The Swamp

'Don't ask, don't tell:' Congress asks

2008-07-24T10:15:00Z

By Amanda Erickson

A House subcommittee Wednesday began examining whether gay men and women should be allowed to serve openly in the armed forces for the first time in15 years.

Congress had not reconsidered the controversial 'Don't Ask, Don't Tell' policy since it was approved by former President Bill Clinton in 1993. Currently, recruitment officials are not allowed to ask enlistees about their sexual orientation and service personnel may not engage in homosexual conduct or aggressively display homosexuality.

At the 2½-hour hearing, lawmakers focused on two key questions: What effect a change in the policy would have on troop unity and whether the current policy is hurting recruitment and retention of service members who are gay.

Occasionally, the debate got heated, such as when Elaine Donnelly of the Center for Military Readiness, which opposes gays in the military, suggested that allowing gays to openly serve in the military would increase the number of HIV-positive cases among service members. Rep. Vic Snyder (D-Ark.) called that contention "inappropriate" and said under that logic "you ought to recruit only lesbians to the military because they have the lowest incidence of HIV."

But the hearing mostly drew on the personal experience of openly gay former service members, retired sergeants and the head of a group that opposes allowing gays and lesbians to serve.

Capt. Joan Darrah, who served in the Navy for 30 years and won several commendations, spoke of the stress the policy caused her. Darrah had been at a meeting in the Pentagon just minutes before it was attacked on Sept. 11, 2001. Seven of her colleagues were killed.

"The reality is that if I had been killed, my partner then of 11 years, would have been the last to know," she said. "I had not dared to list her in any of my paperwork."

]]> She subsequently decided to retire a year early and said that she now discourages gay men and women from enlisting.

Donnelly contended that the "forced cohabitation" of straight and gay personnel would make military personnel uncomfortable and increase the incidence of sexual assaults.

"Do we want to have a sexualized atmosphere?" she asked.

She called the current policy an attempt by the "San Francisco left" to push its agenda through Congress.

Many Democratic leaders were particularly critical of Donnelly's testimony, asking her if she would have opposed the integration of black and white troops in the 1940s and arguing that her comments on sexual assaults were beside the point.

"We're talking about orientation, not misconduct," said Rep. Patrick Murphy (D-Pa.), who has served in the armed forces.

Army Sgt. Maj. Brian Jones, who opposes opening the military to openly gay men and women, said that he saw the proposal as a threat to military unity.

When he served in Somalia in 1993, he said he spent several months sleeping and showering in close quarters with almost 300 other men.

"Introduction of homosexual men under these conditions would create unnecessary tension and a potential for disruption that would be disastrous," he said.

But later in the hearing, Darrah disagreed, saying it was leaders' jobs to bring people of different genders, races, ethnicities and religions together.

"I pride myself in taking a diverse group of people and figuring out how to work together to accomplish a mission," she said.

Democratic presidential contender Barack Obama supports repeal of the current policy, while John McCain, the presumptive Republican nominee, supports retention of it.

Swamp Sunrise

2008-07-24T10:00:08Z

Good morning.

Here are a few Washington events of note for Thursday, July 24.

NASA is announcing the first results from a fleet of five satellites that have discovered what powers sudden brightening and rapid movements of the Northern Lights, or aurora borealis.

The Senate Judiciary Committee is holding a hearing on crimes associated with polygamy.

The Senate Finance Committee is holding a hearing on its investigation into a single building in the Cayman Islands that is listed as the address of thousands of companies, with a look into implications for U.S. tax compliance.

Obama visits wailing wall

2008-07-24T09:45:48Z

by Mike Dorning

JERUSALEM--Barack Obama made a brief visit this morning before leaving Israel to the Wailing Wall, one of the best-known holy sites in Jerusalem, a section of the western supporting wall of the ancient Temple Mount, per a pool report by Jeff Zeleny of the New York Times.

Appearing unannounced shortly before dawn, Obama, who wore a white skullcap, was surrounded by dozens of onlookers as he made his way down a walkway toward the wall escorted by the Rabbi of the Wall, Shmuel Rabinovich. The rabbi quietly read Psalm 122 as both he and Obama flipped through a holy book on a wooden stand by the wall.

After the prayer, Obama walked a final few steps to the wall and followed the custom of placing a personal note between the stone cracks containing a prayer or wish. Then he put his hand on the wall, bowed his head and stood quietly for a few moments. When asked later what he wrote on his note, he declined to say.

While at the wall, he was heckled by a lone man about 10 yards away who shouted, "Obama, Jerusalem is not for sale!" but several other men tried to drown out the heckler with cries of "Obama, Obama, Obama."

As Obama left, a small group of onlookers cheered and reach out to grab his hand. Within about 10 minutes of arriving, Obama was back in his motorcade headed for the airport in Tel Aviv.

Dems: beware 'irrational exuberance'

2008-07-24T00:04:06Z

by Matthew Hay Brown

With little more than a hundred days before the elections, the chairmen of the House and Senate Democrats' campaign operations both say they will expand their majorities come November. But as they try to reach deeper into Republican strongholds, they said today, they were taking nothing for granted.

"At this point, it's important that people understand - because there is a lot of sense out there that this is going to be another big wave election - that we are going into some really very tough territory here," said Rep. Chris Van Hollen, chairman of the Democratic Congressional Campaign Committee. "And so we do need to be aware of irrational exuberance when it comes to some of the numbers I've heard on the House races."

On the Senate side, Democratic Senatorial Campaign Committee Chairman Charles E. Schumer said his candidates were competing on "the reddest map in a very long time."

"The majority of states, when you hold it up, are either in the Deep South, the Great Plains or the Mountain West," he said. "Not traditionally positive areas for Democrats."

Still, Schumer sees reasons to be hopeful, even in the most conservative corners of the nation. In Mississippi, where the retirement of former Sen. Trent Lott means both seats are up for election, polls show voters favoring a generic Republican against a generic Democrat.

But Schumer said Democratic polls show that when voters are asked to choose between a candidate who will promote more affordable health care, better schools and a more balanced energy policy versus one who will ensure that the U.S. military remains the strongest in the world and that traditional values prevail in Washington, the values associated with Democrats are leading by eight to 12 percentage points.

]]> Both chairman predicted gains. Van Hollen said it was too early to talk numbers, but said as many as 75 seats were in play, including 25 now held by Democrats and 50 held by Republicans.

Schumer said he expected Democrats to take Republican seats in Alaska, Colorado, New Hampshire, New Mexico and Virginia. He said the races for Republican seats in Kentucky, Maine, Minnesota, Mississippi, North Carolina and Oregon could go either way, and those for Republican seats in Georgia, Kansas, Nebraska, Oklahoma and Texas could become competitive.

One Democratic advantage, he says, is the party's presidential nominee. Schumer supported fellow New York Sen. Hillary Clinton in the primary campaign, but says Barack Obama runs well in the states up for grabs.

"Take the Deep South - Mississippi, North Carolina, Georgia," he said. "He runs well in the states like Minnesota, Oregon, Alaska, Colorado. ... He pulls better than the traditional Democrat."

A spokesman for the National Republican Congressional Committee questioned the Democratic message.

"It is laughable to listen to Chris Van Hollen and Chuck Schumer attempt to lower expectations in one breath while setting expections in the stratosphere in another," spokesman Ken Spain said. "As long as Democrats continue to defy 60 percent of the American people who want to drill for more oil to lower the cost of gasoline and send their vulnerable members home in August without passing an energy bill, they won't come anywhere close to winning in the 75 seats they have been ranting about."

Democrats continue to enjoy a wide advantage in fundraising. In the House, the DCCC finished June with $54.7 million on hand, to the NRCC's $8.5 million. In the Senate, the DSCC led with $46.2 million to the NRSC's $24.6 million.

But Van Hollen warned that those numbers tell only part of the story. The Republican National Committee finished June with $68.7 million to the Democratic National Committee's $4.5 million, and independent groups such as the Republican-supporting Freedom's Watch help the GOP effort.

"It's pretty clear that the NRCC has now contracted out its operation to other entities," Van Hollen said. He described Freedom's Watch as "really is the NRCC substitute this time around. And they of course benefit from the fact that there are no limitations at all on their ability to fundraise."

Accordingly, he said he was warning Democratic candidates to look beyond the DCCC's cash advantage.

McCain 'amused' by Obama's coverage

2008-07-23T23:45:00Z

by Mark Silva

Sen. John McCain, admitting to some amusement over the coverage that his Democratic rival, Sen. Barack Obama, is getting with a foreign diplomacy tour this week, also suggests tonight that there is no point in complaining about it.

And McCain, the senior senator from Arizona and Republican candidate for president, tells FOX News Channel's Hannity and Colmes tonight that he is looking for something quite specific in a running mate: Someone who thinks like he does.

McCain spoke with FOX's Sean Hannity about all of this, for a program that will air this evening at 9 pm EDT.

With reports swirling that McCain is near picking a running mate, the party's presumptive nominee is asked what is important to him: "Someone who shares your priorities,'' he replies. "Your principles, your values and I've got to also say priorities.''

And McCain, who at 71 now and 72 in November could become the oldest man ever elected to a first term as president, says this as well about his designs for a running mate: "Someone who can take your place immediately. That's maybe the advice almost even more important in my case."

Of all the attention that Obama is drawing: "All I can do is be amused. It is what it is, Sean. You know very well that if anybody complains then, you know, that's just non-productive... I'm the underdog,'' McCain maintains in the interview. "I've got a lot work to do but I'm proud of our campaign and I'm convinced that we can get directly to the American people."

And this, on Obama opposing the "surge'' of U.S. forces in Iraq: "No rational person who was in Iraq two years ago and saw the situation -- and that it was dire then -- we were on the verge of losing a war, and seeing it now -- no rational person cannot say that the surge has succeeded... It's clear to me that there must be political calculations in his judgment because no rational observer could conclude anything else."

With thanks to FOX News Channel for a preview of the program.

Obama claims he's on banking committee

2008-07-23T22:00:19Z

by Katie Fretland

Barack Obama today boasted about a bill in "my committee,'' a committee on which he has no seat.

While speaking to the press in the Israeli town of Sderot, Obama mistakenly put the U.S. Senate banking committee on his resume, although the Illinois senator does not serve on the committee and Sen. Chris Dodd (D-Conn.) is the chairman.

The Republican National Committee distributed an e-mail pointing out Obama's mistake with a subject line of "Obama's Gaffe Machine Rolls Into Israel."

During the press conference, Obama said, "Just this past -- this past week, we passed out of the U.S. Senate Banking Committee, which is my committee, a bill to call for divestment from Iran as a way of ratcheting up the pressure to ensure that they don't obtain a nuclear weapon."

Obama spokesman Ben LaBolt said Obama was referring to an Iran divestment bill he introduced in 2007 with U.S. Reps. Barney Frank (D-Mass.) and Tom Lantos (D-Calif.). Last week, the Senate Committee on Banking, Housing, and Urban Affairs passed the the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2008, which included provisions Obama offered in his 2007 legislation.

"The Obama provisions clarify that state and local governments can divest from companies that invest $20 million or more in Iran's energy sector and provide safe harbor for private fund managers who divest from such companies," according to a July 17 statement from Obama's Senate office.

In a separate statement July 17, Dodd thanked Obama for his work on the 2007 legislation.

"[Obama] meant to say 'my bill,'" LaBolt said.

The McCain campaign asserted that Obama had nothing to do with the passage of the bill.

"Not only is it not his committee, but he's not even on the committee, he didn't vote on the bill, and he had nothing to do with it's passage," the McCain campaign said in a statement. "Neither has Barack busied himself with work on the committees to which he does belong, such as the Subcommittee on European Affairs, which he chairs and has only convened once.

"Barack Obama has been largely absent from the Senate since his arrival, spending most of his time running for president," the statement continued. "Of course, the same might be said of John McCain, but neither is John McCain a first term senator running on his imaginary record on the Banking Committee."

Continue reading for a portion of the transcript of the press conference:

]]> Q: Senator Obama, you said in the AIPAC convention that a(n) undivided Jerusalem (would continue) to be the capital city of Israel, and then you changed it and clarified later on -- (off mike). How can we (assure) your other statements -- (off mike) -- and you're not going to change (these) when you're president of the United States?

SEN. OBAMA: First of all, I didn't change my statement. I continue to say that Jerusalem will be the capital of Israel. And I have said that before and I will say it again. And I also have said that it is important that we don't simply slice the city in half, but I've also said that that's a final status issue. That's an issue that has to be dealt with with the parties involved, the Palestinians and the Israelis, and it's not the job of the United States to dictate the form in which that will take, but rather to support the efforts that are being made right now to resolve these very difficult issues that have a long history.
Now, in terms of knowing my commitments, you don't have to just look at my words. You can look at my deeds. Just this past -- this past week, we passed out of the U.S. Senate Banking Committee, which is my committee, a bill to call for divestment from Iran as a way of ratcheting up the pressure to ensure that they don't obtain a nuclear weapon. When Israel invaded Lebanon in response to the kidnapping of Israel's soldiers, I was one of the first people to state that Israel had a(n) unequivocal right to defend itself and to rescue soldiers that have been captured, and that is what any country would do.

House passes housing crisis bill

2008-07-23T19:50:42Z

by Jesse A. Hamilton and updated

The U.S. House of Representatives has overwhelmingly passed the long-awaited housing rescue bill -- sending it now for a last Senate approval before President Bush can sign it into law.

The vote, at about 5 p.m., went 272-152.

It will now be the Senate's turn and, except for some expected resistance that could delay the bill for a short time, the chamber will likely pass the measure with a similar high ratio. And though President Bush had long threatened to veto it, a recently added provision to help out mortgage firms Fannie Mae and Freddie Mac has convinced the White House to promise a presidential signature.

The bill will do a number of things, but the section that homeowners in crisis are most concerned with is the one that Sen. Chris Dodd helped author: the foreclosure prevention program. It will allow people with subprime mortgages they can no longer afford to enter into voluntary deals with their lenders, refinancing the loans for less than the current market value of the homes at a 30-year fixed rate. (The Federal Housing Administration will guarantee $300 billion in such loans, and the defaults will be paid out of Fannie and Freddie revenues.)

The program will need to be established, so it likely wouldn't start for a few months.

Read more about the housing legislation at On Background, the Hartford Courant's political blog.

Obama visits Israel, Palestine

2008-07-23T18:45:33Z

by Mike Dorning

SDEROT, Israel--Democratic presidential candidate Barack Obama came Wednesday to an Israeli town that has been rocketed repeatedly by Palestinian militants to assure Israelis--and, crucially, Jewish voters in the United States--of his commitment to protect Israel's security.

"I'm here to say as an American and as a friend of Israel that we stand with the people of Sderot," Obama said. "America must always stand up for Israel's right to defend itself."

Obama spoke in front of shelves stacked with twisted, rusted rocket casings and mortar shells outside a police station that had been attacked by a rocket within the past two weeks.

Sderot is just 4 miles from the Gaza Strip, a Palestinian area controlled by the extremist group Hamas. The town has been hit by 1,900 rockets and mortars, according to the Israel Project, though the attacks recently halted.

With many Israelis expressing concerns about Obama's professed willingness to hold talks with Iranian leaders, he also pledged his determination to prevent Iran from obtaining nuclear weapons. A nuclear-armed Iran is widely feared here as a dire potential threat.

"Iranians need to understand that whether it's the Bush administration or the Obama administration this is a paramount concern of the United States."

He said he would offer "a series of big sticks and big carrots to the Iranian regime to stand down on nuclear weapons."

Obama was accompanied at the news conference by Israeli Foreign Minister Tzipi Livni and Defense Minister Ehud Barak.

While Obama spent much of the day in a series of meetings with high-level Israeli officials, he also traveled to the West Bank to meet with officials of the Palestinian Authority there. He is the first major presidential candidate to do so. Republican rival John McCain visited Israel in March but did not meet Palestinian officials.

]]> As Obama entered the Palestinian presidential compound in Ramallah, dozens of Palestinian security forces wearing camouflage, helmets, flak jackets and armed with rifles lined the road. In an unusual stance, they faced away from the road--apparently a security measure to prevent an attack by a rogue guard.

Obama met with Palestinian President Mahmoud Abbas and Prime Minister Sala Fayyad for an hour. He waved but made no comments as he walked to his motorcade afterward.

Earlier in the day, Obama laid a wreath at Yad Vashem, the Israeli Holocaust memorial and began a series of meetings with Israeli officials.

Israeli President Simon Peres greeted Obama at the presidential residence by telling him of his "high regard" for Obama and his belief that "the future belongs to the young."

Obama's overseas trip, which has included visits to Afghanistan, Iraq, Kuwait, and Jordan and is now in its sixth day, is clearly beginning to wear on him. He appeared fatigued at his news conference. And when Likud party Chairman Benjamin Netanyahu asked him how he was feeling at the start of a morning meeting, Obama responded, "I could fall asleep standing up."

Obama is scheduled to have dinner Wednesday evening with Israeli Prime Minister Ehud Olmert. On Thursday, he flies to Berlin, where he is scheduled to give a speech on trans-Atlantic relations at an outdoor rally. He meets with officials in France and Britain later in the week.

Dems take preemptive whack at Romney

2008-07-23T17:55:35Z

by Jill Zuckman

He hasn't even been picked yet.

But with former Massachusetts Gov. Mitt Romney touted repeatedly by prognosticators as a likely vice presidential pick for Sen. John McCain, the Michigan Democratic Party is putting its two cents in.

"We've noticed 'Mitt' and 'Michigan' showing up in the same sentence a lot lately, so we thought it was time to take a hard look at Romney's record on the issue that matters most to Michigan voters--jobs," said Democratic Party Chair Mark Brewer, touting a new web ad. "And any way you look at it Romney earns a failing grade. Conventional wisdom in Washington might be that Romney's business experience means he's good on the economy, but even the slightest glance at his record indicates otherwise."

Romney, who was born in Michigan and is the son of a famed former Michigan governor, is often described as having just the right sort of business experience that could be helpful to McCain during these tough economic times.

But the Michigan Democratic Party helpfully reminds that as a venture capitalist for Bain Capital, some of his investments resulted in plants and factories being shut down and workers losing their jobs.

"John McCain might trust him with the economy, but you can't afford to," the state party's video concludes ominously.

Scott Romney, the Michigan co-chair for McCain, begs to differ about his brother's record, and notes that Michigan is suffering economically under Democratic leadership.

"This is full of distortions and untruths from the Democrats who are desperate to distract people from Barack Obama's plan to raise taxes. Gov. Romney helped create thousands of jobs in the private sector," Scott Romney said. "When Gov Romney took office, Massachusetts was in a recession and losing thousands of jobs every month. When he left office four years later, the state's economy was adding thousands of jobs every month.

"Unfortunately, under Democratic leadership, Michigan continues to experience soaring unemployment, higher taxes and loss of jobs," he continued. "This is the kind of record that Barack Obama has aligned himself with in Michigan. Mitt will continue to actively engage all Michiganders in support of Senator John McCain's strong economic policies to help Michigan grow their economies and add much needed jobs."

McCain's press corps: 'Junior varsity'

2008-07-23T17:35:00Z

by Mark Silva

Oh boy.

The media circus surrounding Sen. Barack Obama's Euro-Middle-East-War-Front Summer Tour has hardly gone unnoticed at camp McCain, which issued some new credentials, all in fun, of course, for its own, more limited traveling press retinue.

As our friends at the Boston Globe tell it, the tags read: "JV Squad. Left Behind to Report in America," on one side, with a red-white-and-blue, fireworks-exploding image of the Statue of Liberty.

The flip side: A French beret-wearing man pouring wine, with the Eiffel Tower in the background. And, as our friends at the L.A. Times' Top of the Ticket note, the McCain campaign speaks some French as well: "Le groupe de presse de McCain, L'equipe junior,'' le tag reads. "Laisse en arriere pour faire un rapport en Amerique."

That's wine. Not whine.

The campaign of Sen. John McCain has accused the media of a love-affair with Obama's candidacy (The Project for Excellence in Journalism reports that the media has covered Obama more than McCain for the sixth straight week). So when Obama delivers a speech in Berlin on Thursday, the Republican National Committee plans to air a radio ad challenging Obama's record on supporting the troops in three other Berlins back home -- in New Hampshire, Pennsylvania, and Wisconsin.

Bush: Wall Street's 'hangover'

2008-07-23T17:10:00Z

by Mark Silva

President Bush was asking for a shutdown of video cameras at a party fundraiser in Houston.

Judging by a tape obtained by KTRK, the ABC affiliate, we now know why. See NBC's report:

"There's no question about it, Wall Street got drunk,'' Bush told his audience last week, adding with a smile: "That's one reason I asked you to turn off your TV cameras.

"It got drunk and now it's got a hangover,'' the president said of the economic turmoil the nation is facing at the moment. "The question is, how long will it sober up...

"And then we've got a housing issue -- not in Houston,'' he said, adding of his own eventual retirement homestead and a house-shopping first lady: "Evidently not in Dallas, because Laura's over there trying to buy a house.

"I like Crawford,'' Bush said of his Texas ranch. "Unfortunately, after eight years of asking her to sacrifice, I am no longer the decision-maker. She'll be deciding.''

Columnist Novak hits pedestrian

2008-07-23T17:00:00Z

by Frank James

Politico is reporting that syndicated conservative columnist Robert Novak hit a pedestrian this morning during rush hour, then drove off in his black Corvette.

Fortunately, the pedestrian appears to have sustained only minor injuries and was released from the hospital, according to the report which also says Novak was cited by the police.

Novak was chased down by a bicyclist who happened to be partner in a law firm who was pedaling to work when he saw the accident.

Novak told journalists who arrived on the scene that he didn't know he had hit the pedestrian.

"I didn't know I hit him," Novak told reporters from Politico and WJLA on the scene. "He's not dead, that's the main thing." Novak said he was a block away from 18th and K St. NW, where the accident happened, when a bicyclist stopped him and said, "You hit someone." He said he was cited for failing to yield the right of way. (WJLA has video of Novak being interviewed its website. We can't display it in this posting because, alas, we don't have legal rights to it.)

Okay, maybe he didn't see him before he hit him. But there's reason to believe he had a great view of the pedestrian afterwards.

The bicyclist was David Bono, a partner at Harkins Cunningham, who was on his usual bike commute to work at 1700 K St. NW when he saw the accident happen.

As he traveled east on K. Street, crossing 18th, Bono said a "black Corvette convertible with top closed plowed into the guy. The guy is sort of splayed onto the windshield."

]]> It's not been the best of weeks for Novak. Yesterday, it appeared the pundit was used by Sen. John McCain's presidential campaign to disemminate some disinformation that the all-but-official Republican nominee might choose his vice presidential running mate this week.

Then he's involved in a hit-and-run car accident.

And it's only Wednesday.

John McCain fundraising secrets revealed!

2008-07-23T16:34:18Z

by David Nitkin

John McCain's campaign kept its lips tight about the amount raised at a fundraiser in Baltimore last night. But the father of Maryland's former governor spilled some beans.

The reception held at the Center Club, a wood-paneled business club in an office tower overlooking the Inner Harbor, was hosted by former Gov. Robert L. Ehrlich Jr. The invitation to the event said ticket prices were $2,300 for a VIP photo op and $1,000 for general admission.

The invitation told only part of the story, however. As the event was underway, Ehrlich's loquacious father, affectionately known as "Senior" to Maryland politicos, strolled by the reporters traveling with the McCain campaign and characteristically dropped a bit of news.

There was a fancy dinner at the Center Club for 12 couples costing $70,000 apiece, Senior told the reporters. There was a similar breakfast in another state.

"According to Ehrlich Sr., one of the attendees at this evening's dinner was Art Modell," wrote Adam Aigner-Treworgy of NBC News and National Journal in his pool report on the event. Modell is the former football team owner best known for moving the Cleveland Browns to Baltimore and making them the Ravens. "It is unclear when the breakfast was or if it took place at all," Aigner-Treworgy wrote. "But the rumor mill has begun."

Reached by telephone on Wednesday, Modell confirmed that he attended a private dinner and paid $70,000. He left, he said, "more impressed with McCain than I ever have been."

"He came across last night entirely different than he does on television," Modell said. McCain sat at the head of a large table, Modell said, and participated in a "general discussion on many issues."

]]> Asked who else was at the table, Modell did a better job than Senior in keeping a secret: "If I knew, I wouldn't tell you," he said.

Richard E. Hug, the former governor's longtime finance chief, confirmed that nearly a dozen couples paid the $70,000 contribution for the private dinner, accounting for a "a very large portion of the money" raised last night.

Ehrlich announced as he introduced McCain during the open portion that the event raised $1 million. It's now clear most of the money will go to the Republican National Committee.

According to the fine print on the invitation, for donations of up to $37,000 per person, the first $2,300 goes to the John McCain 2008 and the next $2,300 goes to the John McCain 2008 General Election Compliance Fund. "The next $28,500 (goes) to the RNC," the invitation says, "and the balance of up to $20,000 will be divided evenly between the Colorado, Minnesota, New Mexico and Wisconsin state parties' federal accounts.

Hug, too, was keeping quiet on other dinner attendees. "We told the private donors there would be no publicity," he said. But, he added, "the majority of fundraising came from the private dinner."

Maybe Ron Paul should use his blimp?

2008-07-23T15:09:00Z

by Frank James

Is this more proof that God has a strong sense of humor when it comes to Congress?

NEW ORLEANS (AP) _ A Continental Airlines flight carrying former presidential candidate Ron Paul and six other members of Congress to Washington, D.C., made an emergency landing in New Orleans on Tuesday after a loss in cabin pressure.

The seven congressmen, all from Texas, were trying to get back in time for a Tuesday night vote on an aviation safety bill when the flight landed without incident, a spokesman for one of the representatives said. No injuries were reported among the 128 crew and passengers.

All's well that ends well. Suffice it to say, this is a problem the Ron Paul blimp would've never experienced.

Fannie and Freddie, hardball experts

2008-07-23T14:45:00Z

by Frank James

If you want to read a disturbing tale of how Fannie Mae and Freddie Mac used their clout in Washington to try to brush back their critics like pitchers throwing at the heads of batters, check out Paul Gigot's piece in The Wall Street Journal today.

Gigot, editorial page editor of the Journal, recounts how he and the WSJ's editorial page found themselves on the receiving end of Fannie and Freddie's ire after they wrote some critical pieces about Fannie before that company's questionable accounting practices became widely known in 2003.

My battles with Fan and Fred began with no great expectations. In late 2001, I got a tip that Fannie's derivatives accounting might be suspect. I asked Susan Lee to investigate, and the editorial she wrote in February 2002, "Fannie Mae Enron?", sent Fannie's shares down nearly 4% in a day. In retrospect, my only regret is the question mark.

Mr. (Franklin) Raines (then Fannie Mae chief executive) reacted with immediate fury, denouncing us in a letter to the editor as "glib, disingenuous, contorted, even irresponsible," and that was the subtle part. He turned up on CNBC to say, in essence, that we had made it all up because we didn't want poor people to own houses, while Freddie issued its own denunciation.

The companies also mobilized their Wall Street allies, who benefited both from promoting their shares and from selling their mortgage-backed securities, or MBSs. The latter is a beautiful racket, thanks to the previously implicit and now explicit government guarantee that the companies are too big to fail. The Street can hawk Fan and Fred MBSs as nearly as safe as Treasurys but with a higher yield. They make a bundle in fees.

At the time, Wall Street's Fannie apologists outdid themselves with their counterattack. One of the most slavish was Jonathan Gray, of Sanford C. Bernstein, who wrote to clients that the editorial was "unfounded and unsubstantiated" and "discredits the paper." My favorite point in his Feb. 20, 2002, Bernstein Research Call was this rebuttal to our point that "Taxpayers Are on The Hook: This is incorrect. The agencies' debt is not guaranteed by the U.S. Treasury or any agency of the Federal Government." Oops.

]]> Mr. Gray's memo made its way to Wall Street Journal management via Michael Ellmann, a research analyst who had covered Dow Jones and was then at Grantham, Mayo, Van Otterloo & Co. "I think Gray is far more accurate than your editorial writer. Your subscribers deserve better," he wrote to one senior executive.

I also received several interventions from friends and even Dow Jones colleagues on behalf of the companies. But I was especially startled one day to find in my mail a personal letter from George Gould, an acquaintance about whom I'd written a favorable column when he was Treasury undersecretary for finance in 1988.

Mr. Gould's letter assailed our editorials and me in nasty personal terms, and I quickly discovered the root of his vitriol: Though his letter didn't say so, he had become a director of Freddie Mac. He was still on the board when Freddie's accounting lapses finally exploded into a scandal some months later.

Gigot continues to describe how attempts were made to neutralize not just Fannie and Freddie journalistic critics but congressional ones as well.

Such a debacle after so much denial would have sunk any normal financial company, but once again Fan and Fred could fall back on their political protection. In the wake of Freddie's implosion, Republican Rep. Cliff Stearns of Florida held one hearing on its accounting practices and scheduled more in early 2004.

He was soon told that not only could he hold no more hearings, but House Speaker Dennis Hastert was stripping his subcommittee of jurisdiction over Fan and Fred's accounting and giving it to Mike Oxley's Financial Services Committee. "It was because of all their lobbying work," explains Mr. Stearns today, in epic understatement. Mr. Oxley proceeded to let Barney Frank (D., Mass.), then in the minority, roll all over him and protect the companies from stronger regulatory oversight. Mr. Oxley, who has since retired, was the featured guest at no fewer than 19 Fannie-sponsored fund-raisers.

Gigot's column highlights that Fannie and Freddie tend to get what they want because of their sheer size, their importance in the U.S. economy due to their role in buying mortgages and their muscular lobbying efforts.

And it appears that their ability to get what they want shows no signs of waning. Congress is close to voting on housing legislation that incorporates the Bush Administration's proposals to prop up Fannie and Freddie financially by providing lines of credit and potentially buying up their securities. The legislation includes more federal oversight for the two government-sponsored enterprises but some experts question whether the new regulatory attention goes far enough.

If history is a guide, Fannie and Freddie will be able to use their connections on Capitol Hill, cultivated with generous campaign contributions, to shape how the new oversight eventually functions.