Greenspan faults Bush over spending By JEANNINE AVERSA and ANN SANNER, Associated Press Writers

Greenspan faults Bush over spending By JEANNINE AVERSA and ANN SANNER, Associated Press Writers
13 minutes ago



WASHINGTON - Former Federal Reserve Chairman Alan Greenspan, in his new book, bashes President Bush for not responsibly handling the nation's spending and racking up big budget deficits.

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A self-described "libertarian Republican," Greenspan takes his own party to task for forsaking conservative principles that favor small government.

"My biggest frustration remained the president's unwillingness to wield his veto against out-of-control spending," Greenspan wrote.

And he weighed in briefly but pointedly on the Iraq war: "I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil."

Bush took office in 2001, the last time the government produced a budget surplus. Every year after that, the government has been in the red. In 2004, the deficit swelled to a record $413 billion.

"The Republicans in Congress lost their way," Greenspan wrote. "They swapped principle for power. They ended up with neither. They deserved to lose."

In 2006, voters put Democrats in charge of Congress for the first time in a dozen years.

Greenspan's memoir, "The Age of Turbulence: Adventures in a New World," is scheduled for release Monday. The Associated Press purchased a copy Saturday at a retailer in the Washington area.

The book is a recollection of his life and his time as Fed chief.

Greenspan, 81, ran the Fed for 18 1/2 years and was the second-longest serving chief. He served under four presidents, starting with his initial nomination by Ronald Reagan.

He says he began to write the book on Feb. 1, 2006, the day his successor — Ben Bernanke — took over. A caption under a photo of Bernanke's swearing-in has Greenspan saying he was "very comfortable leaving the post in the hands of such an experienced successor."

The ex-Fed chief writes that he regrets the loss of fiscal discipline under Bush.

"`Deficits don't matter,' to my chagrin, became part of Republicans' rhetoric."

Greenspan long has argued that persistent budget deficits pose a danger to the economy over the long run.

At the Fed, he repeatedly urged Congress to put back in place a budget mechanism that requires any new spending increases or tax cuts to be offset by spending reductions or tax increases.

Large projected surpluses were the basis for Bush's $1.35 trillion, 10-year tax cut approved in the summer of 2001.

Budget experts projected the government would run a whopping $5.6 trillion worth of surpluses over the subsequent decade after the cuts. Those surpluses, the basis for Bush's campaign promises of a tax cut, never materialized.

"In the revised world of growing deficits, the goals were no longer entirely appropriate," Greenspan noted. Bush, he said, stuck with his campaign promises anyway. "Most troubling to me was the readiness of both Congress and the administration to abandon fiscal discipline."

Greenspan, in testimony before Congress in 2001, gave a major boost to Bush's tax-cut plan, irking Democrats.

He argued then that a tax cut could help the economy deal with sagging growth. The economy slipped into a recession in March 2001. The downturn ended in November of that year.

Surpluses quickly turned to deficits after the bursting of the stock market bubble and the 2001 recession cut into government revenues.

Government spending increased to pay for the fight against terrorism and receipts declined because of a string of tax cuts.

The Bush White House defended its fiscal policies in light of the Greenspan book.

"Clearly those tax cuts proved to be the right medicine for an ailing economy," White House spokesman Tony Fratto said. The 2001 recession was a mild one.

"Tax cuts contributed a portion to early deficits, but those tax cuts accelerated growth over time," Fratto said. He added: "We're not going to apologize for increased spending to protect our national security."

Greenspan said he was surprised by the political grip that Bush exerted over his administration.

The Bush administration turned out to be different from "the reincarnation" of the Ford administration that Greenspan said he had imagined. "Now the political operation was far more dominant." Greenspan was chairman of the Council of Economic Advisers under President Ford.

Greenspan enjoyed a good relationship with Bush's predecessor, Bill Clinton, "a fellow information hound."

They also were on the same economic page. During the Clinton administration, budget deficits turned to surpluses.

Greenspan recalled a conflict with the White House when Bush's father was president. The elder Bush wanted lower interest rates and challenged Greenspan's inclination to raise them because of inflation risks.

For Bush's father, the economy was his "Achilles' heel, and as a result we ended up with a terrible relationship." The economy went into a recession in the summer of 1990 and emerged from it in the spring of 1991.

Many supporters of the elder Bush blamed Greenspan's tight-money policies for the recession that contributed to Bush's loss to Clinton.

Greenspan says in the book he does not lament the loss of America's manufacturing base.

"The shift of manufacturing jobs in steel, autos and textiles, for example, to their more modern equivalents in computers, telecommunications and information technology is a plus, not a minus, to the American standard of living," Greenspan wrote.

Greenspan's memoir includes his early years growing up in a New York City neighborhood of low-rise brick apartment buildings filled with families of Jewish immigrants, his stint as a jazz musician and his decades as a Washington policymaker.

On other topics, Greenspan:

• Says he believes looser mortgage terms for "subprime" borrowers — those with spotty credit histories or low incomes — raised financial risks. However, he says the benefit of expanded home ownership in the United States was worth the risk.

• Questions whether global powerhouse China can continue its economic successes over the long run if it doesn't incorporate democratic processes. However, he predicts that if Beijing continues to move ahead on free-market principles "it will surely propel the world to new levels of prosperity."

• Predicts the most important economic decision U.S. lawmakers and courts will confront in the next quarter century will be to clarify rules involving intellectual property — patents, copyright and trademarks.

• Proposes lowering barriers to skilled immigrants and improving education to narrow income inequality.

Sen. Craig resigns over sex sting By JOHN MILLER, Associated Press Writers

Sen. Craig resigns over sex sting By JOHN MILLER, Associated Press Writers
2 hours, 56 minutes ago



BOISE, Idaho - In a subdued ending to a week of startling political theater, Sen. Larry Craig announced his resignation Saturday, bowing to pressure from fellow Republicans worried about damage from his arrest and guilty plea in a gay sex sting.

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"I apologize for what I have caused," Craig said, his wife Suzanne and two of their three children at his side with a historic Boise train station as backdrop. "I am deeply sorry."

Craig, 62, said he would resign effective Sept. 30, ending a career in Congress spanning a quarter-century.

Making no specific mention of the incident that triggered his disgrace in his remarks, he spoke for under six minutes and took no questions.

Among those attending was Republican Gov. C.L. "Butch" Otter, who will appoint a successor for the remaining 15 months of Craig's term.

It was a relatively quick end to a drama that began Monday with the stunning disclosure that Craig had pleaded guilty to a reduced charge following his arrest June 11 in a Minneapolis airport men's room.

Craig at first tried to hold on to his position, contending in a public appearance on Tuesday that he had done nothing inappropriate and that his only mistake was pleading guilty Aug. 1 to the misdemeanor charge. But a growing chorus of leading GOP leaders called for him to step down to spare the party further embarrassment and possible harm in next year's elections.

Otter said Saturday he has not chosen a replacement, although several Republicans familiar with internal deliberations said he favored Republican Lt. Gov. Jim Risch.

Otter called speculation that he has made a choice "dead wrong" and declined to say when he would fill the seat.

Craig said he would remain in the Senate until Sept. 30 in hopes of providing a smooth transition for his staff and whoever is chosen as his successor.

President Bush called Craig from the White House after the senator's announcement and told him he knew it was a difficult decision to make, said White House spokesman Scott Stanzel.

"Senator Craig made the right decision for himself, for his family, his constituents and the United States Senate," Stanzel said.

Craig was arrested June 11 in a police undercover vice operation. The arresting officer, Sgt. Dave Karsnia, said in his report that the restroom where he encountered Craig is a known location for homosexual activity.

Craig has faced rumors about his sexuality since the 1980s. He has called assertions that he has engaged in gay sex ridiculous.

"I am not gay. I never have been gay," Craig said defiantly after a news conference Tuesday. He said he had kept the incident from aides, friends and family and pleaded guilty "in hopes of making it go away."

Other lawmakers embroiled in sex scandals also have resigned from Congress, albeit usually at the end of scenarios that took longer to play out than the one that claimed Craig.

Former Rep. Mark Foley, R-Fla., quit last fall over sexually explicit Internet communications with male pages who had worked on Capitol Hill.

Sen. Bob Packwood, R-Ore., resigned in 1995 amid allegations he had made unwanted sexual advances to 17 female employees and colleagues and altered his personal diaries to obstruct an ethics investigation.

On Saturday, Craig said he would pursue legal options to clear his name. He has retained Billy Martin, a Washington lawyer who represented Atlanta Falcons quarterback Michael Vick in his dogfighting case, to pursue his legal options. Washington lawyer Stan Brand will represent Craig before the Senate ethics committee, said spokesman Dan Whiting.

"The people of Idaho deserve a senator who can devote 100 percent of his time and effort to the critical issues of our state and of our nation," Craig said. "I have little control over what people choose to believe. But clearly my name is important to me, and my family is so very important also."

Senate Minority Leader Mitch McConnell, R-Ky., said Craig "made a difficult decision, but the right one."

"It is my hope he will be remembered not for this, but for his three decades of dedicated public service," McConnell said. McConnell had been one of Craig's harshest critics, calling his actions "unforgivable."

Some Idaho residents who attended Craig's public resignation said it felt like a "political funeral."

Bayard Gregory, from Boise, said Craig should have been more forthright after his arrest.

"It's a horribly embarrassing experience to go through," Gregory said. "But if it were me, and I had done nothing wrong, I wouldn't have pleaded guilty."

Craig spokesman Sidney Smith said he did not know whether Craig would return to Washington on Tuesday, the start of the post-Labor Day congressional session.

"We haven't decided that yet, whether he's going to return or not," Smith said.

Craig represented Idaho in Congress for more than a quarter-century, including 17 years in the Senate. He was up for re-election next year.

Republicans, worried about the scandal's effect on next year's election, suffered a further setback Friday when veteran Republican Sen. John Warner of Virginia announced he will retire rather than seek a sixth term. Democrats captured Virginia's other Senate seat from the GOP in the 2006 election.

Craig opposes gay marriage and has a strong record against gay rights. He was a leading voice in the Senate on gun issues and Western lands. Craig chaired the Senate Veterans Affairs Committee and was a senior member of the Appropriations Committee, where he was adept at securing federal money for Idaho projects.

A fiscal and social conservative, Craig sometimes broke with his party, notably on immigration, where he pushed changes that many in his party said offered "amnesty" to illegal immigrants. Much of the impetus behind Craig's push to ease bureaucratic hurdles to immigrant farm workers stemmed from his background as a rancher and the state's large rural, farming community.

___

Associated Press writers Matthew Daly and Deb Riechmann in Washington, D.C., and Todd Dvorak in Boise contributed to this report.

Bush cites new tax relief for homeowners By JENNIFER LOVEN, Associated Press Writer

Bush cites new tax relief for homeowners By JENNIFER LOVEN, Associated Press Writer
44 minutes ago



WASHINGTON - New tax relief and the ability to refinance adjustable rate mortgages could help many Americans who are in danger of losing their homes, President Bush said Saturday.

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The president devoted his weekly radio address to a modest set of proposals he announced Friday to deal with an alarming rise in mortgage defaults, which has contributed to turbulent financial markets.

"The mortgage industry is going through a period of adjustment," Bush said. "And some Americans are worried about the impact this is having on their ability to make their monthly mortgage payments."

Foreclosure and late payments have spiked, especially for so-called subprime borrowers with blemished credit histories or low incomes. Higher interest rates and weak home values have made it impossible for some to pay or to keep up with their monthly mortgage payments. Some overstretched homeowners can't afford to refinance or even sell their homes.

Mortgage foreclosures and late payments are expected to worsen. Some 2 million adjustable rate mortgages are to reset to higher rates this year and next. Steep penalties for prepaying mortgages have added to some homeowners' headaches.

Bush's proposals would make it easier for borrowers currently holding adjustable rate mortgages to refinance using the resources of the Federal Housing Administration, a Depression-era agency created to help low- and moderate-income Americans afford homes.

An estimated 60,000 homeowners who have fallen behind on their payments because their mortgages have reset would be able to refinance with FHA-insured loans. That marks a significant change because now FHA does not insure refinanced loans from borrowers who are currently delinquent.

To qualify for the new program, being called FHA Secure, a borrower must prove that the original loan was being repaid until it reset to a higher rate and must have 3 percent equity in the home. The FHA does not supply the mortgage loan but it guarantees loans extended by banks and other lenders.

FHA officials said another 20,000 people would be helped by a new type of risk-based pricing for its loan guarantees that will allow lower-income mortgage holders to qualify by paying slightly higher rates.

As another part of his mortgage package, Bush said he would support legislation currently pending in Congress that would temporarily change tax law to let homeowners avoid paying taxes on forgiven debt in loans that are being restructured by financial institutions. Bush also urged Congress to modernize and improve the FHA so more homeowners could qualify for the mortgage insurance provided by the agency.

Bush emphasized that his actions are not aimed at bailing out home buyers who made bad decisions.

"It is not the government's job to bail out speculators, or those who made the decision to buy a home they knew they could never afford," he said. "We'll continue to work hard to keep our housing market strong."

The president's proposals follow a number of measures that have already been introduced in Congress to deal with the mortgage lending crisis. Many Democrats said they welcomed Bush's ideas, but felt they did not go far enough and should be modified to help more people.

___

Associated Press writers Martin Crutsinger, Deb Riechmann and Jim Abrams contributed to this story.

GOP: Craig plans to resign from Senate By JOHN MILLER and MATTHEW DALY, Associated Press Writers

GOP: Craig plans to resign from Senate By JOHN MILLER and MATTHEW DALY, Associated Press Writers
52 minutes ago



BOISE, Idaho - Idaho Republican Sen. Larry Craig's decision to quit spares his party the embarrassment of an indefinitely prolonged scandal following his arrest during a sex sting in a Minneapolis airport bathroom.

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Craig will announce his resignation, effective Sept. 30, at a news conference in Boise Saturday morning, GOP officials in Idaho and Washington told The Associated Press, speaking on condition of anonymity.

Still, opting to wait a month before officially bowing out raises questions of what Craig hopes to accomplish in Washington once the post-Labor Day session begins.

Word of the resignation came four days after disclosure that Craig had pleaded guilty to a reduced misdemeanor charge arising out of his June 11 arrest during a lewd-conduct investigation at the Minneapolis-St. Paul International Airport.

Craig's regional director in Boise, Will Hart, declined to say if the senator will appear in Senate chambers Tuesday. Craig, should he show up, could continue to be a liability for his party as it tries to shed negative publicity, said Jasper LiCalzi, a professor of political economy at Albertson College of Idaho in Caldwell.

"If he's trying to walk into the Senate chamber, everybody is going to be following him," LiCalzi said. "I've been surprised by everything — this is one more."

The three-term Republican senator had maintained he did nothing wrong — except for making the guilty plea without consulting a lawyer. But he found almost no support among Republicans in his home state or Washington.

Although several Republicans familiar with internal deliberations said Idaho Gov. C.L. "Butch" Otter favored Lt. Gov. Jim Risch as a replacement, both Otter aides and Risch said no decision had been made.

"I have not been promised the job of U.S. senator, nor has there even been a hint that the governor would appoint me to that position," Risch told the AP. "At this point in time, that discussion is very premature."

Mark Warbis, a spokesman for Otter, said the governor would not comment until he hears from Craig.

Craig has been out of public view since Tuesday, when he declared defiantly at a Boise news conference: "I am not gay. I never have been gay." But Republican sources in Idaho said he spent Friday making calls to top party officials, including the governor, gauging their support.

There has been virtually none publicly.

GOP lawmakers stripped Craig of leadership posts Wednesday, a day after calling for an investigation of Craig's actions by the Senate Ethics Committee. Senate Minority Leader Mitch McConnell called Craig's conduct "unforgivable" and acknowledged many in the rank and file thought Craig should resign.

Craig, 62, has represented Idaho in Congress for more than a quarter-century and was up for re-election next year.

Larry LaRocco, a former Democratic House member who is campaigning for Craig's seat in 2008, said, "Obviously, change is in the air. I represent that change, and based on the last few days, people are really looking for that change."

Still, Idaho remains one of the nation's most reliably Republican states. The GOP controls the statehouse and all four seats in Congress, and Bush carried the state in 2004 with 68 percent of the vote.

Risch, the lieutenant governor, served for seven months as governor last year after former Gov. Dirk Kempthorne was named interior secretary. Risch had said earlier he was interested in Craig's Senate seat if Craig did not seek re-election in 2008.

Rep. Mike Simpson, R-Idaho, also had been mentioned as a possible replacement for Craig, but the officials, speaking on condition of anonymity because Craig has not resigned, said Otter would probably choose Risch.

___

Daly reported from Washington. Associated Press writers Todd Dvorak in Boise and David Espo and Liz Sidoti in Washington contributed to this report.

Bush to tour New Orleans, Gulf Coast By JENNIFER LOVEN, Associated Press Writer

Bush to tour New Orleans, Gulf Coast By JENNIFER LOVEN, Associated Press Writer
20 minutes ago



NEW ORLEANS - President Bush is marking Hurricane Katrina's devastating blow two years ago by celebrating those he says have "dedicated their lives to the renewal of New Orleans" even as he and others are criticized for not doing more to get the city and Gulf Coast back to their former selves.

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Bush and his wife, Laura, are to spend Wednesday's anniversary remembering the storm in New Orleans and Bay St. Louis, Miss.

It is the president's 15th visit to the Gulf Coast since the massive hurricane obliterated coastal Mississippi, drowned most of the Big Easy and killed 1,600 people in Louisiana and Mississippi when it roared onto land the morning of Aug. 29, 2005 — but only his second stop in these parts since last year's anniversary.

The performance by the president and the federal government in the immediate aftermath of the storm — and some residents' lingering sense of abandonment since — severely dented Bush's image as a take-charge leader.

As on other visits, the president and his team arrived here armed with facts and figures to show how much the Bush administration has done to fulfill the promises the president made two-and-a-half weeks after the hurricane.

"We will do what it takes, we will stay as long as it takes, to help citizens rebuild their communities and their lives," Bush said then from historic Jackson Square in New Orleans' French Quarter. "This great city will rise again."

In fact, there is some good news here. The city's population is rebounding, and a few neighborhoods thrive. New Orleans has recovered much of its economic base and sales tax revenues are approaching normal. The French Quarter survived Katrina, and the music and restaurant scenes are recovering.

But much of New Orleans still looks like a wasteland, with businesses shuttered and houses abandoned. Basic services like schools, libraries, public transportation and childcare are at half their original levels and only two-thirds of the region's licensed hospitals are open. Rental properties are in severely short supply, driving rents for those that are available way up. Crime is rampant and police operate out of trailers.

Along Mississippi's 70-mile shoreline, harsh economic realities also are hampering rebuilding.

Many projects are hamstrung by the soaring costs of construction and insurance, while federal funding has been slow to flow to cities. Other economic indicators are down — such as population, employment and housing supplies.

Bush's Gulf Coast rebuilding chief, Don Powell, noted the federal government has committed a total of $114 billion to the region, $96 billion of which is already disbursed or available to local governments. Most of it has been for disaster relief, not long-term recovery. He implied it is local officials' fault, particularly in Louisiana where the pace has been slower, if money has not reached citizens.

Powell also said the president intends to ask for the approximately $5 billion federal share of the $7.6 billion more needed to strengthen New Orleans' levee system to withstand a 100-year storm and improve the area's drainage system. Though the levees are not yet ready for the next massive storm, they are slated to be strengthened by 2015.

But Powell said other areas — such as infrastructure repair and home rebuilding — are shared responsibilities with local officials or entirely the purview of state and local governments, suggesting that the federal government is absolved when those things don't happen.

The president and Mrs. Bush began this anniversary's visit with dinner Tuesday night with about two dozen politicians, athletes, musicians, developers and others at Dooky Chase, once a gathering place for civil rights leaders now famous for its traditional Creole cooking.

Craig and GOP await voters' judgment By TODD DVORAK, Associated Press Writer

Craig and GOP await voters' judgment By TODD DVORAK, Associated Press Writer
2 hours, 37 minutes ago



BOISE, Idaho - Sen. Larry Craig has apologized to Idaho and now waits — along with officials of both political parties — to see if voters are in any mood to forgive and forget the scandal tied to his arrest in a men's bathroom.

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Idaho Republicans possess a fiercely independent streak, characterized by a healthy dose of libertarian values and distrust of the federal government and the media. They generally hold deep religious beliefs and conservative social values.

"It all makes it hard sometimes to predict exactly how Idahoans would vote or how Idaho politicians will act on certain issues," said James Weatherby, a professor emeritus at Boise State University who knew Craig when they were students at the University of Idaho.

Craig, 62, a third-term senator up for re-election next year, defended himself Tuesday against a police report alleging he attempted to engage in a homosexual encounter with an undercover officer.

Flanked by his wife, Suzanne, Craig stated three times that he was not gay. He cast his arrest for lewd conduct as unfounded and his subsequent guilty plea to disorderly conduct as an error in judgment spurred by frustration with the state's biggest newspaper prying into his past.

The Idaho Statesman published a lengthy story on Tuesday, a day after the June 11 arrest was first reported, detailing allegations of homosexual behavior by Craig. The senator denied the allegations and contended the paper was engaged in a witch hunt. In a statement, the newspaper said its story spoke for itself.

"While I was not involved in any inappropriate conduct at the Minneapolis airport or anywhere else, I chose to plead guilty to a lesser charge in hopes of making it go away," Craig said. "It's clear, though, that through my actions I have brought a cloud over Idaho. For that, I ask the people of Idaho for their forgiveness."

The Idaho Republican Party took a measured, wait-and-see stance while Democrats remained mum, content to let Republicans sort through the fallout. The GOP's biggest names reminded voters of Craig's tenure in the Senate and his powerful seat on the Appropriations Committee.

"I would encourage all Idahoans to avoid rushing to judgment and making brash statements about a man who has dedicated his life to public service," GOP state party chairman Kirk Sullivan said in a statement.

Ignoring that plea, some social and religious conservatives and right-wing radio talk show hosts called for Craig's resignation. And political analysts said Craig will have trouble convincing Gem State voters that his 27-year political career is worth sparing.

"I think what makes it very difficult is the guilty plea," said Randy Stapilus, a former political editor at the Idaho Statesman who has a political blog. "That is something a lot of people will have a tough time getting around."

In Idaho, with its 1.4 million people, politicians know many supporters by name. The state also likes its Republicans. The GOP controls the statehouse and Congress, and President Bush carried the state in 2004 with 68 percent of the vote.

More than 166,000 residents are Roman Catholic and more than 385,000 Mormon.

"This isn't Massachusetts, that's for sure," said Chris Preston, a merchant in downtown Boise. "And because of that I think it's going to be tough for the state to forgive his transgressions."

And perhaps even for those in his own party. Republican leaders in the Senate called for an Ethics Committee review of the case.

"This is a serious matter," they said in a written statement issued in Washington over the names of Sen. Mitch McConnell of Kentucky, the party leader, and several others.

Two Republicans seeking the party's presidential nomination didn't mince words. Mitt Romney, in whose campaign Craig was playing a prominent role until he quit amid the scandal, told CNBC, "He's disappointed the American people." On Jay Leno's "The Tonight Show," Sen. John McCain said, "It's disgraceful."

Reports state that police Sgt. Dave Karsnia was investigating allegations of sexual conduct in Minneapolis airport restrooms when he went into a stall. The complaint against Craig alleged that he employed "a signal often used by persons communicating a desire to engage in sexual conduct."

Craig was arrested, read his rights, fingerprinted and photographed for a mug shot released by police showing him in coat and tie. He signed a guilty plea on Aug. 1 and later paid $575 in fines and fees and was placed on unsupervised probation for a year.

Bush: Fight against extremism is crucial By JENNIFER LOVEN, Associated Press Writer

Bush: Fight against extremism is crucial By JENNIFER LOVEN, Associated Press Writer
2 hours, 17 minutes ago



RENO, Nev. - President Bush aims to inspire patience with the war Tuesday by arguing that the fight against extremists in Iraq is crucial to U.S. security and the future of a strategic, struggling region. Bush is speaking before thousands of veterans Tuesday at the American Legion convention. It his second major speech in a week devoted to an attempt to buttress support for the war.

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Last week before the Veterans of Foreign Wars convention, he likened today's fight against extremism in Iraq to past conflicts in Japan, Korea and Vietnam.

On Tuesday, he plans to discuss the implications of the fight in Iraq for the broader Middle East, a global crossroads that has largely missed the democratic and economic advances seen in other parts of the world and is thus vulnerable to the rise of terrorism, said a senior administration official. The official spoke on condition of anonymity to avoid pre-empting the president.

The pair of speeches is intended to set the stage for a crucial Sept. 15 assessment of the fighting, particularly whether the additional U.S. forces that Bush ordered to Iraq in January are improving security enough to create an environment for lasting political progress. The report, required by law to be presented to Congress, also is to measure Iraq's performance on U.S. benchmarks for military and political development.

Democrats, as well as some Republicans, are pressing to start the withdrawal of U.S. forces. The president is expected to announce shortly after the report's release whether he intends to do so.

Bush added 30,000 troops to help calm Baghdad and a western province, making the total now more than 160,000. At least 3,728 military members have died in the war.

In the next week, Bush and his senior advisers are likely to hear the initial thinking from Ryan Crocker, Bush's envoy in Baghdad, and the top U.S. general in Iraq, Gen. David Petraeus, another senior administration official said. The official spoke on condition of anonymity to describe a schedule still in flux.

Bush leaves Monday to spend nearly a week in Australia, but Crocker and Petraeus are expected to testify to Congress as soon as Sept. 10 on the military and political landscape in Iraq more than four years after the start of the war, officials said. The two will give two days of testimony before their report is sent to lawmakers.

The two have already telegraphed many of their conclusions, and Bush has made it increasingly clear that he is likely to say that he wants more time for the additional forces to have an impact.

In fact, the first official said the president in his Tuesday speech would note the security gains from the surge, as well as early signs of political progress, while asking lawmakers to hold off on any judgments until hearing from Crocker and Petraeus.

But he was also to make a broader argument about the importance of the fighting in Iraq. He was to argue that Iraq is at the heart of rising extremist movements in both the Sunni and Shiite Muslim communities, the former dominated by al-Qaida and the latter by Iran, the official said.

"Failure in Iraq would cause the enemy not to retreat but to follow us to America," Bush said Monday night in Bellevue, Wash., in remarks at a fundraiser for GOP Rep. Dave Reichert.

Earlier Monday, he sought to highlight nascent moves toward political reconciliation in Iraq, heralding an agreement over the weekend among leading Iraqi politicians. He called Sunday's pact on some issues that have blocked national reconciliation a good step, but not enough.

"I reminded them, and they understand, much more needs to be done," Bush said on an airport tarmac in New Mexico, where he was raising campaign cash for Republican Sen. Pete Domenici. He added that it will be up to the Iraqi parliament to codify the new agreements when it reconvenes in early September.

Both Bush and Iraq's leaders are under increasing pressure to show progress amid slow deliberations and political squabbling in Baghdad and sinking support for the war among Americans and in Congress.

The Iraqi leaders said on Sunday that they agreed on some issues that the U.S. has set as targets, among them holding provincial elections, releasing prisoners held without charge and changing the law preventing many former members of Saddam Hussein's Baath Party from holding government jobs and elected office.

No details were released and committees must hash out final versions of legislation to be presented to the Iraqi parliament. Iraqi officials have announced similar deals in the past, only to have them fall apart.

The deal also was not enough to convince the main Sunni Arab political bloc to take back posts in government that they abandoned this month over differences with Iraqi Prime Minister Nouri al-Maliki.

___

AP Diplomatic Writer Anne Gearan in Washington contributed to this report.

Arrest clouds Idaho senator's future By MATTHEW DALY, Associated Press Writer

Arrest clouds Idaho senator's future By MATTHEW DALY, Associated Press Writer
2 hours, 13 minutes ago



WASHINGTON - Idaho Sen. Larry Craig, who has voted against gay marriage and opposes extending special protections to gay and lesbian crime victims, finds his political future in doubt after pleading guilty to misdemeanor charges stemming from complaints of lewd conduct in a men's room.

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The conservative three-term senator, who has represented Idaho in Congress for more than a quarter-century, is up for re-election next year. He hasn't said if he will run for a fourth term in 2008 and was expected to announce his plans this fall.

A spokesman, Sidney Smith, was uncertain late Monday if Craig's guilty plea in connection with an incident at the Minneapolis airport would affect his re-election plans.

"It's too early to talk about anything about that," Smith said.

A political science professor in Idaho said Craig's political future was in jeopardy. And a spokesman for the Democratic Senate Campaign Committee, Hannah August, said Craig's guilty plea "has given Americans another reason not to vote Republican" next year.

The married Craig, 62, has faced rumors about his sexuality since the 1980s, but allegations that he has engaged in gay sex have never been substantiated. Craig has denied the assertions, which he calls ridiculous.

The arrest changes that dynamic, said Jasper LiCalzi, a political science professor at Albertson College of Idaho in Caldwell, Idaho. He cited the House page scandal that drove Florida Rep. Mark Foley from office.

"There's a chance that he'll resign over this," LiCalzi said. "With the pressure on the Republican Party, he could be pressured to resign. If they think this is going to be something that's the same as Mark Foley — the sort of 'drip, drip, drip, there's more information that's going to come out' — they may try to push him out."

Already Craig has stepped down from a prominent role with Mitt Romney's presidential campaign. He had been one of Romney's top Senate supporters, serving as a Senate liaison for the campaign since February.

"He did not want to be a distraction and we accept his decision," said Matt Rhoades, a Romney campaign spokesman.

According to a Hennepin County, Minn., court docket, Craig pleaded guilty to a disorderly conduct charge on Aug. 8, with the court dismissing a charge of gross misdemeanor interference to privacy.

The court docket said Craig paid $575 in fines and fees and was put on unsupervised probation for a year. A sentence of 10 days in the county workhouse was stayed.

Roll Call, a Capitol Hill newspaper, which first reported the case, said on its Web site Monday that Craig was arrested June 11 by a plainclothes officer investigating complaints of lewd conduct in a men's restroom at the airport.

Minneapolis airport police declined to provide a copy of the arrest report after business hours Monday.

Roll Call, citing the report, said Sgt. Dave Karsnia made the arrest after an encounter in which he was seated in a stall next to a stall occupied by Craig. Karsnia described Craig tapping his foot, which Karsnia said he "recognized as a signal used by persons wishing to engage in lewd conduct."

Roll Call quoted the Aug. 8 police report as saying that Craig had handed the arresting officer a business card that identified him as a member of the Senate.

"What do you think about that?" Craig is alleged to have said, according to the report.

Craig said in a statement issued by his office Monday that he was not involved in any inappropriate conduct.

"At the time of this incident, I complained to the police that they were misconstruing my actions," he said. "I should have had the advice of counsel in resolving this matter. In hindsight, I should not have pled guilty. I was trying to handle this matter myself quickly and expeditiously."

Craig joins other GOP senators facing ethical and legal troubles.

Sen. Ted Stevens, R-Alaska, is under scrutiny for his relationship with a contractor who helped oversee a renovation project that more than doubled the size of the senator's home.

Sen. David Vitter, R-La., acknowledged that his phone number appeared in records of a Washington-area business that prosecutors have said was a front for prostitution.

Craig, a rancher and a member of the National Rifle Association, lives in Eagle, Idaho, near the capital of Boise. He was a member of the House for 10 years before winning election to the Senate in 1990. He was re-elected in 1996 and 2002.

Last fall, Craig called allegations from a gay-rights activist that he's had homosexual relationships "completely ridiculous."

Mike Rogers, who bills himself as a gay activist blogger, published the allegations on his Web site, http://www.blogactive.com, in October 2006.

Matt Foreman, executive director of the National Gay and Lesbian Task Force, an advocacy group, on Monday called Craig a hypocrite.

"What's up with elected officials like Senator Craig? They stand for so-called family values and fight basic protections for gay people while furtively seeking other men for sex," Foreman said.

___

Associated Press writers Steve Karnowski in Minneapolis and John Miller in Boise contributed to this story.

Currency change aimed at adding security By MARTIN CRUTSINGER, AP Economics Writer

Currency change aimed at adding security By MARTIN CRUTSINGER, AP Economics Writer
8 minutes ago



WASHINGTON - After six decades in which the venerable greenback never changed its look, the U.S. currency has undergone a slew of makeovers. The most amazing is yet to come.

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A new security thread has been approved for the $100 bill, The Associated Press has learned, and the change will cause double-takes.

The new look is part of an effort to thwart counterfeiters who are armed with ever-more sophisticated computers, scanners and color copiers. The C-note, with features the likeness of Benjamin Franklin, is the most frequent target of counterfeiters operating outside the United States.

The operation of the new security thread looks like something straight out of the Hogwarts School of Witchcraft and Wizardry. This magic, however, relies on innovations produced from decades of development.

It combines micro-printing with tiny lenses — 650,000 for a single $100 bill. The lenses magnify the micro-printing in a truly remarkable way.

Move the bill side to side and the image appears to move up and down. Move the bill up and down and the image appears to move from side to side.

"It is a really complex optical structure on a microscopic scale. It makes for a very compelling high security device," said Douglas Crane, a vice president at Crane & Co. The Dalton, Mass-based company has a $46 million contract to produce the new security threads.

The redesign of the $100 is about one-third of the way complete. The bill is expected to go into circulation late next year.

___

On the Net:

Bureau of Engraving and Printing: http://www.moneyfactory.gov

A history of U.S. currency from the Federal Reserve Bank of San Francisco: http://www.frbsf.org/currency/index.html

Report will be critical of Iraq leader 20 minutes ago

Report will be critical of Iraq leader 20 minutes ago



NEW YORK - A new assessment on Iraq may shed some negative light on Iraq's Prime Minister Nouri al-Maliki. The New York Times is reporting on its Web site that U.S. intelligence agencies will issue a new assessment Thursday expressing doubt about al-Maliki's ability to end the violence that's tearing his country apart.

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The assessment will also reportedly show doubt in the fledgling government's ability to meet benchmarks toward achieving political unity. The Times' story cites unidentified officials.

It comes just a day after President Bush scrambled to show his support for the embattled Iraqi leader. Bush called him a "good man with a difficult job," after expressing frustration with the ongoing political tensions in Iraq.

In just a few weeks, the administration is due to present a crucial report to Congress on progress in Iraq, including steps toward political reconciliation. Democrats and some Republicans are pressing to start the withdrawal of U.S. forces.

The president maintains that the buildup of U.S. forces in militant strongholds is showing results.

Bush: History to prove Iraq war worth it By BEN FELLER, Associated Press Writer

Bush: History to prove Iraq war worth it By BEN FELLER, Associated Press Writer
2 hours, 43 minutes ago



KANSAS CITY, Mo. - President Bush wants a nation running short on patience with the Iraq war to take a long view, comparing it to U.S. involvements in Asia that lost popular backing but eventually proved their worth and led to lasting peace.

"The ideals and interests that led America to help the Japanese turn defeat into democracy are the same that lead us to remain engaged in Afghanistan and Iraq," Bush said in advance excerpts of a Wednesday speech to the Veterans of Foreign Wars.

"The defense strategy that refused to hand the South Koreans over to a totalitarian neighbor helped raise up an Asian Tiger that is a model for developing countries across the world, including the Middle East," Bush said.

Bush often uses historical comparisons in urging patience on Iraq, but White House aides hope a specific focus on Asia will get skeptics to rethink their positions on Iraq and get beyond the daily, violent setbacks there.

Bush even cites Vietnam as a cautionary tale for those urging troop withdrawals today.

"Three decades later, there is a legitimate debate about how we got into the Vietnam War and how we left," Bush said. "Whatever your position in that debate, one unmistakable legacy of Vietnam is that the price of America's withdrawal was paid by millions of innocent citizens whose agonies would add to our vocabulary new terms like 'boat people,' 're-education camps' and 'killing fields.'"

Senate Majority Leader Harry Reid, D-Nev., quickly dismissed Bush's position.

"President Bush's attempt to compare the war in Iraq to past military conflicts in East Asia ignores the fundamental difference between the two," he said. "Our nation was misled by the Bush administration in an effort to gain support for the invasion of Iraq under false pretenses, leading to one of the worst foreign policy blunders in our history."

Bush's speech at the VFW is the first in a planned two-punch combo.

After comparing the current war against extremists with the militarists of Japan and the communists in Korea and Vietnam in Wednesday's speech, he plans to discuss the war in Iraq in the context of its implications for the broader Middle East in a speech next Tuesday at the annual American Legion convention in Reno, Nev.

In the aftermath of Japan's surrender, many thought it was naive to help the Japanese transform themselves into a democracy, Bush will tell the VFW conventioneers. He said critics also complained when America intervened to save South Korea from communist invasion. And in Vietnam, Bush said, people argued that the real problem was the U.S. presence there, "and that if we would just withdraw, the killing would end."

"The advance of freedom in these lands should give us confidence that the hard work we are doing in the Middle East can have the same results we have seen in Asia — if we show the same perseverance and sense of purpose," Bush said.

The president's address at the convention was preceded by a two-day parade of presidential hopefuls and Gen. David Petraeus, the top U.S. commander in Iraq, who addressed the group Monday.

Petraeus and Ryan Crocker, the U.S. ambassador to Iraq, are to report to Congress before Sept. 15 about the impact of the troop buildup that Bush ordered in January. Their report will provide the basis for Bush's decisions about the way forward in Iraq.

Meanwhile, Bush has notably tempered his view of Iraqi Prime Minister Nouri al-Maliki.

When they met in Jordan last November, the president called al-Maliki "the right guy for Iraq." Now, he continually prods al-Maliki to do more to forge political reconciliation before the temporary military buildup ends.

"I think there's a certain level of frustration with the leadership in general, inability to work — come together to get, for example, an oil revenue law passed or provincial elections," Bush said in Canada on Tuesday.

Crocker echoed Bush's frustration with the lack of action by al-Maliki's government.

"Progress on national level issues has been extremely disappointing and frustrating to all concerned — to us, to Iraqis, to the Iraqi leadership itself," Crocker said.

US military looks to reduce role in Iraq By ROBERT BURNS and LOLITA C. BALDOR, Associated Press Writers

US military looks to reduce role in Iraq By ROBERT BURNS and LOLITA C. BALDOR, Associated Press Writers
Tue Aug 21, 3:32 AM ET



WASHINGTON - U.S. military officials are narrowing the range of Iraq strategy options and appear to be focusing on reducing the U.S. combat role in 2008 while increasing training of Iraqi forces, a senior military official told The Associated Press on Monday.

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The military has not yet developed a plan for a substantial withdrawal of forces next year. But officials are laying the groundwork for possible overtures to Turkey and Jordan on using their territory to move some troops and equipment out of Iraq, the official said. The main exit would remain Kuwait, but additional routes would make it easier and more secure for U.S. troops leaving western and northern Iraq.

The official, who spoke on condition of anonymity because internal deliberations are ongoing, emphasized that the discussions do not prejudge decisions yet to be made by President Bush. Those decisions include how long to maintain the current U.S. troop buildup and when to make the transition to a larger Iraqi combat role.

It is widely anticipated that the five extra Army brigades that were sent to the Baghdad area this year will be withdrawn by late next summer. But it is far less clear whether the Bush administration will follow that immediately with additional drawdowns, as many Democrats in Congress are advocating.

Bush has mentioned publicly that he likes the idea, first proposed late last year by the Iraq Study Group, of switching the emphasis of U.S. military efforts from mainly combat to mainly support roles. But he also has said that this should not happen until Baghdad in particular is stable enough to enable Iraqi political leaders to make hard choices about reconciling rival interests among Sunnis, Shiites and Kurds.

There are now 162,000 U.S. troops in Iraq, of which 30,000 have arrived since February as part of Bush's revised strategy to stabilize Baghdad and to push Iraqi leaders to build a government of national unity.

Military efforts to stabilize the country effort have made strides in recent months, but political progress has lagged.

In a joint statement Monday, Sens. John Warner, R-Va., and Carl Levin, D-Mich., said that while the military buildup has "produced some credible and positive results," the political outlook is darker. The senators said that during their visit to Iraq last week they told Iraqi leaders of American impatience with the lack of political progress, and "impressed upon them that time has run out in that regard."

In a separate telephone interview with reporters, Levin urged the Iraqi assembly to oust Prime Minister Nouri al-Maliki and replace his government with one that is less sectarian and more unifying.

Speaking to reporters in Washington by phone from Tel Aviv, Levin acknowledged that while there is broad frustration with the lack of action by the al-Maliki government, U.S. officials cannot dictate a change in leadership there. He said he and Warner did not meet with al-Maliki when they were in Iraq this time.

In response to Levin's remarks about dumping al-Maliki, Gordon Johndroe, spokesman for the National Security Council, noted that Iraqi leaders have been holding talks in recent days on ways to move toward a unified government.

"We urge them to come together, reach agreements and show the Iraqi people and the rest of the world their determination to create a stable and prosperous Iraq," Johndroe told reporters, adding that the administration believes al-Maliki is capable of moving the talks to a successful conclusion.

Under pressure even from members of his own party to change direction in Iraq, Bush is expected to decide his next steps after hearing in September from Gen. David Petraeus, the top commander in Iraq, and U.S. Ambassador Ryan Crocker, on what the U.S. troop buildup has accomplished.

Petraeus and Crocker are likely to present their views to Congress on Sept. 11 or 12, said Johndroe, the National Security Council spokesman. Johndroe said White House officials are consulting with congressional leaders this week on setting a date for the testimony.

Bush also will receive advice and recommendations from Defense Secretary Robert Gates as well as the Joint Chiefs and Adm. William Fallon, the top commander for American forces in the Middle East.

Bush's options are limited, politically and practically. The Army and Marine Corps do not have the capacity to increase troop levels, or even to maintain the current number beyond next spring. With the 2008 presidential election approaching, it's not so much a question of whether troop levels will be cut but when and how much.

U.S. commanders in Iraq believe they are making substantial progress toward stabilizing Baghdad and other contested parts of the country — including in Anbar province in western Iraq where the insurgency has weakened noticeably this year. But they are dubious about the ability of Iraq's political leaders to take advantage of the improved security in ways that promote political reconciliation.

Petraeus and other senior commanders have said in recent weeks that the U.S. troop buildup will end in 2008, but Petraeus has not yet recommended a follow-on strategy to Bush. Much depends on judgments about how soon Iraqi security forces will be ready to assume a bigger role, as well as the likelihood of political progress.

Speaking on Monday to a Veterans of Foreign Wars convention in Kansas City, Mo., Petraeus said Americans should not underestimate the efforts of the Iraqi army and police.

In some areas, partnerships between U.S. forces and Iraqi soldiers are "quite robust," Petraeus said. He noted that Iraqi losses have been three times as high as those suffered by the U.S.-led coalition.

"There should be no question that Iraqi soldiers and police are dying for their country," Petraeus said.

Bush wants closer ties with Canada, Mexico By Caren Bohan

Bush wants closer ties with Canada, Mexico By Caren Bohan
44 minutes ago



OTTAWA (Reuters) - President George W. Bush will try to assure leaders of Canada and Mexico on Tuesday that the United States wants to build closer ties with them, despite the distraction of wars in Iraq and Afghanistan.

But the Quebec summit between Bush, Canadian Prime Minister Stephen Harper and Mexican President Felipe Calderon risked being overshadowed by a monster hurricane threatening to wreak havoc on Mexico's Yucatan peninsula.

Not long after he arrived in Montebello, Quebec, for what has been dubbed the "Three Amigos summit," Calderon announced he was cutting his trip short to deal with a potential catastrophe from Hurricane Dean.

Dean killed at least 11 people as it blasted through the Caribbean islands. It strengthened into a monster Category 5 -- the strongest type of hurricane -- and was to reach Mexico's coast early on Tuesday.

Bush told Calderon the United States was willing to help after the storm. "We want to be in a position to help them as appropriate and as best we can should Dean hit any part of Mexico," said Dan Fisk, a White House specialist in Western hemisphere affairs.

Calderon canceled plans for a meeting with Harper as well as a business lunch in Toronto. The leaders were still due to hold a news conference around midday.

The summit at the chateau by the Ottawa River got under way amid demonstrations by protesters who shouted for Bush to go home and objected to the aim of boosting trade and working on a common approach against terrorism.

Critics expressed concern that broadening economic ties would erode national sovereignty and that closer cooperation on anti-terrorism could lead to human rights abuses.

DON'T APPEAR TOO CLOSE

But both Harper and Calderon are interested in furthering the trade relationship, although neither wants to appear too close to Bush, who is unpopular in both of their countries.

Bush came into office in 2001 pledging to focus on strengthening ties with Mexico but critics say he has neglected the concerns of his North American neighbors in the aftermath of the September 11 attacks.

Mexico is frustrated by increasingly tough U.S. border policies and by the collapse in Congress of a push to overhaul U.S. immigration laws.

Canada is irked that anti-terrorism measures have hampered the flow of goods and services across the border.

Harper discussed Canada's concerns about Russia's symbolic laying of claim to the North Pole, where it placed a flag on the seabed. Canada claims it has sovereignty over the Northwest Passage of the Arctic, but the United States views it as an international strait.

"I think it's fair to say the president came away with a far better understanding of Canada's position," Fisk said. "However, I will note that from the U.S. position we continue to believe that the Northwest Passage is an international waterway, that there is international navigational rights through the Northwest Passage," he said.

"It's a very safe issue for Harper to bring up because it allows him to sound a nationalist theme," said Stephen Clarkson, a professor of international economy at the University of Toronto.

"It also allows him to have a little bit of disagreement with the United States," said Clarkson, noting that opposition politicians have accused Harper of being a Bush protege.

Top court judge rejects doctor's request 24 minutes ago

Top court judge rejects doctor's request 24 minutes ago



WASHINGTON - A Supreme Court justice on Monday rejected a request by a cancer researcher in a dispute with a university over ownership of thousands of blood and tissue samples.

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Dr. William Catalona spearheaded creation of a repository of more than 3,500 prostate tissue samples and 100,000 blood samples during a 27-year career at Washington University in St. Louis.

In 2003, Catalona became director of the Clinical Prostate Cancer Program at Northwestern University in Chicago, asking participants in research efforts that he oversaw at Washington University if they would consent to transferring their tissue to Northwestern.

Donors of 4,000 tissue samples agreed to the transfer, but Washington University sued to keep the samples there, and won rulings from a U.S. District Court judge and the 8th U.S. Circuit Court of Appeals.

In papers filed with Justice Samuel Alito, Catalona said he and the research participants could suffer irreparable harm if the appeals court decision is allowed to go into effect. Alito refused to grant a delay in the appeals court decision while the full Supreme Court decides whether it will review the case.

Washington University could use the tissue in studies the patients would find objectionable, or publish research results in a way that could identify the patients, Catalona's lawyers argued, raising the possibility that participants or their family members might be denied health, life or disability insurance.

In June, Dr. Larry Shapiro, dean of Washington University's School of Medicine, called the appeals court decision a precedent that assures the right of research institutions to use repositories without fear they will be taken or disrupted.

A dozen major research universities, as well as the American Cancer Society and associations of medical colleges and universities, had filed briefs supporting Washington University.

Web's 'Obama girl' is no hit with Obama By NEDRA PICKLER, Associated Press Writer

Web's 'Obama girl' is no hit with Obama By NEDRA PICKLER, Associated Press Writer
4 minutes ago



SALEM, N.H. - Obama girl has upset Obama's girls. The Web video of a scantily clad actress pledging her affection for Democratic presidential candidate Barack Obama has been a hit online, but not in his own home. Obama says his 6-year-old daughter Sasha has noticed news coverage of the video.

"Sasha asked Mommy about it," Obama said Monday in an interview with The Associated Press. "She said, 'Daddy already has a wife' or something like that."

"I Got A Crush On Obama" stars an aspiring model and actress named Amber Lee Ettinger, aka Obama Girl. Her song, which has lines like "Universal health care reform, it makes me warm," has gotten more than 3 million hits and nearly 10,000 comments since being posted two months ago on YouTube, the online video-sharing site.

Sen. Obama, D-Ill., said he knows the video was meant to be lighthearted, but he wasn't smiling when asked about it in the interview.

"I guess it's too much to ask, but you do wish people would think about what impact their actions have on kids and families," Obama said during the interview, held in the den of a supporter who just had hosted a campaign stop on her front lawn attended by about 120 people.

"This is part of the process of politics that can be difficult, (that) is making sure that your kids and your wife and your family are insulated from both things like this and what I suspect will be at some point some negative campaigning," Obama said.

When the campaign gets negative, Obama said, he'll be able to be tough without being inconsistent with his call for a new politics of hope.

"I feel pretty comfortable about the tone that we've taken during the course of this campaign," Obama said. "I think I've been respectful of all the candidates. I would challenge anyone to find a statement that I've made that has been personal as opposed to a substantive difference with a candidate."

He said calling rival Hillary Rodham Clinton's refusal to negotiate with rogue foreign leaders "Bush-Cheney lite" didn't cross the line. Clinton responded to that earlier comment by asking, "What's ever happened to the politics of hope?"

"The Clinton campaign reacted as, `Oh, whatever happened to the politics of hope. That's negative campaigning,'" Obama said. "If you actually look at the quote, I wasn't accusing her of being Bush."

"If Senator Clinton thinks that we should to continue with that type of approach of setting preconditions before we meet as opposed to preparation, then that is a light version of that policy," he said. "So that wasn't a sort of personal attack or an ad hominem attack. That was a very specific argument about the need to break away from some of this administration's policies. That is inevitable. Otherwise we're not going to be having any conversations during the course of this debate, other than a bunch of platitudes."

Obama said he understood the view of a New Hampshire voter who warned him last week to avoid public spats with his Democratic rivals or risk becoming part of politics as usual.

"Listen, I understand and am sympathetic to her view," Obama said. "And I do think that we've got to be careful not to fall into those habits. The way that I try to balance in my own mind is we should respond rapidly and aggressively to attacks that are made, but our responses should be truthful."

___

On the Net:

http://www.barackobama.com

Obama girl video: http://www.youtube.com/watch?vwKsoXHYICqU

Thompson is sparse on policy positions By LIZ SIDOTI, Associated Press Writer

Thompson is sparse on policy positions By LIZ SIDOTI, Associated Press Writer
56 minutes ago



WASHINGTON - Republicans rushing to embrace Fred Thompson's would-be presidential candidacy might have trouble figuring out what he would do if he actually won the White House.

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On most public policy issues, the former Tennessee senator and "Law & Order" actor has offered few, if any, specifics. Even on the dominant issue of the 2008 campaign — the war in Iraq — Thompson has carefully stopped short of wading into what he would do about the conflict should he inherit it, although he has generally backed President Bush.

And while not yet offering a broad foreign policy vision, some of Thompson's statements on the subject border on the impolitic, including comments maligning the Mexican, French and Russian governments.

What few clues there are about the direction a Thompson administration might take come from his growing body of online writings, a smattering of recent speeches and statements, and a somewhat sparse eight-year Senate record.

Thompson, who is expected to enter the presidential race formally in September, but plans to campaign in Iowa on Friday, was not known as a big-ideas guy and was hardly a heavy-hitter when it came to legislation during his Senate career from 1994 to 2002. Still, he was considered a reliably conservative vote on economic, security and social issues alike. He backed Bush's tax cuts, a prohibition on a late-term abortion procedure and voted to give the president the authority to invade Iraq.

More prominently, he established a reputation for working to limit the role of the federal government and protect states rights — an issue that remains very important to him and, perhaps, is an indication of what may lie at the root of his candidacy.

Broadly, he favors a strong federalist approach that emphasizes personal liberties and fiscal conservatism.

"Centralized government is not the solution to all of our problems and, with too much power, such centralization has a way of compounding our problems," Thompson wrote in a recent column on his Web site. "This was among the great insights of 1787," when the Constitution was adopted, "and it is just as vital in 2007."

He adds: "How we draw the line between federal and state roles in this century, and how we stay true to the principles of federalism for the purpose of protecting economic and individual freedom, are questions we must answer."

Thompson also:

_Splits with Bush on immigration, opposing the president's comprehensive immigration law overhaul bill and, instead, argues for increased border security as well as full enforcement of current federal immigration laws. The issue has divided the GOP, and Thompson is seeking the support of Republicans who object to illegal immigrants getting a path to U.S. citizenship.

In one online column, he says: "Federal law must be enforced, or our neighborhoods will continue to be the scene of chilling and lurid crimes committed by those who broke the law in the first place to come to America."

_Appears to take a hard-line approach to foreign policy. He criticizes the United Nations, saying the world body "seems to oppose human freedom rather than promote it." And, in one particularly incendiary commentary for ABC radio in April, he carried on about the perception of the U.S. around the world and its relationships with certain countries.

He assails Mexico on immigration, arguing that leaders there "apparently have an economic policy based on exporting their own citizens while complaining about U.S. immigration policies that are far less exclusionary than their own." He adds: "The French jail perfectly nice people for politically incorrect comments, but scold us for holding terrorists at Guantanamo."

Thompson saves his most aggressive comments for Russia, contending that ex-KGB agents "apparently" run the country, use their oil wealth to engage in blackmail, and dispose of people who cross them. "Oppose the Russian leadership, and you could trip and fall off a tall building or stumble into the path of a bullet."

_Emphasizes individuals' right to keep and bear arms, as well as the right to own and keep property. He suggests in one online piece that the Virginia Tech massacre could have been deterred had those who were at least age 21 and met certain criteria been allowed to carry concealed weapons on school grounds. In the Senate, Thompson voted against requiring criminal background checks for purchases at gun shows.

In a recent commentary, he assailed a 2005 Supreme Court decision giving local governments broad power to seize private property to generate tax revenue.

_Calls Bush's tax cuts a "success story" that helped grow the economy and says: "Letting them expire would amount to a tax hike of historic proportions." He also says the president should hold the line on spending.

Thompson already ranks in the top-tier of the GOP field in national polls and is in strong contention as well in early voting states. But he significantly lags his top long-running rivals in organization and money.

_On Iraq, Thompson said recently in London: "We need to do everything possible to avoid the appearance of utter weakness."

To some degree, his lack of detail is a legal matter. The law under which he is "testing the waters" of a presidential run limits activities that would make it appear he was doing more than simply weighing a bid. Talking about what he would do as president could violate that threshold.

Politics also comes into play. Going into detail now could invite attacks from opponents and force Thompson to engage in the presidential race before he's ready.

"Noncandidates don't need to have a message because they're noncandidates. Now the moment that he announces, people are going to want to know exactly what he stands for," said John Geer, a Vanderbilt University political science professor.

"If he comes out of the gates with a clear compelling message then he's going to look very strong," Geer said. "If he doesn't, he's going to stumble."

___

On the Net:

Thompson campaign Web site: http://www.imwithfred.com

Democrats target 2008 Calif. vote plan By MICHAEL R. BLOOD, Associated Press Writer

Democrats target 2008 Calif. vote plan By MICHAEL R. BLOOD, Associated Press Writer
2 hours, 47 minutes ago



LOS ANGELES - Leading Democrats are uniting with Hollywood producer Steven Bing and hedge fund manager Tom Steyer to oppose a California ballot proposal they fear could hand the 2008 presidential election to the Republican nominee.

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A lawyer with ties to the Republican Party wants California voters to change the way the nation's most populous state awards its electoral votes — a proposal Democrats call a power grab but that supporters describe as a blueprint for fairness in presidential contests.

California now allots all of its 55 electoral votes to the statewide winner in presidential elections, a practice followed in most states.

The proposal calls for awarding two electoral votes to the statewide winner, with the rest allocated according to results in each congressional district.

California has voted Democratic in the last four presidential elections. The change — if it qualifies for the June primary ballot and is approved by voters — could mean a Republican could be positioned the following November to win 20 or more electoral votes in GOP-leaning districts.

Nineteen of the state's 53 congressional districts are represented by Republicans. President Bush carried 22 districts in 2004, while losing the statewide vote by double digits.

It takes 270 of 538 electoral votes to win the White House. Only Maine and Nebraska currently allocate their electoral votes by congressional district.

In what is shaping up as an important subplot to the 2008 race, a political committee is being formed by Steyer that will raise money — possibly tens of millions of dollars — to defeat the GOP-backed idea.

The committee is being supported by Sens. Dianne Feinstein and Barbara Boxer, San Francisco Mayor Gavin Newsom, Los Angeles Mayor Antonio Villaraigosa and Democratic leaders in the Legislature.

The proposal is a "power grab orchestrated by the Republicans," Feinstein and Boxer said in a joint statement. It's "another cynical move to keep the presidency in Republican control."

Democrats were scheduled to announce formation of the committee, Californians for Fair Election Reform, on Thursday.

It will be headed by Steyer, who is raising money for Sen. Hillary Rodham Clinton's presidential campaign. A longtime Democratic donor, Steyer also raised funds for John Kerry's 2004 campaign and House Speaker Nancy Pelosi.

"Democrats would lose 20 electoral votes and very likely the presidency if California abandons the winner-take-all system while large Republican states like Florida and Texas do not," Steyer said in a statement.

The Presidential Election Reform Act, as it's dubbed, is being pushed by Thomas Hiltachk, a lawyer in a Sacramento firm that represents the California Republican Party and has worked with Gov. Arnold Schwarzenegger.

"In a state as large and diverse as California, what can be fairer than using congressional districts to apportion electoral votes," said Kevin Eckery, a spokesman for Californians for Equal Representation, a committee backing the proposal.

Immigration divides Romney and Giuliani By LIBBY QUAID, Associated Press Writer

Immigration divides Romney and Giuliani By LIBBY QUAID, Associated Press Writer
46 minutes ago



WASHINGTON - Mitt Romney accuses former New York Mayor Rudy Giuliani of making his city a haven for illegal immigrants. Giuliani denies it, insisting he cracked down on lawlessness of every kind.

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It's the first real clash between two leading Republican candidates who are vulnerable on immigration, a volatile issue that infuriates Republican conservatives who hold sway over primary elections.

At issue are so-called sanctuary cities, places where city employees are not required to report illegal immigrants to federal authorities. Some, such as San Francisco, have declared themselves sanctuaries or refuges. Others, like New York, have never adopted the "sanctuary" moniker.

New York's policy, issued by Democratic Mayor Ed Koch in 1988, is intended to make illegal immigrants feel that they can report crimes, send their children to school or seek medical treatment without fear of being reported.

An estimated half-million illegal and undocumented immigrants live in New York, and only a fraction are deported each year.

"What's the best thing to do about that?" Giuliani asked in 1996. "Put them in a situation in which they keep children out of school? Put them in a situation in which they don't go to hospitals? Or put them in a situation in which they don't report crimes to the police?"

Giuliani went to court to preserve the policy, suing over a 1996 attempt by Congress to undo the city's protections. He lost, but Mayor Mike Bloomberg later issued a new, broader version of the policy that is still in effect.

In the presidential campaign, Giuliani and Romney are talking tough on immigration, even opposing the bipartisan immigration overhaul backed by President Bush. Yet their records are not necessarily tough. For example:

_Several illegal immigrants worked on Romney's lawn as employees of a lawn care company; Romney said he didn't know the company had hired illegal workers.

_As mayor, Giuliani often spoke positively about illegal immigrants: "If you come here, and you work hard, and you happen to be in an undocumented status, you're one of the people who we want in this city," he told The New York Times in 1994.

_Both Romney and Giuliani spoke favorably of 2006 legislation providing a path to citizenship for illegal immigrants; they opposed a similar bill earlier this year.

Immigration inflames conservatives in early voting states such as Iowa and South Carolina, where some argue that illegal immigrants are straining schools and hospitals, lowering wages or taking jobs from law-abiding citizens.

In Aiken, S.C., on Tuesday, Giuliani repeated a pledge to closely track immigrants with tamperproof identity cards, bolster fencing and law enforcement at the border and deport illegal immigrants who commit crimes.

Romney, inspecting border fencing and checkpoints Monday in San Diego, reiterated his plan to hire more Border Patrol agents, sanction employers who hire illegal immigrants and cut federal dollars for sanctuary cities.

Romney blames "don't tell" policies, and Giuliani's support for them, for luring millions of illegal immigrants to the United States.

"New York City was the poster child for sanctuary cities in the country," Romney said last week in Bettendorf, Iowa.

Giuliani's defense is that he cracked down on all crimes, including illegal immigration. "New York City had the least amount of illegality per capita of any major city in the country, and I brought that change about," he said last week in Colorado Springs, Colo.

And his campaign accused Romney of hypocrisy, pointing out that as governor of Massachusetts, Romney did not try to punish sanctuary cities — Cambridge, Orleans and Somerville — in his own state.

"He had three sanctuary cities in his own state," longtime Giuliani aide Randy Mastro said. "The New York City program was very different. We had a system that protected public safety by encouraging aliens to come forward to the authorities to report crimes, and then required authorities to cooperate in the investigation and prosecution of aliens who committed crimes."

Romney says he tried to curtail the problem by deputizing state police to enforce federal immigration laws.

"It was exactly in response to the fact that immigration laws were not being enforced," spokesman Kevin Madden said. "It was also in conjunction with his belief that enforcement has to be a joint state and federal effort."

Bloomberg, who may run for president himself, waded into the dispute this week. Asked Monday about the idea of New York as a sanctuary for illegal immigrants, he said, "Let 'em come."

"I can't think of any laboratory that shows better why you need a stream of immigrants than New York City," he added. "I don't know what to tell anybody. If they don't believe that immigrants add a heck of a lot more than they cost, they just aren't looking at the numbers."

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Associated Press writer Sara Kugler in New York contributed to this report.

Romney worth as much as $250 million By JIM KUHNHENN, Associated Press Writer

Romney worth as much as $250 million By JIM KUHNHENN, Associated Press Writer
2 hours, 44 minutes ago



WASHINGTON - Republican presidential candidate Mitt Romney's vast wealth is spread over a dizzying array of foreign and domestic investments that at times have been sold to avoid conflicts with his public stances, the trustee of his blind trust said Monday.

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Among the investments sold by trustee R. Bradford Malt were holdings in companies known to have interests with Iran, including French and Italian oil companies. Romney earlier this year called for state pension systems to divest themselves of Iran-related stocks.

Romney and his wife, Ann, hold assets worth between $190 million and $250 million, his advisers said. The campaign released details of his wealth Monday in a personal financial disclosure report filed with the Federal Election Commission and the U.S. Office of Government Ethics. The value of assets in federal financial reports are listed in ranges, making a precise figure impossible to discern.

Romney reported that he and his wife have joint interest checking accounts with Bank of America of between $5 million and $25 million and a money market account between $1 million and $5 million. Both also have Individual Retirement Accounts. But the bulk of their money is in two blind trusts, which Malt said are divided evenly between husband and wife.

Blind trusts are designed to prevent public officials from controlling their investments, thus avoiding potential conflicts of interest. Under federal rules, the Romneys were not required to report a blind trust in the name of their children, which aides say is valued at about $100 million.

Romney is by far the wealthiest candidate in the presidential field. He has already pumped about $9 million into his campaign from his personal wealth. The report suggests he could easily tap that vein again.

Presidential candidates had been required to file such disclosures by May 15, but Romney asked for two 45-day extensions to obtain detailed values of his and his wife's blind trusts.

The delay allowed Romney to file two days after the Iowa straw poll, a nonbinding but politically significant rite of passage in a state that holds the first presidential caucus. Romney won the straw poll with 31.5 percent after spending generously in the state on ads and mobilizing supporters.

Though the blind trusts precluded Romney from knowing or controlling the assets of his wealth, Malt, the trustee, said he was aware of the political sensitivity of the investments.

"As I become aware that ownership of some stock was inconsistent with public positions, I might sell them," Malt said in a teleconference with reporters Monday.

He specifically singled out blind trust investments with the Italian-based Eni SpA and the French Total, oil companies that have done business in Iran. Each was sold for between $15,000 and $50,000.

The report offers the most detailed public look yet at the finances of the former Massachusetts governor, who has refused to release his income tax returns, and who previously filed only state financial disclosure forms that described his holdings in the most general terms.

The 47-page federal report was something of a revelation for Romney as well.

Forced to open his blind trust, the Romneys — and the world — discovered precisely which stocks, bonds and mutual funds they own.

Among them: $2.5 million to $8 million in AB Svensk Exportkredit, a Swedish export credit corporation; and $1 million to $5 million in Eksportfinans ASA, a Norwegian financing corporation, and $100,000 to $250,000 in Russian energy giant Gazprom. Ann Romney's trust reported various Goldman Sachs investments of more than $1 million (spousal assets can be reported in less precise figures). Romney's trust has $3.5 million to $16 million in Goldman Sachs investments.

Malt said none of Romney's overseas investments are tax shelters or help reduce his federal tax obligations in any way. "They don't reduce income taxes, they don't defer income taxes," he said.

Malt is a Boston-based lawyer with the national law firm of Ropes & Gray and has been trustee for the Romney blind trusts since Romney became governor of Massachusetts in January 2003. He said the funds will now continue operating as blind trusts and that Romney will not be privy to any further transactions.

Asked while campaigning in Fresno, Calif., whether his enormous financial wealth kept him from appealing to average voters, Romney said his track record in establishing a scholarship program for top-achieving high school students and broadening access to health insurance in Massachusetts showed he "understood the hearts of people."

Romney has said he would give his annual presidential salary of $400,000 to charity.

Malt approved sales of millions of dollars of holdings during the past 18 months, most transactions that would be expected with a portfolio as large as that of the Romneys. Other sales, besides the Iran-related stocks, also helped avoid potential political embarrassment for Romney.

Among them were investments in gaming companies, including Ameristar Casinos and Harrahs Entertainment. Romney has been eager to present himself as the most socially conservative candidate in the field, decrying what he has said is the debasement of the culture.

Romney's blind trust also got rid of between $100,000 and $250,000 in stock in Schlumberger Ltd., the oilfield services company that does business in Sudan. Other presidential candidates, including Democrat Barack Obama and Republican Rudy Giuliani, have reassessed their holdings after discovering that funds they held invested in Schlumberger stock.

Boston Red Sox fans — Romney among them — may blanch at one of the stocks held by one of Ann Romney's blind trust funds: A Goldman Sachs Capital Partners Fund invests in the Yankees Entertainment and Sports network.

The report also highlights a continuing connection between Romney and Bain Capital, the venture capital firm he founded and which he left in 1999 to assume leadership of the Salt Lake City Winter Olympics.

Earlier this year, Romney played down any lingering connection after The Associated Press reported Bain Capital and Bain & Co., the management consulting firm where Romney used to work, had links to Iranian business interests. At the time, a spokesman highlighted Romney's 1999 resignation from Bain, while Romney himself said his divestment call applied only to future activity, not past dealings.

A notation in Romney's filing, however, says that under a noncompete agreement with Bain Capital, Romney retains a "passive profit share as a retired partner in certain Bain Capital entities formed on or prior to Feb. 11, 2009."

A note in Romney's report states that Romney asked for a listing of Bain's underlying holdings, but, like other funds in his blind trust, the fund managers said the information was confidential and declined to provide it.

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Associated Press Writer Glen Johnson in Boston and Garance Burke in Fresno, Calif., contributed to this report.

Presidential race hits breakneck pace By PHILIP ELLIOTT, Associated Press Writer

Presidential race hits breakneck pace By PHILIP ELLIOTT, Associated Press Writer
1 hour, 18 minutes ago



CONCORD, N.H. - Late-night conference calls, Sundays spent in the office and a diet served in takeout bags are the hallmarks of the final weeks of a presidential primary campaign.

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They're already the norm in the early voting states of New Hampshire and Iowa — and it's only August.

"We think it's nonstop now?" says Mike Dennehy, Sen. John McCain's national political director. "Once we hit Labor Day, it's going to be blazing fast."

And it's not just McCain sprinting. Former Massachusetts Gov. Mitt Romney's 14-hour campaign days begin at 7 a.m.; to save time, he carries a gallon Ziploc bag of granola — made by his wife, Ann — to double as breakfast and snacks.

Former New York Mayor Rudy Giuliani flew to Iowa for a recent debate, landing less than two hours before it began. And Sen. Hillary Rodham Clinton flew from New Hampshire to Chicago and back in less than 24 hours, sandwiching an AFL-CIO forum between twin policy addresses here.

The pace is even faster in Iowa, where several forums, the 11-day Iowa State Fair and other events have produced a bumper crop of candidates.

Part of the rush is the ever-accelerating primary calendar, which could well begin this December and produce nominees in February. The race also is the first since 1928 without a sitting president or vice president seeking to stay in the White House. (President Harry Truman dropped out early in 1952, as did his vice president, Alben Barkley, soon afterward.)

Add to that voracious media attention, top candidates who are virtual celebrities and torrid fundraising, and it's clear the relative sanity of Augusts of yore is a thing of the past.

"Everything is happening earlier this time around. I think the campaign just started earlier," said Patricia Harris, a minister in Nashua, N.H., who has met all the candidates and endorsed Clinton.

Like many key community organizers in early voting states, Harris was hoping to lay low for a while after being deeply involved in the last primary campaign — for Democratic Sen. John Kerry, in her case.

That didn't last long.

"Things are so bad in this country that we need to do something now," she said. "I get annoyed when people say, 'Talk to me in a year.' We can't wait."

Others obviously share her sense of urgency. When freshman New Hampshire Rep. Paul Hodes endorsed Sen. Barack Obama last month, the candidate flew in for a two-hour visit that attracted 600.

"You've never rolled out a major endorsement in August (during past cycles). The fact that they seem to be going fast and furious in the beginning of August shows the intensity is significantly different than in the past," said Ray Buckley, state Democratic chairman in New Hampshire.

"It was not that long ago that presidential candidates took vacations in the month of August to prepare for the upcoming presidential primary season. It is a very different primary than we've had before," Buckley said.

Unchanged, however, is the need for candidates to spend large amounts of time in early states, where voters typically think long and hard before choosing.

Recently, Giuliani was the latest presidential hopeful to stop by the Flapjack Family Restaurant in Maquoketa, Iowa.

"We've been here for about 24 years. For whatever reason we've had an awful lot of activity," said owner Sid Thompson, who actually lives in Minneapolis.

He said celebrity doesn't count for much with Maquoketa's 6,000 residents.

"They're open to listening to the candidates, but the residents here do an awful lot of digesting of information rather than being overwhelmed by the candidates being here," he said.

The same appears to be true in New Hampshire, if the latest University of New Hampshire poll for CNN and WMUR-TV is any guide. The poll found that 64 percent of Democrats still haven't made up their minds, and 71 percent of Republicans said the same.

"I know you people in New Hampshire like to shop," Obama said during a recent stop. "You like to take us for a test drive, like to kick our tires."

Those tires, meanwhile, are going to keep spinning at full speed.

"I don't think it's possible (to slow)," Dennehy said. "It's full steam ahead. You try to squeeze out as much as you can from a 24-hour day."

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Associated Press writer Mike Wilson in Iowa contributed to this report.