“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.

Wednesday, May 4, 2005 | 9:15 a.m. ET
From Elizabeth Wilner, Mark Murray, Huma Zaidi and Kasie Hunt

First glance
As President Bush sells progressive indexing before a group of Latino small business owners today, assessments of the proposal's chances are mix-and-match: top Democrats slam it; some Democrats might find some appeal in it; some Republicans don't like it; Ways and Means chair Bill Thomas does like it; some key conservative activists and think tanks like it; the American public doesn't like the sound of it; the American public is braced to suffer some pain to fix the program. Taken individually, all of the above are true, but the way in which the combo platter is assembled does a lot to determine whether the prognosis is optimistic or pessimistic.

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Beyond Social Security, the President and his RNC chairman are reaching out to Latinos at the same time that the federal government is seeking unprecedented regulatory authority -- in the form of national drivers' license standards -- over the states in an effort to curb illegal immigration. Bush does a roundtable on Social Security at the 2005 Latino Small Business Economic Conference in DC at 10:25 am. Ken Mehlman addresses the group at 12 noon. Tonight, the Bushes attend a Cinco de Mayo dinner at the White House.

There are lots of mixed messages here, illustrating how complex and politically tricky an issue illegal immigration has become. Bush is heavily courting Latinos to join the GOP -- and back his Social Security plan -- on the one hand, while arguably alienating some on the other. That said, some immigrants who are in the United States legally are just as opposed to illegal immigration as other Americans because, among other reasons, they want new immigrants to have to overcome the same bureaucratic hurdles they did. (Which, we'd note, is one possible explanation for Arnold Schwarzenegger's views on it.) And the war supplemental, which contains the drivers' license standards, also contains a higher cap on seasonal guest workers, which is somewhat in line with Bush's proposed guest-worker program.

Also, while this Administration has never really claimed to be for limited government, this is still one of those times when their approach would seem to conflict with standard GOP philosophy. Both business interests and conservatives seem to have adopted the view that bigger government is OK, so long as it's their government. Still, it's worth noting that when Bush signs the supplemental, it will be yet one more in a long list of examples of an expanded federal government under his watch, along with: federalized airport screeners; the Patriot Act; new education accountability standards; the Department of Homeland Security; the new Medicare prescription-drug benefit; the director of national intelligence post; and federal intervention in the Terri Schiavo case. Not all of which can be chalked up as efforts to improve homeland security after September 11.

The Senate's still out, but the House today fills the void. House Republicans plan to talk about their efforts to bolster the economy today. House Democrats plan to hit them at their 10:00 am stakeout on gas prices, health care costs, and interest rates, per a Democratic caucus spokesperson.

Also, the House Ethics Committee is expected to meet (behind closed doors) and start organizing today. House Democrats Meehan and Emanuel (who's charged with ousting Republicans in 2006) will propose new legislation to tighten the rules on travel, lobbyists paying for trips, etc. at 12:30 pm.

DeLay's weekly pen and pad: 1:55 pm. The House meets at 10:00 am.

Lastly, polls open in the UK at 2:00 am ET tonight.

Social Security
NBC's Mike Viqueira reports that House Democratic leaders are taking every chance they get to declare their opposition to the President's indexing plan. Pelosi, Hoyer, Rangel, and Levin did a presser yesterday to denounce indexing as an attack on the middle class -- who will see dramatic benefit cuts under the plan -- which will in effect turn Social Security into a welfare program, something they say is against its spirit and intent. It's an important point, Viqueira notes, as Hill Republicans believe that the indexing plan is consistent with Democratic economic orthodoxy and will entice many of the party's rank and file. Democratic leaders will fight like the dickens to maintain a unified front. They're also wary of the perception that the President has moved towards them in good faith, and they still are refusing to negotiate.

The Wall Street Journal says Bush "now boasts two new assets" he "didn't have a week ago: A solvency plan as Democratic adversaries have demanded and an energized champion in the House with a track record for getting things done," Ways and Means chair Bill Thomas. "To be sure, Mr. Thomas' resourcefulness can't push an overhaul plan through the Senate. So Democrats have preserved an insuperable wall of resistance there."

The Los Angeles Times points out that although Bush visited one of "the country's poorest regions Tuesday... in appearing before relatively well-paid workers at a Nissan plant in Canton, Bush was addressing a middle-class constituency whose Social Security benefits could be squeezed by his plan."

The Christian Science Monitor says that "[i]n endorsing progressive indexing in his news conference last week..., the president has proposed something that would have a substantial impact on the vast majority of U.S. workers, whether they wanted it to or not. More so than with private accounts, Bush may have now launched a national debate on the core costs and promises of the system."

AEI's Karlyn Bowman offers three reasons for why Bush's ratings on Social Security, and support for his proposals, are so low: "Public wariness of big changes;" "People’s views of their own retirement prospects. Most people don’t think they will get what they are due from Social Security when they retire (and many young people don’t think they will get anything at all) -- yet most expect they will receive something;" and, "Solid Democratic opposition."

It's the economy
The Fed raised interest rates by a quarter-point yesterday, having noticed, as NBC's Anne Thompson reported, that higher gas prices are translating into lower retail spending. The Fed's habitual consistency in its press releases enables analysts to easily spot whatever might be new or missing from earlier ones. So when it issued its original statement yesterday, analysts noticed the absence of the earlier assertion, "inflation expectations are well contained," and began issuing alerts. However, a second, amended Fed release included the sentence, "Longer-term inflation expectations remain well contained." After which, stocks jumped about 50 points.

But another key line went missing for real, signaling the impact of rising oil and gas prices on consumers. "Recent data suggests that the solid pace of spending growth has slowed somewhat, partly in response to the earlier increases in energy prices," the Fed said yesterday. CNBC's Steve Liesman notes that in previous statements, the Fed had added, "The rise in energy prices, however, has not notably fed through to core consumer prices" -- but that this statement was omitted yesterday. So, the Fed now seems to be saying that higher energy prices are impacting the consumer and consumer prices.

Still, as a reality check, the folks at International Strategy & Investment, a DC-based economic research firm, point out that the amount Americans are spending on gas as a share of their personal income is still "significantly below" where it was more than two decades ago.

With the reality slowly sinking in that gas prices may never really go down, and that $2.50/gallon will become the new norm, it's worth noting the differences in how Republicans and Democrats approach the issue, with both sides needing to make some fast adjustments in order to keep pace with consumers' concerns. Republicans are positioned to bear the brunt of the pain because they run the government. Republican pollster David Winston wrote in his memo to GOP lawmakers that not only is gas prices a real pocketbook issue, but that Americans may be starting to link gas prices to jobs. Also, Bush and Cheney's oil-industry backgrounds, long a target for Democrats, could complicate any effort they make to address the issue with industry-related solutions.

But Winston in his memo also argues that Democrats don't know how to deal with gas prices as an economic issue -- that they're used to talking about it as an environmental concern. In 2004, Kerry cast energy as both a national security issue and as an environmental issue, but gave up on the "green" context by late in the campaign in favor of putting it in the context of jobs. The Wall Street Journal editorial page yesterday argued that environmentalists' demands on the regulation of natural gas hinder its use as an energy source. In other words, this could be yet another issue -- like abortion -- on which Democrats may have to move away from a key component of their base in order to look like they're in touch with mainstream America.

Riling up green activists, USA Today reports that if the House-approved version of the energy bill becomes law, "many oil-and-gas projects will no longer be analyzed for their environmental effects or be open to public comment."

As Bush spoke at the Nissan plant in Mississippi yesterday, auto sales data came out. CNBC's Phil Lebeau reports that April sales also showed a trend away from big SUV's toward smaller SUV's, plus strong sales of hybrids. Lebeau also reports that Japanese auto makers posted strong results, while General Motors reported sales dropping 7%. "Soaring gas prices apparently are continuing to hurt domestic automakers more than the competition," says USA Today.

The anti-Wal-Mart campaign has broken through again: The New York Times rounds up their latest efforts to secure wage hikes for employees, and says that "the debate is also heating up" among Wal-Mart workers. Company execs respond that higher wages would "largely wipe out Wal-Mart's profit or its price advantage over competitors." (We wonder whether Wal-Mart is ever going to hire political strategists to battle the political strategists steering its opposition.)

While unions battle Wal-Mart, layoffs are starting at the AFL-CIO. – Washington Post

Another looming politico-economic issue: The head of the military base-closing commission warned at the commission's first hearing yesterday that communities who lose bases or see them realigned will be hit like "tsunamis." A report is expected by September 8. – Washington Times

Massachusetts, for one, has hired DC consultants to defend its facilities. In California, Governor Schwarzenegger and the state's Hill delegation have sent a letter to Bush and the commission about the importance of their state's bases.

The Washington Post front-pages that Jack Abramoff paid "at least a portion of the expenses" for Democratic Reps. Jim Clyburn and Bennie Thompson, as well as for aides to DeLay, "during a pair of trips in the mid-1990s to the Northern Mariana Islands." The members' response; like DeLay, they had no idea that Abramoff paid with his own credit card.

The New York Times looks at whether the controversy surrounding DeLay and other members of Congress is analogous to the banking scandals of the early 1990s.

The Washington Times covers GOP charges of hypocrisy by Nancy Pelosi for not calling for investigations into House Democrats' travel issues.

The Boston Globe details the Democratic bill being introduced today that would "tighten lobbying restrictions and reporting requirements."

The Washington Post profiles DeLay challenger Nick Lampson, a former Democratic member of Congress from Texas, who "plans to formally file papers as a candidate today and then to move into DeLay's suburban Houston district."

Schwarzenegger has a 1:00 pm ET event at the capitol in Sacto to present medal of valor awards to five peace officers "who have gone above and beyond the call of duty," per the release, which notes that the medal is "the highest honor the state bestows upon peace officers."

The Los Angeles Times casts Schwarzenegger's decision not to try to reorganize the state environmental agency this year as his "shelving yet another part of its once ambitious effort to refashion state government."

Roll Call profiles William Mundell, a high-tech millionaire who is helping to fund the campaign for Schwarzenegger's redistricting plan. The story notes that within the next few days, "supporters expect to submit petitions containing more than 900,000 signatures to place the measure on the ballot in November. If state elections officials find that 600,000 signatures are valid," a special election may happen.

The values debate
The Chicago Tribune writes about current vacancy of the top spot at the FDA, as Democrats hold up Bush’s nominee for that position in the debate over the morning-after pill.

The New York Times covers Florida Gov. Jeb Bush backing off from blocking a 13-year-old girl in state custody from having an abortion. “The reversal was a striking change for Governor Bush, who has intervened in several recent cases to fight for what he calls the sanctity of life.”

Speaking of increased government control, a new group has formed to advocate less of that and more parental involvement, or "personal responsibility," when it comes to what kids watch on TV. TV Watch is seeking to build grassroots support "to advocate for responsibility over government intervention and educate Americans about tools to control TV content," per the press release. Executive director Jim Dyke tells First Read that the group is funded by entities representing both ends of the ideological spectrum -- as well as by NBC Universal, we'd note. In conjunction with its launch, TV Watch will release a new national survey today showing that by nearly four to one, Americans say more government regulation is not the solution -- personal responsibility is.

The rollout comes at a time when another new survey shows that mothers "fear popular culture is undermining their efforts to raise children with 'values;'" when a UCLA study shows that the movie ratings system is "all but meaningless;" and, of course, when TV networks are still feeling the FCC and PR sting over Janet Jackson. – Washington Times

First Read has learned that DNC chairman Howard Dean is expected to address the Massachusetts Democratic party convention next week, where state Democrats are expected "to add an endorsement of gay marriage to [the] platform, despite a nationwide backlash against same-sex marriage that led voters to approve bans in 11 states last fall." The Boston Globe notes that the DNC "does not explicitly endorse same-sex marriage, but it supports 'full inclusion of gay and lesbian families in the life of our nation' and opposes... a federal constitutional ban on gay marriage."

Also, tomorrow brings the start of the Kansas board of education hearings on whether or not to include the teaching of intelligent design and criticism of evolution in the public school curriculum. In an updated reprise of the state's debate over this issue from the 1990s, the stakes are higher now that Kansas is investing $500 million in bolstering its bioscience industry. Critics say that the hearings send the wrong message to potential investors and could keep Kansas students from getting the educational background they need to enter the industry. A couple dozen proponents of intelligent design are expected to give their views at the hearings in Topeka, while proponents of evolution are expected to boycott them.

The Wall Street Journal editorial page notes that the 53 Senate votes in favor of a temp visa program for ag workers, which failed to get the 60 votes necessary pass, indicates "a recognition by a majority of Senators that enforcement-only approaches to illegal immigration won't work." The page says that what happened with "the AgJobs bill is a sign that Mr. Bush's guest-worker idea isn't as dead as advertised by the anti-immigration right," and calls on Congress to consider it "as a stand-alone measure."

The Washington Times notes that the war supplemental also includes, in addition to federal drivers' license standards and tighter restrictions on asylum, an elimination of caps on several categories for asylum, an increased cap on visas for non-farm temporary foreign workers, and funding for 500 new Border Patrol agents this fiscal year.

The Manhattan Institute's Migration Policy Institute announced yesterday that it's convening a bipartisan panel, chaired by former Sen. Spencer Abraham (R) and former Rep. Lee Hamilton (D), to produce sound information and workable policy ideas in the immigration debate. The panel will look at the illegal immigrant population, enforcement and security, labor markets and the immigration system, and the integration of immigrants into US society. It hopes to produce recommendations by next spring.

The UK elections
With the polls opening less than 24 hours from now, police have made a second arrest in their investigation into postal voting fraud. "A record 6.5 million people are expected to vote by post, nearly four times the number in 2001, and almost a quarter of 26.4 million total who voted then... The Royal Mail had advised people to send in postal votes by yesterday at the latest but those who receive their ballot paper before polling day can deliver it by hand up until 10pm tomorrow." -- Times Online

"Blair today fended off efforts to confirm when he would bow out as Prime Minister in the event of a Labor victory tomorrow... Blair conceded that there would be a 'handover' period for his successor to take control, but appeared reluctant to say when that would be." -- Times Online

The real fight appears to have boiled down to one between Labor and the Liberal Democrats, with the Tories on the sidelines. – The Guardian


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