From NBC's Pete Williams
Handing an important tactical victory to challengers of the new health-care law, a federal judge today refused to throw out one of the first lawsuits against it. And in doing so, he said the arguments against the law are worth further consideration.

The challenge was brought by the state of Virginia, which passed a law declaring that no state resident can be required to buy insurance. Though finding that the law "has a distinctive political undercurrent," Judge Henry Hudson nonetheless ruled today that Virginia has a legitimate interest in defending it. He rejected the Justice Department's argument that the state has no legal standing to challenge the health-care law and that any lawsuit is premature -- given that the federal requirement won't take effect until 2014.

Virginia claims the health-care law's requirement, that all Americans buy health insurance, violates the Constitution's commerce clause, which gives Congress power to regulate interstate commerce. The state argues that a decision NOT to buy something is not an economic activity -- it's the lack of it -- and is therefore beyond the reach of Congress. The federal government responds that no person can simply choose to avoid participating in the health care market, because everyone will eventually require medical care.

The Justice Department also says the federal law contains a penalty for failing to buy insurance, and Congress has broad taxing authority. The state contends, however, that the purpose of taxes is to raise money. If everyone buys health insurance, no penalties will be paid, and no revenue will be raised. So the state says it's not really a tax.

In today's ruling, the judge wrote that Virginia's attack on the constitutionality of the federal health care law has some merit. The law, he said, "extends Commerce Clause powers beyond its current high watermark."

"Neither the US Supreme Court nor any circuit court of appeals has squarely addressed this issue" of whether Congress has the power to regulate and tax a person's decision not to participate in interstate commerce, he said.

Each side has some good arguments, the judge concluded, finding that the lawsuit should stay alive so that the issues can be hashed out in a full-blown trial over the health-care law.

The Alexi Giannoulias (D)-vs.-Mark Kirk (R) Senate race in Illinois will likely be decided by this question: Which is worse -- Giannoulias' bank problems or Kirk's misstatements about his record/background?

Over the last few weeks, Kirk's various embellishments have dominated the campaign coverage. But today, the Chicago Sun-Times brings up Giannoulias' Broadway Bank -- and even the infamous Tony Rezko.

This was the Tony Rezko who, looking for millions of dollars for a massive South Loop development, turned to Broadway Bank, owned by the family of Alexi Giannoulias. Giannoulias, the Democrat now running for U.S. Senate, had left his post as a senior loan officer at the Chicago bank in late 2005 to mount a successful campaign for Illinois state treasurer, though he still held an ownership stake in the bank.

Rezko's company asked. And Broadway Bank came through.

On Feb. 14, 2006, newly obtained records show, the bank made a $22.75 million loan to a company called Riverside District Development LLC, whose owners, it turns out, included Rezko.

Here's the response from the Giannoulias campaign:

"Alexi left daily operations of the bank in September of 2005, months before this loan was made," says Kathleen Strand of his campaign staff. "He had no knowledge of it, and his name is not on any documents related to the loan.

"This guilt-by-association story is an unfortunate and failed attempt to link Alexi to Mr. Rezko.''

From NBC's Mark Murray and Ellie Hall
The Democratic nominee is incumbent Bill Foster (who is currently serving his first full term). The GOP nominee is state Sen. Randy Hultgren. In 2008, Obama won 55% in this district, and Bush won an equal percentage in '04.

Foster voted yes on the stimulus and health care, but no on cap-and-trade.

The Cook Political Report rates the race as Toss Up, while the Rothenberg Political Report has it Lean Democrat.

Note: We accidentally forgot to include this in our First Thoughts section today.

From NBC's Ken Strickland
Sen. John McCain (R) has placed a "hold" on the nomination of James Clapper to be Director of National Intelligence.

"McCain requested a specific report from Mr. Clapper, and until that report is provided, Sen. McCain will continue to hold his nomination," said his spokeswoman Brooke Buchanan. His office declined to specify the nature of the report.

Clapper's nomination was passed out of the Senate Intelligence Committee with unanimous support last week.

The "hold" doesn't necessarily doom the nomination. It has the effect of a filibuster, which will require 60 votes to break it. More than likely it means any vote on Clapper's nomination won't come until at least September -- after Congress returns from its summer recess.

The latest issue of the New Yorker has a lengthy look at the current complaints that the U.S. Senate is broken. Here are some snippets from the article:

“The Senate, by its nature, is a place where consensus reigns and personal relationships are paramount,” Lamar Alexander said. “And that’s not changed.” Which is exactly the problem: it’s a self-governing body that depends on the reasonableness of its members to function. Sarah Binder, a congressional scholar at George Washington University, said, “To have a chamber that rules by unanimous consent—it’s nutty! Especially when you’ve got Jim Bunning to please.”

[snip]

In 1917, Woodrow Wilson, with his wartime legislative agenda blocked by filibusters, forced the Senate to pass Rule XXII, which allowed a two-thirds majority to bring a floor debate to an end with a “cloture” vote. For decades, the rule was rarely used; between 1919 and 1971, there were only forty-nine cloture votes, fewer than one per year. In the seventies and eighties, the annual average rose to about a dozen. (Frustration with this increase led the Senate, in 1975, to lower the threshold for cloture to sixty votes.) In the nineties and early aughts, the average went up to twenty-five or thirty a year, as both parties escalated their use of the filibuster when they found themselves in the minority. After the Republicans lost their majority in 2006, filibusters became everyday events: there were a hundred and twelve cloture votes in 2007 and 2008, and this session Republicans are on target to break their own filibuster record.

[snip]

“They’ll get over it,” Alexander said of the Democrats’ enthusiasm for [reforming the filibuster]. “And they’ll get over it quicker if they’re in the minority next January. Because they’ll instantly see the value of slowing the Senate down to consider whatever they have to say.” He added that the Senate “may be getting done about as much as the American people want done.” The President’s ambitious agenda, after all, has upset a lot of voters, across the political spectrum. None of the Republicans I spoke to agreed with the contention that the Senate is “broken.” Alexander claimed that he and other Republicans were exercising the moderating, thoughtful influence on legislation that the founders wanted in the Senate. “The Senate wasn’t created to be efficient,” he argued. “It was created to be inefficient.”

The piece concludes:

On July 21st, President Obama signed the completed bill. The two lasting achievements of this Senate, financial regulation and health care, required a year and a half of legislative warfare that nearly destroyed the body. They depended on a set of circumstances—a large majority of Democrats, a charismatic President with an electoral mandate, and a national crisis—that will not last long or be repeated anytime soon. Two days after financial reform became law, Harry Reid announced that the Senate would not take up comprehensive energy-reform legislation for the rest of the year. And so climate change joined immigration, job creation, food safety, pilot training, veterans’ care, campaign finance, transportation security, labor law, mine safety, wildfire management, and scores of executive and judicial appointments on the list of matters that the world’s greatest deliberative body is incapable of addressing. Already, you can feel the Senate slipping back into stagnant waters.

Reuters reports:

A U.S. judge on Monday refused to dismiss the state of Virginia's challenge to President Barack Obama's landmark healthcare law, a setback that will force his administration to mount a lengthy legal defense of the overhaul effort.

Virginia Attorney General Ken Cucinelli earlier defended the state's lawsuit at a Tea Party rally this way, "This isn't about health care; it's about liberty."

Attorneys General from Virginia and 13 other states have filed suit to not enact the legislation in their states. Their cases center on the individual mandate.

Polling has indicated that popular opposition to the health-care law has waned.

*** UPDATE *** NBC's Pete Williams reports that this is a tactical victory for Virginia. The Justice Department asked the judge to throw the suit out, arguing that the state had no legal standing to sue.

Iraq is back, with Obama speech at 11:30 am ET to discuss the end of combat operations there by Aug. 31… Could the Iraq drawdown buy the administration some more patience with Afghanistan?... First Read's handy calendar looking at the other big events to watch during the dog days of August… Rangel and Waters ethics allegations create a headache for Dems… The push for more state aid in the Senate… It's close in Colorado between Bennet and Romanoff… And the St. Pete Times takes a critical look at Jeff Greene.

From NBC's Chuck Todd, Mark Murray, Domenico Montanaro, and Ali Weinberg
*** Iraq is back: It has been weeks, it seems, since we last typed the word "Iraq" on this blog -- which is ironic given that it was the ultimate political issue from 2003 to 2007 (and was the biggest supposed issue difference between then-candidate Obama and candidate Clinton). But it once again takes center stage, both today and this month. At 11:30 am ET in Atlanta, President Obama addresses the Disabled Veterans of America conference, where he will discuss the U.S. meeting its goal of ending combat operations in Iraq by Aug. 31. "Already, we have closed or turned over to Iraq hundreds of bases," Obama is expected to say, according to excerpts. "We're moving out millions of pieces of equipment in one of the largest logistics operations that we've seen in decades. By the end of this month, we'll have brought more than 90,000 of our troops home from Iraq since I took office." But the White House is wary of echoing Bush's "Mission Accomplished, and the president will remind the public that thousands of troops will remain in the country, the Washington Post writes. "We will maintain a transitional force until we remove all our troops from Iraq by the end of next year," he will say.

*** A campaign promise kept: The end of combat operations in Iraq would mark the completion of another campaign promise for Obama, and it could possibly buy him some more patience with Afghanistan, especially among Democrats. "America, it's time to start bringing our troops home," Obama said when he announced his presidential bid in Feb. 2007. "Letting the Iraqis know that we will not be there forever is our last, best hope to pressure the Sunni and Shia to come to the table and find peace." (However, the date Obama mentioned for withdrawal in that speech was March 2008, so he did end up missing that date by, oh well, more than two years.) Still, all of this talk of withdrawal from Iraq also is going to serve as an impetus to have the conversation about how much longer the U.S. will have approximately 100,000 troops in Afghanistan -- and just how real the July 2011 deadline is. Defense Secretary Robert Gates this weekend again indicated that the likelihood of a major withdrawal next summer is HIGHLY unlikely.

*** The Dog Days of August: In addition to the end of combat operations in Iraq by Aug. 31, here are the other events for this busier-than-usual August:
Aug. 3: primaries in Kansas (Moran vs. Tiahrt GOP Senate race), Michigan (featuring the crowded GOP gubernatorial primary), and Missouri
Aug. 5: primary day in Tennessee (yes, it's on a THURSDAY); Obama stumps for Alexi Giannoulias and will also visit a Ford plant in Illinois
Aug. 6: July jobs report is released
Aug. 10: primaries in Colorado (the Dem Bennet vs. Romanoff race, and the GOP Buck vs. Norton and McInnis vs. Maes primaries), Connecticut, and Minnesota (featuring the Dem gubernatorial primary), plus the GOP gubernatorial run-off in Georgia (Handel vs. Deal)
Aug. 12: Pawlenty goes to the Iowa State Fair, while Romney heads to New Hampshire
Aug 16-18: Obama makes campaign stops in WI, CA, WA, OH, and FL
Aug. 17: primaries in Washington state and Wyoming
Aug. 24: primaries in Alaska (Murkowski vs. Miller), Arizona (McCain vs. Hayworth), Florida (Scott vs. McCollum and Meek vs. Greene), and Vermont
Aug. 31: end of combat operations in Iraq

*** From September to August: By the way, if you're a longtime political junkie and wondering are, "Since when did the August primary calendar get so crowded?" you can thank the Florida recount in 2000. As a result of the voting reforms implemented after the 2000 debacle, states have to make sure they get absentee and overseas ballots out by a certain date and in order to meet PRIMARY vote certification deadlines, many states have to move their primaries out of the month of September. A few states have exemptions this year, but that will continue to fade. Look at this cycle: A slew of former September primary states are now in August -- AZ, FL, WA, MN, and VT.

*** The Dems' ethics headache: But while Obama and the Democrats are hoping Iraq gives them a positive story to tell heading into the fall elections, it appears that ethics is a different matter. Here's the front page of the New York Times: "By defiantly pushing for full-fledged ethics trials, Representatives Charles B. Rangel and Maxine Waters are raising the prospect of a spectacle focusing on Congressional corruption this fall, just as Democrats are fighting to hold on to their majority in an election already defined by distrust of Washington." Because both Rangel and Waters are black, some folks might see this as a story about race. But is it race or the fact that both Rangel and Waters have served so long in Congress? The temptation by many in the media and in political circles to use the race card to cover this story will be great but, folks, take a breath and realize this is good 'ol fashioned Congressional entitlement mixed with blinders to wrongdoing.

*** Battle over state aid: The Democratic National Committee is making a push to help pass legislation in the Senate for more aid to states and localities. And the DNC is releasing this Web video: "States across America are facing tough choices -- choices like laying off police and firefighers, and one hundred forty thousand teachers losing their jobs," the Web video goes. "Democrats believe in education and safe communities. But Republicans have different values -- like saying 'yes' to tax breaks for CEOs who ship our jobs overseas, while saying "no" to teachers and those who keep us safe."

*** It's close in Colorado: It appears Colorado's Democratic Senate primary -- which features incumbent Sen. Michael Bennet and challenger Andrew Romanoff -- is going to be a close. After a robo-poll showed Romanoff with a slight lead, Bennet's campaign released its own poll showing them up by four points. And if the best you can do is release your own poll showing you up by four, you've got a tight race on your hands.

*** More midterm news: In Florida, the Washington Post notes that top aides/adviers (including Joe Trippi and manager Jessica Vandenberg) have departed Jeff Greene's (D) Senate campaign, and new folks are in… Also, the St. Pete Times runs a VERY critical piece about Greene. "Send Jeff Greene to the U.S. Senate, and what do you get? Maybe you've elected a self-made success story who doesn't owe anyone anything… Or maybe your new senator is a tyrant and egomaniac who spends six years embarrassing Florida." For those who have issues with the current campaign finance laws, check out Florida: Both the non-self-funding Senate candidates and gubernatorial candidates have to abide by very strict fundraising rules. The self-funding billionaires do not. Something's wrong with a political system that creates two sets of rules for candidates based solely on wealth. Whether you are an advocate for MORE spending restrictions or an advocate of LESS raising and spending restrictions, there's nothing about what's going on in Florida that looks fair right now, period.

Countdown to KS, MI, MO primaries: 1 day
Countdown to TN primary: 3 days
Countdown to CO, CT, and MN primaries, plus GA run-off: 8 days
Countdown to WA and WY primaries: 15 days
Countdown to AK, AZ, FL, and VT primaries: 22 days
Countdown to Election Day 2010: 92 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.
Check us out on Facebook and also on Twitter.

“A House investigative panel has decided to charge Democratic Rep. Maxine Waters of California with ethics violations, raising the possibility of a second high-profile political trial this fall,” AP writes.

In his first comments on the Rangel scandal, Obama said on CBS Evening News: "I think Charlie Rangel served a very long time and served his constituents very well. But these allegations are very troubling. He's somebody who's at the end of his career. Eighty years old. I'm sure that what he wants is to be able to end his career with dignity. And my hope is that it happens."

“At a barbecue outside his Lenox Terrace home in Harlem yesterday, the Democrat was asked about the president's statement that the ethics charges against Rangel were ‘very troubling’ and that the congressman was ‘at the end of his career.’ Rangel shot back, ‘I've never gotten a fair shake,’” the New York Post reports.

“[F]ive Republican senators have pledged to vote for Kagan, making her a shoo-in for confirmation. This puts the NRA in the tricky position of having to decide how much political capital to spend against Kagan,” The Hill writes.

“Sen. Lindsey Graham called on Congress to turn to border security and fix the nation’s ‘broken’ immigration laws next year,” Roll Call writes.