California Dems target 8 GOP districts--By Carla Marinucci, Chronicle Political Writer

California GOP voter registration is "dropping like a rock," a new study shows, declining so fast that Democratic Party officials see an unprecedented opportunity to gain voters and House seats in the 2010 election.

The Democratic Congressional Campaign Committee has targeted 35 districts across the country represented by Republicans in the U.S. House of Representatives - including eight in California - that were won by Barack Obama in the 2008 presidential election, said Jennifer Crider, the committee spokeswoman.

The Democrats plan increased appeals to voters in those areas and will make aggressive efforts to recruit Democratic candidates to run against the Republican incumbents, she said.

A new study suggests that Republican numbers in California are falling precipitously, even in the historically strongest bastions of GOP voters.

"The big picture is that, currently, there is not one single state legislative or congressional district that has a majority of the voters registering Republican," says Allan Hoffenblum, who just finished an analysis for the California Target Book, a nonpartisan publication that regularly analyzes state congressional and legislative races.

Hoffenblum says he can't recall another time in state history when the GOP was in such a dire situation: "Republican registration in California is dropping like a rock.

"There's a large slice of voters there being turned off by the Republican Party," said Hoffenblum. "What's really hurting them there is an increase in middle-class Asian and Latino voters - and they're not voting Republican. They're registering decline-to-state."

The vulnerable California districts with Republican representatives that were won by Obama are those of Reps. Dan Lungren of Gold River (Sacramento County), Mary Bono-Mack of Palm Springs, David Dreier of San Dimas (Los Angeles County), Elton Gallegly of Thousand Oaks (Ventura County), Brian Bilbray of Solana Beach (San Diego County), John Campbell of Newport Beach (Orange County), Ken Calvert of Riverside and Howard "Buck" McKeon of Santa Clarita (Los Angeles County), the committee says.

Even Democratic House Speaker Nancy Pelosi seemed surprised this week at the number of Republicans her party's campaign experts are targeting.

"I don't know about eight seats. ... I do know there is a tremendous enthusiasm ... to enjoy the prospects of more Democrats in California," she told The Chronicle. "Some of this is coming from races for the state Legislature. Some of those districts are really becoming more and more Democratic. And so they're saying, 'Well, maybe there's an opportunity to spring from that.' "

But state Republican Party Vice Chairman Tom Del Beccaro - who is considering a run for Democratic Rep. Ellen Tauscher's soon-to-be-vacated Contra Costa seat in the 10th Congressional District - said the GOP will have its own opportunities in the midyear cycle.

"Political trends come and go - and 2010 is not going to be a good year for Democrats," said Del Beccaro, who publishes the PoliticalVanguard.com Web site. "Between the unemployment and the exploding deficits, Republicans will be competitive if we have a strong message on the problems facing America. Big debt and big taxes will not sell."

Hoffenblum said his studies show a more complex problem facing the California GOP, which is confronting a base of voters that is crumbling under its feet.

He said Republicans held majorities in several state legislative districts in 2001 - when districts were redrawn and gerrymandered to protect the territories of both the GOP and Democrats in California.

But his latest Target Book tracked "significant drops in GOP registration," an average of 5 to 7 points even in those strong conservative districts. That's due to a one-two punch - legions of GOP voters who are reregistering as "decline to state" and the growing ranks of younger, ethnic voters, particularly Latinos, who simply are not drawn to the party's message, Hoffenblum said.

The Republican problems are dramatized in areas like Congressional District 3, the Sacramento district Lungren represents, which is considered a stalwart of GOP conservatism.

In 2001, the district's voter registration was 54 percent Republican, 34 percent Democrat, and 13 percent "decline to state," Hoffenblum said.

His latest analysis shows that the same district has lost nearly 30 percent of its GOP base and is now 40 percent Republican, 38 percent Democrat and 18 percent decline-to-state.

There, as in other regions of California, "Republicans can no longer be elected by Republican alone - they need crossovers," Hoffenblum said. "The decline-to-states will be a significant factor in the 2010 election cycle."

The Democratic campaign committee's Crider says: "If you just look at how close a race that Lungren had ... it tells you how far these districts have changed - and the members are not changing with them.

"There's a lot of strong Democrats who have expressed some interest in running," she said. "Right now, in the political calendar, we're in the recruiting phase."

California GOP state Chair Ron Nehring says Democrats won't find their work easy.

He notes that none of the eight districts will have an open seat in 2010, giving all eight GOP incumbents a huge advantage.

And 2010 "is on track to be a 'correction' election where the opposition party picks up seats ... as voters correct for Democrats' overreaching," he said.

Hoffenblum observes that Democrats will have an even tougher job if they fail to offer more centrist candidates to appeal to the all-important decline-to-state middle ground.

But California Republicans, he said, haven't shown they are focused on the job, either.

"They're too busy recalling all those (moderate Republican) legislators to do something about it," Hoffenblum said. "It's a sign of a party in decline - they're eating their own."

Chronicle Washington Bureau political writer Carolyn Lochhead contributed to this report. E-mail Carla Marinucci at cmarinucci@sfchronicle.com.

This article appeared on page A - 1 of the San Francisco Chronicle.

The benefits of failure--By Peter T. Leeson

Why we should let some firms go belly up
Friday, April 3, 2009

In a market economy, business deaths are like death itself - an unfortunate but inevitable fact of life. However, recent government bailouts have tried to stop the inevitable by intervening in the market, at least temporarily saving failed firms from the economic grim reaper. Before putting the next failed business on life support, it's worth remembering why it makes sense to let struggling producers expire.

• --When failing businesses are allowed to fail, resources are released from employments where they don't add value and made available for employments where they do.

Resources used for one purpose can't be used for another. Thus, it's important that they find their way to the purposes we value most. Enter the profit-and-loss system. Under this system, when producers use resources in ways that are consistent with our wants, they earn profits. When they don't, they earn losses. If losses are severe enough or accumulate over time, the producers who earn them go under.

Far from cause for concern, this failure is cause for celebration. When ineffective producers fail, resources committed to producing goods we value less are freed for producing goods we value more. Polaroid's failure released resources for the production of digital cameras; Commodore Computers' failure released resources for the production of IBM computers; and Chi Chi's restaurant's failure released resources for, well, the production of food that tastes good. Who better to sacrifice the resources required to expand production of the things we want than producers of the things we don't?

If government prevents failing producers from going out of business, resources get “stuck” in employments where they're less productive. We can't have as many of the products we care more about because the means needed to make them remain locked in the manufacture of products we care less about. Society suffers as a result.

• --When failing businesses are allowed to fail, producers learn how to combine resources in ways that create wealth.

We take it for granted that producers know what we want. But this information doesn't appear magically. It has to be produced. The profit-and-loss system produces this information - but only when government lets failing businesses fail.

Profits and losses do for producers what traffic signals do for drivers. They tell them when to “go,” “slow down” and “stop” their productive activities. By communicating which resource combinations consumers value most and which they don't, profits and losses direct “economic traffic,” informing producers how to produce.

If government prevents ineffective producers from failing, the red light on the “economic traffic signal” stops working. Production continues and resources flow when they should halt, destroying wealth instead of creating it.

• --When failing businesses are allowed to fail, producers have incentives to combine resources in ways that create wealth.

The profit-and-loss system works because successful producers reap rewards when they combine resources effectively and unsuccessful producers incur costs when they don't. The prospect of profits from making good decisions and losses from making bad ones encourages producers to make choices that improve our lives.

But if government shields ineffective producers from the consequences of their bad decisions, producers' incentives become skewed. For instance, when policy permits producers to enjoy the benefits of successful risk-taking but subsidizes the losses of unsuccessful gambles, producers have an incentive to take on more risk than they should. Since they're no longer responsible to consumers when they make poor choices, the link connecting producers' and consumers' interests is weakened and, with it, the economy's ability to advance.

At a time when failure is the new dirty word and government seems willing to prop up floundering firms at any cost, we would do well to remember the benefits of letting failing businesses go belly up.

Peter T. Leeson is BB&T Professor for the Study of Capitalism at George Mason University and author of the new book, “The Invisible Hook: The Hidden Economics of Pirates.”.

Meek raises $1.5 million for Senate bid

Rep. Kendrick Meek, D-Miami Gardens, announced today that his campaign for U.S. Senate raised nearly $1.5 million during the first quarter of this year.

Two-thirds of the contributions came from Florida donors. After the campaign's web site, www.kendrickmeek.com, went live on Feb. 26, nearly 1,000 donors have contributed on line.

``There is no denying that $1.5 million is a very large annd impressive figure, especially this early in the campaign,'' said Steve Hildebrand, campaign consultant and senior strategist.

Meek, who is serving his fourth term in the U.S. House of Representatives representing Florida's 17th congressional district, which includes parts of Miami-Dade and Broward counties, announced his campaign in January after Sen. Mel Martinez, R-Fla., announced he would not seek re-election.

Meek to hit petition trail

U.S. Rep. Kendrick Meek, D-Miami, plans to try to qualify by petition as a candidate for the U.S. Senate.

To successfully qualify, his campaign must collect 112,476 valid signatures of registered voters and submit THEM to county election supervisors.

Meek announced Thursday he will cross the state for the petition drive from Pensacola to Key West, April 4 to 13, with stops in Orlando, Tampa, Jacksonville, Tallahassee, Panama City, Pensacola, Key West, Miami-Dade, Broward and Palm Beach counties.

``To win in 2010, this campaign will organize the grassroots in 2009 by reaching out to all Floridians from the Panhandle to the Keys,'' Meek was quoted as saying in a press release.

Meek, who is serving his fourth term representing Florida's 17th congressional district, which includes parts of Miami-Dade and Broward counties, is campaigning to replace Sen. Mel Martinez, R-Fla., who is not seeking re-election.

Budget cuts concern contractors--By Jen DiMascio

The pledge by Defense Secretary Robert Gates to close the spigot of military spending that opened after the Sept. 11, 2001, terrorist attacks has drawn defense contractors by the hundreds to Capitol Hill in recent weeks — all of them trying to shore up congressional support for their projects.

Gates has taken great pains to spell out the strategic rationale behind his plans to revamp defense spending, but since the start of the Obama presidency, he’s coupled that with tough talk about the need to slash budgets.

Though the details of the $534 billion defense budget are still unknown, there are numerous signs that Gates could take the ax to a major defense weapons program as early as next week.

That has defense industry officials, whose fortunes will rise or fall on the outcome, madly trying to decode which programs are the most vulnerable and scrambling to defend them.

For starters, they might read a report last week by the Government Accountability Office that reviewed 47 defense programs and concluded that the Pentagon’s top weapons systems are nearly $300 billion over budget, despite Defense Department efforts to scale back.

Pentagon spokesman Geoff Morrell said that focusing on Gates’ overhaul of Defense as an exercise in budget cutting misses his larger goal: changing the Pentagon’s focus from waging conventional wars against traditional foes to fighting more unconventional wars of the sort that the United States is conducting in Iraq and Afghanistan.

As part of that shift, Morrell said, the Pentagon is conducting an extraordinary review of its weapons programs.

“Virtually every program is on the table for harsh scrutiny,” he said. “We have no plans determined yet as to how or when we will communicate his budget recommendations.”

The review has been carried out largely in secret, with officials at the Pentagon and the Office of Management and Budget signing nondisclosure forms barring them from discussing it.

Sen. Carl Levin (D-Mich.), the chairman of the Senate Armed Services Committee, encouraged Gates to release his review soon, telling reporters Tuesday it would pre-empt the leaks that inevitably occur in Washington.

“I think he would like to disclose his recommendations early,” Levin said.

Unveiling his proposed program cuts early also would help give political cover to President Barack Obama and would provide time for debate and changes if strong pushback erupts, the senator said.

Citing past examples, defense industry officials said the secrecy surrounding this year’s budget also could slow down the process. They said that when nondisclosure forms previously were signed, the circle of people involved in budget deliberations shrank to such a degree that it dramatically limited their ability to quickly craft a spending plan the size of the Pentagon’s — $534 billion this year.

And that’s one reason that some officials said they believe the administration will delay the scheduled release of budget details from April 21 until mid-May or later. While new presidents often are late with their budget details (President George W. Bush’s final budget didn’t hit Capitol Hill until the summer), it could complicate matters for congressional defense committees that are tasked with approving spending bills by the start of the next fiscal year in October.

The uncertainty surrounding the defense budget — and the threat that some programs are on the chopping block — has drawn hundreds of lobbyists and defense officials to the Capitol in recent weeks to argue on behalf of their products and services.

Boeing Corp. brought more than 100 employees to Washington last week to devise strategies and talk with key congressmen. A main thrust was appealing to members of the Appropriations Committee for a three-year contract to make F-18 Super Hornet fighter jets for the Navy, which expects a shortfall in its fighter jet fleet in the coming years.

Officials from Northrop Grumman are touting the merits of two missile defense programs — the Kinetic Energy Interceptor and the Space Tracking and Surveillance System — that have been identified as vulnerable to cuts.

Meanwhile, General Dynamics this week promoted progress on its Marine Corps amphibious Expeditionary Fighting Vehicle — a program that has been whipped by the GAO for years because of reliability problems, cost increases and delays.

Last week, senators from South Dakota, Louisiana and Texas changed hats and joined the lobbying brigade, writing a letter to Obama and urging him to keep funding the Pentagon’s classified program to build a next-generation bomber.

On Thursday, the Senate Armed Services Committee will tackle some of the issues raised in the GAO’s recent report on over-budget defense programs when it marks up the Weapons Systems Acquisition Reform Act.

The Aerospace Industries Association and other trade associations that make up the Acquisition Reform Working Group have praised parts of the bill, but the group complained that it doesn’t address some of the most pervasive problems in Pentagon contracting.

“Unfortunately, the act is silent regarding the large disconnect that often exists between cost estimates and budgets,” the working group said in a paper on the bill. “The act as introduced also fails to address defense industrial base concerns, i.e. consideration in the planning stage of not only the government’s interests but also the industry’s interests, both short term and long term, to assure that capabilities are available when needed at reasonable prices.”

Acquisition reform hawk Winslow Wheeler, director of the Straus Military Reform Project at the Center for Defense Information, derided the legislation as the “Let’s pretend we’re going to reform something” bill.

“It’s riddled with loopholes — by that, I mean waivers,” he said, noting that nearly every significant provision in the bill allows the Pentagon to waive the rules for national security reasons.

And the bill contains other exceptions to allow programs to show competitiveness where competition is in fact limited, said Wheeler, a former military adviser to Republican and Democratic lawmakers. “It’s not serious legislation,” he said.

House approves $3.6 trillion budget blueprint--By DAVID ESPO and ANDREW TAYLOR, Associated Press Writers

The Democratic-controlled House approved a budget blueprint drawn to President Barack Obama's specifications Thursday and the Senate hastened to follow suit after administration allies rejected alternatives from liberals and conservatives alike.

The vote in the House was 233-196, largely along party lines, for a $3.6 trillion plan that includes a deficit of $1.2 trillion.

The country wants "real change, and we have come here to make a difference," House Speaker Nancy Pelosi, D-Calif., said as both chambers worked on plans to boost spending on domestic programs, raise taxes on the wealthy in two years' time and clear the way for action later in the year on Obama's priority items of health care, energy and education.

Republicans in both houses accused Democrats of drafting plans that would hurt the recession-ravaged economy in the long run, rather than help it, and saddle future generations with too much debt.

"The administration's budget simply taxes too much, spends too much and borrows too much at a moment when we can least afford it," said the Senate Republican leader, Mitch McConnell of Kentucky.

Despite the rhetoric, there was no suspense as lawmakers engaged in an annual budget ritual destined to end in approval of the blueprints drafted by Obama's supporters and supported by the White House.

In the House, that meant voting first on doomed alternatives drafted by progressives, the Congressional Black Caucus, Republicans and a splinter group of conservatives. In the Senate, it meant a day of sifting through nonbinding proposals often meant to score political points.

The House plan called for spending $3.6 trillion in the budget year that begins Oct. 1, according to the Congressional Budget Office, compared with $3.5 trillion for the Senate version and $3.6 trillion for Obama's original plan.

The House plan envisioned a deficit of $1.2 trillion for 2010, falling to a projected $598 billion after five years. The comparable Senate estimates were $1.2 trillion in 2010 and $508 billion in 2014.

Obama's budget would leave a deficit of $749 billion in five years' time, according to congressional estimates — too high for his Democratic allies.

To reduce the red ink, Democrats reduced Obama's proposed spending, ignored his call for another $250 billion in bailout money for the financial industry and assumed that his signature tax cuts of $400 for individuals and $800 for couples would expire in 2011.

The day's events capped a busy three months for the Democratic-controlled Congress that took office in January.

Moving with unusual speed, lawmakers have enacted a $787 billion economic stimulus measure, cleared the way for release of $350 billion in financial industry bailout funds, approved an expansion of children's health care and sent Obama legislation setting aside more than 2 million acres in nine states as protected wilderness.

While they represented victories for the administration, the budgets merely cleared the way for work later in the year on key presidential priorities — expansion and overhaul of the nation's health care system, creation of a new energy policy and sweeping changes in education.

Major battles lie ahead, particularly over health care and energy. And while Obama made a series of specific proposals to fund his initiatives, congressional budget-writers avoided taking a position on his recommended curtailing of Medicare spending, for example, or imposing hundreds of billions of dollars in new costs on the nation's polluters.

The budget plans do not require Obama's signature, but the House and Senate will have to reconcile the two versions before they can move onto the next phase of Obama's agenda.

"We are not that far apart," said Rep. John Spratt, the South Carolina Democrat who chairs the House Budget Committee.

One difference, seemingly arcane, involved the ground rules to cover work later in the year on health care.

The House budget provides for a "fast-track" procedure that would bar Senate Republicans from attempting to filibuster the legislation Obama wants to remake the nation's health care system. Republicans have warned that the prospects for bipartisanship will all but vanish if majority Democrats attempt to muzzle them.

In a long day of debate in the House, Democratic liberals and Republican conservatives took turns Thursday presenting lost-cause alternatives that reflected varying priorities.

The Progressive Caucus advanced a plan to spend hundreds of billions more on domestic programs than Obama, while cutting back on his defense budget. It failed, 348-84.

Next came a proposal from the conservative Republican Study Conference that would have cut Obama's domestic spending proposals, and reduced taxes. It was defeated, 322-111.

The Congressional Black Caucus proposed immediately repealing Bush-era tax cuts for wealthy taxpayers, while adding a new tax on couples making over $1 million. It called for greater spending on domestic programs,including education, transportation and job training. It fell, 318-113.

House Republicans presented a comprehensive alternative, including a provision to eliminate the current traditional Medicare program as an option for anyone currently under 55. Upon turning 65, their Medicare coverage would come only from plans operated by private insurance companies. Their costs would be paid at least in part with government funds.

Supporters said the change would prevent Medicare from going broke.

The Republican budget was rejected 293-137. More than three dozen members of the GOP rank and file voted against it, and several officials said the internal opposition stemmed in large measure from controversy surrounding the Medicare proposal.

The GOP budget would have cut deeply into Obama's recommended spending levels for domestic programs such as education, parks and transportation, while cutting a variety of taxes and making sure that Bush-era tax cuts on the wealthy remained in existence.

Republicans said their alternative would have spent $4.8 trillion less than Obama's budget over 10 years, with significantly lower deficits.

Senate Republicans decided not to produce a comprehensive alternative budget, although Sen. John McCain, R-Ariz., and others advanced one that would have retained Bush-era tax cuts, spent more on defense, and curbed spending on Medicare and other programs. It failed, 60-38, on a near-party line vote.

Republicans also worked to limit Democratic options later in the year. They put the Senate on record against using fast-track rules to implement Obama's energy policy, which they said would impose a new energy tax of hundreds of millions of dollars.

Obama's scorecard: Some setbacks but a good summit--By JENNIFER LOVEN, AP White House Correspondent

At his summit debut, President Barack Obama failed to persuade foreign counterparts to commit to fresh and lavish spending to boost economic revival. And the success he did achieve in finding common ground was as much the result of modified goals as swaying other countries to bend to U.S. priorities.

Still, he emerged with much of what he wanted from allies on the flailing global economy. And he helped thwart a French-backed attempt to set up an international financial regulator.

Closing out the 20-nation gathering here, Obama — aware of the risks of over-promising to a hurting public back home — hailed the agreement hammered out among wealthy and developing countries while stopping well short of claiming it would reverse dismal conditions or even prevent a deeper recession.

"This is not a panacea," Obama said at a news conference where he straddled nearly every issue.
The president called the meeting a "turning point in our pursuit of global economic recovery" and heralded steps agreed to by the Group of 20 leaders as both "critical" and "necessary."

But, he cautioned: "Whether they're sufficient, we've got to wait and see."

The new U.S. president also has met privately with other heads of state, from Russia, China, Great Britain and India on the sidelines of the summit.

How has he done? "I think we did OK," he said, summing up his performance so far.

Thursday's daylong gathering of the G-20 nations pledged $1.1 trillion in loans and guarantees to struggling countries, agreed to crack down on tax havens, large hedge funds and other risky financial products, rejected protectionism that hampers foreign trade and committed to upgrading an existing financial forum to flag problems early in the global financial system. Those were all elements Obama was seeking.

And, as he hoped, the leaders also rejected a push by French and German politicians for a global financial super-regulator, a proposal that had been expected to go down in defeat. The emphasis, instead, was on cooperation among nations to each choose it own way to enact "a stronger, more globally consistent, supervisory and regulatory framework."

Overall, the outcome seemed more robust than the one global leaders were able to muster at a first summit held last fall in response to the financial meltdown and hosted by Obama's predecessor, George W. Bush. Since that November meeting, the global crisis has worsened, making the need for urgent action more plain to formerly reluctant nations.

Still, the leaders, many wary of piling up debt, did not sign off on large new stimulus packages for their own countries. Obama's administration had initially pushed for such a commitment, but backed off in recent days as European opposition solidified.

Obama claimed Thursday's collective action was a giant victory, calling the meeting historic "by any measure." The president said he was sure the steps would have "a concrete effect" in each nation of creating jobs, saving jobs, expanding economies, loosening credit and restoring confidence in financial markets. To Americans hurting at home, he argued that working to boost the economy worldwide — in particular by helping poorer nations — creates export markets for U.S. goods and the restoration and creation of crucial jobs.

"The steps that have been taken are critical to preventing us sliding into a depression," he said. "They are bolder and more rapid than any international response that we've seen to a financial crisis in memory."

He acknowledged the U.S. had to make concessions. But he begged off detailing them, saying the final communique reflected a collective voice of world leaders.

In a jam-packed news conference that drew hundreds of journalists from around the world, Obama was both playful and wonkish, coughing and sniffling at times with a cold he said he'd been fighting all week.

Obama moved closer to his goal of decisively putting a new, listening-not-lecturing stamp on U.S. foreign policy, not only as it is conducted but as it is perceived around the globe. Citing international polling showing his popularity, Obama said: "I would like to think that, with my election and the early decisions that we've made, that you're starting to see some restoration of America's standing in the world."

Yet, Obama also found himself defending American prominence for the second time in as many days. Just before he spoke, the summit host, British Prime Minister Gordon Brown, declared "the old Washington consensus is over," a reference to decades of U.S.-led dominance of the global economic order.

"I do not buy into the notion that America can't lead in the world," Obama said. "America is a critical actor and leader on the world stage and that we shouldn't be embarrassed about that. But ... we exercise our leadership best when we are listening."

Obama acknowledged that some participants during the summit made comments that seemed to blame America and Wall Street for triggering the crisis that has spread around the world.

"It's hard to deny that some of the contagion did start on Wall Street," Obama said, asserting that some firms took "wild and unjustified risks" and some government regulators were "asleep at the switch."

But he said there were problems in other parts of the world as well.

While Obama argued that the document the G-20 produced included both "a strong, coordinated response to growth" and "a strong, coordinated regulatory response," he said it also reflected the range of the nations' individual priorities, and he added: "It is hard for 20 heads of state to bridge our differences."

House approves FDA regulation of tobacco products--By ERICA WERNER, Associated Press Writer

Anti-smoking forces won a long-awaited victory Thursday as the House passed legislation that would give the federal government key controls over the tobacco industry for the first time.
The measure, passed 298-112, gives the Food and Drug Administration authority to regulate — but not ban — cigarettes and other tobacco products.

The Senate could take up its version of the bill later this month, and supporters are confident they can overcome opposition from tobacco-state senators. The White House supports the legislation, a shift from the Bush administration which threatened to veto a House-passed measure last year.

President Barack Obama has spoken publicly about his own struggles to kick a smoking habit.

"This is truly a historic day in the fight against tobacco, and I am proud that we have taken such decisive action," said Energy and Commerce Committee Chairman Henry Waxman, D-Calif., the bill's sponsor. "Today we have moved to place the regulation of tobacco under FDA in order to protect the public health, and now we all can breathe a little easier."

Waxman and his Senate counterpart, Sen. Edward Kennedy, D-Mass., have promoted legislation giving the FDA regulatory powers over tobacco products since the Supreme Court in 2000 ruled that the agency did not have that authority.

That ruling came after years of lawsuits and debate on the issue, including Waxman's memorable 1994 hearing where the heads of big tobacco companies testified that nicotine was not addictive.

Waxman's Family Smoking Prevention and Tobacco Control Act wouldn't let the FDA ban nicotine or tobacco outright, but the agency would be able to regulate the contents of tobacco products, make their ingredients public, prohibit flavoring, require much larger warning labels and strictly control or prohibit marketing campaigns, especially those geared toward children.

Kennedy plans to introduce his version of the bill after Congress returns from its April recess. Sen. Richard Burr, R-N.C., is expected to lead the opposition, but supporters are confident they can clear the 60-vote threshold needed to break a filibuster.

"FDA regulation of cigarettes — the most lethal of all consumer products — is long overdue," Kennedy said Thursday. "I am confident that the Senate will approve it expeditiously."

Opponents from tobacco-growing states such as top-producing North Carolina argued that the FDA had proven through food safety failures that it's not up to the job. They also said that instead of unrealistically trying to get smokers to quit or prevent them from starting, lawmakers should ensure they have other options, like smokeless tobacco.

That was the aim of an alternate bill offered by Rep. Steve Buyer, R-Ind., who would leave the FDA out and create a different agency within the Health and Human Services Department. His proposal failed on a 284-142 vote.

"Effectively giving FDA stamp of approval on cigarettes will improperly lead people to believe that these products are safe, and they really aren't," Buyer said. "We want to move people from smoking down the continuum of risk to eventually quitting."

Major public health groups, including the American Lung Association and the American Medical Association, wrote to lawmakers asking them to oppose Buyer's bill, contending it would leave tobacco companies without meaningful regulation and able to make untested claims about the health effects of their products.

Buyer pointed out that Waxman's bill is supported by the nation's largest tobacco company, Marlboro maker Philip Morris USA. Officials at rival tobacco companies contend the Waxman bill could cement Philip Morris' market advantage.

Lorillard Tobacco Co. said in a statement that among other problems, Waxman's bill "leads to an industry monopoly by locking in the huge market share of our largest competitor while eliminating our ability to communicate with our adult smokers."

___
The bill is H.R. 1256.
On the Net:
Congress: http://thomas.loc.gov

Dodd Trails Potential GOP Opponents in 2010 Race, Poll Shows

The survey reflects the fallout Sen. Chris Dodd, D-Conn., has suffered as a result of the AIG bonuses.

Connecticut Sen. Chris Dodd is trailing several potential Republican challengers in the 2010 Senate race, according to a new state poll which shows the veteran Democratic lawmaker suffering from fallout over the AIG bonuses.

The Quinnipiac University poll released Thursday shows Dodd with record low approval ratings. Just 33 percent of Connecticut voters approve of the job Dodd is doing in the Senate.

The numbers foretell a challenging race for the five-term senator in 2010. In one matchup, the survey shows Dodd trailing former U.S. Rep. Rob Simmons, an announced rival, 50 to 34 percent.

In two other matchups, Dodd trails state Sen. Sam Caligiuri, 41 to 37 percent, and former ambassador Tom Foley, 43 to 35 percent.

Dodd's job approval rating stands at 33 percent, a dip from 44 percent in a March 10 poll
That is "especially devastating" considering he is a longtime incumbent Democrat in a solidly blue state, poll director Douglas Schwartz said.

Simmons, who acknowledged that his standing against Dodd could fluctuate drastically over the next year and a half, said it's still "exciting to start not only even but way ahead."

He said Dodd's numbers are a reflection of the controversy over the $165 million in bonuses doled out by American International Group -- the insurance giant that distributed the bonuses despite being bailed out by the federal government to the tune of more than $180 billion. Some employees have since pledged to return their bonus money.

"This is a historic low (for Dodd's numbers), but these are historic times," Simmons said. "People up here feel he has abdicated his responsibility."

Dodd is chairman of the Senate Banking, Housing and Urban Affairs Committee and took heat for a provision added to the February stimulus bill that exempted previously negotiated bonuses at companies like AIG from certain pay restrictions.

The Quinnipiac survey shows 27 percent of state voters believe Dodd is most to blame for the bonuses, while 28 percent pin the blame on former President George W. Bush.

Treasury Secretary Timothy Geithner was the top scapegoat for 20 percent, while 7 percent blamed President Obama.

The poll surveyed 1,181 registered Connecticut voters and had a margin of error of 2.9 percentage points. The poll was conducted between March 26-31.

Early Specter TV ad targets Toomey on derivatives--By PETER JACKSON, The Associated Press

U.S. Sen. Arlen Specter on Thursday launched a cable television ad seeking to tie likely challenger Pat Toomey's past career as an investment banker to the chaos in the nation's financial markets, even though Toomey hasn't declared his candidacy.

The 30-second spot claims Toomey, a conservative former congressman whom Specter narrowly defeated in the 2004 Senate Republican primary, sold risky derivatives called credit default swaps while working as a Wall Street trader before his election to Congress in 1998.

These are "the same swaps that have now plunged us into this financial mess," the ad asserts.

Toomey, who serves as president of the Washington, D.C-based Club for Growth, a national network of citizens who say prosperity and opportunity come through economic freedom, denied the charge. He called it "a desperate and silly attempt" to divert attention from the crucial vote Specter cast for the $787 billion economic-stimulus package and other federal spending to ease economic pain.

"As is so often the case, Specter doesn't have the facts right," Toomey said in a statement. "While I worked in banking twenty years ago, I have never sold a single credit default swap to anyone in my life. They hadn't even been invented yet."

The Specter campaign attributed its claim to a May 1999 article in a now-defunct trade magazine, Derivatives, which is archived on DerivativesStrategy.com.

The article does not mention credit default swaps but quotes Toomey's description of the derivatives he sold during his seven years with Morgan Grenfell, a former British merchant bank that is now owned by Deutsche Bank.

"We were dealing in various currencies, all kinds of interest rate and currency-related derivatives , options, swaps, forwards and so on," Toomey told the magazine.

The $100,000 ad buy on cable channels across the state is expected to last for about a week, Specter campaign spokesman Christopher Nicholas said.

Specter, a moderate who was elected to the Senate in 1980, is seeking a sixth term in next year's election.

While Toomey has yet to formally launch his campaign, he is widely expected to do so and regularly criticizes Specter's vote on the stimulus bill in his public appearances.

On Saturday, at the state's largest annual gathering of political conservatives, Toomey received a standing ovation when he told the crowd that "it is very, very likely that very soon I will be a candidate for the United States Senate."

Specter defeated Toomey in the 2004 primary by 17,000 votes out of 1 million cast, aided by endorsements from then-President George W. Bush and then-Sen. Rick Santorum.

Assuming Toomey runs in next spring's primary, he will face competition from Pat Luksik, an anti-abortion activist who set a record for third-party candidates by attracting 13 percent of the statewide vote as an independent candidate for governor in 1994. Some observers think Luksik could split the conservatives and pave the way for Specter's re-election.

Senate Rejects Obama Plan to Cut Tax Breaks on Charitable Gifts--By Brian Faler

The U.S. Senate rejected a proposal by President Barack Obama to finance an overhaul of the nation’s health-care system by limiting the ability of the well-to-do to take tax deductions for charitable contributions.

The chamber unanimously approved an amendment to a pending budget plan that rejects the proposal to limit the size of itemized deductions that can be taken by those earning more than $250,000.

Obama proposed using the estimated $318 billion such a change would generate to help finance a health-care overhaul, which he says will cost at least $630 billion. Lawmakers said they feared the effect of such a tax change on charities.

“The Senate sent a clear message to the president,” said Senator Bob Bennett, a Utah Republican who sponsored the amendment. “Charities benefit greatly from the donations made by individuals in this income bracket, and raising taxes on these contributions would be a disservice to Americans and the millions of charities across the country.”

To contact the reporters on this story: Brian Faler in Washington at bfaler@bloomberg.net

HHS nominee on track for confirmation by Senate--By ERICA WERNER

Kansas Gov. Kathleen Sebelius stepped around potential land mines on abortion and her own tax errors Thursday as she testified at a hearing en route to her expected confirmation as health and human services secretary.

Sebelius was not asked any questions about abortion, an issue that's caused loud complaints from conservative groups angered about her vetoes of some abortion restrictions and the presence of a prominent abortion doctor at a reception at the governor's residence.

Nor was Sebelius asked about what she has called "unintentional errors" related to charitable deductions, mortgage interest and business expenses on her most recent tax returns. She has paid nearly $8,000 in taxes and penalties.

Instead of focusing on those topics, Senate Finance Committee Chairman Max Baucus, D-Mont., tried to pin Sebelius down on the key question of whether every American should be required to buy health insurance.

In dodging his question, Sebelius said that she and President Barack Obama believe that all Americans should have insurance — even though Obama's campaign proposal required just children to be covered. She avoided endorsing Baucus' call for making all people legally responsible for becoming insured.

"There may be variations about how best to reach the goal most effectively, most cost effectively, most efficiently, with the best health outcomes of insuring every American," Sebelius said.

"And I think he's open to all of those proposals," she said of Obama.

"I know the president is totally committed to that proposal, that every American should have health insurance."

Some 48 million Americans are uninsured. The concept of how, or whether, universal coverage should be mandated is one of the toughest issues Congress and the administration must tackle as they seek to reshape the nation's health care system.

Senators want to move health overhaul legislation forward by summer. But they decided Thursday to wait to vote on Sebelius' nomination until they return from a two-week recess that's about to start, so that lawmakers have more time to review her responses.

It's taken Obama longer than expected to fill the HHS job because his first pick, former Senate Democratic leader Tom Daschle, withdrew from consideration over $140,000 in back taxes and interest he owed on income from consulting and use of a car service.

Sebelius, on the other hand, appears set to win confirmation smoothly. Earlier this week the administration disclosed that she recently filed amended tax returns for three years after an accountant she hired discovered the errors.

The top Republican on the Finance Committee, Sen. Chuck Grassley of Iowa, raised the tax issue in his opening statement Thursday and told her, "I take tax matters very seriously and I am eager for you to address those matters today." But Grassley didn't return to the issue during questioning, and Sebelius didn't bring it up.

Sebelius had the backing of both of Kansas' Republican senators, Pat Roberts and Sam Brownback — the latter a strong anti-abortion figure — and no senator raised abortion on Thursday or during a hearing Tuesday before the Senate Health, Education, Labor and Pensions Committee.

Republican senators pressed Sebelius on Thursday to oppose a parliamentary maneuver that would allow health reform legislation to pass the Senate with 51 votes instead of a filibuster-proof 60 votes. Sebelius reiterated that she hoped for a bipartisan solution but didn't want to take anything off the table.

There was also discussion of whether any health overhaul should include a government-run insurance option. Sebelius expanded on her support for the concept, saying that Kansas' state employees' health system includes a public plan that competes with private insurers without putting them out of business.

Sebelius disclosed that she and her husband would be divesting their small investment portfolio of four stocks and funds that could pose conflicts of interest if she's confirmed. They are the Fidelity Advisor Energy Fund, Westar Energy Inc., Kronos Worldwide Inc. and NL Industries Inc.

The latter two companies manufacture titanium dioxide, an ingredient in cosmetics and milk, both of which are regulated by the Food and Drug Administration, which is part of HHS.

Sebelius and her husband had $15,000 or less in stock in the three companies, and between $15,000 and $150,000 in the Fidelity fund, according to her financial disclosure form.
Associated Press writer Ricardo Alonso-Zaldivar contributed to this report.

On the Net:
Health and Human Services: http://www.hhs.gov/

Blagojevich Indicted on Federal Corruption Charges

A federal grand jury handed down the 19-count indictment against Blagojevich, his brother, two former aides and two businessmen Thursday.

Impeached and ousted Ill. Gov. Rod Blagojevich has been indicted on charges he engaged in a "wide-ranging scheme to deprive the people of Illinois of honest government."

A federal grand jury handed down the 19-count indictment against Blagojevich, his brother, two former aides and two businessmen Thursday. It accuses Blagojevich of corruption involving billions of dollars in state pension bonds.

FBI agents arrested the Chicago Democrat in December on allegations that also include trying to auction off President Barack Obama's vacant U.S. Senate seat.

Illinois lawmakers impeached him and threw him out of office in January.

Blagojevich has repeatedly denied wrongdoing.

The former governor is not in Chicago; he's with his family at Walt Disney World in Florida.

Obama hails summit as 'turning point' for recovery--By JENNIFER LOVEN, AP White House Correspondent

Concluding his first international summit, President Barack Obama hailed agreements at the emergency meeting of world powers Thursday as a "turning point in our pursuit of global economic recovery." But he cautioned, "There are no guarantees."

The new U.S. leader said the heads of industrial countries that met in London agreed on "unprecedented steps to restore growth and prevent a crisis like this from happening again."

He spoke shortly after G-20 leaders pledged an additional $1.1 trillion in financing to the International Monetary Fund and other global institutions and declared a crackdown on tax havens and hedge funds. The leaders announced the creation of a supervisory body to flag problems in the global financial system — but did not satisfy calls from the U.S. and others for new stimulus measures.

Despite that failure, Obama called the one-day London gathering "very productive" and historic because of the scope of the challenges the world faces in righting the economic crisis that's wreaking havoc on virtually every country.

"The challenge is clear. The global economy is contracting," Obama said.

In a one-hour news conference packed with media from across the world, Obama said, "We're starting to see some restoration of America's standing in the world." He had been asked about diminished esteem under his predecessor, George W. Bush.

"I do not buy into the notion that America can't lead in the world," Obama said, but he added that it is "very important for us to be able to forge partnerships as opposed to dictating solutions."

He acknowledged that some summit participants made comments that seemed to blame America and Wall Street for triggering the crisis that has spread around the world.

"It's hard to deny that some of the contagion did start on Wall Street," Obama said, asserting that some firms took "wild and unjustified risks" and some government regulators were "asleep at the switch."

But he said there were problems in other parts of the world as well.

As for the summit, he praised the G-20 nations for rejecting protectionism that hampers foreign trade and could deepen the economic crisis, and he urged global unity, saying, "We owe it to all of our citizens to act."

Still, he said, "it is hard for 20 heads of state to bridge our differences."

"I think we did OK," he said, speaking generally about his trip. "When I came here it was with the intention of listening and learning but also providing American leadership."

He said the document the G-20 produced and actions that will follow "reflect a range of our priorities."

"We wanted to make sure we had a strong, coordinated response to growth" and "we thought it was important we had a strong,coordinated regulatory response," Obama said — and added that both were achieved.

When asked, he could not point to an individual summit accomplishment that would help recession-battered Americans beyond general points such as fighting protectionism and making the global economy work together.

But he said, the summit communique "affirms the need for all countries to take fiscal responses that increase demand, that encourages the openness of markets. Those are all going to be helpful in us being able to fix what ails the economy back home."

"This is not a panacea, but it is a critical step," Obama said.

He declined to specify where the White House compromised, saying the final communique reflected a consensus of world leaders.

"Each country has its own quirks or issues that a leader may decide was really, really important," Obama said.

He said he was committed to "forging a consensus instead of dictating our terms" and argued that the United States acting alone would only be "halfway effective, not even half."

On his whirlwind, weeklong European trip, the new U.S. president also met privately with other heads of state on the sidelines of the summit.

He said he had had productive one-on-one talks with leaders of Russia, China, Great Britain and India, on topics that included ways to "reduce the nuclear threat" throughout the world. He called for a coordinated response to North Korea's plans to launch a multistage rocket in the coming days.

Earlier Thursday, Obama and South Korean President Lee Myung-bak agreed on a need "for a stern, united response from the international community" in light of North Korea's efforts toward a threatened satellite launch. The White House also announced that Lee would visit Obama in Washington on June 16.

Officials said the two leaders also discussed a free-trade pact between the countries that would slash tariffs and other barriers to trade.

Obama has hinted he might seek to renegotiate a 2007 deal with South Korea that was hammered out under former President George W. Bush. Legislators in both countries failed to ratify it amid opposition from farmers and labor groups. Officials said Obama told Lee that he understood there were difficulties with the deal on both sides, but that he wanted to "make progress" on it.

Obama also met on Thursday with Indian Prime Minister Manmohan Singh to discuss how their countries could work together. Obama had been expected to reassure Singh about plans to boost aid to India's rival, Pakistan.

Obama wouldn't declare that the steps the G-20 took would prevent a deeper recession.

"In life there are no guarantees; in economics there are no guarantees," Obama said, coughing and sniffling at times as he battled a cold he said he'd been fighting all week.

"There are always risks involved," he added. Still, he said, "I have no doubt, though, that the steps that have been taken are critical to preventing us sliding into a depression."

He called the G-20 prescriptions bolder and likely to work more quickly than any international response to an economic crisis in memory, and he said he was confident the steps would have "a concrete effect" in each nation of creating jobs, saving jobs, expanding the economy, loosening credit and restoring confidence in the financial markets.

The steps "were necessary," Obama said. "Whether they were sufficient, we've got to wait and see."

Stocks extend 4-week rally; Dow breaches 8,000--By SARA LEPRO, AP Business Writers

Investors dove into stocks Thursday, extending a rally that gave the Dow Jones industrial average its best four weeks since 1933.

Stocks rose across the board in heavy trading following an accounting rule change that will help banks and commitments from world leaders to toughen up regulatory oversight of financial institutions.

The Dow Jones industrials broke through 8,000 for the first time since Feb. 9 but ended slightly below that level ahead of a closely-watched monthly report on employment Friday morning that could easily upset the market if it comes in below expectations.

The Dow is now up 20.4 percent over the last month, its biggest percentage gain in a four-week period since the spring of 1933. Bits of good news about the economy in recent weeks, including better-than expected-numbers on the housing and manufacturing sectors, have given investors more reasons to buy.

According to preliminary calculations, the Dow rose 216.24, or 2.8 percent, to close at 7,977.84, after earlier rising as much as 314 points.

Broader market indicators also rose sharply. The Standard & Poor's 500 index gained 23.30, or 2.9 percent, to 834.38. The Nasdaq composite index rose 51.03, or 3.3 percent, to 1,602.63.

Industrial and consumer discretionary stocks picked up speed Thursday while demand for safe-haven assets like gold, Treasurys and the dollar plummeted.

"Everyone is in a buying mood," said Eric Ross, director of research at brokerage Canaccord Adams. "Everyone is feeling good. ... A lot of this is simply confidence."

The market has managed to shrug off some negative data on employment recently such as initial claims for jobless benefits, but a far more important reading on the job market is coming up Friday morning, the monthly report from the Labor Department. That report is closely watched by investors and policy makers as a barometer of health for the U.S. economy.

A bad reading on that figure could easily disrupt the market's newfound sense of optimism. Economists currently predict the report will show a loss of 654,000 jobs in March following a decline of 651,000 jobs in February, which was a record third straight month of job losses above 600,000. The unemployment rate is expected to rise to 8.5 percent from 8.1 percent in February.

"People are worried about this report, so the last hour we sold off," said Richard Campagna, managing director and chief investment officer of Pasadena, Calif.-based investment manager 300 North Capital.

Banking shares got a significant boost after a rulemaking body for the accounting industry relaxed financial reporting rules that force banks to value their assets at current market prices.

The change in "mark-to-market" accounting rules, which should help banks reduce losses, sends another lifeline to the troubled financial industry. Many investors believe financial stocks, which have largely carried the market's four-week rally, are a gauge of when the economy is turning.

The conclusion of a one-day summit in London of the world's finance ministers sent stocks to their highest levels in early afternoon trading. While the G-20 leaders did not satisfy calls for new stimulus measures, they pledged an additional $1.1 trillion in financing to the International Monetary Fund and declared a crackdown on tax havens and hedge funds.

Another positive indicator on the economy also lifted sentiment on Wall Street. Factory orders posted a large increase in February, coming on the heels of better-than-expected readings on pending home sales, manufacturing activity and auto sales the day before.

In other trading, the Russell 2000 index of smaller companies jumped 23.43, or 5.5 percent, to 452.59.

For every three stocks that fell, nearly nine stocks rose on the New York Stock Exchange where volume came to 1.87 billion shares.

While analysts have warned that the market could retest the lows hit early last month, there's no doubt a growing sense on Wall Street the economy, at least stateside, might be bottoming out.
"The market mindset is: OK, we're not in a tailspin," said Jack A. Ablin, chief investment officer at Harris Private Bank.

Among the biggest advancers in the financial sector Thursday were Wells Fargo & Co., which jumped 85 cents, or 5.9 percent, to $15.33, and Goldman Sachs Group Inc., which rose $3.93, or 3.6 percent, to $114.22. Regional banks also rose sharply.

The benchmark 10-year Treasury note fell nearly 1 point, sending its yield up to 2.76 percent from 2.66 percent late Wednesday. The dollar fell against other major currencies after the European Central Bank cut its key interest rate by less than expected. Gold prices also fell.

Oil prices benefited from the better-than-expected economic news. Light, sweet crude jumped $4.25 to settle at $52.64 a barrel on the New York Mercantile Exchange.

Stocks are still well below their October 2007 record highs, however, and the market just finished one of its most tumultuous quarters on record on Tuesday. Investors got another dose of volatility on Monday, when stocks dropped sharply as the Obama administration raised the possibility of a U.S. automaker bankruptcy.

"It's premature to suggest that we're out of the challenges," said Richard Hughes, co-president of Portfolio Management Consultants. "But it's equally worthwhile to acknowledge that the rate of decline (in economic data) has subsided in the last 30 to 60 days."

Overseas markets also logged big gains. Japan's Nikkei stock average rose 4.4 percent, while Hong Kong's Hang Seng index jumped 7.4 percent. In Europe, Britain's FTSE 100 rose 4.3 percent, Germany's DAX index rose 6.1 percent, and France's CAC-40 rose 5.4 percent.

Dollar skids as G20 prompts new risk-taking

The dollar tumbled except against the yen Thursday as investors gained new confidence to take risks after the Group of 20 meeting on the global economy and strong US manufacturing data.

Dealers said the gains in the euro were supported by the European Central Bank's decision to cut interest rates by a smaller-than-expected quarter point and take a cautious line on doing any more for the moment to stoke the economy.

At 2100 GMT, the European single currency was quoted at 1.3461 dollars from 1.3234 dollars late in New York on Wednesday.

The dollar climbed to 99.52 yen from 98.54 yen on Wednesday.

The dollar has benefited in recent months from its safe-haven status as the US and global economy headed ever deeper into recession, strengthening on bad news as investors sought out the asset best-placed to weather the storm.

However, as recent data suggests the worst downturn since the 1930s may finally be bottoming out, investors have become more confident about looking for other investment opportunities.

This was reflected Thursday in massive gains on world stock markets and a weakening of the dollar as funds were moved out of the US unit.

Dealers said that even if there were still concerns about the depth of the downturn, the focus was turning to prospects of a recovery later this year.

The G20 summit turned out positive overall, especially for emerging market currencies which have been under great pressure from the global crisis.

"Despite all the skepticism around the G20 summit, a key accomplishment will be much-reduced risk of an emerging market currency crisis thanks to the increased funding for the IMF (International Monetary Fund) and commitment to support trade finance," Citigroup analysts said in a note.

Derek Halpenny, at Bank of Tokyo-Mitsubishi, said it was encouraging that the sharp twist to the crisis that followed the collapse of US investment bank Lehman Brothers in September appeared to be easing and this would be supportive for the euro.

"Risk appetite appears to be returning," Capital Economics noted.

Jon Gencher at BMO Capital Markets said the yen, which like the dollar is seen as a safe haven in times of market turmoil, was coming under selling pressure.

"The yen, on top of the ongoing economic weakness in Japan, is also coming under some renewed pressure as the risk appetite is seeing a degree of the carry trade being reestablished," he said.

In the carry trade, investors borrow yen at low rates in Japan and invest the funds in higher-yielding currencies, a phenomenon that depresses the Japanese currency.

In late New York trade, the dollar 1.1340 Swiss francs after 1.1461 Wednesday.

The pound was at 1.4725 dollars after 1.4444.

World stocks lifted by G20, US accounting shift

World stocks shot higher Thursday amid greater optimism following a G20 summit pledge to boost efforts to fight recession and a US accounting change that could ease pressure on the banking system.

On Wall Street, the Dow Jones Industrial Average vaulted 2.79 percent and the tech-heavy Nasdaq index closed with gain of 3.29 percent. The broad Standard & Poor's 500 index rallied 2.87 percent.

London's FTSE 100 index of leading shares closed up 4.28 percent, Paris soared 5.37 percent and Frankfurt catapulted 6.07 percent.

"The G20 meeting yielded more talks of regulation, more aid for developing nations, and additional labor efforts globally," said Jon Ogg at 24/7 Wall Street.

"But the real boost was the end of 'mark-to-market' accounting for the banks on illiquid debt assets. This sent the banks flying."

The Financial Accounting Standards Board voted to modify the so-called "mark-to-market" accounting standard, which had aimed for more transparency in financial reports but had been blamed by some for worsening the financial crisis.

The latest change "should give a boost to profits of financial companies," said Ed Yardeni at Yardeni Research.

"More importantly, it should take the pressure off of them to raise funds to fill up black holes in their capital created by the original rule."

"The step could enable greater lending activity to spur the broader economy," said Jocelynn Drake at Schaeffer's Investment Research.

"Banks may also not be as likely to take big write-downs," she said, while adding "critics say that altering the rules could make banks' financial health less transparent to investors."

In London, G20 leaders on Thursday agreed to give an extra one trillion dollars for international credit and an extra 250 billion dollars to boost global trade, as well as setting new rules on pay and bonuses for corporate chiefs.

"A new world order is emerging and with it we're entering into a new era of international cooperation," British Prime Minister Gordon Brown said in a post-summit press conference.

French President Nicolas Sarkozy, who had threatened to walk out of the summit if it did not meet his aims, said its conclusions were "more than we could have hoped for" from the crunch talks.

US banking giant Citigroup said one key achievement was the "much reduced risk of an emerging market currency crisis, thanks to the increased funding for the IMF (International Monetary Fund) and commitment to support trade finance."

Derek Halpenny from Bank of Tokyo-Mitsubishi said: "What is most encouraging for the G20 leaders summit in London today is the building evidence that the Lehman-related collapse in global demand seems to be coming to an end."

The collapse of US bank Lehman Brothers last year aggravated a serious financial sector crisis and loss of confidence in the economy in the United States, which then spread to almost every other part of the world.

"Demand for equities is improving, signalling that the light at the end of the tunnel is getting closer," said Joshua Raymond, market strategist at London-based online spread-betting firm City Index.

Stocks got an extra boost by a 1.8-percent rise in orders for US manufactured goods in February after six consecutive monthly declines, the latest sign that the decline in industrial activity may have hit bottom.

In other markets, Toronto's S&P/TSX index added 1.47 percent and Brazil's Bovespa surged 4.19 percent.

The rally started even before the G20 concluded, as Asian stocks powered higher.

Hong Kong led the charge in Asia, shooting up 7.41 percent, while Tokyo closed up 4.40 percent at a three-month high and Mumbai gained 4.51 percent.

Market attention also turned to the European Central Bank, which cut its key interest rate by a less-than-expected quarter point to a record low 1.25 percent and stuck to a guardedly upbeat medium-term outlook.

Global stocks have risen over the past four weeks as confidence returns to markets following a number of stimulus measures by governments and a US pledge to help banks clear their books of toxic assets that have clogged lending.

Signs recession nears bottom, but layoffs persist--By CHRISTOPHER S. RUGABER, AP Economics Writer

New signs that the recession could be nearing a bottom emerged Thursday, as factory orders were far better than expected and the Dow industrials surged over 8,000 for the first time in two months.

The Commerce Department said orders for manufactured goods rose 1.8 percent in February, reversing six straight monthly declines and easily beating estimates of another drop. Other economic indicators came in better than expected Wednesday, including construction spending and pending home sales.

Meanwhile, world leaders meeting in London on Thursday pledged $1.1 trillion to global institutions such as the International Monetary Fund to combat the downturn. And the European Central Bank agreed to cut a key interest rate to a record low of 1.25 percent.

Still, the job situation remains grim. Traditionally, the labor market doesn't pick up until well after a recovery has started.

The monthly unemployment report due out Friday likely will be dismal, and new jobless claims reported Thursday were worse than expected.

The Labor Department said initial claims for unemployment insurance rose to a seasonally adjusted 669,000 from the previous week's revised figure of 657,000. That total was above analysts' expectations and the highest in more than 26 years, though the work force has grown by about half since then.

Financial stocks led a rally on Wall Street after the board that sets U.S. accounting standards gave banks and other companies more leeway when valuing assets and reporting losses. The Dow Jones industrial average added more than 290 points, or 3.8 percent, to 8,053 in afternoon trading, the first time it has risen above 8,000 since Feb. 10. Broader indices also surged.

Bank of America Chief Executive Ken Lewis also bolstered the financial markets when he told CNBC that the recession is "getting close to the bottom."

Still, economists said the jobless claims figures indicate that companies continue to lay off workers at a rapid pace.

"Claims are typically one of the very first indicators to signal economic recovery, and there is no sign of that in the data yet," Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a client note.

The tally of laid-off workers claiming benefits for more than a week rose 161,000 to 5.73 million, setting a record for the 10th straight week. That also was above analysts' expectations and indicates that unemployed workers are having difficulty finding new jobs. The continuing claims data lag the initial claims by one week.

An additional 1.5 million people received benefits under an extended unemployment compensation program Congress approved last year. That's as of March 14, the latest data available. Jobless benefits typically last 26 weeks, but the federal government is paying for an additional 20 to 33 weeks of compensation under the extended program, depending on each state's unemployment rate.

As a proportion of the work force, the number of people on the jobless benefit rolls is the highest since May 1983. The four-week moving average of jobless claims, which smooths out weekly volatility, rose to 656,750, the highest since October 1982, when the economy was emerging from a steep recession.

Employers are eliminating jobs and taking other cost-cutting measures to deal with sharp reductions in consumer and business spending. The current recession, now in its 17th month, is the longest since World War II.

Economists forecast that Friday's report will show employers cut 654,000 jobs in March, while the unemployment rate increased to 8.5 percent from 8.1 percent, according to a survey by Thomson Reuters.

Some economists raised their projection for job losses in March in response to the increase in claims. David Resler, chief economist at Nomura Securities International, said he now expects the department will report payroll cuts of 725,000 in March, up from a previous forecast of 680,000.

Companies reduced their payrolls by 651,000 jobs in February, a record third straight month of job losses above 600,000.

A private survey Wednesday said businesses cut 742,000 jobs in March. Employment at medium- and small-sized companies fell the sharpest — by a combined 614,000. The rest of the job cuts came from big firms — those with 500 or more workers_ according to the report from Automatic Data Processing Inc. and Macroeconomic Advisers LLC.

More job losses were announced this week. 3M Co., the maker of Scotch tape, Post-It Notes and other products, said Tuesday it's cutting another 1,200 jobs, or 1.5 percent of its work force, because of the global economic slump. Fewer than half the jobs will be in the U.S., but include hundreds in its home state of Minnesota. The 1,200 figure includes cuts made earlier in the first quarter.

Elsewhere, healthcare products distributor Cardinal Health Inc. said it would eliminate 1,300 positions, or about 3 percent of its work force, and semiconductor equipment maker KLA-Tencor Corp. said it will cut about 600 jobs, or 10 percent of its employees.

Among the states, California reported the biggest increase in new claims for the week ending March 21 with a jump of more than 6,700, which it attributed to layoffs in the construction and service industries. The next largest increases were in Missouri, Kansas, Oklahoma and Iowa, according to the Labor Department data.

The biggest drop was in Texas, which had 4,822 fewer claims as the trade, service, manufacturing and transportation industries cut fewer jobs. New York, Tennessee, Illinois and Virginia had the next largest declines.

The Federal Reserve has cut a key benchmark interest rate to nearly zero in an effort to jump-start lending and embarked on a series of radical programs to inject billions of dollars into the financial system.

The Obama administration's $787 billion stimulus package, approved by Congress in February, is trying to counter the recession by providing money for public works projects, extending unemployment benefits and helping states avoid budget cuts.

__
AP Business Writer Jane Wardell in London contributed to this report.

America Needs To Go International In Education by Akindele Akinyemi

America makes too many excuses for our children not being able to compete in a global society. It does not matter who controls the educational system what matters is the end results. A failing education in our society is a immediate threat to national security. As much as we spend on education in the United States we are still lagging behind.

In fact, U.S students spend less time at school and studying than do the students of international nations that beat out U.S students in the aforementioned subject areas. It seems the U.S is fast falling behind in the technological advancement it started years ago.

H-1B workers are international professionals that come into the U.S to work under an H-1B visa and take a position in the Industrial Technology industry. An increase in H-1B workers being utilized in U.S IT corporations in recent years tells tale of the poor standards of education U.S graduates are receiving. They are ill prepared, and ill qualified to find a position, and to contribute anything significant to the country. This relates to the fields of electronics development, engineering, and medical research as well.

Urban conservatives in the silver rights movement should be active in moving and pushing education into a 21st century priority. There is no way we can transform urban communities (or ANY communities) if we still think we are in the 19th century.

We need to understand how high school students in Japan, France, Germany spend more than twice as many hours studying math, history and science as U.S. students. In these countries about half of all students take advanced examinations: a third pass. Only 6.6% of U.S. students take advanced placement exams and 4.4% pass.

The average days in school in Japan is 240 while South Korea is at 222,Taiwan 222, Israel 215, and the U.S. is last at 178. In addition, other countries school days tend to be longer, they assign more homework and apply more discipline in the classroom. These items alone place U.S. youth at a significant competitive disadvantage in the global marketplace.

Despite astronomical increases in spending, educational attainment levels have declined and are nothing short of criminal, especially in most of our large inner cities including our Nation's Capitol. Our graduation rate statistics are meaningless because we have been graduating students from high school with grade school attainment levels ( in other words twelve years of schooling is not twelve years of education).

People are applauding President Obama's $100+ billion educational stimulus package. WHY?
1. The problem IS NOT insufficient money. It might even be too much money. Bigger schools do not improve education.
2. Instead of improving the system we have been dumbing down the requirements. Remedial education courses at our colleges and universities have been skyrocketing, because our secondary schools have failed to prepare students for college and the real world of work world.
3. Our public school monopoly controlled by the teacher unions and the educational bureaucracy are inhibiting real improvement.

Was anyone surprised with the release in December 2007 of the results of the newest International Math & Science Test Series showing U.S. 8th graders showed no improvement on the same test as our 8th graders scored on the prior series, when they scored behind 27 other nations ? The quality gap is real, compared to foreign nations today, and to prior generations at home.

A 2006 US News & World Report study showed that students in Japan, Germany & France:
1. Spend 100% more hours studying math, science and history than U.S. students.
2. 50% of all students in these countries take advanced examinations, compared to but 6.6% in U.S.
3. The students in these countries are 8 times more intense in pushing for measurable quality at advanced levels of learning.

Not only do more foreign students take advanced exams, but the same data shows:
1. How their passing rate is 8 times higher than U.S. (33% vs. 4%).
2. How a foreign school of 1,000 students produces 165 advanced exam graduates vs. only 3 advanced graduates in the same size U.S. school.
3. How foreign schools having a success rate 57 times higher than U.S. schools for advanced examinations.

A picture emerges of a very dangerous deal for U.S. students and the future of the U.S. economy concerning foreign trade balance of payments, standards of living and national security.

The Program for International Student Assessment (PISA) was developed by the Organization for Economic Cooperation and Development (OECD), an intergovernmental organization of industrialized countries. This was to assess the reading, mathematics and science literacy of 15-year-olds in participating countries. PISA assesses how well prepared students are for life beyond the classroom by focusing on the application of knowledge and skills to problems with a real-life context.

Average scores of 15-year-old students on combined science literacy scale, by jurisdiction: 2006

OECD Jurisdictions

Finland 563
Canada 534
Japan 531
New Zealand 530
Australia 527
Netherlands 525
Korea, Republic of 522
Germany 516
United Kingdom 515
Czech Republic 513
Switzerland 512
Austria 511
Belgium 510
Ireland 508
Hungary 504
Sweden 503
Poland 498
Denmark 496
France 495
Iceland 491
United States 489
Slovak Republic 488
Spain 488
Norway 487
Luxembourg 486

Average scores of 15-year-old students on mathematics literacy scale, by jurisdiction: 2006

OECD jurisdictions

Finland 548
Korea, Republic of 547
Netherlands 531
Switzerland 530
Canada 527
Japan 523
New Zealand 522
Belgium 520
Australia 520
Denmark 513
Czech Republic 510
Iceland 506
Austria 505
Germany 504
Sweden 502
Ireland 501
France 496
United Kingdom 495
Poland 495
Slovak Republic 492
Hungary 491
Luxembourg 490
Norway 490
Spain 480
United States 474
Portugal 466

In its report the OECD cited that the United States of America's score placed it in a group called "significantly below average."

Were you surprised in February 2008 to read that China produced four times more B.S. engineering degrees than the U.S., and Japan twice as many. Additionally, Nobel Prize-winning scientist R.E. Smalley of Rice University reported "by 2010, 90% of all Ph.D. physical scientists and engineers in the world will be Asian living in Asia."

The International Math & Science Study reported how U.S. 12th graders were out-performed by 90% of other nations in math and 76% in science. In advanced math the U.S. was out performed by 94% and in science by 100% of other nations. What is worse is that our students fall further behind those from other nations the longer ours are in school.

For example, our 4th graders performed mediocre since 46% of other nations outscored them in math. But it gets worse. By the time they were in the 8th grade they were outperformed by 68% of the other nations. And, lastly as mentioned above, by the time they were in the 12th grade they were outperformed by 90% of other foreign nations. This is indeed shocking, signaling that an education gap opens up wider and wider vs. other nations as ours progress from one grade to another.

Were you surprised back in June 2004 when Achieve, Inc., a bipartisan, nonprofit education organization formed by governors and prominent business leaders, found that math and English tests for high school diplomas require only middle school knowledge, and found those math graduation tests measure only what students in other countries learn in the seventh grade?

Currently, there is no graduation standard in the U.S by which to judge a student's grasp of math and science. Some would argue that such tests as the SATs and ASVAB are high school students gauge of mathematic and scientific understanding. However, countries such as Japan, whose average math score is 51 points over that of the U.S, and whose science score is 57 points higher than the U.S, require entrance and exit examinations for high school students.

According to the National Center for Education Statistics (2007), "U.S. 15-year-olds performed below the international average of 29 industrialized countries in both mathematics literacy and problem solving in 2007." These countries include the aforementioned Japan, as well as China, Korea, the United Kingdom, Sweden, the Netherlands, and Australia, among others.

Part of the problem is how most U.S. high school students don’t take advanced science; they opt out, with only one-quarter enrolling in physics, one-half in chemistry.

Another issue we hardly ever talk about are the textbooks. As younger, inexperienced teachers are thrown into classrooms to meet new federal standards, as much as 90 percent of the burden of instruction rests on textbooks. This is where people miss the boat. They don’t realize how important the textbooks are. Americans talk about shutting down the U.S. Department of Education, charters, saving failing public schools, vouchers and more teachers, but education is about the books.

Many textbooks appear more aimed to political and cultural correctness as a priority instead of aimed only to 100% accurate AND relevant information and disciplined learning of the subject. As a result, student mastery of a subject is not only diminished or partly destroyed but it's often skewed to information that is plain wrong (or slanted, or one-sided) due to major text errors and other objectives - - a form of child abuse.

85% of middle school students use inaccurate science textbooks and, honors high school texts are no more difficult than an eighth grade reader was before World War II.

Twelve of the most popular science textbooks used in middle schools nationwide are riddled with errors, a new study found.

American textbooks are both grotesquely bloated and light as a feather intellectually, flitting briefly over too many topics without examining any of them in detail. Worse, too many of them are pedagogically dishonest, so thoroughly massaged to mollify competing political and identity-group interests as to paint a startlingly misleading picture of America and its history.

We have a long way to go, in a world that will become more and more internationally and technologically competitive for the U.S. than any prior time in history. The future living standards of our young generation and their national security are on the table.

It's time to significantly increase measurable quality standards and hurdles at every level of the process not lower them, or dilute them. Lets forget about using excuses for poor quality performance to justify non-action. Instead, lets mobilize to eliminate the international gap. This will require education system changes concerning quality delivery, its management and accountability not more money per student.

And while I agree with getting federal government out of the education business and turning the power over to the states and local governments that is NOT going to happen anytime soon.

Finland's educational system is controlled by their federal government and has consistently been among the highest scorers worldwide. The French educational system is highly centralized, organized yet 99% of the men and women are literate. Nigerians have the Ministry of Education controlled by government. Yet, Nigerians come to America and become affluent and well educated. Education in Hong Kong is similar to the United Kingdom. The system can be described as extremely competitive by global standards. Japan has a Ministry of Education that runs the public schools, yet Japan has one of the strongest educational systems in the world. Education in South Korea is controlled by a centralized administration that oversees the process for the education of children from K-12. Extracurricular activities such as physical education is not considered important as it is not regarded to be education and therefore many schools lack high-quality gymnasiums and varsity athletics. South Korea was the first country in the world to provide high-speed Internet access from every primary, junior, and high school.

All these educational systems are government controlled. Until the day comes where we can eliminate the federal government out of education we need to be creative in our approach to making education more internationally competitive from K-12.

Education should be the main policy discussion in 2009, 2010, 2011 and 2012. Any policymaker would take advantage of this opportunity to create better strategies to help our children compete GLOBALLY. We can continue missing the ship for our children or deal with real time issues such as true educational reform to help America become strong again in the years to come.

--
Education is a passport to freedom.

Former AIG CEO criticizes successors, bailout--By DANIEL WAGNER, AP Business Writer

The man who built insurance giant American International Group Inc. from a startup to a global behemoth said he didn't mismanage the company — but the government did.

Following weeks of public and congressional outrage over largest corporate failure in U.S. history, Maurice "Hank" Greenberg, AIG's chief executive until March 2005, said taxpayers got a raw deal in the largest bailout of the financial crisis.

Testifying before the House Oversight and Government Reform Committee Thursday, Greenberg said his team had "nothing to do" with failures that so far have cost more than $182 billion. But he said the government's actions since taking over the company have left taxpayers with a nearly 80 percent stake "in a steadily diminishing asset" and no good exit strategy.

Greenberg, 83, said he never would have made the disastrous decision to sell hundreds of billions of dollars in guarantees for corporate and consumer debt.

"When I left the company, it was a healthy company," Greenberg said, citing its strong earnings and share price at the time. He did not discuss liabilities AIG was accumulating on its balance sheet through derivatives and a securities lending business.

In essence, AIG lent its triple-A credit rating to other companies for a small charge so they could reinvest money spent on securities backed by mortgages and other debt. When it lost that rating, it was forced to put up billions in collateral.

Greenberg blamed his successors for all of New York City-based AIG's problems. He said they recklessly abandoned "comprehensive and conservative" risk management procedures that he and his executive team employed.

"AIG's business model did not fail; its management did," Greenberg said. He went on to criticize his successors' handling of the financial products division, which he said "functioned quite well" under his leadership. That division wrote the notorious credit-default swaps that have forced the company to pay about $50 billion to U.S. and foreign banks.

Financial products was "an informal kind of joint venture," but it was tied to his risk management policies, Greenberg said. He said the division doubled in size in the nine months after he left. But he accepted no blame for the failure to offset risk on billions of dollars in derivatives the company sold during his 38-year tenure.

AIG is so sprawling, and so intertwined with banks and other market players, that its failure could upend the global financial system.

Longtime AIG critic Rep. Elijah Cummings, D-Md., rejected Greenberg's finger-pointing.

"I'm convinced that the systemic problems at AIG go far deeper than mistakes made in the four years since you left the company," Cummings said. "What you failed to mention was that a good portion of those risky (bets) were written" before Greenberg's 2005 departure.

Cummings asked multiple times how many of the credit-default swaps were written while Greenberg was in charge.

"The amount we wrote was for European banks," Greenberg replied. "As far as I know, there was never a loss on any of that."

The swaps are commonly used contracts to insure against the default of financial instruments such as bonds and corporate debt. But they also are bought and sold as bets against bond defaults.

Besides forcing AIG's rescue, they played a prominent role in the credit crisis that brought the downfall last year of investment firm Lehman Brothers Holdings and Merrill Lynch & Co. selling itself to Bank of America Corp.

Greenberg repeatedly said the company's strong credit rating, which persisted until his departure, meant he had less cause to worry about risk AIG was taking on.

Greenberg, who is AIG's largest shareholder, spent the bulk of his testimony alleging flaws in the government's handling of the bailout, which has been restructured four times.

"That plan has failed," he said, adding that the company never should have funneled the $50 billion to banks it had deals with, and the government should have focused on keeping the company strong rather than splitting it up.

"The goal of government should not be to liquidate large companies that have demonstrated they can succeed if properly managed," Greenberg said. "It should be to restore them so that they can be employers and taxpayers."