In it, but not of it. TPM DC

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.

This isn't exactly optimism from Team Coleman.

Two days ago, lead Coleman lawyer Joe Friedberg appeared on a local talk-radio show in Minnesota, for a wide-ranging interview on everything from criminal defense to college football -- and oh yeah, that his client is going to lose the trial and then appeal:

Friedberg: We've been trying this case with the appeal record in mind, and that's where we're going. And it's gonna be a very quick appeal, and then I'll know whether or not it worked.

Rosenbaum: Well, when you say a quick appeal, are you confident that you're gonna lose the case in front of the three-judge panel? By losing the case, I mean Norm ends up with less votes.

Friedberg: I think that's probably correct -- that Franken will still be ahead, and probably by a little bit more. But our -- you know, our whole argument was a constitutional argument. And it's an argument which is really suited for the Minnesota Supreme Court, not for the trial court. So we'll see whether we were right or not.

On the bright side, the normally Democratic Friedberg did say that he promised Norm Coleman that in case there's a new election, he will vote for Norm this time.

Late Update: Professor Rick Hasen from Loyola Law School has this review of the Coleman legal argument: "In the end, Coleman doesn't have a strong equal-protection argument. Then again, most of us thought George W. Bush didn't, either."

It seems that House Democratic leaders have settled on an interesting compromise in the debate over whether to use budget reconciliation rules to pass health care reform -- effectively shielding any future bill from a Senate filibuster.

The House budget will include a filibuster-proofing rule that only kicks in if Dems and the GOP cannot reach a health reform compromise by the time Congress breaks for its month-long August recess, the WaPo reports this morning.

That means that if Republicans can make good on their kumbaya rhetoric and reach common ground with the president's party by August, a longer debate and the ability to attempt a filibuster would be within their reach. But the House's intriguing plan might be a moot point if the Senate doesn't agree, since both chambers need to agree on a budget plan by next month.

And with Senate Budget Committee Chairman Kent Conrad (D-ND) openly pooh-poohing the reconciliation option, that agreement on filibuster-proofing is anything but a foregone conclusion.

Obama Reaches Out To Iran In New Video President Obama has posted this new video, reaching out to the people of Iran in celebration of Nowruz, the Iranian New Year:

"So on the occasion of your New Year, I want you, the people and leaders of Iran, to understand the future that we seek," Obama says. "It's a future with renewed exchanges among our people, and greater opportunities for partnership and commerce. It's a future where the old divisions are overcome, where you and all of your neighbors and the wider world can live in greater security and greater peace."

Obama's Day Ahead: Discussing Stimulus With Top State And Local Officials President Obama and Vice President Biden are speaking at 12:35 p.m. ET today to representatives from the National Conference of State Legislatures, about oversight and transparency in the implementation of the stimulus program. At 2:15 p.m., Obama will be meeting with Arnold Schwarzenegger, Ed Rendell and Mike Bloomberg. At 2:45 p.m. ET, the President and First Lady will attend a reception of the National Newspaper Publisher Association, where they will be presented a Newsmaker of the Year award.

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President Obama has just released this statement on the House's passage of the bonus tax:

"Today's vote rightly reflects the outrage that so many feel over the lavish bonuses that AIG provided its employees at the expense of the taxpayers who have kept this failed company afloat. Now this legislation moves to the Senate, and I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated.

In the end, this is a symptom of a larger problem - a bubble and bust economy that valued reckless speculation over responsibility and hard work. That is what we must ultimately repair to build a lasting and widespread prosperity."

Jim Tedisco, the Republican candidate in the March 31 special election for Kirsten Gillibrand's former House seat, is upping his populist appeal against the AIG bonuses: He's not just endorsing the 90% bonus tax, but he's calling for Tim Geithner to be fired -- and challenging his Democratic opponent Scott Murphy to join him.

Murphy has responded with a press release declaring that he's ideally for a 100% tax on the AIG bonuses -- though he would have voted for the 90% tax, too.

When asked about Tedisco's call for sacking Geithner, Murphy spokesman Ryan Rudominer told TPM: "Scott trusts President Obama's judgment. Tedisco is just trying to distract from saying no to creating or saving 76,000 jobs Upstate and the largest middle class tax cut in history."

Rudominer is referring here to the stimulus bill, which Tedisco said on Monday he would have opposed. And since Tuesday, Tedisco has been using the stimulus bill as a foothold to accuse Murphy of supporting the bonuses.

We now have an illustrious addition to the ranks of Republican governors turning down stimulus money: Sarah Palin.

Palin has announced that she is rejecting $416 million, out of $930 million originally headed to her state. "We are not requesting funds intended to just grow government," Palin said in a statement. "We are not requesting more money for normal day-to-day operations of government as part of this economic stimulus package. In essence we say no to operating funds for more positions in government."

Freshman Democratic U.S. Senator Mark Begich has already called on the legislature to override Palin on this.

This is notable for two reasons. First, Palin is widely seen as a potential presidential candidate, and a move like this can help her build up credibility with conservatives. Second, this might actually be the first time that Alaska rejected federal dollars for anything.

Treasury Secretary Tim Geithner has confirmed that his department did press Sen. Chris Dodd (D-CT) to water down the executive-bonus limits included in last month's stimulus bill, delivering a boost to the beleaguered Dodd -- but at a greater potential cost to his own damaged credibility on Capitol Hill.

In an interview set to air later today on CNN, Geithner took "full responsibility for the situation" and said "calls for resignation are part of the job," according to an early report on the network's website.

Late Update: The full exchange between CNN's Ali Velshi and Geithner is posted after the jump. It's notable how rapidly the media has become fixated on this change to the Dodd amendment ... considering that most mainstream news outlets were fudging the truth on it just days after it became law.

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