In it, but not of it. TPM DC

As D.C. legend has it, George Washington told Thomas Jefferson that the Senate was designed as a saucer to "cool" the heat of House-passed legislation. Put another way, the Senate has a talent for helping bills grind to a screeching halt after arriving from the House, where the majority party has more power.

And this week's outrage-fueled AIG bonus tax is no exception. One day after the House passed a 90% retroactive levy intended to claw back bonuses at the infamous company, the future of the bill in the Senate remains less than clear.

The Senate version of the bonus tax is more measured than the House version, imposing a 35% tax on bonuses. But it also applies the tax to any company receiving more than $100 million from the bailout, while the House measure only applied to firms getting more than $5 billion. Several senior GOP senators, from Judd Gregg (NH) to Jon Kyl (AZ), have blasted the tax bill in recent hours, suggesting that Republican leaders may split on the proposal, just as they did in the House.

Could Republicans mount a filibuster of the bonus tax bill next week? Anything is possible in the current volatile political climate -- especially after today's revelation that the House bill would exempt $2.5 billion in hasty bonuses awarded last year at Merrill Lynch.

Ultimately, however, the political risk of appearing tolerant of AIG's bonuses is sure to push at least a few GOP senators over to the "yes" camp. Then the X factor becomes whether any Democrats will take the unpredictable route and raise questions about the bonus tax's constitutionality.

For an accurate reading of the tea leaves, check out this headline from Dow Jones (emphasis mine): "Sen. Reid: Senate Should Take Up AIG Bill Before April 6."

There really is no dismissing Rush Limbaugh, is there? Earlier today, in the special election for Kirsten Gillibrand's old House seat, Republican candidate Jim Tedisco declared that "Rush Limbaugh is meaningless to me."

Now, Tedisco's campaign has released a statement clarifying what he meant:

"Jim's comments were in response to a question about what voters are asking him about on the campaign trail. So far, the concerns he has been hearing from voters on the campaign trail have been local in nature, such as his support for lower property taxes, fiscal responsibility, and his opponent's appalling support for the AIG bonus loophole. That was his point and any effort to characterize it otherwise is a distortion of the facts."


Late Update: The DCCC's statement ridiculing Tedisco is available after the jump.

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TPMDC has reported on how indignant Republicans are that Democrats are considering filibuster-proofing the coming climate change bill by making it part of the budget -- remember, 25 GOPers signed a letter nixing that option last week -- but the GOPers on the Senate environment committee are taking it to a new level.

In a letter to their fellow senators today, the environment panel's Republicans throw every rhetorical weapon in their arsenal at the Obama administration for putting revenues from carbon regulation in its budget. What they're afraid of is what the energy industry has called the "nuclear option," a budget item for climate change that would fast-track the bill to passage.

And to help strangle that option, the Republicans have renamed cap-and-trade emissions limits. They're now being christened an "energy tax," which creates a nice opening to slam Democrats as tax-hikers. Read the full letter after the jump, and fear the ominous "energy tax" ...

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Minnesota DFL spokesman Eric Fought has given TPM this statement about the comments by Coleman attorney Joe Friedberg, that Coleman will likely lose the election trial and then appeal:

"It's refreshing to have someone aligned with former Senator Coleman actually telling the truth. Mr. Friedberg is right -- Al Franken received more votes on Election Day. That was proven in a fair and accurate recount and will be proven once again at the conclusion of this meticulous and fair contest.

"When the results of the recount became evident, Coleman's legal team claimed that they were focused on the contest because that was where they could make their case. Now that they have failed to make their case in the courtroom, they claim that they will make their case in the appeals process. Clearly, there isn't a case to be made. Senator-elect Franken needs to be seated so he can move on to do the people's business."

The non-partisan Congressional Budget Office (CBO) dealt a bad blow to the Obama administration's budget today, releasing projections that show the expected 10-year deficit to hit $9.3 trillion -- that's $2.3 trillion more than the White House's budget estimated last month.

In the age of trillion-dollar financial bailouts, one might ask, what's a couple of more trillions between friends? It means a lot to congressional Democrats, who are preparing to release their own budget outlines next week and need a large new deficit figure like they need a hole in the head.

To get an idea of the kind of heated (and rather hypocritical, coming from George W. Bush's party) rhetoric that's already coming out from GOPers on this issue, listen to Sen. Chuck Grassley (R-IA):

CBO's word is the gospel. Congress and the administration need to get the message. The buck stops with the American taxpayer. People can afford only so much government spending, even for the worthiest-sounding causes.


And here's how House Minority Leader John Boehner (R-OH) put it:

This report should serve as the wake-up call this administration needs. We simply cannot continue to mortgage our children and grandchildren's future to pay for bigger and more costly government.


To some extent, this is nothing new. Former President Clinton took a similar hammering in 1995 from then-GOP House leader Newt Gingrich when the Congressional Budget Office (CBO) came out with numbers that differed sharply from the White House's.

And that tale had at least a quasi-happy ending, with the nation heading into the black by the time Clinton left office. But in these recessionary times, the best President Obama can hope for is keeping his promise to halve the budget deficit over the next five years.

For a taste of how Democrats aim to counter-punch in the coming clash over the budget, check out the White House's official talking points on the new CBO figures. TPMDC has obtained a copy, which is posted after the jump.

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Sen. Chris Dodd (D-CT) just spoke to home-state voters about his sudden emergence as the scapegoat for the watering-down of his executive pay amendment to the stimulus bill -- and the Banking Committee chairman was openly angry with the Treasury Department for not owning up to its role in the flap earlier this week.

Dodd defended his role in ensuring that Wall Street compensation limits made it into the stimulus. The senator expressed disappointment that Treasury let him twist in the wind until yesterday evening, when Secretary Tim Geithner admitted that officials from his department requested that Dodd's amendment be changed to grandfather in existing bonus contracts.

We'll have the video of Dodd's comments for you soon, but here's his key quote:

I wouldn't go around and change my own amendment within days of that if I didn't think it was merely technical in nature.

And so I'm angry about it and angry that, in a sense, I've been held up as sort of responsible for all of this, when, in fact, I responded to what I thought was a reasonable request at the time [from Treasury] ... it turned out to be far more than that.


But this back-and-forth over the executive pay amendment isn't the only issue that could put Dodd at odds with Geithner and White House economic adviser Larry Summers.

As I mentioned earlier today, Dodd has been openly skeptical of consolidating future financial regulatory power at the Federal Reserve, preferring to run broader regulation out of the FDIC -- and that position may not sit well with Geithner, the former head of the New York Fed, as well as Summers, who is widely tipped to be the next Fed chairman.

Late Update: Here's the video of Dodd.

Michael Steele will be speaking tonight to the Colorado Republican Party -- his first public appearance since he stopped doing interviews amid a series of gaffes about:

• Calling Rush Limbaugh an "entertainer" whose rhetoric is "incendiary" and "ugly" -- and then apologizing to Rush and praising his leadership.

• Declaring that he was "in the business of ticking people off."

• Saying in the GQ interview that abortion is an individual choice, then quickly backing off after it was published. This one really got the base angry -- for example, his former RNC rival (and then a supporter) Ken Blackwell said Steele needed to re-read the Bible.

• And just for extra comedic value, Steele said he was a fan of Frank Sinatra and the "Pack Rats."

Dick Wadhams, the chairman of the Colorado GOP, told the Denver Post that Steele's comments about abortion being an individual choice "have been a topic of conversation," but that he hasn't gotten any "angry phone calls" about it. "I think he was real quick to clarify what he said," said Wadhams.

The question that many people will be looking out for: Will Steele end up clarifying anything he says tonight?

On CNBC this morning, host Mark Haines -- who is catching heat this morning for arguing that Wall Street can't "be run well" by anyone making under $250,000 -- was at it again defending the need for high executive bonuses in order to keep Wall Street running.

But Haines' interviewee, Rep. Brad Sherman (D-CA), pushed right back at the host's conspicuously pro-Wall Street line.

When Sherman observed that "most people on Main Street do not" agree that AIG can't be put into government receivership (an assertion supported by recent polling on nationalization), Haines replied: "And what do the people on Main Street know about running a financial system?"

To which Sherman quipped: "What do AIG executives know about running a financial system? They only know how to destroy one."

Video of the exchange is below, and a full transcript is posted after the jump.

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As frustration with Sen. Chris Dodd (D-CT) reaches a fever pitch, both on the Hill and among his home-state voters, it's worth taking a step back and asking why some fellow Democrats left him to flail this week while they scrambled for cover from AIG anger.

Here's one potential answer, gleaned from months of watching the still-evolving debate over broader financial regulatory reform: depleting Dodd's political capital positions the Federal Reserve for a major increase in power by next year -- handing a plum position to Larry Summers, who has long been tipped as the next Fed chairman. As the WSJ put it:

Mr. Summers is widely seen as having ambitions beyond his current job. He originally wanted to be Treasury secretary, several Democrats say. He has long been described as a possible chairman of the Federal Reserve -- a job that could come open as soon as 2010, if Mr. Obama chose not to reappoint Ben Bernanke when his term runs out.


But why would kneecapping Dodd help those in D.C. who want regulatory power consolidated at the Fed?

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Jim Tedisco, the Republican candidate in the March 31 special election for Kirsten Gillibrand's old House seat, is now distancing himself from Rush Limbaugh.

"Rush Limbaugh is meaningless to me," Tedisco told an editorial board meeting of the Oneonta Daily Star. "The only constituency I'm worried about are the residents of the 20th Congressional District."

This race is going down to the wire, with a poll from a week ago showing Tedisco with only a four-point lead, after he'd previously led by 12.

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