U.S. celebrates as President Obama vows new era

Barack Obama launched his presidency before an estimated 1.5 million people on the National Mall on Tuesday with somber yet confident tones, saying the country will overcome its serious economic and international challenges.

President Barack Obama 2009 Inauguration Video


"Today I say to you that the challenges we face are real," Obama said in his inaugural address. "They are serious, and they are many. They will not be met easily or in a short span of time. But know this, America: They will be met."

Obama's tempered optimism, however, was bookended by celebration in the Mall and across the country for the inauguration of the country's first African-American president.

"This is America happening," said Evadey Minott, a Brooklyn, New York, resident who witnessed the inauguration.

"It was prophesized by King that we would have a day when everyone would come together. This is that day. I am excited. I am joyful. It brings tears to my eyes."

Obama's address came before a crowd that had been building since 4 a.m. Tuesday down the National Mall. People sang, danced and waved flags as his swearing-in approached.

Many in the crowd seemed moved as Aretha Franklin belted out a rousing version of "My Country 'Tis of Thee" before Joe Biden was sworn in as vice president.

Wearing a navy suit and red tie, Obama repeated the oath of office, his hand on the same Bible used in President Abraham Lincoln's first inauguration.

When Obama took the podium, however, the jubilant crowd grew somber and quiet, hanging on his every word. There was only scattered applause -- punctuated by an occasional "That's right" or "Amen."

Obama thanked those who sacrificed so much so "a man whose father, less than 60 years ago, might not have been served at a local restaurant can now stand before you to take a most sacred oath."

He promised to end petty squabbles on Capitol Hill, bring "old friends and former enemies" into the fold, and invoked the Bible, saying, "The time has come to set aside childish things."

He also vowed to leave Iraq to its people, responsibly, and to finish forging "a hard-earned peace" in Afghanistan. To Muslims, he promised "a new way forward, based on mutual interest," and to terrorists, he leveled a threat: "You cannot outlast us, and we will defeat you."

The challenges are daunting, he said, but anyone who underestimates this nation has forgotten about its past perseverance.

His words resounded with spectators and revelers who let out deafening cheers after his address. Spectator L.J. Caldwell likened Obama to some of the most heroic figures of the civil rights movement.

"When you think back, Malcolm [X] fought, then we come a little further. Rosa Parks sat, then come up a little further, and [the Rev. Martin Luther King Jr.] spoke. Then today, President Obama ran and we won," said Caldwell, of Somerset, New Jersey.

Celebrations weren't limited to Washington. Across the country, friends and strangers gathered on the streets and in schools, bars and auditoriums to witness Obama's inauguration, united in their hope that he will deliver on his promise of change.

In New York's Bronx borough, students huddled in the halls of a school to watch the ceremony on a projection screen.

"They were cheering; they were clapping; they were in awe because everything we had talked about, they were able to see," teacher Marta Rendon said.

Leaders around the world offered their congratulations. French President Nicolas Sarkozy said the United States expressed "its resolve to have an open, new, strong and caring America."

Australian Prime Minister Kevin Rudd said Obama is "the hope of our time."

After Obama's address, hundreds of thousands remained on Washington's National Mall as Obama entered the Capitol and signed his first documents as the 44th president of the United States. Among those were his Cabinet nominations. The Senate approved most of those nominations later in the day.

Obama then lunched with lawmakers at the Capitol's Statuary Hall, telling them, "What's happening today is not about me. It is about the American people."

Later, Obama's motorcade carried him past barricaded crowds along Pennsylvania Avenue toward the White House. He and his family watched the rest of the parade in a reviewing stand outside the White House. The president and first lady then began the rounds of 10 official inaugural balls scheduled over the course of the evening.

Many said before the festivities that they did not have tickets and would be happy to catch a mere glimpse of the nation's first African-American president. Some spectators were more than a mile from the swearing-in ceremony, watching on giant TV screens erected along the National Mall.

At St. John's Episcopal Church, where the Obamas kicked off a packed day, 9-year-old Laura Bruggerman waited with her mother, Wendy, and father, Jeff, of Bethesda, Maryland. The affable crowd tried to let shorter onlookers and children to the front for better views.

"I want to see Obama. I think that would be really cool. I could tell all of my friends that I got to see him," the youngster said.

Security was tight in Washington. However, no arrests related to the inauguration were reported as of Tuesday evening, an FBI spokesman said.

The ceremony also drew celebrities like Dustin Hoffman, Denzel Washington and Steven Spielberg.

"It's behind the dream. We're just here feeling it with the throngs of people. It's amazing grace personified," Oprah Winfrey said, sitting next to actor Samuel L. Jackson.

Obama and congressional leaders formally bade farewell to Bush, and the now-former president took a presidential jet to Midland, Texas, shortly afterward.

As Obama and his wife, Michelle, made their way to the White House, they stepped out of their limousine amid another round of boisterous hoorahs.

The first couple beamed as they walked down Pennsylvania Avenue, waving to the throngs kept back by police barriers. They walked a few blocks before returning to their vehicle to finish the two-mile parade that took them to the White House.

"I have a sneaky suspicion that Barack and Michelle will be out and about on the streets of Washington [during his term]. ... You'll see them again," said Tracy Miller, who was watching the Obamas.

After arriving at the White House, Obama and his family watched the rest of the inauguration parade from a reviewing stand.

After historic day, Obama set to tackle agenda

Barack Obama, fresh from the pageantry of his historic inauguration, will turn on Wednesday toward his goals of rescuing the economy, charting a new course for the Iraq and Afghanistan wars and shaping his approach to the Middle East conflict.

Obama has pledged bold and swift action to deal with the worst economic crisis since the Great Depression. He has also asked Americans for patience in grappling with challenges both foreign and domestic that will take time to resolve.

With financial markets reeling and job losses mounting, Obama will meet with his economic advisers, who are working with the Democratic-led Congress on an $825 billion fiscal stimulus package.

He also is seeking fresh approaches to repair the battered financial system and is mulling a host of ideas, including the creation of a government-run bank that would buy up toxic assets from ailing U.S. banks.

The aim is to rekindle the flow of the credit to the economy so businesses and consumers can get access to loans.

Iraq and Afghanistan will dominate Obama's foreign policy agenda, but he has also said he will take an active role to try to resolve the Israeli-Palestinian conflict.

He may move quickly to name a Middle East envoy and is strongly considering George Mitchell, a former U.S. senator and veteran international troubleshooter, for the job.

In addition to the economic meeting, Obama will also sit down with top military officials to discuss Iraq and Afghanistan.

He has said he favors a 16-month timetable for the withdrawal of U.S. troops from Iraq and U.S. officials said that in his meeting with military leaders, he would discuss the possibility of accelerating their departure.

Obama also will discuss plans to bolster troops in Afghanistan as he meets with a Pentagon delegation led by Defense Secretary Robert Gates and Navy Adm. Mike Mullen, chairman of the Joint Chiefs of Staff.

Gen. David Petraeus, the former Iraq commander credited with pulling the country from the brink of civil war, was to attend Wednesday's meeting after flying back from Afghanistan.

SECRETARY OF STATE

A Senate vote is expected on Wednesday on Obama's nomination of Hillary Clinton as secretary of state.

But he will begin his new administration without a Treasury secretary. His nominee for the job, Tim Geithner, will face questions from a Senate panel about his past failure to pay some taxes.

Geithner has said the tax problem stemmed from an error and several senators have said they thought the issue would not prevent his confirmation.

Obama has found a receptive audience on Capitol Hill for his call for aggressive action to help the economy and hopes to garner bipartisan support for the massive stimulus package.

But Republicans have raised questions about the package, including how quickly the money will be spent and whether certain projects will actually kick-start the economy, which has been in a recession for over a year.

Obama is pressing for passage of the package by mid-February.

Source: Timothy Geithner failed to pay taxes

President-elect Barack Obama's choice to run the Treasury Department and lead the economic rescue effort disclosed to senators Tuesday that he failed to pay $34,000 in taxes from 2001 to 2004, a last-minute complication in an otherwise smooth path to confirmation.

Timothy Geithner paid most of the past-due taxes days before Obama announced his nomination in November, an Obama transition official said. The unpaid taxes were discovered by Obama's transition team while investigating Geithner's background, the official said.

The transition official requested anonymity because the source was not authorized to discuss Geithner's situation.

Obama reiterated his support Tuesday for Geithner as senators who are considering the appointment quizzed Geithner behind closed doors.

"He's dedicated his career to our country and served with honor, intelligence and distinction," incoming White House spokesman Robert Gibbs said. "That service should not be tarnished by honest mistakes, which, upon learning of them, he quickly addressed."

Geithner failed to pay self-employment taxes for money he earned while working for the International Monetary Fund from 2001 to 2003, the transition official said. In 2006, the IRS notified him that he owed $14,847 in self-employment taxes and $2,383 in penalties from 2003 and 2004.

Transition officials discovered last fall that Geithner also had not paid the taxes in 2001 or 2002. He paid $25,970 in taxes and interest for those years several days before Obama announced his nomination, the transition official said.

Geithner also didn't realize a housekeeper he paid in 2004 and 2005 did not have current employment documentation as an immigrant for the final three months she worked for him, the transition official said.

Geithner is the second Obama nominee to face controversy. New Mexico Gov. Bill Richardson withdrew his name on Jan. 4 as Obama's Commerce secretary after questions surfaced about an ongoing federal investigation.

Richardson withdraws bid to be commerce secretary

New Mexico Gov. Bill Richardson on Sunday announced that he was withdrawing his nomination to be President-elect Barack Obama's commerce secretary amid a grand jury investigation into how some of his political donors won a lucrative state contract.

Richardson's withdrawal was the first disruption of Obama's Cabinet process and the second "pay-to-play" investigation that has touched Obama's transition to the presidency. The president-elect has remained above the fray in both the case of arrested Illinois Gov. Rod Blagojevich and with the New Mexico case.

A federal grand jury is investigating how a California company that contributed to Richardson's political activities won a New Mexico state contract worth more than $1 billion. Richardson said in a statement issued by the Obama transition office that the investigation could take weeks or months but expressed confidence it will show he and his administration acted properly.

"But I have concluded that the ongoing investigation also would have forced an untenable delay in the confirmation process," Richardson said. "Given the gravity of the economic situation the nation is facing, I could not in good conscience ask the president-elect and his administration to delay for one day the important work that needs to be done."

Richardson said he will remain as governor and told Obama, "I am eager to serve in the future in any way he deems useful."

The announcement came ahead of Obama's Monday meetings with congressional leaders on a massive economic recovery bill he wants lawmakers to pass quickly.

Obama said he has accepted Richardson's withdrawal, first reported by NBC News, "with deep regret."

"Governor Richardson is an outstanding public servant and would have brought to the job of Commerce Secretary and our economic team great insights accumulated through an extraordinary career in federal and state office," Obama said. "It is a measure of his willingness to put the nation first that he has removed himself as a candidate for the Cabinet to avoid any delay in filling this important economic post at this critical time. Although we must move quickly to fill the void left by Governor Richardson's decision, I look forward to his future service to our country and in my administration."

A person familiar with the proceedings has told The Associated Press that the grand jury is looking into possible "pay-to-play" dealings between CDR Financial Products and someone in a position to push the contract through with the state of New Mexico.

State documents show CDR was paid a total of $1.48 million in 2004 and 2005 for its work on a transportation program.

Richardson ran against Obama in the Democratic presidential primary, but withdrew after a poor showing in the Iowa caucuses and New Hampshire primary.

He is one of the most prominent Hispanics in the Democratic Party, having served in Congress and as President Clinton's ambassador to the United Nations and energy secretary. As governor, he has kept up an international profile with a specialty in dealing with rouge nations. Obama also considered him to be secretary of state.

CDR and its CEO, David Rubin, have contributed at least $110,000 to three political committees formed by Richardson, according to an AP review of campaign finance records.

The largest donation, $75,000, was made by CDR in June 2004 — a couple of months after the transportation financing arrangement won state approval — to a political committee that Richardson established before the Democratic National Convention that year.

Ill. Gov. Blagojevich pledges to fight, won't quit

Gov. Rod Blagojevich said Friday he will be vindicated of criminal corruption charges and has no intention of letting what he called a "political lynch mob" force him from his job.

"I will fight. I will fight. I will fight until I take my last breath. I have done nothing wrong," Blagojevich said in his first official public comments since his arrest last week on federal corruption charges.

The Democrat is accused, among other things, of plotting to sell or trade President-elect Barack Obama's U.S. Senate seat.

"I'm not going to quit a job the people hired me to do because of false accusations and a political lynch mob," Blagojevich said.

Blagojevich had been itching to talk, even though his attorney Ed Genson didn't like the idea.

Genson has said he plans to challenge the court-ordered wiretaps at the heart of the allegations against Blagojevich. Genson called the wiretaps inappropriate, if not illegal.

Genson said he expects a federal grand jury to indict his client, which likely would unseal many of the documents supporting the charges.

The governor is also accused of trying to strong-arm the Chicago Tribune into firing editorial writers who criticized him, and pressuring a hospital executive for campaign donations.

Blagojevich attorney says wiretaps were illegally obtained

A lawyer for Illinois Gov. Rod Blagojevich told state lawmakers Thursday that the federal wiretaps at the heart of the pay-to-play allegations against his client were illegally obtained, and therefore should be kept out of any impeachment proceedings. The wiretaps are crucial to the federal charges filed against Blagojevich last week. Prosecutors say they caught the Democratic governor discussing efforts to auction off Barack Obama's U.S. Senate seat and pressure a hospital executive for campaign donations.

Genson told the impeachment committee that it shouldn't consider any material from the wiretaps, saying the evidence was "illegally obtained."

Earlier on MSNBC, Genson said the governor maintains his innocence: "He's telling me that he's not guilty, he's telling me that he wants to fight."

The panel was expected to hear later Thursday from the state's top internal watchdog, who says his own past probes of the Blagojevich administration have turned up improper contracts, incomplete records and sloppy handling of tax money.

Meanwhile, Attorney General Lisa Madigan denied a request by Genson to have the state pay for Blagojevich's impeachment defense. The move was all the more significant because Genson said federal officials are seeking to freeze the governor's campaign fund — $3.6 million as of June — a source Blagojevich could tap to pay his legal bills.

Madigan's office said the impeachment review is a case against Blagojevich's capacity as governor and isn't a court action — a classification that doesn't entitle the governor to taxpayer-funded legal representation.

Genson also appeared before the House panel Wednesday and challenged it on multiple fronts. He said three members should be removed, the committee's rules should be changed and it should not consider accusations in a criminal complaint against the governor.

Blagojevich, who left his home Thursday morning without speaking to reporters, has been under siege since his arrest last week. He got some good news Wednesday when the court rejected Madigan's claim that the governor's legal troubles made him unfit to serve.

The court's decision renewed calls from Republicans for a special election to choose Obama's successor in the Senate. They argue that neither Blagojevich nor Lt. Gov. Patrick Quinn — who would take over if Blagojevich goes — should be allowed to make the appointment.

Genson said he doesn't expect Blagojevich will make an appointment.

"Harry Reid said that they're not going to accept anybody he picks," said Genson, referring to the Senate majority leader. "Why would he do that?"

Blagojevich spokesman Lucio Guerrero said he didn't know if Genson was correct about the governor's intentions.

The Illinois House has appointed a 21-member committee to review the possibility of impeachment. The panel, divided 12-9 between Democrats and Republicans, will recommend whether the full House should move to impeach Blagojevich. If that happened, the state Senate would then decide whether the governor is guilty.

Disgraced Illinois governor weighs legal options

Illinois Gov. Rod Blagojevich met with a renowned Chicago criminal lawyer Saturday as he weighed his legal options on how to fight a scandal that has left his career in tatters and disrupted President-elect Barack Obama's White House transition.

The Democratic governor had a four-hour meeting with Ed Genson in the lawyer's downtown office Saturday. Genson has defended newspaper baron Conrad Black, R&B singer R. Kelly and numerous public figures on corruption charges, earning a reputation as the lawyer big shots call when they get in a bind in Chicago.

Genson confirmed the two met but wouldn't discuss details of their dialogue. When asked if he would take the case, Genson said: "We'll make our mutual decision on Monday."

Blagojevich had brushed back calls for his resignation after he was charged with trying to sell Obama's Senate seat. He sought to project a business-as-usual image amid the turmoil, going to work every day and handling state business.

As the legal maneuvering intensified, some observers speculated that he might be trying to leverage the governorship to his advantage in his criminal case — just like prosecutors said he did with the Senate seat for financial gain.

"I would be saying, 'Let me see what I can get in exchange for you resigning. Don't just give it up for nothing. Let me see if I can get you a better deal,'" said Steve Cron, a defense lawyer from Santa Monica, Calif.

Others suggested his lingering refusal to resign is more rooted in his ego than anything else. The governor has been known to love being in the spotlight, whether the attention is good or bad.

"You would think he would see his life collapsing around him," said Chicago defense lawyer John Beal, who was in the courtroom with Blagojevich this week and noted how carefree he seemed. "But he was the center of attention and seemed to love it."

The scandal continued to hound Reps. Jesse Jackson Jr. and Rahm Emanuel, Obama's choice for chief of staff. About a dozen protesters stood outside Jackson's office Saturday demanding his resignation, and Republicans called for more information from Obama about Emanuel's role in the Senate selection process.

The Chicago Tribune reported that Emanuel had conversations — captured on wiretaps — before the election with the Blagojevich administration about who would replace Obama in the Senate. The report did not suggest any dealmaking in the conversations, and Obama has strongly denied that anyone on his team committed wrongdoing.

Jackson was identified as one of the candidates Blagojevich was considering to replace Obama, and a criminal complaint said his supporters were willing to raise $1.5 million for the governor to make the appointment happen.

Blagojevich's political future remains in limbo. The Legislature could start impeachment proceedings as soon as Monday, and the Illinois Supreme Court could act on a request by Attorney General Lisa Madigan to strip him of his powers.

Madigan's staff has taken steps to rewrite lender-assurance language on a short-term borrowing plan, according to a spokeswoman for state Comptroller Dan Hynes. That would head off any problems the state has had in paying its bills over the Blagojevich scandal.

The governor has not made any public comments about his future. Spokesman Lucio Guerrero said the governor plans to sign a bill Monday that provides tax credits to filmmakers in Illinois.

Beal, the Chicago lawyer, said Blagojevich may be contemplating a deal with prosecutors or be in denial. Beal said he has seen many white-collar clients go through a defiant denial stage after they're charged with a crime.

"It often takes awhile to sink in on a gut level how much trouble they've gotten themselves into and what their options are," Beal said.

Chicago defense attorney and former assistant U.S. attorney Ron Safer said the prospect of trading a resignation in a plea deal with federal prosecutors may be far-fetched, but Blagojevich's nature seems to be a self-serving one in which he gains a personal advantage from every action he takes.

Safer sized up the prospect of a possible resignation and plea deal from his perspective as a former federal prosecutor: "If he came in and said, 'Look, I want to plead guilty. I want to cooperate. I want to accept responsibility. I'm going to resign my office,' all of those would indicate to me acceptance and would be relevant to me as a prosecutor."

Obama calls for Illinois governor to resign

President-elect Barack Obama on Wednesday joined others calling for Illinois Gov. Rod Blagojevich to resign, distancing himself further from the unfolding scandal over allegations that the governor schemed to barter Obama's vacant Senate seat for personal gain.

"The president-elect agrees with Lt. Gov. (Pat) Quinn and many others that under the current circumstances it is difficult for the governor to effectively do his job and serve the people of Illinois," Obama spokesman Robert Gibbs said in response to questions from The Associated Press.

Blagojevich was arrested Tuesday, accused of seeking money or other favors to influence his choice in picking Obama's replacement. The governor has authority to appoint the replacement, but top Illinois lawmakers have said they are preparing to call the Legislature into session as early as next week to set a special election to choose Obama's successor.

Asked whether Obama supports a special election, Gibbs said Obama believes the General Assembly should consider how to fill the Senate seat and "put in place a process to select a new senator that will have the trust and confidence of the people of Illinois."

Aides say Obama is refraining from stating what that solution should be.

If Blagojevich resigns, Quinn would become governor and have the right to appoint Obama's successor. That would avoid a special election, which can be costly, and speed up the appointment of Illinois' junior senator.

Over the past two days since Blagojevich's arrest, Obama and his aides have largely refrained from commenting on the scandal. When Obama has spoken about the case, he's been cautious.

In brief comments to reporters Tuesday, Obama said "like the rest of the people of Illinois I am saddened and sobered by the news that came out of the U.S. attorney's office today," but he didn't go so far to condemn Blagojevich's alleged actions.

He did add about Blagojevich's process of considering a successor: "I had no contact with the governor or his office, and so I was not aware of what was happening."

Obama reiterated that point in an interview published in the Chicago Tribune and the Los Angeles Times on Wednesday. "I have not discussed the Senate seat with the governor at any time," he said.

But Obama wouldn't answer a question on whether he was aware of any conversations between the governor and his top aides, including incoming White House chief of staff Rahm Emanuel. "It's an ongoing investigation," Obama said. "I think it would be inappropriate for me to ... remark on the situation beyond the facts that I know."

And, aides didn't say whether Emanuel, a Democratic Illinois congressman, was ever approached by the governor's emissaries involved in allegedly corrupt schemes. Nor did they say whether Obama is investigating his own ranks to determine whether any of his staffers had contact with the governor or his office.

Report: Jesse Jackson Jr. is 'Candidate 5' in Blagojevich scandal

ABC News has a law enforcement source telling them that Jesse Jackson, Jr. is "Senate Candidate Five," the one who was -- according to Blagojevich -- willing to supply campaign cash in exchange for the Senate seat.

(This, incidentally, doesn't strike me as all that unusual in politics, or as obviously criminal as other things in the complaint -- though the crudeness with which Blagojevich discussed it was.)




Jackson Jr. said "I don't know" when asked if he was Candidate #5, but said he was told "I am not a target of this investigation."

Jackson Jr. said he agreed to talk with federal investigators "as quickly as possible" after he consults with a lawyer.

The Congressman, a son of the famed civil rights leader, denied that anyone had been authorized to make payments or promises to the Governor on his behalf.

"It is impossible for someone on my behalf to have a conversation that would suggest any type of quid pro quo or any payments or offers," Jackson Jr. told ABC News. "An impossiblity to an absolute certainty."

Obama works to distance himself from Ill. governor

As Obama works to set up his new administration and deal with a national economic crisis, suddenly he also is spending time and attention trying to distance himself from Illinois Gov. Rod Blagojevich and charges that the governor was trying to sell the now-vacant Senate post.

The president-elect was blunt and brief in addressing the case on Tuesday: "I had no contact with the governor or his office, and so I was not aware of what was happening" concerning any possible dealing about Blagojevich's appointment of a successor.

It's Obama's first big headache since his election last month, and Republicans were anything but eager to let it go away.

Said Rep. Eric Cantor of Virginia, the new GOP House whip: "The serious nature of the crimes listed by federal prosecutors raises questions about the interaction with Gov. Blagojevich, President-elect Obama and other high ranking officials who will be working for the future president."

Added Robert M. "Mike" Duncan, chairman of the Republican National Committee: "Americans expect strong leadership, but President-elect Barack Obama's comments on the matter are insufficient at best."

In Chicago, U.S. Attorney Patrick Fitzgerald said prosecutors were making "no allegations" that Obama was aware of any scheming.

And Blagojevich himself, in taped conversations cited by prosecutors, suggested that Obama wouldn't be helpful to him. Even if the governor was to appoint a candidate favored by the Obama team, Blagojevich said, "they're not willing to give me anything except appreciation."

The two Illinois politicians have never been especially close and have largely operated in different Democratic Party camps in the state. Blagojevich's disdain for Obama was clear in court documents; he is quoted as calling the president-elect a vulgar term in one phone conversation recorded by the FBI.

Still, at the very least, the episode amounts to a distraction for Obama at an inopportune time just six weeks before he's sworn into office. It also raises the specter of notorious Chicago politics, an image Obama has tried to distance himself from during his career.

There were signs the continuing investigation could still involve him.

His statement that he didn't have contact with Blagojevich about the Senate seat seems to conflict with that of top adviser David Axelrod, who told Fox News Chicago on Nov. 23: "I know he's talked to the governor, and there are a whole range of names, many of which have surfaced, and I think he has a fondness for a lot of them."

Obama transition officials say Axelrod misspoke.

It also appears that Obama friend Valerie Jarrett, an incoming senior White House adviser, is the person referred to repeatedly in court documents as "Candidate 1." That individual is described as a female who is "an adviser to the president-elect" and as the person Obama wanted appointed to the Senate seat. Court papers say that "Candidate 1" eventually removed "herself" from consideration for the Senate seat.

In a Nov. 11 phone conversation with an aide, Blagojevich talked at length about "Candidate 1" and said he knew that Obama wanted her for the open seat but "they're not willing to give me anything except appreciation. (Expletive) them."

One day later, Jarrett, a Chicago businesswoman who is one of three co-chairmen of Obama's transition team and was a high-level adviser to his presidential campaign, made it known that she was not interested in the seat. And, on Nov. 15, Obama announced that Jarrett would be a senior White House adviser and assistant for intergovernmental relations.

Obama has maintained a cordial but distant relationship with Blagojevich during the governor's tenure. He supported his fellow Democrat for re-election in 2006, even though the governor backed someone else over Obama in the U.S. Senate Democratic primary race in 2004. Obama has said little about the many misconduct allegations that have piled up against Blagojevich, and he has complimented Blagojevich for running "a sound administration" with "the right priorities."

Obama's circle of major Illinois political allies and supporters is largely separate from Blagojevich's, with two major exceptions. Both Obama and Blagojevich got extensive money and support from Chicago businessman Antoin "Tony" Rezko, who is now under federal indictment. And Obama is close to Illinois Senate President Emil Jones, who has been the governor's staunchest legislative ally.

At least one top aide to Obama, Michael Strautmanis, previously worked for Blagojevich. Obama has appointed Strautmanis to serve as White House chief of staff to the presidential assistant for intergovernmental relations and public liaison. The Chicago native was legislative director and counsel to Blagojevich when the governor was a member of Congress and then helped Blagojevich win the governorship in 2002. There is no indication that Strautmanis is involved in the case.

More details on the case could be forthcoming.

Court documents say they don't include all calls dealing with the governor's efforts regarding the Senate seat appointment. And many people in the documents are referred to by aliases; there's little doubt their identities will eventually surface.

In Chicago, Obama largely kept a low profile as word of Blagojevich's arrest spread.

He went to a gym to work out as he does most mornings but canceled a previously scheduled FBI briefing and, instead, headed to his transition office next door to the federal courthouse. He stayed there and mostly out of sight until a midday meeting with former Vice President Al Gore on environmental and energy issues. That was supposed to be the news of the day out of the Obama office but the president-elect found himself peppered with questions about Blagojevich when reporters entered the Gore meeting for a photo op.

"Like the rest of the people of Illinois I am saddened and sobered by the news that came out of the U.S. attorney's office today. But as this is an ongoing investigation involving the governor, I don't think it would be appropriate for me to comment on the issue at this time," Obama said - and then he said he wasn't aware of Blagojevich's maneuvering.

Robert Gibbs, an Obama spokesman, said: "We did not know about this recent part of the investigation until today."

In court documents, FBI Special Agent Daniel Cain detailed several phone calls between Blagojevich and his aides that were intercepted on court-authorized wiretaps over the past month. Blagojevich is accused of conspiring to sell or trade the vacant Senate seat for personal benefits for himself and his wife, Patti. Among his alleged desires: a Cabinet post, placement at a private foundation in a significant position, campaign contributions or an ambassadorship.

Obama meeting with Al Gore raises eyebrows

Could Obama be looking at Al Gore in his search for energy secretary and Environmental Protection Agency administrator?

One has to to wonder with Al Gore making to trip to Chicago to meet with President-elect Barack Obama and Vice President-elect Joe Biden Tuesday.

A spokesman for Gore flatly said last week the former vice president has no interest in serving the Obama administration.

Nonetheless, Gore's high profile visit to Chicago, Illinois, to meet Obama and Biden is raising eyebrows, even among some of Gore's close advisers.

"The Gore trip is for more than just a chat," a close friend of Gore told CNN's John King. "He wouldn't burn that much carbon flying to Chicago just to talk."

But a Gore appointment would almost certainly be greeted with celebration from members of the party's liberal wing, many of whom are still angry he lost the White House in 2000 despite winning the popular vote.

Obama's transition office says the meeting will focus on energy and climate issues

Obama to name Richardson to head Commerce Dept

President-elect Barack Obama is expected to nominate New Mexico Gov. Bill Richardson to head the Commerce Department, a senior Democratic source said on Tuesday.

Obama is expected to announce the appointment during a news conference scheduled for 1140 EST/1640 GMT on Wednesday in Chicago, his fifth since he began naming nominees for his Cabinet.

The appointment of Richardson, a former U.N. ambassador and energy secretary who became an Obama supporter earlier this year after dropping his own presidential bid, would make him the first Hispanic named to Obama's rapidly filling Cabinet.

Last week Obama announced members of his economic team including his nominee for Treasury secretary, New York Federal Reserve President Timothy Geithner, and this week he unveiled his national security team including his designate for Secretary of State, New York Sen. Hillary Clinton.

Richardson, 61, had been a contender for the secretary of state post that went to his former Democratic presidential rival Clinton, but at Commerce he will play a key role in efforts to revive the faltering U.S. economy.

Clinton vows to make US force for positive change

Hillary Clinton on Monday vowed to make the United States a new force for positive change, saying that as secretary of state she would work with the world community to solve global crises.

"The American people have demanded not just a new direction at home, but a new effort to renew America's standing in the world as a force for positive change," Clinton told a Chicago press conference after being nominated to the post of secretary of state by president-elect Barack Obama.

Clinton vowed to "reach out to the world again" after eight years of President George W. Bush's administration and promised to give "this assignment, your administration and my country, my all."

"America is a place founded on the idea that everyone should have the right to live up to his or her God-given potential. It is the same ideal that must guide America's purpose in the world today," said Clinton, who leaves a seat as New York senator to serve as secretary of state. Her nomination requires Senate confirmation.

Obama said that Clinton's appointment as top diplomat was a "sign to friend and foe of the seriousness of my commitment to renew American diplomacy and restore our alliances."

Former president Bill Clinton, who had fiercely campaigned for his wife in her battle against Obama for the Democratic presidential nomination, praised the president-elect for his choice.

"She is the right person for the job of helping to restore America's image abroad, end the war in Iraq, advance peace and increase our security," Clinton said in a statement.

Clinton said the former first lady had "already earned the respect of foreign leaders and diplomats" through her work to promote human rights and improve women's access to education and healthcare worldwide.

"I commend president-elect Obama for asking her to be a part of a great national security team. America will be well-served," he said.

Obama, who is to take office on January 20, also confirmed that he was keeping Defense Secretary Robert Gates in his post, but with a "new mission" to end the Iraq war and hand over control of the country to the Iraqis.

"I will be giving Secretary Gates and our military a new mission as soon as I take office, responsibly ending the war in Iraq through a successful transition to Iraqi control," said Obama, pledging to turn attention to the fight against Al-Qaeda and insurgents in Afghanistan.

"We will also ensure that we have the strategy and resources to succeed against Al-Qaeda and the Taliban," Obama said.

Obama to name AG, UN, homeland picks on Monday

A Democratic official says President-elect Barack Obama plans to name his picks for U.N. ambassador, attorney general and homeland security secretary at a news conference Monday.

Obama has settled on Susan Rice, his campaign foreign policy adviser, for the U.N. post. For attorney general, the pick is Eric Holder, who helped run Obama's vice presidential search. At the Homeland Security Department, it's Arizona Gov. Janet Napolitano.

Those names had been discussed before for those jobs. But a Democratic official said Sunday that Obama will make the three announcements official — along with Hillary Rodham Clinton as secretary of state and members of national security team — Monday in Chicago.

The official spoke on a condition of anonymity because the announcements were not authorized for public release.

Obama names Robert Gibbs as White House press secretary

President-elect Barack Obama on Saturday named longtime spokesman Robert Gibbs as White House press secretary and reached outside his inner circle for the post of White House communications director.

The director of communications will be Ellen Moran, who is currently executive director of the Washington group EMILY's List. She will join a team of longtime close advisers who will work closely with Obama on a daily basis.

Her deputy in the White House will be Dan Pfeiffer, who is communications director for Obama's presidential transition team. He helped managed the press operation on the Obama campaign. Gibbs went to work for Obama's Senate campaign in 2004 and was communications director while Obama was in the Senate.

Moran will be in charge of getting Obama's message out. EMILY's, a group that backs female candidates who support abortion rights, was an active supporter of Sen. Hillary Rodham Clinton during the presidential primary. Moran also has worked for the AFL-CIO and has helped plan inaugurals for President Bill Clinton.

"These individuals will fill essential roles, and bring a breadth and depth of experience that can help our administration advance prosperity and security for the American people," Obama said in a statement. "This dedicated and impressive group of public servants includes longtime advisors and a talented new addition to our team, and together we will work to serve our country and meet the challenges of this defining moment in history."

Gibbs, 37, was born in Auburn, where his parents, Robert and Nancy, worked for Auburn University. In 1989, he graduated from Auburn High School and headed to North Carolina State University to major in political science.

Gibbs worked for several Southern Democrats before heading to Chicago to work in Obama's U.S. Senate campaign in 2004.

Obama picks Daschle to head HHS

Tom Daschle will become Secretary of Health and Human Services.

President-elect Barack Obama has chosen former Sen. Tom Daschle to be Secretary of Health and Human Services, and the former Senate majority leader has indicated he wants the job, three sources close to the transition told CNN Wednesday.


The sources said that Daschle negotiated that he will also serve as the White House health "czar," or point person, so that he will report directly to the incoming president.

By wearing two hats, Daschle -- not White House staffers -- will be writing the health care plan that Obama submits to Congress next year.

The sources said the precise timing of the announcement has not been worked out, but Daschle is likely to officially join the Obama transition team as the lead adviser on health issues in the next few weeks.

An Obama transition official would not comment.

Daschle is currently billed as a "special public policy adviser" in the Washington office of the lobbying firm Alston Bird, though he is technically not a federally registered lobbyist.

But his wife, Linda Daschle, is a registered lobbyist at the powerful firm Baker Donelson, which does have some clients in health-related fields.

Meanwhile, critics questioned whether Obama's top staff picks so far represent the "change" that he promised during the campaign.

More than half of the people named so far to Obama's transition or staff posts have ties to former President Bill Clinton's administration.

The Clinton-heavy team has caused some Republicans to question Obama's call for change.

"I think several individuals are very frustrated to think that President-elect Obama may just cut and paste from some of the Democratic operatives from the Clinton administration and put them into his White House," said Leslie Sanchez, a Republican strategist and CNN contributor.

Republicans aren't the only ones who want Obama to branch out. Robert Kuttner, a liberal and author of "Obama's Challenge," says the president-elect should broaden his recruiting efforts.

"It's not as if the only competent people who ever served in government or who are capable are serving in government are veterans of the Clinton administration, so he's got to be careful how many Clintonistas he appoints to top level government posts," Kuttner said.

Before Clinton, however, Democrats had not been in the White House since Jimmy Carter, and many of those in Carter's administration are too old to serve again under Obama.

Lanny Davis, President Clinton's former special council, lobbied publicly for Obama to choose Sen. Hillary Clinton as his running mate during the campaign. Despite what critics say, Davis says real change is about policy, not people.

"What this conversation is about is laughable if you ask people in America what they care about. They care about the economy, jobs, education, health care. They don't care about whether somebody who fills a particular box is from a prior administration," he said.

The Obama transition team said in a statement that they are dedicated to building a well-rounded administration.

"President-elect Obama is committed to putting together a competent team that is diverse in many ways, including experience. Serving in high level positions whether in government, in the private sector or in public service is seen as a positive," spokesman Nick Shapiro said.

Among the so-called "Clintonistas" is the former president's wife, who is widely considered the frontrunner to be the next secretary of state.

Obama last week asked Sen. Clinton if she would consider taking on the post, multiple sources told CNN. Her response is expected this week.

Observers say President Clinton could pose an obstacle to his wife's becoming secretary of state, given his extensive international business dealings and global foundation.

The former president has agreed to release the names of several major donors to his charitable foundation and will submit future foundation activities and paid speeches to a strict ethics review, according to a source with knowledge of the discussions.

Clinton also would step away from day-to-day responsibility for his foundation and would alert the State Department to his speaking schedule and any new sources of income, should his wife become the secretary of state, the source said. That move could smooth Sen. Clinton's path to the new job.

Obama's latest selection -- Eric Holder -- also has ties to Clinton. Sources told CNN on Wednesday that Obama offered Holder the position of attorney general.

Holder served in the Clinton administration as deputy attorney general,

Rahm Emanuel, the incoming White House chief of staff, is a former top aide to President Clinton.

And Peter Orszag, the head of the Congressional Budget Office, was picked to head Obama's Office of Management and Budget, a top Democratic source told CNN on Tuesday. Orszag worked at the Clinton White House as special assistant to the president at the National Economic Council and served on the Council of Economic Advisers.

There's been little word on how the president-elect's transition team is going about business in the Pentagon, but that is because they are under strict orders not to talk to the news media, according to a senior Pentagon official who has been interacting with the transition team.

The reason is that there still is no signed Memorandum of Understanding, an agreement between the Bush administration and President-elect Obama's transition team that spells out who is allowed access to classified information and what degree of classified information that are allowed to see, sources say. Once that is done, Pentagon officials expect the pace of transition planning to pick up.

Al-Qaida No. 2 insults Obama with racial epithet

Al-Qaida's No. 2 leader used a racial epithet to insult Barack Obama in a message posted Wednesday, describing the president-elect in demeaning terms that imply he does the bidding of whites.
The message appeared chiefly aimed at persuading Muslims and Arabs that Obama does not represent a change in U.S. policies. Ayman al-Zawahri said in the message, which appeared on militant Web sites, that Obama is "the direct opposite of honorable black Americans" like Malcolm X, the 1960s African-American rights leader.

In al-Qaida's first response to Obama's victory, al-Zawahri also called the president-elect—along with secretaries of state Colin Powell and Condoleezza Rice—"house negroes."

Speaking in Arabic, al-Zawahri uses the term "abeed al-beit," which literally translates as "house slaves." But al-Qaida supplied English subtitles of his speech that included the translation as "house negroes."

The message also includes old footage of speeches by Malcolm X in which he explains the term, saying black slaves who worked in their white masters' house were more servile than those who worked in the fields. Malcolm X used the term to criticize black leaders he accused of not standing up to whites.

In Washington, State Department spokesman Sean McCormack said the latest message was just "more despicable comments from a terrorist."

The 11-minute 23-second video features the audio message by al-Zawahri, who appears only in a still image, along with other images, including one of Obama wearing a Jewish skullcap as he meets with Jewish leaders. In his speech, al-Zawahri refers to a Nov. 5 U.S. airstrike attack in Afghanistan, meaning the video was made after that date.

Al-Zawahri said Obama's election has not changed American policies he said are aimed at oppressing Muslims and others.

"America has put on a new face, but its heart full of hate, mind drowning in greed, and spirit which spreads evil, murder, repression and despotism continue to be the same as always," the deputy of al-Qaida chief Osama bin Laden said.

He said Obama's plan to shift troops to Afghanistan is doomed to failure, because Afghans will resist.

"Be aware that the dogs of Afghanistan have found the flesh of your soldiers to be delicious, so send thousands after thousands to them," he said.

Al-Zawahri did not threaten specific attacks, but warned Obama that he was "facing a Jihadi (holy war) awakening and renaissance which is shaking the pillars of the entire Islamic world; and this is the fact which you and your government and country refuse to recognize and pretend not to see."

He said Obama's victory showed Americans acknowledged that President George W. Bush's policies were a failure and that the result was an "admission of defeat in Iraq."

But Obama's professions of support for Israel during the election campaign "confirmed to the Ummah (Islamic world) that you have chosen a stance of hostility to Islam and Muslims," al-Zawahri said.

Hillary Clinton will be Barack Obama's secretary of state.

Hillary Clinton plans to accept the job of secretary of state offered by Barack Obama, who is reaching out to former rivals to build a broad coalition administration, the Guardian has learned.

Obama's advisers have begun looking into Bill Clinton's foundation, which distributes millions of dollars to Africa to help with development, to ensure that there is no conflict of interest. But Democrats do not believe that the vetting is likely to be a problem.

Clinton would be well placed to become the country's dominant voice in foreign affairs, replacing Condoleezza Rice. Since being elected senator for New York, she has specialised in foreign affairs and defence. Although she supported the war in Iraq, she and Obama basically agree on a withdrawal of American troops.

Clinton, who still harbours hopes of a future presidential run, had to weigh up whether she would be better placed by staying in the Senate, which offers a platform for life, or making the more uncertain career move to the secretary of state job.

As part of the coalition-building, Obama today also reached out to his defeated Republican rival, John McCain, to discuss how they could work together to roll back some of the most controversial policies of the Bush years. Putting aside the bitter words thrown about with abandon by both sides during the election campaign, McCain flew to meet Obama at his headquarters in the Kluczynski Federal Building, in downtown Chicago.

Obama, speaking before the meeting, said: "We're going to have a good conversation about how we can do some work together to fix up the country." He said he also wanted to thank McCain for his service to the country.

Asked by a reporter whether he would work with Obama, McCain, who has long favoured a bipartisan approach to politics, replied: "Obviously".

Sources on both sides said Obama did not offer McCain a cabinet job, but focused on how the senator for Arizona could help to guide through Congress legislation that they both strongly favour.

Given Obama's status as president-in-waiting, the two met in a formal setting, a room decked out with a US flag, and were accompanied by senior advisers. Obama appeared the more relaxed of the two, sitting with legs crossed, smiling broadly and waving to reporters, while McCain sat stiffly, with a seemingly fixed grin.

Although the two clashed during the election campaign over tax policy and withdrawal from Iraq, they have more in common than they have differences. They both favour the closure of the Guantánamo Bay detention centre, an increase in US troops to Afghanistan, immigration reform, stem cell research and measures to tackle climate change, and oppose torture and the widespread use of wire-tapping.

Although Democrats made gains in the Senate in the November 4 elections, they fell short of the 60 seats that would have allowed them to override Republican blocking tactics and will need Republican allies to get Obama's plans through. This was highlighted today when the Democratic leadership in Congress announced that a broad economic stimulus package Obama sought was not likely to be passed because of Republican opposition.

Obama confirmed at the weekend that he would offer jobs to some Republicans. One of the names that crops up most often is Chuck Hagel, the former Republican senator who is a specialist in foreign affairs and a critic of the Iraq war.

White House denies Bush holding on 2nd stimulus

The White House on Tuesday denied that President Bush is holding out support for a second stimulus and help for automakers until Democrats agree to approve a trade deal with Colombia.

"There was no linkage," said White House press secretary Dana Perino, speaking to reporters in New York, where the president traveled to give a speech on Veterans Day.

"They did speak about a range of issues, both domestic and international, and they did spend some time talking about the economy." She said. "But in no way did President Bush suggest that there was a quid pro quo when it came to Colombia free trade agreement or the other free trade agreements."

Mrs. Perino also played down rumors that Mr. Bush was angry over the leaks coming from the Obama transition team.

"I've also gotten several requests wanting to know if there is irritation at the White House towards the Obama team, and you're not going to hear that from me," Mrs. Perino said.

"When you're dealing with unidentified aides, as we have done over the past eight years, from all different types of aides that choose to be nameless rather than to say what they feel like they want to say on the record -- it happens."

Media reports on Tuesday said that President-elect Barack Obama on Monday pressed Mr. Bush to do more for automakers, but that Mr. Bush said he wanted the Democratic-controlled Congress to pass the Colombia free trade agreement, and wanted a quid pro quo.

The reports in the Washington Post and New York Times cited Obama aides as the source of the leak, and on Tuesday morning the Web site The Drudge Report reported that the president was angry at the leak.

"Bush anger: Obama aides leak chat details," screamed the banner headline across the Drudge home page, and the story cited a "top Bush source" as saying that "Senator Obama would be wise to keep close counsel."

"Senator Obama may not be familiar with a long-standing tradition of presidents holding their private conversations, private".

Speculation swirls about Obama appointments

While President-elect Barack Obama enjoyed a few days with his family after a hard-fought election, speculation swirled in the nation's capital around potential administration appointees.

Obama pivoted quickly to begin filling out his team on Wednesday, selecting hard-charging Illinois Rep. Rahm Emanuel as White House chief of staff while aides stepped up the pace of transition work that had been cloaked in pre-election secrecy.

Several Democrats confirmed that Emanuel had been offered the job. While it was not clear he had accepted, a rejection would amount to an unlikely public snub of the new president-elect within hours of an electoral college landslide.

Obama he has promised to hold a news conference later in the week. As president-elect, he begins receiving highly classified briefings from top intelligence officials Thursday.

In offering the post of White House chief of staff to Emanuel, Obama turned to a fellow Chicago politician with a far different style from his own, a man known for his bluntness as well as his single-minded determination.

Emanuel was a political and policy aide in Bill Clinton's White House. Leaving that, he turned to investment banking, then won a Chicago-area House seat six years ago. In Congress, he moved quickly into the leadership. As chairman of the Democratic campaign committee in 2006, he played an instrumental role in restoring his party to power after 12 years in the minority.

Emanuel maintained neutrality during the long primary battle between Obama and Sen. Hillary Rodham Clinton, not surprising given his long-standing ties to the former first lady and his Illinois connections with Obama.

The day after the election there already was jockeying for Cabinet appointments.

Several Democrats said Sen. John Kerry of Massachusetts, who won a new six-year term on Tuesday, was angling for secretary of state. They spoke on condition of anonymity, saying they were not authorized to discuss any private conversations.

Kerry's spokeswoman, Brigid O'Rourke, disputed the reports. "It's not true. It's ridiculous," she said.

Announcement of the transition team came in a written statement from the Obama camp.

The group is headed by John Podesta, who served as chief of staff under former President Clinton; Pete Rouse, who has been Obama's chief of staff in the Senate; and Valerie Jarrett, a friend of the president-elect and campaign adviser.

Several Democrats described a sprawling operation well under way. Officials had kept deliberations under wraps to avoid the appearance of overconfidence in the weeks leading to Tuesday's election.