WASHINGTON -- The pitched drama over bonuses for bailed-out executives will be revived on Capitol Hill Wednesday as a government watchdog explains how some executives nearly brought down the financial system -- then pocketed millions.

Neil Barofsky, the special inspector general for the $700 billion financial rescue program, will answer questions about a new report outlining the official missteps that led to massive bonus payments for executives at insurer American International Group Inc.

In a report released Tuesday, Barofsky wrote that the Treasury Department did not understand AIG's byzantine pay structures when it gave the firm billions in aid last fall. The government has committed a total of more than $180 billion to wind down the New York-based insurance and financial services conglomerate, and now owns about 80 percent of the company.

AIG's bonuses sparked a political firestorm earlier this year when it was revealed that the government could not legally ... Read more »

The battle over health care reform has only just begun. 

After an overhaul package that was months in the making cleared a major hurdle Tuesday, Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi now must grapple with stiff Republican opposition and warring factions among Democrats as they try to bring an acceptable bill to the floor. 

The Senate Finance Committee voted 14-9 to send its version of reform legislation to the Senate floor, becoming the last of five panels to act on legislation and marking the biggest advance so far toward health care reform. 

But President Obama previewed the tough road ahead, even as he hailed the vote as a "critical milestone" late Tuesday and pledged to "get this done." 

"We have a lot of difficult work ahead of us. There's still significant details and disagreements to be worked ou ... Read more »

A Delaware first-grader who was facing 45 days in an alternative school as punishment for taking his favorite camping utensil to school can return to class after the school board made a hasty change granting him a reprieve.

The seven-member Christina School Board voted unanimously Tuesday to reduce the punishment for kindergartners and first-graders who take weapons to school or commit violent offenses to a suspension ranging from three to five days.

Zachary Christie, 6, had faced 45 days in an alternative school for troublemakers after he took the utensil — a combination folding knife, fork and spoon — to school to eat lunch last month. Now, he could return Wednesday.

"I want to get him back as soon as possible. I want to put this behind him as soon as possible," said Debbie Christie, Zachary's mother. "But I also want him ... Read more »

WASHINGTON -- The Obama administration's pay czar is planning to clamp down on compensation at firms receiving large sums of government aid by cutting annual cash salaries for many of the top employees under his authority, according to people familiar with the matter.

Instead of awarding large cash salaries, Kenneth Feinberg is planning to shift a chunk of an employee's annual salary into stock that cannot be accessed for several years, these people said. Such a move, the most intrusive yet into corporate compensation, would mark the government's first effort to curb the take-home pay of everyone from auto executives to financial traders.

Feinberg is expected to issue by mid-October his determination on compensation packages for 175 of the most-highly compensated executives and employees at the seven firms he oversees. The companies are: American International Group Inc., Bank of America Corp., Citigroup Inc., General Motors Co., GMAC Financial Services Inc., Chrysler LL ... Read more »

WASHINGTON -- President Barack Obama is confronting a split among his closest advisers on Afghanistan, reflecting divisions in his own party over whether to send in thousands more U.S. troops and complicating his efforts to adopt a war policy he can sell to a public grown weary of the 8-year-old conflict.

With top military commanders and congressional Republicans pushing for a troop increase, Obama pressed key members of his national security team Wednesday for their views during an intense, three-hour session in a packed White House Situation Room.

According to The Wall Street Journal, the discussion focused on the political and security situation on the ground, according to an administration official, with military commanders detailing the gains made by the insurgency and top diplomats discussing the Afghan election results that were marred by fraud claims.

In an interview w ... Read more »

WASHINGTON — The Environmental Protection Agency took steps Wednesday to control the emissions blamed for global warming from power plants, factories and refineries for the first time.

The EPA proposal would require polluters to reduce six greenhouse gases by installing the best available technology and improving energy efficiency whenever a facility is significantly changed or built. The rule applies to any industrial plant that emits at least 25,000 tons of greenhouse gases a year.

These large sources are responsible for 70 percent of the greenhouse gas emissions — mainly carbon dioxide from burning fossil fuels — that are released in the U.S., the EPA said.

"By using the power and authority of the Clean Air Act, we can begin reducing emissions from the nation's largest greenhouse gas emitting facilities without placing an undue burden on the businesses that make up the vast majority of our economy," EPA Administrator Lisa Jackson said. "We know the corner coff ... Read more »

The United States and five other world powers went to the table with Tehran Thursday to discuss its nuclear program, but senior administration officials said the U.S. would not push for sanctions against Iran at the Geneva talks and is prepared to talk one-on-one with Iranian negotiators if such engagement appears "useful." 

The officials also said that while gaining access to inspect Iran's uranium enrichment facility near Qom is "critically important," the U.S. won't walk away from negotiations if Iran refuses.

"Tomorrow is the negotiations track and that is the thrust," a senior official said ahead of the talks. "The thrust is dealing with this nuclear program and trying to get a process underway to address the growing international concern. These will not be easy talks." 

The talks were expected to last the full day. 

If the leader of the U.S. delegation, William Burns, decides direct talks with Iran would move U.S. objectives forward ... Read more »

President Obama met with his national security team Wednesday but did not make a decision on America's reshaped military strategy for the Afghanistan war. 

The meeting -- the first of a series of sessions -- took place in the Situation Room as the White House fended off charges that the president has been stalling on Gen. Stanley McChrystal's request for more troops. 

Obama will not make any decision on an Afghan strategy for at least a few weeks, the White House announced Wednesday night. Obama will reportedly meet again with his national security team to discuss Afghanistan and Pakistan on Oct. 7.

Wednesday's closed-door meeting marked the first time the president has had any interaction with McChrystal, the top U.S. commander in Afghanistan, since the general made the request for up to 40,000 troops. 

Obama spent three hours meeting with staff, according to a senior administration official who spoke on the condition of anonymity. The offic ... Read more »

When it comes to national security, President Obama has a surprising amount of support from the right. 

Despite a recent outbreak of conservative-led criticism toward Obama's handling of the Afghanistan war, the Democratic president has won plaudits from Republicans for his leadership on military matters. 

They roundly reject his economic, environmental, health care and regulatory policies. But until two weeks ago, when Obama demurred at sending more troops to Afghanistan, conservatives largely applauded his conduct of the war -- particularly his early deployment of 17,000 troops and his replacement of Gen. David McKiernan with Gen. Stanley McChrystal. 

"He moved much more rapidly to replace a commander he was dissatisfied with, who was not performing well, than Bush did in his tenure, and all of that looked very good and very promising," said Frederick Kagan, resident scholar at the American Enterprise Institute. 

Karl Rove, former adv ... Read more »

Up against a midnight deadline to avoid a government shutdown, the Senate passed legislation Wednesday that temporarily would extend spending on most federal programs at current levels while raising Congress' budget by 6 percent.

The measure, approved by a 62-38 vote that sends it to President Obama's desk, would keep the government open for one more month. Obama is virtually certain to sign it before day's end.

The legislation also would patch over problems in the struggling postal service and pay for soon-to-expire highway programs for an additional month as well. The stopgap measure is needed because Congress has failed to complete work on the 11 remaining spending bills for agency budgets.

The community activist group ACORN was in line for another hit as Democrats added language saying the organization could not receive federal dollars under the stopgap measure or any prior legislation. ACORN has received federal funds for providing counseling to homeowner ... Read more »

The fate of a government-run health insurance plan may rest in President Obama's hands after the Senate Finance Committee rejected amendments that would include the so-called "public option" in its version of health care reform legislation.

Liberal Democrats failed twice on Tuesday to include a government-run insurance option in the legislation before the committee, the last of five congressional panels completing work on the president's top domestic priority. 

Once touted by Obama as essential in "keeping insurance companies honest," the government plan was blasted by Senate Republicans and moderate Democrats, some of whom argued it would lead to a single-payer system.

The vote to strike down two separate amendments underscored the disagreement among Democrats over the necessity of a public option. Whether Obama will continue to fight for it remains to be s ... Read more »

STATELINE, Nev. —  A wildfire at Lake Tahoe is burning on a mountain within about a half mile of the main casino district in downtown Stateline.

Fire crews responded to about a one acre blaze at about 10:25 a.m. in the tree line behind the casinos in the area of Upper Lake Parkway Drive.

Fire officials say no homes are immediately threatened, however strong winds appear to be pushing the fire northeast toward the residential area of lower Kingsbury Grade.

Wind gusts up to 44 mph have been reported nearby at Edgewood Gold Course.