Senator Zell Miller (D-GA) has announced that he will not run for re-election in 2004. He has indicated that he would neither endorse nor campaign for any candidate seeking his seat. He made public his intentions now so that people who want to run can begin their preparations.

He indicated that he would resign within days after the November 2004 election so that his successor can begin to serve immediately and gain additional seniority.

Senator Miller came to the Senate in July 2000 when he was appointed by then Governor Roy Barnes (D) upon the death of Senator Paul Coverdell (R). He was elected to the seat with in November 2000. Previously he served for two terms as Governor of Georgia.

We've just posted a piece in the analysis section detailing the outlook for FY2003 Appropriations. The prospects for early passage are quite low given the number of obstacles to be overcome in the opening days of the 108th Congress from simple organization issues to keeping the government funded through a series of Continuing Resolutions. For the whole scoop, check out the piece located here.

U.S. Senate Democratic Leader Tom Daschle of South Dakota announced on Tuesday that he has decided not to run for president at the next election.

"I concluded that I want to be here in the Senate, making a difference for my state and my country," Daschle said in a statement issued by his office.

Daschle's announcement came as something of a surprise since he had been widely expected to join up to a half dozen or so other congressional Democrats in seeking their party's 2004 presidential nomination. An announcement was planned for this weekend in his home of Aberdeen, South Dakota with a fly around the state and the key primary states of Iowa, New Hampshire, South Carolina to follow. In fact, some fellow Democrats were so sure he was running that some had already begun to jockey for position to replace him as the Senate's incoming minority leader.

We've recently posted a brief summary of the US Conference of Mayor's meeting today which includes items of interest on several fronts from welfare reform to TEA-21 reauthorization. Take a look over in our analysis section!

When the 108th Congress convenes tomorrow, process will be the priority. While GOP leaders in both chambers will meet to map out their agendas, they must first tackle many housekeeping issues including the selection of committee chairman.

In the House, candidates for full committee chairmanships and for top Appropriations subcommittee positions came before the Republican Steering Committee yesterday and today to explain why they wished to head committees. No decisions are expected before January 8. The Democratic Steering Committee began its own deliberations today as well.

In the Senate, incoming Senate Majority Leader Bill Frist (TN) and his leadership team were to meet today to discuss the stalled organizing negotiations with Democratic leader Tom Daschle (SD).

One of the first policy tasks Congress is expected to dispense with when it reconvenes is to quickly push through an extension of unemployment benefits that expired shortly after Christmas. President Bush has called for Congress to speedily pass legislation that would resume the extension of unemployment benefits and apply it retroactively to Dec. 29.

In a few weeks, President Bush is to release his new federal budget. After many years of increases in spending for popular domestic programs, the Administration is putting the government on a restrained, wartime budget which would lessen funding for many domestic programs for the foreseeable future.

In the new budget, the President is calling for domestic spending to be held steady at $316 billion, the same as last year. This excludes spending on homeland security. This policy marks a major adjustment of federal priorities in the face of soaring defense spending, new demands for funds to protect the nation against terrorism and stagnant tax revenue. NOTE: Spending on domestic programs funded in annual appropriations bills rose by about 40% in President Bill Clinton's second term with increases for education, natural resources, job programs, transportation and health research.

Democratic leaders have been expressing displeasure that the administration's main motive for the hold on domestic spending is to offset the revenue lost through the president's 2001 tax cut. They also claim the administration wants to cut spending in order to make room in the budget for further tax cuts and new priorities such as Medicare prescription drug benefit for seniors.

The virtual freeze on domestic spending comes as many governors are lobbying for federal assistance to help them weather one of the worst fiscal crises in years. Federal grants and payments to public schools, local law enforcement agencies, universities, research laboratories and state highway departments are crucial to state budgets, which are mostly forced by state constitutions to be balanced each year.

States have asked the White House for a reduction in payroll taxes to spur local spending and for temporary increases in the federal share of the Medicaid low-income health program, and the administration is considering making some relief part of a broad stimulus plan that would include tax cuts.

We've got a special look at the new proposal from the House Democratic leadership to spur the ailing economy. The proposal will focus on five different areas to target job creation and economic growth, with a proposed cost of $100 billion over ten years. House Democratic Leader Nancy Pelosi (D-CA) claims the measure will help create over one million jobs. Be sure to check out the entire measure over on the analysis side of the website.

We understand the House Committee on Transportation & Infrastructure will send to committee members before January 10 a questionnaire to be used for proposing projects for earmarked funding in the upcoming reauthorization of the TEA-21 legislation. Committee majority staff is circulating the draft questionnaire to minority staff today (January 6) for final approval. House Members at large will probably receive the questionnaire shortly after committee members.

As soon as a copy of the questionnaire is available we will post it in the analysis area of our website.

While a variety of leaks and previews have sketched some of the outlines of economic stimulus proposals from the Administration and congressional Democrats, the details will finally emerge on Monday, January 6 (Democrats) and Tuesday, January 7 (Administration).

The two approaches are expected to be different in many respects. The President's biggest ticket item will be a complete repeal of taxes on stock dividends. Other items in his package may include, so-called "bonus depreciation" or partial expensing of investment in equipment, some form of fiscal aid to states (possibly through changes in Medicaid reimbursement) and a retroactive extension in unemployment benefits. The total budgetary cost of the President's package over 10 years will be $600 billion, he said over the weekend. The full details of his plan will come out on the 7th in a speech in Chicago.

The House Democrats' plan, due out on Monday afternoon, will also include the unemployment compensation provisions and some form of fiscal aid to the states. However, the tax breaks proposed by Democrats will focus more on small business and middle income taxpayers. One idea which appears to have been rejected is a payroll tax holiday. Other forms of tax relief will be substituted. The plan, to be announced by incoming Minority Leader Rep. Nancy Pelosi (D-CA), may also include spending for infrastructure as part of a job creation program.

We will report to our clients and friends on the details of these two plans on the 7th after they are both available.

As expected, outgoing House Minority Leader Richard Gephardt (D-MO) will file papers to form a presidential exploratory committee as early as this weekend.

Congressman Gephardt is the second Democrat this week to announce his intention to form such a committee. Yesterday, Senator John Edwards made his entry into the race, following former Governor Howard Dean of Vermont and Senator John Kerry of Massachusetts who both formed committees last month.

This is the congressman's second run for the presidency. Gephardt is expected to do well in Iowa, which he won in 1988. His base consists of blue-collar, union Democrats who will be invaluable in Iowa and in the first primary state of New Hampshire.

Gephardt stepped down as the Democratic leader in November, as he failed to lead the Democrats back into the majority in the House for the fourth time.

Republicans:

• Grassley
• Hatch
• Nickles
• Lott
• Snowe
• Kyl
• Thomas
• Frist
• Santorum
• Bunning
• G. Smith

Democrats & Independent:

• Baucus
• Rockefeller
• Daschle
• Breaux
• Conrad
• Graham
• Jeffords
• Bingaman
• Kerry
• Lincoln

Today, Senator John Edwards (D-NC) announced that he was setting up an exploratory committee with the goal of getting into the 2004 Presidential race. He joins Vermont Governor Howard Dean and Massachusetts Senator John Kerry who have already announced that they are running for the democratic nomination. Other Democrats close to announcing their decisions on a White House run are Senate Democratic leader Tom Daschle, Missouri Representative Dick Gephardt and Connecticut Senator Joseph Lieberman. Senator Bob Graham of Florida has indicated he will decide this month whether to run.

The primary advantage that Senator Edwards has is that thus far he is the only Southerner in the race. No Democrat has won the presidency without winning at least a few southern states. The Democratic ticket has never won the White House without a Southerner or a man associated with the South on it. Edward's regional advantage would be muted if Senator Graham of Florida joins the race.

It's not known yet whether Edwards will defer to run for his Senate seat in 2004. Under North Carolina law, he's allowed to run for both positions simultaneously, but the conventional wisdom is that such a race would be extremely competitive, given the current political makeup of the state and the outcome of the Dole/Bowles race.

In one of his final acts before Governor Granholm took office, outgoing Governor Engler vetoed a bill to create a public transit authority in the Detroit area and surrounding suburbs. The bill had already received at least half a million dollars in federal earmarks from the U.S. House and Senate, and Engler had pledged in May to sign the bill if it reached his desk, angering supporters of the measure. The outgoing governor appeared to kill the bill because of the failure earlier to enact a plan to expland his education plan for the area. From the piece:

In his veto message, Engler said that because southeast Michigan couldn't get its act together on education, it served no purpose to put resources into a regional public transportation system.

On Monday, Engler suffered one of his few legislative defeats when the Senate did not approve a plan for 15 new charter high schools in the city of Detroit. He's been trying for four years to expand the number of charter schools in the state.

"I knew when he didn't get charters on Monday that he would take it out on DARTA," said Karen Kendrick-Hands, president of Transportation Riders United, a Detroit-based group that advocates for bus users in metro Detroit. "His heavy-handed doctrinaire disdain for southeast Michigan makes me grateful for term limits."

Those of us ancient enough to remember the General Revenue Sharing Program (born 1972 - died 1986) are watching with interest the growing interest in a fiscal relief program which would send unrestricted grant funds from Washington to states and cities. Such a program may well slip into an economic stimulus package Congress and the Administration will work on early in the 108th Congress.

We reported recently on the proposal from incoming Senate Finance Committee Ranking Member Sen. Max Baucus (D-MT) proposing a one-time $75 billion relief program for the states. In the Washington Post of December 31, columnist E.J. Dionne pours more fuel on the fire with a thoughtful op-ed piece containing some of the arguments for such a program. The article mentions that incoming Governors such as Ed. Rendell (D-PA) and Jennifer Granholm (D-MI) might be expected to lead the charge for such legislation.

For a detailed economic analysis of the old General Revenue Sharing Program and the implications of a new program check out this policy paper from the Economic Policy Institute, written before September 11th, yet still applicable in the current economic environment. Many of the same problems exist today, and the revenue-sharing solutions are more likely to be implemented now that state and local budgets are being increasingly pinched for funds.

This could emerge as the key issue of 2003 for states and cities and we will stay on top of it.

On December 28, 800,000 Americans ran out of benefits in the Unemployment Compensation program. According to the AFL-CIO, an additional 95,000 workers will lose benefits each week unless action is taken. Recent statements by congressional leaders and the White House have made it clear that a proposal to extend benefits will be considered as the first order of substantive business when Congress reconvenes on January 6.

In recent weeks, fingers have been pointing all around Washington as the Administration and key Members of Congress seek to place blame for the current problem. This much can be stated as fact: before departing in December, both the House and Senate had passed bills to extend unemployment benefits. The Senate bill would have maintained current benefits for unemployed people for another three months. The House version would have cut the amount each family received and extended benefits for five weeks. Each side has blamed the other for the failure to enact a final version.

After Congress left town, President Bush weighed in with a statement that he thinks benefits should be broadly extended and the extension should be retroactive to December 28. Assuming this position is adopted by the GOP leadership on Capitol Hill, it would appear a solution can be worked out quickly.

Our guess is that this legislation will reach the President's desk by the end of the first week of the 108th Congress. Stay tuned.