In it, but not of it. TPM DC

President Obama recently announced that he would hold a fiscal responsibility summit at the end of this month, with a particular focus on the long-term funding shortage that faces Social Security and Medicare.

And who's bound to be high on the guest list? None other than Sen. Judd Gregg (R-NH), who abruptly pulled out of contention to become Commerce Secretary today. Not to mention that when Obama releases his maiden budget proposal -- also likely to come before month's end -- the leader of the opposition will be none other than Gregg, the senior Republican on the Budget Committee.

All together now, everyone: Awkward!

"It really is going to be very interesting" when the budget debate pits Gregg against the Obama team, budget expert Robert Bixby told me. Bixby is executive director of the Concord Coalition, a nonprofit fiscal watchdog.

"I actually could never quite figure out why Gregg had accepted the Cabinet position in the first place, since it was obvious that [he and the president] had some very fundamental disagreements about fiscal policy," Bixby added.

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White House press secretary Robert Gibbs has just released this statement, putting the blame for Judd Gregg's withdrawal squarely on Gregg -- that Gregg had said at the outset they could work together despite economic policy differences, then didn't follow through:

"Senator Gregg reached out to the President and offered his name for Secretary of Commerce. He was very clear throughout the interviewing process that despite past disagreements about policies, he would support, embrace, and move forward with the President's agenda. Once it became clear after his nomination that Senator Gregg was not going to be supporting some of President Obama's key economic priorities, it became necessary for Senator Gregg and the Obama administration to part ways. We regret that he has had a change of heart."

Late Update: It turns out Judd Gregg blames Judd Gregg, too:

"I couldn't be Judd Gregg and serve in the Cabinet. I should have faced up to the reality of that earlier," Gregg said. "I've been my own person and I began to wonder if I could be an effective team player. The president deserves someone who can block for his policies. As a practical matter I can contribute to his agenda better -- where we agree -- as a senator and I hope to do that."

One important development may have just come from legal arguments by Coleman lawyer James Langdon: He has definitively stated that the Coleman camp does not want to include fraudulent ballots, despite some past arguments that have gone on.

Langdon did say that the burden of proof for fraud, which would lead to ballot rejection, has to be very high. After all, a voter is signing both an application and a ballot envelope, which certify that they are legal voters under penalty of a felony charge.

"We will not play loosey-goosey here," said Langdon. "We will not countenance anything that constitutes fraud or the possibility of fraud. But we will believe that Minnesota's voters say what they believe and believe what they say, like Horton the Elephant."

As an example of a specific case where evidence of improper behavior exists, he mentioned Douglas Thompson, the friendly Coleman witness who testified in court that his girlfriend forged his signature on the absentee-ballot application, and who said his ballot should be counted because he signed the actual ballot envelope.

That's a huge reversal from Coleman lawyer Joe Friedberg, who said he didn't care about the procedures in Thompson's case, or Friedberg's other attempt to admit that one person had illegally signed and cast two ballots, but one of them should be counted.

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I won't claim to know the precise reasons why Judd Gregg, who last week stood with President Obama, and vowed to work with him as Commerce Secretary is now withdrawing. But a couple of sources in New Hampshire politics chalk it up to the abuse Gregg was taking over the past few weeks, first from some on the right for going into the liberal Obama administration and then from all sides for being too cute about the stimulus package, abstaining from voting for or against it. Gregg was ridiculed in New Hampshire's most important newspaper, the Union Leader.

The situation creates headaches for everyone. Back home, Gregg might come to be seen as principled for staying in his seat but at the moment he looks weirdly indecisive and he still faces a tough reelection bid in 2010 if he chooses to run again. He's embarassed a popular governor, John Lynch, who took some political risks by nominating a Republican to fill Gregg's seat. But the biggest fallout is probably for the Obama administration which has seen two other cabinet nominations (those of Tom Daschle to be HHS Secretary and Bill Richardson to head Commerce) blow up on the launch pad.

It's hard to see why the differences with Obama had somehow become irreconcilable for Gregg. The stimulus package has moved in a conservative direction since the days when he was named to the Commerce post. And if he's feeling neutered over the decision to make the Bureau of the Census appointment, which I wrote about at the time, a White House-appointed position, surely he could have worked behind the scenes to make sure someone sufficiently politically independent got the slot. He didn't have to switch caree to guarantee someone who met with his approval got the Commerce slot.

The withdrawal would seem to be very different than that of Tom Daschle's in most ways. There was no hint of financial or personal misdeed about Gregg. But the two withdrawals are similar in the sense that the person's peer group started to come down on them. In the case of Daschle, it was the New York Times and the chattering classes who had begun to transform him from aw-shucks good guy to limousine villain. Likewise, Gregg's peer group was giving him crap back in New Hampshire and he, like Daschle, withdrew although Daschle at least gave the White House a few hours to scramble so they could release simultaneous statements of regret. This time, the White House had no heads up, so far as I have heard. You have to wonder what the president will think about his outstretched hand after its been slapped like this.

Late Update: Gregg has reaffirmed to the ABC affiliate in New Hampshire that he is not running for re-election in 2010. (e.k.)

In some key arguments just now before the Minnesota election court, lead Coleman lawyer Joe Friedberg has just advanced a novel argument: While he's until now been arguing ballot by ballot that certain rejected absentee envelopes really meet all legal requirements, he's now going much farther -- demanding that a large number of votes that don't meet the requirements be counted, anyway. And failure to do so is a violation of Equal Protection.

Friedberg's argument is that most of them must be counted -- though he was careful to say that this would not mean all of them --because there have already been documented cases of improperly-accepted ballots elsewhere in the count, where a voter clearly failed to properly fill out the required forms. "There's not a single type of malady in the ballot or application process that has not already been admitted one way or the other," he said.

And since he defines an Equal Protection violation as a failure to treat similarly-situated people exactly the same, this means it's a violation of Equal Protection rights to not count invalid votes, if it can be shown that a significant number of similarly-illegal ballots were counted elsewhere.

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It's a truism of Washington that the more your industry is regulated and influenced by the actions of the federal government, the more you're going to want to make your case in the halls of Congress and in the federal agencies that influence your business's fate. So at this important moment, when the federal government is preparing to overhaul the financial services industry, in all it's many parts, and when the largest bank bailout ever conceived is being rolled out, and the public is up in arms, it's worth stepping back and taking a look at how the affected industries will make their case and who they will make it to

First, it's worth keeping in mind that financial services are a diverse lot. The American Bankers Association represents the mainstream banks while the Credit Union National Association representes the nations credit unions. There's the Financial Services Forum that represents the largest financial institutions and others. The Independent Community Bankers of America have different interests, too. It opposes the merger of multiple banking regulators that's favored by larger banks. Then there are the divergent needs of semi-banks, represented by the Financial Services Roundtable which includes the likes of General Electric.

Private Equity has the Private Equity Council and the hedge funds industry as the Managed Funds Association, headed by Richard Baker, a former Republican Congressman from Louisiana which is most determined to stop a bill that would require them to disclose their holdings.

Not surprisingly, members of comittees that regulate the financial services tend to do quite well in terms of campaign contributions from the industry. Look at Rep. Jim Himes of Connecticut. The Democrat represents a lot of constituents who work in the financial services industry and according to the Center for Responsive Politics collected more from those companies that have received TARP monies than any other member. The center's full listing of members of the committee and what they got from TARP recipients is here. In the Senate, Chuck Schumer has long been seen as a defender of the financial services industry, a point articulated at length in this New York Times story in December. As financial services reform makes its way through Congress keep an eye on Schumer and what happens to proposals that come out of Barney Frank's Financial Service Committee when they hit Chris Dodd's Banking Committee. Today, for instance, the Senate Banking Committee is holding a hearing on proposed credit card regulations. which is a very big deal to bankers and of no real consequence to hedge funds. In the coming days, we'll keep an eye on those fights that have a real impact on policy but that also illustrate larger points about Washington has and hasn't changed under Barack Obama.

As we mentioned last week, Sen. Tom Coburn (R-OK) offered a successful amendment to the stimulus bill preventing any of its dollars from going to zero-gravity chairs, saunas, and rotating pastel lights.

The comic value of Coburn's crusade aside, his amendment also barred any money for parks, museums, theaters or any other arts organization that is struggling to survive the current economic downturn. And it looks like Democrats have kept that limitation after final conference talks on the bill.

As New York magazine reports, that's distressing news for cultural groups that call the Big Apple home -- and they're laying blame at the feet of Chuck Schumer (NY), the No. 3 Democrat in the Senate. Alliance for the Arts Randall Bourscheidt tells the magazine that Coburn's blanket limitation was

very prejudicial and, I think, intended to appeal to a constituency of Senator Coburn's which finds the arts an easy target for things they don't like. The surprising thing is that Senator Schumer voted for it.

Senate Judiciary Committee Chairman Patrick Leahy (D-VT) is getting laudable attention for his call for an independent "truth commission" to investigate civil liberties and human rights abuses committed during the Bush years. But as I mentioned earlier this week, the commission may not be directly legislated by Congress -- and one reason is that not every Democrat thinks it's necessary to do so.

Sen. Ben Cardin (D-MD) told me that the Obama Justice Department is already positioned to do the type of analysis that such an independent commission would perform, and he warned against investigating the Bush years "in a way that could impose partisan concerns."

Now Sen. Jack Reed (D-RI), a trusted ally of party leaders, is the second Democratic senator to openly question the need for a formal panel to look back on the Bush administration's potentially illegal misdeeds. As Reed told MSNBC today:

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The Hill reports that there might just be something to a meme that's been floating around about the Minnesota Senate race: That the Republican Party quite likes the situation of Norm Coleman's lawsuit keeping the Democrats one vote short of what they would otherwise have.

GOP aides told the paper that there is not a specific desire to wage the lawsuit as a stalling maneuver on Franken's seating. But one anonymous leadership aide did say that "It's better for us to have one less member." The same person also admitted this about Franken: "He's got a very good shot at winning."

And Ron Bonjean, a former Senate Republican aide who now runs a public-relations firm, had this to say: "If Franken was going to vote on the stimulus package, they wouldn't necessarily need one of the Republicans. So yeah, it matters."

Even if the lawsuit isn't specifically being done as a stall tactic, the delaying effect does appear to be a nice fringe benefit.