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Et tu, State Department?

Earlier this week, we told you that the Iraqi government had decided not to renew Blackwater's contract to operate in Iraq, thanks to a 2007 incident in which Blackwater guards opened fire in a Baghdad square, killing 17 Iraqis, among several other cases of excessive force. Five ex-Blackwater guards were charged with voluntary manslaughter and are awaiting trial in connection with the 2007 incident.

Now, the State Department, which depended on Blackwater as its biggest contractor providing security to US diplomats in Iraq, has followed suit, according to the Associated Press, declining to renew the controversial company's contract to protect department personnel in Iraq when it expires in May.

The decision was a result of the Iraqi government's move, according to a department official.

In the AP's words, the state Department is "still considering its options" as to how to proceed.

Michael Steele is back in the lead for RNC Chairman, after Ken Blackwell dropped out and endorsed him -- but he's still just short of a full majority. On top of that, third-place finisher Saul Anuzis dropped out and endorsed nobody.

Here are the fifth-ballot numbers, compared to the fourth:

• Steele 79 (+19)

• Dawson 69 (+7)

• Anuzis 20 (-11)

As mentioned above, Anuzis dropped out after the vote, but didn't make an endorsement. "We've got two great people still running," said Anuzis, wishing the best of luck to the eventual winner.

Steele at this point should be regarded as the most likely to win, as he is only six votes short of the magic number 85.

As this slow news day moves on, it's a good time to prepare for the Senate stimulus debate that will begin on Monday -- it's shaping up an only slightly more genial cage match than we saw in the House.

One possible X factor arising today is the sideline maneuvering of Sen. Ben "Gang of 14" Nelson. He's staying true to form by trying to build a bipartisan coalition of senators to support major changes to the House bill.

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So does that letter Newsweek obtained, sent January 16 by the Bush White House to Karl Rove's lawyer, instructing Rove not to respond to any subpoenas that might be issued, change the state of play as to whether Rove will end up testifying on the US Attorneys firings? After all, President Bush is now on the record claiming the right to assert executive privilege even after leaving office.

Not according to Neil Eggleston, who specialized in executive privilege issues for President Clinton's White House. Eggleston told TPMmuckraker that, since President Obama has already issued an executive order that appears to take the view that a former president can't assert executive privilege, he's unlikely to back Bush's claim. And assuming things then wind up in court, Eggleston said he'd be very surprised if a court sided with Bush, ruling that executive privilege can be asserted retroactively.

"Remember what Obama kept saying during the transition: 'There's only one president at a time?'" asked Eggleston. "This is one where I think a court's going to decide there's only one president at a time."

Eggleston told TPMmuckraker last week that Obama's order seemed designed to help gain access to Bush White House documents and testimony that Congress has been seeking, including on the US Attorney firings matter.

Ken Blackwell, who has been in last place in all four ballots that have been held so far in the RNC chair race, has just withdrawn his candidacy -- and he's endorsed Michael Steele.

Blackwell had the support of many movement conservative activists and bloggers, but it just wasn't meant to be.

Blackwell won 15 votes on the fourth ballot, compared to 62 for Katon Dawson, 60 for Steele, and 31 for Saul Anuzis. If Blackwell's supporters were to all go to Steele, that would put the former Maryland Lt. Governor at 75 votes, just ten shy of the 85 needed to win.

We now know where the RNC chairmanship race is going: The black candidate versus the white Southerner candidate.

Here are the vote totals from the fourth round of voting, compared to the third round held right before incumbent Mike Duncan dropped out:

• Dawson 62 (+28)

• Steele 60 (+9)

• Anuzis 31 (+7)

• Blackwell 15 (+0)

So Michael Steele has lost the lead he achieved on the third ballot, and is now narrowly trailing South Carolina GOP chairman Katon Dawson.

This is now pitting Steele, an African-American conservative who has criticized the GOP for failing to reach out to minority voters, against Dawson -- who until recently belonged to an all-white country club, and has said he got involved with politics as a teenager in opposition to busing programs.

The House GOP's tax-cut-heavy alternative stimulus plan may have failed this week, but they've become addicted to erroneously using past research by Dr. Christina Romer, the chair of President Obama's Council of Economic Advisers.

House Minority Leader John Boehner (R-OH) and his crew have been claiming that Romer's math proves their plan creates 6.2 million jobs -- a crafty blurring of a 2007 paper by Romer and her husband, Berkeley economist Dr. David Romer. And Mitt Romney was at it again today during his speech to House Republicans at their retreat in Hot Springs, Virginia:

First, there are two ways you can put money into the economy, by spending more or by taxing less. But if it's stimulus you want, taxing less works best. That's why permanent tax cuts should be the centerpiece of the economic stimulus. Even Christine [sic] Romer, the President's own choice to lead the Council of Economic Advisors, found in her research that tax cuts are twice as effective as new spending.

Sorry, Mitt -- as Brad DeLong has pointed out, Romer's paper never found that. You're actually citing former George W. Bush economic adviser Greg Mankiw, who drew his own wacky conclusions by comparing two totally different studies, with different methodologies.

But if you want to use Christina Romer's 2007 research as a model, that's cool. Since she also found that "tax increases to reduce the deficit appear to have little negative impact on output," can we roll back the Bush tax cuts now?

Mike Duncan has withdrawn from his race for re-election as chairman of the Republican National Committee.

Duncan came in second place on the third ballot with only 44 votes, or 26% of the total. It was very clear that he could not win re-election. Duncan said he was proud of his accomplishment heading up the party over the last two years: "Obviously, the results that we wanted weren't there. And I think our results going forward will be better."

Though he was officially talking about how the party's numbers just weren't there in 2008, he could have just as easily been referring to his own race today.

The big question now is where his support will go. Will the current leader Michael Steele pick up enough votes from Duncan and other candidates, to take him from his present 51 to the 85 needed for a win?

Another thing: One committee member asked for an extra recess period to sort out the voting, now that Duncan is out -- and was roundly booed by others there, with no recess as a result. The strong objection to a recess could be a sign that one campaign felt they could win it right now, and doesn't want to blow it.

In a press conference outside the courtroom held just a short while ago, Norm Coleman announced that if he gets back into the Senate, he'll work on ways to make it easier for young people to vote online.

Coleman was saying this while advocating for Peter DeMuth, a young college student and Coleman-voter who filled out his absentee ballot application on his computer, using the mouse to "sign" his initials. He later filled out the physical absentee ballot that he received in the old-fashioned way, resulting in his ballot being disqualified because of a mismatch because of the appearance of his moused initials versus his physically signed out name.

"The world of these young people is a world of computers," Coleman said. "More and more folks are gonna be doing that, that's the next generation. And we have to look at the whole use of technology to accommodate people who are gonna vote that way."

Coleman said that if he's fortunate enough to win this thing, he'll be using his role as a policy-maker to better enfranchise young people like DeMuth, or his own 22-year old son, whose first instincts are to work with computers.

(Special thanks to The Uptake for carrying the presser.)

As we told you earlier today, Bloomberg reported last night:

New York Attorney General Andrew Cuomo may demand the return of $4 billion in bonuses paid by Merrill Lynch & Co. just before it was acquired by Bank of America Corp.

But it turns out that may overstate the case a bit. A person familiar with the matter told TPMmuckraker that the investigation is considering several other possible remedies, including imposing fines and alleging violations of securities law -- as the Wall Street Journal reported yesterday.

The probe of Merill is still at an early stage. Depositions haven't yet been taken from former Merrill CEO John Thain, and Bank of America chief administrative officer J. Steele Alphin, both of whom have been subpoenaed to give investigators details on just when Bank of America learned about the bonuses, and about Merrill's massive fourth quarter losses.

If Cuomo doesn't try to get the money back, Congress might. Chris Dodd, who chairs the Senate Banking committee, declared at a press conference yesterday:
I'm going to be urging -- in fact not urging, demanding -- that the Treasury Department figures out some way to get the money back.