updated 10/25/2005 9:12:21 AM ET 2005-10-25T13:12:21

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First glance
The New York Times reports this morning that, per notes now in special prosecutor Patrick Fitzgerald's hands, Lewis "Scooter" Libby learned of Valerie Plame's identity from Vice President Cheney rather than from journalists, as Libby had previously testified.  The Times thus becomes the first to report direct involvement by Cheney in the White House effort to learn more about Joe Wilson -- though the story notes that it's unclear whether either Cheney or Libby knew at the time they discussed Plame that her status was classified.  "But any effort by Mr. Libby to steer investigators away from his conversation with Mr. Cheney could be considered by [Fitzgerald] to be an illegal effort to impede the inquiry."

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President Bush may or may not take questions today after his Rose Garden statement at 2:55 pm with the head of the Kurdistan regional government (note that Bush has another event, a photo op, scheduled for just 15 minutes later).  White House spokesperson Scott McClellan suggested yesterday that Bush's 11:35 am address to a joint armed forces officers’ wives’ luncheon will include some recognition of the looming 2,000 KIA milestone for US troops in Iraq.  Tonight, Bush headlines another $1 million fundraiser for the Republican National Committee.

And NBC's Ken Strickland suggests that the intensifying face-off between the White House and US senators of both stripes over the White House's refusal to release records of Miers' work for Bush may be part of an unspoken exit strategy.  More on this below.

Now for a few words about Bush's Monday.  Wall Street is theorizing about inflation, risk premiums, and other monetary terms of art under a Bernanke-chaired Federal Reserve.  But was a hefty dose of much more easily understandable politicking in Bush's announcement of his nominee to replace Alan Greenspan yesterday.

First, Bush reaffirmed that he is focused on the economy, a topic he hasn't addressed for a long time.  Apart from recognizing high energy prices, NBC White House producer Alicia Jennings says Bush last spoke at length about the economy after a mid-July Cabinet meeting, when he talked with the press pool about his goal of halving the deficit by the time he leaves office.  But as tricky as gas prices have made it for Bush to talk about the economy, tougher times may be ahead, with the Gulf Coast recovery just getting underway and high home heating costs, inflation and increasing minimum payments for credit cards all expected to eat into pocketbooks this holiday season, and more economists speculating about a possible recession in the midterm election year.

Second, Bush succeeded in at least briefly changing the subject -- and temporarily distracting the markets -- from the possibility that one or more top White House aides will be indicted later this week.  Lehman Brothers' Kim Wallace told First Read recently that if the Plame leak investigation produces any results the markets don't currently expect, which he estimates would be anything beyond an indictment of Cheney chief of staff Lewis "Scooter" Libby, the markets will take a hit.  Before yesterday, Bush hadn't been expected to announce a replacement for Greenspan until next month.  The Wall Street Journal reported after the closing bell yesterday that the 169.78-point and 1.66-percent increases in the Dow Jones Industrial Average were the largest since April.

Third, despite speculation that Vice President Cheney's profile in the White House has shrunk in recent months, don't think he didn't play a lead role in this search.

Fourth, at a time when Bush's domestic legacy looks uncertain, nominations like this one remain a way for him to leave his mark.  Not only is Fed chair one of the most powerful jobs in the federal government, but the role has, under Greenspan, evolved into that of national economic commentator.  Per former Bush campaign strategist Matthew Dowd, Greenspan has ranked in the top three, along with Bush and Congress, in GOP polling on "who is integral to the direction on the economy."  Fed watchers say Bernanke may be an even stronger spokesperson than Greenspan, NBC's Anne Thompson reports.

Fifth, any opportunity for Bush to build his legacy is a potential soapbox for increasingly emboldened Hill Democrats.  Senate Democratic Leader Harry Reid, who has criticized Greenspan as a political "hack" for Bush economic policies, said in a written statement yesterday that Bernanke must "demonstrate that he is committed to guiding the economy to produce results for all Americans rather than promoting partisan policies that benefit special interests and an elite few."

But -- sixth -- if Democrats plan to use the nomination to try to score some political points on the economy, so does the GOP.  Speaker Hastert noted in his reaction to the nomination that "Republican pro-growth policies have helped our nation recover from the 2001 terrorist attacks.  Homeownership has risen to a record high, particularly among minorities.  The deficit continues to decrease, and Americans are finding the jobs they need to take care of their families."

All that being said, a Republican member of Congress who's close to the leadership tells First Read that the Bernanke rollout went well, but "Bush is unlikely to get much credit.  Right now in the wake of Katrina and Miers, people are more interested in criticizing than praising" the President.  "Giving him credit is something we will not see until the Plame issue is resolved, Rove's fate is determined and the Supreme Court choice is settled."

Ethics
More from the New York Times: "It is not clear why Mr. Libby would have suggested to the grand jury that he might have learned about Ms. Wilson from journalists if he was aware that Mr. Fitzgerald had obtained the notes of the conversation with Mr. Cheney or might do so."  Also: "Some lawyers in the case have said Mr. Fitzgerald may face obstacles in bringing a false-statement charge against Mr. Libby" because "it could be difficult to prove that he intentionally sought to mislead the grand jury."  And: "Lawyers involved in the case said they had no indication that Mr. Fitzgerald was considering charging Mr. Cheney with wrongdoing."

Is this developing in the late hours into Cheney v. Libby?  Bloomberg reports that the "disclosure doesn't indicate that the vice president did anything wrong, said a senior Republican with ties to Cheney.  The person declined to make a similar statement about Libby.  The senior Republican, who spoke on condition of anonymity, sought to portray Cheney as uninvolved in any violation of" the law "forbidding the revelation of a covert intelligence agent's identity."

The Boston Globe's Canellos looks at how the CIA leak probe could affect Cheney.

The New York Daily News reports that the White House and its allies have created "a sophisticated war room offensive" to counter any indictments that Fitzgerald might hand out.  "The White House strategy is counting on major help from GOP allies and neocon commentators who turned on Bush for naming Harriet Miers to the Supreme Court and are now looking for redemption with a miffed President.  An emerging theme in the Bush war room is arguing that ... Karl Rove simply got tripped up on his recollections of whom he talked to and what he told them when questioned about the outing of CIA spy Valerie Plame.  He shouldn't be indicted simply because of contradictory grand jury testimony, a source said."

After Democrats literally showered reporters yesterday with Lewinsky-era quotes from GOP lawmakers, many of them still in office, asserting at the time that perjury is a serious crime, we wonder whether Republicans will press ahead with this line of argument as it becomes increasingly likely that perjury will factor into the outcome of this probe.  Conservative commentator Laura Ingraham said on TODAY this morning that perjury is indeed a serious crime.  Ingraham also noted that the Bush White House has "bent over backward" to cooperate with the investigation -- unlike the Clinton White House with Whitewater, she charged.

The Washington Post, duly noting the arguments of Wilson's critics and backers, points out that "nobody disputes" that "Wilson helped propel the unmasking of his wife's identity as a CIA operative into a sprawling, two-year legal probe," and "turned an arcane matter... into a proxy fight over the administration's credibility and its case for war in Iraq."

The Wall Street Journal observes that Democrats "face a particular risk in using the investigation to attack Mr. Bush on Iraq, given the initial support for the war from some of their most influential members."  (We've mentioned here before how some prominent Hill Democrats are using Bush's own line to defend their votes for the war, saying it was necessary to fight a broader war against terrorism.)

Roll Call reports that House "Democratic leaders today are arming the Democratic Caucus with message points on a response that consists of a two-pronged argument accusing the Republicans of continuing to foster a 'culture of corruption' and of compromising the nation’s security by leaking classified information."

In a separate story, the paper reports that the Democratic House campaign committee has begun "[r]evving up their strategy of nationalizing the 2006 midterms around Republicans’ ethics troubles" by "firebombing local media with news releases that accuse specific GOP Members of voting at the behest of special-interest donors."

The House Republican campaign committee, meanwhile, yesterday distributed a memo to the party's Hill press secretaries and chiefs of staff, noting that it's hypocritical for Democrats to call on Republicans to return money they received from DeLay's PAC -- when the House Democratic campaign committee won't return money donated by convicted former Rep. Frank Ballance (D).  "The next time you face a Democrat attack on ethics, it may be helpful to reference this," the memo says.

The New York Times catches up on recent HCA-related news about Senate Majority Leader Bill Frist -- how his political fortunes are inextricably linked to his family’s stake in the company, and how, while Frist has tried to distance himself from HCA in the Senate, he “has also been deeply involved in legislation affecting his family's business.”

And a court date of November 1 has been set to hear whether the judge presiding over the DeLay case should recuse himself because he has made various campaign contributions to Democrats. - AP

The Bernanke Fed and the Bush agenda
The Washington Post puts the Bernanke announcement in the context of a big White House effort to right the ship: "Bush and his team are devising plans to salvage the remainder of his presidency by... refocusing attention on the president's larger economic and foreign policy goals...  White House advisers have developed a twofold strategy -- confront head-on problems such as the Iraq death toll, while shifting attention to other areas such as conservative economic policies."  The rollout began yesterday with Bernanke and will continue today with Bush's Bolling AFB speech; a similar speech will come on Friday in Norfolk.

The Los Angeles Times links Bush's Bernanke announcement to the flagging Miers nomination: "Speeding up the announcement of Bernanke was expected to deflect some of the attention focused on Miers...  In addition, White House officials hope that the move will ensure a speedier Senate confirmation process for the new Fed chief, and one that might overlap and perhaps partially offset what is expected to be a contentious Senate debate over Miers."

The Boston Globe says the Administration, with yesterday's Cabinet meeting and Fed nomination, is trying to make things look like "business as usual" in Washington.

Given that the transition from Greenspan to a new Fed chair "has the potential to roil markets and unsettle investors, many of whom see Mr. Greenspan as a rock of stability for a U.S. economy afflicted by budget and trade deficits, high energy prices and heavy reliance on borrowing from abroad... the Bush administration made what appeared to be a safe choice, for itself and the economy."

In another story, the Journal reminds us that "Mr. Bush told reporters recently he has 'plenty' of political capital left, despite the deficit, problems in Iraq, a criminal probe involving close political advisers and a Supreme Court nomination that is taking on water in the Senate.  But he clearly didn't want to start another fight by picking a nominee who might roil markets or face trouble in the Senate."

USA Today: "The Senate should uncover no unwelcome surprises in Bernanke's background, because he has already gone through the Senate confirmation process three times for his Fed and White House appointments.  Sen. Jim Bunning, R-Ky., however, said he would oppose Bernanke, because he did not dissent from Greenspan on policy votes during his time on the Fed."

Bloomberg notes how Bernanke testified on the Hill recently that "deficit spending when the country is at war and recovering from natural disasters is 'not an unreasonable approach'' and suggested the economy might suffer if Congress doesn't make permanent the tax cuts passed in Bush's first term."

The Chicago Tribune says that "one major question is whether the personality cult of Fed chairmen will abate under a Bernanke regime.  Many central bank critics said Greenspan conducted monetary policy with too much discretion, raising and lowering interest rates according to the Fed's view of broad economic developments."

The Miers nomination
Five times yesterday in the White House briefing, Scott McClellan said, "I'm not aware of any official requests" from the Senate Judiciary Committee seeking documents from Harriet Miers' tenure at the White House, NBC's Ken Strickland counts.  But just a few hours after that briefing, Committee chair Arlen Specter again told reporters, "We've asked the White House to go through and see if there are non-privileged documents that she can give."  Specter even had his chief counsel acknowledge he'd participated in a 2 1/2 hour meeting with the Administration about getting some paperwork that would not violate attorney-client or executive privilege.  That's on top of a request Specter and ranking member Patrick Leahy made in an October 19 letter asking Miers to supplement answers to the committee's questionnaire "listing all reports, memoranda, or policy statements prepared... during the time in which you served in any public office... or any of your positions in the White House."

With Bush making it clear on Monday that he won't turn over documents about the decision-making process, Strickland says, some Capitol Hill insiders are privately questioning whether the White House and the Senate are playing out a strategy suggested in a Washington Post column to withdraw Miers' nomination in a manner designed to let all involved save face.  Last Friday, conservative columnist Charles Krauthammer, who called Miers' nomination a mistake, laid out the exit strategy that centered on "irreconcilable differences over documents."  He wrote of her "honorable" withdrawal, "The Senate cannot confirm her unless is has this information.  And the White House cannot allow release of this information lest it jeopardize executive privilege."

Lots of papers round up stepped-up conservative opposition to the nomination, including websites and planned ad campaigns:  Washington Times, New York Times, Boston Globe

Energy politics
Again, gas prices have begun to drop, but oil companies are expected to report record third-quarter profits this week.  Sen. Hillary Clinton gives what her office is billing as a "major" speech on energy policy in Washington this morning at 9:00 am.  And Roll Call reports that "House GOP leaders, concerned that high gasoline and heating-oil prices are hurting their standing with the American public, plan to unveil an initiative today to urge big oil companies to build new refineries in the United States while the industry’s profits are soaring...  New data collected by GOP pollster David Winston... indicate that a large majority of Americans of all political stripes believe that the cause of high gas prices is gouging by the oil companies, not supply shortages, rising demand and production shortfall."

The Washington Times says Speaker Hastert will actually refer to the industry as "Big Oil."

The Wall Street Journal says not to expect oil companies to crow much about their earnings, given the circumstances.

Spending and the GOP agenda
NBC's Mike Viqueira reports that House Republicans are still struggling to get enough votes to increase the level of "savings" from programs like Medicaid, student loans, and food stamps from $35 billion to $50 billion.  No matter what, Viq says, there will be House-backed reductions in spending for those programs -- the only question is how much.  This week, House committees start looking at exactly where and how it will be done.  For example, it is alleged that some people intentionally impoverish themselves in order to be eligible for Medicaid.  House Republicans say that cracking down on this practice will save billions.  Ditto reforming the pricing mechanism for prescription drugs in Medicaid.  And there are other proposals out there, Viq says, with several House committees meeting this week to decide which make it into the final version that is expected to hit the House floor sometime in the next couple of weeks.

Don't forget, Viq adds -- all of this will be coupled with $70 billion in tax cuts, which are expected to include an extension of the cuts in capital gains and dividend taxes, as well as a "fix" for the alternative minimum tax (AMT) problem.

Hill Democratic leaders hold an 11:00 am presser today with Katrina victims to criticize Republican efforts to cut funding for social programs that would benefit those in need of hurricane relief.

2005 and 2006
Election day 2005 is two weeks from today.

Gov. Arnold Schwarzenegger (R) does a town hall for his ballot initiatives at KUVS-Univision in Sacramento at 2:00 pm ET; all Univision affiliates in California will air it.  Schwarzenegger will do another town hall at KNBC next week.  The Los Angeles Times says last night's forum had all the trappings of a big debate, including a spin room, but still wasn't actually a debate.

New Jersey Democratic gubernatorial nominee Jon Corzine makes remarks at a dinner with fellow Sen. Hillary Clinton at 8:00 pm in West Orange, NJ.  Doug Forrester (R), in Newark, picks up the endorsement of Republican Majority for Choice at 1:00 pm.  The Newark Star-Ledger notes how Corzine is faring much better with women than Forrester is.

Turning to Virginia’s gubernatorial race, the Richmond Times-Dispatch does another look at all the national pols who will be stumping for Jerry Kilgore (R) and Tim Kaine (D).  Rudy Giuliani does a fundraising lunch for Kilgore tomorrow, and John McCain will campaign with him in Northern Virginia on November 2.  Meanwhile, Govs. Jennifer Granholm and Bill Richardson are stumping for Kaine tomorrow.

First Read got its hands on a piece of direct mail in which Kelly Timbrook -- whose husband, a police sergeant, was murdered -- attacks Tim Kaine (D) for his personal opposition to the death penalty.  "With his lifetime of opposing the death penalty as evidence, I'm extremely concerned that Tim Kaine will overturn the death penalty for my husband's murderer...  If Jerry Kilgore is elected governor, he will make certain that justice is served so that closure can finally come to families like mine."  The mailing fails to mention, however, that while Kaine is personally opposed to the death penalty because of his Catholic faith, he says he'll carry out death sentences as governor.  So far, polling has been inconclusive as to whether Kilgore's assault on Kaine's death penalty stance has been effective.

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