Congress Approves President's
4th Tax Cut in as Many Years
The House and the Senate overwhelmingly voted to extend three tax cuts aimed at the middle class, along with an array of business tax breaks, sending President Bush a $146 billion tax cut that would be his fourth in four years.
With the approval of the legislation, virtually all of Bush's first-term tax agenda -- four tax measures worth nearly $1.9 trillion over 10 years -- would survive a potential second Bush term, unless Washington elects to change the tax code again. The total is $300 billion more in tax relief than Bush envisioned with his first tax-cut proposal in 2001.
But the tax cut would exacerbate a budget deficit that will probably have to be addressed in the next presidential term. The tax cut passed the House 339 to 65 Thursday. It then passed the Senate 92 to 3.
The legislation would extend the $1,000-per-child tax credit, rather than letting it slip back to $700 next year. It would extend tax breaks for married couples that otherwise would also have to be trimmed in 2005. It would prevent the 10 percent income-tax bracket from being applied to smaller amounts of earned income, as was the case in the past.
-- Jonathan Weisman
Fannie Mae Is Cited for
Improper Accounting Methods
Fannie Mae, the giant mortgage finance company, has used improper accounting methods that raise serious questions about the quality of its management and the validity of its financial reports, government regulators reported.
Though it did not quantify the effect of what it called pervasive misapplication of accounting rules on the company's books, the report by the Office of Federal Housing Enterprise Oversight cited one instance in 1998 where the company inappropriately deferred $200 million of estimated expenses, which enabled management to receive full annual bonuses. Had the company recorded the expenses in 1998, no bonus would have been paid, the report said.
The report also detailed numerous transactions over several years where it said Fannie Mae management intentionally smoothed out gyrations in its earnings to show investors it was a low-risk company.
The report criticized "a culture and environment that made these problems possible," and it named J. Timothy Howard, the company's vice chairman and chief financial officer, saying he "failed to provide adequate oversight" of key control and reporting functions and had jobs in which he both set earnings targets and then the accounting policies that could be used to meet them.
-- David Hilzenrath
Studies Show Impact
Of Lifestyle on Aging
Four new studies have found that healthy lifestyles can produce dramatic benefits for the body and mind even among the elderly.
Although an abundance of research has demonstrated that a good diet and regular physical activity are potent promoters of health, the new studies found that the effects extend into old age, sharply reducing the risk not only of heart disease and cancer, but even of dementia. They were published in the Journal of the American Medical Association.
One of the studies found that elderly people who ate a healthful diet, exercised regularly, drank alcohol moderately and avoided smoking slashed by more than half their risk of dying from any cause, while another found that the same type of diet improved blood vessel function and reduced inflammation. The two other studies produced the strongest evidence yet that simply walking every day goes a long way toward keeping the mind sharp and warding off dementia.
-- Rob Stein
Judge Strikes Down FEC Rules
About Raising Campaign Funds
U.S. District Court Judge Colleen Kollar-Kotelly struck down rules governing campaign fundraising, concluding that the regulations undermine a two-year-old campaign finance law.
Under the 2002 McCain-Feingold campaign finance law, Congress generally prohibited candidates for federal office from becoming involved in raising "soft money" -- unlimited amounts of cash from corporations, labor unions and wealthy individuals. But Kollar-Kotelly concluded that Federal Election Commission regulations designed to implement the law had the opposite effect.
She found that the regulations created "an immense loophole" that allowed candidates and friendly political organizations to coordinate their efforts to raise and spend soft money.
Kollar-Kotelly said the commission defied logic, used creative new definitions of common words and so narrowly interpreted the 2002 law that some of its rules would "foster corruption."
Her decision came six weeks before the presidential election but will probably not change the activities of political organizations in any contest, analysts and attorneys in the case said.
-- Carol D. Leonnig
3 DeLay Aides Are Indicted
In Probe of Illegal Fundraising
Three top political aides to House Majority Leader Tom DeLay (R-Tex.) were indicted on charges of illegally raising political funds from corporations in 2002, much of which was funneled into the Republican takeover of the Texas legislature.
Corporate contributions to state legislative candidates are illegal in Texas. A Travis County grand jury indicted DeLay political aide Jim Ellis, fundraiser Warren RoBold and John Colyandro, the executive director of DeLay's political action committee, Texans for a Republican Majority, known as TRMPAC. Eight corporations also were indicted for making illegal political contributions.
The grand jury never questioned DeLay or sought records from him. But the targeted fundraising activities were at the heart of one of DeLay's most cherished, endeavors of the past several years: giving Republicans control of the Texas legislature so the state's 32 U.S. House districts could be redrawn in a way likely to send more Republicans to Congress.
Ellis, 47, of Arlington, Va., and Colyandro, 40, of Austin, were indicted on one count each of money laundering -- specifically taking $190,000 in corporate money raised by TRMPAC and giving it to the Republican National Committee which had the Republican National State Elections Committee contribute to seven Texas House candidates. Colyandro was indicted on 13 counts of unlawfully accepting $425,000 in corporate political contributions. RoBold, 48, of Middletown was indicted on nine counts of unlawfully soliciting and accepting $250,000 in corporate political contributions.
-- Sylvia Moreno
U.N. Security Council Adopts
Resolution Threatening Sudan
The U.N. Security Council adopted a resolution threatening possible sanctions against Sudan and establishing a U.N. commission of inquiry to investigate atrocities in Darfur, Sudan, and to determine whether Sudanese authorities and militias are responsible for committing genocide there.
The U.S.-drafted resolution passed in the 15-nation council by a vote of 11 to 0, with China, Russia, Algeria and Pakistan abstaining. The resolution's adoption came after the United States agreed to water down language that explicitly threatened sanctions against Sudanese officials or the country's oil industry if Khartoum fails to comply.
Sudan said the resolution was unfair and would make it harder to resolve the crisis.
-- Colum Lynch and Emily Wax