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Monday, January 30, 2006 | 9:15 a.m. ET
From Elizabeth Wilner, Mark Murray, Huma Zaidi and Holly Phillips

First glance
President Bush's 10:00 am Cabinet meeting today is the White House's latest effort to dominate coverage and set the tone leading up to his State of the Union address tomorrow night. After the speech, Bush will hit the road to build public support for his ideas.

  1. Other political news of note
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      House Speaker John Boehner became animated Tuesday over the proposed Keystone Pipeline, castigating the Obama administration for not having approved the project yet.

    2. Budget deficits shrinking but set to grow after 2015
    3. Senate readies another volley on unemployment aid
    4. Obama faces Syria standstill
    5. Fluke files to run in California

Senate Democrats, meanwhile, will detour from their pre-SOTU emphasis on lobbying reform and the troubled Medicare prescription-drug plan and force a procedural vote to determine whether or not they have the necessary 41 votes to filibuster Supreme Court nominee Sam Alito. The vote is scheduled for 4:30 pm. The effort is expected to come up short, but those leading it believe that the last-minute show of opposition is worth the risk of looking disunified. Alito's final confirmation vote will take place tomorrow, just in time for Bush's speech.

Also setting the stage: a recent spate of pre-SOTU polls showing Bush's job approval rating hovering somewhere above 40%; Time magazine and Washington Post/ABC showed it at 41% and 42% yesterday, respectively. The new NBC/Wall Street Journal poll conducted Thursday through Sunday will be released tonight on NBC Nightly News at 6:30 pm ET, with more from the poll on a special edition of MSNBC's Hardball at 7:00 pm ET.

"This is more of a visionary and directional speech than it is a laundry list of proposals," White House spokesperson Scott McClellan said last week about Bush's upcoming address. Nevertheless, according to political, economic, congressional and national security analysts surveyed by First Read, the vision Bush lays out tomorrow night is likely to reflect the limitations placed on his second-term presidency.

These limits are set by a range of factors: budgetary constrictions imposed by the latest deficit projection; demands already placed on the US military by its presence in Iraq and Afghanistan; the fact that current high energy prices are beyond Bush's control; and other obstacles to his getting anything through Congress these days. Among them: his poll standing; his party's narrow majorities in Congress and an increasingly emboldened Democratic opposition; the looming midterm elections making some Republicans skittish about not voting their districts or states; and scandals making lobbying reform a new legislative priority that's crowding others off the front burner. (Remember: Congress is scheduled to actually legislate for only 60 days or so this midterm election year.)

With his speech tomorrow night, "beyond looking for policy initiatives that cost little or no money, the President has to figure out how to tread water while making it look like he's doing the butterfly stroke," observes NBC political analyst Charlie Cook of the nonpartisan Cook Political Report. Tom Gallagher, head of the Washington office of economic research firm International Strategy & Investment, says that what strikes him most about the prospect of the speech "is how much they've scaled back the ambition of their agenda."

Gallagher sees Bush's agenda as limited mainly by "his own Iraq policy problems" rather than by the current state of the economy. "Politics used to rise and fall on the economy," he notes, but retiring Fed chair Alan Greenspan "has taken care of that" by steering the country into a period of relative prosperity, albeit also one of rising debt. When it comes to delivering peace and prosperity, this Administration has "outsourced the latter to the Fed," Gallagher says, adding that "Bush is counting on [Fed chair nominee Ben] Bernanke to continue that." Bernanke is expected to be confirmed as Greenspan's replacement by the Senate tomorrow before the speech.

National security analyst Kevin Nealer, a partner with The Scowcroft Group, doesn't expect "foreign policy challenges" to feature prominently in Bush's speech, despite growing tensions with Iran and North Korea. "Terrorism and the freedom agenda remain the organizing principles." On the former, Nealer expects Bush to "continue to be on the offensive on [NSA domestic] wiretapping, amplifying the distinction between Democrats' fuzzy logic on civil liberties and a global terrorist threat manifested again by the recent bin Laden tape." On the latter: "The freedom agenda will be celebrated through examples ranging from Ukraine to Lebanon." Bush also "may take time out to celebrate Condoleezza Rice's transformation of America's diplomatic architecture, citing a new activism and making foreign aid responsive to US interests."

And on Iraq, Nealer advises: "Expect Bush to talk in affirming tones about the elections... While the hope of US troop reductions will be held out -- contingent on the security picture -- the President's staying power will be contrasted with what will be characterized as Democrats' 'cut-and-run' policy."

Health-care reform also will play prominently in the speech. Business and government strategist William Moore says that the health-savings accounts Bush will propose would, if implemented, "hasten the cost-shift" away from business and onto employees. A former Democratic Hill aide who advises hospitals and health-care companies, Moore explains: "HSAs hasten the demise of risk pooling. The well will stop subsidizing the sick... In an HSA system the pooling of risk is lost, but none of the care is skipped. Patients will be bankrupted on their way to the limit of their deductible." He adds: "Younger and healthier Americans won’t see things change much; older and sicker Americans will see their costs skyrocket. Short-term, you get to put money in a personal account; long-term, you lose the benefit of community."

Moore also expects that "HSAs will add a new problem in addition to the growing number of uninsured: it will create a new class of the underinsured, leading to a bad debt problem for providers. The end result may be to force providers to reduce the quality of care or face bankruptcy themselves." And: "As employers begin to pull their money out, it is hard to imagine a government program that reverses the trend without huge expenditures, which is an anathema to the White House and the Republican majority, especially now that the Medicare prescription-drug program has turned into a political liability."

As for how the proposal might fare in Congress, Moore says that since the plan for HSAs won’t affect Medicare, "it won’t bear the burden of angering the retired" in the way Bush's Social Security plan did.

The week ahead
Your updated scheduled for a big week in Washington:
-- Tuesday: return of the House; Senate vote to confirm Alito; Greenspan's last Fed meeting; Senate vote to confirm Bernanke to replace Greenspan; State of the Union
-- Wednesday: Bush travels to Nashville; expected close House vote on the budget-reconciliation bill held over from last year; expected House vote on lobbying reform; possible Senate re-vote on the extension of the dividend and capital gains tax cuts
-- Thursday: Bush addresses the National Prayer Breakfast and travels (location TBD); House GOP leadership elections
-- Friday: Bush travels (location TBD); deadline for the current extension of the Patriot Act; Lewis "Scooter" Libby pre-trial hearing

Also this week: daily Senate Homeland Security hearings on Katrina recovery

And next Monday: Bush 2007 budget rollout; Senate Judiciary hearings on the NSA program; Senate debate on the asbestos litigation reform bill (which Democrats may filibuster)

The State of the Union: One day out
The Washington Post/ABC and Time magazine poll write-ups/SOTU previews.

"The president has one formidable weapon available" to meet the challenges he currently faces, says Bloomberg's Roger Simon: "the 'bully pulpit' of his office. Tomorrow's address will provide clues to how Bush will use that weapon to persuade voters to stay with him and his party. A strong speech may set up a year that reverses the political damage of 2005... Another such year, culminating in a Republican defeat in November, would reduce Bush's effectiveness... and may diminish his entire presidency." The story also notes Democrats' past history of underestimating Bush.

The Financial Times say Bush's speech is expected to be "long on optimism and short on detailed policy proposals... In setting out priorities in his speech, he may also confirm that plans for ambitious tax reform have been shelved - though he is expected to put forward proposals aimed at helping Americans to pay for healthcare. He is also expected to make optimistic comments on the US economy - unbowed by a report on Friday that suggested it slowed sharply at the end of last year - and to endorse policies aimed at improving the competitiveness of US industries."

The Los Angeles Times calls the speech "a second chance to launch his second term" -- with lowered sights. The speech "will include a renewed defense of Bush's conduct of the war in Iraq and" the NSA domestic eavesdropping program, as well as a "message that the administration also is working on healthcare, education and jobs - issues voters consistently rank as their main concerns."

The New York Daily News: “What President Bush says... may not be as crucial to his agenda as how he says it, according to sources familiar with the speech. ‘He needs to demonstrate that he's in command and control and his path is the right one for the country,’ said a Bush political adviser.”

The New York Times profiles William McGurn, director of White House speechwriting. “While they have had varying success, Mr. Bush's State of the Union addresses have been memorable for one reason or another: defining an ‘axis of evil,’ preparing the nation for the Iraq war, opening a re-election campaign, calling for an overhaul of Social Security. This one is vital in another way. After the worst year of his presidency… Mr. Bush must reassert himself to drive forward his policy agenda and his party's prospects of hanging on to a slim majority on Capitol Hill.”

USA Today looks at how the speech will be the culmination of a "yearlong lobbying process" by lawmakers, government officials, and others to have their ideas and priorities showcased. "Bush's personal style makes it a little harder for specific programs to make their way into the State of the Union," because he "likes big ideas."

The paper also runs a status report on 10 proposals Bush made in his speech last year:

The Dallas Morning News recaps Laura Bush's year of helping at-risk youth caught up in gang violence through her "Helping America's Youth" agenda, which Bush tasked her with during the 2005 State of the Union. "...[R]eviews are mixed. Any talent expended on the daunting gang problem is time well spent, some say. Others wonder whether she can have any effect on the gritty world of street gangs in cities such as Dallas without surrounding herself with homeboys."

The Boston Globe focuses on Bush's expected focus on increasing the use of alternative energy sources. "White House officials believe the economy is surging, and that Bush can sell it as one of his strengths. But high gasoline prices, coupled with news of massive layoffs in the auto industry, have combined to heighten public anxiety about the economy." Also: "Bush is expected to push for the deductibility of some healthcare expenses, renew his call for an extension of tax cuts, and embrace proposals that are designed to make American businesses more competitive."

Two 11th-hour bumps in the road: The Congressional Budget Office has warned that the deficit-reduction legislation (which the House will vote on this Wednesday) would force millions of low-income Americans to pay more for health care, and some of them would drop out of Medicaid completely due to higher co-payments and premiums. “The budget office predicted that 13 million low-income people, about a fifth of Medicaid recipients, would face new or higher co-payments for medical services like doctor's visits and hospital care.” – New York Times

And the Wall Street Journal looks at how "Iran's nuclear program and Hamas's sudden rise to power" have surged to the top of the Administration's foreign policy agenda. "Secretary of State Condoleezza Rice... will spend almost a full day on those issues" in London today "before she returns to Washington tomorrow for" Bush's speech."

The Alito nomination
The Washington Times highlights Democratic Sen. Barack Obama's criticism of his party's "over-reliance" on procedural maneuvers like the filibuster threat on Alito. The story mentions that the filibuster attempt has "led to more than one Democrat changing" his or her position.

The New York Times says the elevation of John Roberts and expected elevation of Alito to the Supreme Court are the culmination of efforts, over more than two decades, by the conservative Federalist Society and its allies.

It's the economy
Economists tell USA Today that they expect the Fed will "raise interest rates Tuesday, Chairman Alan Greenspan's last day in office, and will keep pushing rates higher under his expected successor, Ben Bernanke, at least initially."

The New York Times on Greenspan: “After serving a term longer than that of any other Fed chairman except William McChesney Martin Jr.,... Mr. Greenspan's departure will be a historic transition. Mr. Bernanke, who is expected to be confirmed by the Senate on Tuesday, is likely to usher in a new era at the Fed - one that is less personalized, less idiosyncratic and perhaps less mysterious.”

The Wall Street Journal also previews the Bernanke era: "Though a highly respected economist, Mr. Bernanke won't initially command the deference that Alan Greenspan earned... With his colleagues expecting to contribute more, Mr. Bernanke may face a delicate tradeoff when they disagree. He might compromise, which could damp his influence over the Fed's message. Or he could decide to impose his views, which could provoke dissents and raise questions about his authority."

Today on Hardball at 5:00 pm: GOP Rep. Tom DeLay's first national TV interview since his indictments on money-laundering charges. On his race for re-election, DeLay says: “It's going to be a very tough one. It's going to be a national election. We have all the MoveOn.org's down here. They've been down here for over a year. All the leftists groups have been down here...doing the telephones. This is a national campaign.” On the guilty pleas of Abramoff and former DeLay aide Michael Scanlon: “I think that's really unfortunate that they broke the law and they've been found guilty breaking it. I had nothing to do with that. I've done nothing wrong. I haven't broken any laws. Uh, I have no problem.”

The AP covers GOP lawmakers saying yesterday that "Bush should publicly disclose White House contacts with Jack Abramoff... Releasing the records would help eliminate suspicions that Abramoff, who helped raise more than $100,000 for Bush's re-election campaign, had undue influence on the White House, the Republicans said."

The Justice Department is insisting that the replacement of its lead Abramoff prosecutor won't slow down the investigation.

Bloomberg previews an expected House vote on February 1 "on its first new legislation curtailing the activity of lobbyists," a measure to ban lawmakers-turned-lobbyists from the House floor. The story focuses on how Republicans are now "standing against their own history of embracing lobbyists and relaxing ethics rules since they took control of Congress in 1995."

"Fearful of appearances as they make lobbying reform a centerpiece of their 2006 agenda, top Senate Democrats have decided to shut down their longstanding biweekly huddle with corporate lobbyists."

Bob Novak devotes his column today to Sen. John McCain and Sen. Tom Coburn’s efforts to reduce congressional earmarks, a/k/a pork.

Sunday's Boston Globe reported that based on a review of Senate records, "the secretive earmark process" has become a "boon for lobbyists, who sell clients on their ability to persuade members to insert pet projects into the budget... The Globe review found that lobbyists arguing for the projects often have close connections to the members of Congress they are pressuring for cash. Many have worked on Capitol Hill -- including directly for the lawmakers they are lobbying -- and others contribute to the members' campaigns."

The GOP leadership
The House majority leader race has taken on "enormous significance," the Washington Post says, because of the circumstances surrounding the GOP in this midterm election year. A victory for acting Majority Leader Roy Blunt "probably would keep the year's legislative agenda focused on themes already voiced by the existing leadership team: immigration law changes, a restructuring of congressional lobbying rules and fiscal discipline. A victory by either [Rep. John] Boehner or [Rep. John] Shadegg could lead to a significant change of direction, fortifying conservative forces."

Roll Call notes that Blunt and Eric Cantor "will try to jump one more hurdle in their quests to become Majority Leader and Majority Whip, respectively, as they work to round up votes for the budget reconciliation measure Wednesday, just one day before their colleagues vote in leadership contests."

The midterms
Also today on Hardball at 5:00 pm: the kickoff of the show's 2006 midterm election coverage.

There was much handicapping going on last Friday on the House side of Capitol Hill. Republican House campaign committee chair Tom Reynolds laid out his priorities for reporters: 1) "bring back a majority," 2) incumbent retention ("We are an incumbent-retention committee... As long as Bob Ney is running for Congress, we are going to back him"), 3) winning open seats (which currently account for the handful of most competitive races out there), and 4) defeat Democratic incumbents. Reynolds emphasized that local issues will drive what are really local races, and insisted that one member's ethical problems would only affect that member's prospects of getting re-elected -- not his colleagues' prospects.

On the same day, House Minority Leader Nancy Pelosi told reporters that her own personal target is a net gain of 30 seats, twice as many as the 15 Democrats need to retake control of the House, and that ethics will be a major theme of the elections. She also said she and her colleagues see about 45 seats in play right now.

Democrats' Hill leadership is angry with Democratic National Committee chair Howard Dean for how he's managing the DNC and particularly the DNC's money, Roll Call says. Dean has emphasized "that for the first time the DNC, House and Senate leaders, governors and mayors are meeting regularly to chart message, strategy and an agenda for the election year."

Cindy Sheehan told the AP over the weekend that she is "considering" challenging Sen. Dianne Feinstein (D) because of her support for the Iraq war.

And the candidates who are battling this year to replace Iowa Gov. Tom Vilsack (D) aren't all that well known, finds a new Des Moines Register poll. In fact, “45 percent of Iowans knew too little to have an opinion about U.S. Rep. Jim Nussle, the best-known candidate in the large field, the poll showed.”


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