Obama Poised to Name New Defense, Treasury Chiefs

With the "fiscal cliff" crisis behind him, President Obama is poised to name two new key players to his cabinet, with both announcements expected to come next week.

Obama will name the replacement for outgoing Defense Secretary Leon Panetta as soon as Monday, sources told ABC News. Former Republican Sen. Chuck Hagel is the likely nominee, they said.

Meanwhile, the president is also eyeing a replacement for outgoing Treasury Secretary Timothy Geithner, the longest-serving member of Obama's first-term economic team and one-time lead negotiator for the administration in the "fiscal cliff" talks.

Current chief of staff Jack Lew is all but certain to get the nod for Treasury, according to people familiar with Obama's thinking.

A White House spokesman cautioned that the president has not yet made a final decision on either post, calling reports about Hagel and Lew "merely guessing."

Still, when Obama returns from his Hawaiian vacation on Sunday, he's expected to waste little time filling out his team for a second term.

Geithner has said he would remain at his post "until around the inauguration" Jan. 20, a Treasury spokesperson noted Thursday, putting the department potentially in transition just as the administration confronts the next "cliffs" over the automatic spending cuts and nation's debt limit.

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During an appearance on ABC's "This Week" in April, Geithner said the next Treasury secretary would need to be someone who is "willing to tell [Obama] the truth and, you know, help him do the tough things you need to do."

Lew, a former two-time Office of Management and Budget director and trusted Obama confidant who has held the chief of staff role since early 2012, is the front-runner for the job.

Meanwhile, Sen. John Kerry -- Obama's nominee to replace outgoing Secretary of State Hillary Clinton -- has begun making more regular appearances at the U.S. State Department before his expected confirmation later this month.

His Senate hearings are set to begin shortly after Obama's inauguration, sources say. The administration still expects Clinton to testify about the Sept. 11 Benghazi, Libya, attacks before Kerry is confirmed.

But it is the potential nomination of Republican Hagel that has caused the most stir.

Critics from across the political spectrum have taken aim at the former senator from Nebraska's record toward Israel and what some have called a lack of experience necessary to lead the sprawling Pentagon bureaucracy or its operations. The controversy has set the stage for what would be a contentious confirmation process.

"A lot of Republicans and Democrats are very concerned about Chuck Hagel's position on Iran sanctions, his views toward Israel, Hamas and Hezbollah, and that there is wide and deep concern about his policies," Sen. Lindsey Graham, R-S.C., told "Fox News Sunday."

He would not say whether Republicans felt so strongly as to expect a filibuster of the nomination.

"I can tell you there would be very little Republican support for his nomination," Graham said. "At the end of the day, they will be very few votes."

Still, Hagel, 66, a former businessman and decorated veteran who served in the Vietnam War, has won praise and admiration from current and former diplomats for his work on Obama's Intelligence Advisory Board and Panetta's Policy Advisory Board.

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Why U.S. lives under the shadow of 'W'

Julian Zelizer says former President George W. Bush's key tax and homeland security policies survive in the age of Obama

STORY HIGHLIGHTS

• Julian Zelizer: For all the criticism Bush got, two key policies have survived


• He says fiscal cliff pact perpetuates nearly all of Bush's tax cuts


• Obama administration has largely followed Bush's homeland security policy, he says


• Zelizer: By squeezing revenues, Bush tax cuts will put pressure on spending

Editor's note: Julian Zelizer is a professor of history and public affairs at Princeton University. He is the author of "Jimmy Carter" and of "Governing America."

Princeton, New Jersey (CNN) -- Somewhere in Texas, former President George W. Bush is smiling.

Although some Democrats are pleased that taxes will now go up on the wealthiest Americans, the recent deal to avert the fiscal cliff entrenches, rather than dismantles, one of Bush's signature legacies -- income tax cuts. Ninety-nine percent of American households were protected from tax increases, aside from the expiration of the reduced rate for the payroll tax.

Julian Zelizer

In the final deal, Congress and President Barack Obama agreed to preserve most of the Bush tax cuts, including exemptions on the estate tax.

When Bush started his term in 2001, many of his critics dismissed him as a lightweight, the son of a former president who won office as result of his family's political fortune and a controversial decision by the Supreme Court on the 2000 election.

But what has become clear in hindsight, regardless of what one thinks of Bush and his politics, is that his administration left behind a record that has had a huge impact on American politics, a record that will not easily be dismantled by future presidents.

The twin pillars of Bush's record were counterterrorism policies and tax cuts. During his first term, it became clear that Obama would not dismantle most of the homeland security apparatus put into place by his predecessor. Despite a campaign in 2008 that focused on flaws with the nation's response to 9/11, Obama has kept most of the counterterrorism program intact.

Opinion: The real issue is runaway spending

In some cases, the administration continues to aggressively use tactics his supporters once decried, such as relying on renditions to detain terrorist suspects who are overseas, as The Washington Post reported this week. In other areas, the administration has expanded the war on terrorism, including the broader use of drone strikes to kill terrorists.

Now come taxes and spending.

With regard to the Bush tax cuts, Obama had promised to overturn a policy that he saw as regressive. Although he always said that he would protect the middle class from tax increases, Obama criticized Bush for pushing through Congress policies that bled the federal government of needed revenue and benefited the wealthy.

In 2010, Obama agreed to temporarily extend all the tax cuts. Though many Democrats were furious, Obama concluded that he had little political chance to overturn them and he seemed to agree with Republicans that reversing them would hurt an economy limping along after a terrible recession.

Opinion: Time to toot horn for George H.W. Bush

With the fiscal cliff deal, Obama could certainly claim more victories than in 2010. Taxes for the wealthiest Americans will go up. Congress also agreed to extend unemployment compensation and continue higher payments to Medicare providers.

But beneath all the sound and fury is the fact that the 2001 and 2003 tax cuts, for most Americans, are now a permanent part of the legislative landscape. (In addition, middle class Americans will breathe a sigh of relief that Congress has permanently fixed the Alternative Minimum Tax, which would have hit many of them with a provision once designed to make sure that the wealthy paid their fair share.)

As Michigan Republican Rep. Dave Camp remarked, "After more than a decade of criticizing these tax cuts, Democrats are finally joining Republicans in making them permanent." Indeed, the Congressional Budget Office estimates that the new legislation will increase the deficit by $4 trillion over the next 10 years.

The tax cuts have significant consequences on all of American policy.

Opinion: Christie drops bomb on GOP leaders

Most important, the fact that a Democratic president has now legitimated the moves of a Republican administration gives a bipartisan imprimatur to the legitimacy of the current tax rates.

Although some Republicans signed on to raising taxes for the first time in two decades, the fact is that Democrats have agreed to tax rates which, compared to much of the 20th century, are extraordinarily low. Public perception of a new status quo makes it harder for presidents to ever raise taxes on most Americans to satisfy the revenue needs for the federal government.

At the same time, the continuation of reduced taxes keeps the federal government in a fiscal straitjacket. As a result, politicians are left to focus on finding the money to pay for existing programs or making cuts wherever possible.

New innovations in federal policy that require substantial revenue are just about impossible. To be sure, there have been significant exceptions, such as the Affordable Care Act. But overall, bold policy departures that require significant amounts of general revenue are harder to come by than in the 1930s or 1960s.

Republicans thus succeed with what some have called the "starve the beast" strategy of cutting government by taking away its resources. Since the long-term deficit only becomes worse, Republicans will continue to have ample opportunity to pressure Democrats into accepting spending cuts and keep them on the defense with regards to new government programs.

Politics: Are the days of Congress 'going big' over?

With his income tax cuts enshrined, Bush can rest comfortably that much of the policy world he designed will remain intact and continue to define American politics. Obama has struggled to work within the world that Bush created, and with this legislation, even with his victories, he has demonstrated that the possibilities for change have been much more limited than he imagined when he ran in 2008 or even in 2012.

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The opinions expressed in this commentary are solely those of Julian Zelizer.

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Olympics 100m bottle-thrower 'wanted Bolt to lose'

LONDON: A man screamed abuse at Usain Bolt before throwing a plastic beer bottle on to the track shortly before the men's 100 metres final at the London Olympics, prosecutors said at his trial on Thursday.

Ashley Gill-Webb, 34, pushed his way to the front of an exclusive seating area without a ticket and shouted things like: "Usain, I want you to lose," Stratford Magistrates' Court in east London was told.

As the sprinters went up into the 'set' position on their starting blocks for the race on August 5, Gill-Webb threw the green Heineken bottle on to the track behind the athletes, prosecutors said.

Bolt went on to win the race in 9.63sec to retain his 100m title.

Gill-Webb, from South Milford, near Leeds in northern England, denies two charges of using threatening words or behaviour with intent to cause harassment.

He was confronted by Dutch judoka Edith Bosch then restrained by Olympic volunteers and arrested by police at the Olympic Stadium in east London, the court was told.

After the beer bottle was thrown, Bosch said she had confronted him saying "Dude, are you crazy?"

The judoka, who won a bronze medal at the Games, said in a statement read out in court that she had been "flabbergasted" because what Gill-Webb had done was "so disrespectful".

The court heard that Gill-Webb had suffered manic episodes in 1997 and 1999 and claimed he did not remember throwing the bottle. He was treated at a psychiatric hospital following his arrest.

Prosecutors said his DNA had been found on the bottle and that CCTV showed him throwing it "in a lobbing motion".

Opening the case, prosecutor Neil King said: "In the stadium, along with the many thousands who should have been there legitimately and were watching the race in hushed anticipation, was also Mr Gill-Webb who it is now accepted was unwell at the time.

"His conduct at the time however, the Crown (Prosecution Service) say, was one that was causing harassment, alarm and distress to those around him and his conduct was one that he intended to cause harassment, alarm and distress.

"He had somehow, without a ticket ever being found on him, made his way into very exclusive seats indeed.

"He was mingling with members of the Dutch Olympic team. Indeed he would be within striking distance of a bronze medallist Ms Edith Bosch.

"Whilst there he hurled abuse towards the athletes in the final, particularly towards the eventual winner Usain Bolt."

"This bottle landed extremely close to the athletes and it's probably luck rather than Mr Gill-Webb's judgment that it did not do anything far more serious."

Gill-Webb was granted bail providing that he stays at his home address or at hospital. The case was adjourned until January 11.

- AFP/jc

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Boehner chokes up during speech

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FTC: Google does not violate antitrust laws

Google hasn't violated any antitrust laws, the Federal Trade Commission announced Thursday, but it has agreed to make some changes in how it treats its rivals as part of a settlement to end the 19-month investigation into its business practices.

The FTC's investigation focused on allegations that Google has been abusing its dominance in Internet search. Google's rivals say the company has been highlighting its own services on its influential results page while burying the links to competing sites.

Google Inc. has fiercely defended its right to recommend the websites that it believes are the most relevant.

The FTC said it voted unanimously to close the investigation on whether Google's algorithm unfairly favored itself because there was no evidence that Google violated antitrust laws.

"Although some evidence suggested that Google was trying to eliminate competition, Google's primary reason for changing the look and feel of its search results to highlight its own products was to improve the user experience," FTC chairman Jon Leibowitz said to reporters Thursday.

Google was also investigated for abusing patent protection against competitors like Apple. As part of the settlement, Google is agreeing to license patents deemed to be "essential" for rival mobile devices such as Apple Inc.'s iPhone and iPad, regulators said.

Regulators say Google is also promising that upon request, it will exclude snippets copied from other websites in its summaries of key information, even though the company had insisted the practice is legal under the fair-use provisions of U.S. copyright law.

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Senate Panel Probes Bin Laden Movie Torture Scenes

The Senate Intelligence Committee has launched a new probe to determine how much the CIA may have influenced the portrayal of torture scenes shown in "Zero Dark Thirty," the Hollywood dramatization of the decade-long hunt for Osama bin Laden.

The probe, as first reported by Reuters and confirmed to ABC News by a spokesperson for the committee's chairman, will attempt to answer two questions: Did the CIA give filmmakers "inappropriate" access to secret material and was the CIA responsible for the perceived suggestion that harsh interrogation techniques aided the hunt for America's most wanted man?

In a press release today, Senate Intelligence Committee Chairman Sen. Dianne Feinstein's office said Feinstein, Senate Armed Services Committee Chairman Carl Levin (D.-Mich.) and former Presidential candidate John McCain (R.-Ariz.) – the latter of two are ex officio members of the Intelligence Committee – sent two letters to acting CIA Director Michael Morell in December asking just what the CIA might have told the filmmakers about the effectiveness of enhanced interrogation.

The first letter, dated Dec. 19, focused on the possibility that the CIA "misled" the filmmakers into showing torture as an effective tactic.

"As you know, the film depicts CIA officers repeatedly torturing detainees. The film then credits CIA detainees subjected to coercive interrogation techniques as providing critical lead information on the courier that led to the [bin Laden] compound," the letter says. "The CIA cannot be held accountable for how the Agency and its activities are portrayed in film, but we are nonetheless concerned, given the CIA's cooperation with the filmmakers and the narrative's consistency with past public misstatements by former senior CIA officials, that the filmmakers could have been misled by information they were provided by the CIA."

Two days after the letter was sent, Morell posted a statement on the CIA website explaining that the movie was "not a realistic portrayal of the facts" but said some information did come from detainees subjected to enhanced interrogation.

"...[T]he film creates the strong impression that the enhanced interrogation techniques that were part of our former detention and interrogation program were key to finding Bin Laden. That impression is false," Morell said. "As we have said before, the truth is that multiple streams of intelligence led CIA analysts to conclude that Bin Laden was hiding in Abbottabad. Some came from detainees subjected to enhanced techniques, but there were many other sources as well. And, importantly, whether enhanced interrogation techniques were the only timely and effective way to obtain information from those detainees, as the film suggests, is a matter of debate that cannot and never will be definitively resolved."

The trio of Feinstein, Levin and McCain wrote the second letter on New Year's Eve in apparent frustration with that statement and asked Morell to provide information on what exactly the CIA learned from detainees who underwent harsh interrogation – and if it was learned before, during or after the detainees' ordeals.

A CIA spokesperson told ABC News today the agency had received the letters and "take[s] very seriously our responsibility to keep our oversight committees informed and value[s] our relationship with Congress."

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Look beyond the fiscal cliff

STORY HIGHLIGHTS

• Dean Baker: Budget deficit is not the only top issue in our national economic policy


• Baker: Fiscal cliff debate has been a distraction of the bigger problem of a downturn


• He says fears of big deficits are preventing us from boosting the economy more


• Baker: Given the economy's weakness, the government has to run big deficits

Editor's note: Dean Baker, an economist, is co-director of the Center for Economic and Policy Research, a progressive economic policy organization. He is author of "The End of Loser Liberalism: Making Markets Progressive."

(CNN) -- We have just passed into the new year, and the distractions created by the debate over the fiscal cliff appear to be behind us. Maybe.

That debate has been part of a larger distraction -- the concern over budget deficits at a time when by far the country's most important problem remains the economic downturn caused by the collapse of the housing bubble. The obsession with budget deficits is especially absurd because the enormous deficits of recent years are entirely the result of the economic downturn.

In spite of this, the leadership of both parties has elevated the budget deficit to be the top and virtually only issue in national economic policy. This means ignoring the downturn that continues to cause enormous amount of unnecessary suffering for tens of millions of people.

Dean Baker

But fears of big deficits are preventing us from giving the same sort of boost to the economy that got us out of the Great Depression. The explanation is simple: profits have returned to prerecession levels.

Opinion: Cliff deal hollow victory for American people

This means that from the standpoint of the people who own and run American businesses, everything is pretty much fine. Moreover, they see the deficits created by the downturn as providing an opportunity to go after Social Security and Medicare.

The Campaign to Fix the Debt, a nonpartisan organization involving many of the country's richest and most powerful CEOs, sets out to do just that. It has become standard practice in Washington for Wall Street types and other wealthy interests to finance groups to push their agenda.

The Campaign to Fix the Debt involves the CEOs themselves directly stepping up to the plate and pushing the case for cutting Social Security and Medicare as well as lowering the corporate income tax rate.

It's clear what's going on here. We don't need any conspiracy theories.

iReport: What's your message for Washington?

CEOs from both political parties have openly come together to demand cuts in Social Security and Medicare, two programs that enjoy massive political support across the political spectrum. The wealthy are joining hands without regard to political affiliation to cut benefits that enjoy broad bipartisan support among everyone who is not rich.

President Barack Obama has an opportunity to show real leadership. He should explain to the public the basic facts that all budget experts know: We do not have a chronic deficit problem. The big deficits are the result of collapsed economy. The priority of the president and Congress must be to put people back to work and bring the economy back up to speed.

Fiscal cliff deal: 5 things to know

When the housing bubble burst, annual spending on residential construction fell back by more than 4% of GDP, which is $600 billion in today's economy. Similarly, consumption plunged as people drastically curtailed their spending in response to the loss of $8 trillion in housing bubble generated equity.

There is no easy way for the private sector to replace this demand. Businesses don't invest unless they see demand for their products, regardless of how much love we might shower on the "job creators." In fact, if anything, investment is surprisingly strong give the large amount of excess capacity in the economy. Measured as a share of GDP, investment in equipment and software is almost back to its prerecession level. It is hard to envision investment getting much higher, absent a major boost in demand from some other sector.

This is why it is necessary for the government to run large deficits. Ideally, the money would be spent in areas that will make us richer in the future: Education, infrastructure, research and development in clean energy, etc. There is just no way around a large role for the government given the economy's current weakness.

Big issues still pending

Obama needs to explain this simple story to the country. The rich of both parties will hate him for going down this route. They will use their powers to denounce him. But the American people support Social Security and Medicare, and they support an economy that creates jobs for ordinary workers.

Obama needs the courage to tell the truth.

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The opinions expressed in this commentary are solely those of Dean Baker.

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Pentagon welcomes fiscal deal, warns against cuts

WASHINGTON: US Defense Secretary Leon Panetta on Wednesday welcomed a deal to avert automatic budget cuts that would have slashed military spending and caused "damaging" consequences.

But the Pentagon chief urged more decisive action from Congress to remove the threat of mandatory cuts to defence spending that could be triggered in two months if lawmakers fail to break a stalemate over how to reduce the federal budget deficit.

"Had Congress not acted, the Department of Defense -- along with other federal agencies -- would have been forced to begin taking dramatic steps that would have severely impacted our civilian personnel and disrupted our mission," Panetta said in a statement.

He said he had warned for more than a year of the potentially disastrous impact if the automatic budget cuts, or sequestration, had gone ahead.

"Over the past few weeks, as we were forced to begin preparing to implement this law, my concerns about its damaging effects have only grown," he said.

Until the last-minute agreement was approved on Tuesday, Panetta said he was poised to notify the Pentagon's 800,000 civilian employees of possible rolling furloughs to absorb the budget cuts.

"Congress has prevented the worst possible outcome by delaying sequestration for two months. Unfortunately, the cloud of sequestration remains.

"The responsibility now is to eliminate it as a threat by enacting balanced deficit reduction," he said.

The Defense Department was already "doing its part" by cutting back planned spending by US$487 billion over the next ten years but the "spectre" of automatic cuts of another US$500 billion over the next decade had made it difficult to make budget plans, he said.

"We need to have stability in our future budgets."

Congress voted overnight on a stop-gap agreement that avoided across-the-board tax hikes and automatic spending cuts that had threatened to drive America back into recession.

The agreement, a political victory for President Barack Obama's White House, raised taxes on the very rich and delayed the threat of US$109 billion in automatic spending cuts for two months.

If the mandatory cuts were to enter into force, the Pentagon would be forced to scale back training for troops, slash spending for spy agencies, cancel purchases of some weapons and issue furloughs to large numbers of its vast civilian workforce, officials said.

The defence cuts amount to at least US$52.3 billion for 2013 -- or about 10 per cent across all the armed services -- under mandatory budget reductions, which were designed to be so drastic that Congress would reach a compromise to avoid heading over the "fiscal cliff."

If the automatic cuts go into effect in two months' time, the impact would be even more dramatic as a larger portion of the defence budget for fiscal year 2013 would be spent by then, officials said.

Some sceptics say the Pentagon and the defence industry have overstated the impact of the mandatory budget cuts, and that America's massive military spending needs to be trimmed back.

- AFP/jc

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Hillary Clinton discharged from New York hospital

From Jill Dougherty, CNN

updated 6:59 PM EST, Wed January 2, 2013

STORY HIGHLIGHTS

• NEW: Clinton is "making good progress on all fronts" and has been discharged


• She has been hospitalized since Sunday after doctors found a blood clot in her head


• Clinton has been on the phone and talking with aides, a spokeswoman says


• The 65-year-old secretary plans to step down once the Senate confirms a successor

(CNN) -- Secretary of State Hillary Clinton was discharged from a New York hospital on Wednesday, three days after she was admitted for treatment of a blood clot in a vein between her skull and brain, the State Department announced.

"Her medical team advised her that she is making good progress on all fronts, and they are confident she will make a full recovery," Clinton spokesman Philippe Reines said in a statement announcing her release.

Clinton walked out of New York Presbyterian Hospital accompanied by her husband, former President Bill Clinton, and daughter, Chelsea, for a brief period Wednesday afternoon. She had been admitted Sunday, after doctors found the clot during a medical test related to a concussion she suffered in December.

The secretary is being treated with blood thinners to dissolve the clot, which has not resulted in a stroke or any neurological damage. Doctors expect her to make a full recovery.

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Earlier, State Department spokeswoman Victoria Nuland told reporters that Clinton was in communication with aides and there was nothing new on her condition or treatment.

Clinton "has been quite active on the phone with all of us, but she also made some calls on Saturday to a couple of foreign officials," Nuland said.

Those official calls came before the blood clot was disclosed on Sunday. The first, to the Joint Special Envoy on Syria, Lakhdar Brahimi, lasted a half hour. The second was to the Prime Minister of Qatar, who is also the foreign minister.

"She has begun to pick up her regular phone contact with some of her counterparts," Nuland added.

Clinton, 65, has not been publicly seen or heard from in more than three weeks since falling ill with severe stomach flu and a subsequent concussion that occurred when she fainted because of dehydration, officials said.

Questions also have been raised as to why there was almost a day's delay in explaining the precise location of the clot and why she was administered an MRI, which revealed the problem.

Nuland said officials have been "extremely forthcoming" about Clinton's health.

"We will continue to keep you updated as we have new information to share, as we've been doing all along," Nuland said. "I think that was eighth statement in some three weeks so please bear with us."

Asked how Clinton's illness might affect her plans to testify on Capitol Hill about the deadly September terror attack on the U.S. diplomatic mission in Benghazi, Libya. Nuland did not directly say whether Clinton would appear.

"She has said that she is open to going up to the Hill. We are working with them now on their schedule because there's also a question of when they are going to be in and we will let you know when we have something to share," Nuland said.

Clinton, a former first lady, New York senator and presidential candidate, does not plan to stay on for President Barack Obama's second term, but prefers to remain until her replacement is in place.

Some senators have said they would delay confirmation hearings for her proposed successor, Sen. John Kerry, until Clinton has testified on the Libya attack that killed Ambassador Christopher Stevens and three other Americans.

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Hillary Clinton discharged from hospital

WASHINGTONSecretary of State Hillary Clinton was discharged from a New York hospital Wednesday, after spending 72 hours under observation following the discovery of a blood clot in her head, the State Department said.

In a statement, spokesperson Philippe Reines said: "Her medical team advised her that she is making good progress on all fronts, and they are confident she will make a full recovery. She's eager to get back to the office."

Clinton and her family thanked her medical team "for the excellent care she received," Reines said.

Earlier Wednesday, Clinton had been seen in public for the first time in three weeks when she walked out of the Harkness Eye Institute in New York City and into a secure van along with a smiling Bill and Chelsea Clinton and accompanied by a security detail, reports CBS News correspondent Margaret Brennan.

The State Department had said Secretary Clinton was active in speaking with staff and reviewing paperwork while she continued to recover at New York Presbyterian Hospital.

Clinton was admitted to a New York hospital Sunday and was treated with blood thinners to dissolve a clot in the vein behind the right ear. Doctors found the clot during a follow-up exam stemming from a concussion she suffered in early December. She has been hospitalized for around 72 hours, which is a window of time during which it is possible to establish the proper blood thinner dosage that would be required prior to discharge according to doctors.

Clinton's doctors say there was no neurological damage.

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