October 23, 2005

Apart from natural disasters, most of this week's biggest news is likely to come from Washington, D.C., where the hot topics are expected to include alleged crime in high places, tax reform, the war on terror, budget cutting and a continuing judicial standoff.

ROVE, LIBBY & FITZGERALD -- Patrick J. Fitzgerald, the prosecutor in the CIA leak case, is expected to make known this week whether he intends to bring indictments against Karl Rove, President Bush's senior adviser, and/or I. Lewis Libby Jr.,Vice President Dick Cheney's chief of staff, for alleged crimes related, directly or indirectly, to a leak of the identity of CIA agent Valerie Plame.The term of the grand jury that convened to hear witnesses in Fitzgerald's investigation of the leak and events that followed expires Friday. The prosecutor has signaled to associates that he does not intend to extend the investigation. If Rove is indicted, it would be a heavy blow to a president who has long relied on his political and policy advice. If Fitzgerald does nothing, it would be a positive sign for a recently beleaguered president.

TAX REFORM -- Closer to home for most voters, a sure-to-be-controversial federal tax reform plan that would make significant changes in how we measure our tax obligations is expected to be presented to President Bush by an advisory panel he appointed. The proposal suggests the elimination of almost all existing tax deductions, including state and local income and property taxes. Almost all existing exemptions and deductions would be replaced by much smaller tax credits. Home-interest deductions would be limited and interest deductions on home-equity loans and second home mortgages would not be allowed. The idea is to raise as much revenue as the current tax system does while eliminating the alternative minimum tax,which is taking a steadily larger bite from middle- income taxpayers. To offset the $1.2 trillion that tax would generate over the next 10 years, the commission is proposing limits on popular breaks. With Bush's popularity at low ebb, pushing any tax reform package through Congress without strong bipartisan support appears problematic.

WAR ON TERROR -- Another argument over giving the FBI greater power to demand records in terrorism investigations without a judge's approval is likely to heat up, as Senate Republican leaders push their colleagues to agree to a House version of a bill that would extend the anti-terrorist USA Patriot Act. The law is expected to be extended in some form, despite a broad national debate over its potential negative effect on civil liberties. Critics say the House version would give the FBI almost unlimited power to gain access to business and personal records. Supporters say the agency already has such powers in some criminal investigations and needs the same to pursue terrorism.

BUDGET CUTTING -- Elsewhere in Congress, Republicans are expected to continue their struggle to find ways to cut as much as $50 billion from the federal budget to offset the costs of hurricane recovery and take a first step toward slashing the size of soaring federal budget deficits. But Democrats have been uncooperative, and with congressional popularity near all-time lows the Republicans are likely to have a difficult time winning votes for sweeping cuts in social and health care programs. Last week they gave up on an effort to cut food stamp spending by $300 million a year.

JUSTICE MIERS? -- Harriet E. Miers, Bush's Supreme Court nominee, is expected to attempt to continue her efforts to build bridges to potential allies in the Senate as crucial November hearings on her nomination approach.

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