By Dan Froomkin
Special to washingtonpost.com
Monday, November 29, 2004; 11:40 AM

As the White House starts making over its economic team and firms up a daring domestic agenda, initial signs from Capitol Hill are mixed.

Metamorphosing the Social Security system and tax policy will require President Bush to use a lot of that political capital he's been talking about since the election. And if you consider the ongoing battle over the proposed intelligence overhaul to be Bush's first post-election legislative test case, this may be a problem. Emboldened House Republicans are resisting Bush's avowed call to action.

But is this because Bush doesn't have as much political capital as he thought? Or is it because, in spite of his public pronouncements, he's just not bothering to use it on this issue?

The latter appears more likely if you consider that powerhouse senior adviser Karl Rove continues to strengthen his hand politically -- and that the intelligence reorg just doesn't seem to be on his radar, one way or the other. Instead, Rove is revving up to push a series of audacious plans to fundamentally reconfigure the way the government gets and spends money, in a way intended to strengthen the Republican Party's grip on power for decades to come.

Mike Allen writes in The Washington Post: "President Bush plans to overhaul his economic team for the second time in two years and wants to tap some prominent replacements from outside the administration to help sell rewrites of Social Security and the tax laws to Congress and the country, White House aides and advisers said over the weekend.

"Aides said changing four of the five top economic officials -- including the Treasury and Commerce secretaries, with only budget director Joshua B. Bolten likely to remain -- is part of Bush's preparation for sending Congress an ambitious second-term domestic agenda."

Allen writes that while Bush is considering reaching beyond administration loyalists for his domestic team, he will continue dispatching White House staff members to key jobs. "Aides said many other such moves will be announced, because Bush and senior adviser Karl Rove are determined to 'implant their DNA throughout the government,' as one official put it."

And Allen writes that an order of battle has been established.

"Bush aides, who have been debating what parts of his legislative package to send to Capitol Hill first, will start with measures to restrict medical malpractice claims and other lawsuits. Bush will then try to advance his initiative on Social Security, after which will come proposed changes in the tax laws. In the next month or two, Bush plans to name a commission to make recommendations on the tax code that could eliminate some loopholes and even replace the income tax with a sales tax or value-added tax."

Just this morning, Bush announced that he has chosen Carlos Gutierrez, a refugee from Cuba and currently the chief executive of Kellogg Co., to replace Don Evans as secretary of Commerce.

Howard Fineman writes in Newsweek that Rove, who Bush called the "Architect" of his victory, has officially withdrawn his pledge not to be involved in the 2008 presidential nomination.

"Meeting with reporters only days after the election, he seemed to count himself out. 'And 2008 is going to be left to someone who has a little bit more energy and interest than me,' he said then. 'This will be the last presidential campaign I will ever do.' Last week he backtracked on that pledge. 'I said that in haste,' he said. 'A lot of people in the White House told me that that was a really stupid thing to say. So let me say that I can't imagine spending two years away from my wife and son again, the way I did this time. But besides that, who knows?' "

So what's up with that? Fineman has the all-important explanation here:

"Translation: the Karl Rove Primary has begun -- - or at least Rove (and Bush) want the world to believe it has, if for no other reason than to dangle the possibility of help from (or the threat of opposition from) the Architect before the eyes of would-be GOP contenders and power brokers. 'The president will be a lame duck soon enough,' said a Republican strategist. 'He can't afford to let Karl be one, too.' Indeed, being seen as 'close to Karl' is a sign among desperate Republicans of 'election' in an almost theological sense. All the more reason for Rove to be slow about taking sides."

In the meantime, Rove's immediate and lofty goal is "to design a legislative and philosophical agenda that will lead to further GOP gains, and beyond that to a political dominance that could last for decades, as FDR's New Deal did. . . .

"On domestic policy, Rove has a theme at the ready: 'the ownership society' he says the president wants to build. It's a bland phrase, but the ideas behind it are hardly status quo. One is to consider abolishing the income-tax system, replacing 'progressive' (meaning graduated) rates with a flat tax or even a national sales tax or value-added tax. Another is to rechannel massive flows of tax money from Social Security to private savings accounts and into expanded medical savings accounts. Yet another is a crusade Bush and Rove have been pursuing since Texas: a national cap on damage awards in lawsuits."

And Fineman sums up Rove's political calculus for the coming years: "In all cases, Rove wants to force Democrats to defend taxes and lawyers, . . . gay rights and unfettered access to abortion."

Reporters are carefully examining the White House role in the impasse over the proposed overhaul of the U.S. intelligence community.

Michael Isikoff and Eleanor Clift write in Newsweek: "The White House publicly bemoaned Congress's failure to pass a sweeping measure to overhaul the U.S. intelligence community -- a top 9/11 Commission recommendation -- and said it would press to revive the bill soon. But behind the scenes, the White House's support has been less than vigorous, reflecting ambivalence on the part of many in the administration, especially the Pentagon, about the idea of creating an all-powerful new intelligence czar.

"Aides said President George W. Bush, while on Air Force One on his way to Chile, called one of the two principal congressional holdouts -- House judiciary committee chairman Jim Sensenbrenner -- in an effort to break the legislative logjam. But Sensenbrenner tells Newsweek that Bush was 'extremely low-key' during their conversation and never pressured him. . . . A few days later, Sensenbrenner met with Vice President Dick Cheney for a prearranged meeting about legislative priorities for next year, and the veep never even raised intel reform."

Ronald Brownstein writes in his Los Angeles Times political column: "No president relishes legislative fights within his own party. But for any president, one of the clearest tests of leadership is the willingness to stare down his own supporters to protect the national interest. . . .

"Bush, in his first term, signed the McCain-Feingold campaign finance reform law and legislation requiring annual tests for students in reading and math despite opposition from many congressional Republicans. Mostly, though, he has advanced ideas only with broad Republican support. That explains why his first instinct in the intelligence standoff has been to pursue a compromise aimed at soothing House Republicans while holding enough Senate support to avoid a lethal filibuster.

"But such a deal is unlikely. And that means Bush could face a stark choice: Pressure the House Republicans to allow a vote on the existing compromise, or permit the failure of security reforms that passed the Senate on a 96-2 vote and have been endorsed by the Sept. 11 commission, by the Republican chairmen of the House and Senate intelligence committees, and, officially at least, by the president himself."

Brownstein adds: "One senior House GOP aide, intriguingly, says the picture is so murky that even Bush and Vice President Dick Cheney have sent conflicting signals on whether they want Congress to vote on the existing compromise. 'I'm sure the president would,' the aide said. 'I'm not sure the vice president would.' "

Jennifer C. Kerr writes for the Associated Press: "The fate of an overhaul of U.S. intelligence agencies rests with President Bush, who must exert more pressure on holdout Republicans if he wants compromise legislation to pass this year, a lead Senate negotiator said Sunday.

" 'If the president of the United States wants this bill, as commander in chief in the middle of a war, I cannot believe Republicans in the House are going to stop him from getting it,' said Sen. Joseph I. Lieberman (D-Conn.) on ABC's 'This Week.' "

Yet, as Charles Babington explained in Saturday's Washington Post, Speaker J. Dennis Hastert last week "enunciated a policy in which Congress will pass bills only if most House Republicans back them," regardless of whether they could pass with Democrat votes.

Philip Dine writes in the St. Louis Post-Dispatch that the battle over intelligence reform "threatens to overshadow the president's own priorities for a second term. . . .

"Bush faces a delicate choice between two potentially risky actions:

"He can continue to call for change in the nation's intelligence apparatus but wait for those changes until the new Congress convenes in January. This is the easier course politically, but it means the president's ambitious agenda might be delayed while the battle over intelligence reform continues to loom -- and possibly that no intelligence reform will occur at all.

"He can aggressively take on the handful of House Republicans blocking a deal, in hope of achieving a quick solution when the current Congress meets briefly starting Dec. 6. That would clear the slate for other legislation he wants taken up, such as changes in Social Security. But it also could antagonize powerful congressional chairmen whose support he'll need later. And, because success on intelligence is far from guaranteed, he could end up squandering his new political capital in a losing cause."

William Neikirk writes in the Chicago Tribune: "Moving swiftly to consolidate their control over government in the wake of their big election triumph, President Bush and Republican leaders in Congress are facing a different kind of threat -- themselves.

"Political analysts warn that overly aggressive efforts to push a conservative agenda could leave Bush and his allies vulnerable to charges of political overreaching, and ultimately cause a voter backlash. . . .

"Presidents who win a second term often get into political trouble by simply going too far. Political analysts cited several examples, including Franklin Roosevelt's efforts to pack the Supreme Court, Ronald Reagan's entanglement in the Iran-contra affair and Richard Nixon's Watergate cover-up."

Richard W. Stevenson writes in the New York Times: "The White House and Republicans in Congress are all but certain to embrace large-scale government borrowing to help finance President Bush's plan to create personal investment accounts in Social Security, according to administration officials, members of Congress and independent analysts.

"The White House says it has made no decisions about how to pay for establishing the accounts, and among Republicans on Capitol Hill there are divergent opinions about how much borrowing would be prudent at a time when the government is running large budget deficits. Many Democrats say that the costs associated with setting up personal accounts just make Social Security's financial problems worse, and that the United States can scarcely afford to add to its rapidly growing national debt."

Jonathan Weisman wrote in The Washington Post a week ago: "Republican budget writers say they may have found a way to cut the federal deficit even if they borrow hundreds of billions more to overhaul the Social Security system: Don't count all that new borrowing.

"As they lay the groundwork for what will probably be a controversial fight over Social Security, Republican lawmakers and the Bush administration are examining a number of accounting strategies that would allow the expensive transition to a partially privatized Social Security system without -- at least on paper -- expanding the country's record annual budget deficits. The strategies include, for example, moving the costs of Social Security reform 'off-budget' so they are not counted against the government's yearly shortfall."

Janet Hook writes in the Los Angeles Times: "If President Bush wants to push an overhaul of Social Security through Congress during his second term, he will probably have to do something he rarely did during his first term -- get his hands dirty.

"To revamp the popular retirement program, many allies say, Bush will have to offer detailed proposals to Congress and engage in a broad public campaign to justify the changes and its cost. And he will have to ride herd on legislators to ensure they do not veer from his main goal of shoring up Social Security by allowing younger workers to invest some of their payroll taxes in private accounts."

Susan Schmidt wrote in The Washington Post last week: "A federal prosecutor investigating whether administration officials illegally leaked the name of an undercover CIA operative has directed considerable effort at learning how widely the operative's identity was disseminated to reporters before it was published last year by columnist Robert D. Novak, according to people with knowledge of the case. . . .

"[Special prosecutor Patrick J.] Fitzgerald is continuing to ask questions that suggest he is still trying to assess the accuracy of some of the more serious allegations about administration leaks to reporters other than Novak, according to people involved in the case. Prosecutors have questioned numerous witnesses, some of them repeatedly, to learn whether two senior White House aides actively peddled Plame's identity to more than half a dozen reporters before Novak revealed it in print -- an allegation made by an anonymous administration official in a Sept. 28, 2003, Washington Post article."

Charles Lane writes in today's Washington Post: "Two reporters, Matthew Cooper of Time magazine and Judith Miller of the New York Times -- neither of whom had anything to do with the leak to Novak -- now face as much as 18 months in jail for refusing a court order to testify about their contacts with confidential sources related to the Plame story. . . .

"[T]heir cases demonstrate an uncomfortable fact of life for Washington reporters: The symbiotic relationship between journalists and confidential sources enjoys less protection under federal law than it does in most states."

Lane also puts forth an interesting theory regarding Novak's mysterious role in the investigation.

"One intriguing possibility, noted by several lawyers familiar with the case, is that Novak may have invoked his Fifth Amendment right against self-incrimination, and that Fitzgerald has not yet chosen to give him immunity from prosecution to compel his testimony."

Just a week after visiting South America, Bush heads up north to Canada tomorrow for a two-day visit.

Stephen Thorne writes for the Canadian Press service: "Thousands of activists are expected to march on the capital Tuesday, clogging streets and shouting complaints over all manner of perceived wrongs -- imperialism, racism, elitism, torture, treaties and terrorism."

Beth Gorham writes for the Canadian Press service: "George W. Bush hopes his visit to Canada will help him confront and confound Canadians and Americans alike who believe he's a unilateralist cowboy sneering at the world's unease over the war in Iraq."

Doug Struck wrote in Saturday's Washington Post: "The weather won't be the only thing that's cool when President Bush visits neighboring Canada next week.

"Longtime observers here say the societies in Canada and the United States are drifting further apart in values and outlook even as their economies become more closely intertwined. Politically, they say, the two countries' populations are more estranged than at any time in recent memory, and Canadians are becoming increasingly critical of their southern neighbors. . . .

"Much of the antipathy here is focused on Bush. He will be met by demonstrations in Ottawa over issues ranging from U.S. involvement in Iraq to gay marriage, and the White House has declined an invitation to address Parliament, where Bush might be heckled."

Jeff Sallot writes in the Toronto Globe and Mail: "Federal officials predict that the mad-cow dispute with the United States will be resolved during President George W. Bush's visit to Canada this week, but caution that other trade quarrels will take longer. . . .

"To highlight the issue, organizers of the two-day summit have included Alberta beef on the menu tomorrow night at the official dinner Prime Minister Paul Martin is hosting for Mr. Bush."

Greg Miller and Peter Wallsten write in the Los Angeles Times: "President Bush has ordered what may be a major expansion of the CIA, calling for the beleaguered agency to add thousands of analysts and spies as part of an ongoing buildup in the war on terrorism, according to a White House memorandum released Tuesday.

"But the directive set no timetable for the changes and offered no indication that the White House intended to ask Congress for the massive funding increase such a plan would require."

President and Mrs. Bush on Friday were scheduled to send out more than 2 million Christmas cards to friends, family and foreign dignitaries, from the Crawford, Texas post office.

Maria Recio writes in the Fort Worth Star-Telegram about how local artist Cindi Holt's painting of the White House's Red Room -- decorated for the holidays with a cranberry topiary and a fire in the fireplace -- made its way to the cover.

Here's a picture of the front of the card.

The inscription inside reads:

"Let us come before him with thanksgiving and extol him with music and song. Psalm 95:2 (NIV) May songs of joy fill your home with warmth and your heart with happiness this holiday season. 2004."

This morning, the first lady formally received the official White House Christmas tree.

Elisabeth Bumiller writes in the New York Times about "Brad Freeman, the presidential chum and the most talkative in the triumvirate of Bush fund-raisers tasked with calling people up and asking for $100,000 each to help with the swearing-in festivities."

Freeman will get together with other inaugural fund-raisers for a planning session in Washington on Saturday.

" 'We'll figure out what we want to do, and then Karl will tell us what we can do,' Mr. Freeman said, referring to Karl Rove, the president's chief political adviser, with whom Mr. Freeman has a complex relationship."

Holly Bailey writes in Newsweek: "More than a dozen of President Bush's top fund-raisers have been tapped to collect millions to pay for festivities tied to his second Inauguration next month. Among those heading up the fund-raising effort is Mercer Reynolds, an Ohio businessman and longtime Bush donor who raised more than $200,000 for the president's re-election campaign."

Calvin Woodward writes for the Associated Press: "History probably has forgotten President Bush's flowery declaration four short years ago that an 'angel still rides in the whirlwind and directs this storm.'

"When Bush delivers his second inauguration address on Jan. 20, he may be hard pressed to say something truly for the ages. Not many presidents have, especially the second time around."

AFP reports: "President George W. Bush has urged Northern Ireland's leaders to accept an Anglo-Irish proposal aimed at ending political deadlock between Protestants and Roman Catholics, the White House said.

"Bush on Sunday called Sinn Fein leader Gerry Adams, whose party is the political wing of the militant Irish Republican Army, a White House official said. Bush called Democratic Unionist Party leader Ian Paisley on Friday. . . .

"Adams said after the call that Bush proposed he mediate in the Northern Ireland conflict, but the White House official did not comment on that statement.

" 'I thank President Bush for his interest. I briefed the president on Sinn Fein's objectives in the current negotiations,' Adams said."

Warren Vieth and Rachel van Dongen write in the Los Angeles Times: "Marxist rebels tried to organize an assassination attempt against President Bush during his visit to the port city of Cartagena last week, a top Colombian official said Saturday."

Richard Benedetto writes in USA Today: "President Bush, who returned to the White House from his Texas ranch Sunday, had no comment on a report that a Colombian terrorist group ordered him assassinated on his recent visit there."

Mark Knoller reports for CBS News from Crawford that "presidential tschoschkes have become a cottage industry," -- and that 75,000 Bush action figures have been sold.

Declan McCullagh writes for CNET News.com: "As the holiday season looms, Web publishers led by the Washington Post are battling the White House over, of all things, a video of a dog.

"This is no laughing matter. At stake are Webcasting rights to video clips of Barney, the first pooch, and his antics around 1600 Pennsylvania Ave. The White House has so far denied requests from online publishers seeking copies of the third annual Barney holiday video, insisting on hosting the video exclusively on its own Web site while at the same time freely granting broadcast rights to TV networks."

This of course assumes that there will be another Barney Cam, following on the original Barney Cam (2002) and Barney Cam II: Barney Reloaded (2003).

"We haven't discussed the plot of the next Barney Cam, and we haven't discussed distribution," White House spokesman and Internet director Jimmy Orr told CNET.