by Frank James

Once again, the federal government is riding to the rescue of the U.S. financial system with the statement of Treasury Secretary Henry Paulson Sunday that the government would make taxpayer funds available to mortgage giants Fannie Mae and Freddie Mac to meet their capital requirements.

It's an effort to dampen the panic among global investors over the possibility that the two goverment-sponsored entities or GSEs which own or support millions of U.S. mortgages, could essentially implode, resulting in the government having to takeover the two companies.

In his statement, Paulson said:

First, as a liquidity backstop, the plan includes a temporary increase in the line of credit the GSEs have with Treasury. Treasury would determine the terms and conditions for accessing the line of credit and the amount to be drawn.

Third, to protect the financial system from systemic risk going forward, the plan strengthens the GSE regulatory reform legislation currently moving through Congress by giving the Federal Reserve a consultative role in the new GSE regulator's process for setting capital requirements and other prudential standards.

The steps Treasury is taking is reminiscent of what the Federal Reserve did after a panic driven by rumors caused the investment bank Bear Stearns to experience what was essentially a bank run, leading to its takeover by JPMorgan Chase.

Something to watch today will be investor-reaction to Treasury's announced plan as well as the response to an auction of $3 billion in debt by Freddie Mac. If the response to the auction is weak, it's likely investor panic would flare up once again.

by Frank James

In a move that shouldn't surprise anyone, the Bush Administration decided it wanted no part of regulating the greenhouse gases most scientific experts believe contribute to global warming.

The EPA decision took the form of a 588-page document issued by the Environmental Protection Agency in which the EPA declined to take the vital step of declaring greenhouse gases unhealthy to the public.

If the EPA had done so, the agency would have been required by law to regulate greenhouse gases. Last year, the Supreme Court said the EPA had the authority to make such regulations if it determined that such gases were harmful to Americans' health.

Even though Bush has publicly accepted the premise that humans are contributing to global warming, his administration has opposed such regulations on the grounds that the U.S. economy could potentially be bogged down if the EPA were required to sign off on thousands or more projects and activities across the nation that influenced greenhouse gases.

The Bush administration's view on new EPA rules also mirrors its objections to the Kyoto Protocol; that the global warming problem is by definition a world-wide problem and it doesn't make a whole lot of sense for the U.S. to burden its economy with rules and costs to fight global warming if developing nations like China and India weren't similarly constrained.

So Bush's EPA essentially punted, leaving it to a future president and Congresses to determine how the EPA should proceed. In lieu of making regulations, the EPA issued a document that, among other things, merely sums up the objections it heard from across the administration to possible regulations.

by Bay Fang

Iran's reported test-firing of missiles two days in a row, just as it is showing more interest in dialogue about its nuclear enrichment program, highlighted the mixed messages that pose a dilemma for the U.S. as it weighs how to approach a country moving ever closer to becoming a nuclear power.

In a show of strength and readiness, the Iranian Revolutionary Guards reportedly launched nine mid- to long-range ballistic missiles in the Strait of Hormuz Wednesday, and two more Thursday, including one that could reach Israel and U.S. forces stationed in the region.

But it comes as Tehran has seemed to react favorably to a new package of incentives presented by the U.S. and its European allies to halt its nuclear program, and as its top nuclear negotiator is planning to meet with European Union representative Javier Solana in the coming weeks.

Regional analysts surmise that the two approaches could indicate a real division in Tehran over how to deal with the West, but could also be an effective negotiating tactic.

by Matthew Hay Brown

Three months ago, congressional Democrats began pressing President Bush to halt new shipments to the Strategic Petroleum Reserve. Today, with gasoline prices still climbing, House Speaker Nancy Pelosi asked him to begin drawing the reserve down.

"Deploying a small portion of the resources in the SPR would provide much needed assistance to American consumers facing record prices and help our economy during a serious period of instability," Pelosi wrote to Bush. "I strongly urge you to use every available tool, including deployment of the SPR, to provide timely relief for American consumers and businesses."

Bush initially resisted the calls to stop adding 60,000 barrels of oil each day to the giant undergound caverns in Texas and Louisiana where the reserves are stored, but relented after Congress passed legislation to do so by veto-proof margins.

It's unclear whether Pelosi's current request will garner the same bipartisan support.

"The fact is, the American people expect and deserve far more than what Speaker Pelosi is proposing," House Minority Leader John Boehner said in a statement. The Ohio Republican did not indicate whether he favored drawing down the reserve.

"With her call for President Bush to release supplies from the Strategic Petroleum Reserve, the speaker is admitting yet again that increasing the supply of oil will help reduce the price of gasoline," Boehner said. "I agree that more supply is necessary, and so do my House Republican colleagues who have been arguing for decades in favor of more American energy production."

Pelosi's letter follows.

by Matthew Hay Brown

After a year and a half of pushing unsuccessfully for a timeable for a U.S. withdrawal from Iraq, congressional Democrats have found an ally in Baghdad.

Iraq's national security adviser told reporters in Najaf today that the U.S.-backed government would not agree to the security deal it is negotiating with Washington unless it included details of a pullout.

"We will not accept any memorandum of understanding if it does not give a specific date for a complete withdrawal of foreign troops," National Security Adviser Muwaffaq al-Rubaie said. His comments echoed those made by Iraqi Prime Minister Nuri al-Maliki to Arab diplomats in Abu Dhabi on Monday.

The State Department slapped the Iraqi demand down today.

"The U.S. government and the government of Iraq are in agreement that we, the U.S. government, we want to withdraw; we will withdraw," spokesman Gonzalo Gallegos told reporters. "However, that decision will be conditions-based."

But the demand has found a willing audience among the congressional majority.

"President Bush refuses to listen to Congress or the American people, but he cannot support Iraqi political reconciliation and security and ignore Iraqi Prime Minister Maliki's call for a timetable for the withdrawal," House Speaker Nancy Pelosi said.

by Matthew Hay Brown

Growing up in the West African nation of Mali, Alima Traore assumed that girls everywhere had to undergo the procedure.

"In my country, it is usually an old lady" who performs the crude surgery, the 29-year-old woman said in her attorney's office. "They have a traditional knife for it. They cut your intimate parts. This knife is used for many girls."

It wasn't until Traore came to the United States eight years ago that she learned that female genital mutilation has been condemned the world over as a human rights abuse. Now that she's here - she has been living in Maryland since 2000 - she doesn't want to go back.

Traore's fight against deportation - her student visa expired in 2003 - has put her at the center of a growing dispute between rights groups and the Bush administration over whether victims of the practice also known as female circumcision, or female genital cutting, qualify for asylum here.

Read about the debate in today's Baltimore Sun.

In considering her case last fall, the Board of Immigrations Appeals described the "infliction of FGM" as "reprehensible." But the board, a tribunal within the Department of Justice, ruled that Traore does not have a well-founded fear of future persecution if she were to return to Mali, because the damage, though permanent, has already been done.

That interpretation, which now is binding on immigration judges, has drawn criticism from rights advocates, physicians and others, who say it defies federal case law and reverses the board's own reasoning in earlier, similar cases.

by Bay Fang

While her boss, President Bush, spoke out in Japan on the eve of the G8 summit about North Korean abductions and human rights in China, Secretary of State Condoleezza Rice was fielding the press back home on a different subject - her golf game.

In interviews with both CBS News and XM radio during the AT&T National Golf Tournament, at the Congressional Country Club in Bethesda, MD Saturday, Rice confessed that her summer goal was to "get just a little bit better at chipping so that I can have a little shorter putt."

Bush got in trouble in May when he told reporters he had sacrificed his golf game for the sake of the troops. "I don't want some mom whose son may have recently died to see the commander in chief playing golf," he said in an interview with Politico. "I feel I owe it to the families to be in solidarity as best as I can with them."

(Enterprising reporters later revealed that although Bush said he made that decision after the August 2003 bombing of the UN headquarters in Iraq, his last round of golf was actually played in October 2003.)

Rice's last game was on the morning of the Fourth with her cousin and her cousin's husband, and a couple of friends in town for the holiday.

by David Nitkin

President Bush said today he wants to continue toward a diplomatic resolution to Iran's nuclear ambitions, and would not directly address reports that Israel plans a military strike to destroy Iranian uranium enrichment capabilities before the end of the year.

"I have made it very clear to all parties that the first option ought to be to solve this problem diplomatically," Bush said. "And the best way to solve it diplomatically is for the United States to work with other nations to send a focused message. And that is that, You will be isolated and you will have economic hardship if you continue trying to enrich."

Bush addressed his goals for an upcoming trip to Japan for a G8 summit during a statement in the Rose Garden, and took five questions from reporters at the conclusion of his prepared remarks. Two of the questions concerned Israel's intentions in Iran, a topic of escalating debate. But the president did not specifically mention the prospect of Israeli military attacks in his responses.

Bush said he supported a proposal from Russian leader Vladimir Putin to provide enriched uranium for an Iranian civilian nuclear power program and collect the spent fuel, "thereby negating the need for the Iranian regime to enrich at all."

Questions about Israeli intentions in Iran have swelled since last month, when more than 100 Israeli F-16s and F-15s flew more than 900 miles over the Mediterranean in an exercise that included refueling tankers and helicopters that could rescue downed pilots, the New York Times reported. The distance covered during the exercise showed that Israel jets could reach Iran's Natanz nuclear enrichment facility.

by Bay Fang

Although President Bush announced this morning that he would lift key sanctions against the North Korean regime and remove it from the US terrorism blacklist, the State Department and administration officials followed up by emphasizing that other sanctions against the regime once dubbed part of the "axis of evil" remained in place.

For one, bans remain against missile equipment, possible dual-use technology, and the assets of any designated proliferators. Any assets that were previously frozen under the Trading with the Enemy Act remain frozen. Furthermore, sanctions put in place due to the regime's "gross violations" of human rights continue to prohibit any development or security assistance to Pyongyang.

While traveling in Japan for the G-8 meeting of foreign ministers, Secretary of State Condoleezza Rice urged the North Koreans to do more on resolving the issue of abductions of Japanese civilians "We're continuing to expect the North Koreans to take this issue seriously because it is a major issue for Japan and it's a major issue for the United States," Rice said.

In his remarks this morning, Bush expressed skepticism about the regime, which the Bush administration has accused of lying about its nuclear capabilities before.

"We will trust you only to the extent you fulfill your promises," Bush said in the Rose Garden. "I'm pleased with the progress. I'm under no illusions. This is the first step. This isn't the end of the process. It is the beginning of the process."

Next up in the process is a largely symbolic, made-for-TV destruction of a 65-foot-tall cooling tower, which is currently attached to its main nuclear reactor at Yongbyon - which, under the terms of the agreement, has already been largely disabled.

Rice told reporters traveling with her in Japan that she thought the declaration was verifiable. "We believe we have ... the means by which to verify the completeness and accuracy of this document," she said.

by Bay Fang

Secretary of State Condoleezza Rice's three-country, five-day Asia tour, which starts this week, appears to be a last-ditch attempts to salvage the legacy of the Bush administration.

She will be going first to Japan for the G8 foreign ministers' meeting Thursday before heading to South Korea and visiting quake-ravaged China, but the biggest focus of the trip will be on scoring a breakthrough on the North Korea nuclear disarmament talks, which involve China, Russia and Japan, as well as South and North Korea.

But even while raising expectations of a coming declaration by Pyongyang on its full nuclear capability, which has been the sticking point in the process, Rice revealed that new intelligence could stymie the effort. Apparently, this intelligence comes from traces of uranium found on the pages of documents that were handed over by North Korea last month, which were supposed to help US officials verify the declaration that is still awaited.

Defense Department Press Secretary Geoff Morell. (Pentagon photo.)

by Frank James

At today's Pentagon briefing, Defense Department press secretary Geoff Morrell, was asked about the preparations his agency is making to continue operating in the event Congress doesn't pass the war-spending bill.

He answered by saying that officials within the department were working now to figure out who the "essential" employees are who would have to work even if the department shutdown:

...And so we are, as you know, I think, taking some prudent planning measures just in case that money doesn't come through. Deputy Secretary Gordon England sent a memo throughout the department earlier this week asking for all the departments to begin planning for a possible shutdown, and all the departments are due to report back to him by June 30th with a plan as to what they would do to shut things down. And he's additionally, I think, asked that we figure out who sort of the essential civilian personnel is that would have to remain working even without pay in the event of a shutdown.

Morrell's use of the word "essential" would likely send shivers through some at the Pentagon and cause painful flashbacks for federal employees who lived through the government shutdowns of 1995 and 1996.

That's because all federal workers like to be regarded as essential. Otherwise, maybe federal managers will get it in their heads to start downsizing their agencies.

by Matthew Hay Brown

The Democratic House leadership is preparing to stick the articles of impeachment raised by Rep. Dennis Kucinich Monday night against President Bush on the same shelf that they stuck a similar effort the Ohio Democrat filed last year against Vice President Dick Cheney.

House Majority Leader Steny Hoyer told reporters today that the 35-count indictment of Bush, which took Kucinich more than four hours to read on the House floor, would be forwarded to the House Judiciary Committee. The Democratic leadership has opposed impeachment as an unhelpful distraction; the Judiciary Committee is unlikely to pursue further action.

Kucinich, using arguments similar to those he employed last year against Cheney, says Bush misled Congress and the American people into war with tales of weapons of mass destruction in Iraq.

House leaders were caught off-guard last year when Republicans voted to take up the Cheney impeachment in order to force a debate that could have proved awkward for Democrats. They avoided that debate by sending it to the Judiciary Committee.

Hoyer said today that Kucinich had "an absolute right" to raise the issue. But he questioned whether it made sense to spend time on it during what he called "the waning months" of the Bush administration.

Hoyer said the administration has one of the worst records of any administration in his lifetime, or maybe ever. He said Congress has conducted wide-ranging oversight since Democrats took over last year.

by Bay Fang

Secretary of State Condoleezza Rice opened the 26th annual Susan G. Komen Race for the Cure this mornng with a sly joke that must have had gossip columnists momentarily salivating.

"There is a very important man in my life," she said, standing on a stage near the National Mall above a throng of tens of thousands of people wearing pink. "He is my personal trainer, Tom."

With that, she introduced Thomas Tomlo, who also acts as a fitness advisor to the Race for the Cure, who led participants in a warm-up stretch.

The cause, however, is no joke for Rice or the millions of others who run, walk or sleep in every year to raise money for breast cancer research and public health programs. Rice's mother, Angelena, was diagnosed with breast cancer in 1969, and died in 1985.

Rice, who travels next week to Paris and the Middle East, shared the stage with Ambassador Nancy Brinker, a breast cancer survivor and founder of the Race for the Cure, Sex and the City star Cynthia Nixon, and DC mayor Adrian Fenty. The event in DC, which has one of the highest breast cancer mortality rates in the US, drew nearly 50,000 people.

by Frank James

One of the most interesting stories today is the Washington Post piece on a new book which states that Benazir Bhutto, the former Pakistani premier who was assassinated last year, provided nuclear secrets back in the 1990s to North Korea in exchange for missile technology.

The book, "Goodbye, Shahzadi," which was published recently in India by author Shyam Bhatia who knew Bhutto well, states that she smuggled sensitive information on nuclear technology into North Korea in 1993 during a state visit to North Korea.

Here's a snippet of the Post story:

At the time, Pakistan was in desperate need of new missile technology that would counter improvements in India's missiles. Bhutto said she was asked to carry "critical nuclear data" to hand over in Pyongyang as part of a barter deal.

Highly enriched uranium, a fuel for nuclear weapons, is produced by cascades of centrifuges that spin hot uranium gas. Albright, who has read Bhatia's account, said the CDs probably contained blueprints of the more than 100 centrifuge components as well as general assembly drawings. "It is tricky to assemble a centrifuge," he said.

This is a fairly stunning revelation especially since it implicates Bhutto, of all people, with nuclear proliferation. It was Bhutto who the Bush Administration had hoped would regain power in Pakistan to transition the government away from President Pervez Musharraf, the nation's former top Army general who has essentially kept the nation under strongman rule.

by Mark Silva

President Bush knew that Scott McClellan's book was coming, the White House says, but he was "surprised'' by the tenor of the tome that his former longtime aide has written about "the culture of deception'' in the Bush White House.

"He is puzzled, and he doesn't recognize this as the Scott McClellan that he hired and confided in and worked with for so many years,'' said Dana Perino, the sitting White House press secretary. Bush, she said, was "disappointed that if he had these concerns and these thoughts he never came to him or anyone else on the staff that we know of.''

In voicing the suggestion that this is not the same Scott McClellan "we knew,'' the president himself, through his spokeswoman, has heeded to the script that several past and present Bush aides are following, Perino and former counselor Dan Bartlett among them. Bush will not be commenting personally, Perino said, but she had a lot to say about the book and her predecessor two press secretaries back. He hired her.

"I think it's just a sad situation,'' Perino said, aboard Air Force One en route to Salt Lake City this afternoon.

"We didn't really know what was in the book until yesterday -- well, I shouldn't say that, there are some people in the White House who get -- they get on any book chances to review, like from the legal perspective, but it was not widely distributed at all,'' she said.

Will the White House offer a line-by-line rebuttal?

"I don't think it's necessary to do that for this situation,'' she said. "You know, you can go through that, look at it yourself. I don't think it's the White House's responsibility to do a fact check of someone's memoirs, where they're rewriting what we all thought was a very different history with him at the White House.''

But, yes, the president was surprised: "I think you can fairly characterize it is as surprised, as well as he thinks it's a sad situation and was disappointed.''

Asked how McClellan's contentions might affect the public's already declining confidence in the war in Iraq, Perino said: "Look, setting aside his comments about what he now thinks about the war in Iraq, people can argue back and forth as much as they want about the ultimate decision to go to war.

"I think that the quest