• Secretary Nicholson makes surprise retirement announcement.
• Rangel set to lecture leaders of Peru and Panama over labor laws.
• Democrats hold all-nighter in Senate to debate Iraq War.
• Ames straw poll gets more interesting.
• Chuck Hagel in trouble in Nebraska.

Outlook

1. The all-night session of the Senate scheduled by Majority Leader Harry Reid (D-Nev.) did not achieve the 60 votes needed to actually pass a troop-withdrawal motion. But it does meet the Democratic goal of stressing the Iraq fiasco -- the principal reason the 2008 election prospects are so bleak for the Republicans.
   
   
2. In response, Republicans stressed the failure of the Democratic-controlled Congress to send substantive legislation to the President's desk so far. The poor approval rating of Congress -- even lower than President George W. Bush's -- is the greatest GOP asset. So, the all-night session also fits Republican goals.
   
   
3. Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, delivered a menacing threat about the confirmation of former Rep. Jim Nussle (R-Iowa) as OMB Director. To get confirmed, Conrad hinted, Nussle will have to express compromise on appropriations bills. Implicitly, he would have to back down from President Bush's plans to veto nine out of 12 appropriations bills because of overspending.
   
   
4. But none of those bills has yet cleared the Senate. Democrats do not want a string of Bush vetoes, highlighting their spendthrift tendencies. Only three bills are likely to get through to final passage: Homeland Security, Military Construction-Veterans Affairs and Legislative Branch. Of these, only Homeland Security will be vetoed. The remainder of the appropriations bills will likely be bundled into one omnibus bill.
   
   
5. Would President Bush veto such an omnibus bill? That looks ahead to a possible government-closing scenario, with a question about which side would have the will to prevail. Bill Clinton stared down a Republican Congress in 1995, but nobody is sure that Bush could do the same.

Bush Administration

Veterans Affairs: The sudden resignation by Veterans Affairs Secretary Jim Nicholson came as a huge surprise in Washington. Nicholson says he is feeling his age at 70 years, and there are a number of cabinet members who would like to leave. He has no political plans.

Nicholson felt the need to retire now because otherwise he would have to stay all the way through the end of the Bush Administration. A later retirement would make it too difficult for the President to get a new nominee through the Democratic-controlled Senate. Nicholson will leave at the end of September.

Nicholson's departure comes after he had quietly made peace with Rep. Bob Filner (D-Calif.), the liberal chairman of the House Veterans Affairs Committee. As the committee's ranking minority member during the last Congress, Filner had criticized Nicholson. But when the Democrats took over Congress last year, they buried the hatchet.

The Nicholson-Filner cordiality contrasts with bitter public animosity between Filner and Rep. Steve Buyer (R-Ind.), the Veterans Committee's ranking Republican. Buyer regards Filner as unschooled in veterans' issues and has heaped incredible scorn upon him in extraordinary public scenes.

Congress

Trade: As of this writing, U.S. Trade Representative Susan Schwab was still holding out a sliver of hope that Democrats will make good on their agreement to pass trade agreements for Peru and Panama. Republicans on Capitol Hill are less sanguine, and they seem to be more realistic.

1. House Ways and Means Chairman Charlie Rangel's (D-N.Y.) recent announcement that he will visit these countries to demand that they change their labor laws prior to congressional passage of a free-trade agreement is a highly unusual move in trade negotiation. In fact, Democrats seem to be reneging on the deal that kept the Panama and Peru agreements alive. Behind the scenes, U.S. labor leaders are calling the shots.
   
   
2. Meanwhile, agreements with South Korea and Colombia may be dead. Canadian Prime Minister Stephen Harper of the Conservative Party traveled to Bogota to take a slap at the U.S. Congress and reassure Colombian President Alvaro Uribe that Canada remains an ally and trading partner. This is small consolation to Uribe, considering the small size of the Canadian economy.
   
   
3. Democrats have balked at the status of human rights in Colombia after the current government has made significant strides in pushing back the threat of Marxist guerrillas who once controlled vast sections of that nation. Alleged ties between members of Uribe's government and paramilitaries used as protection against the guerrillas generated a major scandal in Bogota.

Iraq: Senate Majority Leader Harry Reid kept the Senate up all night Tuesday to discuss the Iraq War.

1. The gesture appeared an empty stunt, but that would be a misreading. A laser-like focus on the Iraq War remains the best strategy Democrats have for expanding their Senate majority in 2008. This is the equivalent of the Republicans' all-nighter over judges in 2004. Democratic National Committee Chairman Howard Dean was out appealing for funds with an e-mail to supporters: "put on a pot of coffee."
   
   
2. While there are enough Republican defections to do something about Iraq, the question is what. The new Republican objectors are not necessarily interested in some of the Democratic proposals, especially those that are more or less political or require an unrealistically quick withdrawal. On the other hand, the invitation by Iraqi Prime Minister Nouri al-Miliki to leave the country could open the door to more defections.
   
   
3. By spending two weeks on the Defense Authorization bill, majority Democrats all but guarantee an omnibus appropriations bill at the end of the fiscal year and a showdown later in the year over a government shutdown.
   A few other notes on the Defense Authorization bill:

• An amendment to change federal hate-crimes statutes was filed by Sen. Ted Kennedy (D-Mass.) last week. The Bush Administration has all but promised to veto that provision as it emerged from the House, and conservatives worry about its effect on religious liberty. Given that there is already an intense debate in this bill over Iraq, there's no guarantee on the Democratic side that it will be attached.
  
  
• Senators Tom Coburn (R-Okla.) and Jim DeMint (R-S.C.) will continue in the Senate the anti-earmark fight that Representatives Jeff Flake (R-Ariz.) and Jeb Hensarling (R-Tex.) have been fighting in the House. Two Senate amendments to the Defense bill will target an earmark by one of Flake's favorite targets, Rep. John Murtha (D-Pa.), and a Nebraska defense company. Two other amendments will require a competition to determine the best rifle for U.S. soldiers and require competitive contract processes for winning earmarked Defense money. Coburn leads the charge in stripping individual earmarks, while DeMint pushes for new transparency rules.

President 2008

The second-quarter financial filings should be alarming for Republicans, revealing that the top three Republicans have raised a total of $93 million for the presidential race compared to the $135 million raised by the top three Democrats. Recent polls put former Sen. Fred Thompson (R-Tenn.) and former New York City Mayor Rudy Giuliani (R) in the lead among Republicans, but "undecided" places slightly higher than either one. Democratic voters, meanwhile, appear to be far more satisfied with and locked into their choices.

Ames Straw Poll: With Sen. John McCain's (R-Ariz.) campaign all but dead, the August 11 Ames, Iowa, straw poll takes on a significance it did not have before. McCain, already lagging Iowa, had dropped out of the straw poll with a sigh of relief after Giuliani chose not to compete, and that would have left the two frontrunners out of the contest. But now, only frontrunner Giuliani is missing.

1. That sets up a brawl between former Massachusetts Gov. Mitt Romney (R) and several minor conservative candidates. For the latter, a strong showing in the Ames straw poll is their best chance to compensate for a lack of campaign funds and propel themselves out of the second tier.
   
   
2. Romney probably needs to win at Ames. Despite the fact that he lags in national polls, Romney is the clear frontrunner in most Iowa and New Hampshire state polling, largely a reflection of the positive ads he has run in those states to build up his image. Even if he continues to trail nationwide come January, winning in those states would make him instantly more credible heading into the big Super Tuesday of February 5. A second-place finish could embarrass Romney but not destroy him. A multi-millionaire, Romney will not be devastated by bad news with donors fleeing in every direction -- as McCain has been and will be in the coming month.
   
   
3. One candidate who could surprise in Ames next month is Sen. Sam Brownback (R-Kan.), whom most commentators write off for his lack of fundraising ability. Iowa Republicans have a history of supporting social conservatives, nearly handing Pat Buchanan a victory in 1996. Although Buchanan is really closer politically to presidential candidate Rep. Duncan Hunter (R), Brownback has a geographic and issue advantage in Iowa that Hunter, Romney and Giuliani lack with respect to farm issues. He also may be picking up many of McCain's former supporters, who are not turned off by Brownback's position on immigration.
   
   Low on funds, Brownback has been frugal and intensely concentrated on Iowa. His operation is all grassroots, with no mail or television in the state. The conventional low expectations work in his favor, but a more realistic appraisal is that he needs a win or a close second at Ames to have a shot at Iowa in January.
   
   
4. Among the other battlers for the right-wing vote is Rep. Tom Tancredo (R-Colo.), who views Brownback as a key rival. Tancredo landed a few punches on Brownback for his support of the comprehensive immigration reform bill and the fact that Brownback changed his vote from "yes" to "no" during the Senate's second cloture vote on the bill last month. Brownback responded by blanketing Tancredo's congressional district with mailers about contributions Tancredo had received from John Tanton, an anti-immigration activist with ties to Planned Parenthood. Tancredo has toned things down since then, a sign that he is likely to run for his seat again when the presidential campaign is over.
   
   
5. Rep. Ron Paul (R-Tex.) has gained much attention for being the only anti-war Republican in the race. At the same time as some Republicans are accusing him of treason, he appears to have collected more in campaign donations from active-duty military than any other Republican presidential candidate. He has attracted enough attention that some worry about a third-party candidacy.
   
   Paul's anti-ethanol subsidy position will not help him in Iowa. Yet like Buchanan, he embraces an isolationist foreign policy that many Iowans appreciate. He recently stoked controversy with an appearance on the radio show of a 9/11 conspiracy theorist, in which he suggested that the Bush Administration is looking for an excuse to go to war with Iran.
   
   
6. What about Fred? It is an open question where Fred Thompson stands in Ames, considering that he will probably not be an official candidate by then and will not actively participate in the straw poll.

Gilmore: The exit of former Virginia Gov. Jim Gilmore (R) from the race did not shock anyone, but it is a lesson in the difference between a frontrunner and an underdog campaign. Even as he received advice to go out on a limb by attacking the frontrunners or by embracing bold policy proposals that would distinguish him from other candidates, Gilmore ran a very cautious campaign.

Instead of running like an underdog, Gilmore campaigned like a frontrunner, presenting himself as a mainline conservative. He also made a habit of showing his résumé constantly during the debates, answering questions from his experience in one capacity or another.

The result of his exit now could be that Gilmore competes for the Senate seat of John Warner (R-Va.) should Warner retire. In a state where Republicans have received few breaks lately, many conservatives would find him preferable to Rep. Tom Davis (R-Va.), whom they see as more moderate.

Giuliani: By releasing a list of prospective judicial nominees, Rudy Giuliani wants to ease the minds of conservatives who are otherwise unwilling to support him because of his views on abortion. With Fred Thompson at his heels, Giuliani needs to offer these conservatives something more substantial (and more consistent) than his message on abortion in the campaign so far.

Fred Thompson: Thompson has wavered from an outright denial to an acknowledgement that he may have lobbied for or at least given advice to a group seeking to have the U.S. government fund abortions abroad. If he did, he does not remember. This would have occurred during the administration of George H. W. Bush, before Thompson was elected to the Senate. Conservatives appear to be unconcerned by the allegation, which was brought by the abortion group.

Thompson could form an exploratory committee at the end of July, which would allow him to avoid disclosing campaign contributions until the third-quarter reporting period. Thompson would instead file an IRS form to maintain the tax-exempt status of his "testing the waters committee." His official announcement might not come until September.

Randy Enwright, a Republican political consultant from Florida with strong ties to the Iowa GOP, has been tapped as political director of Thompson's forthcoming presidential campaign. Based in Tallahassee, Enwright worked on George W. Bush's 2000 Florida campaign and has been the Republican National Committee's regional political director for Florida since then. In the early 90s, he was staff director of the Republican Party in Iowa, where caucuses will kick off the 2008 delegate selection. Enwright was executive director of the Florida party in 1995-1999 and adviser to Gov. Jeb Bush (R).

Clinton: Sen. Hillary Clinton (D-N.Y.) received the endorsement this week of former Ambassador Joseph Wilson.

Her husband, President Bill Clinton, appealed to small donors for Senate Democratic campaigns recently by asking for a tax increase for upper-income earners -- which include himself. As President in 1993, Clinton pushed huge upper-bracket tax increases through Congress, after which Republicans won control of the House in 1994 for the first time in 40 years.

His June 25 appeal, asking contributions of "$50, $100 or even more," included the declaration: "I never had any money until I left the White House. But now that I'm a millionaire, I get more help from the federal government than anybody. I think it's inconsistent with the common good to give me huge tax cuts."

Senate 2008

Nebraska: State Atty. Gen. Jon Bruning (R) doubled Sen. Chuck Hagel's (R-Neb.) fundraising in the second quarter and ends with a significant cash advantage. The conventional wisdom in Washington at this point is that Hagel is serving his last term in the Senate -- whether his departure is voluntary or otherwise.

It remains doubtful that Hagel will run on a third-party presidential ticket with New York City Mayor Michael Bloomberg (I) who is hardly his ideological soul mate. But a primary challenge from the conservative Bruning will be extremely daunting. Republicans may be weary of the Iraq War, but they still give it majority support. Hagel's apostasy in that field and ambivalence on the nomination of John Bolton have upset many Republicans, in spite of the senator's long and solid conservative record on taxes, guns and abortion.

House 2007

Georgia-10: This battle between two Republicans proved to be a shocker for Washington observers. Dr. Paul Broun (R), exploiting Georgia Republican voters' disgust with their party establishment, appears to have come out of nowhere to upset former state Sen. Jim Whitehead (R) in the special election runoff to succeed deceased Rep. Charlie Norwood (R-Ga.). The two candidates are separated by about 400 votes, with 1,700 absentee ballots yet to be counted.

Both are strong conservatives, Broun a bit more outspoken. Still, not only did Broun reach out to Democratic voters in his native Athens -- who were fearful that their portion of the district would be ignored by Whitehead -- during the second round, but he also launched a vigorous campaign on Whitehead's turf, the more populous Augusta portion of the district. By all available early accounts, he worked much harder than Whitehead, who had topped the first round of the special election with 44 percent over Broun's 21 percent.

Whitehead's campaign was certain that he had the race in the bag. They made an insufficient effort to turn out the vote in his portion of the district, and they totally wrote off Athens. The Whitehead media plan for the runoff included some television and radio, two mailers and just a few phone calls.

Broun was far more aggressive with mail and phone calls attacking Whitehead for failing to care about the Athens area. So overconfident was Whitehead that he chose not to respond in kind, wishing to remain above the fray.

The race had been Whitehead's to lose, and he looks to have done just that.

		Sincerely,
		Robert D. Novak