Congress sends White House auto aid plan with czar

WASHINGTON – Congressional Democrats and the White House worked to resolve their last disputes Monday over terms of a $15 billion bailout for U.S. auto makers — complete with a "car czar" to oversee the industry's reinvention of itself — that's expected to come to a vote as early as Wednesday.

House Speaker Nancy Pelosi, with House Financial Services Committee Chairman Barney Frank, D-Mass., at right, talks about a possible bailout of American automakers during a news conference on Capitol Hill in Washington, Monday, Dec. 8, 2008

Top Democrats gave the White House their proposal for rushing short-term loans to Detroit's Big Three through a plan that requires that the industry remake itself in order to survive. The Bush administration gave a cool initial response, saying the measure didn't do enough to ensure that only viable companies would get longer-term federal help. Negotiators worked into the night Monday to resolve differences.

"We've made a lot of progress in recent days to develop legislation to help automakers restructure and achieve long-term viability," Dana Perino, the White House press secretary, said in a statement. "We'll continue to work with members on both sides of the aisle to achieve legislation that protects the good faith investment by taxpayers."

President George W. Bush himself said it was "hard to tell" if a deal was imminent because definite conditions had to be met. "These are important companies, but on the other hand, we just don't want to put good money after bad," he said in an interview with ABC's "Nightline."

Despite optimism on both sides that Congress and the White House could reach a swift agreement on the measure, it was still a tough sell on Capitol Hill.

"While we take no satisfaction in loaning taxpayer money to these companies, we know it must be done," said Senate Majority Leader Harry Reid, D-Nev. "This is no blank check or blind hope."

The bill puts a government overseer named by Bush — a kind of "car czar" — in charge of setting guidelines for an industrywide overhaul, with the power to revoke the loans if the carmakers weren't taking sufficient steps to reinvent themselves.

House Speaker Nancy Pelosi, D-Calif., said the restructuring would require tough concessions from management, labor, creditors and others.

"We call this the barbershop. Everybody's getting a haircut here," Pelosi said.

Still, the White House said a preliminary look at the draft didn't appear to contain strict enough conditions to ensure that long-term financing would be available only to companies that could survive, according to officials who would comment on the continuing negotiations only on condition of anonymity.

The crux of the White House's concern is that there may not be enough clear, immediate protection for taxpayers if a company is not meeting its own promises for long-term viability after review by the president's overseer. The latest proposal suggests Congress may have to get involved again in a few months and pass a law to force a company to stick to its own plan — a potentially unwieldy political step.

Rep. Barney Frank, D-Mass., the House Financial Services Committee chairman who is leading negotiations on the measure, said he was optimistic that the differences could be resolved.

"There are a couple of specific issues to be negotiated. I think they can be worked out," Frank said Monday afternoon.

Sen. Carl Levin, D-Mich., a key ally of the auto industry, said getting the roughly 15 Republicans needed to support the plan was an uphill battle.

"This is a real hill to climb even if we can get agreement between the White House and congressional leaders," he said.

Even sympathetic Republicans weren't ready to sign on. Sen. George Voinovich, R-Ohio, has "numerous concerns" about the bill, including the strength of the taxpayer protections and the role of the so-called car czar, said spokesman Chris Paulitz.

There are lingering differences between the administration and Congress on details of the czar's role and responsibilities, essentially a proxy fight between the White House and Democrats over whether Bush or President-elect Barack Obama should have the final say on who runs the auto industry restructuring.

Democrats are pressing to allow the president to choose other people beside the czar to help oversee the bailout, while the White House wants just one person tapped by Bush to have control.

Congress Republicans and the White House also are balking at a requirement Democrats included in their proposal that the carmakers drop their opposition to efforts by California and several other states to impose stricter emissions rules than the federal standard.

Pelosi is seeking that bar at the behest of environmentalists who are angry that money to bail out the auto industry will be drawn from an existing loan program that was meant to help the Big Three build greener vehicles that burn less gasoline.

That's just one of several restrictions the bill places on the automakers while they're receiving the loans.

Among the requirements included in Democrats' draft proposal is one that the carmakers getting federal help get rid of their corporate jets — which became a potent symbol of the industry's ineptitude when the Big Three CEOs used them for their initial trips to Washington to plead before Congress for government aid.

The automakers also would be subject to some of the same restrictions imposed on banks as part of the $700 billion Wall Street bailout, including limits on executive compensation, a prohibition on paying dividends, and requirements that the government share in future profits and taxpayers be repaid before any other shareholders.

The special inspector general overseeing the Wall Street rescue also would keep tabs on the carmaker bailout. The Senate on Monday confirmed Neil M. Barofsky, a federal prosecutor in New York, for that post.

The proposed automakers' bailout also gives the car czar say-so over any major business decisions by the companies while they're taking advantage of federal aid. The companies would have to open their books to the government, including informing the overseer of any transaction of $25 million or more.

Under the plan, the carmakers' could get emergency loans right away. Then the overseer would write guidelines, due on the first of the year, for restructuring the Big Three.

In testimony before Congress last week, General Motors Corp. and Chrysler LLC, which have said they are weeks from collapse, made it clear they would need a total of $14 billion to $15 billion to survive through early 2009. Ford Motor Co. has said it has enough money to stay afloat unless one of the other Big Three goes under or the economy deteriorates more sharply.

While the measure would put an administration official selected by Bush in charge of setting terms for restructuring, the decision about whether the terms were being met would not be made until Obama had been sworn in. Some Democrats were pushing to name Kenneth Feinberg, the lawyer who oversaw the federal Sept. 11 victims' compensation fund, to the post, but top congressional officials said there had been no discussion of that.

In the latest gauge of public opinion, people were split about evenly over providing federal money to keep the car companies functioning.

Forty-five percent approved and 44 percent were opposed, according to a CBS News poll released Monday. Nearly six in 10 Democrats favored the aid, while nearly the same share of Republicans opposed it.

About seven in 10 said the government should have a say in managing the companies if taxpayers provide assistance, and nearly as many said requiring more alternative fuel vehicles should be a condition of such aid. Fifty-six percent blamed management for the companies' problems, double the number who blamed uncontrollable economic problems.

Oil bounces off 4-year lows to above $43 a barrel

SINGAPORE – Oil prices bounced off four-year lows to above $43 a barrel Monday in Asia after OPEC's president suggested the group could surprise investors with a large production cut later this month.

Light, sweet crude for January delivery was up $2.45 to $43.26 a barrel in electronic trading on the New York Mercantile Exchange by late afternoon in Singapore. The contract fell Friday nearly $3 to settle at $40.81. Prices fell as low as $40.50, levels last seen in December 2004.

Chakib Khelil, president of the Organization of Petroleum Exporting Countries, said Saturday the group could announce a "severe" reduction of output quotas at its next meeting on Dec. 17 in Algeria.

The OPEC head would not specify how deep the output cut would be, but noted that some analysts are predicting a decrease of as much as 2 million barrels per day.

An output decision that startles markets would help bolster plunging oil prices, Khelil said.

"The best way is to surprise them," he said. "I hope it will."

OPEC will likely cut production by at least 1 million barrels a day, said David Moore, commodity strategist with Commonwealth Bank of Australia in Sydney.

"The possibility of OPEC moving to tighten up the oil market is real," Moore said. "As we get closer to the meeting, people may get more wary that OPEC may make a large cut."

OPEC announced a production cut of 1.5 million barrels a day in October and investors largely ignored it, focusing instead on a global economic slowdown that has weakened crude demand.

President-elect Barack Obama warned Sunday that the U.S. economy, which saw the worst job data in 34 years on Friday, would get worse before improving.

The price of oil has fallen about 70 percent since peaking at $147.27 in July.

"Pessimism about the international outlook has remained intense," Moore said. "Concerns about weakening oil demand have not gone away. You have to look at today's movement in the oil price in light of the ferocious decline over the past week."

In other Nymex trading, gasoline futures rose 5.18 cents to 95 cents. Heating oil gained 5.80 cents to $1.48 a gallon while natural gas for January delivery slid 20.6 cents to 5.59 per 1,000 cubic feet.

In London, January Brent crude rose $1.96 to $41.70 on the ICE Futures exchange.

Bush, Democrats seek to finalize auto bailout

WASHINGTON (Reuters) – White House and congressional negotiators sought on Sunday to remove remaining differences over an emergency rescue for the struggling auto industry, a stark symbol of the deepening U.S. economic crisis.

General Motors Chairman and CEO Richard Wagoner (L-R), Chrysler CEO Robert Nardelli, and Ford Motor Company President and CEO Alan Mulally provide testimony about a proposed government bailout plan for the US auto industry at a hearing of the House Financial Services Committee on Capitol Hill in Washington

Prodded by shock unemployment figures which showed the country shed more than half a million jobs in November alone, negotiators tried to forge an agreement in principle to provide "The Big Three" American automakers with at least $15 billion in short-term loans.

The Senate is due back in session on Monday and negotiators hope to have a package ready that can be quickly approved and sent to President George W. Bush as one of the last measures he signs into law before Democrat Barack Obama succeeds him as president on January 20.

The amounts under discussion are less than half the $34 billion that the automakers asked Congress for last week. Some economists believe they may need $75 billion to $125 billion to survive in the longer term.

Nevertheless, lawmakers fear a recession will deepen if any of the three giants -- -- GM, Ford and Chrysler -- collapses soon. But some from Bush's Republican party don't want another rescue plan after a $700 billion Wall Street rescue package that triggered voter backlash in the November 4 congressional elections.

Critics also say market forces, not state intervention, ought to determine the fate of the auto industry.

Bailout backers say that since the government helped Wall Street, it must also help hundreds of thousands of blue-collar auto workers who have the support of Democrats.

Obama added his weight to the drive, saying while the car companies had made mistakes, letting them collapse was not an option -- although they must be forced to radically revamp their operations.

"I think that Congress is doing the exact right thing by asking for a conditions-based assistance package that holds the auto industry's feet to the fire," he said in Chicago, adding that new management could also be an option.

CONDITIONS AND CONCESSIONS

In addition to reorganizing and protecting taxpayer investment, possible conditions include creating a government "car czar" to oversee the bailout and additional concessions by the United Auto Workers (UAW) union.

A UAW official, speaking after a Detroit church service dedicated to prayers for the auto industry, said on Sunday the union was open to moves by Chrysler to seek an alliance with a rival automaker as long as it saves as many jobs as possible.

Congressional aides said it was as yet unclear whether companies would have to implement at least some of the conditions or merely promise them before getting any money.

Senate Banking Committee Chairman Christopher Dodd said on Sunday that GM chairman Rick Wagoner should resign to allow new leadership to restructure the faltering company.

"He has to move on," Dodd, a Connecticut Democrat who is leading efforts to craft bailout legislation, told CBS.

Faced with plummeting sales they blame largely on the credit crunch and recession, GM, Chrysler and Ford sought $34 billion from Congress last week to avoid possible collapse. A deal negotiated by the White House and Congress would provide no more than $17 billion to last into March.

Critics have said any loans would be a waste of money unless U.S. automakers were able to cut costs and better compete with more fuel-efficient, foreign-made cars.

Democratic Sen. Carl Levin of Michigan, home to the major automakers, said he was confident there would be a deal in the next 24 hours. But he was less certain if backers would garner the 60 votes needed in the 100-seat Senate to avoid a Republican procedural hurdle known as a filibuster.

"That's a much more complicated question," Levin said on "Fox News Sunday."

Senate Republican Leader Mitch McConnell earlier indicated he might support a bailout if it had adequate safeguards. But Sen. Richard Shelby, an Alabama Republican who has spoken out against the proposed "bridge loan" emergency package, indicated he was ready for battle.

"This is a bridge loan to nowhere," said Shelby, appearing with Levin on "Fox News Sunday."

UNKNOWN FUTURE

Despite the progress in Washington, America's auto industry is headed into an unknown future.

GM and Chrysler, along with Ford once bywords for U.S. industrial power, are both headed for wrenching restructuring under federal oversight that will hit their investors, creditors, dealers and workers almost as hard as if they had filed for bankruptcy protection.

Ford is in slightly better financial shape, but all three are expected to continue to mothball plants and dismiss tens of thousands of employees.

A breakthrough in the auto crisis emerged on Friday after government statistics showed that employers slashed more than 533,000 jobs in November, the highest monthly decline in 34 years. This underscored lawmakers' feared that hundreds of thousands more would be thrown out of work if any of the major automakers went down.

Indian official denies call to Pakistani president

NEW DELHI – India's foreign minister has denied making a phone call to Pakistan's president at the height of the Mumbai attacks that led to Pakistan putting its air force on alert.

U.S. Secretary of State Condoleezza Rice, left, shakes hands with Indian Foreign Minister Pranab Mukherjee, right, during a joint press conference following a meeting in New Delhi, India, Wednesday, Dec. 3, 2008. Rice said Pakistan has a 'special responsibility' to cooperate with the investigation into the attacks, which Indian and U.S. officials have blamed on militant groups based in Pakistan.

Pakistan says President Asif Ali Zardari received a "threatening" call during the crisis, apparently from Indian External affair minister Pranab Mukherjee.

Pakistan's Dawn newspaper says the call was a hoax.

Reacting for the first time to the report, Mukherjee says in a statement Sunday that "I had made no such telephone call."

Carmakers' bailout pleas hit Senate skepticism

WASHINGTON – Desperate U.S. automakers ran into fresh obstacles from skeptical lawmakers Thursday as they appealed with rising urgency — and a new dose of humility — for a $34 billion bailout. Without help, said one senator, "we're looking at a death sentence."

Auto executives, from left, General Motors Chief Executive Officer Richard Wagoner, UAW President Ron Gettelfinger, Ford Chief Executive Officer Alan Mulally, and Chrysler Chief Executive Officer Robert Nardelli testify on Capitol Hill in Washington, Thursday, Dec. 4, 2008, before a Senate Banking Committee hearing on the auto industry bailout.

With lawmakers in both parties pressing the automakers to consider a pre-negotiated bankruptcy — something they have consistently shunned — the Big Three were contemplating a government-run restructuring that could yield results similar to bankruptcy, including massive downsizing, in return for the bailout billions. But there was no assurance they could get even that.

And that wasn't all the unwelcome news. Congressional officials said one leading proposal — to tap an already approved fund set aside for making cars environmentally efficient — wouldn't give the carmakers nearly as much money as they say they need.

The auto executives pleaded with lawmakers at a contentious Capitol Hill hearing — their second round in less than a month — for emergency aid before year's end. But with time running out on the current Congress, skepticism about the bailout appeared to be as strong as ever.

"In all due respect, folks, I don't think there's faith that the next ... three months will work out, given the past history," said Sen. Charles E. Schumer, D-N.Y.

"No thinking person thinks that all three companies can survive," said Republican Sen. Bob Corker of Tennessee.

Chris Dodd, chairman of the Banking Committee, was the senator who spoke of a death sentence — though he also said, "We're not going to leave town without trying" to help.

The auto executives are to make their case at a House hearing on Friday, and Congress could take up rescue legislation next week in an emergency session.

But Democratic congressional leaders were leaning on the White House to act on its own. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., wrote to President George W. Bush on Thursday asking him, as they have repeatedly, to use the $700 billion Wall Street rescue fund to help the auto makers — something the administration has consistently refused to do. They argued that such a course was justified because of the potential for grave harm to the financial sector in the event of a carmaker collapse.

Auto state lawmakers went further, threatening to block the administration's access to the second half of the financial bailout fund unless it made "a firm commitment to assist working Americans and save American jobs."

The clear implication was that no more Wall Street aid would be available without help for the Big Three.

"I think they'll read between the lines," said Rep. Fred Upton, R-Mich., who teamed with Democratic Rep. John Dingell, also of Michigan, in a letter to colleagues outlining their position.

Under legislation enacted in October creating the financial industry rescue program, Congress can vote to block the Treasury Department from accessing the second $350 billion, although it would need a two-thirds supermajority to do so over a presidential veto.

Bush, too, voiced skepticism about an auto rescue package.

"No matter how important the autos are to our economy, we don't want to put good money after bad. In other words, we want to make sure that the plan they develop is one that ensures their long-term viability for the sake of the taxpayer," he said in an interview with NBC News.

President-elect Barack Obama was keeping his distance, prompting Rep. Barney Frank, D-Mass., who has been dealing with both the financial bailout and the auto rescue proposal to say Obama is "going to have to be more assertive than he's been." Frank is chairman of the House Financial Services Committee, which will conduct Friday's hearing.

Repentant after a botched first crack at bailout pleas, the executives from General Motors Corp., Ford Motor Co. and Chrysler LLC all agreed during Thursday's session that a multibillion-dollar bailout deal would include a supervisory government board that could order major overhauls of the companies if deemed necessary for survival.

United Auto Workers union President Ron Gettelfinger, aligned with the industry in pressing for the aid warned that without action by Congress: "I believe we could lose General Motors by the end of this month." He said the situation was dire and time was of the essence.

The Big Three CEOs apologized for past blunders. "We made mistakes, which we're learning from," GM chief Rick Wagoner said. Ford CEO Alan Mulally also acknowledged missteps, saying his company's approach once was "If you build it, they will come."

But as a result of the misjudgments, he said, "we are really focused."

The Bush administration wants the aid to be drawn from an existing $25 billion program to help the industry retool its plants to make their vehicles more fuel-efficient.

But congressional budget analysts said Thursday that would yield only $7.5 billion in short-term loans.

The auto executives made the trip from Detroit in new-model hybrid autos made by their respective companies, two weeks after a first appeal for $25 billion in which they were chided for flying on private jets to beg for money.

Chrysler CEO Bob Nardelli promised that his company, recipient of a previous government-subsidized rescue loan in the 1970s that it repaid, would reimburse taxpayers by 2012 this time and would devote itself to manufacturing "fuel-efficient cars and trucks that people want to buy."

Asked whether the carmakers would agree to a setup like the one established for Chrysler's 1979 bailout, with a federal restructuring trustee who had some of the same powers as a bankruptcy court, all three executives indicated they would. Ford's Mulally added, "I probably need to think about that a little bit. It sounds right, but I just don't know all of the implications."

Lawmakers still complained of sticker shock, noting that the bailout's price tag had jumped $9 billion since the trio last appeared.

Sen. Richard Shelby of Alabama, the senior Republican on the Banking Committee, pressed the automakers to explain why, and explain how the sum would not simply "prop up a failed business model for a few months ... and how are you going to pay it back?"

Democrats, too, questioned whether an auto bailout would amount to investing taxpayer money in a failing enterprise.

"Be honest and tell me ... just tell me if things stay the way they are now, are you going to be back in a year" asking for more money? asked Sen. Jon Tester, D-Mont.

Protesters who briefly interrupted the hearing were a reminder of what polls show is thin public support for a rescue. "The bailout is a sellout!" demonstrators chanted as they were escorted from the hearing room by police.

Gene L. Dodaro, the top official at Congress' watchdog agency — the Government Accountability Office — agreed with Dodd that the financial industry rescue fund set up in October "is worded broadly enough" to permit it to be tapped for the automakers.

Dodaro testified that the Federal Reserve also has the authority under existing law to make loans to the domestic auto industry if it so chooses.

Dodd said that both Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke had been invited to testify at Thursday's hearing but had declined. He later criticized the treasury chief for traveling to China at a time of economic peril in the U.S.

"Time to come home — we have a serious problem here," Dodd said. "I need the Federal Reserve to step up as well."

Though the current total request is $34 billion, Ford's proposal says it might have to come back with a second request for an additional $4 billion if the recession persists into 2010, raising the total even higher.

Democrats: Obama needs hands-on economic approach

WASHINGTON – Democrats are growing impatient with President-elect Barack Obama's refusal to inject himself in the major economic crises confronting the country. Obama has sidestepped some policy questions by saying there is only one president at a time. But the dodge is wearing thin. "He's going to have to be more assertive than he's been," House Financial Services Committee Chairman Barney Frank, D-Mass., told consumer advocates Thursday.

Frank, who has been dealing with both the bailout of the financial industry and a proposed rescue of Detroit automakers, said Obama needs to play a more significant role on economic issues.

"At a time of great crisis with mortgage foreclosures and autos, he says we only have one president at a time," Frank said. "I'm afraid that overstates the number of presidents we have. He's got to remedy that situation."

Obama has maintained one of the most public images of any president-elect. He has held half a dozen press conferences, where he has entertained question after question about the economy, the mortgage crisis, and the flailing auto industry. He called for passage of extended unemployment benefits — which has passed — and even a stimulus package if possible before Jan. 20. But he has stayed away from trying to dictate remedies for the toughest problems Congress is confronting: the auto industry's troubles and how to spend the $700 billion bailout.

Frank's remarks came as the Bush administration considers whether it needs the second half of the $700 billion of the Troubled Asset Relief Program aimed at helping the financial sector before Obama takes office on Jan. 20.

An Obama official said the Bush administration reached out to the transition team about tapping into the money. The official, speaking on the condition of anonymity because of the sensitivity of the talks, said Obama's transition team urged the administration to talk to bipartisan congressional leaders and assemble a meeting between the White House and Congress. The official said the Obama team offered to participate in a bipartisan meeting if it would be helpful.

Earlier this week, Obama was asked whether he worried that Treasury Secretary Henry Paulson might begin spending the next installment of the money before he assumes the presidency. Obama demurred.

"Until Secretary Paulson indicates publicly that he's drawing down the second tranche, the second half of the TARP money, it would be speculation on my part to suggest that that money's going to be used up," he told reporters at a Chicago news conference Wednesday.

Obama did stress that a significant component of the fund should be used to reduce the number of foreclosures. But he did not specify a particular remedy.

He also declined to take a stand in a debate over the source of money for an auto loan package. The dispute has divided Democrats and hindered progress on assistance for the industry. At issue is whether to take money from the $700 billion designated for the financial sector or to take it from a previously approved loan aimed at manufacturing more energy efficient cars.

"I think it's premature to get into that issue," Obama said at the conference.

Presidents-elect typically spend the transition period assembling their cabinets, their White House staff and preparing to take the reins of power. But this transition is occurring at an extraordinary time, with bad economic news mounting by the day and with one of the country's major industries begging for a hand to keep from collapsing.

Two Democratic senators involved in trying to salvage the auto companies have said Obama could help move the process along and should become more engaged.

"The Obama team has to step up," Sen. Christopher Dodd, chairman of the Senate Banking Committee and one of the lead negotiators, said Nov. 21 in Hartford, Conn. "In the minds of the people, this is the Obama administration. I don't think we can wait until January 20."

Two days later, Sen. Carl Levin of Michigan, a point man in helping his state's main industry, called on Obama to help resolve the dispute over money for the auto loan package.

"It would be very helpful if the president-elect would become more involved in resolving the issue over the source of the funds," he said. "I want him to offer his assistance. He is a person who can really bring people together."

Frank, shrewd and quick-witted, also poked fun at Obama's calls for a "post-partisan" governing environment in Washington. Frank predicted that regulatory legislation aimed at preventing abuses related to subprime mortgages and credit cards stood a much better chance next year, when Democrats have greater majorities in the House and Senate.

"It is a grave mistake to assume that parties are irrelevant to this process," he said. "My one difference with the president-elect, about whom I am very enthusiastic, is when he talks about being post-partisan.

"Having lived with this very right wing Republican group that runs the House most of the time, the notion of trying to deal with them as if we could be post-partisan gives me post-partisan depression," Frank said.

Palin files late disclosure for free 2007 trips

ANCHORAGE, Alaska – Gov. Sarah Palin has added to her financial disclosure forms two free trips that she took nearly two years ago but failed to report. Palin, who was Republican presidential candidate John McCain's running mate, made the disclosures last month, but after Election Day when she and McCain lost to Barack Obama and Joe Biden. The trips were first revealed in a story by The Associated Press in October.

Alaska Gov. Sarah Palin, center, waves to a crowd during a campaign stop for Sen. Saxby Chambliss, R-Ga, in Savannah, Ga. Palin has added to her financial disclosure forms two free trips that she took nearly two years ago but failed to report

The free trips were taken in April and May of 2007 and should have been reported within 30 days under state ethics law. The Nov. 17 disclosure forms note that the reports were "not filed timely due to administrative error."

Bill McAllister, the governor's spokesman, said this week that the mistakes were made by travel support staff. He said he could not explain the timing of when and how they were caught, but that it was irrelevant because the error was corrected.

Palin, who has criticized state lawmakers for gifts they take, is not facing any sanctions for the late filings, according to Linda Perez, state administrative director. Perez said she was alerted to the matter by McCain's presidential campaign before the Oct. 14 AP story.

"It wasn't necessarily the governor's oversight, nor was she trying to hide anything," Perez said. "It was a staff oversight."

In one of the trips, the James B. Hunt Jr. Institute of North Carolina — a nonprofit education policy group — paid the $2,827 cost of Palin's April 2007 flight and hotel in Scottsdale, Ariz., to attend a four-day conference, according to her report. The group has said it also paid for other governors attending the annual event in recent years.

In May 2007, Palin accepted lodging for herself and her three daughters at Mt. Chilkoot Lodge in the Southeast Alaska town of Skagway. The lodging, valued at $300, was paid for by the owners, including Palin friend and former deputy campaign treasurer Kathy Hosford.

The reports were among recent disclosures released to the AP after a public records request.

Among other gifts Palin reported last month is a June 30 flight valued at $1,187.50 that was paid by the North Slope Borough for Palin and her 7-year-old daughter, Piper, to attend various functions, including a whaling festival in the town of Barrow.

Palin and husband Todd also received travel, food and lodging valued at $4,620.12 to attend a Republican Governors Association event in Texas, in April — gifts that were not reported until August, according to disclosure forms. Palin and the other governors attending the event also received $1,000 Rocky Carroll cowboy boots.

Russia to send warship through Panama Canal

PANAMA CITY, Panama – Russia said Wednesday it is sending a warship through the Panama Canal for the first time since World War II, a short journey loaded with symbolic weight: the destroyer will dock at a former U.S. naval base, showcasing Russia's growing influence in the region.

This is a July 2004 file photo of the Admiral Chabanenko, Russian anti-submarine destroyer, seen in the Barents Sea, Russia, Russia. The Admiral Chabanenko will sail through the Panama Canal this week for the first time since World War II, the Russian navy announced Wednesday Dec. 3, 2008, pushing ahead with a symbolic projection of Moscow's power in a traditional U.S. zone of influence

Russia appears to be relishing the idea of stopping at what was long a symbol of U.S. global power; the Russian Navy announced it would visit "the Rodman naval base" — a name that the host nation, Panama has not used since taking over the base from the United States in 1999.

The destroyer Admiral Chabanenko is scheduled to enter the Panama Canal on Friday morning and arrive late in the day at what Panama calls the Balboa Naval Base.

"It is a sort of tit-for-tat for Russia's perception of U.S. meddling in Georgia, Ukraine and Eastern Europe," and has little military purpose, said Adam Isacson, an analyst for the Washington-based Center for International Policy.

Russia, like the United States, already has ports with access to both the Atlantic and Pacific oceans.

"Sending a destroyer through the Panama canal obviously has a lot of symbolic significance (and) this is primarily symbolism," said analyst Michael Shifter of the Inter-American Dialogue think tank in Washington

U.S. officials have expressed no concern over the visit — continuing a stance they took when the ship earlier participated in joint exercises with Venezuela's navy, which concluded Monday.

Venezuelan President Hugo Chavez, who campaigns against U.S. influence in the hemisphere, invited the Admiral Chabanenko and the nuclear-powered missile cruiser Peter the Great to join the exercises, adding to his growing military ties with the Kremlin.

Panamanian authorities said they would treat the Admiral Chabanenko as just another toll-paying ship, and the calm surrounding the visit is a sign of how far the country has come since it served as a Cold War bastion studded with U.S. military bases when the Canal Zone was U.S. control.

The canal was a symbol of America's growing global reach when it opened in 1914, and it was a major military outpost for generations. The 10-mile-wide, 51-mile-long strip along the canal was considered U.S. territory — a fact that allowed Canal Zone native John McCain to run for the U.S. presidency.

Panama is carrying out a multibillion dollar project to widen the waterway to accommodate bigger ships, and it sees the former U.S. bases as a tourist draw: the nearby Fort Amador is better known locally these days for its seafood restaurants than its military past.

"This isn't the moment where I think the (U.S.) conservatives will get too alarmed," said Shifter. "Perhaps if they had done it even a couple of months ago there would have been more concern, in the context of the Georgia crisis when oil prices hadn't dropped they way they have. Russia is now seen as sort of a weaker position then they were before."

Some U.S. conservatives tried to block or delay the canal hand-over in 1999, arguing that growing operations by a Hong Kong-based ports company would lead to a Chinese takeover of the waterway.

"Obviously, they've been proved to be wrong," Shifter said. "I think the Panamanians have demonstrated that they're perfectly able to run the canal very well; it's been very well managed and there's absolutely no concern" about foreign control.

Even the U.S. government is sanguine about the Russian ship.

"We have no interest in reviving Cold War images and rhetoric. We and the region have left this behind us and no longer see our relationships with other countries through the Cold War lens," said a U.S. State Department official who was not authorized to be quoted by name.

"We are looking for ways to enhance mutual cooperation in the Americas, and see a constructive role for Russia" in the process, he said.

But the presence of the Russian warship still has resonance for some in Panama, which was dominated by the United States for nearly a century, and which underwent a U.S. invasion in 1989 that ousted dictator Manuel Noriega.

President Martin Torrijos is the son of military strongman Omar Torrijos, who negotiated the return of the canal to Panama's control in the 1970s with former president Jimmy Carter. For Panamanians, the Russian "shows 'we're not under Uncle Sam's domination anymore,'" Isacson said.

Mario Rognoni, an adviser to ruling-party presidential candidate Balbina Herrera, said the Russian visit "demonstrates how times have changed, and the neutrality we have shown in operating the canal."

Automakers plead for aid, but Senate votes lacking

WASHINGTON – Imperiled automakers and their union worked feverishly Wednesday to sell a skeptical Congress on a $34 billion aid plan, promising labor concessions and restructuring. The Senate's Democratic leader said there still weren't enough votes to tap the $700 billion federal bailout fund to prop up the foundering Big Three.

General Motors CEO Rick Wagoner, passenger seat, left, travels in Frederick, Md.,Wednesday, Dec. 3, 2008, by car from Detroit to Washington to testify in a Congressional hearing on the auto industry bailout.

One day before the chiefs of the auto companies return to Capitol Hill to make their urgent cases for loans, Sen. Harry Reid, D-Nev., said the money was unlikely to come from the Wall Street rescue fund.

"I just don't think we have the votes to do that now," Reid told The Associated Press in an interview.

The White House called the timing of his comments "interesting" coming on the eve of high-stakes congressional hearings Democrats demanded.

"It's not hospitable," said Dana Perino, the White House press secretary.

In Capitol Hill meetings, industry officials said the collapse of one or more of the Big Three carmakers could greatly worsen the nation's recession and undermine the companies' ability to survive.

"We're on the brink with the U.S. auto manufacturing industry. We're down to months left," Chrysler's vice chairman, Jim Press, told the AP in a separate interview. "If we have a catastrophic failure of one of these car companies, in this tender environment for the economy, it's a huge blow. It could trigger a depression."

The United Auto Workers union, scrambling to preserve jobs and benefits, agreed at an emergency meeting in Detroit to allow the companies to delay payments to a multibillion-dollar, union-run health care trust and to scale back a jobs bank in which laid-off workers are paid most of their wages. The concessions could help mollify some lawmakers who have criticized the union's benefits as too rich when compared with those of workers at foreign-brand auto plants in the U.S.

The Bush administration and auto-state Republicans and Democrats are pushing to help the automakers with aid from a different source: a previously approved $25 billion program that's supposed to be used to help them produce more environmentally advanced vehicles.

Environmentalists — and a number of powerful friends in Congress — are vigorously opposing that idea.

Reid said the administration could act unilaterally to use a portion of the Wall Street bailout program for loans to the automakers, but the White House has consistently resisted that approach.

"There's talk going around now that the Bush White House may ask for" the second $350 billion installment of the $700 billion financial industry rescue fund, Reid said.

But if Bush's team doesn't act, he said, "I think that we are probably going to have to try to do something" in Congress.

Reid said he would rely on Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, to determine what kind of legislation would be appropriate.

The autoworkers' concessions are "a step in the right direction," he said.

"I think it's too bad that negotiated contracts between labor and management are going to have to be changed," Reid said. "But it's obvious to everyone — as strong of a union guy as I am — it's obvious that there has to be some changes made."

Ahead of Thursday's televised hearings, GM's president and chief operating officer, Fritz Henderson, met with congressional aides and said bankruptcy for his company would further erode consumer confidence. About 25 auto dealers also combed through House and Senate office buildings, lobbying for the bailout package.

General Motors Corp., Chrysler LLC and Ford Motor Co. submitted three separate survival plans to Congress this week after flunking their first attempt to persuade lawmakers to throw them a lifeline.

GM and Chrysler said they needed an immediate infusion of government cash to last until New Year's, and both said they could drag the entire industry down if they fail. Ford wants a $9 billion standby line of credit in case a competitor fails.

Chrysler said it needed $7 billion by year's end to keep operating. GM asked for an immediate $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit to use if conditions worsen.

Ford's chief executive, Alan Mulally, and GM's chief executive, Rick Wagoner, said they would work for $1 a year if each company accepted government loans. The carmakers also have offered to cancel bonuses and merit raises. Chrysler said its chief executive has cut his annual pay to $1.

All three plans envision the government getting a stake in the companies that would allow taxpayers to share in future gains if they recover.

The Senate Banking, Housing and Urban Affairs Committee was to hear testimony Thursday from the executives, the UAW's president, Ron Gettelfinger, and the head of the Government Accountability Office on the companies' plans. The House Financial Services Committee planned similar session Friday.

Officials at the White House and the Treasury and Commerce departments were scouring the plans. Perino said it was "too early to say" whether the companies have outlined a path toward viability that justifies new federal assistance.

President-elect Barack Obama said it appeared that Big Three chiefs were returning to Washington with a "more serious set of plans."

The bailout faces a skeptical public. Sixty-one percent oppose providing the auto companies with billions in federal assistance, according to a CNN-Opinion Research Corp. poll released Wednesday. Fifty-three percent said it would not help the economy.

Few saw any quick impact if the U.S. auto industry were to go bankrupt — only one in three expected to be affected immediately or in a year. Most of the rest said they thought it would affect them eventually, though nearly one-quarter said they would never feel its impact.

Court ruling brings down Thai government

BANGKOK, Thailand – A court dissolved Thailand's top three ruling parties for electoral fraud Tuesday and temporarily banned the prime minister from politics, bringing down a government that has faced months of strident protests seeking its ouster.

The Constitutional Court ruling set the stage for thousands of protesters to end their weeklong siege of the country's two main airports, but also raised fears of retaliatory violence by a pro-government group that could sink the country deeper into crisis and cripple its economy.

Members of the People's Alliance for Democracy, occupying Bangkok's Suvarnabhumi international airport, cheered and hugged after they heard news of the verdict.

"My heart is happy. My friends are very happy," said Pailin Jampapong, a 41-year-old Bangkok housekeeper choking back tears as she jumped up and down.

Government spokesman Nattawut Sai-kau said Prime Minister Somchai Wongsawat and his six-party ruling coalition would step down.

"We will abide by the law. The coalition parties will meet together to plan for its next move soon," he told The Associated Press.

Hours later, a Thai aviation official announced that Suvarnabhumi international airport was to reopen to cargo flights despite an ongoing siege of the facility.

Chaisak Anksuwan, general director of the Department of Aviation, said cargo flights were authorized to land at the airport as of 9 a.m. Tuesday and the first flights were expected to arrive later in the day.

Gold prices hit record high

Gold Price Close Today : $774.60
Change: -41.60 or -5.1%

Silver Price Close Today : $9.35
Change: -83.5 cents or -8.2%

Gold Silver Ratio: 82.84
Change: 2.707 or 3.4%

Dow Industrials: 8,148.29
Change: -680.75 or -7.7%

US Dollar Index Today: 87.05
Change: 0.44 or 0.5%

The US Mint, in another dazzling display of marketing skill and organisational competence, announced today that, until further notice, in 2009 they would make no American Gold Buffalos, no fractional Gold American Eagles, and no Platinum American Eagles. Yet they will be striking one ounce gold and silver American Eagles, but selling through their cartel of dealers "by allotment", which translates "rationing."

Iss brilliant viktory of socialist buzzness plannink, Comrades!

More lunacy today.

Based apparently on news that the Fed is going to inflate more than ever, the US dollar index has risen to 87.052. This news is added to the $8 trillion worth of bail-outs, cop-outs, and spend-outs, plus the $300 - $800 billion of new bailouts the Fed or Treasury announces daily. They're going to kill the dollar. Really.

More news: the National Bureau of Economic Researched announced today that the economy has been in a recession since last December. They also announced that Napoleon lost the Battle of Waterloo.

Stocks took a big fall today, No. 4 in history for size, but it's not a new low and comes on a day with a big dollar rise. If the Dow survives -- that is, doesn't break the old 7,552 low -- than it will simply confirm that it has made a bottom. Odds favour that outcome.

SILVER and GOLD PRICES were nuked today. The gold price dropped 41.60 to 774.60 and silver price dropped 83.50 cents to close at $9.35. However, when you look at a chart, even these large drops are not fatal to the uptrend. In fact, they don't appear significant. Nothing climbs straight up; everything zigs and zags. This is a zag. Y'all remember that I have warned that volatility would be the rule, and that it would wear your nerves raw. Here 'tis.

The GOLD/SILVER RATIO is dropping, but slightly and slowly. This also bodes well for metals. "A trend in force remains in force until broken." Uptrend for silver & gold remains in force, so I continue to observe that Nov 18 marked the bottom for both. Both metals have also entered a new rally that will carry much higher into next spring.

Joke of the day: Last week Citibank's [sic] research group announced that gold could hit $2,000 [sic] next year. Too bad Citibank management hasn't been reading the reports from its research group -- for the past 10 or 12 years!

Dow plunges on news recession began in Dec. 2007

WASHINGTON – Most Americans sorely knew it already, but now it's official: The country is in a recession, and it's getting worse. Wall Street convulsed at the news — and a fresh batch of bad economic reports — tanking nearly 680 points. With the economic pain likely to stretch well into 2009, Federal Reserve Chairman Ben Bernanke said Monday he stands ready to lower interest rates yet again and to explore other rescue or revival measures.

Rushing in reinforcements, Treasury Secretary Henry Paulson, who along with Bernanke has been leading the government's efforts to stem the worst financial crisis since the 1930s, pledged to take all the steps he can in the waning days of the Bush administration to provide relief. Specifically, Paulson is eyeing more ways to tap into a $700 billion financial bailout pool.

On Capitol Hill, House Speaker Nancy Pelosi, D-Calif., vowed to have a massive economic stimulus package ready on Inauguration Day for President-elect Barack Obama's signature.

That measure — which could total a whopping $500 billion — would bankroll big public works projects to generate jobs, provide aid to states to help with Medicaid costs and provide money toward renewable energy development. Crafting such a colossal recovery package would mark a Herculean feat: Congress convenes Jan. 6, giving lawmakers just two weeks to complete their work if it is to be signed on Jan. 20.

President George W. Bush, in an interview with ABC's "World News," expressed remorse about lost jobs, cracked nest eggs and other damage wrought by the financial crisis. "I'm sorry it's happening, of course," said Bush. The president said he'd back more government intervention.

None of the pledges for more action could comfort Wall Street investors. The Dow Jones industrials plunged 679.95 points, or 7.70 percent, to close at 8,149.09.

It was another white-knuckle day, punctuated by grim economic reports. An index of manufacturing activity sank to a reading of 36.2 in November, a 26-year low, the Institute for Supply Management reported. Construction spending fell by a larger than expected 1.2 percent in October, the Commerce Department said.

Adding to the gloom, the National Bureau of Economic Research, a group of academic economists, concluded Monday that the country has been suffering through a recession since December 2007.

With NBER's decision, the United States has fallen into two recessions during Bush's eight years in office. The first one started in March 2001 and ended in November of that year.

The economy jolted into reverse in the final three months of last year. After a short spring rebound, it contracted again in the summer. Economists say it is still shrinking and will continue to do so through at least the first quarter of next year.

Unlike past recessions, consumers are bearing the brunt of this one. Clobbered by job losses, hard-to-get credit and hits to their wealth from sinking home values and plunging portfolio investments, consumers have cut back sharply on their spending, throwing the economy into chaos.

Watching customers' appetites wane, employers have throttled back on hiring. The unemployment rate in October zoomed to 6.5 percent, a 14-year high. So far this year, 1.2 million positions have disappeared. The jobless rate is likely to climb to 8 percent or higher next year.

Against that backdrop, many economists believe the current recession will be the worst since the 1981-82 downturn.

To help ease the pain, Bernanke said additional interest-rate cuts are "certainly feasible," but he warned there are limits to how much such action would revive the economy, which is likely to stay mired in weakness well into next year.

The Fed's key interest rate now stands at 1 percent, a level seen only once before in the past half-century, and many economists predict Bernanke and his colleagues will drop the rate again at their next meeting on Dec. 15-16.

The Fed can lower its key rate only so far — to zero — and it's getting ever closer. Given that constraint, Bernanke said there are other ways to bolster economic activity.

The Fed, for instance, could buy longer-term Treasury or agency securities on the open market in substantial quantities, he said. This might lower rates on these securities, "thus helping to spur aggregate demand," Bernanke said.

Because the Fed can go only so low in reducing interest rates, the central bank over the past year has resorted to a flurry of other radical and often unprecedented actions with the hope of busting through credit jams and getting financial markets operating more normally.

The bracing impact of the Fed's aggressive rate reductions, however, has been somewhat stymied by the credit and financial crises, Bernanke said. Despite lower borrowing costs, skittish banks have been reluctant to lend money to people and businesses, a vicious cycle that has seriously hobbled the U.S. economy.

"Even if the functioning of financial markets continues to improve, economic conditions will probably remain weak for a time," Bernanke warned.

Paulson, meanwhile, has been working closely with the incoming administration, including New York Fed President Timothy Geithner, Obama's pick to be the next treasury secretary, to pave the way for a smooth transition.

"We are actively engaged in developing additional programs to strengthen our financial system so that lending flows into our economy," Paulson said, referring to tapping the $700 billion bailout fund. "When these programs are ready for implementation, we will discuss them with the Congress and the next administration," he added.

Paulson did not provide specifics on what type of programs the administration was weighing other than to say that it was looking at ways to boost capital injections into financial institutions.

Oil slumps 3 pct to 3-1/2 year low on econ worry

SINGAPORE (Reuters) – Oil slid to a 3 and a half year low under $48 on Tuesday, extending the previous day's sharp drop as signs grew the global economy is in worse shape than expected and after OPEC opted to delay talks on further output cuts.

Japan's Nikkei average slid 5 percent on Tuesday, with exporters hit by a stronger yen after signs the U.S. economy has been in a recession for a year heightened risk aversion.

U.S. light crude for January delivery fell $1.43 to $47.85 a barrel by 0342 GMT, the lowest since May 2005 and almost $100 off the record $147.27 peak reached in July. That followed an over 9 percent dive on Monday.

London Brent crude dropped $1.40 to $46.57.

Surging demand from emerging countries sent oil on a six-year rally from 2002, but prices have tumbled since July's all-time high above $147 a barrel as economic turmoil erodes demand in top consumer the United States and other big developed nations.

Producer group OPEC on the weekend put off a decision on whether to deepen production curbs until later this month as Saudi Arabia and other Gulf members called for greater compliance, a delay that sent oil prices tumbling on Monday.

More bearish news could be in store on Wednesday, with U.S. crude oil inventories likely having risen by 1.8 million barrels last week, a third consecutive build, as imports continued to increase, a preliminary Reuters poll of analysts showed.

"While some price consolidation above last month's lows of $48.25 could be forthcoming (on Tuesday), we will be looking for Wednesday's EIA report to provide additional fodder for the bears," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.

The Organization of the Petroleum Exporting Countries is ready to cut production by a significant amount when it meets later this month in Algeria in order to whittle down high stocks, the group's secretary-general said on Monday.

But Saudi Arabian Oil Minister Ali al-Naimi told Saudi-owned al-Hayat newspaper OPEC would not need to make a further output cut in Algeria if producers comply with previous curbs and fuel stocks decline.

The Abu Dhabi National Oil Co (ADNOC) raised more questions on Tuesday by telling its Asian customers that it would increase term crude oil supplies in January, an apparent reversal of curbs imposed after OPEC cut output a month ago.

Given the emphasis on compliance, it was not clear why ADNOC, the main oil producer for the United Arab Emirates and a core Gulf OPEC member, would boost sales, and some traders said it may be cutting spot market sales to offset higher term shipments.

Clinton's India ties may complicate Obama policy

WASHINGTON – The close ties with India that Secretary of State-nominee Hillary Rodham Clinton forged during her years as a U.S. senator and presidential candidate could complicate diplomatic perceptions of her ability to serve as a neutral broker between India and its nuclear neighbor, Pakistan.

With tensions rising between India and Pakistan after last week's deadly terrorist attacks in Mumbai, Hillary Clinton faces an early test of her influence in South Asia, where President-elect Barack Obama on Monday said that instability and the rise of militants pose "the single most important threat against the American people."

Both Hillary Clinton and her husband, former President Bill Clinton, have maintained warm relations for years with India and the Indian-American community. As New York's senator for eight years and as a 2008 presidential candidate, Hillary Clinton toured India and visited with Indian officials and entrepreneurs, and her campaigns profited from the largesse of Indian-American fundraisers. Bill Clinton's charitable foundation has been funded by some of the same well-heeled Indian businessmen who backed his wife's campaigns.

In her new role as the nation's top diplomat, Hillary Clinton would project Obama's policies, not her own. But even foreign affairs experts who wave off suggestions that Hillary Clinton would lean toward either Asian power acknowledge that the perception of such a tilt could cause suspicions in Pakistan. South Asia experts reject the assertion of bias, but they acknowledge it exists.

"There are some who believe it, but I think most people think she is an objective observer with a good understanding of South Asia," said Walter Andersen, Associate Director of the South Asia Studies Program at Johns Hopkins University's School for Advanced International Studies. Andersen insisted perceptions of Hillary Clinton's bias toward India are "based on inaccuracy."

Karin Von Hippel, a South Asia expert at the Center for Strategic and International Studies, agreed, saying Hillary Clinton is "very balanced" and "understands almost better than anybody how delicate the situation is between these two countries."

Still, perceptions matter, especially in the region. "There are concerns that she is seen as pro-India, she and her husband both," said one Washington-based foreign diplomat with extensive experience in South Asia. "The Pakistanis definitely see them as closer and friendlier to India."

The diplomat spoke on condition of anonymity to discuss the sensitive issue of India and Pakistan, which have fought three wars — two of them over the disputed Himalayan region of Kashmir — since winning independence from Britain.

Influential members of the Indian-American community have rejoiced in Hillary Clinton's selection as secretary of state.

"Sen. Clinton will continue the close relationship between the United States and India that started with the Clinton administration and has progressed in the Bush years," said Varun Nikore, founder of the Indian-American Leadership Initiative, an independent political organization supporting Democratic candidates.

"You cannot expect that any nominee for secretary of state would have a special relationship going into this job, but we're very lucky that we have in Sen. Clinton someone who is already well-versed on one of the more important countries and emerging economies in the world," said Nikore.

A current State Department official allowed that Bill Clinton had substantially boosted engagement with India, but noted that any administration would likely have done so. The official stressed that President George W. Bush has continued that course, most recently signing a civilian nuclear pact with New Delhi.

"None of this has been meant to exclude Pakistan, but it is a zero-sum game when you are dealing with these two countries," the official said. "You can't do something with one without it affecting the other." The official spoke on condition of anonymity to discuss internal administration thinking.

Ties between the United States and India improved dramatically, as did Pakistani suspicions of pro-India bias in Washington, during Bill Clinton's administration, which embraced India as a major power and market as it opened its economy in the 1990s.

The administration's disparate treatment of India and Pakistan was most apparent during a 2000 Asian trip, with the president spending five days in India and seven hours in Pakistan.

The Clinton White House barred media coverage of the Pakistan stop and released only an official photo of Bill Clinton and Gen. Pervez Musharraf seated among aides, 12 feet across from each other. Bill Clinton admonished Pakistan's military government to retreat from its nuclear weapons course and to lower dangerous tensions with India.

In a speech to India's Parliament on that trip, Bill Clinton said he shared many of New Delhi's concerns about "the course Pakistan is taking; your disappointment that past overtures have not always met with success; your outrage over recent violence. I know it is difficult to be a democracy bordered by nations whose governments reject democracy."

Early during her presidential campaign in 2008, the former first lady pointed to the "strong partnership" that Bill Clinton forged between India and the U.S. As New York's senator, Hillary Clinton also touted her role as co-chair of the Senate India Caucus.

"As president I will work with India to make our strong friendship even stronger," Hillary Clinton promised earlier this year.

During the presidential campaign, Indian-Americans reciprocated Hillary Clinton's long-standing embrace of India by giving generously — $2 million at a single fundraiser in New York in 2007.

At one point, the Obama camp prepared, but then disavowed, a campaign memo that carried the headline "Hillary Clinton (D-Punjab)," a mocking play on the standard reference to a candidates' party and constituency.

The memo, which created a furor in India and the Indian-American community, also referred to the Clintons' investments in India, Sen. Clinton's fundraising among Indian-Americans and the former president's $300,000 in speech fees from Cisco, a company that has moved U.S. jobs to India.

Obama called the memo "a dumb mistake" and "not reflective of the long-standing relationship I have had with the Indian-American community."

Now as president-elect, Obama has chosen Hillary Clinton to be his chief diplomat and highlighted India and Pakistan as priorities for his administration.

"The situation in South Asia as a whole and the safe havens for terrorists that have been established there represent the single most important threat against the American people," he told reporters at a news conference Monday as he unveiled his foreign policy and national security team, including Hillary Clinton.