“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.  To bookmark First Read, click here.

Thursday, September 1, 2005 | 9:15 a.m. ET
From Elizabeth Wilner, Mark Murray and Huma Zaidi

Please note:  Technical problems prevented First Read from including hyperlinks to today's new articles.  They'll return tomorrow.

First glance
We don't have the means or the words to begin to address the epic health-related, psychological, and environmental repercussions of Hurricane Katrina.  From an economic standpoint, obviously the supply and cost of gas are the immediate and all-consuming concerns.

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But Katrina's economic reverberations will be far-reaching and in many respects long-term or even permanent.  Many of them may stem from gas prices: analysts have raised the possibility of high prices stymieing consumer spending, exacerbating financial problems for already struggling airlines and automakers, and/or prompting the Fed to change course on interest rates.  Some of the effects will be unrelated to gas, such as disruption of distribution of foodstuffs and other products, causing higher prices, and job losses in the afflicted area's hotel and tourism industries, which could temporarily goose national unemployment figures.

Shrinking unemployment, along with a shrinking deficit, were two of many signs of improvement in the US economy before Katrina hit, although President Bush's plan to tout such improvements in August was obscured by rising gas prices and airline troubles.  For Bush, tapping the Strategic Petroleum Reserve is a visible step that he was previously unable to take toward providing the public with some relief from high gas prices.  As his job approval slid throughout August, the CW was that it was due both to developments in Iraq and to pain at the pump, but the latest survey by the Washington Post and ABC shows that Bush's ratings on Iraq have remained fairly constant, spotlighting fuel costs as the main cause of the slide.

Given what's now happening on that front, and the massive federal relief effort that could blow open the deficit, it's hard to see how Bush can sell the public on an improved economy in the first few weeks of September.  Most Americans are likely to give Bush a pass on the deficit -- if they even notice -- because of the national emergency.  But gas will be an issue everywhere, as Bush himself acknowledged yesterday.  A DC-based energy industry consultant suggests to First Read that from a regional standpoint, the Northeast and mid-Atlantic aren't likely to face the same degree of fuel shortages and prices as the Midwest because about two-thirds of the Northeast/mid-Atlantic's fuel comes from Canada and overseas, and only about one-third from the Gulf.  But, he says, the Rockies could get hit hard because they have little refining capacity.

Analysts say that natural disasters usually wind up having a positive economic impact because of job creation and spending on reconstruction -- but that because of gas prices, probably not this time.  The Merrill Lynch research department wrote to clients yesterday, "The difference this time... is the typical net-add will be offset to a large degree by the rise in energy prices...  In fact, the net positive may be one of the smallest ever, despite total insured costs that could be as high as $26 billion, which would be the largest insurance payout for a hurricane ever recorded."

On economic repercussions unrelated to gas prices, Merrill Lynch also warned yesterday that because "disruptions to economic activity (particularly tourism and convention business) may be longer lasting than usual," unemployment in September could rise "even though the survey week is still 13 days away."  Also, "August and September retail sales may be dampened, or at least skewed, towards food and building materials...  Industrial production in August and September will likely see a negative impact in all three major categories, with disruptions of energy production [mining (oil extraction), utilities and manufacturing (refining)] the main cause."

As far as the political fallout in Washington, the two parties in Congress are already skirmishing over whether or not to cut their five-week recess short by a day to get back to work to provide disaster relief (see below).  This fall, the energy industry consultant suggests, we may see an even harder Administration push this fall to drill for oil in ANWR, which has yet to pass Congress.  Also, we may see a bigger push to facilitate offshore drilling.  Environmentalists, having taken a back seat to labor and choice groups for much of this year, are about to become very busy.  The Administration already has temporarily lifted fuel standards.  In addition to easing supply concerns by waiving regional requirements on formulations of gas, the EPA administrator says the waiver will allow refineries to produce more gas by simplifying the process of making summer-grade fuels.

President Bush has no public events scheduled at this writing.  With Supreme Court nominee John Roberts' confirmation hearings starting on Tuesday, White House officials briefed NBC News yesterday, and results of that briefing are below.

Lastly, please pardon the absence of links and several of our usual news sources today due to technical difficulties.

Hurricane economics
Lots of coverage of estimates that Katrina will be the costliest US natural disaster ever, beating out the 1004 Northridge, CA earthquake, which cost nearly $7 billion.

NBC's Pete Williams reports that per Attorney General Alberto Gonzales, Justice Department lawyers met yesterday to discuss what legal needs might exist in the area devastated by Katrina, and federal agents will watch closely for evidence of price-gouging and the formation of fraudulent charities.

The latest from Bloomberg: "Gasoline rose for a fourth day..., raising prospects U.S. pump prices will exceed $3 a gallon...  Crude oil fell for a second day after the government promised to release oil from the Strategic Petroleum Reserve...  Retail prices have now surpassed levels not seen for 25 years.  Gasoline prices surged then because of the Iranian revolution of 1979.  Pump prices peaked at a nationwide average $1.38 a gallon in 1981, according to the Energy Department.  That's about $2.95 in today's dollars."

The New York Times: “For the first time since the 1970’s, gasoline lines reappeared yesterday in some corners of the country,” such as in South Carolina, the Dakotas, Arkansas and Kentucky.”

The Wall Street Journal, like First Read, looks at how "Katrina could be different" from other natural disasters in terms of its economic impact because "Katrina is both destructive and disruptive."  "How large and lasting the impact on the national economy turns on questions that can't yet be answered accurately...  The vulnerability of the nation's economy to Louisiana and Mississippi -- which account for only 2% of all the economic activity in the country -- is painfully becoming evident."

Another Journal story asks, "Will Katrina cause the Fed to pause?," noting that "the odds of an eventual pause" in the Fed's gradual raising of short-term interest rates "have edged up."  One Federal Reserve Bank president asserted in a speech yesterday that the US economy "'has proved to be surprisingly capable of absorbing such shocks.'"  The story also notes that the Fed "is likely to be on heightened alert for evidence that the economy's resilience is fraying."

The Washington Post: "The storm hit a chokepoint in the U.S. economy -- a concentration of ports, rail lines, barge traffic and major highways making up one of the nations major trade hubs."

More from the Journal: "Katrina is taking some steam out of the farm economy" by shutting down grain-exporting ports around New Orleans "for an indefinite period, depressing prices that Midwest farmers are fetching for corn, wheat and soybeans...  The Katrina-related slump in crop prices is the latest in a string of events conspiring to put an end to one of the American farm belt's most profitable periods."

The good news: USA Today notes that hurricanes "fail to have a lasting depressive effect on stock prices...  An analysis of the performance of stocks in 17 affected industries, including energy, home building, insurance and construction, after the four most costly hurricanes in U.S. history, shows that virtually every group has been up one week, one month, three months and six months after the hurricane made landfall, according to Ned Davis Research."  But one "senior stock sector strategist" notes that the economy is "not out of the woods," as "gasoline inventories are extremely tight; short-term interest rates have been rising, and the economy is also vulnerable due to the overheated housing market."

The Washington Post looks at how companies hit hard by Katrina are "grappling with how generous they can afford to be to employees who lost both homes and work."  Many large employers in the area, like Harrah's, Northrop Grumman, and Wal-Mart will continue to pay employees, and some are offering financial additional assistance.

And the Washington Post's Milbank, reporting on a briefing by the head of the American Petroleum Institute yesterday, says, "Anybody who remembers odd-even days and President Jimmy Carter in a sweater knows how an oil shock can throw economies into recession and politics into turmoil."

Hurricane politics
The Wall Street Journal says Bush's return to Washington yesterday and the string of appearances by Cabinet members "were intended to reassure Americans who have grown increasingly dispirited in recent months over Iraq and high gas prices...  Several recent presidents have improved their standings with high-profile responses to disastrous events," including Clinton with Oklahoma City and Bush with September 11.  "Observers in both parties agreed the president could achieve a short-term boost from his handling of Katrina, which has shifted attention away from the Iraq war."

The New York Times analyzes the challenge Bush faces in dealing with Katrina’s aftermath, noting that -- unlike September 11 -- Bush “confronts this disaster with his political capital depleted by the war in Iraq…  The next few weeks will determine whether he can manage several challenges at once…  Success could help him emerge from a troubled moment in his presidency, when his approval ratings have hit an all-time low.  But it is hardly assured.”

The Times editorial page says Bush “gave one of the worst speeches of his life yesterday, given the level of national distress and the need for words of consolation and wisdom.  In what seems to be a ritual in this administration, the president appeared a day later than he was needed.  He then read an address of a quality more appropriate for an Arbor Day celebration: a long laundry list of pounds of ice, generators and blankets delivered to the stricken Gulf Coast.”

A new USA Today/CNN/Gallup poll conducted Sunday through Tuesday -- meaning, we'd note, that it may not reflect still-evolving public opinion about Bush's handling of the hurricane -- shows Bush with the lowest ratings of his presidency on the economy and health care, while three out of four people disagree with Bush's handling of gas prices, the paper reports.  Bush's current overall approval rating is at 45%, which "reflects a rebound from his all-time low of 40% in a Gallup Poll taken last week."

Another Journal story notes that "the unusual character of the storm and the tens of billions of dollars the recovery is likely to cost make it far harder for the administration to meet its goal of continuing to reduce the deficit going into the 2006 midterm elections."  Although White House economic advisors say the economy won't be severely hurt, "the administration's deficit projections are more vulnerable."  And: "The prospect of a huge disaster-aid package comes as conservative activists have grown increasingly vocal about their disillusionment with record federal spending at a time when both the White House and Congress are in Republican control.  Some party strategists fret that disgruntled conservatives could stay home on Election Day."

But the Wall Street Journal editorial page skirts the spending question and praises the Administration for releasing just the right amount of crude from the Strategic Petroleum Reserve and for temporarily waiving fuel standards, though the pages wishes the waiver would stretch for longer than September 15.  As for the Fed, however, the page says that Katrina "is not so far a financial crisis," so the Fed shouldn't change course on interest rates.

The Washington Post says Bush's words yesterday "echoed the language [he] used through much of his August vacation whenever he emerged from the ranch to defend his handling of the Iraq war, and it reflected his leadership style.  In times of calamity, he seeks to project an air of undiminished confidence regardless of the dark circumstances.  He fashions himself a take-charge leader who thrives at making decisions that he never second-guesses even if they do not turn out the way he imagined them."  The story also notes that "Democrats painted the president as dithering while New Orleans drowned.  Other Democrats began circulating accusations that the administration had neglected disaster preparedness to pay for the Iraq war..."

Democrats also are trying to one-up Republicans on disaster relief.  House Minority Leader Nancy Pelosi yesterday asked Speaker Dennis Hastert to call a special session of Congress in order to quickly get to work on any federal legislation that might be needed to assist in the Katrina disaster, NBC's Mike Viqueira reports.  A Pelosi aide tells Viq that Congress will no doubt have to appropriate emergency funds to deal with the crisis, and argues that it's better to get started right away.

Hastert declined to call a special session.  A House GOP leadership aide tells Viq that FEMA has the wherewithal to deal with the disaster in the short term, so there's no point in having the House return to Washington one day early (the congressional recess will have lasted for five weeks by the time they return on September 6).  Hastert and Senate Majority Leader Bill Frist released a statement yesterday pledging "swift action" in response to the disaster.  "As has been the case in other national tragedies, such as 9/11, Congress will move quickly to assist those affected by this tragedy."

And Majority Leader Tom DeLay's office is circulating this statement: "Congress will get right to work at crafting a comprehensive Hurricane Katrina relief package that will address the overwhelming challenges facing our fellow citizens who are attempting to cope with an unthinkable catastrophe."

Meanwhile, Pelosi's Senate counterpart, Harry Reid, issued a written statement commending "the President for his decision to return to Washington, DC to oversee recovery efforts," and noting (warning?) that the Senate "will return Tuesday, and in order to ensure we are prepared to act on that day, I hope the President and his administration will act swiftly to provide the Congress with damage assessments so that we can provide immediate relief to the people of the Gulf Coast."

The Kerry-Edwards ticket has (separately) e-mailed their respective lists of supporters asking them to contribute to the relief effort.

The Washington Post also notes how the storm has put the spotlight on Governors Blanco (D) of Louisiana and Barbour (R) of Mississippi: "the storm will define and dominate their public lives for the duration of their time in office."

National security politics
The Washington Post reports on the cable sent by new undersecretary of state for public diplomacy Karen Hughes to all US embassies "urging them to think of ways to commemorate the fourth anniversary of" September 11.  "The instructions are an early sample of Hughes's plans to try to close the chasm between the United States and much of the rest of the world, particularly the bloc of more than 50 Islamic countries."  The story says Hughes will unveil her plan with Condoleezza Rice in a town hall with State Department staff next Thursday.

The Roberts nomination
White House officials briefed NBC News on Roberts' nomination and his upcoming confirmation hearings:

-- On the new memos the Reagan library found, one official said that the White House only learned about their existence on Monday. "We've got eight people out there" looking at them.

-- On the White House's refusal to turn over Roberts' memos from his days in the Bush 41 US solicitor general's office, the official said the solicitor general is the top attorney representing the United States, and that releasing the documents "would undermine the ability of that office to continue its business in the future."

-- On whether or not the pool of candidates for the next SCOTUS vacancy -- say, if Rehnquist retires -- would look like the pool for the O'Connor slot, the official said that the pool probably would consist of many of the same candidates who were considered over the summer, but noted that it could also expand beyond those people.

-- On whether Roberts is in the mold of a Clarence Thomas or an Antonin Scalia, "I think [Bush] got someone in the mold of a Scalia and Thomas" -- meaning that Roberts "will apply the laws and interpret them."

-- On whether conservative GOP Judiciary Committee members Sam Brownback and Tom Coburn might vote against Roberts, "We take no vote for granted."

This White House official also revealed that Roberts has been involved in some moot hearings to rehearse for next week.  But the official also noted that Roberts doesn't need much coaching, since he helped prepare Sandra Day O'Connor for her own hearings in 1981.  "It's a little like working with Michael Jordan on his jump shot," the official said.

The Democratic staff counsels for the Senate Judiciary Committee hold a background briefing today.

The coalition of organizations supporting Roberts holds a press conference call today "to outline their media and grass roots strategy for the coming weeks as well as sketch out their expectations from Democratic Senators and left leaning organizations," per the release.

As their affiliated interest groups try to pressure Democratic lawmakers to get tough on Roberts, the Senate Democratic leadership announced yesterday that they support their Judiciary Committee colleagues in their pursuit of Roberts documents they haven't yet received.  DNC chair Howard Dean issued a statement echoing that assertion.  Meanwhile, a group of legal scholars and professors formally declare their opposition to Roberts' nomination today at 2:30 pm.

The New York Times takes a look at the mock hearings -- or “murder boards” -- Roberts has been undergoing to prepare for his hearings that begin next week.  “So far, administration officials said, Judge Roberts had participated in some 10 mock hearings of two to three hours each at the Justice Department, where administration lawyers and a revolving cast of Judge Roberts’s colleagues and friends baited him with questions.”

And USA Today reports that Sen. Evan Bayh (D) and Sen. John Warner (R) will appear with Roberts when his hearings begin on Tuesday.  The paper says the bipartisan appearance is "an important symbolic boost for his confirmation process."  Bayh notes, however, that he's appearing with Roberts as a "courtesy" and that he hasn't made up his mind yet about which way he'll vote.

The values debate
The Washington Post reports on the voluntary departure of the FDA official in charge of women's health issues "in protest against the agency's decision to further delay a final ruling on whether the 'morning-after pill' should be made more easily accessible."  She charged that "the decision was widely seen in the FDA as political," and that the new FDA chief kept top officials there "in the dark" about his decision until it was announced.

2005 and 2006
Turning to New Jersey's gubernatorial race, a state agency yesterday released “a complex ruling that failed to resolve questions about the legality of millions of dollars in campaign contributions” that Doug Forrester (R) has made to himself and other candidates, the New York Times reports.  Democrats have charged that Forrester, who owns Heartland Fidelity Insurance Company, has been violating state laws prohibiting insurance companies from making political donations, while Forrester counters that Heartland is based in DC -- and thus isn’t subject to New Jersey law.  “But when state regulators released their highly anticipated opinion Wednesday, they declined to issue the letter Mr. Forrester had requested, and their advisory opinion fell short of vindication.”

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