(Reuters) - Goldman Sachs Group Inc was sued on Monday by a large union pension fund that accused the Wall Street investment bank of overpaying its executives.

The International Brotherhood of Electric Workers fund filed the lawsuit in Delaware Chancery Court, seeking to recover money for the company on behalf of other shareholders.

It seeks to stop Goldman from allocating roughly 47 percent of 2009 net revenue as compensation, saying such allocations "vastly overcompensate management and constitute corporate waste."

The lawsuit also wants Chief Executive Lloyd Blankfein and others in management, rather than shareholders, to be responsible for charitable contributions that Goldman is making as a an apology for its activities.

Goldman has been at the center of a public debate over how much banks should pay out in the wake of the 2008 financial crisis, after taking billions of dollars of federal bailout money.

Last week, Goldman said it would cap 2009 compensation expense at $16.2 billion, for a 36 percent compensation ratio, despite posting a record profit.

The bank also said its board rejected several shareholder demands to investigate recent pay awards and recoup excessive pay, while admitting it could face "negative publicity" from media portrayals.

Goldman spokesman Ed Canaday said: "We believe the lawsuit is completely without merit." A lawyer for the plaintiff did not immediately return a call seeking comment.

The lawsuit is similar to one filed in the same court in January by the Southeastern Pennsylvania Transportation Authority, or SEPTA, which oversees public transit in the Philadelphia area.

The case is International Brotherhood of Electrical Workers Local 98 Pension Fund v. Blankfein et al, Delaware Chancery Court, No. 5315,

(Reporting by Jonathan Stempel and Steve Eder; Editing by Steve Orlofsky.)

Utah's Hill Air Force Base has hired a psychologist and others to deal with a rash of suicides, mostly among civilians complaining of harsh working conditions.

Ogden Air Logistics Center commander Maj. Gen. Andrew Busch says two civilians and an airman have committed suicide this year.

A Hill spokesman says that brings to at least 25 confirmed suicides since 2006 that were mostly committed off the base.

Bonnie Carroll, a military widow who founded the advocacy group Tragedy Assistance Program for Survivors, says suicides also have been a problem at Fort Campbell, an Army base in Kentucky and Tennessee.

She says the Defense Department has added thousands of mental health professionals to the ranks of the military because of a greater awareness of the problem.

Bill Kristol just launched a pre-emptive assault on a statement criticizing his and Liz Cheney's group, Keep America Safe, which bears the signature of a prominent lawyer who's typically a Cheney ally.

I've obtained a copy of the statement drafted by Brookings' Ben Wittes, which labels "shameful" Keep America Safe's focus on the Justice Department for hiring, and temporarily concealing the names of lawyers who did work for detainees. Its signatories, according to Human Rights Watch's Tom Malinowski, who circulated the draft, will be former government officials and legal experts, "mostly conservatives." The signatories are well-known lawyers, if largely people whose criticism of Cheney won't come as a surprise. They include including the Bush Administration Acting Attorney General Peter Keisler, Condoleeza Rice legal adviser John Bellinger, former Deputy Assistant Secretary of Defense for Detainee Affairs Matthew Waxman, and the right-leaning legal scholars Philip Bobbitt and Robert Chesney.

The most surprising name, however, is that of David Rivkin, an official in the first Bush administration who has emerged as a leading defender of the interrogation policies advocated by the Cheneys.

"The past several days have seen a shameful series of attacks on attorneys in the Department of Justice who, in previous legal practice," says the statement. "We consider these attacks both unjust to the individuals in question and destructive of any attempt to build lasting mechanisms for counterterrorism adjudications."

The statement doesn't mention Cheney or Keep America Safe, but says the "attacks undermine the Justice system more broadly. "

Kristol responds that his group's video didn't represent "attacks" on the lawyers -- labeled the "Al Qaeda Seven" in the video -- and says that his group's claim isn't that the lawyers shouldn't be allowed to work in Justice, but that their names should be public, a question on which Justice caved last week. The other question, Kristol writes, is "whether former pro bono lawyers for terrorists should be working on detainee policy for the Justice Department."

The issue has served as a proxy, however, for broader conservative complaints about Obama's tone and policy toward terror prosecutions, and if the call for the lawyers to be drummed out of government isn't stated, it's pretty clearly implied.

The full statement is after the jump.

The past several days have seen a shameful series of attacks on attorneys in the Department of Justice who, in previous legal practice, either represented Guantanamo detainees or advocated for changes to detention policy. As attorneys, former officials, and policy specialists who have worked on detention issues, we consider these attacks both unjust to the individuals in question and destructive of any attempt to build lasting mechanisms for counterterrorism adjudications.

The American tradition of zealous representation of unpopular clients is at least as old as John Adams' representation of the British soldiers charged in the Boston massacre. People come to serve in the Justice Department with a diverse array of prior private clients; that is one of the department's strengths. The War on Terror raised any number of novel legal questions, which collectively created a significant role in judicial, executive and legislative forums alike for honorable advocacy on behalf of detainees. In several key cases, detainee advocates prevailed before the Supreme Court. To suggest that the Justice Department should not employ talented lawyers who have advocated on behalf of detainees maligns the patriotism of people who have taken honorable positions on contested questions and demands a uniformity of background and view in government service from which no administration would benefit.

Such attacks also undermine the Justice system more broadly. In terrorism detentions and trials alike, defense lawyers are playing, and will continue to play, a key role. Whether one believes in trial by military commission or in federal court, detainees will have access to counsel. Guantanamo detainees likewise have access to lawyers for purposes of habeas review, and the reach of that habeas corpus could eventually extend beyond this population. Good defense counsel is thus key to ensuring that military commissions, federal juries, and federal judges have access to the best arguments and most rigorous factual presentations before making crucial decisions that affect both national security and paramount liberty interests. To delegitimize the role detainee counsel play is to demand adjudications and policymaking stripped of a full record. Whatever systems America develops to handle difficult detention questions will rely, at least some of the time, on an aggressive defense bar; those who take up that function do a service to the system.

* *

* *

*Benjamin Wittes*

· Senior Fellow and Research Director in Public Law, The Brookings Institution

*Robert Chesney*

· Charles I. Francis Professor in Law, University of Texas School of Law

· Nonresident, Senior Fellow, Governance Studies, The Brookings Institution

*Matthew Waxman*

· Associate Professor, Columbia Law School

· Former Deputy Assistant Secretary of Defense for Detainee Affairs

* *

*David Rivkin*

· Partner, Washington, D.C. Office, Baker Hostetler, L.L.P.

· Former Deputy Director, Office of Policy Development, Department of Justice, Ronald Reagan and George H.W. Bush Administrations

· Former Associate General Counsel, Department of Energy

* *

*Philip Bobbitt*

· Herbert Wechsler Professor of Jurisprudence and Director of the Center for National Security, Columbia Law School

* *

*Peter Keisler*

· Former Assistant Attorney General, Civil Division

· Former Acting Attorney General, Department of Justice

PORT-AU-PRINCE, March 8 (Reuters) - Haitian President Rene Preval plans to tell U.S. President Barack Obama on Wednesday that food aid to the earthquake-devastated Caribbean nation should be stopped because of the risk of damaging its economy.

The two men will meet at the White House in the wake of a Jan. 12 quake that killed 230,000 people, according to Haitian government estimates, crippled the economy and devastated much of the capital Port-au-Prince and other cities.

Donations of food and water have proved a lifeline for more than 1.2 million people displaced by the quake, but Preval told a news conference on Monday the aid could in the long term hurt the economy of the poorest country in the Western Hemisphere.

"I will tell him (Obama) that this first phase of assistance is finished," said Preval, standing in front of the ruined presidential palace in Port-au-Prince.

"If they continue to send us aid from abroad -- water and food -- it will be in competition with the national Haitian production and Haitian commerce," he said.

Preval said the priority should instead be to create employment in Haiti, a country where a high percentage of the population lacked work even before the quake.

The Haitian government, working with the international community, is preparing a master plan for reconstruction that would have ambitious goals, Preval said after a meeting with Canadian Governor General Michaelle Jean.

A trust fund with voting and nonvoting board members would manage donor funds, Preval said.

RECONSTRUCTION

Priorities for reconstruction include strengthening buildings to withstand future earthquakes and rehabilitating the environment, much of which is denuded, to protect against flooding from tropical storms and hurricanes, which last battered Haiti in 2008.

Some $38 million was needed for storm protection, Preval said.

Reopening the country's schools was also key, Preval said, though he gave no date for when that would happen. Education is considered critical to development in Haiti, where 38 percent of the population is under age 15 and nearly half of those 15 and older are illiterate.

"I will also tell him (Obama) that our vision is to rebuild Haiti and if we don't take advantage of this historic event to reinvent Haiti, to reinvent Port-au-Prince, we will be making a mistake of historical proportions," Preval said.

"Our generation has the obligation to shoulder this responsibility," he said.

Many Haitians have criticized the government's performance since the earthquake and argued that Preval has not done enough to communicate with the people or to marshal government aid, instead leaving international aid groups to fill the gap.

Jean's two-day visit is significant because she was born and raised in Port-au-Prince, arriving in Canada as a refugee, and has worked to promote Haiti's needs since the quake.

"We are here ... to say to Haitians that they are not alone ... We have suffered with you," she said in an impassioned speech after her meeting with Preval.

As Canada's governor general, Jean represents Britain's Queen Elizabeth, who is Canada's head of state.

FORT DRUM — A Fort Drum soldier was killed Thursday by a roadside bomb while serving in Afghanistan, according to the Buffalo News.

Spc. Alan N. Dikcis, 21, Wheatfield, Niagara County, apparently was riding in a vehicle near the Taliban stronghold of Marjah when it hit an improvised explosive device, the newspaper reported. A member of the 630th Engineer Company in the 10th Mountain Division, he had been slated for a two-week leave in April.

Spc. Dikcis's older brother, Stanley, 23, suffered wounds and head trauma as the result of a roadside bomb in Afghanistan a year and a half ago while serving in the Army, according to the report.

The U.S. Department of Defense on Sunday evening had yet to confirm the death of Spc. Dikcis.

A California-based reservist recently died in Afghanistan, the Defense Department announced Friday.

Lance Cpl. Nigel K. Olsen, 21, of Orem, Utah, was killed March 4 while supporting combat operations in Helmand province, a volatile area where Marines continue to battle against Taliban fighters for control of Marjah.

Olsen was assigned to the 4th Light Armored Reconnaissance Battalion from Camp Pendleton.

Another reservist with 4th LAR — Lance Cpl. Carlos A. Aragon, 19 — was killed March 1. Aragon was also from Orem, Utah.

No additional information was immediately available.

The Department of Defense says a Maryland soldier has died in Afghanistan. Spc. Anthony A. Paci, 30, of Rockville died Thursday from injuries suffered during a vehicle rollover.

Paci was assigned to Joint Base Lewis-McChord in Washington state. Paci enlisted in October 2004. He deployed to Iraq from December 2005 to November 2006. Afghanistan was his second deployment.

No silkworms died in the making of Suzy Amis Cameron's Oscars dress, designed by a 21-year-old Michigan State University student with sustainability in mind.

The wife of "Avatar" director James Cameron unveiled the silk dress Wednesday night, when she and her husband hosted a pre-Oscars party in Los Angeles.

While the dress was displayed on a mannequin at that party, Amis Cameron had plans to wear the creation to Sunday's Academy Awards. Her husband's movie had been nominated for nine Oscars.

"I'm really excited to see Suzy on the red carpet wearing my dress," says Jillian Granz, a senior from Canton who is majoring in apparel and textile design.

Granz and MSU spokeswoman Kristen Parker flew to California last week to be on hand for the unveiling of Granz's design, which Amis Cameron selected from hundreds of entries as the winner of a national charity fundraising contest.

Amis Cameron created the "Red Carpet Green Dress" competition to support Muse, an educational organization in Topanga Canyon, Calif., founded by her and her sister Rebecca Amis.

The guidelines called for a dress made of only sustainable material.

"Granz recommended the dress be made from peace silk, which allows silk worms to complete their life cycle, rather than be boiled, as is the case with traditional silk," Parker explained in a posting on the school's Web site. The dress was made by Hollywood costume designer Deborah Scott.

Parker said the design also used a "no-waste pattern, in which every part of the pattern is utilized and put into the final garment rather than being discarded."

"Choosing from sketches and designs worldwide, it was a tough decision," Amis Cameron said in a statement. "Jillian's design was stunning and had that something special.

"It's a beautiful combination of sustainability and style. I'm excited to promote the talent of this young designer."

REYKJAVIK, Iceland — Still smarting from the crippling aftermath of the global financial crisis, Iceland's voters on Saturday resoundingly rejected a $5.3 billion plan to pay off Britain and the Netherlands for debts spawned by the collapse of an Icelandic Internet bank, according to initial results.

Results returned from around 83,500 ballots — or more than 40 percent of the total ballots expected — counted so far showed that 93 percent of voters said "no" in the referendum, compared to just 1.5 percent who said "yes." Final results are expected overnight.

The referendum results are indicative of how angry many Icelanders are at bankers and politicians as the tiny island nation struggles to recover from a deep recession. The global financial crisis wreaked political and economic havoc on Iceland, as its banks collapsed within the space of a week in October 2008 during the credit crunch and its currency, the krona, plummeted. The Icelandic government was the first to fall as a result of the meltdown.

Icelanders were deciding whether to back a plan outlining the payment of $3.5 billion to Britain and $1.8 billion to the Netherlands as compensation for funds that those governments paid to around 340,000 of their citizens who had accounts with the collapsed bank Icesave, an Icelandic Internet bank that offered high interest rates before it failed along with its parent, Landsbanki.

Many voters object to the tough terms of the deal imposed by the debtor countries, not the idea of payment itself.

"This result is no surprise," Prime Minister Johanna Sigurdardottir said. "Now we must turn to the task of finishing the negotiations on Icesave."

Icelandic authorities have recently been in talks with Britain and the Netherlands to come up with a better deal to try to avert Saturday's referendum, which was forced by the refusal of Iceland's president to agree to the so-called Icesave bill.

Last minute talks between the three countries broke down this week, despite the debtor countries saying they offered better terms for a new deal — including a significant cut on the 5.5 percent interest rate in the original deal hammered out at the end of last year.

The vote could jeopardize Iceland's credit ratings, making it harder to access much-needed funding to fuel an economic recovery. Unemployment has surged since the crisis began, to about 9 percent in January, and inflation is running at about 7 percent annually, while the island's economy continues to shrink.

The British say their "best and final offer has been turned down," but Iceland's Foreign Ministry said late Saturday it remained confident a solution acceptable to all parties can be achieved.

The debt owed to Britain and the Netherlands is a small sum compared to the massive amounts spent to rescue other victims of the global meltdown — $182.5 billion was paid out to keep U.S. insurance giant American International Group Inc. alive — but many taxpayers in the country of just about 320,000 say they can't afford to pay it.

The deal would require each person to pay around $135 a month for eight years — the equivalent of a quarter of an average four-member family's salary.

Locals see the deal as an unfair result of their own government's failure to curtail the excessive spending of a handful of bank executives that led the country into its current malaise.

"I said no," said Palmar Olason, 71, at a polling station. "We should get a better deal," he said.

Britain and the Netherlands have been pushing hard for repayment and there have been fears that they will take a hard-line stance on Iceland's application to join the EU and refuse to approve the start of accession talks until an Icesave deal is signed into law.

About 1,000 Icelanders gathered to protest in downtown Reykjavik Saturday, demanding a better say in the issue. Many ordinary Icelanders resent forking out the money to compensate for losses incurred by potentially wealthier foreign investors who chased the high interest rates offered by Icesave.

There's also residual anger that Britain invoked anti-terrorist legislation to freeze the assets of Icelandic banks at the height of the crisis, prompting the worst diplomatic spat between the two countries since the Cod Wars of the 1970s over fishing rights in the North Atlantic.

President Olafur R. Grimsson tapped into the public anger and used a rarely invoked power to refuse to sign the so-called Icesave bill after it was passed by parliament in December.

Since then, opinion polls indicated that a strong majority intended to reject the plan. The Social Democrat-Left Green coalition government and the center-right opposition say the country could get better terms in negotiations with Britain and the Netherlands.

"I voted no," said Rognvaldur Hoskuldsson, a 36-year-old machine technologist, after casting his vote Saturday morning. "We have to send a message that these countries are not going to profit from this situation."

Although the International Monetary Fund has never explicitly linked delivery of a $4.6 billion loan to the reaching of an Icesave deal, it is committed to Iceland repaying its international debt — the months taken to reach the original Icesave deal were responsible for holding up the first tranche of IMF funds last year.

During the national furor that erupted last year after American International Group paid more than $165 million in bonuses, the voices of those vilified for receiving the payments remained silent, at least in public.

But behind closed doors, employees at AIG's Financial Products division -- the very unit whose trading had hastened the insurance giant's collapse -- were defiant, saying they were merely getting what they were due, recoiling at public accusations that they were behind their capitalizing on the company's massive taxpayer bailout.

"I will stand behind every action I have taken in this company from Day One," one employee said, according to a newly obtained transcript of a conference call the division's head held last March with some of his staff.

But when another employee asked whether the staff would be getting a second round of bonuses promised for March 2010, his colleagues burst into laughter, apparently considering this a preposterous notion amid the public outrage.

Yet they did see that money, at least most of it. Last month, under a deal in which employees agreed to take a cut in their upcoming retention bonuses in return for an accelerated payment, AIG paid out about $100 million to employees at the firm. AIG is scheduled to pay the last of the bonuses this month.

Even so, neither time nor money has softened the employees' feelings of wrongful persecution and their anger over becoming the subjects of scorn and ridicule. Seldom was that sense of victimhood more clear or more visceral than in the conference call of March 23, 2009.

Gerry Pasciucco, who had been hired to wind down Financial Products after the AIG bailout, was in Wilton, Conn., broadcasting his image and his voice to shaken, frustrated and furious employees in London, Paris and Hong Kong. Pasciucco quickly encountered a buzz saw of complaints over demands that they forgo the bonuses they were due. Emotions were running especially high in the London boardroom, where scores of staffers had gathered around a large table.

"I think it violates everything I believe in, and it's un-American," one employee said that day, according to the transcript of the call.

"This country is supposed to stand on due process," said another. The names of the staff members were redacted from the transcript obtained by The Washington Post.

'Missing the point'

The employees said that the corporate leaders who had driven the firm into the ground were already gone from the company. Those who had remained behind to help clean up the mess and repay the taxpayer bailout were due their compensation, they told Pasciucco.

"You made a commitment to us, and we made a commitment to you. And for anybody to look beyond that, as the politics and the media are at the moment, is missing the point," said an employee. "You can't expect us to just roll over and ignore that commitment because there is a bunch of immoral bigots that intend us to do something different. It's not going to happen."

Another was even more irate, lashing out at the public for scapegoating AIG employees. "To be honest with you, I really hope it blows up. I think the U.S. taxpayer deserves to lose a trillion dollars over this thing for the way they have behaved."

And then he turned on politicians who had joined the anti-AIG posse. "They only care about the next election, just like we only care about the next bonus. Well, none of them cares about the country, none of us cares about the institution," he said, adding: "They really don't care, and I really don't care. And frankly, if a trillion dollars gets lost, fine."

The AIG retention bonuses have rankled many in the public because the company has received a federal rescue package of about $180 billion in loans, stock investments and other commitments from the Federal Reserve and the Treasury Department. Closing down AIG Financial Products' trading portfolio has been vital to stemming further losses and repaying the public money.

As the employees were confronting Pasciucco last spring, lawmakers in Washington were contemplating a 90 percent tax on the bonus payments. AIG's chief executive, Edward M. Liddy, had been berated on Capitol Hill. Employees had received anonymous threats, some violent.

'Is this blackmail?'

Pasciucco wanted to assuage their angst that day. But he also had another goal: persuading them to return 50 percent of the bonus money in hopes that New York Attorney General Andrew M. Cuomo would not make their names public, as he was threatening. Employees fumed, accusing Cuomo of "blackmail" and "extortion." They complained that they were being forced to pay "protection money."

"Is this blackmail? To a certain extent, it is," Pasciucco told employees that morning. "If the only reason you would give money back is because you are afraid for your family and you are afraid for your safety, then it is."

He agreed that the manner in which some Washington officials had responded to the furor was despicable. "I think it's distasteful. It's unfair. It's unjust. I agree with you, it's not American. It is McCarthy-ite. . . . It will be viewed as a horribly dark period."

Still, he tried to offer a dose of realism. The retention payments might have been guaranteed by contract, he said, but Financial Products had made bad bets that cost taxpayers billions of dollars. Although the decision to return part of their money was voluntary, he said, such a pledge might help employees defuse some of the public anger.

"I am not laying this out that it's the right, moral thing to do, but I am telling you that you are naive if you think that you can ignore the political reality around this as you make your decision," he said, adding: "I am just going to caution you that if you are not lionized and . . . garlands of roses are not put around your shoulders, you shouldn't be surprised."

Reporting from Washington - Key presidential advisors are pushing to move the trial of the accused mastermind of the Sept. 11 attacks to a military commission, abandoning plans to try Khalid Shaikh Mohammed and others in federal courts, according to current and former officials.

The recommendation has deeply distressed human rights groups who believe that, if endorsed by President Obama, the change will mean a nearly wholesale return to the detention policies of the Bush administration.

The administration's plans to hold a trial in New York City met widespread, bipartisan resistance, and other venues have proven difficult to find.

"It is politically untenable," said one official. "No place wants to hold a trial."

Officials emphasized that the formal recommendation has not been made to the president, and Obama has made no decisions.

Conservatives have repeatedly demanded that the Sept. 11 plotters be tried by military commissions. And embracing the commissions could be a key part of a compromise that would win congressional approval for purchasing a state prison in Thomson, Ill., and moving detainees held at the military-run prison at Guantanamo Bay, Cuba, to that facility.

If Congress approves the purchase of Thomson, the administration would likely hold Mohammed's military trial at the prison.

Using the military commissions "is part of a broader package the administration is hoping to work out to once and for all put the whole detention policy on a surer footing," said Charles Stimson, a former Pentagon official. "It remains to be seen whether or not if they will get the broad political support to do it, but I applaud them."

The recommendation was first reported Friday by the Washington Post. Floating the proposed change in the media is likely a trial balloon, aimed at judging the reaction of both liberals and conservatives.

Human rights organizations did their best to try to pop the balloon, arguing that a decision to change the trial strategy would be bad politics and bad policy.

Abandoning civilian trials, said Tom Malinowski of Human Rights Watch, would render irrelevant any potential for the closing of Guantanamo, simply re-creating a new version of the controversial prison in Illinois.

"The world wasn't clamoring to close Guantanamo because it was built on some sacred Indian burial ground," said Tom Malinowski of Human Rights Watch. "It was clamoring to close 'Gitmo' because it stood for the militarization of justice in America and indefinite detention without charge. Keeping all of that preserves the essence of what people were objecting to at 'Gitmo.'"

Sen. Lindsey Graham (R-S.C.) has been pushing a plan that would move detainees to Thomson, use military commissions to try the Sept. 11 plotters, and pass legislation establishing administrative detention for accused terrorists who cannot be tried.

Malinowski said Graham's proposal has little support among other Republicans and did not represent a compromise so much as capitulation. He argued that abandoning the plan will have all of the political costs of closing Guantanamo, with none of the strategic benefits of eliminating a prison system that has angered both allies in Europe and many in the Islamic world.

It would also, Malinowski said, make the administration look weak in Washington.

"The political cost is catastrophic," he said. "It will invite endless bullying on national security. It is not the way to look strong."

But the administration clearly knows that opposition from human rights groups will be vociferous. What is less clear is how conservatives and moderates will react, and how any concession will be received.

Stimson said that, to be successful, the administration needs to move to make quick changes to the military commissions, replacing military lawyers with federal prosecutors experienced with trying terrorism cases.

"It is often said personnel is policy," Stimson said. "That is more true in commissions than in any other context. Now is the time to not only fully resource commissions but thank and excuse inexperienced military prosecutors and bring in the A team."

WASHINGTON — A senior Senate Democrat said Thursday the Pentagon should consider barring Blackwater, now called Xe Services, from a new $1 billion deal to train Afghan police because of "serious questions" about the contractor's conduct.

The comments by Senate Armed Services Committee Chairman Carl Levin suggests thinning patience in Congress for the Pentagon's heavy reliance on contractors on the battlefield.

U.S. efforts to rebuild Iraq and Afghanistan using independent contractors has been a boon for companies like Blackwater and saved money and time for the Defense Department, whose forces are busy in combat.

But the outsourcing has made it more difficult for military commanders to control what happens on the battlefield.

In one recent incident in Afghanistan, two contractors tied to Blackwater allegedly killed two Afghan civilians and injured a third. U.S. officials say the May 2009 shooting damaged relations with the local population

"The inadequacies in Blackwater's performance appear to have contributed to a shooting incident that has undermined our mission in Afghanistan," Levin, D-Mich., wrote in a letter to Defense Secretary Robert Gates.

Blackwater, headquartered in Myock, N.C., changed its name to Xe Services after its security guards were accused of killing unarmed Iraqi civilians more than two years ago.

Mark Corallo, a company spokesman, said Xe Services agrees with Levin that the Pentagon should carefully review its past performance when deciding future contracts.

"We are confident that Xe's record of service in training thousands of security personnel in Afghanistan demonstrates the companys strong record of supporting critical U.S. government initiatives in Afghanistan, which are essential to advancing the United States national interest," he said in an e-mailed statement.

Pentagon spokesman Bryan Whitman said Thursday he knew of no effort under way to ban Xe Services from contracting with the military. Until then, the company would be legally allowed to submit a bid, he said.

In a separate letter to Attorney General Eric Holder, Levin called for a Justice Department investigation into whether Blackwater officials duped the Army into awarding a separate $25 million contract to train Afghan police by creating a shell subcontractor called Paravant.

Levin alleges that company officials boasted to the Army of its large presence overseas and several years of experience without mention of the Blackwater name or that the State Department had dumped the contractor in 2009 after saying it had lost confidence in its management.

Corallo said the contracting officials were aware that Paravant was a Blackwater subsidiary.

Xe is among five companies eligible to compete for a $1 billion contract to train Afghanistan's national police force. DynCorp International of Falls Church, Va., had held a large contract for such training since 2003.

But a decision to transfer control of the program from the State Department to the military is ending DynCorp's run and opening a major opportunity for Xe.

DynCorp has filed a protest with the Government Accountability Office, alleging that the approach is "procedurally and legally flawed," according to company vice president Donald Ryder.

Xe has been shifting its work to training, aviation and logistics after the September 2007 incident at Nisoor Square in Baghdad. Its security guards were accused of killing 17 unarmed Iraqi civilians.

BERKELEY, Calif. – Students staged raucous rallies on nationwide college campuses Thursday in protests against deep education cuts that turned violent as demonstrators threw punches and ice chunks in Wisconsin and blocked university gates and smashed car windows in California.

At least 15 protesters were arrested by University of Wisconsin-Milwaukee police after as many as 150 students gathered at the student union then moved to an administrative building to deliver petitions to the school chancellor.

A woman who was allowed to go inside encouraged protesters to rush the building after she emerged, university spokesman Tom Luljak said.

No serious injuries were reported in the melee that followed.

"We have no problem with a protest," Luljak said. "We do have a serious problem when individuals decide to become violent."

Kas Schwerdtfeger, a national organizer for Milwaukee Students for a Democratic Society, said demonstrators were peaceful but persistent in approaching the hall.

"What we did was try to assert ourselves peacefully and nonviolently," Schwerdtfeger said. "Police started pushing, shoving, using mace on somewhere around 20 to 25 people."

The school was among dozens of nationwide campuses hit with marches, strikes, teach-ins and walkouts in what was billed as the March 4th National Day of Action for Public Education.

Organizers said hundreds of thousands of students, teachers and parents were expected to participate in the nationwide demonstrations.

The steep economic downturn has forced states to slash funding to K-12 schools, community colleges and universities to cope with plummeting tax revenue.

Experts said schools and colleges could face more severe financial trouble over the next few years as they drain federal stimulus money that temporarily prevented widespread layoffs and classroom cuts.

Some university officials said they supported the protests as long as they remained peaceful.

"My heart and my support are with everybody and anybody who wants to stand up for public education," University of California President Mark Yudof said in a statement. "Public education drives a society's ability to progress and to prosper."

In Wisconsin, more than 25,000 students have been put on a waiting list after the state's premier financial aid program ran out of money because of increased demand.

At the University of Illinois, about 200 professors, instructors and graduate faculty marched through campus carrying signs that read "Furlough Legislators" — a reference to recent furloughs and 4 percent pay cuts imposed on thousands of university employees.

The state is $487 million behind on payments to the University of Illinois. State government has a budget deficit of $13 billion.

In Olympia, Wash., a group of about 75 protesters arrived at the Capitol bearing a faux coffin emblazoned with the slogan "R.I.P. Education."

They were later ejected from the state Senate gallery after interrupting a debate with a protest song that followed the tune of "Amazing Grace."

"I once could eat, but now I find, I can't afford the food," they sang.

Several Democratic senators applauded the performance, as security guards escorted the protesters from the building.

In Northern California, rowdy protesters blocked major gates at two universities and smashed the windows of a car.

Protesters at the University of California, Santa Cruz surrounded the car while its uninjured driver was inside. Earlier, demonstrators blocked campus gates.

University provost David Kliger said there were reports of protesters carrying clubs and knives, but Santa Cruz police Capt. Steve Clark could not confirm those reports. No arrests had been made.

An advisory posted on the school Web site urged people to avoid the campus because of safety concerns.

At the University of California, Berkeley, a small group of protesters formed a human chain blocking a main gate to the campus. Later in the day, hundreds gathered for a peaceful rally.

"We're one of the largest economies in the world, and we can't fund the basics," said Mike Scullin, 29, a graduate student in education who plans to become a high school teacher. "We're throwing away a generation of students by defunding education."

At the University of Texas at Austin, about 100 students and staff rallied on campus to protest a 5.4 percent hike in tuition and fees approved by regents a day earlier. Protesters complained the quality of education was taking a backseat to the university's bottom line.

Officials said the tuition hikes, which include another 3.89 percent jump for the fall of 2011, were necessary to avoid cuts in the face of declining endowment payouts and an anticipated cut in state aid.

In Alabama, Broderick Thomas, a 23-year-old Auburn senior, attended an annual higher education rally in Montgomery and said he feels "it's the moral duty of the state to give back what they promised."

However, the chairman of the state Senate education budget committee, Sen. Hank Sanders, D-Selma, curbed the enthusiasm, saying it would be hard to find additional funds for higher education this year.

"I wish we could give all the money higher education needs," Sanders said, as some in the crowd groaned. "We're having to cut up to $460 million out of the budget the governor recommended."

Students, teachers, parents and school employees from across California gathered in Sacramento for a midday rally at the Capitol to urge lawmakers to restore funding to public schools.

Linda Wall, a state Department of Mental Health employee, said she had two children attending Sacramento State University. Hikes in student fees and mandatory furloughs for state workers have strained her budget.

"Their tuition has taken a big chunk of my paycheck and my paycheck is shrinking, so it's a double whammy," Wall said.

___

Associated Press Writers Marcus Wohlsen in San Francisco, Robin Hindery in Sacramento, Calif., David Mercer in Urbana, Ill., April Castro in Austin, Texas, Bob Johnson in Montgomery, Ala., Curt Woodward in Olympia, Wash., and Dinesh Ramde in Milwaukee contributed to this report.

With his soon-to-be-released book, Karl Rove is trying to mount something of a rear-guard action in the war over George W. Bush's legacy. According to the AP, which has obtained a copy of the book, Rove

blames himself for not pushing back against claims that President George W. Bush had taken the country to war under false pretenses, calling it one of the worst mistakes he made during the Bush presidency. The president, he adds, did not knowingly mislead the American public about the existence of [weapons of mass destruction].

And The New York Times reports that in the book, which will hit stores on Tuesday, Rove writes that his failure to counter the narrative that "Bush lied" was "one of the biggest mistakes of the Bush years." Rove adds, "did Bush lie us into war? Absolutely not."

Here we go again: Did Bush grease the way to war with lies? Having written two books on the subject—The Lies of George W. Bush and (with Michael Isikoff) Hubris: The Inside Story of Spin, Scandal, and the Selling of the Iraq War—I have some skin in this game.

Let's cut to the bottom line: prior to the Iraq war, US intelligence generally produced faulty information overstating Saddam Hussein's WMD capabilities, which were actually nonexistent. But Bush and his crew purposefully and callously overstated these overstatements—and made dramatic and untrue assertions unconnected to the flawed intelligence—in order to whip up popular support for the invasion of Iraq. Mother Jones has produced a timeline that lists the false Bush administration assertions. And to remind Rove—and book reviewers—here's a limited sampling of notable whoppers, reported in my books and elsewhere.

• When Bush issued his ultimatum to Saddam Hussein on March 17, 2003, he declared, "Intelligence gathered by this and other governments leaves no doubt that the Iraq regime continues to possess and conceal some of the most lethal weapons ever devised." But there was doubt—and plenty of it. Intelligence analysts had registered uncertainty regarding key elements of Bush's case for war—such as whether Iraq had attempted to obtain uranium in Niger, and whether it had purchased aluminum tubes for an enrichment process to make material for nuclear weapons. Moreover, the doubters were correct.

• Seven months earlier, Vice President Dick Cheney similarly said in a speech, "Simply stated, there's no doubt that Saddam Hussein now has weapons of mass destruction. There is no doubt he is amassing them to use against our friends, against our allies, and against us." But there was no intelligence suggesting that Saddam's intention was to beef up his WMD arsenal so he could deploy it against the United States—which would have been a suicidal act. In fact, the existing intelligence indicated Saddam was not interested in a WMD showdown with the United States.

• During an October 7, 2003, speech in Cincinnati, Bush declared that UN inspectors had "concluded" that Iraq in the 1990s had actually produced "two to four times" the 30,000 liters of anthrax and other deadly biological agents than it had acknowledged making. Bush went on: "This is a massive stockpile of biological weapons that has never been accounted for, and capable of killing millions." But UN inspectors had concluded no such thing. They had reported destroying key facilities Iraq had used to develop chemical, biological, and nuclear weapons. The inspectors had encountered discrepancies in the accounting of Iraq's weapons and WMD material and had noted that Iraq could have produced more weapons than the inspectors had uncovered. Bush was misstating the facts to turn a possible stockpile of WMDs into an actual arsenal.

• Throughout the fall of 2002 and the winter of 2003, Bush and his aides insisted Iraq was loaded with WMDs. At one point, Defense Secretary Donald Rumsfeld huffed, "There's no debate in the world as to whether they have those weapons...We all know that. A trained ape knows that." On January 7, 2003, Rumsfeld declared, "They currently have chemical and biological weapons." Yet a September 2002 report by the Defense Intelligence Agency said, "There is no reliable information on whether Iraq is producing or stockpiling chemical weapons, or where Iraq has—or will—establish its chemical warfare agent production facilities." A national intelligence estimate produced about that time did assert, "Baghdad has chemical and biological weapons." The point is that contradictory information existed, yet Bush and his crew chose to ignore any data that undermined their contention that Saddam was up to his neck in WMDs.

• At a September 7, 2002, joint news conference with British Prime Minister Tony Blair, Bush said that a 1998 International Atomic Energy Agency report had found that Iraq was "six months away from developing a [nuclear] weapon. I don't know what more evidence we need." But there was no such IAEA report. And in 1998, the IAEA had reported there were "no indications" that Iraq was producing nuclear weapons. Bush had concocted a nonexistent report to bolster the case for war.

• On November 7, 2002, Bush said Saddam "is a threat because he's dealing with Al Qaeda." Yet as the 9/11 Commission later noted, there had been no intelligence confirming contacts between Iraq and Al Qaeda that added up to an operational relationship. (On September 26, 2002, Rumsfeld said that he had "bullet-proof" evidence that Saddam was tied to Osama bin Laden. He never produced that evidence. In March 2003, Cheney claimed Saddam had a "long-standing relationship" with Al Qaeda. He didn't.)

• At a December 31, 2003, press conference, Bush asserted, "We don't know whether or not [Saddam] has a nuclear weapon." But there was no intelligence at the time suggesting that the Iraqi dictator might already possess nuclear weapons. The faulty national intelligence estimate produced in October 2002 had errantly declared that Iraq was "reconstituting" its nuclear weapons program but it had also concluded Iraq had no nuclear weapons and would not be able to produce one for years. Bush had no basis for suggesting Saddam could already be nuclear-armed. Yet he did so.

I could go on. Remember Colin Powell's lengthy UN presentation? Practically every relevant fact in it proved to be false. Rove can argue that in the run-up to the war, Bush and the others believed what they were saying about Iraq's WMDs. But Bush and his crowd demonstrated a profound disinterest in sorting out the truth. They made no effort to distinguish between known facts and convenient suppositions. They exaggerated. They trumped up unconfirmed pieces of information. They presented rosy assumptions. They overlooked or discounted data that didn't advance the cause.

It was a PR campaign girded with misrepresentations and false statements. Rove contends that his old boss did not knowingly bamboozle the public. (Bush, though, did in a January 2003 meeting with Tony Blair raise the idea of staging an incident—in which US reconnaissance planes painted in UN colors would fly over Iraq and try to draw fire—to provoke an excuse for war.) But Bush, Cheney, and other administration aides exercised a thoroughly reckless disregard for the truth, as they pushed an utterly phony and over-the-top case for invading Iraq.

The leader of a group of House Democrats pressing for tougher language banning the use of federal funds for abortion says he’s willing to risk the defeat of the health-care bill if the lawmakers don’t get their way.

Representative Bart Stupak of Michigan says Senate-passed language on abortion isn’t acceptable to him and the dozen or so lawmakers in the group. Without a resolution, they will vote against the broader health legislation, said Stupak.

“Yes, we’re prepared to take responsibility” for the defeat of the bill, Stupak said today on ABC Television’s “Good Morning America” program. “I want to see health care, but we’re not going to bypass some principles and belief we feel strongly about.”

His comments underscore the risk the abortion issue poses as congressional Democrats seek to pass comprehensive health legislation with no Republican support. Party leaders have yet to settle on a strategy to resolve the abortion dispute.

“It’s probably the biggest challenge we have,” said Representative Bill Pascrell, a New Jersey Democrat.

In the House, the health-care legislation passed on Nov. 7 with just 220 of 435 votes, and the potential loss of support over abortion may be enough to sink the bill. And some House Democrats who favor abortion rights have said their votes also may hinge on how the matter is addressed.

Echoes of Past

Abortion policy has delayed -- or killed outright -- past legislation ranging from a rewrite of bankruptcy law to foreign aid and military spending measures. To avoid that fate last year, Democratic leaders in both chambers let anti-abortion lawmakers attach tougher restrictions to the health legislation, President Barack Obama’s top domestic priority.

Stupak took the lead in the House, while Senator Ben Nelson of Nebraska provided Democrats in that chamber with the 60th vote needed to clear the health measure after he negotiated abortion language.

House Speaker Nancy Pelosi today said the Senate language should satisfy those who oppose federal funding for abortions.

“If you believe that there should be no federal funding of abortions and if you believe there should be no change in the policy and if you believe we need health care for all Americans, then we will pass the bill,” she told reporters.

Two-Step Process

Democratic leaders say they’ll try to approve health legislation by first pushing the Senate bill through the House. Then each chamber would address a host of changes through separate legislation via a parliamentary maneuver called budget reconciliation, which would allow the Senate to pass it with just 51 votes. Without reconciliation, the health measure could be subjected to a filibuster that would take 60 votes to overcome, and Democrats control the chamber with 59 votes.

Democratic leaders said that because reconciliation is designed for use on matters that relate to the federal budget, not social policy, it can’t be utilized to resolve abortion differences.

Senate Majority Whip Richard Durbin, an Illinois Democrat, said there are no plans for separate legislation to address the divide over abortion, and it will be up to Pelosi to find the votes in her caucus for the Senate language.

“She’s got to deal with this,” Durbin said.

‘Standing Firm’

The broader legislation is intended to ratchet down health costs and extend coverage by expanding Medicaid and requiring Americans to get insurance -- with new online purchasing exchanges and government aid to help. The White House estimated that Obama’s proposal would bring the cost of the overhaul to $950 billion over a decade.

The top lobbyist for the U.S. Conference of Catholic Bishops agreed with Stupak that a dozen House Democrats will oppose a final measure if the Senate abortion language is in it. They include Representative Brad Ellsworth of Indiana and Representative James Oberstar of Minnesota, he said.

“Those members are standing firm,” said Richard Doerflinger, associate director of the Secretariat of Pro-Life Activities at the conference.

Supporters of the abortion language in both chambers say they want to adhere to the Hyde amendment, an appropriations measure first passed in 1976 that bans federal funding for abortion except in cases of rape, incest or risk to a mother’s life.

Stronger Wall

The House health bill’s abortion language, however, establishes a stronger wall restricting federal dollars from being used to pay for health plans that include abortion coverage. The Stupak amendment would bar the use of new federal subsidies from being used to pay costs of any plans covering abortion offered through a new, national insurance-purchasing exchange. Women could use their own funds to buy a “rider” to cover the procedure.

In the Senate bill, the federal Office of Personnel Management would oversee at least two multistate insurance programs in the exchange. At least one would provide abortion coverage and one wouldn’t. States could opt out of having any plan with abortion coverage.

Groups such as the National Right to Life Committee say the Senate language is unacceptable because it would let one plan in each market allow abortion coverage, and because some consumers who oppose abortion would be required to help pay for coverage of the procedure.

‘Ban on Abortion’

Pro-choice groups are lobbying against abortion provisions in both the House and Senate bills. Nancy Keenan, president of NARAL Pro-Choice America, said the Stupak language is of particular concern. It would effectively block private plans on the exchange from offering abortion coverage, preventing access to the procedure for many lower-income women.

“It is a ban on abortion in the exchange,” she said.

Six years after the intense fighting began in the Iraqi town of Fallujah between US forces and Sunni insurgents, there is a disturbingly large number of cases of birth defects in the town.

Fallujah is less than 40 miles (65km) from Baghdad, but it can still be dangerous to get to.

As a result, there has been no authoritative medical investigation, certainly by any Western team, into the allegations that the weapons used by the Americans are still causing serious problems.

The Iraqi government line is that there are only one or two extra cases of birth defects per year in Fallujah, compared with the national average.

'Daily cases'

But in the impressive new Fallujah General Hospital, built with American aid, we found a paediatric specialist, Dr Samira al-Ani, who told us that she saw two or three new cases every day.

Most of them, she said, exhibited cardiac problems.

When asked what the cause was, she said: "I am a doctor. I have to be scientific in my talk. I have nothing documented. But I can tell you that year by year, the number [is] increasing."

The specialist, like other medical staff at the hospital, seemed nervous about talking too openly about the problem.

They were well aware that what they said went against the government version, and we were told privately that the Iraqi authorities are anxious not to embarrass the Americans over the issue.

There are no official figures for the incidence of birth defects in Fallujah.

The US military authorities are absolutely correct when they say they are not aware of any official reports indicating an increase in birth defects in Fallujah - no official reports exist.

Mothers warned

But it is impossible, as a visitor, not to be struck by the terrible number of cases of birth defects there.

We heard many times that officials in Fallujah had warned women that they should not have children.

We went to a clinic for the disabled, and were given details of dozens upon dozens of cases of children with serious birth defects.

One photograph I saw showed a newborn baby with three heads.

While we were at the clinic, people kept arriving with children who were suffering major problems - a little girl with only one arm, several children who were paralysed, and another girl with a spinal condition so bad I asked my cameraman not to film her.

At the clinic we were told that the worst problems were to be found in the neighbourhood of al-Julan, near the river.

This was the heart of the resistance to the Americans during the two major offensives of April and September 2004, and was hit constantly by bombs and shells.

River water

We went to a house where three children, all under six, were suffering from birth defects.

Two boys were partially paralysed, and their sister clearly had serious brain damage.

Like all the other parents we spoke to, their mother had no doubt that the American attacks were responsible.

Outside, a man who had heard we were there had brought his four-year-old daughter to show us. She had six fingers on each hand, and six toes on each foot.

She was also suffering from a number of other serious health problems. The father told us that the house where they still lived had been hit by an American shell during the fighting in 2004.

There may well be a link with drinking-water, especially in al-Julan.

After the fighting was over, the rubble from the town was bulldozed into the river bank, and most people in this area get their water from the river.

The true causes of the problem, and the question of the effects of the weapons the Americans used, can be resolved only by a proper independent inquiry by medical experts.

And until the security situation in and around Fallujah improves, it will be difficult to carry that out.

Former Alaska Gov. Sarah Palin -- who has gone to great lengths to hype the supposed dangers of a big government takeover of American health care -- admitted over the weekend that she used to get her treatment in Canada's single-payer system.

"We used to hustle over the border for health care we received in Canada," Palin said in her first Canadian appearance since stepping down as governor of Alaska. "And I think now, isn't that ironic?"

The irony, one guesses, is that Palin now views Canada's health care system as revolting: with its government-run administration and 'death-panel'-like rationing. Clearly, however, she and her family once found it more alluring than, at the very least, the coverage available in rural Alaska. Up to the age of six, Palin lived in a remote town near the closest Canadian city, Whitehorse.

Officials at several hospitals in that area declined to give out information on patient visits.

WASHINGTON (Reuters) - Pushing back against Pentagon opposition, lawmakers said on Wednesday they would forge ahead with legislation to lift restrictions on homosexuals in the armed forces before a year-long military review is completed.

Following President Barack Obama's call for ending the "don't ask don't tell" policy, the lawmakers said they would seek to repeal the law in coming months, or at least place a moratorium on discharges under the ban as an interim step.

"We're going for full repeal because that really is the solution we need to this problem. We're going to fight for as much support as we can get," said Senator Joe Lieberman as he and others introduced legislation to repeal the ban on gays serving openly in the U.S. military.

U.S. Defense Secretary Robert Gates has said he supports Obama's decision. But he and military leaders want Congress to hold off on lifting restrictions until the Pentagon completes a study to assess the impact of a repeal and the best way to implement the changes.

That review must be completed by December 1 under guidelines by Gates announced this week.

"Right now, we're not in a position to offer any advice to Congress on a legislative remedy to 'don't ask, don't tell' if they wanted to pursue one. We just don't know enough about the impact," said Geoff Morrell, Pentagon press secretary.

"So the secretary wants to take the next nine, 10 months and focus on figuring out the implications of a change in the law for our forces, for their families, for readiness, for recruiting, for retention, for all of the potential consequences of the change in the law."

Senate Armed Services Committee Chairman Carl Levin, speaking at the news conference with Lieberman, said his committee could act as soon as May on Lieberman's legislation.

Senators could try to add the repeal, or a moratorium on discharges, to the annual bill that authorizes U.S. defense programs, said Levin, who is a Democrat.

But Pentagon officials leading the policy review wondered why lawmakers didn't wait for the results. "I would think Congress would like to hear from us first before undertaking to consider to repeal (the law)," Jeh Johnson, Pentagon general counsel, told a House Armed Services subcommittee.

Johnson and General Carter Ham, the commanding general of the U.S. Army in Europe, are co-chairing the Pentagon study.

Admiral Mike Mullen, the top U.S. military officer, whose support for the repeal has set him at odds with some senior members of the U.S. military, said the study was crucial to properly lead a significant policy change.

Mullen, Chairman of the Joint Chiefs of Staff, said it was crucial the politically charged question not add further stress to a force already stretched thin by the wars in Afghanistan and Iraq.

"One of my biggest concerns is that this review and this issue not put a heavily strained military in the middle of this debate in a way that burdens them when they are pressed as hard as they've ever been pressed," Mullen told students in Kansas.

The repeal is a crucial test for Obama, who is struggling to fulfill promises like enacting healthcare reform despite having a Democratic majority in both houses of Congress.

Lieberman said he believes a majority favors the legislation in the Senate, but that currently there are not 60 votes for the repeal -- a crucial threshold for being able to overcome procedural hurdles in the chamber. "That's our battle, but we've come a hell of a long way," he said.

Americans favor allowing gays to serve openly in the military by 57 percent to 36 percent, a recent poll by Quinnipiac University showed.

The Republican National Committee plans to raise money this election cycle through an aggressive campaign capitalizing on “fear” of President Barack Obama and a promise to "save the country from trending toward socialism."

The strategy was detailed in a confidential party fundraising presentation, obtained by POLITICO, which also outlines how “ego-driven” wealthy donors can be tapped with offers of access and “tchochkes.”

The presentation was delivered by RNC Finance Director Rob Bickhart to top donors and fundraisers at a party retreat in Boca Grande, Florida on February 18, a source at the gathering said.

In neat PowerPoint pages, it lifts the curtain on the often-cynical terms of political marketing, displaying an air of disdain for the party’s donors that is usually confined to the barroom conversations of political operatives.

The presentation explains the Republican fundraising in simple terms.

"What can you sell when you do not have the White House, the House, or the Senate...?" it asks.

The answer: "Save the country from trending toward Socialism!”

Manipulating donors with crude caricatures and playing on their fears is hardly unique to Republicans or to the RNC – Democrats raised millions off George W. Bush in similar terms – but rarely is it practiced in such cartoonish terms.

One page, headed “The Evil Empire,” pictures Obama as the Joker from Batman, while House Speaker Nancy Pelosi and Senate Majority Leaders Harry Reid are depicted as Cruella DeVille and Scooby Doo, respectively.

The document, which two Republican sources said was prepared by the party’s finance staff, comes as Chairman Michael Steele struggles to retain the trust and allegiance of major donors, who can give as much as $30,400 a year to the party.

Under Steele, the RNC has shifted toward a reliance on small donors, but the document reveals extensive, confidential details of the strategy for luring wealthy checkwriters, which range from luxury retreats in California wine country to tickets to a professional fight in Las Vegas.

The 72-page document was provided to POLITICO by a Democrat, who said a hard copy had been left in the hotel hosting the $2,500-a-head retreat, the Gasparilla Inn & Club. Sources at the event said the presentation was delivered by Bickhart and by the RNC Finance Chairman, Peter Terpeluk, a former ambassador to Luxembourg under President George W. Bush.

The RNC reacted with alarm to a question about it Thursday, emailing major donors to warn them of a reporter’s question, and distancing Steele from its contents.

“The document was used for a fundraising presentation Chairman Steele did not attend, nor had he seen the document,” RNC Communications Director Doug Heye said in an email. “Fundraising documents are often controversial.

“Obviously, the Chairman disagrees with the language and finds the use of such imagery to be unacceptable. It will not be used by the Republican National Committee – in any capacity – in the future,” Heye said.

The most unusual section of the presentation is a set of six slides headed “RNC Marketing 101.” The presentation divides fundraising into two traditional categories, direct marketing and major donors, and lays out the details of how to approach each group.

The small donors who are the targets of direct marketing are described under the heading “Visceral Giving.” Their motivations are listed as “fear;” “Extreme negative feelings toward existing Administration;” and “Reactionary.”

Major donors, by contrast, are treated in a column headed “Calculated Giving.” Their motivations include: “Peer to Peer Pressure”; “access”; and “Ego-Driven.”

The slide also allows that donors may have more honorable motives, including “Patriotic Duty.”

A major Republican donor described the state of the RNC’s relationship with major donors as “disastrous,” with veteran givers beginning to abandon the committee, which is becoming increasingly reliant on small donors.

The party’s average contribution in 2009, according to the document, was just $40, and the shift toward a financial reliance on the grassroots may help explain Steele’s increasingly strident tone toward the Obama Administration.

While the crude portrayal of Obama may be - as Steele ‘s spokesman put it - “unacceptable,” other elements of the presentation may be of equal interest to close political observers.

The RNC plans to raise $8.6 million from major donors alone in 2010, less than 10% of its total 2009 fundraising take, which was primarily from small donors."

The center of that plan is an extensive, and colorful, schedule of events. Along with traditional fundraisers with conservative luminaries including Weekly Standard Editor Bill Kristol and former presidential candidate Steve Forbes, the party plans to raise $80,000 for a trip to London to meet David Cameron, the British Conservative Party leader, on September 17.

The RNC’s “Young Eagles” – younger major donors and the only group, according to a major donor, continuing to pull its weight financially – are invited to a “professional bull riding event” in October, expected to raise $50,000, and to a no-holds-barred Ultimate Fighting Championship fight in Las Vegas the same month, expected to raise $60,000.

The RNC’s aim, according to one section of the document: “Putting the Fun Back in FUNdraising.”

March 3 (Bloomberg) -- For consumer advocates, housing a new agency to protect Americans from financial-product abuse within the Federal Reserve would be a defeat after lobbying for an independent body. For banks, it would represent a victory.

Barney Frank, Chairman of the House Financial Services Committee, called a Senate plan to house the proposed Consumer Financial Protection Agency at the Fed “a joke.” Shielding consumers from harmful financial products is “the most conspicuous failure by the Fed,” Frank said in an interview yesterday.

Banks say placing the agency with the Fed alleviates their concern that an independent entity would ignore the health of the financial system. Consumer advocates say it’s a mistake because the Fed didn’t succeed in curbing abuses during the subprime lending boom that contributed to the worst financial crisis since the Great Depression.

“We have all sorts of individual agencies that protect Americans, and none of them is subservient to the regulator that is in charge of looking out for the industry,” said Lauren Saunders, managing attorney at the National Consumer Law Center in Washington. “This agency has to be independent so that it can fix the problems the banking regulators failed to fix.”

The Obama administration’s proposal for a consumer protection agency is part of the biggest overhaul of financial regulation since the 1930s. Putting it inside the Fed, instead of creating a standalone bureau, was a compromise proposed by Senator Bob Corker, a Tennessee Republican, and Banking Committee Chairman Christopher Dodd, a Connecticut Democrat.

Joining in Criticism

Frank, who oversaw legislation passed by the House in December that would create an independent agency, said the chamber wouldn’t accept the proposed deal. Senators joined in the criticism yesterday.

Jeff Merkley of Oregon said the Fed had an “abysmal” record on consumer protection. Richard Shelby, the top Republican on the Banking committee, said the entity shouldn’t be autonomous within the Fed. “If you have something at the Federal Reserve, the Board of Governors ought to have the control,” he said.

Federal Reserve spokeswoman Susan Stawick declined to comment yesterday.

Banking lobbyists say the Fed’s knowledge of the banking system makes it well-suited to coordinate rules on credit cards and other consumer financial products.

Connected to Regulation

“Regulation of the products should be connected to the regulation of the bank,” said Scott Talbott, senior vice president of government relations for the Financial Services Roundtable, which represents the largest financial institutions.

The financial-services industry has lobbied lawmakers to defeat the plan for a consumer agency. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon called the agency “just a whole new bureaucracy” on a December conference call with analysts.

The American Bankers Association, the largest trade group representing banks, organized hundreds of meetings with its members and Congressmen and spearheaded a campaign that encouraged almost 300,000 letters to be sent to Capitol Hill, all in opposition to the CFPA. ABA spokesman John Hall said the organization wouldn’t comment on the Fed idea until the proposal became official.

Consumer advocates say the Fed didn’t use its authority to put in place stronger protections for home buyers as the subprime mortgage market began to expand earlier this decade. The Fed has the broadest authority of any regulator to write rules on lending practices and disclosure.

More Clout

The Fed’s specific enforcement authority is limited to 800 state member banks. It wields much more clout as the supervisor of bank holding companies, such as Bank of America Corp., some of which had subprime mortgage lending subsidiaries.

Some $600 billion in subprime mortgages were originated in 2006, up from $310 billion in 2003, according to Inside Mortgage Finance, a trade publication. The Federal Reserve began to hold hearings around the country in 2006, and consumer advocates provided details of abuse, transcripts from the meetings show.

“We were yelling at them in 2001 and 2002” to use their authority, says Michael Calhoun, president of the Center for Responsible Lending in Durham, North Carolina and the current chairman of the Fed Board’s Consumer Advisory Council. “It wasn’t like people didn’t know this stuff was going on.”

Edward Gramlich, a Fed Governor from 1997 to 2005, proposed that the Fed use its bank holding company authority to examine subprime lending subsidiaries. The proposal was opposed by then- Chairman Alan Greenspan, he said, and never went to the Board of Governors. Gramlich died in September 2007. Greenspan in the past has declined to comment.

Subprime Casualties

Among the subprime casualties on Wall Street: Bear Stearns Cos., acquired by JPMorgan Chase & Co. with help from the Fed, Merrill Lynch & Co., taken over by Bank of America Corp., and Lehman Brothers Holdings Inc., which went bankrupt.

Fed Chairman Ben S. Bernanke began to step up restrictions on subprime lending only after Congress threatened to strip the Fed of its authority. In a June 2007 hearing, Frank told then- governor Randall Kroszner: “Use it or lose it.”

“If the Fed doesn’t start to use that authority to roll out the rules, then we’ll give it to somebody who will,” Frank said.

The Fed drafted tougher mortgage lending rules in 2007 and completed them in 2008. The rules prevented mortgages for borrowers with no documented income, required lenders to write loans borrowers could repay, and made escrow accounts mandatory for high-cost mortgages. The Fed also toughened restrictions on prepayment penalties.

Credit-Card Disclosure

Separately, the Fed has forced credit-card companies to improve disclosure and has increased its scrutiny of possible discrimination in lending. The central bank referred 17 cases to the Justice Department in the three-year period ending 2009, up from nine the prior three years.

The Fed’s actions came too late, consumer advocates say.

Subprime mortgage delinquencies rose to 25 percent of the total at the end of 2009, from 10 percent at the end of 2004, according to Mortgage Bankers Association data. Total home loans in foreclosure rose to 4.6 percent from 1.2 percent.

“We have the track record of them failing to take action when they should have and potentially could have averted this foreclosure crisis,” said John Taylor, president and chief executive officer of the National Community Reinvestment Coalition in Washington, a group of 600 organizations promoting fair lending.

The action the Fed does take against banks is often kept secret.

“When examiners identify banks with weak and ineffective compliance programs, they document the weaknesses in the examination report and take appropriate supervisory action,” Fed governor Elizabeth Duke, who served as Chairman of the American Bankers Association from 2004 to 2005, testified before the House Financial Services Committee last March.

Because “most banks voluntarily address any violations and weaknesses,” she said, “we find public formal actions are not typically necessary.”