“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.

Friday, April 29, 2005 | 9:25 a.m. ET
From Elizabeth Wilner, Mark Murray, Huma Zaidi and Kasie Hunt

First glance
In his news conference last night, the President:
-- specifically came out for benefit cuts for the first time, proposing to fix Social Security by raising future benefits based on wage increases for lower-income workers, while slowing benefit increases for middle- and upper-income workers.  Democrats have jumped on the middle-income part; conservative Republicans may worry about the fate of private accounts.  Bush also offered no-risk Treasury bonds as an alternative option to stocks for (the downplayed) private accounts.
-- said he feels Americans' pain over high gas prices, and acknowledged that his energy plan won't offer relief from current high costs, but noted that economists tell him that growth is going to improve in coming months.
-- split with GOP conservatives over the role religion should play in politics, saying it's a personal matter and he doesn't condone anyone or view anyone as less of an American who feels differently about it than he does.  Bush said he thinks Democrats are opposing his judicial nominees because Democrats don't like their judicial philosophy.
-- implied, as the Administration has been doing lately, that anyone interested in reforming the UN should support Bolton's nomination.
-- emphasized his legislative victories, but expressed frustration over the partisan climate in Washington, and argued that Republicans are the party of ideas.
-- said things in Iraq are going well -- despite recent evidence to the contrary.
-- got a little grumpy with Russian President Putin for selling anti-aircraft missiles to Syria.
-- said it's best to assume that North Korea is working toward nuclear weapon capability, but that he's confident that diplomatic efforts will succeed in keeping them out of the nuke business.

  1. Other political news of note
    1. Animated Boehner: 'There's nothing complex about the Keystone Pipeline!'

      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

Not addressed during the news conference:
-- details on the budget, which Congress narrowly passed last night and which includes $10 billion cuts in Medicaid spending in the name of curbing the deficit, but also includes $107 billion in tax cuts.
-- House Majority Leader DeLay, R-Texas.

The Social Security battle is now enjoined anew, with progressive indexing as the new front, President Bush has an event at a community center in Falls Church, VA at 10:20 am, while Democrats criticize his proposal as a benefit cut for the middle class.

Bush didn't go all that negative on Democrats for alleged obstructionism last night, playing up the GOP as the party of ideas and reform, but RNC chairman Ken Mehlman played bad cop in a written statement: "Now that President Bush has set a clear course to permanently strengthening Social Security for future generations, the time for Democrat obstructionism is over."

Mehlman will expand upon this line of criticism in a new speech to Republican state chairs gathered in Cleveland today.  Per excerpts, he will declare that "[c]onservatism is the ideology of the future.  Republicans are driving the course of history with new solutions to promote opportunity at home and freedom abroad.  And it is the left, including unfortunately many of today's Democratic leaders, who seek to turn back the clock and obstruct the march of history."  Mehlman will attack Democrats for allegedly saying "no" "to terrorism insurance to spur new construction after 9/11.  No to tax relief to end the recession.  No to the Department of Homeland Security.  No to prescription drug coverage for our seniors."

Also out there for today: Schwarzenegger's venture into the immigration arena, again.  Yesterday he praised the Minutemen, criticized the federal government for not sufficiently protecting the border, and said he's going to talk to Bush about it the next time he sees him.

In a possible preview of things (not) to come should the filibuster on judicial nominees be eliminated, Senate business hit a speed-bump yesterday when an unknown Democrat objected to the Judiciary panel meeting, causing the Senate to recess for a few hours.  NBC's Ken Strickland says it's unclear exactly what Democrat X was objecting to, but a similar procedural move last week by Democrats wound up delaying the Foreign Relations vote on Bolton.  More on this below.

And, while GOP conservatives have been dominating the news lately, it's notable that the party's moderates are making a bit of a comeback.  They hold the cards in whether the Senate Finance Committee can produce a Social Security bill; they will decide if Bill Frist has the votes to eliminate the filibuster; and some of them in the House might even be thinking "I told you so" after the ethics-rules reversal in the controversy around DeLay.  But here's the big question: Can a moderate grab the GOP presidential nod in 2008?  First Read takes a look, below.

It's the economy
The Washington Times on yesterday's economic data: "Record-high energy prices thwarted consumer and business spending in the first quarter, causing growth to fall off to a 3.1 percent pace, the slowest in two years...  The oil-induced 'soft patch' set in last month when premium crude oil prices soared to more than $58 a barrel in New York trading, and most likely is continuing in the spring quarter...  Because no one can say how long oil and gasoline prices will stay elevated, it's difficult to predict how long and deep the effects will be on the economy." 

USA Today says, "Economists, who had already reduced their forecasts for economic growth to a 3.5% pace, called the data disappointing but not a cause for panic.  Many said the economy was strong enough and inflation potent enough that the Federal Reserve will continue to raise interest rates." 

International Strategy & Investment's Thursday oil update noted that neither the energy proposals Bush laid out in his speech on Wednesday, nor the energy bill, "will have a meaningful impact on the oil market for some time.  That's due in part to the reality that the Administration is basically relying on the free market, but politically it's hard to rely on the market when the market outcomes are upsetting so many people."  More: "A measure of how the policy debate has evolved is that Democrats, despite being the party of an activist government, have no real alternatives other than occasionally calling for the SPR to be used in a more proactive way.  So Bush is engaging in a battle of perceptions, not in a real policy debate."

On the proposed policies themselves, Lehman Brothers' political shop says "the President’s call for energy reform before Congress adjoins for the summer appears unrealistic.  MTBE liability and judicial nominations remain significant obstacles that, among others, have stalled the legislation every year since the President took office."

The Wall Street Journal noted yesterday after the closing bell that if the Dow closes down more than 30 points this afternoon, it will amount to the worst percentage decline for any April since 1970.  And the paper says today, "On Tuesday, the Fed likely will raise the target for its key short-term interest rate to 3% from 2.75%.  That would be the eighth quarter-point rate increase in as many meetings."

USA Today says even the insured aren't necessarily shielded from high health care costs, as the costs from those who don't have insurance get shifted to those who do.  The story reminds us that the "personal savings rate, the difference between what people earn and what they spend, fell for the second-straight year in 2004 to the lowest level since 1934." 

Another economic semi-indicator?  "AFL-CIO President John J. Sweeney... yesterday acknowledged that the organization is financially squeezed and may have to lay off a quarter of its workforce," the Washington Post reports.

Bush II
On last night's news conference, and why now, the Chicago Tribune notes that Bush “used a format he does not like to discuss issues he cannot resolve in hopes that he can sell the American people on policies most say they don't want.  In other words, he has fallen into the unfortunate pattern for second-term presidents who face a broad constellation of things gone wrong and few ways to fix them quickly.” 

"Some Republican strategists concede a temporary slowing of Mr. Bush's political momentum.  But they say he remains in a strong position and simply needs to stay the course as his current losing streak plays out," notes the Wall Street Journal.

"Mr. Bush did what he likes to do best: He took his case directly to the people.”  - New York Times

"Whatever the merits of Bush's new proposal, the president has taken another one of the bold strokes that worked so well for him in his first term...  He repeatedly gambled on major policy matters by refusing to compromise -- and he repeatedly won, gaining more power each time.  But an end to Bush's winning streak in the second term could cause the opposite phenomenon."  - Washington Post

On Social Security, the Boston Globe reports that "conservative leaders... say they intend to prevail by making private accounts a central issue in the Senate and House races next year."  The story notes that while "many of the most ardent proponents of the president's plan are in a sour mood about its chances... conservative leaders say that perhaps their biggest obstacle is the blockade Democrats have mounted against adding private accounts to a social program they take credit for inventing."

On Bolton's nomination, the Washington Post reports that a "former senior Bush administration official told Senate staff members yesterday that [Bolton] sought to punish two State Department officials for disagreeing with him on nonproliferation issues, congressional sources said.  And a former CIA chief, disputing Bolton, said the nominee had tried to fire a national intelligence officer who believed Bolton was exaggerating evidence on Cuba."  The story also notes that Voinovich "told a luncheon of the Cleveland Club that he was still undecided." 

In his speech to the GOP state chairs in -- coincidentally -- Cleveland today, RNC chairman Mehlman will cast Bolton's confirmation as key to continuing "the march to freedom:" "we need a reformed United Nations that works for progress and inspires confidence.  President Bush is working to make the UN more effective by naming John Bolton as our ambassador."

DeLay
The Los Angeles Times says of the anticipated DeLay ethics probe, "even if the panel begins immediately, it is expected to take six months to a year to complete an investigation... and there is no guarantee that either the House majority leader or the committee will emerge unscathed, legal experts say...  Experts say DeLay is likely to find himself entangled in a process that will be lengthy and carried out largely in secret - and it will be committee members, not DeLay, who will shape the scope of the investigation."

The New York Times looks at the challenges confronting the ethics panel, including filling its staff and (most importantly) proving that it’s impartial.

NBC's Lisa Myers reported last night that in August 1997, DeLay and Abramoff stayed at a tony Moscow golf resort, with the bills being covered not by Abramoff's non-profit National Center for Public Policy Research, as DeLay's office says he was led to believe, but by Abramoff personally -- and by a Russian businessman in charge of an oil and gas company.  Again, a violation of House ethics rules.

The Dallas Morning News examines the $1.1 million in DeLay's legal defense fund. 

The Senate and the judiciary
There's some coverage -- clearly overshadowed by Bush's news conference -- of the deal Frist offered yesterday which was rejected by Democrats: that he would allow 100 hours of debate for each appointee to an appellate court, including the Supreme Court, in exchange for Democrats giving up their ability to filibuster appeals court nominees.  The White House and Republicans had previously rejected a compromise offered by Senate Democrats.  (So now they're even.)

Democratic Sen. Ken Salazar represents Colorado, which is home to Colorado Springs, which is home to prominent social conservative organization Focus on the Family.  Salazar's increasingly personal battle with the group over the filibuster just escalated when he called them "the Antichrist of the world" on talk radio, after they picketed his wife's business.  – Washington Times

It's been too busy a week for us to get to the asbestos bill -- beyond noting its potential to further cripple the trial lawyers financially, and thus, the Democratic Party -- until now.  The bill, part two of Bush's three-part tort reform effort (class action reform passed; med mal is TBD), was scheduled to be marked up by the Senate Judiciary Committee yesterday, but the work wasn't completed.  President Bush specifically called last night for Congress to pass the legislation.

But in a seldom used procedural move, NBC's Ken Strickland reports, an unknown Democrat objected to Judiciary proceeding with its meeting yesterday, forcing the Senate floor to go into recess before the committee could continue.  Strickland says it's unclear exactly what Democrat X was objecting to, though the committee was working on asbestos at the time.  But a similar procedural move last week by Democrats wound up delaying the Foreign Relations vote on Bolton.

Strickland suggests two possible reasons for the maneuver.  First, most committee Democrats find the bill to be objectionable, and the fight has gotten nasty.  But the second possible reason has nothing to do with the bill itself -- Democrats might have just wanted to give an indication of what life in the Senate would be like if the filibuster is eliminated and they resort to stopping all non-essential business.

A new liberal 527 called the Senate Accountability Project, funded by a group of trial lawyers, is up with TV ads opposing the bill.  The ads, airing in Arkansas, Montana, and Nebraska, are aimed at US senators on both sides in those states.  A spokesperson for the group says that despite their liberal roots, they're going to target lawmakers of both parties, going after centrist Democrats in the same way that the fiscally conservative Club for Growth occasionally targets moderate Republicans.  While this $200,000 ad buy opposing the asbestos bill is their first, the spokesperson says the group intends to raise and spend $10-15 million on a range of issues including Social Security, tax reform, and the filibuster.

Immigration
On the John and Ken Show yesterday, Schwarzenegger praised the Minutemen campaign and whacked the Administration for "not doing their job" on curbing illegal immigration.   "I think they've (the Minutemen) done a terrific job.  They've look, they've cut down the crossing of illegal immigrants by a huge percentage...  I mean it's a doable thing and it shows that our federal government is not doing their job, it's a shame that the private citizen has to go in there and start patrolling our borders."  Asked why he thinks Bush has called the Minutemen "vigilantes," Schwarzenegger said, "I am sure he is trying to solve the problems as well as anyone can and maybe he has more information than you or I have.  Why... he has a policy about the borders the way he has, but I mean you know I don't know.  I have not had that conversation with him, but the next time I see him I will have that conversation."

"Just last week," the Los Angeles Times reminds us, "Schwarzenegger and his aides sought to clarify his statement to a convention of newspaper publishers that the nation should 'close the borders.'  Before his speech was over, an aide told reporters that Schwarzenegger had meant to say that the U.S. should secure its borders - not shut them down."

The San Francisco Chronicle adds that Schwarzenegger "appeared stumped when he was asked why Bush had criticized the armed citizens as vigilantes." 

USA Today looks at the split within the GOP over illegal immigration, including Bush's guest worker program, which has stalled, and the REAL ID Act, which is about to pass with White House support, resulting in the beefing up of the border fence.  "Conservatives... are angry that Bush has funded only one-tenth of the new Border Patrol agents that Congress has authorized.  They're even angrier that Bush is considering the guest-worker program."

The UK elections
In what some see as an effort to distract attention from his struggle to get out from under the Iraq war, Blair again offered that chancellor Gordon Brown would succeed him as head of the party.  – Times Online

Margaret Thatcher, "depressed at the prospect of a third Labour victory in a row, left the country yesterday after failing to take part in a general election campaign for the first time in 70 years."  Thatcher "declined to make any comment about the conduct of Michael Howard’s campaign."  - Times Online

Meanwhile, "Thousands of faulty postal ballot papers have been sent out in three parliamentary constituencies, raising fears that the election results may face legal challenge...  It is unlikely that the ballot papers can be reissued in time and the recipients will probably be disenfranchised."  - The Guardian

Oh-eight (R)
While GOP conservatives have been dominating the headlines -- think Terri Schiavo, judges, and the filibuster -- it's notable that GOP moderates are making a bit of a comeback.  They hold the cards in whether the Senate Finance Committee can produce a Social Security bill; they will decide if Bill Frist has the votes to eliminate the filibuster; and some of them in the House might even be thinking "I told you so" after the ethics-rules reversal in the controversy around DeLay.

But here's the big question: Can a moderate grab the GOP presidential nod in 2008?  McCain failed to do so in 2000, but the current political environment might provide an opening.  The April NBC/Wall Street Journal poll showed a whopping 64% of Republicans saying Congress shouldn't become actively involved in cases like Schiavo's, 41% of them saying they lost respect for Congress in the Schiavo matter, and 50% of them saying that the federal government should be less active on moral and social issues.  And some prominent Republicans have begun to grumble about the state of their party, as former UN Ambassador John Danforth did on the New York Times op-ed page.

That said, political scientists still think the odds are against any moderate capturing the nomination in '08.  "Sure, some could set themselves up as the moderate," says Dante Scala, a political scientist at New Hampshire's St. Anselm College. "That message will work up here.  [But] will it work in South Carolina, and in the southern and western primaries where the people are more conservative?  That's the difficulty."

James Thurber, a political science professor at American University, says that what eventually will doom moderate oh-eight candidates is organization.  "Yes, there might be a place for a more moderate candidate.  But the problem is those people aren't organized.  The people on the religious right are organized and are focused."  In fact, he says that this kind of organization is part of the reason why Frist has cozied up to conservatives lately.  Thurber also points out that if rallying the base becomes the formula for Republicans in winning the general election -- like it was for Bush in 2004 -- "then there is no place for the moderate in the primary system."  But copying the 2004 GOP playbook, he says, could have risks for any Republican who doesn't have the charisma or the post-September 11 glow that helped Bush beat Kerry.

Thurber maintains the GOP's best kind of general election candidate is someone like Bush in 2000 -- a candidate who leans right in the primaries, but who's still well-positioned to move to the center in the general.  Among the potential oh-eighters who can do this, Thurber cites Virginia's Republican Senator George Allen as an example.

Speaking of Allen, he actually leads National Journal's Insider poll examining the '08 field, followed on the GOP side by McCain, then Frist, Giuliani, and Romney.  The magazine's poll of Democratic insiders has Hillary Clinton leading the pack (with 68 first-place votes), followed by Edwards (with 7), Mark Warner, Bayh, and Kerry.

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