Biden adviser to take Senate seat
By David R. Sands
Monday, November 24, 2008
http://washingtontimes.com/news/2008/nov/24/longtime-biden-adviser-take-senate-seat

Edward E. "Ted" Kaufman, longtime adviser and chief of staff for Vice President-elect Joseph R. Biden Jr., will serve the first two years of Mr. Biden's Senate term as the Delaware Democrat moves to the White House.

Delaware's Democratic Gov. Ruth Ann Minner made her choice known at a press conference in Wilmington Monday, setting the table for a special election in 2010 in which Mr. Biden's son, Beau Biden, is the clear front-runner to claim his father's Senate seat.

Mr. Kaufman, a Wilmington-based political consultant and a lecturer at the Duke University School of Law, served as head of the senior Mr. Biden's vice presidential transition team and has long been one of his closest aides. From 1974 to 1993, he was Mr. Biden's Senate chief of staff.

Mr. Biden, the longest-serving senator in Delaware history, won a seventh six-year term Nov. 4 in addition to his election as vice president. But Mr. Kaufman said Monday he would not serve out the full term and would not run in the 2010 special election.

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complete copyrighted story at link above

Dems: Napolitano emerges for Homeland Security job
By LIZ SIDOTI, Associated Press Writer
25 mins ago [Thu Nov 20, 2008 2:38 pm EST]
http://news.yahoo.com/s/ap/20081120/ap_on_go_pr_wh/obama_cabinet

WASHINGTON -- President-elect Barack Obama is likely to choose Arizona Gov. Janet Napolitano to be secretary of homeland security, top Obama advisers and several Democrats said Thursday as the shape of Obama's Cabinet begins to emerge.

The Obama advisers cautioned that no final decision has been made on putting Napolitano in charge of the Homeland Security department, the massive agency created by Congress after the Sept. 11, 2001, terrorist attacks. But the advisers said she was by far the top contender.

Thus far, Obama has informally selected Washington lawyer Eric Holder as attorney general and former Senate Majority Leader Tom Daschle as health and human services secretary. The plans could be sidetracked by unexpected glitches in the final vetting process, officials note.

Sen. Hillary Rodham Clinton seems more likely than ever to be Obama's secretary of state. Clinton is deciding whether to take that post as America's top diplomat, her associates said.

Among other Cabinet posts: senior Democrats say there is a strong possibility that Defense Secretary Robert Gates would stay temporarily and later give way to former Navy Secretary Richard Danzig. Even so, Republican Sen. Chuck Hagel of Nebraska and Democratic Sen. Jack Reed of Rhode Island also are said to be under consideration.

Democrats also say that several people remain in the running for Treasury secretary, including Timothy Geithner, president of Federal Reserve Bank of New York; Lawrence Summers, former treasury secretary and one-time Harvard University president; and former Federal Reserve Chairman Paul Volcker.

Several news organizations reported Thursday that Chicago businesswoman Penny Pritzker, who was Obama's national campaign finance chairman, was his leading choice to become secretary of commerce. However, Pritzker issued a statement Thursday saying she is not a contender for the post.

Officials say Laura D'Andrea Tyson, the former chair of White House Council of Economic Advisers under President Clinton, is in the running for the Commerce job.

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complete copyrighted story at link above

Red and blue DNA
Study: Politics not logical but biological
Posted on Mon, Sep. 22, 2008
http://www.philly.com/philly/health_and_science/29231989.html

Forget about a candidate's issues and character. You may be biologically driven to lean toward John McCain or Barack Obama, a new study says, depending on your involuntary response to threat.

From a random sample of 1,310 residents of Lincoln, Neb., researchers selected 46 with strong political opinions that diverged on the intensity with which they sought to protect the long-term survival of the group. Views on the Iraq War, gun control, gay marriage and illegal immigration were among 18 variables separating the pro- and anti-status quo.

Two months later, the volunteers were shown 33 photos - including a few shockers, such as a large spider on a frightened face - while equipment monitored their skin conductivity, a measure of physiological response to threat. They were also startled by loud noises while machines tracked involuntary eye-blink responses to fear.

The results, published in the current issue of Science, showed that people with the greatest physiological responses took political positions most protective of the existing social structure, and vice versa. Age, income and other demographic factors that often influence political leanings made no difference. (Military service was not considered.)

Although they did not investigate reasons for varying physiological response, the researchers speculated that it may be inherited. And while the scientists emphasized there was no right or wrong, how we perceive threats may explain why neither liberals nor conservatives can fathom the other.

"People experience the world differently," says lead author John R. Hibbing, a professor of political science at the University of Nebraska-Lincoln, "and this probably affects their political beliefs."

Ladies and gentlemen, if we were to look at Mccains record on womens rights, it would remind us of Chinas record on human rights.


It is abominable. John Mccain has spent over 25 years working against womens rights. He voted against womens healthcare 125 times. He plans to overturn Roe VS Wade and outlaw abortion.

I admit im no fan of abortion myself, but who am i to think that i know better than a woman or her doctor about an issue that doesnt affect me AT ALL!? I wouldnt force my views on the American people, and neither should John Mccain!!!

Because his views are not right for the american people! or the women of america!!!

Moreover, who is John Mccain to decide? Or his judges in black robes?

What do they know? Asking a judge on advice about abortion is like asking a Soccer player to perform surgery! The two just dont go together!

Then theres also Mccains Birth Control and Viagra Moments:

http://www.youtube.com/watch?v=D6IlGXhCUHo

http://www.youtube.com/watch?v=kkQDbfF4RqA

Ladies, is THIS the guy you want in the Oval Office making decisions about YOUR rights that he doesnt even KNOW ABOUT?

Ladies, vote for Barack Obama, he supports womens healthcare, and a womans right to choose.

Men everywhere, do the right thing, be a real man, stand up for women and vote for Barack Obama.

Do it for your wives, sweethearts, daughters, sisters, nieces, cousins, aunts, mothers, grandmothers, and all your female friends.

Help us STOP John Mccain!

DO THE RIGHT THING MEN!!!

Fellow Americans, the saying is true.

ITS TIME FOR CHANGE.

Mccain and Palin offer nothing but the same, albeit with minor changes. But the message they send is loud and clear!

They want to maintain the status quo and give us 4 more, and even, founding fathers help us, 8 more years of Bushonomics!

I have friends that are uninsured, because they just cant afford it. I have friends that have to put their head down and keep going when theyre sick or hurt because they cant go and be treated.

And ladies and gentlemen, there are 47 MILLION more uninsured Americans!! 47 MILLION!!! 18 MILLION women! 9 MILLION CHILDREN!!!

CHILDREN!!! UNINSURED and UNPROTECTED!!!

This is NOT acceptable! What has happened to America!?

We know the answer! BUSH AND MCCAIN!!!

They have worked against progress at every turn and led us to ruin!

Now Mccain wants to take over and lead us further down the path to ruin!!

Enough is enough!!

This November we will face a choice... But when you compare Mccains record to Obamas, there is no choice! it is clear and undeniable!!

We must elect Barack Obama president, and put an end to this needless suffering of 47 million Americans! We must protect womens rights, as Mccain has voted against them for nearly 30 years! We must STOP the oil madness and pave the way to the future with investment in alternative energy! We must withdraw from Iraq, an unauthorized, mismanaged drain on our resources and most importantly our FINEST, BRAVEST and BRIGHTEST! Who even now fight, bleed and DIE for a war that is based on a LIE!!!

We MUST make changes! We MUST elect Barack Obama not only for ourselves, but for our CHILDREN, and for WOMEN!!!

Women will suffer with Mccain as president!! His record on womens rights reminds me of Chinas record on human rights!!

We must stop funding aggression and start funding our future!

Men EVERYWHERE, vote for Barack Obama! Not only for yourselves, but for your children! Your daughters, sisters, mothers, grandmothers, friends, aunts, nieces, cousins!

VOTE FOR REAL CHANGE!!

Stand together, unite for change, spread the word and elect Barack Obama the next president of the United States!

http://www.democrats.org/page/group/STOP

Sen. Hillary Rodham Clinton says her defeating Barack Obama at a contested Democratic National Convention “is not going to happen” but she is looking for a way for her delegates to vent before getting behind the future nominee ahead of the November election.

Clinton, who battled Obama for 18 months but came up shy of the delegate votes needed to capture the nomination, told a mostly female group of backers at a California fundraiser last week that she wants unity in the party, but she is asked every day whether she will put her name on the ballot.

Clinton said that her delegates want to have a role and feel that their “legitimacy is validated,” before the group moves forward to back Obama.

“I happen to believe that we will come out stronger if people feel that their voices were heard and their views respected. I think that is a very big part of how we actually come out unified,” Clinton, D-N.Y., said to applause.

“Because I know from just what I’m hearing, that there’s incredible pent-up desire. And I think that people want to feel like, ‘OK, it’s a catharsis, we’re here, we did it, and then everybody get behind Senator Obama.’ That is what most people believe is the best way to go,” she said.

“Doesn’t work that way,” shouted one supporter. The video clip of her remarks was posted on YouTube accompanied by the one-word remark, PUMA, an acronym for a group of Clinton supporters who have not committed to Obama. PUMA stands for “Party Unity My A�".”

Click here to see the YouTube video of Clinton.

In the video, Clinton, who endorsed Obama on June 7 after the final Democratic primary, said that she is fully behind Obama and actually has offered more help to him than other candidates have done for other nominees in previous years.

“I think it’s fair to say if you look at recent history, I have moved more quickly and done more on behalf of my opponent than comparable candidates have. And most of them didn’t endorse until the convention,” she said, naming Massachusetts Sen. Ted Kennedy, former California Gov. Jerry Brown and former Colorado Sen. Gary Hart, all past presidential candidates who lost the party nomination.

Obama spokesman Bill Burton nothing has been decided in terms of the role of Clinton’s delegates. He said Democrats remain united, despite the hard-fought battle between Clinton and Obama.

The Democratic convention is being held in Denver on Aug. 25-28, with the first three nights’ activities taking place at the 21,000-seat Pepsi Center. Obama is expected to accept the nomination at Invesco Field at Mile High, a 75,000-seat stadium where the Denver Broncos play. Convention planners said the venue would demonstrate the massive support Obama commands.

“You don’t have to be a delegate or party insider to witness this historic moment firsthand,” Democratic National Convention Committee CEO Leah Daughtry said, announcing the plans for credentials.

Ticket selection was designed “to showcase the gains the party has made in the West,” she said. Nearly two-thirds of the tickets will go to residents of the West and Southwest, including Colorado, where Democrats have made inroads in recent elections.

But several of Clinton’s supporters are insistent that the former first lady get a vote on the convention floor. One self-identified delegate at the California fundraiser said a petition had been formed to put Clinton’s name on the ballot.

Clinton did not oppose that idea, but said it won’t change the outcome.

“I have made it very clear that I am supporting Senator Obama and we’re working cooperatively on a lot of different matters, but I think that delegates can decide to do this on their own. They don’t need permission. They can decide under the rules of the DNC, and so I think it would be better if we had a plan that actually we put in place and everybody knew what it was and then we executed it because I just think that would go more smoothly,” she said.

Former Clinton campaign manager and Howard Wolfson also obliquely acknowledged Thursday that relations between Clinton’s and Obama’s delegates aren’t all roses and sunshine.

“You know the these two people ran against each other for 18 months there were some moments of … friction as you might imagine,” he said, stressing that Clinton is doing her part to contribute to Obama’s election.

“If you have some people that are concerned that they are not getting the respect that they are looking for, that the party not quite yet unified, what is the way to bring those people back into the party to make sure that they are enthusiastically supporting Senator Obama by the time the November election comes around? And one possible way of doing that is to have roll call that has Senator Clinton’s name placed in nomination, that is one option. There are other options and I think that the important thing is that this is going to get decided between Senator Clinton and Senator Obama in a way that I think both can agree unifies the party and bring people together,” he said.

Democratic strategist Bob Beckel added that a vote for Clinton would help relieve some of the tension between the Obama and Clinton delegates.

“They can’t stop them if they want to do it. They cast their vote for Hillary Clinton and before the final roll call is finished they are going to go back through and make it unanimous by state. That’s one way I think to let a little bit of the pressure out of this pressure cooker, but it’s there. I mean it’s bound to be. You can’t have a convention with 1,800 delegates out of 4,400 be for somebody else and not expect there is still going to be some latent animosity,” Beckel said.

Clinton is expected to deliver a prime-time address to delegates on Aug. 26, the second night of the gathering. Typically the vice presidential nominee delivers the address on the third night of the convention.

As the one-year anniversary of the housing and credit crunch approaches, investors in Fannie Mae and Freddie Mac have nothing to celebrate. They won’t see an end to the losses at these mortgage finance giants until after next year.

Moreover, a report from the regulator of the two mortgage finance giants gives embarrassing new detail on how Fannie (FNM: 12.25, +0.42, +3.55%) and Freddie (FRE: 7.94, +0.42, +5.58%) were mindlessly gunning the securitization engines well after the housing bubble had burst and Wall Street backed off.

Freddie Mac will report its second-quarter financial results Wednesday. Fannie Mae will release its results on Friday. Freddie Mac’s shares are down 88% this year, while Fannie’s shares have dropped 83%. More losses and writedowns for the two are likely on the way.

The Office of Housing Enterprise and Oversight says in a new report that the two combined own about $217 bn in securities minted by Wall Street firms that are backed by the shakiest home mortgages dating to 2004 and 2005, the height of the housing bubble.

The mortgages here are subprime and Alt-A loans, just a notch above subprime. To the extent that Wall Street firms book fair value losses on this pool, “Fannie Mae and Freddie Mac may have to do so as well,” OFHEO says.

As delinquencies and defaults on subprime loans continue, and increasingly even prime loans bellyflop, Fannie and Freddie will continue to book losses into 2009, says Credit Suisse. Some analysts say they may lose an additional $24 bn or more.

This should alarm both taxpayers and investors across the country.

Elected officials enacted a $300 bn housing bailout bill that gives these two carte blanche without any statutory limits on their colossal $5.3 tn book of business (Lehman Bros says the two have another $3.3 tn in hedges, among other items, off the balance sheet). The two have reported more than $11 bn in pre-tax losses over the last three quarters and have a history of accounting misdeeds (on a fair value basis, Fannie incurred a loss of $13.3 bn, Freddie, $24.7 bn, OFHEO says).

The housing rescue now lets the government inject tens of billions of taxpayer dollars into these two publicly traded companies, who clearly have failed in their fiduciary responsibilities. The government can now use tax dollars to buy unlimited equity stakes in the companies and their bonds if needed.

The thinking is, the Treasury will simply mint more debt and use that resulting capital to inject more liquidity into Fannie and Freddie, despite their history of accounting misdeeds, losses, misstatements and repeated dilutive equity raises that prove that these two companies do not know what they are doing. Also, the two can now borrow at the Federal Reserve.

Fear is now rampant that if the rescue doesn’t work, the US government must spend more than what the Congress said it would cost to bolster Fannie and Freddie, $25 bn, a sum it cooked up in order to sell the $300 bn housing bailout bill.

Remember, the government’s estimate of the cost to taxpayers for the S&L crisis rose from an initial $50 bn to more than $124.6 bn (not inflation adjusted).

More importantly, Congress spitballed that $25 bn number even though just this past month it sent in bureaucrats from the Federal Reserve and the Office of the Comptroller of the Currency to go find out what the heck is really sitting on Fannie and Freddie’s books, as it clearly doesn’t believe the management at these two levered up examples of crony capitalism.

The fear is, too, that the government may have to swallow these two obesities, causing the US dollar to plunge in anticipation of the need to mint more dollars, creating more inflation (not to mention the $99 tn in unfunded liabilities at Social Security and Medicare, according to Fed stats).

In effect, US taxpayers have been loaded into the backseat of Congress’s spaceship pointed directly at the center of the sun.

Because the market believes the US government has given Fannie and Freddie an “implicit guarantee”of their debt, for years both have used that backing to execute a sweet carry trade, where they can borrow money much more cheaply than banks and then turn around and use that money to buy things such as higher-yielding mortgage-backed securities from lenders, in turn injecting liquidity into the lending system to make more loans. The two also sell guarantees against defaults on loans for a fee.

For years, Wall Street believed their obligations were “nearly as good as Treasurys themselves,” notes Dennis Gartman of The Gartman Letter. Indeed, their securities traded as if the government backed them, and US government debt traded as if the government did not back them.

Fannie Mae was born in 1938 as part of FDR’s New Deal to get the country out of the Great Depression and provide home ownership. Back then, millions of Americans were struggling to buy homes, and also faced foreclosures, as banks weren’t lending and mortgage money had dried up.

For years Fannie sat on the government’s books, helping to expand the real estate industry. In 1968, the LBJ administration, worried about the effect of the Vietnam War on the federal budget, moved Fannie Mae off the government’s books, and Fannie became a publicly traded company.

When the savings-and-loan industry wanted its own mortgage financing creature to play with beginning in 1968, Congress obliged and in 1970 Freddie Mac was born. The two quasi-socialist mortgage finance giants then became to the US economy what off-balance sheet vehicles were to Enron, Gartman says.

When Freddie Mac and Fannie Mae were limited in the dollar amount of mortgages they could buy and securitize, to $417,000, in the ‘90s, Wall Street stepped in to securitize these loans.

Wall Street then manufactured all sorts of subprime paper, paid the credit ratings agencies to get rosy ratings, and then sold this drunken daisy chain of paper to all sorts of unwitting investors from here to the Arctic Circle, now sitting as landfill in portfolios run by pension funds, hedge funds and local governments.

Wall Street firms then kept a sizable slug of this bad paper off their balance sheets to keep financial results rosy, and then wrote themselves sweet bonus checks off the goosed-up numbers.

So Wall Street, with the help of Fannie and Freddie, shot these risky loans into the ether, thus breaking the bond between the overseer, meaning the lender, and the borrower. Why care about monitoring a borrower who has no skin in the game with a zero-down mortgage when you’ve entirely offloaded that loan as a security?

As far back as 1987 the Financial Accounting Standards Board warned there was no adequate way to value these derivatives, and now Frankenstein derivatives are sluicing financial poison through the system.

Then Fannie and Freddie itself started buying Wall Street’s mortgage backed securities, securities backed by zombie loans given by banks such as Countrywide Financial (CFC), which already had pointed its conveyor belt of bad loans at Wall Street.

When the credit markets seized up in 2007, Wall Street stopped doing much of these securitization deals as its recycling machine for these cut and paste jobs had sand thrown in its gears.

But as Wall Street stepped back, check out how Fannie and Freddie stepped in big time.

OFHEO says in its recent report that while the volume of single-family mortgatges securitized in 2007 fell by 8% to $1.9 tn, as the number of single family mortgages originated declined, “Fannie Mae’s and Freddie Mac’s combined share of MBS [mortgage-backed securities] issuance rose substantially to 61.6% from 46.7% in 2006.”

Indeed, OFHEO says Fannie and Freddie “increased their MBS issuance by nearly one-third in 2007 as competition” from Wall Street “virtually ceased in the second half of the year,” though OFHEO says the two started to curtail their purchases of securities backed by shoddy loans. Too little too late.

Now teetering atop Fannie’s and Freddie’s painfully razor thin $54 bn in net worth is a pyramid of $5.3 tn in debt that is nearly half the size of the US gross domestic product. The two have much higher leverage ratios than banks or hedge funds, but lower borrowing costs due to their implicit government backing. The two whittled down their capital cushions after they gunned their lobbying engines on Capitol Hill, showering elected officials with money.

JPMorgan Chase (JPM: 41.10, +0.96, +2.39%) or Bank of America (BAC: 33.69, +1.07, +3.28%), for example, have almost as much bank-level capital as these two “combined supporting one fifth of the commitments,” says the research website The Institutional Risk Analyst, published by Lord, Whalen LLC.

So the fear is that, as mortgages belly flop right and left and an increasing number of homes go into foreclosure, the two are insolvent. Former Fed official William Poole has said as much of Freddie Mac.

But instead of reining in their colossal, outsized portfolios which has caused such danger to taxpayers, the new housing rescue legislation went in the opposite direction. It would increase the statutory limit on the national debt by $800 bn, to $10.6 tn, as the two would now get to buy and back jumbo loans worth $625,000.

And as economist Edward Yardeni points out (his reports are a must-read), both “have been scrambling to plug all the holes in their huge mortgage portfolios.” Citing the Wall Street Journal, Yardeni notes that at the end of last year, the two “started guaranteeing payments on loans that back mortgage securities held by others to delay recognizing losses on some delinquent loans.”

Yardeni adds that “earlier this year, in their most shocking (desperate) tactic to reduce losses, Fan and Fred started making loans of up to $15,000 to people who have fallen behind on their mortgage payments.”

Here are the stink bombs, potholes and steam pipes bursting in these two reckless publicly traded companies:

*Both have a total of a microscopic�"did you see it, did you catch it?�"$54bn in net worth, generally assets minus liabilities (don’t listen to the $81 bn figure tossed around for their total capital, that’s a pro forma fake number that doesn’t include certain losses).

*Teetering atop that razor thin wedge is a pyramid of $5.3 tn in debt.

*One stink bomb is the total of $260 bn in securitized assets backed by subprime and Alt-A loans, loans which sit in between subprime and prime. Those sums dwarf their capital positions.

*Freddie has $156.8 bn in level three assets, those illiquid securities it can’t get a pricetag on because no one wants them now. Remember, under US accounting rules, it gets to assign its own values to these assets, they could be worth more, they could be worth less.

*Fannie has $56.1 bn in level three assets, or about a seventh of its fair valued assets.

*Fannie and Freddie have combined debts of $1.59 tn, borrowings they made merely to operate their businesses. Again, that’s against just $54 bn in total net worth. Their guaranteed liabilities were 29 times their net worth at the end of the first quarter.

*They each have $2.25 bn pipelines into the Treasury, which the government now wants to expand.

*Forty years ago, when they went public, Fannie had debt of about $15 bn. Do the math against Fannie’s $804 bn in liabilities today, and the pipelines should be about $120 bn each.

Still believe that $25 bn figure Congress is selling you?

The budget office predicts the economy will grow at a rate of 1.6 percent this year and will rebound to a 2.2 percent growth rate next year. That's a half percentage point more than predicted but also the widely cited "blue chip" consensus of leading economists. The administration also sees inflation averaging 3.8 percent this year, but easing to 2.3 percent next year �" better than the 3.0 percent seen by the blue chip panel.

"The nation's economy has continued to expand and remains fundamentally resilient," said the budget office report.

Senior administration officials downplayed the impact of the number, with one noting that as a percentage of the U.S. gross domestic product, the deficit projection would be roughly 3 percent to 4 percent.

Another senior administration official said "a lot can happen" in 18 months that could worsen or improve the outlook, such as an improved economy leading to better tax returns, or increased spending under a new administration. The official specifically warned about the impact a Democrats.

"Democrats could blow the doors off spending and drive the deficit even higher," the official said.

Congressional Democratic leaders took aim at the administration �" and the Republican candidate for the next administration �" for what Senate Majority Leader Harry Reid called misguided priorities.

"The large budget deficit is a symptom of the many serious problems that Bush-McCain Republicans refuse to address. Rather than continuing the flawed policies that produced this result, Democrats believe we must change course," Reid, D-Nev., said.

Among the problems Reid said Republicans neglected were renewable energy, health care reform, and refocusing military efforts on Afghanistan. "Until we deal with these underlying problems, our budget deficits and the squeeze on Americas families will only get worse."

Likewise, House Speaker Nancy Pelosi criticized what she called unrestrained spending.

"President Bush has mortgaged our future with record deficit spending on the wrong priorities. An unnecessary and extraordinarily costly war in Iraq has turned record surpluses into record deficits. Meanwhile, our economy is in a severe economic slump as a result of this President’s mismanagement," she said.

White House officials said the increase from February's $407 billion projection for the coming year is due largely to a worse economy as well as higher-than-expected costs from the $168 billion economic stimulus package passed by Congress earlier this year.

The highest post-World War II budget deficit, in terms of a portion of the GDP, was in 1983 when it was 6 percent of the national economy. The record high-dollar mark to date was in 2004, when the deficit reached $413 billion.

The new figure actually underestimates the deficit, since it leaves out about $80 billion in war costs. In a break from tradition �" and in violation of new mandates from Congress �" the White House did not include its full estimate of war costs.

White House press secretary Dana Perino had no comment on the new outlook figure. But she told reporters that the White House and lawmakers acknowledged months ago that they were going to increase the deficit by approving a short-term boost for the slumping economy.

"Both parties recognized that the deficit would increase, and that that was going to be the price that we pay," Perino said.

Officials said revenues are holding up better than officials hoped for the current year: With costs running about $10 billion lower than expected, the budget deficit is expected to be less than $400 billion at the end of the fiscal year this September.

The deficit for 2007 totaled $161.5 billion, which represented the lowest amount of red ink since an imbalance of $159 billion in 2002. The 2002 performance marked the first budget deficit after four consecutive years of budget surpluses.

That stretch of budget surpluses represented a period when the country's finances had been bolstered by a 10-year period of uninterrupted economic growth, the longest period of expansion in U.S. history.

In his first year in office, helped considerably by projections of continuing surpluses, Bush drove through a 10-year, $1.3 trillion package of tax cuts.

However, the country fell into a recession in March 2001 and government spending to fight the war on terrorism contributed to pushing the deficit to a record in dollar terms in 2004.

House Budget Committee Chairman John Spratt, D-S.C., said the deficit projection confirms "the dismal legacy of the Bush administration: under its policies, the largest surpluses in history have been converted into the largest deficits in history."

Bush signed the paperwork on Monday from the Oval Office, said the officials, who agreed to reveal his decision only on grounds of anonymity. They said he approved the military's request to execute Ronald A. Gray, now 42. Gray was convicted in connection with a spree of four murders and eight rapes in the Fayetteville, N.C., area over eight months in the late 1980s while stationed at Fort Bragg.

U.S. military personnel cannot be executed unless the president approves it. Gray has been on death row since 1988.

John McCain said rival Barack Obama does not understand what’s at stake in the Mideast a and the world and therefore chose to call for a withdrawal in Iraq based on political expediency and not conditions on the ground.

The presumptive Republican presidential nominee said he does not doubt Obama’s patriotism, but he does question his actions in calling for a troop withdrawal in March 2007.

“If Senator Obama had had his way, we’d have been out last March and we’d been out in defeat and chaos, and probably had to come back again because of Iranian influence,” McCain said in an interview on ABC’s “This Week,” taped at his home in Sedona, Ariz.

“He was wrong, I was right,” McCain said, noting that he chose to support the surge of an additional 30,000 U.S. troops last spring that has now been widely credited with reducing violence in Iraq by 80 percent.

McCain said Obama made a decision on the surge based on whether it was the best way to appeal to the Democratic Party base.

“I am saying that he made the decision, which was political, in order to help him get the nomination of his party,” he said.

Obama originally opposed the war in Iraq, which began in March 2003. He said he still does not support the surge, saying if his plan had been enacted to withdraw troops, conditions on the ground also would be very different right now.

Obama says if he is president he will initiate a withdrawal over the first 16 months of his administration. Visiting Iraq, Afghanistan, Israel, the Palestinian territories and three European nations, Obama said he was told by Iraqi leaders that nation does not want an open-ended presence of U.S. combat forces and now is an appropriate time to start planning for a reorganization of troops in Iraq. He also noted that the war costs about $10 billion a month, which could be used to shore up the U.S. economy.

McCain criticized that timeline even though he acknowledged Friday that that 16 months is “a pretty good timetable.” However, he repeated Sunday that “anything is a good timetable” if it is based on conditions on the ground.

“I like six months, three months, two months. I like yesterday. I like yesterday, OK? That seems really good to me. But the fact is, the conditions on the ground have not dictated it,” he said.

McCain said the Democratic presidential candidate does not understand the purpose of the surge or the war itself.

“He does not understand, and did not understand, and still doesn’t understand that the surge was the vital strategy in us not having to lose a war. Chaos, genocide, increased influence of Iranians in the region, the consequences of failure would have been severe, and now the benefits are enormous,” McCain said.

“Saddam Hussein … imposed a threat to the United States of America and our security. And the Oil for Food scandal, the $12 billion he was skimming, the fact that he had said that he’d had in operation and he wanted to have weapons of mass destruction, the fact that this society that he ruled in such a brutal fashion was really awful, and he did pose a long-term threat to the security of the United States of America,” he said.

John McCain said Friday he thinks Barack Obama’s proposed timetable for withdrawal in Iraq is on the right track, even though the Arizona senator spent the last week hammering Obama for his military plans.

Obama calls for a 16-month troop withdrawal timetable, something McCain called “politically expedient” during a forum in Denver, Colo., Friday.

But then in an interview with CNN, McCain had kind words.

“I think it’s a pretty good timetable, as we should �" or horizons for withdrawal,” he added, echoing a phrase President Bush used in recent days. “But they have to be based on conditions on the ground.”

McCain has long maintained that conditions on the ground are a key consideration in any withdrawal of American troops. And he has argued that Obama would withdraw troops based on his timetable without regard to conditions in Iraq, although Obama says he would listen to U.S. military commanders about those conditions.

Obama, who is wrapping up his weeklong tour of the Middle East and Europe, said in London that “we are pleased to see that there has been some convergence around proposals that we’ve been making for a year-and-a-half.”

At first it sounds reasonable: a debit card attached to your 401(k) account. If you need to access your money in an emergency, you simply swipe your card to pay for the expense, withdrawing only the exact amount you need instead of taking out a lump sum.

That’s exactly the pitch from the folks at The Reserve, a company that is taking a lot of heat from outraged members of Congress and over the marketing of its 401(k) debit card. In fact, Sen. Herb Kohl, D-WI, who chairs the Special Committee on Aging, has co-sponsored a bill to outlaw it.

The ability to loan yourself some of the money in your retirement account is perfectly legal. If your plan allows it, the law says you can borrow up to 50% of your balance or $50,000, whichever is less.

The legislation introduced this month would not change this.

What lawmakers object to is the method for tapping your 401(k). Ashley Glacel, spokesperson for the Senate’s Special Committee on Aging, says a debit card “makes it far too easy for people to dip into their retirement savings for casual purposes.”

Lunch. Mocha lattes. The latest electronic toy. Gas for your car. Groceries. A haircut. In other words, relatively small, everyday purchases.

When asked his position on the 401(k) debit card, David Wray, president of the Profit-Sharing 401(k) Council, takes about a pico-second to reply, “We don’t support the practice. The plan loan process in place now works. There’s no need for such a radical change.”

But Bruce Bent, CEO of The Reserve, says all his company is trying to do is bring the 401(k) loan process into the 21st Century.

In general, if you apply for a loan from a 401(k) plan without a debit card arrangement (few do), the plan administrator sells the appropriate amount of investments in your account and issues you a check. Once you deposit this into your bank account, you are free to spend the money anyway you want- including, using a debit card attached to your checking account. Interest earned on the money while it sits in your bank account is, of course, subject to ordinary income tax.

In contrast, Bent points out that with a debit card loan, the amount you borrow is shifted into a money market fund inside your 401(k) account. It stays there until you swipe your card to pay an expense. Any interest earned on assets in the money market account remains tax-deferred.

“Not the point!,” say critics. (Besides, with money market rates around 1-1½ %, how much taxable interest are we really talking about?)

It’s human nature that’s got them worried.

Considering how little most Americans have managed to save for retirement and the record amount of credit card debt we’ve collectively piled up, the concern is that we won’t have the self-restraint to not raid our 401(k)s- because the debit card makes it so easy.

Wray contends that being able to swipe money out of your retirement plan (both literally and figuratively) “would send the message that a 401(k) is about current consumption and that it’s legitimate to use those assets for current consumption.”

Then there’s the issue of re-paying the loan.

Whether you have the standard lump sum variety or swipe the money from your 401(k) using a debit card, federal law requires that you replace the money in your retirement account by making regular payments- at least quarterly. If you fail to do this your plan loan is considered to be in default.

This is a disaster! Instead of being classified as a “loan,” the unpaid balance becomes a “distribution,” which means 1) you own income tax on the amount, plus 2) you get hit with a 10% penalty if you’re under age 59½, and 3) you can never get that money back into your retirement account where it could grow tax-deferred.

In the case of a typical 401(k) loan, your employer makes sure you don’t miss a payment because the amount is automatically deducted from your paycheck. But with a loan taken via a 401(k) debit card, you receive a monthly statement, just as you would with a regular credit or debit card. It’s up to you to send in the money.

Last, but definitely not least, there’s the issue of cost.

To borrow a sum of money from your retirement account, you generally pay a modest, one-time set-up fee of around $25. Although you have to pay interest on the loan, “100% of the interest goes back to your account,” says Wray.

According to Bent, to use the Reserve Solution debit card you pay a set-up fee of $75, plus an annual fee of $25. This goes to the company that administers your 401(k) plan. The interest rate on your loan balance is the prime rate plus 2.9%. Since the prime rate is currently 5%, in today’s market your interest rate would be nearly 8%. And more than a third of that- the full 2.9%- goes into The Reserve’s account- not yours.

“You’re replacing a loan program that is extremely efficient and participant-friendly,” says Wray, “with one that is very expensive.”

With Congress about to leave for summer recess and an election around the corner, its doubtful that legislation making a 401(k) debit card illegal will be enacted this session. But opponents are determined to put an end to the practice. “We think it’s more responsible to create policy that reminds people that taking money out of the 401(k)s is a last resort,” says Glacel.

T. Boone Pickens, the Republican Texas oil mogul who has been pushing a renewable energy agenda, will be among the experts testifying before a Senate panel Tuesday on energy security.

As oil prices continue to hover around the $140 per barrel mark, lawmakers on both sides of the aisle are likely Tuesday to use the Senate hearing as a forum to push for increased U.S. energy security, the idea of reducing foreign influence over the energy consumed in the United States.

Last week, Pickens began a public relations push for the energy plan he simply has titled, "The Pickens Plan." Pickens says installing wind farms in the midsection of the United States could produce 20 percent of electricity consumed domestically, alleviating the need to use natural gas to make electricity.

Under the Pickens Plan, natural gas along with biofuels would power all transportation, reducing foreign oil dependence -- according to Pickens' numbers -- by one-third.

The Economist magazine last week reported that Pickens' plan isn't entirely altruistic, however. According to the magazine, Pickens' company Mesa Power has invested $2 billion in a Texas panhandle wind farm. But Pickens, chairman and founder of BP Capital Management, also regularly points out he doesn't need the money.

The hearing, titled "Energy Security: An American Imperative," will be held at 9:30 a.m. Other panelists before the Senate Homeland Security and Government Affairs Committee will be Gal Luft, executive director of the Institute for the Analysis of Global Security; Geoffrey Anderson, president and CEO of Smart Growth America; and Habib Dagher, director of the University of Maine Advanced Structures and Composites Laboratory.

A Palestinian man from east Jerusalem rammed a construction vehicle into three cars and a city bus in downtown Jerusalem on Tuesday, wounding four people before he was shot dead, in a chilling imitation of an attack that took place in the city earlier this month.

The driver went on his rampage in a busy part of downtown Jerusalem, several hundred meters from the luxury hotel where U.S. presidential candidate Barack Obama is supposed to stay Tuesday night as he kicks off a visit to Israel.

Police said a civilian driving nearby saw what was happening, jumped out of the car and shot the driver, bringing traffic to a halt. A border policeman who rushed to the scene also shot the driver. Police sealed off possible escape routes into predominantly Arab east Jerusalem and were searching for two suspects who fled the scene, police spokesman Micky Rosenfeld said.

The driver of the bus said he was chased by the assailant as he wielded the construction vehicle's shovel.

"I was driving on the main road when the (construction vehicle) hit me in the rear, on the right hand side," the driver of the bus, who was not identified, told Channel 10 TV.

"After I passed him he turned round, made a U-turn and rammed the windows twice with the shovel. The third time he aimed for my head, he came up to my window and I swerved to the right, otherwise I would have gone to meet my maker," he said.

Witness Moshe Shimshi said the driver, who was wearing a large, white skullcap commonly worn by religious Muslims, slammed into the side of the bus, then sped away and went for a car.

"He didn't yell anything, he just kept ramming into cars," Shimshi said.

The driver then headed for cars waiting at a red light "and rammed into them with all his might," he added.

Channel 10 TV said a mother and her baby were wounded. Israeli rescue services said they had evacuated one person whose leg was partially severed; Israel media said he was in the car that was overturned.

"This was another attempt to murder innocent people in a senseless act of terrorism," said government spokesman Mark Regev. "All people who believe in peace and reconciliation must unequivocally condemn this attack. Unfortunately, it is clear that we as a society will have to remain vigilant against terrorism."

Minutes after the attack, the driver, wearing shorts and black shoes, was sprawled backward in the construction vehicle's cabin, his legs dangling lifelessly.

Firetrucks had massed at the scene, where the smell of gas was wafting and liquid had spilled on the ground.

Sirens wailed in the background, and a police helicopter hovered overhead.

The assault was eerily reminiscent of an attack earlier this month, when another Palestinian from east Jerusalem plowed his front-end loader into a strong of vehicles and pedestrians on another busy Jerusalem street about 3 miles away. Three people were killed in that attack and dozens of others were wounded before an off-duty soldier shot the assailant dead.

Tuesday's attack was carried out with the same type of front-end loader. A four-door sedan next to the vehicle had been rammed from the rear and had crashed into a utility vehicle.

A compact car stood nearby, its driver's side smashed, and its hood and engine destroyed. Another four-door sedan was overturned on the sidewalk.

Jerusalem Mayor Uri Lupolianski was in the area when he heard a commotion and rushed over to the scene.

The attacker "is from east Jerusalem," he said. "They keep on inventing ways to attack us," he said. "Every work tool has become a weapon."

The three latest attacks in Jerusalem have been carried out by Palestinians from the city's eastern sector.

Democrats and Republicans queasy about a federal rescue of mortgage giants Fannie Mae and Freddie Mac are coalescing around the idea of letting the government slap limits on the multimillion-dollar pay packages of their executives.

Key lawmakers �" puzzling over how to explain to constituents why they voted to bail out the troubled government-sponsored firms �" see new curbs on compensation for the top officers as a crucial measure to cut down on the cringe factor.

At a time when Fannie Mae's and Freddie Mac's (FRE: 8.75, -0.43, -4.68%) troubles have investors worried and the government ready to jump in with untold sums of cash, the lavish pay of the two companies' executives is increasingly difficult to defend, they say.
Sen. Bob Casey, D-Pa., says Fannie and Freddie "have had their hard-won credibility undermined in recent weeks," on the heels of major accounting scandals at the firms in 2003 and 2004.

"While the subprime mortgage crisis is hardly the fault of these companies, past practices of awarding huge bonuses and higher executive salaries calls into question the prudence of extending an unlimited credit line of taxpayer money to the companies whose management practices have been questionable over recent years," Casey said in a letter to Treasury Secretary Henry M. Paulson.

Casey called for capping the companies' executive pay "at reasonable levels" if they used the line of credit or need Treasury to step in and buy their stock. Casey also said their boards should sue to recover recent bonuses.

Last year, Freddie Mac paid Chairman and Chief Executive Richard Syron nearly $19.8 million in compensation even though the mortgage company's stock lost half its value. During the same period, Fannie Mae President and Chief Executive Daniel Mudd got compensation valued by the company at $12.2 million, including a $2.2 million bonus.

"I would like to know why taxpayers should extend Fannie and Freddie an unlimited line of credit at a time when their stock and investor confidence has fallen precipitously and their CEOs continue to make multimillion-dollar salaries and bonuses," Sen. Chuck Hagel, R-Neb., told Paulson in a letter last week.

Critics of Fannie Mae (FNM: 14.13, +0.73, +5.44%) and Freddie Mac, including Republicans who question the very existence of government-sponsored mortgage companies, have long denounced the firms for richly compensating shareholders and executives in good times while relying on taxpayers and the government to prop them up should they falter.

With the request for a federal lifeline, though, even their biggest boosters are embracing the idea of scrutinizing pay packages.

Rep. Barney Frank, D-Mass., the House Financial Services Committee chairman, said a new regulator for Fannie Mae and Freddie Mac should have the power to approve executive compensation. Frank and Sen. Christopher J. Dodd, D-Conn., the

Senate Banking Committee chairman, want to add the controls to a broad housing package that creates a new regulator.
The House could vote on the bill, which also includes a foreclosure rescue for 400,000 strapped homeowners, as early as Wednesday.

Fannie Mae and Freddie Mac together hold or guarantee $5 trillion in mortgages �" almost half the nation's total. Their stocks have plummeted on fears about their financial stability in a chaotic housing market where falling home values and rising defaults have contributed to large losses at the companies.

Paulson's request for a government lifeline to them has shone an uncomfortable spotlight on the workings of the companies. Both wield armies of lobbyists and shower lawmakers with campaign cash �" prompting critics to charge that their financial problems are of their own making.

Frank said the housing legislation already includes "any reasonable control over Fannie and Freddie," but that he now believes Congress should explicitly give the regulator power to approve pay packages.

The agency that oversees Fannie Mae and Freddie Mac already has the authority to bar them from awarding executives "excessive" compensation that's out of whack with what similar firms' top people receive. But the law expressly forbids capping Fannie and Freddie executives' compensation.

Both versions of the housing bill give the new regulator more latitude to decide what constitutes excessive pay, including taking into account wrongdoing by an executive. The Senate-passed bill also gives the government the power to limit or ban "golden parachute" payments for executives if either company becomes financially unstable, goes belly up or needed a federal bailout.

I think these institutions have outlived their usefulness and should die. Their disappearance may cause some temporary dislocation and “the system” as we know it may never be the same. The wonderful thing about markets though is that they tend to evolve new systems when it makes sense. The only people who should be scared are the Wall Street and Washington big shots who feed on this corrupt and obsolete system. But we shouldn’t let them scare the rest of us into rescuing them, because the destruction of this system and its replacement with something better will only be a minor blip in our lives and in the end will benefit us all. We should rejoice that this detrius may be swept away in favor of something better, newer and more equitable. We should be excited, not scared, that the future can be bright if we don’t insist on preserving the vestiges of the past.

FBI Looking Into IndyMac For Possible Fraud
The Associated Press has learned that the FBI is investigating now-defunct
IndyMac banks for possible fraud.

Oil prices are tumbling, extending a massive sell-off the previous day, after of the government reported that U.S. crude supplies unexpectedly jumped last week.

Light, sweet crude for August delivery is down $6.44 at $132.30 a barrel in morning trading on the New York Mercantile Exchange.

The Energy Information Administration reported U.S. crude oil supplies jumped by 3 million barrels last week. That is the opposite of the 3 million barrel decline analysts surveyed by energy research firm Platts expected. Gasoline supplies also jumped unexpectedly

Consumer prices shot up in June at the second fastest pace in 26 years with two-thirds of the surge blamed on soaring energy prices.

The Labor Department reported that consumer prices jumped 1.1% last month, much worse than had been expected. Energy prices rocketed upward by 6.6%, reflecting big gains for gasoline, home heating oil and natural gas.

The big rise in prices cut deeply into consumers' earning power with average weekly wages, after adjusting for inflation, falling by 0.9%. It was the biggest monthly decline since a 1.1% drop in weekly wages in September 2005.

The 1.1% June price increase was the second largest monthly advance in the past 26 years, surpassed only by a 1.3% gain in September 2005 from a jolt to energy costs after Hurricane Katrina.

Separately, the Federal Reserve reported that industrial output rose 0.5% in June, the fastest pace in 11 months. The increase, the highest since a 0.6% gain in July of last year, reflected an end to an automotive production strike rather than any widespread strength in the economy.

The report on retail inflation followed similarly grim news on Tuesday that wholesale prices had shot up by 1.8% in June.

Wall Street turned higher on Wednesday as a second day of falling oil prices helped to offset the concerns about the jump in inflation last month. The Dow Jones industrial average was up more than 125 points in late morning trading.

Even with the two-day slide in the price of oil, a barrel of crude is about 80% higher than it was a year ago and 40% higher than at the start of the year. As recently as Friday, crude oil trade at record levels above $147 a barrel.

Federal Reserve Chairman Ben Bernanke, wrapping up two days of congressional testimony, repeated his concerns about inflation in remarks to the House Financial Services Committee on Wednesday. He said that the upside risks to the inflation outlook have intensified, reflecting higher prices for oil and other commodities.

Bernanke's comments underscored the bind the central bank is in, caught between a faltering economy that is struggling to overcome a prolonged housing slump and a severe credit squeeze, and the risk that inflation would move higher.

Democrats in Congress said the new inflation report emphasized the need to pass a second stimulus package because the Fed's room to boost growth through further cuts in interest rates was being limited by higher inflation pressures.

"We're now seeing danger for the economy on both sides -- growth is too slow and inflation is too high," Sen. Charles Schumer, D-N.Y., said in a statement. He urged the Bush administration to work with Congress to "pass some mainstream, bipartisan solutions for our economy."

The White House sought to signal continued concern about the economy's weakness but didn't indicate any change in the administration's opposition to a second stimulus package.

"The President is very concerned about the impact high prices are having on Americans, especially those who are on lower incomes. What the president would reiterate is what he said yesterday ... that the health of the overall economy is dependent on inflation remaining low," presidential press secretary Dana Perino told reporters.

Many analysts believe that the central bank is likely to leave interest rates unchanged for the rest of the year out of concern that any tightening of credit policy could send the economy into an even worse tailspin.

Over the past 12 months, consumer inflation is up by 5%, the largest year-over-year gain since a similar 5% rise in May 1991.

Food prices also showed a big increase in June, rising by 0.7%, more than double the 0.3% increase of May. Vegetable prices shot up by 6.1%, the biggest increase in nearly three years.

Core inflation, which excludes energy and food, showed rising pressures too, with an increase of 0.3% in June, up from a 0.2% gain in May and the biggest one-month rise since January.

This increase reflected a 4.5% jump in airline ticket prices, the biggest one-month rise for airline fares since March 2000

Texas Rep. John Culberson uses his Blackberry to post blurbs about his work onto Twitter, a social networking site on the Internet. The Internet has set him free from unfair media reports and other barriers between him and his constituents, enabling him to better represent them in Congress, he says.

But Culberson's actions have put him in possible violation of House rules that appear to ban blogging or other work-related activities on non-House Web sites.

Current rules "have been interpreted to prohibit (House) members from posting official content outside of the House.gov domain," Rep. Michael Capuano, D-Mass., chairman of the Congressional Commission on Mailing Standards, better known as the franking committee, wrote in a report late last month.

In a series of recommendations sent to House Administration Capitol Security Subcommittee Chairman Robert Brady, Capuano said some rules are necessary so as not to mix House official messages with commercial or political campaign material.

"Members of Congress who use taxpayer money to communicate with constituents should be held to the highest possible standard of independence �" and the appearance of independence," he said last week.

"Official content" �" like video �" that is posted outside the House.gov domain should be clearly marked, should not appear alongside commercial or campaign content and should contain an exit notice for people linking out from the House.gov domain, Capuano recommended.

But those recommendations have riled Republicans like Culberson, who argue they limit his communications. The spat has reached the highest levels of the House, with Speaker Nancy Pelosi backing Capuano by saying his work won't restrict but will rather loosen the rules. In response, House Minority Leader John Boehner has rung alarm bells over possible Democratic-led censorship of the Internet.

By communicating on Twitter, Culberson said he can tell his constituents to watch a live video he's about to broadcast on a site called Qik.com. By blasting an announcement that he's going to hold a town hall meeting, Culberson said anyone with a mobile e-mail device, an Internet connection or a phone can tap into the discussion. Or if a vote on a confusing or quickly-moving bill is coming up he can shoot out marching orders as needed to his supporters.

"It's a great way to instantaneously communicate with a large number of people," Culberson said.

Banning video postings by House members also hands the media an advantage they wouldn't have if he were allowed to use new technology to get out his side of the story, beating biased reporters to the punch, he said.

"How do I distinguish between Twitter and e-mail? There is no distinguishing. How do I distinguish between my interview with you on FOX News, and this live video that I'm broadcasting through Qik? How do you distinguish between my interview on Qik, which is live, with an interview on The New York Times?" asked Culberson, pronouncing the Web site as "quick," in an interview with FOX News last week.

Culberson said he believes lawmakers should face few, if any, restrictions on Internet use. If House members run astray of good taste, their constituents will let them know.

But Capuano counters that the rules �" while they don't specifically address capabilities of sites like Qik �" appear to ban such activity for good reason, and Culberson learned the lesson last week when the two men got into a one-on-one confrontation.

In a video posted online of his interview with FOX News, Culberson relayed how Capuano got irritated when Culberson apparently tried to get Capuano on camera, but hadn't asked him first. After the video was posted, Capuano ended up receiving a torrent of e-mails and phone calls from Culberson backers.

Admitting he might have jumped the gun by posting the confrontation, Culberson said he apologized to Capuano and pledged not to film him again without his permission.

Still, Culberson defended his decision to go to Qik to post the video, saying he thought a rule was going to be voted on and he felt it was his only recourse to let Capuano know how the public felt.

"I told him today �" and he's a good guy, and he understood this �" I said, 'Mike, you're going to have about as much luck regulating the Internet as King Knut did when he ordered his men to put this throne on the beach, and he tried to order the tide to stop," Culberson said, summing up the phone call in a video message to his constituents.