From NBC's Chuck Todd
The following notes are from a backgrounder with four key members of the president's national security team on the two-day summit the United States is hosting with Afghanistan and Pakistan.
 
The goal of the summit is to reinforce the point that all three countries face a common threat: Islamic extremism. They think the debacle in the Swat Valley was a wake-up call to the leadership in Pakistan, and that's why they've made significant military gains since, so they believe.
 
Overview of the big events over the next two days:
-- This is part of a bigger push by the administration to create an ongoing dialogue and relationship between Afghanistan and Pakistan and in the hopes that the two countries will acknowledge their shared challenges.
-- The U.S. hopes to have these trilateral gatherings up to four times a year but the next one won't take place until AFTER Afghanistan's elections, which appear to be set for August at this point. 
 
Schedule for Wednesday:
-- President's Karzai and Zardari begin their day at the State Department for private bilateral and trilateral meetings with Secretary of State Hillary Clinton. After the private meetings, there will be some public event at State.
-- The two presidents head to the White House for afternoon meetings with President Obama, both one-on-one and then as a trilateral session.
-- Their day ends at the Naval Observatory, with Vice President Biden hosting a dinner for the two presidents. Invited guests include key members of Congress (whom both presidents were schmoozing today). By the way, interesting tidbit: Zardari has been in the U.S. since last week, according to one of the senior administration officials. 
 
Schedule for Thursday:
-- There are cabinet-specific trilateral meetings. For example, Agriculture Secretary Vilsack hosts his Afghan and Pakistan Ag counterparts, Deputy Secretary of State Jack Lew will play the role of Treasury Secretary Tim Geithner in hosting the two countries' finance ministers. (Geithner is not available tomorrow; he's got that whole bank stress test thing going on.) Eric Holder and FBI Director Mueller will host their law enforcement counterparts from the two countries at a meeting at the FBI, and CIA Director Leon Panetta hosts a private meeting with this intel counterparts from both countries.
-- For many of these Afghan and Pakistan cabinet level officials, it's the first time they'll be meeting EACH other.
 
Key points made by the officials:
-- It's this level and thoroughness of meetings that is leading the administration to call this entire two-day summit "unprecedented." They want it to be a sustained process, with meetings up to four times a year. Obviously, the U.S. motivation is about our own strategic and national security interests.
-- Yes, the administration admits that their short-therm focus is more on Pakistan than Afghanistan (as one official said, "not unlike you folks in the media"), and while they feel better about reports of the Pakistani military making gains again against the Taliban, we don't have boots on the ground to verify these reports. Another senior official reminded reporters that the Pakistani military (not unlike the U.S. military 5-10 years ago) is not prepared for counterinsurgency combat. And the U.S. is not officially "advising" them on how to re-train their military for counterinsurgency efforts but we are making ourselves available to help.
-- The ultimate goal in Pakistan: help it be a stable and secure democratic country. One senior official emphasized that any communication with Zardari's chief political rival Sharif is no different than the U.S. reaching out to Britain's David Cameron (Gordon Brown's chief political rival). They emphasized they are NOT distancing themselves from Zardari. If they were, then he would not have been invited to this summit. 
-- The administration officials kept referring to a "whole of government approach" to this summit. Translation: The U.S. government isn't just about handing out military assistance, but have the money go to non-military Pakistani government entities as well. For instance, the Pakistan government doesn't really have a relief agency, per se, to help residents displaced by the war with the Taliban right now and U.S. aid might help change that.
-- As for the reports Congress might hold up money, the administration officials were VERY dismissive, saying every key member of Congress seems to be on the same page that stability in both countries is in the U.S. national security interest and that the debate is only on what strings to attach to the money. So there may be debates about benchmarks for Afghanistan and Pakistan, but they don't believe money itself gets held up. Unlike Iraq and Vietnam, this administration official said, there's no debate about the merits of the U.S. being militarily involved in this region.

From NBC's Mark Murray

In an interview with Deborah Solomon that will appear in the upcoming issue of the New York Times Magazine, Arlen Specter says he hopes that Republican Norm Coleman wins his recount battle in Minnesota against the Democrat Al Franken.

With your departure from the Republican Party, there are there are no more Jewish Republicans in the Senate. Do you care about that? 
I sure do. There's still time for the Minnesota courts to do justice and declare Norm Coleman the winner.

Which seems about as likely at this point as Jerry Seinfeld's joining the Senate. 
Well, it was about as likely as my becoming a Democrat.

The full interview comes out on Sunday.

From NBC's Mark Murray
Earlier today, we asked readers about their suggestions for possible members of a 9/11-type commission to examine the causes of the financial meltdown.

Some of their additional suggestions: Sam Nunn, Jack Danforth, Warren Christopher, Richard Ben-Veniste, David Gergen.

Also, per our former colleague Carrie Dann, Rep. Darrell Issa (R-CA) mentions Sandra Day O'Connor.

From NBC's Domenico Montanaro
The effusive praise House Speaker Nancy Pelosi had earlier for Israeli President Shimon Peres faded away when she and House Minority Leader John Boehner spoke with Afghan President Hamid Karzai this afternoon.

Pelosi said she welcomed Karzai to the Capitol with "friendship" but also "urgency." She said they would discuss options on how best to "bring stability to the region."

Boehner called this "an important period in our relationship with the Afghan government and President Karzai."

As Karzai stood slightly behind Boehner and Pelosi, his gaze straight ahead, Boehner stressed that serious discussions needed to take place on what U.S. and Afghan plans would be going forward.

Karzai said he was "honored" to again be welcomed to Capitol Hill. He stressed that Afghanistan has been a friend of the United States since 9/11. "We must see that this friendship pays off," he said, adding the Afghanistan will "remain a steadfast ally" in fighting al Qaeda. "We have issues to discuss," he added.

Karzai is politically endangered. He is up for re-election in August, and is making the rounds on Capitol Hill today ahead of his trilateral meeting tomorrow with President Obama and Pakistani President Asif Ali Zardari. Zardari will appear with members of the House Foreign Affairs Committee later this afternoon.

From NBC's Athena Jones
The White House just announced at the top of its daily press briefing that the 2010 budget -- we'll get more details of it later this week -- includes $63 billion over six years to fight diseases and help provide health care to people in the developing world.

While White House officials did not break down the money to be provided each year, they said the total for 2010 was some $8.6 billion, an increase of $459 million over the 2009 figure.

The money will go to address the biggest health problems facing the developing world (like HIV/AIDS, tuberculosis) and child health issues, Deputy Secretary of State Jacob Lew said in making the announcement. Some of the money also will go to increasing funding for PEPFAR (the U.S. President's Emergency Plan for AIDS Relief).

When asked whether family planning money would go to abortions, Lew said that was "not what this funding is about."

From NBC's Mark Murray
It looks like it's Kentucky Republican versus Kentucky Republican. In a conference call with reporters today, Sen. Jim Bunning lobbed a verbal grenade in Sen. Mitch McConnell's direction, per the Louisville Courier-Journal.

"Do you realize that under our dynamic leadership of our leader, we have gone from 55 and probably to 40 (Senate seats) in two election cycles? And if the tea leaves that I read are correct, we will wind up with about 36 after this election cycle," Bunning said. "So if leadership means anything, it means you don't lose … approximately 19 seats in three election cycles with good leadership."

The source of the friction between the two Kentucky senators is over what Bunning perceives as McConnell's desire for Bunning not to run for re-election in 2010. "Do you know Arlen Specter will be 80, has had four bouts with cancer and he still wants to run for the U.S. Senate?" Bunning said, per the Courier-Journal. "And I'm being criticized at 77 and healthy for wanting to run for the U.S. Senate by certain leadership people in my party. Give me a break."

Asked if he was referring to McConnell, Bunning replied: "Obviously. Do you want me to spell it out for you?"

There is speculation that Bunning might bow out with the news that Kentucky Secretary of State Trey Grayson has formed an exploratory committee to run for the Senate. But Bunning hasn't made an official announcement, although he said he encouraged Grayson to set up the committee.

*** UPDATE *** McConnell's office wouldn't comment on Bunning's remarks. But Frank Donatelli, chairman of GOPAC, tells First Read that the Republican Party is "very lucky" to have McConnell as their Senate leader. "He's as good of a leader as we could expect in these difficult times for our party."

Donatelli, who says his opinion is shared by much of the GOP political establishment, adds that McConnell shouldn't be blamed for the party's losses in '06 and '08. "There is lots of blame to go around, but I don't think that Mitch's leadership is to blame."

One other thing: While McConnell was the No. 2 Senate Republican in the 2006 cycle, he didn't assume the top position until 2007.

From NBC's Libby Leist
In testimony before the House Foreign Affairs Committee in advance of tomorrow's trilateral meeting at the White House, U.S. envoy Richard Holbrooke was trying to tamp down recent rhetoric about the political and military situation in Pakistan.

"We do not think Pakistan is a failed state," Holbrooke told lawmakers, though adding that the country is under an "extreme test" from its enemies, and that the U.S. and Pakistan have "the same common enemy"

Holbrooke said he has already met with Pakistani President Zardari last night. And tomorrow, Secretary of State Clinton will meet privately in the morning with the Pakistani and Afghan delegations separately at the State Department -- then together in a trilateral format before moving to the White House.

At the White House, Obama will meet first with Karzai, then with Zardari separately, and then will hold the trilateral meeting.

Holbrooke said this has not been done before. He said George W. Bush had dinner with Musharraf and Karzai, but nothing came of it. Holbrooke called this part of a sustained effort on behalf of the Obama administration.

From NBC's Domenico Montanaro
In the same spot on the Speaker's Balcony where two weeks ago King Abdullah of Jordan called for a ramping up of efforts for peace between Israelis and Palestinians, Israeli President Shimon Peres today steered clear of the subject.

Peres, instead, heaped praise on House Speaker Nancy Pelosi, who stood with him.

The soft-spoken Peres called Pelosi "a great friend," whose "every word is a commitment" not "niceties."

He said he, Pelosi, Israel and the U.S. are all "struggling for the same purpose" -- for "peace" and an end to "poverty" and "discrimination."

Pelosi also showered Peres with praise, lauding him twice as a "hero," who she called the "personification" of the "relationship between the United States and Israel." She called him an "intellectual," a "great visionary," and a "fighter for peace."

She said she was "looking forward" to asking him in their closed-door meeting about the state of affairs in the Middle East.

Neither Peres nor Pelosi mentioned Iran or relations with Palestinians. Both are sure to be topics when Peres and President Obama meet later today.

From NBC's Domenico Montanaro
House Republicans hit Democrats again on energy legislation currently in the House that they say would amount to a "national energy tax."

It's an argument they've made before -- notably two weeks ago when the chamber returned from Easter holiday break. Today, at a news conference following the GOP Conference meeting, Republican leadership promoted its "energy summit" to come up with alternative solutions to, specifically, the Waxman-Markey legislation that has stirred debate even within the Democratic Party.

The GOP has said it's for an "all-of-the-above" approach to energy. It has rolled out members from Oklahoma -- pushing oil, members from West Virginia pushing coal and others promoting off-shore drilling. House Minority Leader John Boehner says the party is for alternative sources as well, but the Democrats' plans picks the "winners and losers" and would have devastating effects on industry in certain states.

In one Bizarro World moment, Boehner found himself defending President Obama from Democratic Appropriations Chairman David Obey, who yesterday demanded the White House issue a report a year from now assessing the situation in Afghanistan and Pakistan before approving more funds.

Boehner said he supports Obama's plan for Afghanistan, and that he deserves the country's support and so do the troops.

He added that it is unlikely that military operations in Afhganistan would be over in a year, intimating that Obey's "performance assessment" requirement is unnecessary and unrealistic.

From NBC's Domenico Montanaro
Military families feel disconnected from the larger community, according to a poll commissioned by a military family advocacy group.

According to the results of the poll, 94 percent feel that way. Blue Star Families released the results of the 3,000-person survey at a roundtable on Capitol Hill led by House Speaker Nancy Pelosi. The roundtable -- meant as one way to bridge the gap -- included Blue Star Families, the National Military Families Association, Tina Tchen of the White House Council on Women and Girls, as well as several members of Congress. 

Pam Eggleton, of Blue Star, who announced the results, said she felt "alone" when her husband went through two tours in Iraq, then returned after being injured and spending three years at Walter Reed Army Hospital recovering.

Joyce Wessel Raezar, of National Military Families, said the results of the survey track with what she's hearing from members of her organization as well. She cited the other spouses gathered for the roundtable, including Mary Scott, whose six children are all enlisted.

"I'm disheartened to hear the results of the survey," because that means leaders aren't doing what needs to be done to make families feel more connected, said Rep. Kay Granger (R-TX), co-chairwoman of the Military Families Task Force. "In some cases we're doing it right; in others, we weren't doing it right at all."

The other co-chairwoman of the task force -- Rep. Susan Davis (D-CA), who represents San Diego -- though said she's "not surprised" by the results.

"We need to do better," Davis said. "Much better."

Rep. Ike Skelton, chairman of the House Armed Services Committee, touted increased funding for military families before telling the spouses gathered for the roundtable, "I'm proud of you."

Military families have become a focus for First Lady Michelle Obama. The White House established the Council on Women and Girls, and Tchen was there to reassure that the administration would do all it could to bridge the gap.

"This crosses the aisle and is a priority of everyone here" and the White House, Tchen said.

Eggleton, who praised Michelle Obama's efforts, said gatherings like this one make her feel that the leadership "does care." She also cited that the Bidens are Blue Star Families members. Beau Biden is currently deployed in Iraq.

Pelosi then dismissed the cameras and members of the press so the group could have a "frank convseration."

From Chuck Todd, Mark Murray, and Domenico Montanaro
*** The chief diplomat: Move over Hillary Clinton, Jim Jones, Richard Holbrooke, and George Mitchell… President Obama himself plays the role of America's chief diplomat this week. Today, at 2:00 pm ET, he has a meeting (closed to the press) with Israeli President Shimon Peres on the status the Middle East peace process. And tomorrow, he hosts a trilateral summit with the heads of Pakistan and Afghanistan. (All three foreign leaders also are making the rounds on Capitol Hill today.) Obama's hands-on approach is interesting: He's not cutting out Clinton or others; it's just that he's enormously confident in his own skills on this front. Also, as he said himself about the pillars of an "Obama doctrine," his international popularity gives him an opportunity in the early stages of his presidency to make some diplomatic gains. As much as the White House knows they need to be focused on the economy when it comes to the president's domestic political health, the situation right now in Pakistan appears dire. And the president has to not only push Pakistan to fight the Taliban harder, he also needs to push congressional Democrats to release money to Pakistan to help them in this war. The chairman of the Joint Chiefs called the situation in Pakistan "grave" yesterday.

*** Sessions' elevation: Laying the groundwork for his upcoming Supreme Court pick, President Obama yesterday spoke with Sens. Orrin Hatch (R) and Arlen Specter (D-last week), the past two top Republicans on the Senate Judiciary Committee. But the person Obama DIDN'T speak with: incoming Judiciary ranking member Jeff Sessions. (An administration official tells First Read that Sessions isn't yet officially the ranking member, and Obama will certainly communicate with Sessions as the process unfolds. The official adds that Hatch is the senior member of the committee, and it was important to reach out to him yesterday.) Indeed, Sessions will be a fascinating story during the nomination battle -- and not only because the Alabaman is more conservative than Hatch and Specter. As it turns out, Sessions' own judicial nomination was defeated in the Judiciary Committee in the 1980s. This time (most likely), he'll be trying to do the same to the other side.

*** Paging Tom Kean and Lee Hamilton: While we might not see a so-called truth commission looking into the Bush administration's interrogation tactics, it does look like we're going to see a 9/11-type commission examining the causes of the financial meltdown. "The details of the commission language are still being worked out between the Judiciary committees between the House and the Senate," Pelosi spokesman Nadeam Elshami told First Read. "That language could be similar to the Senate, but it is in the process of intensive legislative discussions." The way the commission could work, according to preliminary details, is as follows: 1) It would be bipartisan; 2) members of Congress would be excluded; and 3) there would be at least eight people on the committee, and perhaps one or two more. (Each leader would get one person on the committee. There are four leaders. And each financial committee chair -- Banking in Senate, Financial Services in House -- and ranking member would get a pick. That's four more for a total of eight and maybe one to two others.) 

*** List time! OK, First Read fans: Let's hear some nominees for this commission. Start with the ex-senators crowd: Kerrey, Graham, Talent, Sununu, Frist, Robb? The ex-governors: Jeb Bush, Wilson, Whitman, Cuomo, Barnes? How about all-around Washington ex-officionados: Baker (see James or Howard), Albright, and the likes? And here's a nutty idea: How about some journalists (perhaps someone like Doyle McManus)? The tough slots to fill: Do you take ANYONE from the business world?

*** The latest on health care: There's some movement in the health-care debate. In Atlanta today, in a speech to the Council on Foundations, HHS Secretary Kathleen Sebelius mixes in a little health-care politics with her swine flu update. Here's an excerpt. "I know it's tempting for some to reduce every legislative discussion in Washington to a simple political fight. It is easy to stand aside and stay above the fray. But this is it: the once-in-a-lifetime chance to break the gridlock that has hurt so many Americans. This is not political and it is not optional. Inaction threatens our health and our economic security." Also, per the New York Times, Sen. Chuck Schumer is trying to find middle ground on health care. "In an effort to defuse the most explosive issue in the debate over comprehensive health care legislation, a top Senate Democrat has proposed that any new government-run insurance program comply with all the rules and standards that apply to private insurance. The proposal was made Monday by Senator Charles E. Schumer of New York, the third-ranking member of the Senate Democratic leadership, in a bid to address fears that a public program would drive private insurers from the market."

*** Motor City match-up: If it's a Tuesday, it means that somewhere in the U.S. is having an election… Today, current Detroit Mayor Kenneth Cockrel Jr. faces off against former NBA player and current businessman Dave Bing to fill the remainder of Kwame Kilpatrick's term, which ends December 31. Kilpatrick left office in scandal last September and went to jail for committing perjury. A recent Detroit News/WXYZ-TV poll found Cockrel leading Bing -- the former Detroit Pistons star -- by six points, 39%-33%, with 24% undecided. Bing bested Cockrel in February's special primary election. Cockrel has support from Michigan Rep. John Conyers, while Jesse Jackson, former Sen. (and Knicks star) Bill Bradley, and Sacramento Mayor Kevin Johnson are backing Bing. Detroit is a devastated American city, and its problems go well beyond the car crisis and the Kilpatrick scandal. The winner is inheriting one of the toughest jobs in the country. Polling places open at 7:00 am ET and close at 8:00 pm ET.

*** Board games: Meanwhile, looking ahead to 2010, the hits keep coming for Chris Dodd. The Hartford Courant reported over the weekend that Dodd's wife, Jackie Clegg Dodd, "was compensated at a rate of about $500,000 a year in 2007 and 2008 from seats on five corporate boards." The paper adds that good-government groups "question the value that Clegg Dodd's experience brings to corporate boards and wonder whether it is really Dodd the corporations are targeting through his wife. Dodd is one of the longest-serving and most influential members of the U.S. Senate and is chairman of its powerful banking committee."

*** Murtha still in the news: Are the Murtha stories going to ever stop? The Washington Post front-pages, "[L]ast year, Murtech received $4 million in Pentagon work, all of it without competition, for a variety of warehousing and engineering services. With its long corridor of sparsely occupied offices and an unmanned reception area, Murtech's most striking feature is its owner -- Robert C. Murtha Jr., 49. He is the nephew of Rep. John  P. Murtha, the Pennsylvania Democrat who has significant sway over the Defense Department's spending as chairman of the House Appropriations defense subcommittee… Murtha said he does not advertise being the nephew of John Murtha and considers it 'unfortunate' that some will unfairly assume Murtech received its federal contracts because of his uncle's influence at the Pentagon."

*** If a single -- but very vocal -- tree falls in the woods, should we cover it? We meant to ask this question earlier, but have we in the media blown the conservative criticism over Obama's upcoming address at Notre Dame out of proportion? Consider this Pew poll from last week: By nearly a 2-to-1 margin (50%-28%), American Catholics agree with Notre Dame inviting Obama to speak there. Also, by 47%-33%, white Catholics agree with Notre Dame inviting the president. The only subgroup who disagrees: white Catholics who attend church weekly. By a 45%-37% margin, those folks disagree with the school's invitation. So, according to this poll, the criticism is coming from a minority -- albeit a very vocal one.

Countdown to NJ GOP primary: 28 days
Countdown to VA Dem primary: 35 days
Countdown to Election Day 2009: 182 days
Countdown to Election Day 2010: 546 days

Click here to sign up for First Read emails.
Text FIRST to 622639, to sign up for First Read alerts to your mobile phone.

"The Obama administration revved up its search for a new Supreme Court justice on Monday, reaching out to Senators and warning that lawmakers will need to make room in their crowded summer schedules to handle the nomination," Roll Call writes. "But Republicans were already preparing for what they hope will be a unifying fight with the new administration over an issue that has long galvanized the GOP base. As a side benefit, they would also like to force the sizable number of moderate Senate Democrats into a politically difficult corner."

How soon? According to Politico, "After talking to President Barack Obama on the phone today, Republican Sen. Orrin Hatch says he believes the White House will move swiftly on its Supreme Court nominee, perhaps making an announcement by the end of this week."

Alabama Sen. Jeff Session is going to replace Arlen Specter as the ranking Republican on the Senate Judiciary Committee. The Washington Post: "The ascension to the top minority post on the Judiciary Committee brings Sessions full circle from his own nomination fight 23 years ago. Appointed a U.S. attorney in Alabama in 1981, Sessions was nominated to become a U.S. District judge by President Ronald Reagan in 1986. A career Justice Department lawyer testified that Sessions had once called the NAACP an 'un-American' group, while another raised issues about remarks Sessions made about the Ku Klux Klan."

"In conversations with Senator Charles E. Grassley of Iowa, another Republican in line for the Judiciary Committee job, Mr. Sessions said he had agreed that he would serve as the ranking member through 2010 and then relinquish the post to Mr. Grassley," the New York Times adds.

"Facing resistance from members of his own party," Obama today will meet "with all 36 Democrats on the House Energy Committee to reach agreement on climate and energy legislation."

In advance of the stress tests, the results of which will be released on Thursday, the Wall Street Journal has this news: "The U.S. is expected to direct about 10 of the 19 banks undergoing government stress tests to boost their capital, according to several people familiar with the matter, a move that officials hope will quell fears about the solvency of the financial sector. The exact number of banks affected remains under discussion. It could include Wells Fargo & Co., Bank of America, Citigroup Inc. and several regional banks. At one point, officials believed as many as 14 banks would need to raise more funds to create a stronger buffer against future losses, these people said, but that number has fallen in recent days."

The Washington Post adds, "The government plans to divide banks into three categories, based on the adequacy of their capital reserves to absorb projected losses. The tests are based on an economic forecast about the likely depth of the recession. Some banks will get a clean bill of health, which the government hopes will convince investors to embrace them. "

Lots of coverage of Obama's remarks yesterday about cracking down on overseas tax loopholes. The New York Times: "The move would appeal to growing populist anger among taxpayers but is likely to open an epic battle with some major powers in American commerce."

The Washington Post says "the nation's largest business groups immediately assailed the proposal, arguing that it would subject them to far higher taxes than their foreign competitors must pay and ultimately endanger U.S. jobs. Key Democrats were cool to the plan, and said Obama's ideas should be considered as part of a broader effort to streamline the nation's complex corporate tax code."

"The crackdown on corporate tax incentives is the latest move by the administration to squeeze big business," The Hill writes. "The president, who had taken heat from the left for continuing unpopular bank bailouts initiated by the Bush administration, has since called for restrictions on executive pay, the firing of General Motors CEO Rick Wagoner and a reorganization of Chrysler that offered a better deal to unions than a collection of hedge funds and investment banks that owned debt from the troubled automaker."

On the eve of a trilateral summit at the White House with the heads of Afghanistan and Pakistan, news out of Pakistan suggests the Taliban is not only resisting the Pakistani military, but making gains. "Behind this strained hope for a peaceful solution lie an array of factors -- competing military priorities, reluctance to fight fellow Muslims, lack of strong executive leadership and some internal sympathy for the insurgents -- that analysts say have long prevented the Pakistani army from making a full-fledged assault on violent Islamist groups," the Washington Post says.
 
The problem for the Pakistani government isn't the military; rather, it's politics. "In the past five years, the army has made periodic moves against various militant strongholds but has frequently pulled back, often amid public anger over bombing raids. Insurgent leaders hold news conferences and spew religious hatred on FM radio stations with no interference." 
 
And here is another problem for Obama to deal with tomorrow. The New York Times: "But if Taliban strategists have their way, those forces will face a stiff challenge, not least because of one distinct Taliban advantage: the border between Afghanistan and Pakistan barely exists for the Taliban, who are counting on the fact that American forces cannot reach them in their sanctuaries in Pakistan. One Pakistani logistics tactician for the Taliban, a 28-year-old from the country's tribal areas, in interviews with The New York Times, described a Taliban strategy that relied on free movement over the border and in and around Pakistan, ready recruitment of Pakistani men and sustained cooperation of sympathetic Afghan villagers."

The Boston Globe reports, "US and Pakistani officials have begun behind-the-scenes talks aimed at achieving a greater US role in securing Pakistan's nuclear materials, including a proposal to ship some highly enriched uranium to the United States for disposal, according to two administration officials with direct knowledge of the discussions."

"The two senators atop the Foreign Relations Committee on Monday introduced long-awaited legislation tripling financial aid to Pakistan. The bill, sponsored by committee Chairman John Kerry (D-Mass.) and ranking member Richard Lugar (R-Ind.), would give Pakistan $7.5 billion through 2013, which is the total requested by the Obama administration."

Obama meets with Israeli President Shimon Peres today.

Peres spoke to AIPAC yesterday, and the New York Times covers AIPAC's conference in DC, which Vice President Biden addresses today. The formidable political strength of the American Israel Public Affairs Committee, the nation's major pro-Israel lobby, has been on decidedly intentional display here in the last few days. But this year, Aipac's annual conference comes after a period fraught with small anxieties for the group and its supporters."

Appropriations Chairman David Obey "refused to provide $80 million for closing the detainee facility at Guantánamo Bay, Cuba, saying the plans for doing so are not yet ready. And he did not give Obama the authority to invest $100 billion in the International Monetary Fund… The supplemental blueprint, which was endorsed Monday afternoon by Speaker Nancy Pelosi (D-Calif.) through a spokesman, could present Democratic liberals with a quandary."

"President Barack Obama is heading to Indiana on May 17 to headline a fundraiser for four Hoosier Democrats: Reps. Joe Donnelly, Brad Ellsworth, Baron Hill and Andre Carson," Politico notes. "Noticeably missing: Democratic Rep. Pete Visclosky. Visclosky is facing ongoing questions over his involvement with the now-defunct defense lobbying firm PMA Group."

The Hill conducted a survey among House members to see who they thought were the most partisan and bipartisan of their colleagues. Speaker Nancy Pelosi was at the top of the partisans; Majority Leader Steny Hoyer ranked as one of the most bipartisan.

Here's a fun inside story of "hideaways" in the Senate. Apparently when Biden left, he also left open an "office near the floor with a full bathroom, fireplace and chandelier." Sen. Robert Byrd snatched it up, but he also has another hiding place he designated for himself, and "rumors abound that the Senator also has acquired several other nooks and crannies." "'When he leaves the Senate, they'll find enough room for a fourth building,' joked one source who knows the hideaway process well."

The U.S. captain held by pirates testifies again today.

Three different Republicans weigh in today. Here's David Brooks' suggestion: "If the Republicans are going to rebound, they will have to re-establish themselves as the party of civic order. First, they will have to stylistically decontaminate their brand. That means they will have to find a leader who is calm, prudent, reassuring and reasonable. Then they will have to explain that there are two theories of civic order. There is the liberal theory, in which teams of experts draw up plans to engineer order wherever problems arise. And there is the more conservative vision in which government sets certain rules, but mostly empowers the complex web of institutions in which the market is embedded."

Former Senate Majority Leader Howard Baker's solution is simply to wait for the public to tire of Obama and the Democrats. "The core Republican beliefs in less government, lower taxes, more liberty and greater security in a dangerous world united people as different as Mark Hatfield and Jesse Helms during my years as leader of the Senate. Those same beliefs carried Ronald Reagan into the White House in 1980 and 1984. Those beliefs still have power today. And if the American people perceive overreaching or underachieving in the Obama administration and among its allies in Congress, the Republican way may prove very attractive again in very short order."

And Ross Douhat pushes for a rise of a real Republican center, a la the DLC. "Maybe it can bubble up outside the Beltway — from swing-state governors like Mitch Daniels of Indiana and Minnesota's Tim Pawlenty, or reformists in deep-red states, like the much-touted Bobby Jindal of Louisiana and Utah's Jon Huntsman. But to succeed, such a faction will have to represent something legitimately new in right-of-center politics. It can't sound like Rush Limbaugh — but it can't sound like Arlen Specter either."

FLORIDA: Former Republican State House Speaker Marco Rubio may officially announce he's getting into the Senate race this week.

NEW YORK: "In the end, Caroline Kennedy's teenage children convinced her to get out of the running for the U.S. Senate, a new exposé on America's most storied political family reveals. 'Mom, you are above this,' older daughter Rose Kennedy Schlossberg, 19, reportedly told her mom last Jan. 21 - hours before Kennedy called Gov. Paterson to end her bid for Hillary Clinton's old Senate seat. The report in Vanity Fair magazine details for the first time what became a pivotal family meeting during which all three of Kennedy's children expressed worry over her sudden detour into electoral politics."

PENNSYLVANIA: The Washington Post's Chris Cillizza reports that Tom Ridge (R) will decide in the next two weeks if he'll run for Senate next year. "If he ran, he would almost certainly face primary opposition from former congressman Pat Toomey, a conservative who came within two points of knocking off Specter in the 2004 Republican primary. Toomey has made it clear that he is in the race regardless of whether Ridge, who is considered to be a moderate, runs. Polling suggests that Ridge would be more competitive than Toomey against Specter."

SOUTH DAKOTA: "If Rep. Stephanie Herseth Sandlin (D) runs for governor in 2010, her South Dakota at-large seat would become a prime pickup opportunity for House Republicans next year… In a recent interview with Roll Call, Herseth Sandlin said she is still considering running for higher office next year. 'I haven't ruled anything out,' she said. 'But I'm not going to make a final decision until this summer on what office I'll be seeking in 2010.'"

From NBC's Abby Livingston
Ever since CQ reported that Rep. Jane Harman (D-CA) had been overheard on phone conversations allegedly promising to go to bat to the Justice Department on behalf of two former AIPAC officials accused of espionage, the embattled former ranking member of the House Intelligence Committee has been fiercely defending her reputation.

On Sunday, she took her case, to of all places, AIPAC.

AIPAC -- an acronym for American Israel Public Affairs Committee -- is a staunchly pro-Israel lobbying group that has been hosting a policy conference over the last few days. And Harman yesterday served on a panel, which was moderated by Republican Dan Senor and also included former CIA Director James Woolsey. 

Harman spent most of the panel discussing the Iran, but toward the end of the discussion, unprompted, she brought up the wiretapping controversy.

Most notably, she said, "This issue is obviously creating a chilling effect on hardworking, bipartisan members of Congress who care intensely about the U.S.-Israel security relationship, and have every right to talk to advocacy groups and our good friends about that relationship."

"If I were not an optimist, I wouldn't stay in politics," she said. "And I have to say, my optimism has been tested in recent weeks."

Harman then referenced a strange bedfellow. "I never thought as a Democrat, I would recommend the Wall Street Journal editorial page, but read yesterday's." The editorial, which vigorously defended Harman, asked, "Now where do … everyone else besmirched, including California Democrat Jane Harman -- apply to get their reputations back?" after the Justice Department dropped its charges against those two former AIPAC officials. 

Focusing more on the wiretapping -- rather than the quid-pro-quo allegations against her -- Harman continued to express her ire over her wiretapped phone. "I know about the Constitution. I believe in the Constitution. I believe in the 4th Amendment. And I have never, ever supported warrant-less wiretaps on Americans. "

She described herself as "not a victim," but rather "a warrior on behalf of our Constitution and against abuse of power." And she promised that she will "not quit on this, until I am absolutely sure that this never can happen to anyone else."

At several points, the audience broke into applause. During one of those instances, Harman cautioned, "It ain't over yet. Clap next year."

From Domenico Montanaro and Abby Livingston
The House will act likely on Wednesday on legislation that would include a commission to examine the financial meltdown, according to Democratic and Republican Capitol Hill sources.

"The details of the commission language are still being worked out between the Judiciary Committees between the House and the Senate," said Nadeam Elshami, spokesman for House Speaker Nancy Pelosi. "That language could be similar to the Senate, but it is in the process of intensive legislative discussions."
 
The options for the bill are either:
1. The House passes its own House version, and then go to conference with the Senate, or
2. Pass essentially the same bill between the House and Senate that would be ready quickly for the president to sign, which is what they're working on.

Both sides want to move quickly and negotiations are centering on "working off the Senate version."

The way the commission could work, according to preliminary details, is as follows:
(1) It would be bipartisan,
(2) Members of Congress would be excluded
(3) There would be at least eight people on the committee, and perhaps one to two more. (Each leader would get one person on the committee. There are four leaders. And each financial committee chair -- Banking in Senate, Financial Services in House -- and ranking member would get a pick. That's four more for a total of eight and maybe one to two others.

The office of Congressman Darrell Issa (R-CA) said the legislation would be identical to the Senate-passed (S. 386) and according to an Issa spokesman, the House will pass Wednesday. Issa's office contends that the commission will be comprised of 10 members, precludes elected officials from serving on the board and would have subpoena power.
 
Issa's office also described the development as a "rare case where everyone set aside partisan measures."
 
For historical context, there was a commission in the early 1930s called "the Pecora Commission" that investigated the 1929 Crash. The revelations uncovered led to many reforms, including Glass-Steagall Act of 1933. With that context, in March, First Read questioned why in this town that loves its bipartisan blue-ribbon panels, there wasn't a greater movement for a financial panel.

From NBC's Kelly O'Donnell and Ken Strickland
President Obama today called Sens. Orrin Hatch (R) and Arlen Specter (D) about the upcoming Supreme Court vacancy.

Per the White House, Obama "vowed to consult regularly with senators in both parties to ensure an orderly confirmation process that will allow Justice Souter's replacement to be confirmed by the beginning of the Court's next session."

Said Hatch's office in statement:

...Hatch (R-Utah) urged President Obama against choosing a judicial activist for the Supreme Court vacancy. He advised the president to choose a nominee who is more in step with mainstream America and would uphold the rule of law. The president assured Hatch that this was his intention, that he would appoint a pragmatist, not a radical, to this important position."

Added Specter:

"The president called me around noon today to begin the consultation process on a new Supreme Court nominee. He asked for recommendations and I told him I would think it over and get back to him."

From NBC's Domenico Montanaro
David Obey hopes President Obama isn't Leo Durocher -- or Richard Nixon.

In an off-camera meeting with reporters in his ornate office, the grizzled House Appropriations Chairman said he was giving President Obama essentially everything he wanted -- and then some -- in the approximately $94 billion 2009 supplemental appropriations for Iraq, Afghanistan, Pakistan and Pandemic Flu legislation to be presented Thursday.

But there are a couple of exceptions: (1) None of the requested Guantanamo money, and (2) He wants a "performance assessment" in a year on Afghanistan/Pakistan. He used a baseball analogy about the defunct New York baseball Giants -- and the team's above-mentioned manager -- to describe why.

"I'm not much interested in defending a theoretical program," Obey said of leaving out the Guatanamo funds before expressing doubt that any plan would work in Afghanistan or Pakistan -- even what he called an "intelligent" one devised by Obama, Af/Pak envoy Richard Holbrooke and Secretary of State Clinton.

Obey said he was giving the administration what it wanted -- and more -- on funding for Afghanistan and Pakistan, but after a year, he wants a report from the administration assessing five key areas.

As to why he was calling for the report, Obey told reporters crammed into the office of leather chairs and plush carpet of a wistful, old baseball story. He said that the Giants' Eddie Stanky (circa 1940s/50s) had dropped two in a row at second base, so manager Leo Durocher came out, telling Stanky essentially, "Let me show you how it's done, kid."

Durocher proceeded to drop the first ball he tried to field. He turned to Stanky and said, "Damn it kid, you got second base so screwed up, no one can play it."

"I hope Barack Obama has more success than Leo Durocher," Obey said, drawing a straight line from second base to Afghanistan and Pakistan.
 
Obey went on, saying that Congress is an "independent body" and that, "I'm not Dennis Hastert" -- that he's not going to just approve everything the administration wants.

Obey said he was "very dubious" about positive outcomes in Afghanistan and Pakistan. He said he felt the same way about Vietnam when he came into the House in 1969. But he gave Nixon a year, since he had inherited that war.

"If I could give Richard Nixon a year," Obey said, "I don't see why I can't give Barack Obama a year to see what he can do." But he reiterated, "I have very little faith in anybody to solve the situation in Pakistan. … The problem is Pakistan is Pakistan. It's a political system of dealmakers," who don't honor deals.

"I hope my judgment is wrong," said Obey, who has inside a glass-enclosed coffee table in his office a book written by -- himself.

The five areas, Obey wants to see assessed in a formal report in a year from the White House to Congress are: (1) The level of political consensus and unity of purpose to confront the political and security challenges facing the region; (2) The level of government corruption and actions taken to eliminate it; (3) The performance of security forces with respect to counterinsurgency operations; (4) The performance of intelligence agencies in cooperating fully with the U.S. and not undermining the security of our troops and our objectives in the region; and (5) The ability of the government to control the territory within their borders.

The full appropriations summary, from the committee, is below:

Summary: 2009 Supplemental Appropriations for Iraq, Afghanistan, Pakistan, and Pandemic Flu

Department of Defense and Intelligence Activities in Iraq and Afghanistan: $81.6 billion

Stop Loss: $734.4 million to provide over 170,000 service members who have had their enlistments involuntarily extended since September 11, 2001 with $500 per month for every month they were held under stop-loss orders.

Ongoing Military Operations
·         $44.8 billion for operations and maintenance, and military personnel requirements for ongoing military operations in Iraq and Afghanistan. 
·         $1.2 billion for defense health and programs to support military families.  
·         $500 million to enable U.S. military commanders to respond to urgent, humanitarian relief and reconstruction needs in their areas of responsibility.

Support for Coalition Partners
·         $3.6 billion to expand and improve capabilities of the Afghan security forces.
·         $810 million to support Coalition partners who have provided assistance to U.S. military operations in Afghanistan, Pakistan and Iraq.

Equipment and Force Structure
·         $23 billion to refurbish or replace equipment worn out or damaged in Iraq and Afghanistan including an additional $3.1 billion for C-17s and C-130s.
·         $4.8 billion for lightweight Mine Resistant Ambush Protected vehicles to protect our forces and provide a vehicle suited to the terrain and poor roads in Afghanistan.
·         $1.3 billion to confront the evolving threat from Improvised Explosive Devices.

Military Construction Projects: $3.2 billion to support our troops in Afghanistan and their families at home including:
·         $1.1 billion for increased troop strength in Afghanistan.
·         $1.1 billion for hospital construction to address hospitals that are decades old and do not meet current standards for medical care.
·         $488 million for wounded warrior complexes, to help soldiers wounded in combat recover and remain on active duty or transition to civilian life and to support families through this difficult process.
·         $276 million for child development centers, to provide an additional 5,000 child care spaces and address a top concern of military families.
·         $263 million to accelerate and enhance the construction of new hospitals at Bethesda and Ft. Belvoir to replace Walter Reed, as requested.

Rescission: $2.9 billion of these efforts are paid for by rescinding previous appropriations due to a reduction in world-wide fuel prices.

Department of State and USAID, International Affairs and Stabilization Activities: $10.4 billion

Assistance and Operations in Afghanistan, Pakistan, and Iraq
·         Afghanistan: $1.52 billion including: $980 million to fund economic development and agriculture programs, strengthen national and provincial governance and expand the rule of law; and $536 million for diplomatic operations including additional civilian staff and diplomatic security.
·         Pakistan: $2.3 billion including: $997 million to help address the economic crisis, including agriculture and food security, assist the displaced population, strengthen national and provincial governance, expand the rule of law, and to improve access and quality of education; $46 million for diplomatic operations including additional civilian staff and diplomatic security; $897 million for a new secure embassy and consulates in Pakistan; and $400 million for the Pakistan Counterinsurgency Capability Fund to build the counterinsurgency capabilities of the Pakistani security forces.
·         Iraq: $968 million including: $482 million to continue stabilization programs and strengthen governance and rule of law; and $486 million for diplomatic operations.
·         Oversight: $20 million to expand oversight capacity of the State Department, USAID, and the Special Inspector General for Afghanistan to review programs in Afghanistan, Pakistan and Iraq.

Performance Assessment for the Governments of Afghanistan and Pakistan
Because the stability and security of the region is tied more to the capacity and conduct of the Afghan and Pakistani governments and to the resolve of both societies than it is to the policies of the United States, the President shall submit a report to Congress, not later than the date of submission of the fiscal year 2011 budget request, assessing whether the Governments of Afghanistan and Pakistan are, or are not, demonstrating the necessary commitment, capability, conduct and unity of purpose to warrant the continuation of the President's policy announced on March 27, 2009.  This report must include five concrete standards of performance:

1.      The level of  political consensus and unity of purpose to confront the political and security challenges facing the region;
2.      The level of government corruption and actions taken to eliminate it;
3.      The performance of security forces with respect to counterinsurgency operations;
4.      The performance of intelligence agencies in cooperating fully with the U.S. and not undermining the security of our troops and our objectives in the region; and
5.      The ability of the government to control the territory within their borders.

Other Efforts in the Middle East
·         West Bank and Gaza:  $665 million in bilateral economic, humanitarian, and security assistance for the West Bank and Gaza.
·         Jordan: $250 million including $100 million for economic and $150 million for security assistance.
·         Egypt: $360 million including $50 million for economic assistance, $50 million for border security, and $260 million for security assistance.
·         Israel: $555 million for security assistance.
·         Lebanon: $74 million for security assistance.

Humanitarian Assistance
·         International Food Assistance: $500 million for PL 480 international food assistance to alleviate suffering during the global economic crisis.
·         Refugee Assistance: $343 million to help displaced people around the world with food, water, shelter and other basic needs, including humanitarian assistance for Gaza.  Funding for the UN Relief and Works Agency programs in the West Bank and Gaza is limited to $119 million.
·         Disaster Assistance: $200 million to avert famines and provide life-saving assistance during natural disasters and for internally displaced people around the world, including Somalia, Zimbabwe, Ethiopia, the Middle East and South Asia.

Peacekeeping: $837 million for United Nations peacekeeping operations, including an expanded mission in the Democratic Republic of the Congo and a new mission in Chad and the Central African Republic.

HIV/AIDS: $100 million for the Global Fund to Fight AIDS, Tuberculosis and Malaria to address a funding shortfall for grants in key countries such as Haiti, The Democratic Republic of the Congo, and Afghanistan.  

Other International Assistance
·         Africa: $151 million for economic and security assistance for Kenya, Somalia, Southern Sudan, and Zimbabwe.
·         Mexico: $470 million to address growing violence along the United States-Mexico border by supporting the Government of Mexico's war against organized crime and drug-trafficking.
·         Georgia: $242 million to fulfill the United States commitment to the people of Georgia.
·         Global Financial Crisis: $300 million to address the global financial crisis in developing countries.  

Pandemic Flu Response: $2 billion
·         HHS and CDC Response: $1.5 billion for priority efforts including: supplementing federal stockpiles; developing and purchasing vaccines; and expanding detection efforts.
·         State and Local Response: $350 million to assist state and local governments in preparing for and responding to a pandemic.
·         Global Efforts: $200 million to support global efforts to track, contain, and slow the spread of a pandemic. 

Other Security and Urgent Needs
Nuclear Non-Proliferation: $55 million for the National Nuclear Security Administration to safeguard nuclear material in Russia and other sites world-wide. 

Department of Justice: $17 million for counter-terrorism activities and to provide training and assistance for the Iraq criminal justice systems.

Wildfires: $250 million for wildland fire suppression and emergency rehabilitation of burned areas. 

Capitol Police: $71.6 million for a modern digital radio system because of known security threats.

From NBC's Harry Enten
Within hours of the news that Justice David Souter was retiring, numerous media outlets listed the favorites to replace Souter. Among them: Sonia Sotomayor, Elena Kagan, Diane Wood, Leah Ward Sears, Kim McLane Wardlaw, Jennifer Granholm.

But if some recent history is a guide, there's a chance that President Obama's ultimate pick might not be any of these favorites.  

A cursory search of some major newspaper databases -- Los Angeles Times, New York Daily News, New York Times, USA Today, Wall Street Journal, Washington Post, and Washington Times -- reveals that the last time a Democratic president (Bill Clinton) was filling his first Supreme Court vacancy, his ultimate choice (Ruth Bader Ginsburg) was not initially near the top of most experts' top lists.

A Washington Post article written on March 20, 1993, one day after Justice Byron White's retirement was announced, noted that Ginsburg's age (60 at the time) could "exclude" her from being selected. A USA Today article published on March 22nd listed Ginsburg as the last possible nominee in the "also mentioned" category. According to the database, none of the other newspapers in the month of March mentioned Ginsburg's name as a choice.

It was not until the month of May when the Washington Post, New York Times, and Los Angeles Times mentioned Ginsburg as a top choice. Yet even as late as May 6th, a USA Today article said that Ginsburg was "under less serious consideration" than other major nominees.

Clinton appointed Ginsburg a little more than a month later, on June 14th.

On the other hand, both John Roberts and Samuel Alito were high on the experts' lists when George W. Bush was considering his Supreme Court vacancies.

From NBC's Mark Murray
Just how unpopular is New York Gov. David Paterson (D) right now? Consider the latest Marist poll, which has Paterson's approval rating among Democrats at 22%.

And get this: A majority of New York voters (51%) say they would prefer his predecessor who had that little prostitution problem -- Eliot Spitzer -- to him. Ouch.

Paterson is up for re-election in 2010, and most expect him to receive a VERY tough primary challenge, probably from New York Attorney General Andrew Cuomo.

 

From MSNBC's Louis Burgdorf and NBC's Harry Enten
This morning on MSNBC's "Morning Joe," Democratic San Francisco Mayor and 2010 gubernatorial candidate Gavin Newsom said that he would accept an endorsement from Republican Gov. Arnold Schwarzenegger "in a second."

Video: Gavin Newsom discusses his gubernatorial run.

His statement came in response to Schwarzenegger's comment last Friday that backing a Democrat for governor "could happen."

Newsom, however, said that he'd be "surprised" if he received Schwarzenegger's endorsement.

I'm looking for all the support I can possibly get. I mean, the reality at the end of the day, we've got a governor who crosses our differences, not just Democrats or Republicans, but Independents and Green Party members out in California. So, of course, I'd appreciate that. Of course I'd be surprised, considering there's a lot of differences of opinion on a lot of issues. But, again, increasingly, Joe, you know this, we had a Republican governor in Arnold Schwarzenegger who arguably has become a Democratic Governor in Arnold Schwarzenegger near the end of his term. So he's moving, from my perspective, in the right direction.

From NBC's Athena Jones

President Obama, flanked by Treasury Secretary Tim Geithner and IRS Commissioner Douglas Shulman, announced changes to the tax code that he said would prevent businesses from dodging their responsibilities "while ordinary Americans pick up slack."

Combined with additional tax reforms to be laid out later this month, the proposals are expected to increase tax revenues by some $210 billion over the next 10 years. Congress, however, must first approve these moves -- which some argue would amount to a tax increase for U.S. corporations and are likely to face tough opposition from corporate lobbyists.

Video: Obama unveils his tax plan.

In brief remarks Monday morning, Obama said that while most American citizens and businesses meet their responsibilities as taxpayers, others do not. "Many are aided and abetted by a broken tax system written by well-connected lobbyists on behalf of well-heeled interests and individuals," he said. "It's a tax code full of corporate loopholes that makes it perfectly legal for companies to avoid paying their fair share."

During the campaign, candidate Obama often spoke of the need to get rid of tax loopholes that reward companies that "ship jobs overseas" and to create a fairer, simpler tax system. He frequently joked about one building in the Cayman Islands that housed more than 18,000 U.S. companies, saying it was either a really big building, or a tax scam.

Today, Obama argued that his budget would make reforms that have been needed for years and said the problems with the tax code had been cited by Rep. Charles Rangel (D-NY), Chairman of the House Ways and Means Committee; Montana Democrat Sen. Max Baucus; Sen. Carl Levin (D-MI); and Rep. Lloyd Doggett (D-TX).

According a fact sheet provided by the White House, 83 of the 100 largest U.S. corporations have subsidiaries in tax havens, and in 2004 U.S. multinationals paid just $16 billion in U.S. taxes on about $700 billion in foreign earnings -- an effective tax rate of 2.3%.

"The steps I'm announcing today will help us deal with some of the most egregious examples of what's wrong with our tax code," he said. "It's a down payment on the larger tax reform we need to make our tax system simpler and fairer and more efficient for individuals and corporations." Under the proposed rules, companies would not be able get tax deductions for offshore investments until they pay taxes on their offshore profits and the rules would end loopholes that allow U.S. companies to artificially inflate or accelerate U.S. tax credits they receive for foreign taxes paid overseas profits. Both of these changes would take effect in 2011.

This would raise $86.5 billion from 2011-2019 by requiring certain foreign subsidiaries to be considered as separate corporations for U.S. tax purposes so that companies could no longer avoid paying taxes on their foreign profits by shifting income to tax havens. They would also make it more difficult for wealthy individuals to hide money overseas to avoid taxes, make it easier to prosecute tax evaders and add 800 new IRS employees to help crack down on offshore tax avoidance.

Some of the money saved by reducing tax loopholes -- $103.1 billion -- would go toward making permanent a tax credit for research and investment within the United States. The rest would be used to reduce the deficit and help fund tax relief for families, Obama said, outlining steps his administration has already taken to reduce taxes for the middle class and to provide tax credits for higher education and to first-time homebuyers.