MR. STANZEL: Happy New Year's Eve, everyone. I have a few announcements before I take your questions. Hopefully you saw the statement by the President on New Year's, and just to give you a sense of his plans this evening, he will spend some time with friends on the ranch, having dinner on the ranch. They'll be having a Mexican-themed dinner. I'm sorry for the delay in getting started here, but I wanted to wait for an announcement out of Mississippi.

This morning, just a few moments ago, Mississippi Governor Haley Barbour announced the choice to fill the Senate seat being vacated by Senator Trent Lott. And President Bush spoke this morning with the person who was selected, and that was Representative Roger Wicker. The President called him at about 8:15 a.m. this morning to congratulate him on his new role. And the following is a statement by the President:

"Today Mississippi Governor Haley Barbour announced the appointment of Representative Roger Wicker to serve as United States Senator for the state of Mississippi, succeeding Senator Trent Lott. I welcome Representative Wicker's appointment and commend Governor Barbour for the selection. Representative Wicker's leadership has earned the respect of his constituents and his colleagues in the House of Representatives. He is an advocate for our men and women in uniform and a champion of modernizing our health care system. And he shares Senator Lott's commitment to promote the interests of the people of Mississippi. I look forward to working with Roger in his new role representing Mississippi in the United States Senate."

That is a statement that will be released here shortly from the President.

Also this morning the President spoke with Colombian President Alvaro Uribe. They spoke this morning to exchange New Year's best wishes. President Uribe also updated the President on the situation involving the possible release of three Colombian nationals held by the FARC, noting that various issues are still being worked out. The two leaders reaffirmed the strong relationship between the United States and Colombia. And the President reiterated his strong support for gaining the approval of the Free Trade Agreement between our two countries.

And also this morning you should have the statement about the President signing this morning -- singing into law S. 2271, which is the Sudan Accountability and Divestment Act of 2007. So you should have that statement as well.

And with that, I will go to your questions. Read more Comment (0), Email this.

MR. STANZEL: Well, you saw the statement last night from the administration. Tom Casey, from the State Department, did issue a statement. You've also seen statements from the Japanese and the South Koreans. It has been clear that the North Koreans would not provide a declaration by the deadline, and a full and complete declaration we believe is critical in order to move to the next phase.

So it is our view that that process should move forward. There is an opportunity to do that. Good progress has been made at Yongbyon. The United States has been working with North Korea in terms of the removal of the fuel rods and making sure that that's done safely and securely. But there does have to be a complete and full declaration, and this cannot be a situation where the North Koreans pretend to give a complete declaration. So we want that process to move forward and we will be pressing and working with all of the parties in the six-party talks to make sure that happens. Secretary of State Rice, Deputy Secretary Negroponte, Ambassador Chris Hill all have open lines of communication with members of the six-party talks and we hope and expect that that process will move forward. Read more Comment (0), Email this.

MR. STANZEL: Well, those conversations about moving the process forward are ongoing. I think we think it's possible for the North Koreans to provide a full and complete declaration, and we hope that they will do that as soon as possible. I'm not going to speculate beyond that about other actions that could occur. Read more Comment (0), Email this.

MR. STANZEL: I think that we had all hoped that North Korea would meet the December 31st deadline. We think that there is an opportunity to move forward. You saw the statement last night from the State Department that it is unfortunate that they didn't meet the deadline, but we'll be working with all the parties to make sure that this process moves forward. Read more Comment (0), Email this.

MR. STANZEL: Well, they did not meet -- Read more Comment (0), Email this.

MR. STANZEL: I think there is reason to believe that all of the members of the six-party talks think that this process should move forward, and we expect a full and complete declaration. So we hope that it will move forward. Read more Comment (0), Email this.

MR. STANZEL: It was our understanding, based on recent conversations, that obviously they were not going to make the December 31st deadline. You know, the United States actually slowed down part of the disablement process, and that is not something that we blamed the North Koreans for, but we wanted that to be done in a safe and secure manner. So we are not blaming the North Koreans for the slowdown in that disablement process.

However, we believe that the full and complete declaration is key to this process and we think there is an opportunity for them to do that. Read more Comment (0), Email this.

MR. STANZEL: I'm not going to put a timeline on it, but we'll be working with all the parties in pressing North Korea to make sure that that does happen. Read more Comment (0), Email this.

MR. STANZEL: Well, as you know, this is an action-for-action process, where at each point if North Korea meets certain deadlines they can move forward with the process and there is aid that can be provided. I would refer you to the State Department about all of the specifics on that, but it is an action-for-action process, and in order to have action on one side, we have to have action on the other side as well. Read more Comment (0), Email this.

MR. STANZEL: Well, that would be an issue for the people of Pakistan to work out. Obviously they're a sovereign government and they will have to be conducting that investigation. We have offered to provide any guidance or assistance that is requested. At this time, as far as I'm aware, none has been requested of the United States, but that is a matter for the Pakistani government to move forward on; it's early in the investigation. Read more Comment (0), Email this.

MR. STANZEL: I think it's in the interests of the people of Pakistan that there be a full investigation. I think it's in the interests of long-term prospects for democracy in Pakistan that that be the case. And we stand ready to help Pakistan, should they request our assistance with that. Read more Comment (0), Email this.

MR. STANZEL: I think that's what everyone expects and I think that's in everyone's interests. Read more Comment (0), Email this.

MR. STANZEL: In terms of the elections, that is also -- free and fair elections, as we've noted before, are an important part of the democratic society, and it's up to the political parties in Afghanistan to come to an agreement on that. We do believe that Pakistan should set a specific date so the process can be open and predictable. But in terms of the precise timing of that, that's up to the people in Pakistan. Read more Comment (0), Email this.

MR. STANZEL: We do share, of course, concerns with Congress about the situation in Sudan. We do share concerns about the violence that has been perpetrated by the government and by rebel groups there. And while the legislation has an admirable objective of seeking to improve conditions and end suffering in Sudan, certain provisions of the bill do raise constitutional concerns. Under the Constitution, the federal government is entrusted with a full and exclusive responsibility for the conduct of foreign affairs.

So to the extent that any actions taken pursuant to the act interfere with the federal government's foreign policy aims, that action would be unconstitutional. So as the signing statement makes clear, the administration will take appropriate measures to ensure that the United States, through the federal government, speaks with one voice in foreign policy matters. Read more Comment (0), Email this.

MR. STANZEL: I can take that question and probably provide you more guidance from some of our attorneys, who have obviously very closely examined this law. But those are our general concerns. Read more Comment (0), Email this.

MR. STANZEL: I'm sorry? Read more Comment (0), Email this.

MR. STANZEL: Because they didn't turn in a full and complete declaration prior to -- Read more Comment (0), Email this.

MR. STANZEL: And that's the one I have for you. I can't speak to their motivations. Read more Comment (0), Email this.

Q So they didn't communicate with the United States to say, hey, this is going to take a little longer

MR. STANZEL: I'm not going to say that, Olivier, other than I suggest you may touch base with State to see if they want to provide a greater readout of their conversations throughout this process. But it has been clear in recent days that they were not going to meet the deadline. So I'd just refer you to the State Department for those conversations, to see if you can get a readout from them. Read more Comment (0), Email this.

MR. STANZEL: The State Department, if they have not issued it already, should momentarily be issuing a statement about the situation in Kenya. And we are concerned about the outbreaks of violence across Kenya in reaction to the announcement of the voting results there this weekend. We've urged all parties to call on their supporters to remain calm and respect the rule of law. And we do, obviously, respect the right of Kenyans to voice their concerns about the elections publicly and we would hope that all challenges to the election can be channeled through appropriate legal and constitutional mechanisms. And as I noted, the State Department should have a statement that they're releasing here very shortly. Read more Comment (0), Email this.

MR. STANZEL: I would refer you to the -- Read more Comment (0), Email this.

MR. STANZEL: I would refer you to the signing statement, the answer I gave to -- Read more Comment (0), Email this.

MR. STANZEL: -- and tell you that I can follow up on specifics of the law. Read more Comment (0), Email this.

MR. STANZEL: Yes, that is -- I'm not deeply familiar with all the ins and outs of the law, Roger, so I'd have to take that question. Read more Comment (0), Email this.

MR. STANZEL: Well, you've heard the President say many times, and he's fond of saying that he looks forward to the sprint to the finish. I think we have tremendous opportunities in the new year and the President believes that we can work together to get many things done for the American people.

You may have noted his New Year's resolution in the radio address on Saturday is to work with Congress to make sure that we keep the economy moving, we keep taxes low, we keep close watch on the peoples' money and don't balloon the budget.

But I think the President has said very publicly and privately that he expects all of us on staff to sprint to the finish with him. And rest assured it's an effort to keep up with him because he has tremendous energy for the job. And we'll be working very hard not only on domestic issues, but obviously, as you well know, he has many efforts ongoing on the foreign policy front -- whether it's spreading democracy and liberty throughout the world, working with partners in the Middle East to bring peace and stability to that region; also we'll be traveling to Africa, as you know. And all of those are issues that the President looks forward to working on in the next year. Read more Comment (0), Email this.

MR. STANZEL: Well, that really falls to the State of the Union address. That's probably the time in which the President can sort of lay out his specific policy agenda for the upcoming year.

But you've heard the President talk about many of the things that we've worked on over the past year, and that is making sure that we don't see tax increases that would harm our economy during this time when we have headwinds as a result of the housing market; making sure that we keep spending in check so we can stay on path to a balanced budget; working with Congress to make sure that we continue to expand energy security.

Also the President would like to see a reauthorization of the No Child Left Behind Act, which is an education bill that has shown real results for the American people and is demonstrated through testing of students and student achievement has gone up significantly since that law was enacted.

So those are some of the basic priorities that the President has talked about, and I would urge you to, as you will, tune into his State of the Union address for any new initiatives in the coming year.

Sheryl. Read more Comment (0), Email this.

MR. STANZEL: I can't speak to the ambassador -- the ambassador has spoken with all of the parties throughout this process since the tragedy of the assassination of Benazir Bhutto. The President obviously spoke with President Musharraf on Thursday. The conversations with Secretary Rice and others at the State Department level have been ongoing. But I would refer you to the State Department to see if they've had direct conversations with the new PPP leaders. Read more Comment (0), Email this.

MR. STANZEL: The President has not; that's correct. Read more Comment (0), Email this.

MR. STANZEL: Absolutely. Read more Comment (0), Email this.

MR. STANZEL: Correct. Read more Comment (0), Email this.

MR. STANZEL: Well, the House of Representatives Article -- is it Article 1, Section 7 of the Constitution, refers to the fact that the legislation has to be returned to the House in which it was originated. The House of Representatives has adjourned; they did adjourn on December 19th. And per the Constitution, will be back gaveling in on January 3rd.

A pocket veto, as you know, is essentially putting it in your pocket and not taking any action whatsoever. And when Congress -- the House is out of session, in this case it's our view that that bill then would not become law.

In addition to that, that's why we took the additional step of actually returning the legislation on Friday to the House with a message of disapproval. So it's our view that we took the extra step -- what they call a protective return -- to make sure that Congress, when it returns in January, can move forward quickly with a fix to that legislation so the pay raises, the .5 percent can go into effect retroactively and we can make sure that Iraq has an opportunity to continue the process of rebuilding. Read more Comment (0), Email this.

MR. STANZEL: Correct. And that's a process and a procedure that has been used a number of times over the past couple decades. Read more Comment (0), Email this.

MR. STANZEL: It's possible. There are a number of bills coming up for action in the next week or so, it just depends on when those are ready for the President's action. So we'll certainly keep you posted. Read more Comment (0), Email this.

MR. STANZEL: As you know, we don't ever speculate about pardons. We did have some announcements several weeks ago, so I don't have anything further for you on that. Read more Comment (0), Email this.

MR. STANZEL: I am not aware of the President's schedule tomorrow night after we arrive, so I'm not aware of the specific reasoning -- other than I'm sure you all want to get back to your families. Read more Comment (0), Email this.

MR. STANZEL: Maybe so. Read more Comment (0), Email this.

MR. STANZEL: The festive New Year's spirit, the comity between the press and the administration. (Laughter.) Read more Comment (0), Email this.

MR. STANZEL: The one with the "t." (Laughter.) Read more Comment (0), Email this.

MR. STANZEL: Any other questions? Amy. Read more Comment (0), Email this.

Q Scott, back to the Sudan legislation. Does the sort of qualifications that are included in the

MR. STANZEL: Well, yes, to the extent that actions taken interfere with the federal government's foreign policy aims, it would be our view that those would be unconstitutional. So that is a concern that we do have with the legislation.

Actually, the State Department and the Justice Department, in letters in October, did express those concerns. So we've made Congress aware of our concerns about the legislation and the signing statement is to make clear that where we view actions taken to be unconstitutional we will take action. Read more Comment (0), Email this.

MR. STANZEL: Well, we certainly, as I noted, we support the overall goal and we support efforts to address the problem in Darfur, in Sudan. We have sanctions in place. We've been working with international partners on these issues. And we have supported the deployment of peacekeepers there.

And so addressing the situation in Sudan is an important priority. It's just specifics of that legislation drew concern and that's why it was noted in the signing statement.

Olivier. Read more Comment (0), Email this.

MR. STANZEL: You know, I know that President Abbas and Prime Minister Olmert met last week to talk about those issues. We have urged the parties to move forward with those discussions. The President will be heading to the region in just about a week. There are difficult choices that both sides are going to have to make in this process, and we have urged them to move forward with that. But I haven't asked the President more specifics than -- Read more Comment (0), Email this.

MR. STANZEL: I can get back to you on that. We're still a week away. For your planning purposes, I think on Thursday of this week we'll have a briefing for you all with Steve Hadley to sort of lay out our goals for the trip and the parameters for the trip. So that will be coming up on Thursday. Read more Comment (0), Email this.

MR. STANZEL: I think that's a safe bet, Mark, yes. Read more Comment (0), Email this.

MR. STANZEL: This is Scott Stanzel, and I'm going to be joined today by Deputy Press Secretary Tony Fratto, and I will also be joined by senior administration officials from the National Security Council, and they will provide information to you -- they will be referred to as senior administration officials. This is a background call.

As you know, the point of this call is to talk about the President's intention to veto H.R. 1585, which is the National Defense Authorization Act for fiscal year 2008. We did release earlier today a statement that you can read from. But the President intends to veto that bill because particular provisions included in the bill would be unacceptable and interfere with the political and economic progress that everyone agrees is critically important to bringing our troops home from Iraq.

So I would point you to that statement that we do have out there. We also should have a -- you also should have the fact sheet that we've put out about this issue that you can refer to, as well. But with that, I will turn it over to the senior administration officials. SENIOR ADMINISTRATION OFFICIAL: Thank you very much. I'd like to begin by just renewing the observation that Scott made, that the President does intend to veto H.R. 1585, which is the National Defense Authorization Act for fiscal year 2008. He intends to do so because particular provisions included in that bill unacceptably interfere with the political and economic progress everyone agrees is critically important to bringing our troops home.

Section 1083 of the bill would pose extraordinarily grave financial risks to Iraq that would interfere with Iraq's reconstruction efforts and tie up billions of dollars in Iraqi funds that our troops in the field count on to maintain and sustain security gains. We're working with members of Congress to fix the problem posed by Section 1083 as soon as possible after Congress returns in January. SENIOR ADMINISTRATION OFFICIAL: A couple points on why this is so important. First of all, a pool of this money -- this is reconstruction funds and part of Iraq's operating budget. Tying up these funds in litigation -- and it's with a virtual certainty that funds will be tied up in litigation, regardless of the ultimate merits of a claim -- tying up those funds in litigation would have a security impact and would jeopardize our troops in the field.

Everything we're doing on the bottom-up progress, which is now a common story, to lock in a lot of the gains we've seen in 2007, we're depending on various things which we've talked about -- Ambassador Crocker has talked about quite a bit -- about budget execution and flushing Iraqi funds, billions of dollars, into the provinces to sustain and lock in some of these gains. This provision would potentially tie up some of those funds in U.S. courts.

Another issue: The Iraqi parliament returns to session next week; this provision gives a propaganda victory to elements in Iraq which are opposed to everything we're trying to do. We've been, obviously, in close consultation with Ambassador Crocker who said he cannot overemphasize the devastating impact this would have to our relations with Iraq in potentially empowering those opposed to Iraq's democracy at a very sensitive time. Issues of immunity and reciprocity which we could get into, all are impacted here.

So I think I'll leave it there. SENIOR ADMINISTRATION OFFICIAL: I'd like to say a few words about what Section 1083 would do, in particular, vis-a-vis Iraq. Section 1083 would allow Iraqi assets to be attached and frozen solely upon the filing of a claim in court, and that would be up to the amount of damages claimed in a lawsuit even before there was any consideration of the merits of the claim, or the amount of any damages asserted by plaintiff's counsel.

Section 1083 also would expose both the assets of the Development Fund for Iraq and assets of the Central Bank of Iraq to prejudgment attachment, potentially tying up billions in core Iraqi assets while lawyers go about arguing the merits of cases and the reasonableness of the actions in courthouses. Section 1083 also would give plaintiffs' lawyers the ability to seek and impose court orders, freezing assets in entities in which Iraq or any of its instrumentalities or agencies has an interest, potentially exposing assets of the United States' joint ventures with Iraqi national enterprises to attachment and to freezing.

The section also would revive most, if not all, of the previously dismissed lawsuits against Iraq for former Saddam-era acts, and allow lawyers the ability to re-file and re-litigate those claims under the new provisions of Section 1083.

And finally, among the highlights, Section 1083 would also authorize punitive damages against Iraq, and eliminate Iraq's ability to assert standard legal defenses that are normally available to defendants in United States courts.

That concludes the opening remarks. MR. FRATTO: This is Tony Fratto. I just want to emphasize one more thing. And you may -- I know some of you have got questions about this. But within the Defense Authorization bill is a provision for a 3.5 percent pay raise for our military. And you've probably heard some people talking about this, as to whether that's at risk. And just to clarify this a little bit, there will be an automatic 3 percent pay raise that goes to our troops and military, regardless of the dispensation of this legislation.

What we will do -- we're going to look at two provisions in this bill for a fix. One is Section 1083, that you just heard a senior administration official discuss, and the second is dealing with the point -- the additional 0.5 percent pay raise. Any fix of this bill would be retroactive to ensure that the troops and military get the full pay raise that is due to them in this bill. So we just want to make it clear that nothing that we intend to do, and nothing in this veto is intended to in any way put at risk the full pay raise for our military families and their troops.

And with that, I think we can open it up to questions. Read more Comment (0), Email this.

Q Thanks. Can I just ask you to give the state of your negotiations with House and Senate leaders

MR. FRATTO: I don't think we can put a fine point on who specifically. Obviously, the leadership of both parties and both Houses, and members of the Defense Authorization committees, but I don't think we're going to talk about which -- when there are meetings or conversations. I think it's fair to say that they are continuous and ongoing, and have been going on for a number of weeks. Read more Comment (0), Email this.

Q Well, in that case, let me ask you a quick follow-up, which is, Senator Levin is complaining today

MR. FRATTO: Actually, I think it was raised -- in fact, I'm certain that it was raised a number of times throughout the legislative process, in views letters from the department, and certainly in conversations with the committees. I think we were -- I think it's safe to say that we were somewhat surprised by the -- that the final language was as it was in the bill, as it came out, and also learned a great deal since then what the consequences -- the full extent of the consequences of the language would be. But I think we have mentioned this a number of times throughout the process. Read more Comment (0), Email this.

MR. FRATTO: I'd have to go back and look at the SAPs. I seem to think it was mentioned in earlier SAPs on the bill. It's correct to say there wasn't a veto threat specifically on this language. That is certainly correct. Read more Comment (0), Email this.

SENIOR ADMINISTRATION OFFICIAL: The Iraqis certainly did raise very serious and strong concerns about this, which were confirmed as we really dived into this and gamed out the consequences. The strategic consequences to our position in Iraq and to the protection of U.S. personnel here are very real, and the impact of the language, given its strength and given the legal effects -- which I'll let my colleague speak to -- was something that, really the options here were very limited. And that's why we're -- we had to go forward with the veto. SENIOR ADMINISTRATION OFFICIAL: I would also -- I'd supplement that by saying that the administration did send up a series of so-called views letters, what are referred to as views letters, as part of the -- (inaudible)* -- process in the dialogue with the Congress on this particular bill. And at least three of those views letters specifically objected to the amendments that were being considered to the Foreign Sovereign Immunities Act, and specifically to what has now become Section 1083.

I can observe that the Justice Department letter -- it's dated November 13, 2007 -- spoke at some length about the problems that would be presented by Section 1083; in at least one sentence, the problems specific to Iraq were raised. To be sure, though, the acuteness and intensity of those problems have come into clearer focus within the past week or 10 days or so. Read more Comment (0), Email this.

Q I just read through 1083, and Iraq is not mentioned at all in it. I realize it's legalistic and

SENIOR ADMINISTRATION OFFICIAL: Steven, I'd say first, you're correct to observe that the text does not come out and identify Iraq by name. It's a provision that is in more general terms, but one that would have an extraordinarily sharp impact upon Iraq. And I can go through a couple of the points quickly that I raised before, but there's no doubt in the legal look that we have taken at this provision within the executive branch that some of the -- (inaudible) -- and would have an acute effect. -- (inaudible) -- aspects of Section 1083 are the provisions that would permit assets to be frozen -- (inaudible) -- simply upon the filing of a claim in a court, without regard to whether that claim has any merit or not, -- (inaudible) -- the assets and freeze them. Read more Comment (0), Email this.

SENIOR ADMINISTRATION OFFICIAL: Simply upon the filing of a claim, plaintiffs and plaintiffs' lawyers could entangle Iraqi assets up to the dollar amount that's alleged in a suit. The provision that would expose Iraq to punitive damages, also completely new and novel in this area of the law, and could risk extraordinary damage -- (inaudible) --.

There are other provisions in place, too, the upshot of which is simply that Iraq would have absolutely no certainty as to the status of its assets and its property. The property would be tied up in litigation as the matter worked its way through the court and was sorted out by a judge, and it's a risk that would be intolerable financially right now to Iraq and would impose, as was mentioned earlier, extraordinary strains on the relationship at this critical time for Iraq. Read more Comment (0), Email this.

Q Thanks, gentlemen, for doing this. Clarify a couple of points, please. I think one of you mentioned

SENIOR ADMINISTRATION OFFICIAL: Yes. There are a number of issues obviously floating around within the Iraqi political dynamic, many of which you all have covered. One of them, for example, is the question of immunities for U.S. personnel, and a number of things which we're going to be discussing with the Iraqis when our bilateral negotiations for a longer-term partnership begin, which will probably begin very soon. The issue of immunities for U.S. personnel, for example, has come up almost every parliamentary session and it's seized upon by the Sadrists and other groups trying to repeal various provisions, which would subject all U.S. civilian personnel, in particular, and contractors, would strip their immunities, which currently are under a provision of the CPA order.

Those sorts of issues, given this provision, which -- the effect of it, in the Iraqi mind, is very simple: you're subjecting the Iraqi government, a democratically elected government of Iraq, to massive and crippling liability to the crimes and atrocities of the Saddam Hussein regime. That's how they see it. And frankly, they're right. That's exactly what this does, and it does it in an unprecedented way. And it would have a potentially explosive impact within the Iraqi political system, in terms of moving forward with the negotiations, which we're going to be undertaking, and in terms of strengthening the elements in Iraq which desire to build a stable, strong democracy, and build strong, enduring ties with the United States. So that's just one example.

But we're, obviously, in very close contact, not only with the Iraqis on this, but also with our diplomats in the field, who appreciate the potential impact better than anybody, and weighed in very strongly with the potential consequences should this law go into effect. Read more Comment (0), Email this.

SENIOR ADMINISTRATION OFFICIAL: From my perspective, it has been, we really huddled here internally, and did a very, very close look from all elements within the executive branch -- and the legal side can speak to that side -- really analyzing every provision here and every word, and the potential impact, and gaming out what would happen were this to be signed into law, even for a limited period of, say, three weeks, were we to do, for example, a sign and fix scenario. And when that analysis was done, it just became very clear that the consequences were quite serious, and the options for managing the risk and managing those consequences were quite limited. Read more Comment (0), Email this.

Q My question is this: Obviously that Section 1083, as I read it, is designed to get at certain

SENIOR ADMINISTRATION OFFICIAL: I agree with that entirely. When you read Section 1083 -- and I would point you to specifically the provisions in Section 1083 that reopen, if you will, or permit the reopening of lawsuits that are either in place right now, or most especially, ones that went forward in the past without success, from the plaintiff's perspective, and were dismissed. These particular provisions are designed to breathe new life into those suits. And some of those suits, we know with absolute certainty, would hit Iraq and would hit Iraq in the multiple billions of dollars. So I agree completely with that conclusion.

We also observed that some of the particular conditions or criterion, if you will, that would need to be satisfied by a plaintiff seeking to re-file or re-pursue a particular claim, those conditions are tailored directly to the different factors that courts pointed to in ruling against plaintiffs in prior cases. You can look -- one comes right to the top of my head. There's a stripping of defenses that are commonly available to defendants in this type of litigation. If you take a look at Section 1083, it's referred to as "common defenses of collateral, estoppel, and res judicata." Those are eliminated by statute here, which is an extraordinary step, unprecedented to my knowledge, for Congress to take, and that would have the exact impact that you put your finger on, the revitalization of claims.

If there's any doubt at all about whether particular cases were being thought of, there's one that's actually referenced by docket number. I don't think it refers -- to my knowledge it's not to Iraq, but you're absolutely correct to observe that particular cases were in mind when this text was being drafted. Read more Comment (0), Email this.

Q Gentlemen, a couple of questions. The first is, if Section 1083 was specifically designed to allow

SENIOR ADMINISTRATION OFFICIAL: Let me take the first one. It's not that we missed it. It's the question of coming into really acute focus over the past week to 10 days. And I think our consultations on the Hill -- I mean, the same -- I think members on the Hill have had the same realization that we have, when you really looked into the many different subsections of this provision. And it's unfortunate that it came into focus at a late stage, but fortunately, this is something that is reversible, and that's what we are working very closely with the Congress to do.

I would just repeat the points made up front, that we're vetoing this provision based on a very -- on one particular section of the bill, and working very closely with Congress to having a very clear way ahead to put this bill into place as soon as possible, with one technical fix, which we're finding on the Hill there is general agreement needs to be taken. So it's unfortunate that it came into such acute focus at a late stage, but that's just where we are. Read more Comment (0), Email this.

SENIOR ADMINISTRATION OFFICIAL: Let me say this: To my knowledge, the -- and we could take a look at this to be sure -- but to my knowledge the amendment in question led to Section 1083 -- (inaudible) -- in May. It came at a later point in time. And I can tell you that the very significant concerns with Section 1083 are in the different views letters that agencies and departments sent up on this. But at the same time, we need to acknowledge -- as we have -- that the acuteness and the intensity of the problems that would be posed to Iraq were identified with much sharper focus in the past 10 days or so. MR. FRATTO: Yes, Wendell, I think it's -- I think judging from the reactions that we've heard our White House leg staff that have been in communication with many, many members of Congress, is that they had pretty much universal, equal surprise as to the impact and the implications of this final language. And I think we have to go back -- I don't believe that it was the final language that we ended up with, with the legislation coming out of Congress is the same language that we saw back in May. But we do have a record of administration views letters raising concern with this language and with the direction that this might have been going. SENIOR ADMINISTRATION OFFICIAL: I would also add to that the observation that it is either -- I don't know if it is in the question or in one of the answers given so far -- that it is unfortunate that we find ourselves in this situation, but rather than dwell on an unfortunate circumstance, what we're doing is looking forward. The problem has been identified; we believe we'll be able to find a consensus solution with Congress, and to move forward and to get this fixed before it becomes law. The legal risks are too severe to wait for it to become law and then to try to fix it after the fact. Read more Comment (0), Email this.

MR. FRATTO: I think Senator Lautenberg is the sponsor of the amendment. SENIOR ADMINISTRATION OFFICIAL: There may be other sponsors, as well, but Senator Lautenberg is the one that I think offered the amendment. MR. FRATTO: One other point -- well, I'll leave it. We'll see if it comes back. Read more Comment (0), Email this.

Q Hi. I guess I'm still unclear about what actually prompted this coming into, in your words, acute

SENIOR ADMINISTRATION OFFICIAL: There was no threat of pulling money out. What did happen, though, was the Iraqis came to us very strongly and said this provision will have the following consequences to our assets. And given the fact that, again, these are reconstruction funds and this is Iraq's operating budget we're talking about, there are different pools of funds here, but that has real strategic consequences for us. And this is something we then looked at very closely, and the lawyers looked at very closely. And all I can say is the facts that came to light more recently than we would have liked were corroborated. It's absolutely true, and the strategic risk to our fundamental vital national interests in Iraq are at stake here.

And with that, then it comes to what do you do about it, and the options, again, are limited. And we think we found the best way to go. And all I can say, from the Iraq side, again, working very closely with our diplomats in the field, who are as close to this as anybody, and consequences, again, are very real. And I would just emphasize what my colleague said -- yes, we wish --it's unfortunate that this is happening at a late stage, but we are where we are; we think we have a solution that can go forward quickly. And when most people look at this and game out the consequences we have, they see that this obviously is something that would have severe implications for our fundamental and vital national interests. And therefore, we're working very hard to just find a quick solution as soon as Congress returns in January. Read more Comment (0), Email this.

Q Thanks. Two questions. First of all, how is it the Iraqis found out the consequences of 1083

SENIOR ADMINISTRATION OFFICIAL: You cut up just a little bit. Can you ask the last -- just ask your second question again. I got the first one. Read more Comment (0), Email this.

SENIOR ADMINISTRATION OFFICIAL: Section 1083 of this particular bill does -- (inaudible) -- attachment and liens upon the filing of a claim. And that is a -- (inaudible) -- extraordinarily serious concern. But there are other provisions in Section 1083 that also raise very serious legal risks and pose very serious legal risks to Iran [sic] -- the reinstitution, or the revitalization, if you will, of claims that were previously dismissed, coupled with the stripping of the standard defenses that we talked about; the authorization of punitive damages to be imposed; the -- (inaudible) -- attempt in one particular provision -- (inaudible) -- to eliminate protection that is afforded under statues that are commonly invoked to protect assets, including the International Emergency -- statute. There's a provision that is designed to target it.

So I don't think that the elimination of one particular aspect of 1083 would solve the problem with respect to the whole.

And remind us again of your other question. Read more Comment (0), Email this.

SENIOR ADMINISTRATION OFFICIAL: We -- I mean, let me reiterate what we said before in that we've known -- (inaudible) -- has been out there. The administration objected to it in views letters. As was indicated and answered just a minute or two ago, it did -- (inaudible) -- more acute focus, and we benefitted from the dialogue with Iraq on that. While it's unfortunate, what we want to do is find a consensus solution to this problem before this becomes law and before it creates these real and concrete risks to Iraq and to our relationship. Read more Comment (0), Email this.

SENIOR ADMINISTRATION OFFICIAL: I don't know. You saw the statement go out by the Deputy Press Secretary of the President's intent to veto, and I don't know as we sit here when -- MR. STANZEL: This is Scott. It will happen before December 31st. And we'll keep you posted as to when that will happen. But the announcement today was about the President's intent and we will certainly notify you as soon as he does veto the bill. Read more Comment (0), Email this.

Q And the other thing that I was -- I remembered what I was going to ask -- was following up on the

SENIOR ADMINISTRATION OFFICIAL: Yes, of course there was. Iraq was in a position which it had to manage its risk appropriately, and I think the most likely course would have been indeed to pull their assets out of any U.S. jurisdiction, certainly. SENIOR ADMINISTRATION OFFICIAL: One thing that we should underscore, against the backdrop of all of these different amendments that we've spoken about in a couple of these different answers is, you should consider that all of this is occurring to a statute that establishes rules on how foreign countries may be sued under U.S. law. That statute, of course, is the Foreign Sovereign Immunities Act. And these amendments that would pose such grave risks to Iraq and to our relationship with Iraq would dramatically change those rules. And in doing so, it's going to potentially invite foreign governments to take reciprocal actions, and thereby allow suits to proceed against the United States, even for legitimate government activities.

So I think there's some documents that are going to go out today to provide some of that background. It's the amendments that are wrought by Section 1083 against the backdrop of established practice and internationally accepted principles in this area that also makes this such a grave situation. Read more Comment (0), Email this.

Q Thanks very much. Last week the Defense Secretary thanked the Congress for passing the authorization

SENIOR ADMINISTRATION OFFICIAL: Let me address the last part of the question first, and then revert to my colleague here. We took a very careful legal look at this, in an awful lot of detail, benefitted by information provided by Iraq, in the past seven to 10 days, and we reached the conclusion that the legal risk cannot be reduced and mitigated by a circumstance in which the bill would be signed into law and then when Congress returned two weeks, three weeks from now, mid to late January, and a fix taken up by the Congress; that that situation was unacceptable, because in that intervening two-to-three-week period of time, you would have races to courthouses to get claims on file. And you can rest assured that those -- the plaintiffs and their counsel -- plaintiff's counsel would try to attach and freeze any and all Iraqi assets that were in any jurisdiction in the United States, including property interests that were simply flowing through U.S. financial systems as part of ordinary course activity that Iraq would undertake. And that put -- that resulted in our concluding that the risk was intolerable. SENIOR ADMINISTRATION OFFICIAL: I'll just -- Mr. Skelton's statement, I think the end of his statement said he'll continue working with colleagues in the House and Senate and the President to get this act enacted as soon as possible. And that's what we absolutely agree with, and we think there's a very easy fix here. We think that will be done very soon, as soon as Congress comes back into session.

I just can't speak to Secretary Gates' comments. I will say that this decision has been fully coordinated within the entire executive branch and has a unanimous backing. MR. FRATTO: One more thing on that. I'm not sure that Secretary Gates was referring to the Defense Authorization Act, or whether he was referring to the emergency supplemental appropriations. I'd want to go back and take a look at that. Read more Comment (0), Email this.

MR. STANZEL: Your question is what? This would have an impact on the war in Afghanistan? Read more Comment (0), Email this.

MR. FRATTO: I think the answer to that is, no. I think that we feel comfortable that the Defense Department will be able to operate certainly up until the point where we can fix this legislation. Do you agree? SENIOR ADMINISTRATION OFFICIAL: Yes. Read more Comment (0), Email this.

Q I just wondered -- I'm not sure if you've covered this or not, first the actual amount of assets

SENIOR ADMINISTRATION OFFICIAL: In terms of the total assets we're talking about, $20 billion to $30 billion. But that doesn't count the commercial joint ventures, which are also captured in this, which is potentially in the multiple, multiple billions, and has real impacts for all U.S. businesses doing business with Iraq, which obviously is something we encourage.

I'm sorry, was your second question, again -- did the Iraqis bring to this? Read more Comment (0), Email this.

SENIOR ADMINISTRATION OFFICIAL: When did we get the first word? Read more Comment (0), Email this.

SENIOR ADMINISTRATION OFFICIAL: We discovered it. The Iraqis raised a serious concern about 10 days or so ago, through our Ambassador, and then we had a number of consultations at high levels here with the Iraqis, as well. Read more Comment (0), Email this.

Read more Comment (0), Email this.

MR. STANZEL: Good afternoon, everyone. Happy to take your questions. Read more Comment (0), Email this.

MR. STANZEL: The President does plan to talk with President Musharraf today. We had reached out to them earlier, to make those arrangements, but that has not happened yet. You should also know that Secretary Rice has spoken with Benazir Bhutto's husband to offer our condolences, but don't have anything for you beyond that. Read more Comment (0), Email this.

MR. STANZEL: It's too early to tell. We'll see what those arrangements are, and we can provide information as it comes in. Read more Comment (0), Email this.

MR. STANZEL: Well, I think that is up to the Pakistanis. Free and fair elections are an integral part of a democratic society, and we're in the opening hours of this tragedy, this assassination. But that is up to the people of Pakistan. Read more Comment (0), Email this.

Q And more broadly, can you comment a bit about the implications for U.S. policy in Pakistan because

MR. STANZEL: I think it's important to take a step back and consider what we're facing here. This is the nature of the enemy we face. We face terrorists who will stop at nothing. They will take innocent life to stop the march of democracy. And we have seen that in other places around the world -- suicide bombers who kill wantonly. And the President decided to take the fight to the enemy in 2001 to confront this type of danger, because terrorist thugs want to stop the march of democracy, they want to stop the advancement of liberty, and they will stop at nothing to do so. So it is a reminder of the threats that we face. Read more Comment (0), Email this.

MR. STANZEL: That would be up to the Pakistani officials to investigate. Let's be clear: Whoever perpetuated this violence was someone who was an enemy of democracy. But it's too early, at this point, to say that from our perspective. Understand there are various -- there may be claims of responsibility out there, but I'm sure the Pakistani authorities will be looking into the matter.

Steven. Read more Comment (0), Email this.

Q Scott, how confident are you that there will be a thorough investigation, given that there -- the

MR. STANZEL: I think it's -- from our perspective, it's important to have a review of this and to look into the matter, and I think it's important to the long-term prospects of democracy in Pakistan that there be an open review of this matter. And I think that that is something that is necessary. Read more Comment (0), Email this.

MR. STANZEL: Well, you know, again, we're in the opening hours of this tragedy, and the President looks forward to his conversation with President Musharraf today. Obviously we're in contact with Pakistani officials. Pakistan has been an ally in the war on terror. President Musharraf, himself, has faced numerous assassination attempts, numerous attempts on his life, so he is familiar with the threat from extremists. We're in the early hours of this matter, but certainly Pakistan has been a close ally in the war on terror, and we look forward to those further conversations.

Yes, Savannah. Read more Comment (0), Email this.

MR. STANZEL: Well, that's sort of the answer that I provided to Steven. I think it's important to have a thorough investigation of that. We expect that that will happen and, like I said I said to Steven, I think we're willing to work with our allies in Pakistan to make sure that does happen.

Yes. Read more Comment (0), Email this.

MR. STANZEL: Well, the conversation hasn't happened yet, so the President does look forward to his conversation with President Musharraf. But we would urge calm -- and there is a risk of -- after an assassination like this of a political leader, there is a risk of people turning to violence to express their anger. And we would urge calm and hope that all the Pakistanis would mourn her death, celebrate her life, and unite together in opposition to the types of extremists that are trying to stop the march of democracy. Read more Comment (0), Email this.

Q When you were saying before that Musharraf is an ally in the war on terror, are you concerned,

MR. STANZEL: Well, I think it's important to remember that Pakistan -- the Pakistan military has lost hundreds of soldiers in the fight against extremism. They have lost life in their fight against these types of terrorists. Certainly when it comes to aid that is provided, we always want to make sure it's used for the purposes for which it was provided, and those are ongoing reviews that we always have with all countries around the world.

But I think that there is -- what is clear is there are extremist elements in Pakistan and other places around the world who do want to stop democracy and will take measures -- like killing innocent people at a democratic rally -- to try to stop that advancement.

Laurent. Read more Comment (0), Email this.

MR. STANZEL: The President looks forward to his conversation with President Musharraf. Certainly security is an important matter. But as the President said earlier today, Benazir Bhutto returned to Pakistan knowing the risk that she faced, knowing that there would be people who would try to stop her calls for democracy. So the -- it was a dangerous situation, but she returned to it because she believed in democracy. But in terms of providing security and the arrangements that were made, that's not something that I can comment further on. Read more Comment (0), Email this.

MR. STANZEL: Well, the President is always, wherever he goes, he travels with staff. He's here with national security staff and various other members of the senior White House staff -- Read more Comment (0), Email this.

MR. STANZEL: I'm sorry? Read more Comment (0), Email this.

MR. STANZEL: Well, there are numerous people that essentially have the same rank, so there isn't one top person. But Stephen Hadley, the President's National Security Advisor, is in Washington, D.C., and they participate regularly in secure video teleconferences. So the President is never without the advice of his advisors. This morning, as you know, he participated in his regular intelligence briefing, where they did discuss this matter. So the President is always with staff wherever he goes. Read more Comment (0), Email this.

MR. STANZEL: Not at this time, but there will be various staff members here throughout the time here. Read more Comment (0), Email this.

MR. STANZEL: We have an open dialogue with General Kayani, we have strong lines of communication with him. You may recall that Deputy Secretary Negroponte was recently in Pakistan and did have discussions with him. I believe that might be better described as the administration is reaching out to him, because I'm not aware that the White House is reaching out to him directly. But certainly the State Department, Defense Department and other officials throughout the government do have a relationship with General Kayani. Read more Comment (0), Email this.

MR. STANZEL: Well, obviously security and stability is important. And in the wake of this tragedy, we want to talk with officials in Pakistan to make sure that we are providing our advice as they need it or want it. Certainly General Kayani has a responsibility for stability in the country, as the leader of the army. And those are conversations that would be natural, I think. Read more Comment (0), Email this.

MR. STANZEL: Actually the first time we reached out to him, President Musharraf I understand was talking with reporters. So serving your needs, and that's why the conversation didn't happen at that point. So when was that was occurring, we just decided that we would have it later today. That will happen shortly. Read more Comment (0), Email this.

MR. STANZEL: Well, you got his reaction earlier today. And he did want to make a statement about it, because he thought it was very important to call attention to the matter, and to make sure that -- Read more Comment (0), Email this.

MR. STANZEL: I wasn't in the briefing, so I couldn't describe it -- I couldn't describe his immediate reaction, but you saw his statement earlier today. But certainly it is a tragedy, and it's a life that we mourn the loss of.

Jim. Read more Comment (0), Email this.

Q Scott, how soon after the assassination was the President informed? And also, you've been saying

MR. STANZEL: I don't -- I've seen and I'm aware that al Qaeda may have claimed responsibility. I'm aware of news reports of that, but I don't have any specifics for you on that. But certainly whoever perpetrated this attack is an enemy of democracy, and has used a tactic which al Qaeda is very familiar with, and that is suicide bombing and the taking of innocent life to try to disrupt a democratic process.

You had asked about when the President heard -- his regular intelligence briefing began this morning at 7:30 a.m. and he was informed at that time. Read more Comment (0), Email this.

MR. STANZEL: I'm not sure that I will, but I'll see what I can do for you. Read more Comment (0), Email this.

MR. STANZEL: Yes, certainly. Read more Comment (0), Email this.

MR. STANZEL: And I would refer you to that answer, and that is that that is matter for the people of Pakistan, and what they believe is right in terms of advancing democracy is what we would support. So it is important that the democratic process move forward. We believe that is the right thing to do. Obviously we're just in the early hours of the wake of this tragedy, so those are discussions that the various political parties in Pakistan are probably having right now.

Yes. Read more Comment (0), Email this.

MR. STANZEL: Yes. Read more Comment (0), Email this.

MR. STANZEL: Why am I -- why are we what? I'm sorry. Read more Comment (0), Email this.

MR. STANZEL: Well, that is a continuation of a policy. I can work to get you more information on that. But I understand that that's a continuation -- that was a determination that was made to continue that policy for another year, and that was on -- certainly on the advise of transportation officials and what we thought was right in terms of continuing a strong and healthy airline industry.

Other questions? All right, thank you all very much. Read more Comment (0), Email this.

MR. STANZEL: Not today. There could be, certainly. Read more Comment (0), Email this.

MR. STANZEL: Good morning, everybody. We are on our way to Waco, Texas. The President will be there, as you know, until the first, and don't really have that many public activities planned, so it should be a quiet time.

The President did this morning sign the Consolidated Appropriations Act 2008, also known at the omnibus -- he signed that shortly after boarding the plane this morning. The omnibus funds the government at responsible levels that the President proposed without raising taxes. It provides a down payment for our troops who are in harm's way without arbitrary withdrawal timelines. We continue to be disappointed with Congress's addiction to earmarks. And soon the President will outline his fiscal year 2009 budget proposal, which will hold the line on spending, keep taxes low and continue us on the path to a balanced budget.

I would also note that the President also signed 15 other bills once he boarded the plane. We'll get you a full list of those shortly here. Included in those are the Tax Increase Prevention Act of 2007, also known as the AMT; and Terrorism Risk Insurance Reauthorization and Extension, and then a number of other bills that we'll provide the list to you.

So with that, I'll take your questions. Read more Comment (0), Email this.

MR. STANZEL: Well, you'll have a statement; I expect we will be able to release a statement by the President here shortly. Hopefully once we land we'll have that ready for you. But that is an issue that Director Nussle is looking into. So no decisions have been made on that front, but certainly as you noted in the President's press conference last week, he talked about directing the OMB Director, Jim Nussle, to look at ways -- or look at avenues by which the federal government can address those earmarks.

There are 9,800 earmarks in this omnibus bill. When you couple that with the defense appropriations bill, it's up near 12,000 earmarks, totaling I believe around $10 billion. And as you know, the President proposed earlier this year limiting earmarks and cutting the number and the dollar amount in half. And it seemed to have wide support in Congress at the time when we laid that out, yet Congress continues to drop these provisions into bills late at night. So those are issues that we're taking a look at, and you'll see the signing statement. The signing statement will -- or the statement by the President, rather, will note our dissatisfaction with continued addiction to earmarks. Read more Comment (0), Email this.

MR. STANZEL: No. What you'll see is what we'll provide you when we land. Read more Comment (0), Email this.

MR. STANZEL: Well, the PKK is a terrorist organization and is an organization that is a destabilizing force to Iraq. We have worked with our allies in Turkey and Iraq on these issues, as we've noted before, we've shared intelligence. We've also made it clear to the Turkish government that anything that could lead to escalated concerns or civilian casualties; we have concerns about those steps.

But the Iraqis don't want terrorists in their country and the PKK is a destabilizing force in the northern part of Iraq. So we continue to work collaboratively, both with Iraq and Turkey, on these issues. Read more Comment (0), Email this.

MR. STANZEL: I don't believe so -- let me see if I brought the list with me. We'll get you the list. I don't believe -- that's in the extension. There may be an extension in the omnibus of that, but I don't know exactly where that is. Read more Comment (0), Email this.

MR. STANZEL: Nothing to announce at this point. I don't expect any. So the President will be on his ranch spending time with family. As you saw, he was joined today by his daughters and the First Lady and the First Lady's mother, Jenna Welch. And so I expect them to have some time together. I expect the President will take a few bike rides and have regular briefings, but I don't expect any public activities -- but we'll keep you posted. Read more Comment (0), Email this.

MR. STANZEL: Yes. Read more Comment (0), Email this.

MR. STANZEL: Not to tell you right now. Read more Comment (0), Email this.

MR. FRATTO: Good morning, everyone. Read more Comment (0), Email this.

MR. FRATTO: That's exactly what it is. (Laughter.) Thanks, Ann. Buon giorno tutti. (Laughter.) Hope the stenos get that. Read more Comment (0), Email this.

MR. FRATTO: The President taped the radio address this morning, 7:30 a.m. The President will deliver a message of gratitude to our men and women who are fighting in the war on terror, and to their families who are separated from them during the holiday season.

He had his normal briefings. At 11:10 a.m. today, the President and Mrs. Bush depart the White House via Marine One en route Camp David, where they will remain for the weekend -- or through the weekend, I should say. Read more Comment (0), Email this.

MR. FRATTO: I'm going to give you the week ahead now, since there isn't much to it. Read more Comment (0), Email this.

MR. FRATTO: He stays until -- he stays through Christmas, through December 25th, where he'll remain overnight. Wednesday, December 26th, the President travels to Crawford, where he remains until New Year's Eve, December 31st. And then, Tuesday, January 1st, the President returns to Washington. Read more Comment (0), Email this.

MR. FRATTO: In Texas. I think -- Scott will be down there. I'm sure Scott will have an opportunity to do some gaggles down there, but I don't know what the schedule -- Read more Comment (0), Email this.

MR. FRATTO: Nothing here. Read more Comment (0), Email this.

MR. FRATTO: No, not that I'm aware of at this time. Read more Comment (0), Email this.

MR. FRATTO: Camp David to Andrews, correct. Read more Comment (0), Email this.

MR. FRATTO: No. Read more Comment (0), Email this.

MR. FRATTO: I'll be gone. Dana will be in town, and we'll figure out -- we'll be serviceable, as always, around the clock. (Laughter.) Read more Comment (0), Email this.

MR. FRATTO: No. Well, will we have anyone here on Monday? No. I won't be here. I'll be in Pittsburgh. Read more Comment (0), Email this.

MR. FRATTO: Same number here. You all know how to reach me. Questions? Read more Comment (0), Email this.

MR. FRATTO: I'm sorry, does the President or -- Read more Comment (0), Email this.

MR. FRATTO: Any business coming up today or -- Read more Comment (0), Email this.

MR. FRATTO: Nothing to announce right now, and I'm not expecting -- I expect it to be a very light, typical holiday schedule. Read more Comment (0), Email this.

MR. FRATTO: He usually does some meetings. I don't have anything for you on that right now. Read more Comment (0), Email this.

MR. FRATTO: I don't have information on who might be visiting. Read more Comment (0), Email this.

MR. FRATTO: No. I mean, that's going to be for the Department of Justice to address. I'm sure you'll hear from them -- or the court will hear from them, and the court reporters will be able to report on it. But I'm not going to have commentary on that. Read more Comment (0), Email this.

MR. FRATTO: I'm not going to comment on tapes. Read more Comment (0), Email this.

MR. FRATTO: There, I think -- part of what he asked him to do was to review all the options. We may not have tools to deal with earmarks. It may be largely an issue for, again, for Congress to deal with. We don't have a line-item veto, of course. But that's something that the OMB Director will take a look at.

Look, I mean, this is -- we talked a lot about earmarks. The Democratic Congress, when they came in, talked about earmarks and I guess -- maybe we need a 12-step group to deal with earmarks. They took the first step of admitting that they have a problem. I think one of the other steps is you have to make amends. So we'd like to see more amendment making -- (laughter.) Read more Comment (0), Email this.

MR. FRATTO: I think you have to admit to a higher power, too, don't you? Read more Comment (0), Email this.

MR. FRATTO: Restitution is definitely big, yes. Read more Comment (0), Email this.

MR. FRATTO: We have no -- we may not have a higher power, but that's something that Jim Nussle will be looking at. Read more Comment (0), Email this.

MR. FRATTO: That's something that the OMB Director will have an opinion on, and we'll get an answer for you on that. Read more Comment (0), Email this.

MR. FRATTO: I don't have an answer for you on that. I don't have an answer for you on that right now. Are you asking, in terms of a constitutional question or a policy question -- and I don't have a clear answer for you on that right now. Read more Comment (0), Email this.

MR. FRATTO: I was going to -- Read more Comment (0), Email this.

Q I was just going to ask about that, the President having some discretion. Because budget experts

MR. FRATTO: That's something -- that will be part of Director Nussle's review. Look, earmarks present a huge problem for government. Congress sets out lots of standards for programmatic funding. They appropriate the money, and then they tell agencies certain requirements. The agencies go through elaborate regulation and policy regulation processing, grant processing on how they're supposed to distribute money, how it's supposed to be merit-based, what priorities ought to be. States go through an equally rigorous effort to set priorities for funding that they get from the federal government.

And so to then have Congress come in and identify the projects that individual members think ought to be the number one priority, after agencies and state agencies go through all this time and effort and public rule-making to try to get it right, causes real problems for how you spend money. And in some cases -- I think we talked about this when we were talking about earmarks during -- when the Minneapolis bridge collapsed, that earmarks were noted as a particular problem because states go through this process -- in fact, they're required to do it, to list their top spending priorities for transportation projects. And sometimes earmarked funds don't get spent because they're not in the correct order of the list that a state puts together. So it causes lots of problems for agencies that are out there trying to spend money and really trying to do the right thing, based on merit and based on standards of regulation, that have been promulgated publicly, and commented on, and published in Federal Registers.

So it is a real problem. We hope Congress can do more to address it. They've made some progress this year, but a lot more needs to be done. And Director Nussle will be taking a closer look at it to see if there are any tools that we have to be able to address it. Read more Comment (0), Email this.

MR. FRATTO: On phonemarks? I don't know. We'll see.

I'm sorry, I'm going to get Toby, and I'll come back to you, Ann. Read more Comment (0), Email this.

MR. FRATTO: Look, I think we need to just take a step back and look at how the U.S. economy has handled economic headwinds, I mean, just what the current state of the economy is. And the President addressed this a little bit yesterday, in terms of the economic fundamentals for this economy being fairly sound. We're still seeing economic growth; we're still seeing job growth; still seeing wage growth. Exports have been very strong and have supported growth in the economy. And then we have certain headwinds that we have to deal with, whether they be from the effects of higher energy prices; the slowdown in the housing market is certainly a drag on economic growth and is leading to -- and has led to constraints in the credit markets and lending markets, which have an impact also. And we've tried to address these things.

In the case of energy, I mean, it was great to sign an energy bill the other day. The President called for an energy bill back in February; it took all year to get that bill done. In the case of housing, you have lots of federal agencies and -- led by Treasury and Hank Paulson; the Fed is doing their work to use all the tools that they have to deal with, with housing. We also need Congress to act.

Again, we were able to sign this mortgage debt tax forgiveness legislation yesterday, but we have had FHA modernization sitting up in Congress now for really two years, going back to 2006. It wasn't acted on in that Congress, it was reintroduced in this Congress, and has been sitting there all year. The House and the Senate each passed bills and they ended the year without action on reconciling those bills and dealing with this issue to give FHA the tools that we think they need to deal with this problem.

One thing I think is important to note is that when you have an economy that is dealing with these kinds of headwinds, I think any Econ 101 student will tell you the last thing you want to do is raise taxes. So one thing we have been able to do is to keep contractionary economic policy in the form of tax increases from coming through this Congress and hitting taxpayers. Read more Comment (0), Email this.

MR. FRATTO: Yes, all options are always on the table. We're always looking for what are the long-term -- what policies will put us in the best long-term position to continue economic growth and job growth and raise standards of living. We're also in the budget process right now where we're putting together the President's budget. The budget that he presents in the first week of February will reflect our best economic assessment for the near-term and the mid-term -- Read more Comment (0), Email this.

MR. FRATTO: We're always looking at the tools we have available to ensure the best long-term health of the economy. Read more Comment (0), Email this.

MR. FRATTO: I know that. (Laughter.) Read more Comment (0), Email this.

MR. FRATTO: I'm running short on time, but let me get Ann, and then we come back to Deb. And I'll get you, Les. I won't leave without you. Read more Comment (0), Email this.

MR. FRATTO: I mean, the President didn't tell California that, but the EPA Administrator made his independent decision on whether to approve or not approve that waiver. He made a decision not to approve the California waiver, and as he explained, I think, he made that based on what he thought was best for the nation in addressing this issue. And he pointed to the really significant policy changes that are going to come through from the energy bill that we signed last week. Read more Comment (0), Email this.

MR. FRATTO: There's always a balance. And he does support -- he does have a healthy respect for states' rights. But these decisions need to be made in terms of what is best for the country. We support EPA Administrator Johnson's decision, but it was his decision to make.

Les. Read more Comment (0), Email this.

MR. FRATTO: You have to make it quick, because they're calling for me. Read more Comment (0), Email this.

MR. FRATTO: No. Read more Comment (0), Email this.

MR. FRATTO: No. Read more Comment (0), Email this.

MR. FRATTO: I don't have a reaction on that. We're going to limit it to two, and then Paula, and then -- Read more Comment (0), Email this.

MR. FRATTO: It's okay. Paula. Read more Comment (0), Email this.

Q When the President took office, you were in a recession. And the argument at that time was, you

MR. FRATTO: I would ask that question of outside economists. Read more Comment (0), Email this.

MS. PERINO: Hello. I have an update for you on the fire. Today, at 9:15 a.m., the D.C. Fire Department received a call about smoke in the Eisenhower Executive Office Building -- that's also known as the EEOB. Firefighters arrived and found that the second floor through the fifth floor of the EEOB was fairly filled with smoke. They located an area on the second floor of the EEOB. Initial reports is that it appears to be an electrical room, a closet -- or a telephone bank, they're not quite sure and we'll get more information from the U.S. Secret Service and D.C. firefighters later, I'm sure. But they do believe that that area is the origin of the fire.

They were able to identify, isolate and pull out the fire within -- put out the fire within 30 minutes. The Vice President's Ceremonial Office received smoke and water damage, but there is no fire damage. The D.C. Fire Department is working at the direction of the Secret Service to determine the cause. As you know, over 1,000 employees work in this building; fortunately, everyone was evacuated safely -- except for one individual suffered a minor injury, some cuts to his hand, and he is being treated at the White House Medical Unit right now.

White House Management has suggested that all staff members that work in the EEOB go home for the remainder of the day, as the smoke and the situation is just such that they can't work there productively today.

And the President and Mrs. Bush and the Vice President really appreciate all the work that the D.C. firefighters did, and the Secret Service, to make sure that all the White House employees are safe. We don't know the extent of the damage, but they said everyone was safe and property can be replaced or repaired. Read more Comment (0), Email this.

MS. PERINO: I certainly think some office will be -- and I think that they just need to do an assessment to find out how much water damage there is, because given that the fire was on the second floor, water damage can flow downwards.

And so they're going to need some time to be able to go into the building and find out how bad it is. Read more Comment (0), Email this.

MS. PERINO: As I said, it was on the second floor, on this side of the building. But they're still trying to determine -- it appears that it could have been an electrical room or a telephone bank. It was to -- if you're looking at the Vice President's Ceremonial Office from this angle, it would have been to your left. Read more Comment (0), Email this.

MS. PERINO: That room is certainly gorgeous, and it has a lot of historic artifacts in there, and it's got a gorgeous floor, wood floor that is currently under water. So it's going to -- they're going to have to take some care in order to repair that. But they don't know the extent of the damage yet. Read more Comment (0), Email this.

MS. PERINO: No, I don't know whose offices they were. A staff member -- yes, it was one of the -- a member of the military. Read more Comment (0), Email this.

MS. PERINO: Oh, correct, right. That's correct. Read more Comment (0), Email this.

MS. PERINO: The President and the Vice President were both in the West Wing at the time, and the President learned about it from staff -- he was in the Oval Office at the time when he learned about it. Read more Comment (0), Email this.

MS. PERINO: Well, the subhead of the newspaper indicated that the White House -- well, it says the White House role was wider than it said, implying that I had either changed my story, or I or somebody else at the White House had misled the public. And that is not true. And I heard now from The New York Times that they will retract that headline, and they are going to run a correction tomorrow. Read more Comment (0), Email this.

MS. PERINO: I have not commented on that -- and when we are in that -- Read more Comment (0), Email this.

MS. PERINO: Helen, I'm going to finish this answer. The White House has not commented on anybody's involvement or knowledge, save for me telling everybody that the President had no recollection of being briefed on the existence or the destruction of the tapes before he was briefed by General Hayden. After that, I did not comment on anybody's knowledge or involvement. So if somebody has information that contradicts the one thing that I've said, then this would be true -- but it's not. And that is why I asked for a correction and The New York Times is going to correct it. Read more Comment (0), Email this.

MS. PERINO: Absolutely, it's wrong. Read more Comment (0), Email this.

MS. PERINO: I'm not commenting on the underlying facts of the story. I'm sticking with what I have done in the past, which is that -- Read more Comment (0), Email this.

MS. PERINO: Well, there is a -- Read more Comment (0), Email this.

Q (Inaudible) -- it was back before (inaudible) was involved and The New York Times has information

MS. PERINO: If you want to defend The New York Times, then you might look at it that way. I'm looking at it from anybody White House -- Read more Comment (0), Email this.

MS. PERINO: I think anyone -- and believe me, the people that I've talked to, the reading of it -- when I first looked at it, I felt that that was saying that I had misled the American public on this, and I have not. There is nothing I have said that has been contradictory. And there is a preliminary inquiry being led by Attorney General Mukasey and General Hayden, and it is appropriate to let that play out.

Under our Constitution the press is free to speculate as much as they want, and they can report on as many former administration officials or unnamed current officials that they want to, that contradict each other throughout this story. I'm not allowed to do that. I am an employee of the federal government. I respect the request from the White House Counsel's Office that we not comment from this podium, and I have not. And for someone to imply that I had is offensive. Read more Comment (0), Email this.

MS. PERINO: I have not -- what it says is that I had changed my story, and I have not. Read more Comment (0), Email this.

MS. PERINO: It -- that's how I took it, and I am not -- Read more Comment (0), Email this.

MS. PERINO: -- the only one. Read more Comment (0), Email this.

MS. PERINO: That is not -- that's not what it says in its headline, Bill. And there was editorial decision that led to this subheadline, because if they didn't want to make this point to try to say that the White House had misled the public, why would they put it in bold face above the fold, and then not -- and then it's not supported by any of the facts or the contradictory statements in the article. Read more Comment (0), Email this.

MS. PERINO: I respect the fact that Attorney General Mukasey has asked for a preliminary inquiry, that he's working with CIA General Counsel on, as well as General Hayden. Our White House Counsel is supporting that. And CBS News is free to speculate as much as it wants, but I'm not going to do that. And I haven't done it in the past. Read more Comment (0), Email this.

MS. PERINO: It says the White House role was wider than "it" said -- "it" is referring to the White House, I am the spokesperson for the White House. Read more Comment (0), Email this.

Q Okay. Okay, but you're defining it that way. In fact, right after the first -- this story first

MS. PERINO: I am not accountable for all the anonymous sources that you turn up. I'm not. I am accountable -- I speak for the President and the White House. This says that I was misleading, and I was not. Read more Comment (0), Email this.

MS. PERINO: The White House does not comment. The only thing that I have said from this podium is regarding to the President and his recollection. And if CNN has different information that they want to provide to me that contradicts what I've said, you know, let's see it. Read more Comment (0), Email this.

MS. PERINO: I speak for the White House. I represent the White House. Read more Comment (0), Email this.

MS. PERINO: I'm not taking it personally. I'm taking it -- I speak for the White House. It's not a personal thing. The White House asked for a correction. And I would remind you, The New York Times is going to do one. Read more Comment (0), Email this.

MS. PERINO: Well, the question -- Read more Comment (0), Email this.

MS. PERINO: -- some of the questions that you had are legitimate questions that the public has and that the Attorney General and General Hayden has is who knew what when. And that is part of the inquiry. And so that is what they have asked us not to comment on. Read more Comment (0), Email this.

MS. PERINO: Look, I think that in any case, you know, if I were to have said something to you two weeks ago when this first started, that then as more information has turned up, provides more information that makes it look like maybe I had misled you, then we would be having a very different conversation here. There's a good reason why I'm not commenting and why the White House is not commenting, and General Mukasey and General Hayden are doing a joint preliminary inquiry. Read more Comment (0), Email this.

MS. PERINO: I don't have a read on that from General Mukasey. Read more Comment (0), Email this.

MS. PERINO: That's part of -- I'd just refer you to the same answer that I just had, which is I'm not commenting on it in any way, shape, or form. Read more Comment (0), Email this.

MS. PERINO: I've been asked that question before and I have not commented on it, either. There is an investigation and -- preliminary inquiry, they call it, and I have to leave it at that. Read more Comment (0), Email this.

MS. PERINO: What I'm saying is I'm not going to comment from the podium. Read more Comment (0), Email this.

MS. PERINO: I'm not saying if there's things that I know or don't know; I'm saying I'm not commenting. Read more Comment (0), Email this.

MS. PERINO: I'm going to move on. Read more Comment (0), Email this.

MS. PERINO: That's a question that -- look, I understand the question and I said to you yesterday that General Mukasey and General Hayden have done a -- have asked everyone to cooperate in the preliminary inquiry. General Mukasey answered that question to members of Congress, I guess four days ago, and I refer you to him for more. Read more Comment (0), Email this.

MS. PERINO: Of course we do.

Olivier. Read more Comment (0), Email this.

Q Dana, yesterday you mentioned conflicting reports about the Turkish incursion into northern Iraq

MS. PERINO: Well, there are still conflicting reports, and there were also three different operations. And so I'd refer you to the Department of Defense for more on that. But as Secretary Rice said yesterday, we have asked Turkey for -- reminded Turkey that we need to have increased coordination and cooperation between the United States, Iraq and Turkey as we all jointly work together to try to eliminate the PKK.

Goyal. Read more Comment (0), Email this.

MS. PERINO: Well, President Putin is certainly an interesting figure, and Time Magazine makes its decisions based on its own editorial decision-making. And we won't comment on that. But clearly, I think that it's a -- he's an interesting figure. I haven't spoken to the President about it yet. I'll see him in a little bit. Read more Comment (0), Email this.

Q And second, on Burmese leader, in the House, Congressman Crowley and Congressman Manzullo both

MS. PERINO: Well, I think that we would all hope that Aung San Suu Kyi would be able to leave her home and to travel freely. But I don't have information about whether or not that will be able to happen. Read more Comment (0), Email this.

Q Can I follow up on that? Yesterday the First Lady had a statement saying that Myanmar (inaudible

MS. PERINO: No, not that I know of, but we will check. Mrs. Bush got a report yesterday from the U.N. Envoy Gambari, and was troubled by what she heard, which is why she issued the statement. And so if there's going to be a push for sanctions, we'll let you know.

Bret. Read more Comment (0), Email this.

MS. PERINO: Well, we're very disappointed that the Senate decided not to move forward and take up the bipartisan Senate Intelligence Committee bill on the floor, because we think it could have passed and we think that the debate is one that we have been having for well over a year. It's not a debate we've just been having the past few months, but we had a debate leading up to the vote in August, which was a bipartisan vote, which closed the intelligence gap, which is what the DNI, the Director of National Intelligence, and the Attorney General have said.

Now Attorney General Mukasey is in charge at the Justice Department, and he sees the very real need to get this bill passed and to get it done before the clock runs out on February 1st.

So I suppose that the first order of business when Congress gets back is going to be looking at this issue.

Les. Read more Comment (0), Email this.

Q Thank you, Dana. Two questions. In Council Bluffs, Iowa, Senator Clinton said, and this is a

MS. PERINO: I'm not going to comment. Read more Comment (0), Email this.

MS. PERINO: No. What's your second? Read more Comment (0), Email this.

Q Eighty-one-year-old Fidel Castro, while announcing that he won't stay in power forever, also mentioned

MS. PERINO: I don't have a comment on his health. Obviously we hope that democracy could be restored to Cuba soon. Read more Comment (0), Email this.

MS. PERINO: The TRIA bill? Yes. (Laughter.) Read more Comment (0), Email this.

MS. PERINO: We are reviewing that bill. Last spring we had concerns about the bill in SAPS -- statements of administration policy -- that we put out. We are looking at the bill right now. Some of the concerns we have regarded the time frame that they allowed in the bill for responses, which I think was 20 days, and also an inability to collect on fees if you go past that 20-day mark. So they're reviewing the bill now for the final scrub of it before we can decide whether or not he'll sign it.

Paula. Read more Comment (0), Email this.

MS. PERINO: I know you've asked Tony Fratto this question, and we are looking into this bill. I don't have a lot of information on it, but we'll try to get it for you. Read more Comment (0), Email this.

Q And also, I have just one question, if you could clarify on -- you repeatedly keep saying the President

MS. PERINO: It means what it means, that he had no recollection. Read more Comment (0), Email this.

Read more Comment (0), Email this.

MS. PERINO: Hello. I have two for you, first the news that you've been asking for for a while, and we tried to get to you, but we can do it today, which is details, as many as we can give you today, on the President's trip to the Middle East.

President Bush will travel to Israel, the West Bank, Kuwait, Bahrain, the United Arab Emirates, Saudi Arabia and Egypt, from January 8th through the 16th next year. In Jerusalem, the President will meet with President Peres and Prime Minister Olmert, and in the West Bank he will meet with President Abbas and Prime Minister Fayyad.

The President will then travel to Kuwait, Bahrain, the United Arab Emirates, Saudi Arabia and Egypt, where he will meet with Amir Sabah, King Hamad, President Khalifa, King Abdullah, and President Mubarak, respectively. This visit will follow up on the progress made at Annapolis in helping Israelis and Palestinians to advance their efforts toward peace and achievement of the President's vision of two democratic states living side by side in peace and security, as well as to encourage Israeli and Arab reconciliation.

This trip will also be an opportunity to reaffirm the enduring commitment of the United States to the security of our allies in the Middle East, especially with the Gulf nations, and our close work with them to combat terrorism and extremism, promote freedom, and seek peace and prosperity in the region.

The meetings with leaders will allow for discussions of developments in Iraq, the challenges presented by Iran, regional security, economic ties, and relations between the United States and those close allies.

Tomorrow we look forward to, hopefully, passing -- the President signing the Energy Independence and Security Act of 2007. That bill will be voted on for final passage in the House later today. In January, the President announced his 20-in-10 initiative, a comprehensive plan for a more secure, cleaner energy future, which would reduce our consumption of gasoline by 20 percent over 10 years. He has pushed Congress to pass this legislation all year. And the bill would increase fuel economy and expand the use of renewable fuels; it will save billions of gallons of fuel, expand our energy security and reduce greenhouse gas emissions.

While the President's alternative fuel standard and CAFE proposal would have gone farther and faster, we are pleased that Congress has worked together on a bipartisan way that provides the chance for the President to sign a bill that does not include tax increases.

Questions. Read more Comment (0), Email this.

Q Dana, on the Middle East, could you spell out a little bit more about what the President's objectives

MS. PERINO: Well, the negotiations that were launched the day after the Annapolis Conference are just underway now, and what the President's role can be is to help encourage them to help continue to push on those negotiations. They're going to take a while to complete. The President has said that there are going to be good meetings and bad meetings, and the important thing is for the leaders to keep their eye on the big picture, and to work with their staffs and trust their staffs, who are going to work out these details. And the President can help facilitate those discussions. I do not anticipate -- although we can let you know as we get closer -- whether there would be detailed discussions about a concession on one side or the other. Read more Comment (0), Email this.