“First Read” is a daily memo prepared by NBC News’ political unit, for NBC News, analyzing the morning’s political news. Please let us know what you think. Drop us a note at FirstRead@MSNBC.com.

Tuesday, February 8, 2005 | 9:15 a.m. ET
From Elizabeth Wilner, Mark Murray, Huma Zaidi and Kasie Hunt

First glance
Republicans are poring over two sets of numbers: President Bush's budget plan, and new post-inauguration/Iraq elections/SOTU Gallup data showing Bush with his highest job approval rating in a year.  Morning-after coverage of Bush's budget proposal focuses on its lukewarm reception among GOP lawmakers, and the almost schizophrenic reaction among conservatives who are thrilled to see spending discipline but worry about what's not in there and their own re-election bids.  There's also the prospect of Bush having to wield the veto pen for the first time.

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NBC's Ken Strickland says the budget will occupy most of the Senate's time this week as committees sift through the President's spending priorities for FY2006.  Treasury Secretary Snow testifies before the Finance Committee today and the Budget Committee on Thursday.  OMB director Bolten appears before the Budget Committee today, along with House Ways and Means.

The President is sure to bring up the budget and his Social Security plan in his remarks to the Detroit Economic Club at 12 noon.  Timed to that speech, we have some more numbers for you.

The President in 2001 inherited an economy on its way down.  The September 11 attacks were devastating.  And he won a second term, anyway.  Still, the economy under Bush's watch has been far from outstanding -- especially considering that his Administration gotten almost every kind of fiscal stimulus it asked for: big tax cuts, and increased defense and homeland security spending. 

So consider:
-- From January 2001 to January 2005, only 119,000 non-farm jobs have been added to the economy, compared with more than 11 million jobs created during Clinton's first four years.
-- In 2004 -- the best-performing year during Bush's first term -- 181,000 jobs per month were created, compared with the nearly 235,000 jobs created per month during Clinton's entire first term.
-- The unemployment rate is currently at 5.2%, compared with the 4.2% rate he inherited at the beginning of his first term.  (To be fair, the unemployment rate at the start of Clinton's second term was 5.3%.)

Also today, Bush takes part in a celebration of Black History Month at the White House at 3:15 pm.  His RNC chairman, Ken Mehlman, also marks Black History Month by kicking off a series of “Conversations With The Community," as the RNC calls the meetings, "to highlight how Republican policies are empowering people of color."  Mehlman teams up with Maryland LG Michael Steele (R) for this first such conversation in PG County at 7:00 pm.

The Senate meets at 9:30 am; the House meets at 2:00 pm.

Bush today
In his speech to about 1,700 people at the Detroit Economic Club, Bush "is expected -- as he has done in recent appearances around the country -- to lay out economic arguments to reshape Social Security into a partial retirement investment plan for younger workers."  - Detroit Free Press

"[I]t is unusual that the president may have significant problems within his own party: A survey of Michigan's congressional delegation shows that at least four of nine Republicans in the U.S. House are withholding endorsement of Bush's proposed personal accounts that would allow taxpayers to invest up to 4 percent of their payroll taxes that now go toward social security" says States News Service.  "Convincing them to climb onboard, these Republicans say, will take details, and a pledge that benefits will not be cut for current retirees or those close to retirement.  Michigan Democrats, meanwhile, universally oppose Bush's plan."

The article also says that "Detroit Economic Club officials said Monday the traditional question and answer period after the speech has been dropped for Bush's visit."

The Free Press also says that "Michigan could lose more than $1 billion in Medicaid benefits over 10 years and Detroit and other cities would lose millions in public housing funds under the budget submitted Monday by President George W. Bush.  The state would gain millions for education, nutritional programs and the Great Lakes under Bush's plan."

Presidential juice
"In reversals from a month ago, majorities now say that going to war in Iraq was not a mistake, that things are going well there and that it's likely democracy will be established in Iraq," per new Gallup data.  "Bush's approval rating of 57% is his highest since he reached 59% in January 2004, shortly after U.S. troops captured Saddam Hussein." – USA Today

"The poll shows increased optimism about Iraq on many fronts."  And: "The poll suggests a broadly positive environment for Bush's party.  Republicans receive a 56% favorable rating, compared with 46% for Democrats - a 10-point advantage, up from 6 points in September."

Still: "The public remains skeptical about Bush's plans to alter Social Security.  Forty-four percent say they approve of his approach, compared with 50% who say they disapprove.  And Bush's domestic agenda continues to diverge from the priorities cited in the poll."

In advance of Bush's class-action reform event tomorrow, the Washington Post covers the progress of the effort in Congress this week: "solid support by the Republican leadership in both chambers, combined with backing from several influential Democrats in the Senate, has opponents' backs against the wall."

Agenda vs. deficit
"Directly or indirectly, the president's entire domestic agenda hinges on Congress's ability to impose stricter fiscal controls through a budget resolution.  Failure on the budget would send ripples through Congress on the rest of the Bush agenda," says the Wall Street Journal.

USA Today says Bush's budget plan "represents a stark reckoning with some of his own expensive past choices, from cutting taxes to going to war in Iraq.  Operations in Iraq" and "[m]aking permanent the tax cuts of his first term... are in direct competition with the president's election-year pledge to cut the federal budget deficit in half by the time he leaves office in 2009."

"The budget ignores some predictable and pressing demands, including the need to deal with the alternative minimum tax.  The AMT was designed to keep very wealthy taxpayers with lots of deductions or tax credits from escaping taxes altogether.  But it is now hitting more and more middle-income families with an additional tax bite."

The New York Times says slicing the deficit by half is an elusive goal since Bush’s budget assumes all discretionary spending (beyond military and national security) will be frozen over the next five years; since it includes no spending for Iraq and Afghanistan; since it omits the cost of Bush’s Social Security proposal; and since it leaves out the cost of altering the Alternative Minimum Tax.

The Washington Post's Milbank notes, "The White House left out a lot of expenses the government is likely to have, while including savings the government is unlikely ever to see." 

USA Today adds that Bush's budget includes a "proposed change in budgeting rules to require congressional and White House budget analysts to treat Bush's tax cuts as if they are already permanent, even though they are set to expire.   That would mean legislation to extend the cuts would go on the books as costing the Treasury nothing."

The Post also says Bush is "asking for at least six significant governmental reorganizations and an unprecedented five-year freeze in domestic spending to get control of the federal budget deficit."

The Boston Globe says the budget includes "the deepest cuts in social programs since the Reagan administration".

The New York Times says the budget “is intended to demonstrate to three critical groups - conservatives at home, Wall Street and financial markets overseas - that he has become serious about reducing the nation's record deficit.  The question is whether the groups will view it that way or see it as a collection of politically motivated cuts that Congress will almost certainly reverse.”

The Los Angeles Times, pointing out how the government has grown under this GOP president and GOP-run Congress, says, "The era of big government is back...  Bush is releasing his budget at a time when many fiscal conservatives in his party are dismayed by how much he has allowed federal spending and the deficit to rise during his first term in the White House...  In this budget, Bush has moved to placate those critics...  But many analysts view those promises with skepticism because, they say, Bush in his first term had a disappointing record of confronting Congress on popular spending programs.  He has never vetoed a bill..."

The budget and the Hill
The Washington Post: "Virtually no major congressional figure embraced the budget without reservation, and even some Republicans fretted because it did not include the transition costs envisioned by Bush's plans to restructure Social Security."

(Bolten yesterday: "It's important to remember that this transition financing does not have the same effect on national savings, and thus on the economy, as does traditional borrowing.  Every dollar the government borrows to fund the transition to personal accounts is fully offset by an increase in savings, represented by the accounts themselves.  In addition, the transition financing does not represent new debt.  These are obligations that the government already owes, in the form of future benefits.")

"Mr. Bush is asking lawmakers to cut more deeply into domestic programs benefiting children, the poor and other vulnerable groups," says the Wall Street Journal. "Skeptics believe that Mr. Bush will hit a wall of resistance in Congress to cuts that size, from both Republicans and Democrats who face the voters in November 2006...  At the same time, some conservatives who applaud such cuts caution that they aren't enough to substantially shrink the deficit..."

Occasional team player Arlen Specter (R) writes in a Washington Post op-ed that the budget proposal puts social spending at risk.

USA Today says "some Republicans hinted at battles ahead.  House Speaker Dennis Hastert of Illinois called Bush's proposal 'a good starting point.'  Minnesota Sen. Norm Coleman said proposed cuts in community development grants, Medicaid and farm subsidies are 'totally wrong.'"

The plan "does include the cost of extending Bush's tax cuts for dividends, capital gains and business expenses.  But the proposed extensions encountered immediate opposition among Republican senators, some of whom said the huge expense of private Social Security accounts left no room for tax cuts, which would cost $30 billion in 2009."  - Los Angeles Times

Roll Call notes that the President's budget "challenges the conservatives who run Congress to put up or shut up on the spending of taxpayer money."  Conservative members "who want Congress to answer the call for fiscal restraint don’t believe that their leadership is disciplined enough to do it...  Plus, the pressures of re-election, which Bush never has to worry about again, can color the even the most conservative Member’s outlook on government programs - at least those programs that aid his or her constituents."

Budget how-to's
USA Today's lengthy budget at-a-glance.

The Wall Street Journal reports on how the budget would affect taxpayers and on budget line items.

The Washington Times on winners and losers.

Social Security
The Boston Globe's Canellos says of the letter sent earlier by some prominent social conservatives to Karl Rove threatening to withhold support for the President's Social Security plan, "The rebellion by social conservatives is noteworthy... for laying bare the bargain that has bound the Republican coalition for the past quarter-century: Social conservatives support an economic agenda they do not particularly agree with, in exchange for wider backing for their own agenda.  Economic conservatives, in return, tolerate social-issue stances that they do not really share in hope of cobbling together a majority for tax cuts and other GOP economic policies."

"Republicans tout private savings accounts as a way to peel off parts of the Democratic coalition, primarily young people.  Democrats should be able to do some peeling of their own, perhaps not among social conservative activists, but among mainstream followers for whom supporting families means more than just banning gay marriage."

Partisan warfare
Expecting the RNC to e-mail to 1 million donors and activists a 13-page research document charging him with obstructionism, Harry Reid took to the Senate floor yesterday calling into question the President's honesty and integrity in claiming he wants to reach out to Democrats, NBC's Ken Strickland reports.  Reid took his cue from a Roll Call report on how the RNC hopes to tarnish Reid in the same way they encouraged Tom Daschle's ouster in South Dakota.  "Is President George Bush a man of his word?" Reid asked yesterday on the floor.  "Is what he's telling the American people just a charade?"  Reid called on Bush to repudiate the memo and instruct the RNC not to send it around, saying the RNC is "his" committee. 

The thereby much anticipated memo includes a photo of Reid with Daschle, quotes the RNC communications director charging Reid with using taxpayer funds to pay for a war room which attacks the President, and is, well, 13 pages long.  Among the issue- and vote-based attacks, the memo criticizes Reid for calling a "DC Ritz Carlton condo home," much in the same manner that Republicans went after Daschle for his DC residence. 

Strickland reports that a Senate Republican aide brushed off Reid comments as the nature of doing business as the leading voice of the opposition.  Citing Reid's own partisan attacks against the President, the aide said, "If you keep hitting someone in the face, sooner or later they're going to hit back." 

We wonder whether the subject came up at the private dinner Reid attended at the White House last night...

Roll Call says "Reid’s decision to take to the Senate floor to denounce the Republican tactics is a sign of the aggressiveness that he plans to bring to the job, his allies said.  It also reveals that Reid has learned from the example of Massachusetts Sen. John Kerry during the 2004 presidential race, they added."

The Los Angeles Times says "influential Republicans in Washington are telling Gov. Arnold Schwarzenegger that he should drop his effort to redraw congressional voting districts in time for next year's elections and limit his focus to reshaping the state Legislature...  The fear is that tinkering with the California congressional boundaries could jeopardize Republican control of the U.S. House."

The Washington Times reports off an interview with Senate Judiciary chairman Specter that Specter favors more negotiation with Democrats over use of the nuclear option to cut off Democratic efforts to filibuster judicial nominees.

Whither the Democrats
Roll Call reports on incoming DNC chairman Dean's efforts to mend fences with Hill leaders Reid and Pelosi, including his pledge not to "meddle" in policy. 

Another Roll Call story about certain Democratic consultants fretting about losing DNC business to new rivals under Dean's administration features one new DNC pollster saying, "'I assume it’s just the squeals of a couple of pigs worried about their longtime spots at the trough.'"  

Two things: 1) It's not that hard to figure out who has lost polling business at the DNC.  And 2) by this point, after the chair's race and now this, the DNC looks like a sandbox compared to their counterpart up the street.

Roll Call looks at insistence from the left that Nancy Pelosi is not, in fact, a San Francisco liberal.

The Boston Herald says Kerry's new legislative counsel is a former lobbyist for "consulting giant Accenture, which incorporated in Bermuda in 2001" and who "lobbied against cracking down on such businesses on behalf of a Bermuda-based firm...  Accenture argues that it was a global business, never an American one, before it incorporated in Bermuda."

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