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• Wednesday, May 31, 2006 | 9:15 a.m. ET
From Elizabeth Wilner, Mark Murray, Huma Zaidi and Alex Isenstadt

  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

First glance
President Bush hits most of the key themes of his presidency today: some spreading of democracy, some national security, and some record-breaking fundraising.  The highlight of his schedule is his participation in the swearing-in of his new CIA director, Gen. Michael Hayden, in Langley at 1:50 pm.  He also meets with the President of Rwanda at 10:50 am, and does a fundraiser for Maryland Republicans in Baltimore at 6:05 pm.

On Bush's other big theme these days, the economy, the question is whether incoming (by all accounts) Treasury Secretary Hank Paulson will help the Administration convincingly spotlight the many aspects that are performing well, as opposed to the everyday concerns, like the price of gas and health care, that are dimming many Americans' views of the economic picture.

"Two things will determine" whether this personnel change "is important," says Tom Gallagher of the Washington office of economic research firm ISI.  "First, will Paulson play a greater policymaking role than either Snow or [first Bush Treasury Secretary Paul] O'Neill did?"  Gallagher suggests that the Cabinet members who have played a "major policymaking role" in Bush's Administration so far have tended to be those with longstanding ties to him.  We'd add that despite his lack of history with Bush, Paulson's ties to influential White House chief of staff Josh Bolten might be better than nothing.  Paulson is a former colleague of Bolten's from Goldman Sachs and Bolten oversaw his recruitment, per a White House aide.

Second, Gallagher asks, "will Paulson be a better salesman" than either O'Neill or Snow?  Although the premise among political and economic analysts has long been that Bush isn't getting credit for the state of the economy, Gallagher points out that "real income expectations have been declining" since 2001, and suggests that all the personnel changes that have taken place in the Administration in the past few months might have a "quite limited" ability to "alter consumers'/voters' perceptions of their own situation and the government's policies."

White House aides say Bush interviewed Paulson on May 20.  On May 25, in response to a question about a possible Snow resignation, Bush that he hadn't spoken with Snow "about resignation."  White House spokesperson Tony Snow yesterday characterized that reply as "an artful answer" and said Bush did not want to risk moving markets by revealing too much before Paulson's background check was complete, NBC's Kelly O'Donnell reports.  The markets did move yesterday -- they went down.  Perhaps proving Gallagher's point, the Dow Jones Industrial Average dropped 184 points even as Wall Street appeared to welcome the Paulson news.  Concerns about inflation and lagging consumer confidence drove the slide.

The response from Democratic lawmakers has been "wait and see" at worst, and Paulson seems destined to get confirmed, though Democrats may use his confirmation hearing as a chance to critique some of the Administration's economic policies.  As for the departing John Snow, the White House's week-ahead schedule for its economic team shows him doing interviews on Friday timed to the release of the May jobs report and a speech to the American Enterprise Institute.

Bush's fundraiser tonight for the Maryland Republican party is expected to set a record for the state GOP, raising over $1 million.  Endangered GOP Gov. Bob Ehrlich will be present, but the party's other marquee candidate will not.  Per campaign spokesperson Doug Heye, Lt. Gov. Michael Steele will not be in attendance.  The certain nominee for retiring Sen. Paul Sarbanes' seat, Steele is out west raising money in Texas and Nevada.  Bob Novak wrote on Monday that Steele was harshly critical of Bush when speaking to Novak recently: ''In the eyes of blacks, Katrina was a 9/11 event. You didn't fly over 9/11.  You got on the ground in the rubble.  You should have been on the ground for Katrina.''

Incidentally, the First Lady is in New Orleans today.  Sen. Hillary Clinton (D) accepts her party's endorsement of her re-election bid in Buffalo later this morning.  And today also marks House Speaker Dennis Hastert's version of 714 -- the day he ties with Joe Cannon as the longest-serving GOP Speaker in US history.  Unlike Barry Bonds, however, there's no suspense about whether or when Hastert will break the record -- so long as, as he himself joked recently, he makes it to tomorrow.

It's the economy
"To lure a reluctant Mr. Paulson," the Wall Street Journal reports, Bush and Bolten "promised him more clout in domestic and international economic policy than either of his predecessors...  Among other things," Paulson "has been assured that he will rank with the secretaries of defense and state in the Bush inner circle and that the White House National Economic Council... will hold some of its meetings in the Treasury building and that Vice President Dick Cheney will attend some of them.  If they materialize, those would be significant changes for a White House that has tightly held the power to make economic policy, essentially turning the Treasury secretary into a salesman for tax cuts, the centerpiece of its economic strategy."

Bloomberg questions "whether Bush will give [Paulson] the leeway to run Treasury and shape policy...  Under Bush, no one has been allowed to take that role," in part because of the "prominent roles" taken by Vice President Cheney and Karl Rove.

The Financial Times says Paulson’s appointment "could address criticism that Mr Bush’s economy policy team lacks heavyweights.  He has the chance to position himself as the leading voice on the US economy, at a time of rising volatility in the international financial markets, and while Ben Bernanke, chairman of the Federal Reserve, has yet to acquire the decisive authority of his predecessor."

"In choosing Paulson, Bush defied skeptics who predicted that late in his presidency he would be unable to attract a Wall Street heavy hitter for a position that up to now has held little power in his administration," notes the Washington Post.

Another Bloomberg article says Paulson is positioned to become a major player in the China currency and trade debates.  "A former administration official with ties to both the White House and Wall Street said that Paulson's expertise on China was the single biggest reason Bush picked him -- a sign that Bush views dealing with China on currency and trade issues as a primary focus of his economic plans for his final two years in office."  The story notes that Paulson, "with little Washington experience," may not be "able to match his Wall Street success in his dealings within the administration and with Congress."

The Wall Street Journal also says that "one of [Paulson's] first challenges will be guiding President Bush's ballyhooed competitiveness agenda out of choppy waters on Capitol Hill."

The Washington Times sees the announcement as another sign of Bolten's influence.

Goldman Sachs is one of the biggest and most active campaign contributors in American politics, NBC's Bob Windrem reports.  The Center for Responsive Politics ranks Goldman 11th on its all-time donor list, having contributed nearly $23 million to federal candidates since 1989.  Its employees give most of their money to Democrats, Windrem notes.  Since 2003, they have given nearly 60% of their campaign donations to Democratic candidates and in the last two presidential elections, 62% and 61% of Goldman dollars went to Democrats.

Paulson himself made more than $300,000 in federal campaign contributions during that same period, according to CRP -- most of it going to the GOP and its candidates.  But he did give $1,000 to Bill Clinton's presidential campaign in 1992 and to Bill Bradley's in 2000.  He gave $2,000 to Bush in 2004.  He has also given to the campaigns of various Senators who will be voting on his nomination, including Democrat Chris Dodd and Republicans John McCain, Chuck Hagel, Charles Grassley, Richard Shelby, Saxby Chambliss, John Sununu, and Arlen Specter.  And he has been a major contributor to the League of Conservation Voters, having given the environmental group $20,500 over that same period, most recently in 2003.  Windrem notes that LCV is a major critic of Bush's environmental record.

The Washington Post's Milbank covers cantankerous House Judiciary chair Jim Sensenbrenner's assertion yesterday that he will "haul" Attorney General Alberto Gonzales and FBI director Robert Mueller before his committee to testify about the FBI raid of Democratic Rep. William Jefferson's office.  "He also vowed that he will 'promptly' write legislation to prevent a recurrence."

"The disclosure of the search has created the spectacle of the House leadership - Republicans and Democrats alike - siding with the target of a federal bribery investigation in the name of protecting congressional traditions and the doctrine of separation of powers," the Los Angeles Times reminds us.  "It also left some senior officials ... weighing whether to resign if President Bush decided to intervene and order the documents returned."  Bush instead ordered the documents to be sealed for 45 days. – Los Angeles Times

Justice Department lawyers will make another concession to Jefferson in the fight over their search of his Hill office, NBC's Pete Williams reports.  Prosecutors said in their latest court filing that they'll provide Jefferson with copies of everything taken from his office in the raid.  Also, before the agents investigating the case are allowed to see the documents, Jefferson's lawyers will have a chance to urge a judge to exclude any items they consider protected by the Constitution's Speech and Debate clause privilege.  As for the search itself, government lawyers yesterday argued that it did not violate the Constitution.  They said that Jefferson's position would extend the Speech and Debate clause's immunity so far that it would make it impossible to search any place that might contain even one privileged document.  That should be rejected, they said, because the courts have held that "the laws of this country allow no place or employment as a sanctuary for crime."

The New Orleans Times-Picayune reports that during last summer's search of Jefferson's home, Jefferson was seen putting "some documents into a blue bag on the floor."  When an FBI agent, Stacey Kent, "asked him about the papers, he said they were merely copies of the search warrant... But when he eventually handed them over, the filings said Kent found a fax addressed to the congressman.  It was sent from B.K. Son, a person whose name had come up in the investigation.  The name appeared on the search warrant and the FBI was seeking any documents mentioning him. 'It is my belief that when Congressman Jefferson placed documents into the blue bag, he was attempting to conceal documents relevant to the investigation,' Kent wrote."

Senate Minority Leader Harry Reid yesterday defended himself in person, and on paper point-by-point, against the AP report that he accepted free seats to pro boxing matches from the Nevada Athletic Commission at a time when the commission was lobbying him on federal boxing regulations.  Reid said it was "his official duty to attend" the matches and was not unethical.

The New York Times says that in his testimony yesterday at the trial of former Bush Administration official David Safavian, former Rep. Bob Ney aide Neil Volz testified that he helped prepare a travel-disclosure statement for Ney that understated the cost of his 2002 golfing trip to Scotland.  “The testimony from Mr. Volz was the first to put a human face on the Justice Department's case against Mr. Safavian, who is on trial here on charges of lying to government investigators about his friendship with Mr. Abramoff and the circumstances of the August 2002 golfing trip, which Mr. Safavian joined.”

The AP adds that Volz also described "how he had obtained insider information, advice, and assistance from" Safavian "to advance two projects for" Abramoff.  "Abramoff then took Volz on a lavish golf trip to Scotland."

The immigration debate
So how big an issue is immigration in the special election in San Diego between Brian Bilbray (R) and Francine Busby (D) to fill the House seat vacated by jailed former Rep. Randy "Duke" Cunningham (R)?  Apparently big enough to scratch a Bilbray fundraiser, scheduled for today, which was to feature John McCain.  During this hard-fought campaign, Bilbray and the GOP House campaign committee have been shellacking Busby for supporting a measure in the Senate immigration bill that gives illegal immigrants a path to citizenship; they call that provision amnesty.

McCain, of course, is one of the architects of the Senate bill.  As soon as the fundraiser was announced late last week, Busby wrote to McCain: "I hope you will take the opportunity to inform... Bilbray about your tough and comprehensive reform proposal.   During your visit, you may see some of the advertisements or mailers from Mr. Bilbray that attack me for supporting your proposal.  He has repeatedly called your plan 'amnesty' and claims that your plans rewards illegal immigrants."  Busby also began running a web ad yesterday that highlights her support of McCain's immigration plan.

Yesterday afternoon, McCain's Straight Talk PAC announced that McCain has canceled his appearance "to avoid distracting from the overall message of the Bilbray campaign.  The Senator and Brian may disagree on some of the issues related to immigration reform. But they agree on many other issues important to the voters of California's 50th congressional district,... which is why Senator McCain endorsed and fully supports Brian Bilbray."  Bilbray spokesperson Dave Gilliard says of McCain's cancellation: "He just didn't want to give Busby any fodder," he tells First Read.

More on the Bush/GOP agenda
The Hill covers the disintegration of unity among House Republicans.  "In the past two weeks, Republican House members have sparred openly on the House floor and have criticized their Speaker behind closed doors...  While bickering is a constant on Capitol Hill, the recent rancor illustrates the election-year self-interest of individual members that could make it increasingly difficult for leaders to tackle controversial legislation.  In turn, the growing discord could help paint the GOP as divided."

The Democrats
The issue for Democrats, as Bush and the GOP-run Congress face "bleak approval ratings," is "whether the Democrats have an alternative ready to present," says the Los Angeles Times' Brownstein, who notes some of the varying plans being offered by various factions of the party.  "On one side are those who believe the Democrats must present a sharp alternative to Bush's direction...  On the other side are strategists who fear that offering too many specifics could allow Republicans to shift focus away from public discontent with how they have governed...  But attempts to minimize the target for Republicans could leave Democrats vulnerable in a different respect," allowing "the Republicans room to define for voters what the priorities of the Democrats are."

The Hill suggests that most red-state Democratic candidates would support House Minority Leader Nancy Pelosi for Speaker, but may be a little hesitant to say so now.

The midterms
The Hill looks at the skittishness among some GOP incumbents and candidates about appearing alongside President Bush, and notes that in contrast, Laura Bush and Rudy Giuliani are in high demand.

Former Alaska Gov. Tony Knowles (D) announced yesterday that he'll challenge incumbent Gov. Frank Murkowski (R) this year, seeming to ensure a toss-up race -- and a rematch of sorts.  In 2004, Knowles ran against Murkowski’s daughter for the US Senate and lost.

Angelo Tsakopoulos is a "wealthy Sacramento developer who has assumed an unusually high-profile role in California’s Democratic gubernatorial race, steering nearly $9 million to campaigns on behalf of Democrat Phil Angelides," writes the San Francisco Chronicle.  Angelides' opponent, State Controller Steve Westly, "suggested that the Tsakopoulos donations pose 'a real question for all Californians: What is this person trying to buy?"'  But Angelides spokesman Dan Newman criticizes Westly for "splattering mud on TV in a barrage of false attack ads..."

The Baltimore Sun notes that Senate candidate Michael Steele (R) will be absent when Bush travels to his Maryland fundraiser today.  “Steele joins a growing list of Republican candidates who are declining a chance to be seen with the president in this election year… This month, two Republican House members stood Bush up at fundraisers in their backyards. Virginia Rep. Thelma Drake's office said she had to cast a vote in Congress during the president's stop at a fundraiser in Hampton Roads, Va., while Pennsylvania Rep. Curt Weldon skipped Bush's Philadelphia fundraiser last week, telling The Wall Street Journal that Bush was doing so poorly in his state that he wouldn't rely on his help.”

Also in Maryland, after several months spent focused on issues concerning Baltimore Mayor Martin O'Malley's home turf, the Washington Post reports that the state’s Democratic gubernatorial primary is beginning to spotlight problems in Montgomery County, County Executive Doug Duncan's base -- with a little help from Jack Abramoff.

USA Today takes its look at vulnerable GOP Sen. Conrad Burns of Montana, who seems positioned to win his primary next Tuesday despite a credible challenger, but his prospects for the general election are more in doubt with Democrats hammering him for his ties to Abramoff.

The New York Times writes that Hillary Clinton’s bid for a second term as New York senator is “the campaign that isn't.  Even as Mrs. Clinton insists she is focused squarely on her re-election this year - not, as so many speculate, on the presidential campaign of 2008 - the junior senator from New York is not running anything like a recognizable race (apart from her huge fund-raising apparatus, which itself makes it stand out, and which her own advisers admit has more to do with preparing for 2008 than 2006).”

The New York Daily News looks at Hillary Clinton's Democratic challenger for her Senate seat, anti-war activist Jonathan Tasini, who "was engaged in furious eleventh-hour deal making, offering to abandon his attempt to get his nomination to the floor in exchange for an early morning vote on a resolution calling for the withdrawal of troops."

And the New York Times says that abortion-rights advocates in South Dakota have submitted more than twice the number of signatures needed to challenge the state’s abortion ban in November.  “The state election supervisor, Kea Warne, said the signatures would be verified within the next month.  The ban was to go into effect on July 1, but it could be delayed until after the referendum if enough signatures are verified.”


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