. Earlier this year she was expected to move to Harvard University but Harvard’s president rescinded the offer, igniting a small furor among Mrs. Romer’s supporters in academia’s economics community nationwide. There was never any public explanation for Harvard’s decision.

On Monday in Chicago, Mr. Obama will officially name Timothy F. Geithner, 47, president of the Federal Reserve Bank of New York and a former Treasury official, to be his Treasury secretary, and former Treasury Secretary Lawrence H. Summers, who turns 54 on Sunday, to be his senior economics adviser as director of the National Economics Council in the White House.

On Tuesday, the president-elect will announce, as expected, that the director of his Office of Management and Budget will be Peter R. Orszag, 39, who currently is Congress’s budget director. Mr. Orszag, along with Mr. Geithner and Mr. Summers, all are protégés of former Treasury Secretary Robert E. Rubin, an informal adviser to Mr. Obama.

Given the intellectual firepower, aggressiveness and experience of the three men, veteran Washington policy-makers speculate the CEA chairmanship will carry less influence. In recent years, since President Bill Clinton created the NEC director’s office within the White House, the CEA has been diminished somewhat. But it remains the main office for monitoring the national and global economies, and for research on the economic pros and cons of policies under consideration by the administration.

Women's groups silent on Summers pick
Washington Times
Christina Bellantoni
Tuesday, November 25, 2008

When word got out that President-elect Barack Obama might choose Lawrence H. Summers to assume the same Treasury secretary post he once held, women's groups still angry about remarks he made in 2005 about women and math made their voices heard.

But on Monday, when Mr. Obama instead tapped Mr. Summers to be a key member of his economic team and director of the National Economic Council, groups that had been protesting or appearing on cable shows did not put out statements, and did not respond to requests for comment.

While president of Harvard University in January 2005, Mr. Summers stirred up controversy by saying at an economics conference that "innate" differences between men and women could explain why there are fewer female scientists.

Some found the remarks - an exact transcript of which is not available - provocative and worthy of further discussion, while others demanded he be fired and labeled him a sexist.

He ultimately resigned his post after a vote of no confidence from the faculty.

The remarks were rehashed in the days after this year's election, when Mr. Summers' name was raised as in connection with the Treasury slot.

New Agenda, a group that formed to support Sen. Hillary Rodham Clinton even after Mr. Obama won the primary, declared Mr. Summers had a "clear and unequivocal record of sexism and misogyny."

On Monday, the group's Web site had no mention of Mr. Summers beyond a Nov. 6 release mentioning his candidacy for Treasury.

Blogger Matt Stoller wrote at that choosing Mr. Summers for Treasury would "not be a good thing," arguing that he is partially responsible for the current economic crisis.

He also posted a petition to Obama transition chief John Podesta asking for him not to consider Mr. Summers for Treasury.

The petition detailed several complaints beyond the remarks at Harvard, including his stance on trade and a 1991 remark in a private memo then as chief economist for the World Bank that underpopulated countries in Africa were "under-polluted."

The National Economic Council post does not need Senate confirmation, which could be one reason for the silence.

Little of the criticism in the blogosphere had to do with Mr. Summers' comments, but instead focused on his ties to the Clinton administration, with some calling him a "retread."

Meanwhile, both Democrats and Republicans in Congress praised Mr. Summers' announcement, saying Mr. Obama was tapping someone with experience and good judgment.

Former Treasury Secretary to Lead Economic Council (NOT the same thing, apparently, as )
November 23, 2008

President-elect Barack Obama is expected to name Lawrence H. Summers as his pick to head the National Economic Council, an aide to Mr. Obama said Saturday.

The position is considered one of the top three economic posts in the administration, along with Treasury secretary and budget director. The economic council was created during the Clinton administration, and the director’s job is to serve as a coordinator of economic policies and the conduit to the president on domestic and global economic issues. The director is also charged with monitoring implementation of the president’s economic agenda.

Mr. Summers, 53, a former chief economist at the World Bank, served as Treasury secretary in the Clinton administration from 1999 to 2001. After leaving government in 2001, he was president of Harvard for five years but resigned after clashing with faculty over his remarks suggesting that women lack the intrinsic aptitude for math and science...


GONE:  Peter R. Orszag, O.M.B. replaced by Jack Lew.

One Nation, Two Deficits
September 6, 2010

The nation faces a nasty dual deficit problem: a painful jobs deficit in the near term and an unsustainable budget deficit over the medium and long term. This month, the Senate will be debating an issue with significant implications for both — what to do about the Bush-era tax cuts scheduled to expire at the end of the year.

In the face of the dueling deficits, the best approach is a compromise: extend the tax cuts for two years and then end them altogether. Ideally only the middle-class tax cuts would be continued for now. Getting a deal in Congress, though, may require keeping the high-income tax cuts, too. And that would still be worth it.

Why does this combination make sense? The answer is that over the medium term, the tax cuts are simply not affordable. Yet no one wants to make an already stagnating jobs market worse over the next year or two, which is exactly what would happen if the cuts expire as planned.

Higher taxes now would crimp consumer spending, further depressing the already inadequate demand for what firms are capable of producing at full tilt. And since financial markets don’t seem at the moment to view the budget deficit as a problem — take a look at the remarkably low 10-year Treasury bond yield — there is little reason not to extend the tax cuts temporarily.

A benign bond market, however, is a luxury we won’t enjoy forever if we fail to tackle our long-term fiscal problem. What’s more, losing the confidence of the bond market could prove painful, since it is widely known that our fiscal trajectory is unsustainable and market sentiment may therefore shift quickly and unpredictably. In any case, as the economy recovers, the dominant problem will move from depressed demand to excessive budget deficits.

Despite a dire fiscal outlook, many progressives want to make the tax cuts permanent for all but the very highest earners. Many conservatives are even worse: they’d make the tax cuts permanent for the likes of Warren Buffett, even though he’d prefer they didn’t. Making all the tax cuts permanent would expand the deficit by more than $3 trillion over the next decade.

Both approaches lock us into a budget scenario out of which there are few politically plausible routes of escape. Although hardly anyone wants to admit it, we’re not going to solve our budget problem over the next decade unless revenue is part of the equation.

Let’s look at the facts. The projected deficit for 2015 is 4 percent to 5 percent of G.D.P., depending on whose assumptions you use. A sustainable level is more like 3 percent or lower. So we need deficit reduction of 1 percent to 2 percent of G.D.P., or about $200 billion to $400 billion a year by 2015. These figures are uncertain, but they’re the best we have (and they may well turn out to be too optimistic).

How much savings is plausible on the spending side? Medicare, Medicaid and Social Security will account for almost half of spending by 2015. Even if we reform Social Security, which we should, any plausible plan would phase in benefit changes to avoid harming current beneficiaries — and so would generate little savings over the next five years. The health reform act included substantial savings in Medicare and Medicaid, so there aren’t further big reductions available there in our time frame.

The other half of the budget is mostly net interest (which is not negotiable unless we renege on our debt) and discretionary spending. Discretionary spending is split roughly equally between defense and non-defense spending. The defense component already assumes a phase-down in both Iraq and Afghanistan; saving an additional 5 percent of the Pentagon’s base budget would be a substantial accomplishment and would yield about 0.2 percent of G.D.P. Cutting 5 percent out of non-defense discretionary spending, a stretch politically, would save about as much.

It would be tough, then, to squeeze more than a half percent of G.D.P. from spending by 2015. Additional revenue — in the range of 0.5 to 1.5 percent of the economy — will therefore be necessary to reduce the deficit to sustainable levels.

How would we do this?

One possibility would be to establish a new source of revenue, perhaps through revenue-increasing tax reform, and possibly including a modest value-added tax (that is, a V.A.T. of 5 percent to 6 percent). This approach has many potential benefits, including the opportunity to improve our tax code by cutting back on loopholes and shifting toward a consumption-based tax system. It is also politically impossible, at least in the era of the 60-vote Senate. Those who fear a V.A.T. have little reason to worry — the votes aren’t there.

The beauty of extending the tax cuts for only two years is that canceling them doesn’t require an affirmative vote. It happens by default, so Congressional deadlock works in its favor. And it would essentially solve our medium-term deficit problem, reducing the deficit by $200 billion to $350 billion a year from 2015 to 2020.

Like all plans, this one isn’t perfect. Some may complain that higher marginal tax rates, even if deferred until 2013, will cripple small businesses and economic activity. It’s hard to believe, however, that effectively returning the tax code to its 1990s form would lead to economic catastrophe, especially when many leading Republican economists — including Alan Greenspan and Martin Feldstein — agree that we can’t afford to continue the tax cuts forever. More troubling, middle-class and lower-class families would be saddled with higher taxes. That’s a legitimate concern, but also a largely unavoidable one if we are to tackle the medium-term fiscal problem.

Finally, a key part of this deal is actually ending the tax cuts in 2013 — and that will surely require a presidential veto on any bills to extend them after that. (Failing to follow through would be particularly problematic if the high-income tax cuts are made permanent — at a 10-year cost of more than $700 billion.) Minimizing this risk requires as much upfront clarity and commitment as possible, including a strong and unambiguous veto threat from the president.

Senate Democrats and Republicans almost never come together anymore. This month, they should fight the dual deficits rather than each other. Let’s continue the tax cuts for two years but end them for good in 2013.

Peter Orszag, the director of the White House Office of Management and Budget from 2009 to 2010 and a distinguished visiting fellow at the Council on Foreign Relations, is a contributing columnist for The Times. He will also be writing at

Obama picks Lew as budget director

Washington Times
By Stephen Dinan and Kara Rowland
12:53 p.m., Tuesday, July 13, 2010

President Obama on Tuesday tapped as his new budget director Jacob J. "Jack" Lew, the same man who oversaw balanced budgets under President Clinton in the late 1990s.

"If there was a hall of fame for budget directors, then Jack Lew surely would have earned a place," Mr. Obama said.

Mr. Obama touted Mr. Lew's track record as director of the Office of Management and Budget under Mr. Clinton, noting that he has been the only budget director in history to preside over a surplus for three consecutive years.

"Jack Lew is somebody who has proven himself already," the president told reporters in the White House's Diplomatic Room.

The OMB director is a cabinet-level appointment, and serves as the traffic cop for much of the administrative duties of the White House, including issuing statements of policy on legislation and producing the president's annual budget submission to Congress.

Mr. Lew would replace Peter R. Orszag, who is leaving as budget director at the end of this month.

Mr. Lew currently serves as a deputy secretary of state. To become OMB director will require Senate confirmation. The last time he won the job, in 1998, the Senate confirmed him by voice vote.

In tapping Mr. Lew, Mr. Obama is hoping to recapture some of the magic of the late 1990s when Republican in Congress worked with Mr. Clinton to strike a balanced budget deal in 1997, then followed through, producing three straight budgets in balance.

In 2000, Mr. Lew was a key voice late in the Clinton administration warning against assuming large surpluses for the sake of writing bigger tax cuts — a policy President George W. Bush pursued, and which has since become a heated debating point.

© Copyright 2010 The Washington Times, LLC. Click here for reprint permi

A legacy of budget trickery
Last Updated: 5:08 AM, July 25, 2010
Posted: 12:31 AM, July 25, 2010

No more budget gimmicks? That’s what outgoing White House budget director Peter Orszag promised as the Obama team prepared to take control of the White House. “The president prefers to tell the truth, rather than make the numbers look better by pretending,” he told The New York Times.

But numbers games turned out to be Orszag’s specialty. He’s set to step down at the end of July, but for the last 18 months, he’s presided over a wave of fiscal trickery.

This year’s White House budget, which Orszag played a key role in preparing, is a prime example.

When fiscal planners make a budget, they have to create what’s known as a “baseline scenario.” It’s an assumption about what the future holds without budgetary changes — in essence, “here’s what will happen if we do nothing.” Budget wonks then measure their proposed changes in comparison to what would have happened if we’d stuck to the baseline.

In the federal budget process, the baseline scenario is typically based on current law. But the Obama administration has argued that it should be able to work from “current policy.” That way, they can stuff all sorts of expensive future changes into the baseline.

Changing the baseline doesn’t generate any actual savings. But it allows the administration to ignore certain policies and only measure the changes that produce favorable results.

So this year, the White House decided to assume the cost of several provisions from its stimulus bill — expansions of the child tax credit, the Earned Income Tax Credit, and Pell Grants — into its baseline. Those policies were all explicitly created to be temporary. But by quietly assuming they’ll continue on, the administration avoids accounting for $216 billion.

Congress has its own trickery. There’s a pay-as-you-go requirement that says every spending hike must be accompanied by a tax increase or cut somewhere else. But Congress disregards these rules all the time. Since 2007, Democrats in Congress have violated PAYGO requirements to the tune of nearly $1 trillion.

One of the ways they’ve done this is by labeling new outlays “emergency” spending, which allows Congress to skirt offset requirements. This week’s extension of unemployment benefits, for example, was passed as an “emergency” spending bill — despite the fact that it was known well in advance that unemployment benefits would run out.

And then there are the airy promises to somehow eliminate operational waste. The 2010 budget, for example, includes $132 billion in “program integrity” savings. But it’s not a real spending cut in the sense that it’s actually attached to anything. Instead, it’s a vague assurance that the White House hopes to make the government more efficient — allowing them to claim big, impossibly precise savings claims.

Under Orszag’s watch, budget gimmicks weren’t merely used as a way of cleaning up the federal budget. The biggest entitlement expansion in decades — ObamaCare — was packed full of accounting legerdemain.

After initial drafts of the law proved far too expensive, ObamaCare’s authors knew they had to meet two criteria: Keep total spending for the first decade below a trillion dollars, and make sure the Congressional Budget Office reports the law will reduce the deficit.

The White House and its allies in Congress succeeded, but only by piling on the gimmicks. So, for example, in order to keep the total first-decade cost down, ObamaCare delayed the bulk of the spending in the bill until 2014 — meaning that the 2010-2019 10-year score only accounted for six years of spending.

The official estimates also conveniently omitted hundreds of billions in additional spending that will be necessary to implement the law. According to an estimate by former CBO director Douglas Holtz-Eakin, running ObamaCare will eventually require $274 billion in extra spending.

Indeed, in a paper published in the June issue of the journal Health Affairs, Holtz-Eakin estimated that, once all the budget gimmickry is removed, the law will increase the deficit by more than half a trillion dollars — and that’s just in the first 10 years.

Under Orszag’s watch, budget gimmicks became a way of life for the Obama White House. Both he and Obama may want to pretend their budget numbers tell the truth, but at this point, it’s tough to see their constant fiscal fakery as anything other than a long exercise in make believe.

Peter Suderman is an associate editor at Reason magazine.

White House Budget Chief Is Leaving
June 21, 2010

WASHINGTON — Peter R. Orszag will leave his job as the White House budget director in July, according to someone familiar with his plans, making him perhaps the first official to leave the Obama cabinet and removing a major player from President Obama’s economic team.

Mr. Orszag, an economist who previously spent nearly two years as director of the Congressional Budget Office, somewhat reluctantly accepted Mr. Obama’s invitation to join the cabinet after the 2008 election and never planned to stay more than two years. Typically, budget directors do not. While the president recently urged Mr. Orszag to remain, the calendar for drafting the next budget weighed in favor of Mr. Orszag’s leaving sooner. So did Mr. Orszag’s personal calendar: He is getting married in September.

By fall, as Congress is taking final action on the budget for the fiscal year that begins Oct. 1, the Office of Management and Budget is busy preparing the next year’s budget request to be released in February. Mr. Orszag argued inside the White House that his successor should be in place to put the next budget together from the start.

In recent months, Mr. Orszag, 41, has espoused deficit reduction strategies in administration debates against those who pressed for more stimulus spending and tax cuts to keep the economy from slipping back into recession.

A Hard-Charging Doctor on Obama’s Team

April 18, 2009

WASHINGTON — Dr. Ezekiel J. Emanuel has always liked to shake things up.

As a high school senior, he did a little experiment in chemistry class to test the explosive potential of hydrogen gas exposed to a match. A flask burst with a bang, sending shards of glass flying around the classroom.

Since then, Dr. Emanuel has been challenging conventional wisdom, first as a medical student, then as a doctor and an expert on medical ethics.

He is at it again as a White House official trying to remake the health care system.

Dr. Emanuel is a special adviser to the budget director, Peter R. Orszag. He is also the older brother of Rahm Emanuel, the White House chief of staff.

By all accounts, Dr. Emanuel is a powerful force in his own right. In an interview in his cubbyhole of an office, he said he got his job on his own, with no help from his brother. Rahm was “very conscious of the nepotism thing,” he said. Still, he is widely perceived as having extra clout because of his brother.

For two decades, Dr. Emanuel has been writing about how to guarantee health care for all. In White House discussions on health policy, he emphasizes the need to slash co-payments for preventive care and insists that patients should be able to keep their doctors even if they change insurance plans.

But some of his proposals, calling for vouchers, a value-added tax and an end to the system of employer-provided insurance, have differed radically from President Obama’s.

Joseph R. Antos, an economist at the American Enterprise Institute, said, “These are mighty spicy ideas — the opposite of what any politician would say unless he was completely intoxicated.”

Dr. Emanuel brings to the White House a physician’s perspective, which was generally missing from the last big effort to overhaul health care in 1993-94.

Mr. Orszag, himself keenly committed to health care as an economic issue, “has given me the opportunity to stick my nose into anything that’s health-related,” Dr. Emanuel said.

Like his brother, Dr. Emanuel is hyperkinetic and speaks in staccato bursts. The differences are also notable. Rahm, 49, is a practitioner of bare-knuckle politics. Zeke, 51, earned a Ph.D. in political philosophy while getting an M.D. at Harvard Medical School.

“Zeke is the intellectual Emanuel,” said Amy Gutmann, a political theorist who is president of the University of Pennsylvania.

Rahm swears and swaggers. His belligerence has been an asset in crushing Republican hopes at the polls and in Congress, where he held a House seat for six years. Zeke’s mind, by contrast, is more subtle, and his vocabulary is more academic.

Zeke is the oldest of three hard-charging brothers. The youngest, Ari, 48, is a top Hollywood talent agent.

“When we came out of college,” Zeke recalled, “we had to be in three quarters of the country. We couldn’t get anywhere close to each other because of the force fields of our personalities. Now fortunately we are all fairly well established and much more confident of who we are.”

The divorced father of three daughters age 18, 22 and 25, Dr. Emanuel has an unusual lifestyle.

“I don’t have a car, don’t have a TV, don’t have a house,” he said. “I do, however, have four cellphones, so go figure.”

A breast cancer specialist, Dr. Emanuel has built one of the world’s leading centers for bioethics, at the National Institutes of Health in Bethesda, Md. Since 1997, he has been chairman of the bioethics department at the Clinical Center, or research hospital, of the N.I.H.

In articles written over the last four years and in a book last May, Dr. Emanuel proposed giving every household a voucher to buy insurance. He would gradually phase out Medicare and Medicaid and “sever the link between employment and health insurance.” Employers would no longer pay for health care. The whole scheme would be financed with a value-added tax, similar to a sales tax.

While some of his ideas bear little resemblance to Mr. Obama’s, Dr. Emanuel said he fully supported the president’s agenda. “I’m all for my voucher plan,” he said, “but I don’t think it’s on the table now.”

In one chapter of his 2008 book, “Healthcare, Guaranteed,” Dr. Emanuel criticized proposals to require individuals or employers to buy insurance, with government subsidies for those who could not afford it.

Democrats in Congress support some variant or combination of such mandates, as does Mr. Obama. But Dr. Emanuel wrote that mandates “would do little or nothing to reduce high health care costs,” and he said the subsidies would be “an administrative monstrosity.”

A wiry man (5-foot-10, 142 pounds), he has expressed interest in the idea of taxing junk food or banning it from schools to combat obesity.

Dr. Emanuel does not apologize for his unorthodox views. “I’ve had various episodes where people have not liked what I said and tried to put the thumb screws to me to shut me up,” he said.

A decade ago, when many doctors wanted to legalize euthanasia or physician-assisted suicide, Dr. Emanuel opposed it. He challenged a common stereotype of patients expressing interest in euthanasia. In most cases, he found, the patients were not in excruciating pain. They were depressed and did not want to be a burden to their loved ones.

Many of Dr. Emanuel’s passions stem, by his own account, from his childhood. His father, Benjamin, a pediatrician on the North Side of Chicago, provided large amounts of free care and led the fight to get rid of lead paint because of its harmful effects on children.

Dr. Emanuel recalled that his father resigned from the American Medical Association because it opposed the creation of Medicare and Medicaid in 1965. The association, he says, is now “a very different organization, very engaged in health care reform in a positive manner.”

His mother, Marsha, a nurse and a social worker, was active in civil rights and took her children to marches and demonstrations.

“Worrying about ethical questions was very much part and parcel of our daily routine,” Dr. Emanuel said.

Like his brothers, Dr. Emanuel took ballet lessons as a boy. He endured his share of jokes. The experience, he says, “hardened us and taught us that if you do something unusual, people will take potshots at you.”

Dr. Emanuel recently got a black belt in tae kwon do, along with his youngest daughter.

“I like the flying kicks,” he said. But he insists he will use his new skills only as a means of self-discipline or self-defense.

Out of wedlock dad-to-be, engaged to TV talking head.

Budget Director Pick Sounds Alarm
January 13, 2009

WASHINGTON — Peter R. Orszag, President-elect Barack Obama’s choice for budget director, had a relatively easy time at his confirmation hearing before the Senate Budget Committee on Tuesday, even as he offered alarming short- and longer-term fiscal forecasts.

He called for urgent action to “jump-start the economy out of the worst economic crisis since the Great Depression.”

He said the new administration wanted $775 billion to $800 billion to spend on public works, transportation and other projects. While most of the money would be spent in the next two years, he said, some of the spending might occur later.

Even without new spending to stimulate the economy, Mr. Orszag said, the federal budget deficit in the current fiscal year is “likely to exceed $1 trillion — more than 8 percent of gross domestic product, and the largest in our history with the exception of the Civil War and the two World Wars.”

Mr. Orszag, whose official position would be director of the White House Office of Management and Budget, offered an equally alarming projection of the fiscal future. Even after the nation recovers from the current recession, he said, the government is likely to run budget deficits equal to 5 percent of the gross domestic product over the next five to 10 years.

The markets have traditionally reacted negatively to such pools of red ink. The deficit last hit 5 percent of the G.D.P. in 1986 and has not exceeded 4 percent in any year since 1992.

In its current slump, Mr. Orszag said, the economy is producing far less than its potential. Without action by Congress, he said, “the gap between how much the economy could produce each year and how much is actually being produced amounts to roughly $1 trillion a year.”

In the current economic crisis, Mr. Orszag said, the United States has “significant maneuvering room” because it can borrow money at low interest rates, and “our debt is viewed as the safest investment in the world.”

But, he said, if the United States continues to spend beyond its means, “that perception could shift,” and that “could not only trigger a fiscal crisis, but also severely limit our ability respond flexibly to any future economic difficulties.”

The principal cause of the nation’s long-term budget problems, Mr. Orszag said, is rising health costs. He suggested several steps to increase the efficiency of the health care system: greater use of health information technology and research comparing the effectiveness of different treatments, along with new incentives for disease prevention, “healthy living” and “better care rather than more care.”

But he said the return on such investments might not show up for years.

Mr. Orszag, who worked closely with members of both parties as director of the Congressional Budget Office from January 2007 to November 2008, said he hoped to “continue that spirit of bipartisanship.”

...otherwise known for: Running marathons and attending country-western concerts. In a June 2007 appearance on CNN’s “Lou Dobbs Tonight,” Mr. Orszag’s paraphrase of a country star’s hit song disarmed Mr. Dobbs, who was unsuccessfully pushing Mr. Orszag, as the Congressional Budget Office director, to validate his own views that illegal immigrants impose high costs on taxpayers. “Well, Lou, as Toby Keith would say, that’s not how it is,” Mr. Orszag said. The host, taken aback by the unlikely allusion from the bespectacled economist, replied, “You rock on, Mr. Director!”


Veterans' Affairs
Gen. Eric K. Shinseki

Rumsfeld Nemesis Shinseki to Be Named VA Secretary
Filed at 6:33 a.m. ET
December 7, 2008

WASHINGTON (AP) -- President-elect Barack Obama has chosen retired Gen. Eric K. Shinseki to be the next Veterans Affairs secretary, turning to a former Army chief of staff once vilified by the Bush administration for questioning its Iraq war strategy.

Obama will announce the selection of Shinseki, the first Army four-star general of Japanese-American ancestry, at a news conference Sunday in Chicago. He will be the first Asian-American to hold the post of Veterans Affairs secretary, adding to the growing diversity of Obama's Cabinet.

''I think that General Shinseki is exactly the right person who is going to be able to make sure that we honor our troops when they come home,'' Obama said in an interview with NBC's ''Meet the Press'' to be broadcast Sunday.

NBC released a transcript of the interview after The Associated Press reported that Shinseki was Obama's pick.

Shinseki's tenure as Army chief of staff from 1999 to 2003 was marked by constant tensions with Defense Secretary Donald Rumsfeld, which boiled over in 2003 when Shinseki testified to Congress that it might take several hundred thousand U.S. troops to control Iraq after the invasion.

Rumsfeld and his deputy, Paul Wolfowitz, belittled the estimate as ''wildly off the mark'' and the general was marginalized and later retired from the Army. But Shinseki's words proved prophetic after President George W. Bush in early 2007 announced a ''surge'' of additional troops to Iraq after miscalculating the numbers needed to stem sectarian violence.

Obama said he chose Shinseki for the VA post because he ''was right'' in predicting that the U.S. will need more troops in Iraq than Rumsfeld believed at the time.

''When I reflect on the sacrifices that have been made by our veterans and I think about how so many veterans around the country are struggling even more than those who have not served -- higher unemployment rates, higher homeless rates, higher substance abuse rates, medical care that is inadequate -- it breaks my heart,'' Obama told NBC.

Shinseki, 66, is slated to take the helm of the government's second largest agency, which was roundly criticized during the Bush administration for underestimating the amount of funding needed to treat thousands of injured veterans returning from Iraq and Afghanistan.

Thousands of veterans currently endure six-month waits for disability benefits, despite promises by current VA Secretary James Peake and his predecessor, Jim Nicholson, to reduce delays. The department also is scrambling to upgrade government technology systems before new legislation providing for millions of dollars in new GI benefits takes effect next August.

Sen. Daniel Akaka, D-Hawaii, and chairman of the Senate Veterans Affairs Committee, praised Shinseki as a ''great choice'' who will make an excellent VA secretary.

''I have great respect for General Shinseki's judgment and abilities,'' Akaka said in a statement. ''I am confident that he will use his wisdom and experience to ensure that our veterans receive the respect and care they have earned in defense of our nation. President-elect Obama is selecting a team that reflects our nation's greatest strength, its diversity, and I applaud him.''

Veterans groups also cheered the decision.

''General Shinseki has a record of courage and honesty, and is a bold choice to lead the VA into the future,'' said Paul Rieckhoff, executive director of the Iraq and Afghanistan Veterans of America. ''He is a man that has always put patriotism ahead of politics, and is held in high regard by veterans of Iraq and Afghanistan.''

Obama's choice of Shinseki, who grew up in Hawaii, is the latest indication that the president-elect is making good on his pledge to have a diverse Cabinet.

In Obama's eight Cabinet announcements so far, white men are the minority with two nominations -- Timothy Geithner at Treasury and Robert Gates at Defense. Three are women -- Janet Napolitano at Homeland Security, Susan Rice as United Nations ambassador and Hillary Rodham Clinton at State. Eric Holder at the Justice Department is African American, while Bill Richardson at Commerce is Latino.

Shinseki is a recipient of two Purple Hearts for life-threatening injuries in Vietnam.

Upon leaving his post in June 2003, Shinseki in his farewell speech sternly warned against arrogance in leadership.

''You must love those you lead before you can be an effective leader,'' he said. ''You can certainly command without that sense of commitment, but you cannot lead without it. And without leadership, command is a hollow experience, a vacuum often filled with mistrust and arrogance.''

Shinseki also left with the warning: ''Beware a 12-division strategy for a 10-division army.''


The rest of the team in the real West Wing...note that the actual offices of some on "teams" above are actually in the White House. 
Chief of Staff Rahm on contact with Illinois Governor here.

Emanuel gone, Rouse in as chief of staff

By BEN FELLER, AP White House Correspondent
1 Oct. 2010

WASHINGTON – President Barack Obama on Friday said a bittersweet goodbye to the energetic and fierce manager of his White House, chief of staff Rahm Emanuel, and elevated a quiet and seasoned adviser, Pete Rouse, to the most important gate-keeping job in American politics.

"We could not have accomplished what we've accomplished without Rahm's leadership," Obama said. Emanuel is departing after nearly two grueling years to run for Chicago mayor.

The announcement was such a poorly kept secret that Obama joked it was "the least suspenseful announcement of all time," but it represented an important moment of transition for the presidency.

What Emanuel leaves behind is more than a staff job. It is the most demanding and influential position in the White House — save for Obama's. The person who holds it is entrusted to help shape the president's thinking, prioritize his time, manage scores of egos and issues and keep the White House focused on its goals.  The mood at the White House reflected that this was no ordinary staff change. Cabinet members and senior staff members packed the ornate East Room, a setting often reserved for visits of heads of state, for the official word that Emanuel, the hard-charging leader of the staff, was on his way out.

Rouse, named interim chief of staff, is a calm, trusted senior adviser to Obama who has spent much of his career as a chief of staff in the Senate.

"There is a saying around the White House: `Let's let Pete fix it,'" Obama said. "And he does."

In a nod to the political sensitivities of Emanuel's move, he never directly mentioned that he was running for mayor, and Obama didn't touch that, either. Emanuel, sure to be cast as an outsider by his competitors in the upcoming mayoral campaign, did not want to announce his run from Washington.  But Emanuel did call Chicago "the greatest city in the greatest country in the world." And he told Obama, "I'm energized by the prospect of new challenges, and eager to see what I can do to make our hometown even greater." The president and Emanuel, confidants and friends, hugged three times during the event.

"Mr. President, I thought I was tough," Emanuel told Obama. "I want to thank you for being the toughest leader any country could ask for in the toughest times any president has ever faced."

In an unusual display of emotion, Emanuel appeared to choke up as he spoke of his family's immigrant background, and the opportunities he himself has been afforded.

Rouse, befitting his style, stood quietly by the president and never spoke. Obama described him as never seeing a television camera or a microphone that he liked — unlike the boisterous Emanuel. The differences were even apparent on stage — Rahm with his trademark hands on hips, Rouse still and stoic.

Obama's choice of a permanent chief of staff will come in the context of a personnel reorganization, with some key players already planning to leave the White House grind and others likely seeing changes in their portfolios. The results of the Nov. 2 House and Senate midterm elections will also be a factor.

The mantra in the West Wing is that no one who works for the president is irreplaceable. And yet that's how they described Emanuel, a whirling force of ideas and energy with expertise in foreign policy, political campaigns, communications and the legislative process. Obama's aides talk of an unquestioned loss.

More than 150 staff members filled the seats of the East Room, snapping photos. The atmosphere was more joyful than sad, though the mood turned sober as Obama ticked through the list of problems they tackled together in the first 20 months of the administration.

Any feel-good reflection came in contrast to the political realities of the day. No sooner had Washington veteran Rouse been introduced than the Republican National Committee condemned the president for the choice, calling it an expansion of an "insular and out of touch White House."

Emanuel's move pits him against a growing field of local politicians vying for the job that will be vacated next spring by Chicago Mayor Richard M. Daley, who announced in early September that he will not seek a seventh term. Emanuel's victory in the race is no given, with rivals certain to attack the longtime political operative and former congressman as a brusque outsider who belongs more to Pennsylvania Avenue than Michigan Avenue.

Emanuel Eyes Chicago Run, Could Leave White House Soon
Wed Sep 22, 8:45 am ET

White House aides are preparing for the possibility that Rahm Emanuel may step down as chief of staff as soon as early October if he decides to run for mayor of Chicago, according to a person familiar with deliberations in the West Wing.

One issue hastening the timing of Emanuel's departure is concern over whether he can build a campaign operation while holding down the second most powerful job in the Federal Government. If he chooses to go forward with the mayoral race, Emanuel intends to be sensitive to the fact that his dual role could create the appearance of using his government office to his personal advantage, say two people familiar with internal deliberations.(See pictures of Obama's White House.)

Like other White House staff, Emanuel has been briefed by the counsel's office about the importance of not using government resources for personal endeavors. In recent days, he has been working the phones of Chicago political and community leaders; he has fielded a poll testing his chances; and he has met with Representative Jesse Jackson Jr., a potential rival in the crowded field. "His consideration of the mayoral race does not interfere with his official obligations, and he is fully aware of all the applicable requirements for conducting these deliberations," says an aide close to Emanuel.

The aide says Emanuel will not make a decision about whether or not to run this week, but was otherwise vague about when the decision would be made - or exactly when he might step down. Congress is scheduled to enter recess on Oct. 8, in advance of the Nov. 2 midterm elections. (Read about who wants to be Chicago's mayor.)

If Emanuel, a former Chicago Congressman, decides to run for mayor, he must gather 12,500 signatures by Nov. 22 in preparation for a Feb. 22 primary. Already, however, Emanuel has found himself hampered in his exploration of a mayoral run by his day job, which is among the most demanding positions in government, starting as early as 5 a.m. and continuing late into the evening. Several potential mayoral candidates, including Jackson, former U.S. Senator Carol Moseley Braun and Representative Luis Gutierrez, are also beginning the process of exploring candidacies to replace Mayor Richard M. Daley, who announced earlier this month that he would not seek a seventh term.(Read about the Daley dynasty.)

The White House has already begun preparing a list of replacements for Emanuel, who could be replaced by an interim chief of staff if a suitable candidate is not decided upon in time. Names that have been floated as possible replacements for Emanuel include Deputy National Security Adviser Tom Donilon; White House legislative strategist Philip Schiliro; White House counsel Bob Bauer; and Ron Klain, the chief of staff for Vice President Joe Biden.

White House aides have been emphasizing the abundance of choices when it comes to the possibility of replacing Emanuel. "No one is indispensable, and if he decides to go, there are many here ready to fill the breach," senior adviser David Axelrod said recently on NBC's Today Show.

Emanuel has long made no secret of his desire for the job of Chicago mayor, saying most recently on the Charlie Rose show in April, "I would like to run for mayor of the city of Chicago." Among his considerations is the fact that his wife and three children, all under the age of 14, recently relocated from Chicago to the Washington, D.C., area, where the children began the school year just weeks ago.

Obama’s Partisan, Profane Confidant Reins It In
January 25, 2009

WASHINGTON — Early this month, Barack Obama was meeting with the House speaker, Nancy Pelosi, and other lawmakers when Rahm Emanuel, his chief of staff, began nervously cracking a knuckle.

Mr. Obama then turned to complain to Mr. Emanuel about his noisy habit.

At which point, Mr. Emanuel held the offending knuckle up to Mr. Obama’s left ear and, like an annoying little brother, snapped off a few special cracks.

The episode, confirmed by Mr. Emanuel’s office, underscores some essential truths about Mr. Emanuel: He is brash, has a deep comfort level with his new boss, and has been ever-present at Mr. Obama’s side of late, in meetings, on podiums and in photographs.

There he was, standing at President Obama’s desk in one of the first Oval Office pictures; and again, playfully thumbing his nose at his former House colleagues during the inauguration; there he was, accompanying the president to a meeting with Congressional leaders on Friday.

Mr. Emanuel is arguably the second most powerful man in the country and, just a few days into his tenure, already one of the highest-profile chiefs of staff in recent memory. He starred in his own Mad magazine cartoon, won the “Your New Obama Hottie” contest on and has become something of a paparazzi icon around Washington.

In recent months, he has played a crucial role in the selection and courtship of nearly every cabinet member and key White House staff member.

Renowned as a fierce partisan, he has been an ardent ambassador to Republicans, including Mr. Obama’s defeated rival, Senator John McCain of Arizona. He has exerted influence on countless decisions; in meetings, administration officials say, Mr. Obama often allows him to speak first and last.

“You can see how he listens and reacts to Rahm,” said Ron Klain, the chief of staff to Vice President Joseph R. Biden Jr. “You can see that his opinion is being shaped.”

A reason Mr. Emanuel, 49, has drawn so much attention is that he seems to be in a kind of recalibration mode.

How will the feisty, bombastic and at times impulsive former congressman blend with the cool, collegial and deliberate culture of Obama World? And one that is trying to foster bipartisanship? This is someone who once wrote in Campaign and Elections magazine that “the untainted Republican has not yet been invented” and who two years ago — according to a book about Mr. Emanuel (“The Thumpin’ ” by Naftali Bendavid) — announced to his staff that Republicans are “bad people who deserve a two-by-four upside their heads.”

Efforts at a New Aura

It is clear to friends and colleagues that Mr. Emanuel is trying to rein himself in, lower his voice, even cut down on his use of profanity.

“As chief of staff, you take on the aura and image and, in some instance, the political values of the person you work for,” said former Representative Ray LaHood, an Illinois Republican who is now transportation secretary. “I think he’s beginning to morph himself into the Obama image.”

Mr. Emanuel acknowledged in an interview Friday that a stereotype of him as a relentless hothead has some factual basis. But it is an exaggerated or outdated picture, he said.

“I’m not yelling at people; I’m not jumping on tables,” he said. “That’s a campaign. Being the chief of staff of a government is different. You have different tools in your toolbox.”

Still, his high profile and temperament are at odds with that of some past White House chiefs of staff: they were often low-key types who put the “staff” part of their job titles before “chief” — as Andrew H. Card Jr., the longtime chief of staff to former President George W. Bush, suggested to Mr. Emanuel last month.

Mr. Emanuel, who had hopes of becoming House speaker, has stepped into a job characterized by short tenures — just under two and a half years, on average — high burnout rates and the need to subjugate personal ambitions to the service of the president.

He is not accustomed to fading discreetly into the background. As a staff member in the Clinton White House, a three-term House member from Chicago and the chairman of the Democratic Congressional Campaign Committee, he was viewed by many as a consummate purveyor of a crass, kneecapping brand of politics.

Mr. Obama acknowledged as much at a 2005 roast for Mr. Emanuel, who is a former ballet dancer, during which Mr. Obama credited him with being “the first to adopt Machiavelli’s ‘The Prince’ for dance” (a number that included “a lot of kicks below the waist”). When Mr. Emanuel lost part of his middle finger while cutting meat at an Arby’s as a teenager, Mr. Obama joked, the accident “rendered him practically mute.”

The video of that roast has become a recent sensation on the Internet and buttressed a view among some Republicans that Mr. Emanuel’s appointment was, in the words of the House minority leader, Representative John A. Boehner of Ohio, “an ironic choice for a president-elect who has promised to change Washington, make politics more civil.”

While acknowledging that he can be something of a showman, friends say Mr. Emanuel has calmed considerably.

“He’s more temperate now,” said David Axelrod, a senior White House adviser and longtime Emanuel friend who dismissed much of his flamboyant reputation as “pure myth.” Mr. Axelrod added, “A lot of it is a reputation he earned as a younger guy.”

On the Go Before Sunrise

Late Friday afternoon, at the end of his first week in the White House, Mr. Emanuel was sitting in his corner office, sick with a cold, baggy-eyed and looking tired. “Everyone keeps saying, ‘Are you having fun?’ ” he said. “Fun is not the first adjective that comes to mind.”

He woke as usual at 5 a.m., swam a mile at the Y, read papers and was in the office at 7 for the senior staff meeting at 7:30. There was a meeting in the Situation Room about Afghanistan; a leadership meeting; a conversation with the Senate majority leader, Harry Reid, Democrat of Nevada; a meeting with Senator Orrin G. Hatch, Republican of Utah; budget meetings; several conversations with the president.

Mr. Emanuel, in the interview, rejected any notion that he was reinventing himself for his new job. But he is mindful, he said, that he must fit into a culture that was forged over two years on a campaign, “a group that was part of a journey together.”

Mr. Obama had settled on his fellow Chicagoan to be his chief of staff well before he was elected. He was drawn to Mr. Emanuel’s experience in both the White House and Congress and called him “the whole package” of political acumen, policy chops and pragmatism. He is also a skilled compromiser. “He knows there is a time in this business to drop the switchblades and make a deal,” said Representative Adam H. Putnam, Republican of Florida.

Mr. Emanuel initially resisted taking the job. He came around after Mr. Obama insisted, saying these were momentous times and that the awesome tasks he faced required Mr. Emanuel’s help. The president-elect also assured Mr. Emanuel that the position would be the functional equivalent of “a No. 2” or “right-hand man,” according to a person familiar with their exchanges.

After taking the job, Mr. Emanuel spent endless hours reaching out to lawmakers. Mr. Reid gave out Mr. Emanuel’s personal cellphone number, with Mr. Emanuel’s blessing, at a caucus meeting of about 40 Senate Democrats this month. (“He seems to speak to every senator every day,” said Senator Charles E. Schumer, Democrat of New York.)

Mr. Emanuel has been equally solicitous of Republicans in Congress (who also have been given access to Mr. Emanuel’s private contact information). On days he does not swim, he works out, and conducts business, at the House gym: 25 minutes on the bike, 20 minutes on the elliptical, 120 situps, 55 push-ups and many sweaty conversations with his former colleagues. In a recent encounter there, for instance, with Representative Peter Hoekstra, Republican of Michigan, Mr. Emanuel secured his support for Leon E. Panetta to head the Central Intelligence Agency.

Mr. Emanuel has endured, or caused, some early distractions — his conversations with Gov. Rod R. Blogojevich of Illinois about Mr. Obama’s then-vacant Senate seat; his failure to alert Senator Dianne Feinstein, a California Democrat who is chairwoman of the Senate Intelligence Committee, to Mr. Panetta’s appointment.

So far, Mr. Emanuel has been more chief than staff in performing his job, according to several officials. He advocated fiercely for posts for fellow Clinton administration alums like Hillary Rodham Clinton and Mr. Panetta; not so much for the outgoing Democratic National Committee chairman, Howard Dean, with whom he had clashed while at the Congressional Campaign Committee. (“He was never negative about Dean,” said the Obama transition head, John D. Podesta, who added, “I wouldn’t characterize it as the other way, either.”)

Mr. Emanuel has also served as the administration’s chief headhunter. When the Office of Management and Budget director, Peter R. Orszag, had doubts about taking the job, Mr. Emanuel went into his default mode — jackhammering away at him, tracking him down in Hong Kong. “You can’t sit on the sidelines; you’ve got to come inside,” Mr. Emanuel told him.

Asked if “relentless” would be a fair characterization of Mr. Emanuel’s recruitment method, Mr. Orszag said, simply: “He’s Rahm. Come on.”

The selection of Mr. LaHood demonstrates Mr. Emanuel’s sway with Mr. Obama. After Mr. Emanuel sounded out Mr. LaHood about his interest in joining the administration, he was summoned to a meeting in Chicago with the president-elect.

The interview lasted 30 minutes, just Mr. Obama and Mr. LaHood.

“Look, Rahm Emanuel loves you,” Mr. Obama told Mr. LaHood as he prepared to leave. “He is really pressing me and pushing me. And it’s not that I don’t want to do it, but. ...”

A few days later, Mr. LaHood was selected to be transportation secretary.

Banter With the Boss

At a White House gathering with Mr. Obama and a bipartisan team of lawmakers on Friday, the House majority leader, Steny H. Hoyer, Democrat of Maryland, joked that Mr. Emanuel was too busy to talk to him, so he called the president instead. Mr. Obama said he was always happy to take calls for his chief of staff — a reference to an incident a few weeks ago when Mr. Hoyer called Mr. Emanuel, who was in the back of a car and claimed he was too busy to talk, so he handed the phone to Mr. Obama.

In meetings, it is not uncommon for Mr. Obama and Mr. Emanuel to engage in teasing banter. One White House official recalls an exchange last week in which Mr. Obama said something to the effect of, “Well, I was going to do that, but I didn’t want Rahm to mope for a half-hour.”

But it will not always be so pleasant for Mr. Emanuel. “He’s going to be blamed for a lot of things,” Representative Tom Cole, Republican of Oklahoma, said of his former colleague.

Saying no is a big part of being chief of staff. Infighting is inevitable; so are enemies and rivalries.

In addition to cabinet officials — and the vice president — a cadre of “senior advisers” who have long and varied histories with Mr. Obama will be seeking his attention. They include Pete Rouse (Mr. Obama’s chief of staff in the Senate), Valerie Jarrett (a close Obama family friend) and Mr. Axelrod, whose office is a few feet closer to the Oval Office than is Mr. Emanuel’s. The White House spokesman, Robert Gibbs, one of the Mr. Obama’s closest Senate and campaign aides, will also enjoy walk-in access to the president.

Mr. Emanuel has been in the job four days — and, by day’s end Friday, it looked more like four years.

He is slumped deep in his couch, periodically swatting at a giant fly that keeps orbiting his office. He is hoping to get out of the office to meet some friends for the Jewish Sabbath dinner. He has a physical therapy appointment for a pinched nerve in his neck. He missed his children — 8, 10 and 11 — who are visiting this week but are soon headed back to Chicago, where they are remaining for now. “For me to be the parent I want to be, I think it’s very hard,” he said, referring to the demands of his current job.

Just then, Mr. Orszag arrived at his door.

“Orz, what’s wrong?” Mr. Emanuel said. “Can you give me a minute, or do you need something?”

He needed something.

Mr. Emanuel left, returned and started talking about how his staffs tended to be loyal. “I drive people as hard as I drive myself,” he said.

Then Mr. Obama came to his door.

“Mr. President!” Mr. Emanuel said, jumping from his couch to his feet in something that resembled a dance move, and they walked out together.

Acid Test: The Lasting Effects of Political Poison
December 14, 2008

WASHINGTON — It came to John D. Podesta during a jog through the scenic Rock Creek Park over the Thanksgiving holiday weekend. His boss was going to be impeached and there was no way around it. It took Rahm Emanuel a little longer to reach that conclusion. And it fell to Gregory B. Craig to pick up the pieces once it happened.

Ten years ago this week, Bill Clinton became the first elected president ever impeached by the House of Representatives, the culmination of a sex-and-lies scandal that consumed the nation and fractured the political system. Although he was eventually acquitted by the Senate, the scars run deep even as veterans of that showdown return to power under a new president promising to repair the breach that still divides Washington.

As key members of Mr. Clinton’s defense a decade ago, Mr. Podesta, his chief of staff; Mr. Emanuel, his senior adviser; and Mr. Craig, his special counsel, bring the lessons of that searing moment to the table as they now serve in President-elect Barack Obama’s inner circle. They learned the imperatives of moving quickly, closing ranks, controlling information and never conceding an inch when the president faces a threat, strategies employed with varying degrees of effectiveness back then.

Those instincts took over again last week with the furor surrounding the alleged scheme by the governor of Illinois to sell Mr. Obama’s old Senate seat for personal advantage, perhaps a cabinet position or other favors from the incoming president. Mr. Podesta, now Mr. Obama’s transition co-chairman; Mr. Emanuel, the incoming White House chief of staff; and Mr. Craig, tapped to become White House counsel, knew the playbook.

Even though Mr. Obama had no known personal involvement, the Clinton veterans understood that was only part of the issue. They had Mr. Obama publicly declare he had never spoken with Gov. Rod R. Blagojevich about the Senate appointment. They imposed a cone of silence on colleagues so they would not make a remark that could come back to haunt them. And they ordered an internal inquiry to document any contacts with the governor’s advisers.

Republicans were ready to pounce, rushing out statements linking Mr. Obama to Mr. Blagojevich within an hour or so after the governor’s arrest was reported. They too knew the script and that any opening must be exploited. Politics in this hyperpartisan age, after all, is the ultimate contact sport.

Indeed, except for brief interludes, Washington in the last decade has been governed by a climate of anger and animosity, a modern-day tribalism pitting faction against faction that some trace to the days of the impeachment.

“It definitely poisoned the well on both sides,” said Representative Peter T. King of New York, one of the few Republicans to vote against impeachment. “Without getting into the merits of anything, there’s no doubt there were Democrats waiting from the day George Bush took office to even the score for Bill Clinton. And Republicans are the same today with Barack Obama and the Rod Blagojevich scandal.”

The Clinton impeachment was hardly the first partisan showdown in Washington or the first presidential scandal, but it was a singular confrontation that ultimately sucked in all three branches of government. On Dec. 19, 1998, the House voted largely along party lines to impeach him for perjury and obstruction of justice for trying to cover up sexual liaisons with a former White House intern, Monica S. Lewinsky. After a trial with Chief Justice William H. Rehnquist presiding, the Senate fell short of the two-thirds needed for conviction. Mr. Clinton was later found in contempt of court by a federal judge and, in his last hours in office, cut a deal with federal prosecutors admitting he did not tell the truth under oath and accepting disbarment.

In some ways, Mr. Clinton emerged better off than his foes. He remains on the world stage and, with Hillary Rodham Clinton about to become secretary of state, is opening a new chapter. Most of those who pursued the charges have retreated from public life.

Newt Gingrich, Bob Livingston and Tom DeLay, the House Republican leaders at the time, all eventually resigned under pressure for various reasons. Only 3 of the 13 House Republican “managers” who prosecuted Mr. Clinton in the Senate trial will still be in Congress when Mr. Obama is inaugurated.

But those managers still believe they did the right thing holding a president to account for breaking the law. “It was a high-stakes battle over historic American values, the rule of law and the Constitution,” former Representative Asa Hutchinson of Arkansas said in an interview this year. “I hope that will be the first line of history — it was a battle over values of extreme importance. Having said that, I think the second line will be that partisan differences meant that they were unable to find a bipartisan solution.”

Former Representative James E. Rogan, Republican of California, who lost re-election, said he had no regrets. “I did what you’re supposed to do in politics,” he said. “I went home, made the best case I could make for what I did to my constituents and they shellacked me.” But he added: “If the question is, knowing what I know now would I have done everything differently, the answer is no. I did my duty as I saw it.”

With the passage of time, others have come to a different conclusion. “At the end of the day, the Republicans were hurt more,” said Mark Corallo, an aide to Mr. Livingston at the time and later a Justice Department spokesman under President Bush. “We became the party of the moral jihad. I’m as guilty as anyone. We all got wrapped up in it.”

Some blame the fixation on impeachment for distracting attention away from larger issues, like the looming threat of Al Qaeda. This was, after all, a battle waged in the luxury of peace and prosperity. Certainly today, in an era of collapsing banks and teetering automakers, terrorist cells and roadside bombs, Mr. Clinton’s prevarications about sex seem less profound.

But the impeachment represented the triumph of partisanship on both sides of the aisle, a partisanship that remains today. Democrats made a calculated decision to stick by a president of their party no matter his transgressions and to promote partisan division in the Congressional proceedings so they could discredit the other side. Republicans were so intent on turning out Mr. Clinton that they turned away from opportunities for a bipartisan solution.

The result has been a distaste for impeachment but little appetite for consensus. Liberal Democrats agitated to impeach Mr. Bush in connection with the Iraq war, warrantless surveillance and interrogation policies, but party leaders had no interest in going down that road again. “Although there are powerful arguments that President Bush has committed high crimes and misdemeanors, there are questions about whether it is prudent to do so,” said Bruce Ackerman, a Yale Law School professor.

Mr. Bush’s defenders would strenuously disagree. In their minds, the very talk of impeachment over policy differences represents the real cost of the Clinton clash. Mr. Bush, after all, campaigned for office promising to sweep out the toxic atmosphere in Washington, only to find that his disputed election had further polarized the capital and the nation. As he prepares to take leave eight years later, he calls his inability to change the political climate one of his regrets.

Now comes Mr. Obama, who also talks about leaving old battles in the past. But in Washington, the past is stubborn and the knives sharp. And there are many reasons Mr. Obama has hired those who have been in a knife fight before. As Mr. King put it, “It’s much more accepted that you’re going to go for the jugular of a president.”

Emanuel Had Contact With Governor’s Office on Senate Seat
December 14, 2008

CHICAGO — President-elect Barack Obama’s chief of staff, Rahm Emanuel, communicated with the office of Gov. Rod R. Blagojevich of Illinois about potential candidates for Mr. Obama’s Senate seat and provided a list of names, according to two Obama associates briefed on the matter.

The Obama associates said the interactions concerned several people who might fill the seat. Such contacts are common among party officials when a political vacancy is to be filled. It was not clear whether the communication was via direct telephone calls.  The Chicago Tribune reported that communications between Mr. Emanuel and the governor, both Democrats, had been captured on court-approved wiretaps, but Obama associates gave conflicting accounts of the interactions.

Obama aides have said privately that Mr. Emanuel did not engage in any deal-making with Mr. Blagojevich, whom federal prosecutors charged last week with conspiring to turn a profit from the appointment. The federal inquiry is looking into the exact nature of Mr. Emanuel’s contacts with the governor’s office. Mr. Emanuel has not been accused of wrongdoing by federal prosecutors.

Mr. Obama has said he has never spoken with the governor about the seat. But Mr. Obama’s aides have declined for five days to answer publicly questions about what discussions they had about the seat, with several saying they were doing so at the request of the office of Patrick J. Fitzgerald, the United States attorney for the Northern District of Illinois.  In announcing the charges against Mr. Blagojevich, Mr. Fitzgerald said the president-elect was not implicated in the case.

The Illinois governor alone has the power to fill such vacancies. The criminal complaint against him alleges that he sought to benefit personally from the appointment by securing high-paying jobs for himself and his wife, or campaign contributions, in return for his selection.

Mr. Obama said Thursday that his aides were looking through all of their possible contacts with the governor and would release more information in the coming days. Republicans, meanwhile, have raised questions about Mr. Obama’s refusal to say more and about his past ties with the main characters in the story.

Mr. Emanuel’s list of possible candidates included a senior adviser to Mr. Obama, Valerie Jarrett; the Illinois attorney general, Lisa Madigan; Representative Jan Schakowsky; and Dan Hynes, the state comptroller.  The criminal complaint quotes Mr. Blagojevich as saying at one point that Mr. Obama’s aides were not willing to give him anything more than “appreciation” in return for appointing a candidate they favored.

Ms. Schakowsky told The New York Times last week that she called Mr. Emanuel last month when she was exploring whether she might fill Mr. Obama’s seat. She and Mr. Emanuel had served in the House together.  Ms. Schakowsky said Mr. Emanuel had declined to tell her if Mr. Obama had a favorite to fill the seat. She said he seemed wary about Mr. Blagojevich.

Transition officials would not comment publicly on Saturday.  One of the schemes Mr. Blagojevich is accused of involves Mr. Emanuel’s House seat, for which Illinois law requires a special election.

According to the criminal complaint, Mr. Blagojevich talked about approaching an unnamed “president-elect adviser” to ask for help raising “10, 15 million” for the governor to start a nonprofit organization.  The complaint quoted Mr. Blagojevich as saying that when the president-elect adviser asked him about the special election for the House seat, Mr. Blagojevich wanted “it to be in his head.”

Helene Cooper reported from Chicago, and Jackie Calmes from Washington. David Johnston contributed reporting from Washington.

Michael Reynolds/European Pressphoto Agency  (Gibbs in action), top.

Gibbs is resigning as White House press secretary
By BEN FELLER, AP White House Correspondent
5 January 2011

WASHINGTON – Robert Gibbs, the White House press secretary and one of the most visible and forceful advocates for President Barack Obama, said Wednesday he is quitting his job to become an outside political adviser. The change is among the many expected in the coming days as Obama redefines his leadership team to gear up for a re-election bid and a more powerful Republican Party.

Gibbs said he would be leaving the White House by early February. The top contenders to replace him are two of his deputies, Bill Burton and Josh Earnest, and Jay Carney, who is communications director to Vice President Joe Biden.

The move allows Gibbs to escape the grinding pace of the press secretary's job, make money giving speeches and spend more time with his wife, Mary Catherine, and their 7-year-old son, Ethan. From the outside, he will still be a key voice in Obama's decision-making, and he will end up back in a pivotal role in Obama's campaign for a second term.

In a statement, Obama described Gibbs as a friend and one of his closest advisers.

"I think it's natural for him to want to step back, reflect and retool," the president said. "That brings up some challenges and opportunities for the White House - but it doesn't change the important role that Robert will continue to play on our team."

The move alters the dynamic of the White House, particularly combined with the coming departure of senior adviser David Axelrod, who, like Gibbs, has been at Obama's side for his entire presidential run. Obama is losing daily proximity to two of the aides who best know the way he thinks and who remember personally all the pledges of the campaign.

To the world outside of Washington's insular political scene, Gibbs is the rare White House staff member who is considered a familiar face. His sparring with reporters during his press briefings have filled hours of television the last two years.

Gibbs, 39, expressed huge gratitude for getting to serve in the White House. "Over the course of the next two years, we're going to be involved in discussions about which direction to take this country, and in 2012, we'll have a presidential election," he said. "I don't have any fears that there won't be plenty of roles (for himself) outside of the White House."

Obama is also weighing a change at the top staff job at the White House and perhaps in all of politics: his chief of staff. The interim holder of that job, Pete Rouse, may leave soon, and the president is considering bringing in William Daley, the banking executive and former Commerce secretary under President Bill Clinton.

In the coming days and weeks, Obama is expected to have a new chief economic adviser, a new senior political counselor, and two new deputy chiefs of staff. Collectively, the moves reflect that change is coming to the White House in ways that will alter the dynamic of the place — and, in turn, will influence the agenda affecting the nation.

For all the insider intrigue that surrounds who is coming and going, the overlooked element is why.

One core factor shaping Obama's thinking is the new dynamic in Washington. Republicans have won control of the House and eroded the Democratic majority in the Senate, which fundamentally changes the White House agenda.

Obama's chief of staff must reorient his legislative and legal departments to deal with a Republican-led House. The White House will be on the defensive much more than the offensive, trying to protect and enforce the huge health care and Wall Street reform laws of the last year, and getting more organized to deal with aggressive Republican oversight.

Another issue at play is fatigue. People like Axelrod and Gibbs who have been with Obama from the start are ready for a break. So are others in a White House that has kept a crushing schedule. Some senior staff members are eager for fewer hours, more family time and a bigger private-sector salary. Staff members are being asked to either leave shortly or stay for the remaining two years of the term.

Soon to join the White House staff is David Plouffe, the architect of Obama's presidential campaign, who will essentially replace Axelrod as the top political adviser. Gibbs, in turn, will work out of the private office near the White House that has been used by Plouffe, who has written a book and counseled Obama since the end of the 2008 election.

Gibbs said he and Obama have been discussing the spokesman's departure for a while. "I'm going to continue to help him," Gibbs said, "so he's happy with that."

How Obama is rebooting his operation is the broader story, and the aides guiding him are a central part of it.

The White House goal is to become more efficient and less insular, to realign itself for divided government, to find fresh voices and to get Obama re-elected. A major emphasis will be to ensure that the campaign works in tandem with the White House, with Obama loyalists spread across the parallel operations or helping from outside both of them.

Among the expected changes:

_Daley is under serious consideration to replace Rouse as chief of staff, which is considered the most important gatekeeping job in American politics. Rouse, a camera-shy adviser to Obama who has served smoothly as interim chief of staff, had never wanted to do it for long. If Rouse decides to leave, Daley will likely come aboard. No other scenarios are being strongly considered. Obama and Rouse are expected to decide shortly.

_Gene Sperling, a Treasury official and deficit hawk with ties to Wall Street and the Clinton administration, is considered most likely to become Obama's chief economic adviser. That announcement could come as soon as Friday. Sperling would replace Lawrence Summers as director of the National Economic Council. The job becomes even more important considering that no task is more vital to Obama, both for the country's well-being and his own political fortunes, than boosting job growth in a time of high unemployment.

_Jim Messina, the deputy chief of staff who juggles operations, politics and legislative roles, is expected to leave to run Obama's re-election bid out of Chicago. He will likely be replaced by Alyssa Mastromonaco, whose portfolio would center on overseeing the operational aspects of the White House, including staffing and budgeting. Mona Sutphen, Obama's deputy chief of staff for policy, is also expected to leave her post.

_Axelrod, one of Obama's most trusted advisers and strategists, is leaving the White House after the State of the Union speech in January. He plans to recharge at home in Chicago and play a significant role in Obama's re-election bid.

__In the office of the first lady, Tina Tchen will become chief of staff to Michelle Obama, replacing Susan Sher., the White House said Wednesday. And Vice President Joe Biden's chief of staff, Ron Klain, announced Tuesday that he would be leaving for a private sector job.

Gibbs Responds to CNBC Correspondent’s Attack on Housing Plan
By Sheryl Gay Stolberg
February 20, 2009, 3:38 pm
The White House press secretary, Robert Gibbs, answered questions Friday about a CNBC correspondent’s remarks against President Obama’s housing bailout plan.
The old Robert Gibbs was back on Friday, using his perch as President Obama’s press secretary to go into a full broadside against a CNBC reporter, bluntly disagree with Mr. Obama’s transportation secretary and practically call for the resignation of Senator Roland W. Burris of Illinois.

Mr. Gibbs has largely kept his famously barbed tongue in check since Mr. Obama took office last month. On Friday, though, he was in rare form, and the usually sleepy White House briefing was far livelier for it.

Mr. Gibbs stopped just short of saying that Mr. Burris should quit. The senator is facing calls for his resignation over his contradictory statements about whether he had contact with the disgraced former Illinois governor, Rod R. Blagojevich, who was impeached amid accusations he tried to sell Mr. Obama’s old Senate seat.

“I think it might be important for Senator Burris to take some time this weekend to either correct what has been said — and certainly think of what lays in his future,’’ Mr. Gibbs said, adding the senator needs to “come up with an explanation that satisfies’’ his critics.

Mr. Gibbs also shot down a suggestion by Transportation Secretary Ray LaHood that Americans should pay a mileage-based gasoline tax. The press secretary said flatly that would not be the policy of the Obama administration.  Mark Smith, an AP Radio reporter, asked if Mr. LaHood speaking out of turn.

“I would direct you to Secretary LaHood,’’ Mr. Gibbs said.

Mr. Smith said he had just called Mr. LaHood.

“Well,’’ Mr. Gibbs replied, “call him back.’’

But it was Rick Santelli, the CNBC reporter and former derivatives trader who railed against Mr. Obama’s housing plan on the floor of the Chicago Mercantile Exchange, who drew Mr. Gibbs’s deepest wrath. Mr. Santelli complained that the president’s housing plan rewarded “bad behavior” and suggested creating an Internet Web site to allow Americans to vote on whether they wanted to subsidize “losers’ mortgages.”

Mr. Gibbs decried Mr. Santelli for what he called a rant and made these observations:

“I’m not entirely sure where Mr. Santelli lives or in what house he lives but the American people are struggling every day to meet their mortgage, stay in their job, pay their bills, send their kids to school.’’

And: “You can’t stay in this program unless you continue to make mortgage payments. That’s important for Mr. Santelli and millions of Americans to understand.’’

And, “Mr. Santelli has argued, I think quite wrongly, that this plan won’t work for everyone.’’

And: “Now every day when I come out here I spend a little time, reading studying the issues, asking people who are smarter than I am questions about those issues. I would encourage him to read the presidents plan and understand that it will help millions of people many of whom he knows. I would be more than happy to have him come here and read it. I’d be happy to buy him a cup of coffee — decaf.”

A good kicker, perhaps, but Mr. Gibbs was not finished. He finished by holding up a copy of the plan, as television cameras rolled, and urged Mr. Santelli to look it up on the White House Web site.

“I also think it’s extremely important for people who rant on cable television to be responsible and understand what they’re talking about,’’ he said. “I feel assured that Mr. Santelli doesn’t understand what he’s talking about.’’

Magazine Preview (Dec. 17, 2008 online): Between Obama and the Press
December 21, 2008

ROBERT GIBBS’S HEADY WASHINGTON RISE was certified on a humid day in June when a procession of media and political fancies gathered in tribute to Tim Russert, the “Meet the Press” host who died of a heart attack several days earlier. The memorial service was a sweet, solemn and star-struck occasion that, as these events often do, yielded a neat snapshot of the Celebrity Washington food chain — who was up, who was down, who was winning the week.

In a smiling stampede of congratulations, mourners were wearing out the red-carpeted aisles of the Kennedy Center to get to Gibbs, a journeyman campaign flack who had latched onto Barack Obama’s Senate race four years earlier and has been his chief spokesman ever since. By now a senior adviser to Obama, Gibbs was here, along with Obama’s chief strategist and message guru, David Axelrod, to represent the soon-to-be Democratic nominee.

“The new It guys,” declared Anne Schroeder Mullins, a gossip columnist for, noting the shameless run on Gibbs and Axelrod. “I bet they’re being inundated with people trying to book Barack on their shows.”

The paradox of this scene was that the Obama campaign’s communications strategy was predicated in part on an aggressive indifference to this insider set. Staff members were encouraged to ignore new Web sites like The Page, written by Time’s Mark Halperin, and Politico, both of which had gained instant cachet among the Washington smarty-pants set. “If Politico and Halperin say we’re winning, we’re losing,” Obama’s campaign manager, David Plouffe, would repeat mantralike around headquarters. He said his least favorite words in the English language were, “I saw someone on cable say this. . . .”

The campaign bragged that Obama never even visited with the editorial board of The Washington Post — a decision that would have been unheard of for any serious candidate in a previous presidential cycle. “You could go to Cedar Rapids and Waterloo and understand that people aren’t reading The Washington Post,” Gibbs told me last month in Chicago.

It was a source of great amusement to Obama’s staff that people thought they could use conventional schmoozing practices to win favor with them. “In part because we were in Chicago and in part because of our approach, we did not do ‘cocktail party’ interviews,” said Dan Pfeiffer, the campaign’s communications director, who will be the deputy communications director at the White House. “These are interviews that you agree to because you were always bumping into the reporter at cocktail parties, and they keep asking for the candidate’s time. We could laugh every time our opponents would do them.”

There was a sense among Obama’s communications team that not only did they have a gifted candidate to ride but also that they had figured out new ways to maximize their advantages. The campaign highlighted its mastery of new political media that included a vast database of e-mail addresses and an ability to quickly put up Web sites and use blogs, online video and text messaging. They viewed themselves as “game changers” (the 2008 cliché for innovators), avatars of a New Way organization that had more in common with a Silicon Valley start-up — think Google or YouTube — than with any traditional political campaign that came before it.

But Obama’s New Way organization was grounded largely on Old School codes — notions of loyalty, aggressiveness and discretion. Keep things in the family. “We all believe this isn’t about us, it’s about something bigger than us as individuals,” Gibbs told me. “And that governed our ability to keep information to ourselves.”

As much as the Obama communications philosophy was geared to attacking George W. Bush, the operation itself had a lot in common with Bush’s presidential campaigns of 2000 and 2004, and the Bush White House. Like Bush’s, Obama’s campaign brain trust was unusually small and close-knit. This was especially true of the candidate’s traveling orbit — “the plane” or “the bubble,” as it is known in campaign shorthand. Gibbs was a relentless presence there, usually at Obama’s side. Along with Axelrod, they formed a trio at the front of the plane. (Plouffe rarely traveled after the primaries, nor did Anita Dunn, another top adviser.) This enabled the Obama team to maintain tight control of its information. They prided themselves on never leaking. If there was any turf-wrestling, power-grabbing or tantrum-throwing in the Obama campaign, it was never for press consumption — in contrast to the campaigns of Hillary Clinton or John McCain, both of which (God love ’em) dished out all-you-can-eat buffets.

Obama’s operatives spoke with a single voice and a precise message and only when they wanted to. They did it with a smile, not complaining — at least not publicly — about how the press was the enemy. And they did it using interactive tools that bred a feeling of real-time connectedness between campaign and voter.

At the forefront of Obama’s tightly held communications operation was Gibbs, an affable Alabaman with pit-bullish tendencies behind the scenes in defense of his boss. He bragged that he did not tell even his wife that Obama had picked Joseph Biden as his running mate until the campaign revealed it in a mass text message.

As he prepares to become the White House spokesman, Gibbs is acutely aware that it will be harder to enforce discipline from the seat of government than from the seat of the campaign plane. And sure enough, the incoming administration has endured a leaky few weeks. The names of several cabinet nominees appeared in the media before they were announced or even finalized in some cases.

When I spoke to Obama by phone earlier this month, he said he was not surprised by this. “The transition involves an awful lot of people who don’t actually work for me,” he said. “You’ve got a slew of volunteers in every agency in the vetting process. You’ve got F.B.I. folks involved when it comes to appointments. So we anticipated that we weren’t going to be able to march in lock step on our communications as effectively.” Still, Obama was said to be furious over the serial public airings about Hillary Clinton’s eventual nomination to be Secretary of State. He sent an explicit message that anyone caught leaking would be fired — and he sent it through his newly named chief of staff, Rahm Emanuel, who a couple of weeks earlier conducted a very public hand-wringing about whether he would take that job.

Obama’s advisers today convey some weary acknowledgment, if not shell shock, over how they no longer inhabit the contained decision-making cocoon of a few months ago. “The campaign is over,” Plouffe told me. “It’s never going to be the same. I think everyone is wistful.”

Obama said that it will be easier to replicate the leak-free environment of the campaign “once we get into the building,” meaning the White House. But he is also realistic: “This is Washington. Or it will be Washington. So I’m sure it will not be perfect.”

Since Election Day, Gibbs has been the picture of a man in transition. He worked from Obama’s former campaign office on Michigan Avenue in Chicago for a while, even after it was a dark, largely vacated and depressing shell of the former nerve center. “It’s like that hotel from ‘The Shining’ in here,” he said when I visited him there a few days after the election. After the old headquarters closed, Gibbs shuttled between the Chicago Federal Building (home to the Obama transition office), Hyde Park (still home of the president-elect), Washington (the other Obama transition office) and Alexandria, Va. (where he lives with his family). In recent weeks, he has been largely invisible to the public, other than the times he stood off to the side during Obama’s press conferences at the Hilton Chicago and shouted “last question” after the president-elect had taken anywhere from six to nine.

Gibbs is about to start a job that, like the presidency, seems to age its occupants disproportionately to the years they spend in the job. And it happens live and on C-Span. Known in Washington shorthand as “the podium job,” it has achieved a certain iconic stature — or thanklessness — in the ritual kabuki of Washington. White House press secretaries get a daily blistering from the press, nightly ridicule from comedians and are subjected to the widespread belief that they are unhelpful, obfuscating puppets — which, of course, they sometimes are.

The job also carries a distinct stature. Podium veterans are typically remembered for their work in the briefing room more than anything else. Gibbs has already become well accustomed to the odd celebrity that accompanies high-profile front men in the cable age: people recognizing him in airports, campaign volunteers asking for his autograph. One local driver told Gibbs she was as excited to meet him as she was to meet Obama.

On the Saturday after Thanksgiving, I met Gibbs for lunch at a cafe near his home in Alexandria. He is 37 but has an ageless face — at once boyish and well worn — that could put him anywhere from 25 to 50. Gibbs gained considerable weight during the campaign that he is trying to shed, and he has a habit — maybe unconscious — of running his hands up and down his paunch while he speaks. (“The chronicle of his weight is a story unto itself,” Obama told me.)

Gibbs scrolled back a few days on his BlackBerry to show me a helpful reminder that the current White House spokeswoman, Dana Perino, sent him. “Remember to unlist your phone number,” it said. “Your wife will thank you.” (His wife, Mary Catherine, had already thought of that.)

Podium alums share a bipartisan kinship, signified by the ceremonial flak jacket that hangs in the closet of the press secretary’s West Wing office. It was placed there originally by Gerald Ford’s podium man, Ron Nessen. Outgoing press secretaries write notes of advice for their successors and leave them in one pocket. Every previous note remains there, neatly arranged and tied together in a ribbon. “You can’t see the jacket,” Perino told me when I visited her office a few days before Thanksgiving. It’s reserved for club members, apparently.

Perino gave Gibbs a tour of her office shortly after Election Day. “Robert strikes me as a very calm person,” she said. “I try to be calm. People say I am calm. But I’m like a duck. Underneath, I’m paddling, paddling, paddling.”

Gibbs says he’s not nervous. “I don’t think nervous is the right word,” he said. “I don’t think there’s any preparation for it.”

OBAMA INSIDERS TEND TO SHUDDER at any parallels to George W. Bush, but many reporters and rivals have noted the “Bush-like” tendencies the Obama campaign demonstrated in its ability to control information. The comparison is generally meant as a compliment (albeit a grudging one) by members of the press and expressed enviously by veterans of other campaigns. Plouffe himself admitted to me that the Obama campaign subscribed to the “Bush model” of communications discipline. Asked if Obama himself spoke of the “Bush model,” Plouffe told me he did.

“We talked a lot about the Bush model, which is that there are a few people who really know everything,” Plouffe told me in early December. That helps ensure an airtight bubble of knowledge. “If there was leaking, we tried to find out who did it,” Plouffe said. “You didn’t have to worry about having a conference call and anything getting out. That’s the value of a small, continuitous group.”

Like the Bush model, the Obama model also clearly allowed for combat with the press, sometimes extending to punishment, which was usually doled out by Gibbs. In the course of the campaign, especially at the end, a smattering of reporters claimed that they were left off the Obama plane in retribution for negative reports they had filed or for the perceived sins of their news outlets (i.e. endorsing John McCain). Campaign officials denied ever taking such actions — usually citing “space reasons.”

I asked Gibbs if any journalists had been kept off the Obama plane for reasons other than space. “No,” he said at first, but then added, “on occasion yes.” It was rare, he added. “I mean, were there occasions? Sure.”

Gibbs, Obama told me, “is in some ways different than me. Robert is combative in a lot of ways. He can be pretty tough on folks at times. But there is a core integrity about Robert that is combined with a great strategic sense.”

Gibbs acknowledged that there were times in the campaign when he became overly aggressive with certain reporters, which he regrets. When he speaks of press relations, Gibbs tends to do so in metaphor. “Do you build a moat between the two, or do you build a drawbridge?” Gibbs said, the “two” being the press and presidency. He said he advocates the drawbridge approach.

“I might have tended in the campaign to have more of a sledgehammer in lieu of a fly swatter,” he told me. Overlooking that Gibbs was equating reporters with flies, I quibbled with the premise that a fly swatter is in fact a softer way to engage — the fly usually dies, after all.

“True,” Gibbs said, and tried another metaphor. “It’s more like, if you see every problem as a nail, then every time you use a hammer, so to speak.”

ONE WAY THAT THE OBAMA MODEL in the White House would diverge sharply from the Bush model is that Gibbs knows his principal intimately — Obama’s mind, his history, his rhythms. In addition to his podium duties, Gibbs said he plans to continue to spend a great deal of time advising Obama. “That’s part of the role that the president-elect wants me to be taking on,” he told me.

Obama praises Gibbs’s intuitive sense of “what is on the minds of the American people,” and his ear for “how things play” in the media. “He’s honest, sometimes to a fault,” Obama said. “And he’s passionate about folks getting a fair shake.” Gibbs, he added, is “invaluable in any discussion we’re having about policy or politics. And beyond that, I trust him completely.”

None of Bush’s press secretaries had that kind of relationship with the president — not Ari Fleischer, Scott McClellan, Tony Snow or Perino. Nor did Bush seem to want much revelatory information imparted from the podium.

In one semifamous vignette, Bush’s communications team was holding a quiet celebration in the Roosevelt Room a few days after his re-election in 2004. The president stopped by to thank everyone for their efforts and then singled out McClellan, his robotically on-message front man. “I want to especially thank Scotty,” the president said. “I want to thank Scotty for saying” — and he paused — “nothing.”

Having a White House spokesman who is close to the president has advantages. “When the you-know-what hits the fan, knowing of what you speak is an invaluable asset,” said Jody Powell, who served as President Carter’s press secretary for his entire term in office. “How can you expect someone getting thirdhand information to get any respect from the press or public?”

Dan Bartlett, the communications director for Bush from 2001 to 2005, says Gibbs will have access to a vast body of institutional and personal knowledge about Obama that will clearly bolster his authority from the podium. “The flip side of that,” Bartlett added, “is that you never want to get into a situation where the principal” — the president — “doesn’t want to burden the spokesman with information they can’t use.”

A former White House communications adviser who asked not to be named told me, “If you don’t handle it right, having a White House press secretary who is also a confidante can be radioactive.” Having an “open-door chain of command” between their two offices, the former adviser said, can lead to a spokesman feeling pressure to lie to protect the president. Gibbs will report to Emanuel but will have walk-in privileges in the Oval Office, about 25 feet from his own. As in the campaign, the Obama White House will be “very collegial” and “not excessively hierarchical,” Axelrod said.

But the president-elect is unequivocal in saying that he expects the podium to be Gibbs’s “singular” priority. “He will continue to be in our strategic meetings,” Obama said, “but his focus is going to be on making sure that, when speaking for me or the White House, he’s got it all buttoned down.”

In previous White Houses, there was a more formal chain of command that often places the podium job a few layers away from the president. The communications director typically oversees the press secretary and also spends time in the Oval Office, advising the president. George Stephanopoulos played that role in Bill Clinton’s administration and Bartlett did so during Bush’s first term. Stephanopoulos had a brief and somewhat disastrous stint as the White House spokesman at the start of the Clinton administration but quickly shed that role when it was clear that he could not do it in addition to running the communications shop and advising Clinton.

In the Obama communications operation, Axelrod will continue to oversee the media and message strategy. Emanuel will clearly have a pivotal role. And Pfeiffer, the deputy director of communications, and Ellen Moran, the new White House communications director, will try to offset Gibbs’s well-known allergy to things management-related. Gibbs is prone to being disorganized. He also has a frustrating and at times harmful knack for going dark for long periods of time, ignoring urgent e-mail messages from reporters or co-workers. Early in the campaign, Gibbs was essentially overseeing Obama’s communications strategy and operations — and the situation was charitably described as a mess by people within the campaign and journalists who dealt with it. Things improved immeasurably when Anita Dunn came on in February to run the communications team.

“Challenged,” is how Gibbs describes himself when asked how he is as a manager. “It’s not what I’m good at, not what I want to do,” he said.

One unknown is how Gibbs’s relationship with Obama will be affected by the new set of variables between them — the added layers of cabinet secretaries, the vice president and the new White House staff that is not steeped in the drama-free Obama culture. When I asked Gibbs who will yell at him when he messes up at the podium, he laughed and said, “My guess is, people will be lining up to yell at me.”

ON A TEAM known for its cerebral, even-tempered approach, Gibbs is something of a scrappy populist. “Because he has a Southern accent, I often think that he is underestimated by people,” Dunn said of Gibbs, who tends to be playfully chauvinistic about his Southern heritage. He counts himself a member of an organization called Rednecks for Obama, started by two old guys from Missouri operating out of a pick-up truck. He is a proud owner of a Rednecks for Obama T-shirt, button, bumper sticker and sign, all of which he says he will take to his office at the White House.

Called “Bobby” as a kid, Gibbs spent his formative years in the college town of Auburn, Ala. The son of two librarians, Gibbs hated to re