This time last year, supporters of George Bush's war on terror were in euphoric mood. As one Taliban stronghold after another fell to the US-backed Northern Alliance, they hailed the advance as a decisive blow to the authors of the September 11 atrocities. The critics and doom-mongers had been confounded, cheerleaders crowed. Kites were flying again, music was playing and women were throwing off their burkas with joyful abandon.

As the US president demanded Osama bin Laden "dead or alive", government officials on both sides of the Atlantic whispered that they were less than 48 hours from laying hands on the al-Qaida leader. By destroying the terrorist network's Afghan bases and its Taliban sponsors, supporters of the war argued, the Americans and their friends had ripped the heart out of the beast. Washington would now begin to address Muslim and Arab grievances by fast-tracking the establishment of a Palestinian state. Downing Street even published a rollcall of shame of journalists they claimed had been proved wrong by a hundred days of triumph. And in parliament, Jack Straw ridiculed Labour MPs for suggesting that the US and Britain might still be fighting in Afghanistan 12 months down the line.

One year on, the crowing has long since faded away; reality has sunk in. After six months of multiplying Islamist attacks on US, Australian and European targets, civilian and military - in Tunisia, Pakistan, Kuwait, Russia, Jordan, Yemen, the US and Indonesia - western politicians are having to face the fact that they are losing their war on terror. In Britain, the prime minister has taken to warning of the "painful price" that the country will have to pay to defeat those who are "inimical to all we stand for", while leaks about the risk of chemical or biological attacks have become ever more lurid. After a year of US military operations in Afghanistan and around the world, the CIA director George Tenet had to concede that the threat from al-Qaida and associated jihadist groups was as serious as before September 11. "They've reconstituted, they are coming after us," he said.

In other words, the global US onslaught had been a complete failure - at least as far as dealing with non-state terrorism was concerned. Tom Daschle, the Democrats' leader in the Senate, was even more brutal. Summing up a litany of unmet objectives in the US confrontation with militant Islamism, he asked: "By what measure can we say this has been successful?" But most galling of all has been the authentication of the latest taped message from Bin Laden himself, promising bloody revenge for the deaths of the innocent in Palestine, Iraq and Afghanistan. This was the man whose capture or killing was, after all, the first objective of Bush's war. And yet, along with the Taliban leader and one-eyed motorbiker Mullah Omar, the mastermind of America's humiliation remains free.

Meanwhile, in Afghanistan itself, the record is just as dismal. By using the heroin-financed gangsters of the Northern Alliance to overthrow the Taliban regime and pursue al-Qaida remnants ever since, the US has handed over most of the country to the same war criminals who devastated Afghanistan in the early 1990s. In Kabul, the US puppet president Hamid Karzai can rely on foreign troops to prop up his fragile authority. There, and in a few other urban centres, some girls' schools have re-opened and the worst manifestations of the Taliban's grotesque oppression of women have gone.

But in much of what is once again the opium capital of the world, the return of the lawlords has meant harsh political repression, lawlessness, mass rape and widespread torture, the bombing or closure of schools, as well as Taliban-style policing of women's dress and behaviour. The systematic use by Ismail Khan, who runs much of western Afghanistan with US support, of electric shock torture, arbitrary arrests and whippings to crush dissent is set out in a new Human Rights Watch report. Khan was nevertheless described by the US defence secretary Donald Rumsfeld recently as a "thoughtful" and "appealing" person. His counterpart in the north, General Dostam, has in turn just been accused by the UN of torturing witnesses to his troops' murder of thousands of Taliban prisoners late last year, when he was working closely with US special forces.

The death toll exacted for this "liberation" can only be estimated. But a consensus is growing that around 3,500 Afghan civilians were killed by US bombing (which included the large-scale use of depleted uranium weapons), with up to 10,000 combatants killed and many more deaths from cold and hunger as a result of the military action. Now, long after the war was supposed to be over, the US 82nd airborne division is reported to be alienating the population in the south and east with relentless but largely fruitless raids and detentions, while mortar and rocket attacks on US bases are now taking place at least three times a week. As General Richard Myers, chairman of the US joint chiefs of staff, puts it, the US military campaign in Afghanistan has "lost momentum".

All this has been the inevitable product of the central choice made last autumn, which was to opt for a mainly military solution to the challenge of Islamist terrorism. That was a recipe for failure. By their nature, terrorist or guerrilla campaigns which have deep social roots and draw on a widespread sense of injustice - as militant Islamist groups do, regardless of the obscurantism of their ideology - cannot be defeated militarily. And as the war on terror has increasingly become a war to enforce US global power, it has only intensified the appeal of "asymmetric warfare" to the powerless.

The grievances al-Qaida is able to feed on throughout the Muslim world were once again spelled out in Bin Laden's latest edict. But there is little sign of any weakening of the wilful western refusal to address seriously the causes of Islamist terrorism. Thus, during the past year, the US has armed and bolstered Pakistan and the central Asian dictatorships, supported Putin's ongoing devastation of Chechnya, continued to bomb and blockade Iraq at huge human cost, established new US bases across the Muslim world and, most recklessly of all, provided every necessary cover for Ariel Sharon's bloody rampages through the occupied Palestinian territories. In most of this, despite Tony Blair's muted appeals for a new Middle East peace conference, Britain has played the role of faithful lieutenant.

Now, even as "phase one" of its war on terror has been seen to have failed, the US shows every sign of preparing to launch phase two: its long-planned invasion and occupation of Iraq. Perhaps some of the intensity of the current warnings about terrorist threats is intended to help soften up public opinion for an unpopular war. But what is certain about such an act of aggression is that it will fuel Islamist terrorism throughout the world and make attacks on those countries which support it much more likely. If such outrages take place in Britain, there can no longer be any surprise or mystery about why we have been attacked, no point in asking why they hate us. Of course, it wouldn't be the innocents who were killed or injured who would be to blame. But by throwing Britain's weight behind a flagrantly unjust war, our political leaders would certainly be held responsible for endangering their own people.

Commentary:
This story is also being carried by Arab New under the headline "How the West fuels global terrorism."

OTTAWA (Reuters) - The fact that a top Canadian official could dismiss President Bush as "a moron" is a telling indication of how far political ties between the world's two largest trading partners have deteriorated over the last 18 months.

The reported insult by Francoise Ducros -- communications director to Prime Minister Jean Chretien -- reflects increasing frustration inside Ottawa with Bush's often unilateral approach to international affairs since he won the 2000 election.

"The fundamental problem with the current administration in Washington is that it's highly unintelligent," one senior Canadian official told Reuters a few days before the comments were made to journalists in Prague during a NATO summit.

Chretien said on Friday that Ducros did not remember making the comments, but had offered in any case to resign. He rejected the offer.

Canada's foreign policy is firmly based on multilateral diplomacy and Ottawa has therefore watched with ill-disguised displeasure as Bush walked away from the Kyoto climate change protocol, the Anti-Ballistic Missile treaty and talks to ban biological weapons.

Canada also objected strongly to the idea of a preemptive U.S. strike on Iraq, fearing this could fatally damage the authority of the United Nations.

"There is enormous cynicism among government ministers about Bush's motives for wanting to attack Iraq," said another well-placed official.

On a personal level there is little love lost between Chretien, who sits firmly on the left wing of the ruling Liberal Party, and the right-wing Republican President.

"I think rancor is a very good word to use and it's partially the effect of certain issues but it's also partially an effect of the personalities of the two leaders," said David Rudd, executive director of the Canadian Institute for Strategic Studies.

Tensions between leaders of the countries have arisen in the past. Former U.S. President Richard Nixon once referred to Canadian Prime Minister Pierre Trudeau as "that asshole" but other relations have been much closer -- such as between Chretien and former President Bill Clinton.

In the wake of the "moron" comments, Canadian ministers were quick to stress the importance of the relationship with the United States.

Bilateral trade is worth around $1 billion a day, with Canada sending 85 percent of its exports south. Law enforcement agencies in the two countries work closely together and Canada sent 2,000 troops to Afghanistan for six months to take part in the U.S.-led war on terrorism.

But the list of irritants is growing. Canada is locked into costly trade disputes with Washington over exports of softwood and wheat and was extremely upset when U.S. officials started fingerprinting Canadian citizens born in a number of Middle Eastern and African countries.

Natural Resources Minister Herb Dhaliwal said the practice showed "the ugly face of America." Earlier this year, Transport Minister David Collenette likened some leading U.S. players to bullies on an ice hockey rink.

"I think the water is lapping at our chins. As long as our mouth and nose remain above the crest of these waves I think we're going to be OK until such times as issues are resolved or perhaps there's a new person occupying 24 Sussex Drive," Rudd told Reuters, referring to Chretien's official residence.

"We have some major differences right now but we are foul weather friends."

Chretien has little time for the U.S. political system and rarely passes up the chance to stress what he sees as the advantages to the way things are done in Canada.

One notable example of this came during a NATO summit in 1997 when Chretien spoke frankly to then Belgian Prime Minister Jean-Luc Dehaene, not realizing his microphone was turned on.

"In your country or my country, all the politicians would be in prison because they (the Americans) sell their votes...(They say) 'If you want me to vote for NATO, then you have to build a bridge for me in my electoral district'," he said. "It's incredible."

Commentary:
So Bush is a moron. What's new here? "Highly unintelligent" was nice way of putting it though.

WASHINGTON (Reuters) - The U.S. government kicked off the new fiscal year in the red, posting a $53.99 billion budget shortfall, the Treasury Department said on Thursday. The gap in the first month of the 2003 budget year was larger than Wall Street analysts had been anticipating and was up sharply from October 2001's $7.66 billion shortfall.

However, October 2001 revenues were inflated by the delay of a corporate tax payment date. As part of the 10-year, $1.35 trillion tax cut enacted by Congress in 2001, one of four quarterly tax dates for companies was pushed from September 2001 to October 2001, artificially boosting the 2002 budget year's revenues by about $23 billion, according to Congressional Budget Office estimates.

In the 2002 budget year, which ended Sept. 30, the government posted a budget shortfall of $157.67 billion, the first annual deficit since 1997.

The 2002 budget gap had originally been reported as $158.52 billion. The Treasury said the revised figure, released Thursday, was due to additional reporting from various government agencies that resulted in less spending.

While the White House is projecting a $109 billion gap for the new budget year, private sector forecasts have ranged up to $200 billion. Economists polled by Reuters prior to the October report's release had forecast a $47.20 billion shortfall for the month.

The return to deficits has led Democrats to fault the Bush administration's economic policies. But the Republican-led administration has blamed the shortfalls on lower revenues due to the weak economy and the falling stock market.

In October, government revenues totaled $124.93 billion, down from $157.16 billion in the same month a year ago. The decline was led by a 13 percent drop in personal individual tax revenues, which along with Social Security monies, make up the bulk of the government's income.

Medicare spending also jumped, rising to $21.68 billion from $17.17 billion, the Treasury said.

Commentary:
Those who don't want to pay for what they spend are called conservatives. And what happened to the idea that conservatives keep telling us about tax cuts increasing revenue? Another lie bites the dust. Private sector economists are projecting a $200 billion this year. Almost as high as it was before Bill Clinton became president Don't be surprised if this Bush records the highest deficits in US history ($290 billion) as he tries to take that honor from his father.

NEW ORLEANS –– Louisiana's 197-year-old sodomy law does not discriminate against gays and lesbians, a state appeals court ruled. The 4th Circuit Court of Appeal ruled 2-1 on Wednesday against a gay advocacy group, leaving Louisiana's sodomy law intact. "This decision continues to put Louisiana outside the mainstream," said John D. Rawls, an attorney for Louisiana Electorate of Gays and Lesbians Inc., which challenged the law. "We are still the only state whose courts deny a right to privacy to its citizens, we are still the only state whose courts have upheld sodomy laws, we are still back in the 18th century unfortunately," he said. The state Supreme Court ruled that the law against oral and anal sex does not violate the right to privacy, based on a state appeal. But plaintiffs had asked the appeals court to consider the trial judge's ruling that the law does not amount to unconstitutional discrimination. The dissenter on the appeals court, Judge Charles R. Jones, had not released his opinion by early Friday. The other two judges, Joan Bernard Armstrong and David S. Gorbaty, said the plaintiffs brought no evidence that the "crime against nature" law discriminates against gays and lesbians. "In the trial case, discriminatory purpose by the lawmaking body was not given," the opinion said. The appeals court also sided with the trial judge in not letting witnesses testify as to the harmful effects of the law on gays and lesbians.

Commentary:
I don't care how you feel about the issue of homosexuality, but this is how conservatives think. The Supremes and the trial judge don't allow testimony on how the law discriminates against gays and lesbians then they use say there's no evidence the law discriminates. Denying equal protection under the law violates the 14th Amendment and without the ability to provide evidence there can be no justice. Justice is supposed to be blind but not ignorant. Conservatives are both.

In the Bush administration, governing is a family matter.

Two weeks ago, the State Department announced that Elizabeth Cheney, the vice president's daughter, would become a deputy assistant secretary of state. Her husband, Philip Perry, last week left the Justice Department to become chief counsel for the Office of Management and Budget. There, Cheney's son-in-law (??) will join OMB Director Mitchell E. Daniels Jr., whose sister, Deborah Daniels, is an assistant attorney general.

That's just the beginning. Among Deborah Daniels's colleagues at Justice is young Chuck James, whose mother, Kay Coles James, is the director of the Office of Personnel Management, and whose father, Charles Sr., is a top Labor Department official. Charles James Sr.'s boss, Labor Secretary Elaine L. Chao, knows about having family members in government: Her husband is Sen. Mitch McConnell (R-Ky.), and her department's top lawyer, Labor Solicitor Eugene Scalia, is the son of Supreme Court Justice Antonin Scalia.

Everybody knows the Bush administration is famously loyal. One reason Bush aides are like family is because some of them are family. Ken Mehlman, the White House political director, regularly calls his younger brother Bruce, an assistant commerce secretary, to get his input. "He's a great adviser -- I trust him like a brother," quips Ken.

Deputy White House press secretary Scott McClellan recently found himself in front of the microphones introducing a member of the president's Council of Economic Advisers, Mark McClellan. Scott called Mark "my older, smaller brother," and Mark replied: "Thanks, my larger brother."

The Bush administration bloodlines begin at the top and flow through the rank and file. Secretary of State Colin L. Powell is the father of Michael Powell, chairman of the Federal Communications Commission. The director of the Federal Trade Commission's office of policy planning, Ted Cruz, is married to a senior official in the U.S. Trade Representative's office, Heidi Cruz. "It's a little bit like having adjoining booths at the county fair," she says.

Also on the fairgrounds are FCC commissioner Kevin Martin, married to Cheney aide Cathie Martin, and Cheney aide Nina Rees, spouse of White House speechwriter Matthew Rees. The brother of National Economic Council staffer John Ackerly begins work later this year on the president's Council of Economic Advisers. OMB spokesman Chris Ullman served in the administration with his wife, Kris, a Justice Department official, until the couple's daughter was born 14 weeks ago. "She's never worked in the administration," he says of the infant.

Then there are the inter-branch families. Chief Justice William Rehnquist's daughter is at the Department of Health and Human Services. Bush is now pushing the Senate to confirm U.S. District Judge Charles W. Pickering as an appellate judge. He's the father of Rep. Charles W. "Chip" Pickering Jr., a Mississippi Republican. If successful, the Pickering duo would join father-son combinations Jim Bunning (a Republican senator from Kentucky) and David Bunning (confirmed last month as a federal judge) and Strom Thurmond (South Carolina Republican senator) and Strom Jr. (new U.S. attorney in South Carolina).

All of this makes for some blending of the governmental and the familial. At Sunday dinner, the three James officials compare notes from their various corners of the administration. "It's a bit of a dinner debate club," Chuck James says.

Some appointments have brought questions of nepotism. Federal law, passed after Robert F. Kennedy was made his brother's attorney general, requires that "a public official may not appoint, employ, promote [or] advance" a relative in an agency "in which he is serving or over which he exercises jurisdiction or control."

Administration officials say the appointees are qualified in their own right. When Attorney General John D. Ashcroft welcomed the 36-year-old Perry to the Justice Department last year, his statement didn't mention Perry's father-in-law, instead citing Perry's "wise counsel and advice." State Department spokesman Richard Boucher denied a report that the deputy assistant secretary position was created for Elizabeth Cheney and said she is "a very highly skilled individual."

Deborah Daniels said she avoids lobbying her brother, who has sway over her agency's budget. "I have my contacts at OMB which are at a different level, frankly, than my brother," she said. When brother and sister returned to Indiana to celebrate Thanksgiving together, OMB was haggling with agencies over budget requests. "There were some amusing jokes around here about what an interesting Thanksgiving we must have had," she said.

The brothers McClellan frequently find themselves in meetings together. They recently sent their proud mother a photo of the two of them briefing the president. Of course, the two are all business at work -- most of the time. "Ask Mark who is the best tennis player," Scott McClellan goads a reporter. Mark McClellan answers defiantly: "I can factually say for the record that he has not beaten me in more than a decade."

Commentary:
Nepotism is a crime but who's going to enforce it when two of the Supremes have children breaking the "law?"

WASHINGTON (Reuters) - The White House and Republicans in Congress are laying the groundwork for a wide range of tax cuts, including a short-term economic stimulus starting near $100 billion, congressional aides and lobbyists said on Tuesday.

But swift passage of new tax cuts was far from certain under arcane Senate rules, which could hold up deliberations for months, and divisions within the White House and Congress over the risk of exacerbating budget deficits.

Emboldened by the Nov. 5 election giving Republicans control of Congress, Bush directed his top economic advisers to come up with short-term stimulus options, hoping to give the lackluster economy a boost and avert a slide back into recession ahead of the 2004 presidential election.

Bush is also pushing longer-term initiatives, top among them making big tax cuts enacted in 2001 permanent.

Some White House officials led by National Economic Council Director Lawrence Lindsey are advocating broad-based tax cuts to shore up businesses and households.

Treasury Secretary Paul O'Neill is more cautious, pushing for more limited, targeted tax relief less likely to send budget deficits soaring.

White House spokeswoman Claire Buchan said Bush had not made up his mind. "The president is continuing to review options. Any plan must create jobs, spur economic growth, and be good for the short-term and the long-term," she said.

TAX PACKAGE MAKEUP

Officials said a final decision on the size and make-up of Bush's tax package would likely depend on how well the economy holds up in the fourth quarter and the pace of consumer spending during the critical holiday shopping season.

"The first question is whether the measures are needed. If you cross that threshold, the question is how bold are you going to be. You have some (administration officials) who are more willing to take the risk of red ink than others," a senior Republican congressional aide said.

Based on preliminary discussions, the components of a short-term stimulus would likely start at nearly $100 billion, which may be spread over two years. It could end up being far more depending on the state of the economy, Republican congressional aides said.

They said a stimulus of less than $50 billion to $100 billion would have little economy impact. "Anything less than that would be window dressing," a senior Republican aide said.

Bush's advisers are considering several options, including accelerating tax breaks for families that are not scheduled to kick in until later and allowing businesses to write off their capital investments faster.

Even though Republicans hold a thin majority, Bush will need at least some Democratic support in order to get the 60 votes he needs under Senate rules to overcome a filibuster.

Bush could get around the 60-vote rule by getting his tax cuts included in the budget Congress approves, but that process could delay Senate action on taxes until the middle of 2003.

Citing these obstacles, business groups are concerned that any short-term stimulus will come too late. "Earlier is certainly better than later," said Bruce Josten, executive vice president of the Chamber of Commerce. "But I think it's going to be hard to have an early legislative result."

MAKE TAX CUTS PERMANENT

In addition to providing a short-term stimulus, Bush will ask Congress to make last year's $1.35 trillion tax cuts permanent. They are set to expire at the end of the decade.

Bush may also resurrect several ideas that were put on hold before the election because moderate Republicans in Congress -- and some of Bush's own economic advisers -- were concerned about how they would be received by voters.

Those include raising the age at which senior citizens must begin withdrawals from retirement accounts; raising limits on how much pretax income can be put into 401(k) retirement accounts and doubling the amount of capital losses investors can deduct from ordinary income.

O'Neill is expected to make a push to simplify the tax code. Lawmakers also plan to overhaul tax breaks that benefit U.S. exporters to bring them in line with global trade rules.

Some Republicans are pushing for more sweeping and costly changes, including reductions in capital gains taxes. But administration officials -- and some business leaders -- have sought to scale back expectations.

"There's a lot on the table, but all of those discussions have to compete against a growing deficit in an atmosphere of declining tax receipts," Josten said

After four years of surpluses, the federal government sunk back into deficits in fiscal 2002. Additional tax cuts, coupled with Bush's threatened war with Iraq, could send the government deeper into the red for the foreseeable future, Democrats say. (Additional reporting by Donna Smith)

Commentary:
If Bush doesn't repeal his tax cut and/or passes a new tax cut there's only one world left for him---Evil. Since the Reagan tax cut in 1981 the US has created $5.2 trillion of debt. That's five times more debt than all previous generations combined. (Prior to Reagan we had less than a trillion of debt). Future generations won't be dropping bombs on defenseless countries in a silly attempt to make them appear great. Instead, every penny they make will go to finance the taxes this generation didn't pay. Evil has another name--conservatism.

Last week, Treasury Secretary Paul H. O'Neill stood before a packed audience at the U.S. Chamber of Commerce to address the continuing scandals of corporate irresponsibility, banking on his own history as chief executive of Alcoa Inc.

"When I was at Alcoa I never sold a single share of Alcoa stock," he said, repeating a claim he had made on CBS's "Early Show" the day before. "I wanted my financial success and the company's success inextricably linked. Other executives should do the same."

But O'Neill did sell Alcoa stock, 662,547 shares in April 1999 worth nearly $30 million, when he was the company's chairman and chief executive. The proceeds were used to pay the tax liability on stock options he had just purchased, said Treasury spokeswoman Michele Davis. And at the end of the transaction, he had more Alcoa stock, unlike many chief executives who have cashed out of the companies they run.

"This was one integrated transaction, and the net result of the transaction was to increase his holdings of Alcoa stock," she said.

Nonetheless, O'Neill's very public and disputable claim about the stock sale reinforces concerns about what critics say is the secretary's propensity to speak first and think about the consequences later.

No one has suggested any impropriety on O'Neill's part. Selling the stock to raise cash for a tax bill was wise and proper, said Stephen Gallagher, chief economist for SG Cowen. But to then say he had made no stock sales underscores an unflattering reputation, he added.

"He doesn't inspire much confidence," said Vincent Farrell, managing director of Spears, Benzak, Salomon & Farrell, an investment management firm in New York. "He seems to put his foot in his mouth and stumble. I don't think he's helping the cause."

Such comments are particularly vexing for the White House at a time when the financial markets are in turmoil and some observers say the administration needs a credible spokesman for its economic policies and its position on corporate malfeasance.

President Bush's tenure as a director of Harken Energy Corp. and Vice President Cheney's term as chief executive at Halliburton Co. are attracting renewed scrutiny. Harvey L. Pitt's effectiveness as chairman of the Securities and Exchange Commission has been questioned because of his prior work with the accounting industry he now regulates. Deputy Attorney General Larry Thompson, the man in charge of the president's corporate-crime "SWAT team," was a director of a credit card company that paid more than $400 million to settle allegations of consumer and securities fraud.

Administration officials "need to bring in someone with real credibility, with a good understanding of economics and who understands politics," said Stephen Moore, president of the Club for Growth, a conservative political action committee. "The administration is going to have to start seriously thinking about stock-market politics in a way that they haven't done yet."

"You need a Rubin-like figure that can talk to business, talk to the financial community, talk to investors, and really steady nerves," said a source with close ties to the White House economic team, referring to President Bill Clinton's Treasury secretary, Robert E. Rubin. "Right now, there is no economic leadership."

Some officials hoped O'Neill would be that point man. A straight-laced, straight-talking industrial chieftain, O'Neill has gotten near-unanimous praise for his stewardship at the world's largest aluminum company, which he took over in 1987 and turned into a model of efficiency, safety and dynamism.

"He was the kind of old-school CEO that we wish we had more of these days," said Sarah Teslik, executive director of the Council of Institutional Investors, which has been highly critical of more flashy executive behavior.

But his role as a spokesman on economic policy has always been problematic. Where Rubin made an art form out of cryptic comments designed to calm the markets, O'Neill prides himself on blunt talk that has at times rattled investors.

In February 2001, a German newspaper quoted O'Neill as saying: "We are not pursuing, as often said, a policy of a strong dollar. In my opinion, a strong dollar is the result of a strong economy." That day, the dollar lost a full percentage point of its value against the euro, and the Treasury rushed out a clarification.

After the Sept. 11 terrorist attacks sent the financial markets into a tailspin, O'Neill surprised Wall Street by encouraging people to buy stocks and predicted, "We will see new records in the not-too-distant future."

Last month, O'Neill sent Brazil's currency and financial markets into a swoon when he said "throwing the U.S. taxpayers' money" at Brazil "doesn't seem brilliant to me." Enraged, Brazilian President Fernando Henrique Cardoso called Bush's national security adviser, Condoleezza Rice, prompting a clarification issued under O'Neill's name.

"Rubin believed you had to be consistent and speak with balance. And from consistency and balance came credibility," said Gary Gensler, a Treasury official during the Clinton administration. "With O'Neill, the only consistency is you don't know what he's going to say next."

Such criticism has followed O'Neill ever since Bush passed over several Wall Street financiers to tap a captain of industry as Treasury chief. But it is returning loudly as the stock market slides.

"Industrialists and captains of industry have not generally been seen as the best people to run the Treasury," said Maury Harris, chief U.S. economist at UBS Warburg. "You would prefer someone from the world of finance."

One Wall Street executive, who describes himself as a longtime friend of O'Neill's, said: "O'Neill is no more suited to this job then I would be to writing for The Washington Post. It's a terrible mismatch."

Treasury spokeswoman Davis dismissed such comments, saying, "Anyone who knows him knows he's spent an awful lot of time on Wall Street."

Privately, administration officials rankle at Wall Street criticism. "When things aren't going well for them, it's nice for them to point their fingers and say, 'You do something about it.' But government doesn't run the economy," one administration official said.

Wall Street executives and some conservatives in Washington are also wondering just where the Treasury secretary has been during the recent stock tumble. During sharp declines in the stock market in late May, O'Neill was touring Africa with rock star Bono. As the stock market swung wildly on Monday, he was discussing Eastern European economic growth in Ukraine.

"Where has O'Neill been during an economic crisis? Africa? Ukraine?" Moore asked.

Davis said O'Neill is not about to change his policies or schedule because of short-term market fluctuations. And even some critics acknowledged a sudden move, such as a hasty return from abroad or an about-face on policy positions, could do more harm than good.

"Understanding how confidence is affected is a tricky thing," said Martin N. Baily, a chairman of Clinton's Council of Economic Advisers. "If they switch tack now, they may look like they're panicking."

Davis said O'Neill's stock sale was a routine transaction to cover a tax liability, not to cash in on high stock prices or to dump Alcoa shares. Teslik said that in the past 15 years, it has become routine for senior executives to be issued one set of stock options as a form of compensation, and another set of "grossing up" options to cover the tax liability when options are exercised.

An option allows an executive to buy company stock at a fixed price, called the strike price, even if the market price of the stock is considerably higher at the time of purchase. But an executive must pay taxes on the difference between the strike price and the market price on the day the option is exercised. O'Neill sold his shares to cover that tax liability.

Because O'Neill never saw the proceeds of the sale, Teslik said she understands his contention that he never sold Alcoa stock.

"Most executives would say they never got the second amount issued to cover taxes because it went to the government," Teslik said. "The average American would say he sold stock. The average executive would not."

But to other experts on executive compensation, the reason for the sale is not relevant to O'Neill's claim that he never sold a single share.

"He didn't sell a share. He sold a lot of shares," said Marc Steinberg, a law professor at Southern Methodist University and a former SEC enforcement lawyer.

O'Neill did eventually sell all his Alcoa stocks and options -- 2.37 million shares -- after joining the Bush administration. He did so from April through June 2001 in response to criticism that he would face a conflict of interest as Treasury secretary if he continued to maintain such large holdings. The sale was worth nearly $100 million.

Commentary:
When is a sale not a sale? It all depends on the meaning of the word "sale."

"No one has suggested any impropriety on O'Neill's part." When did lying become "proper?" The media is so bent on protecting Bush and his cronies that they say lies are not improper. Shame on them.

Ari Fleischer, the White House press secretary, is famous. But I knew him back when he was merely infamous, as chief Republican spokesman on the House Ways and Means Committee. He spoke with a cool, quick certainty, unhindered by any sense of conscience. A profile in GQ--not many Hill staffers receive such attention--dubbed him the "flack out of hell."

The typical press secretary shovels out fairly blunt propaganda, the kind reporters can spot a mile away and sidestep easily. But Fleischer has a way of blindsiding you, leaving you disoriented and awestruck. Once, about six years ago, I called to ask him something about tax reform. Knowing Fleischer, I tried to anticipate his possible replies and map out countermeasures to cut off his escape routes. I began the conversation by bringing up what seemed a simple premise: His boss, Bill Archer, favored replacing the income tax with a national sales tax. Fleischer immediately interrupted to insist that Archer did not support any such thing. I was dumbfounded. Forgetting my line of questioning, I frantically tried to recall how it was I knew that Archer had advocated a sales tax. But in the face of this confident assertion, my mind went blank. "Wha ... uh, really?" I stammered. He assured me it was true. Completely flustered, I thanked him and hung up. I rummaged through my files, trying to piece together my reality. Didn't everybody who followed these things know that Archer favored a sales tax? Yes--here was one newspaper story, and another, and finally a crinkled position paper, authored by Bill Archer, explaining why we needed a national sales tax. Of course he favored it. Fleischer had made the whole thing up.

Most press secretaries "spin." Spin is a clever, lawyerly art, often performed with a knowing wink, which involves casting your boss's actions in the most favorable light. Practitioners of spin don't deny generally accepted facts or contest a reporter's right to ask questions. Rather, they emphasize alternative facts as a way of establishing the difference between what their boss is perceived to have done and what he or she actually did. During the Clinton administration, spin came to symbolize everything reporters loathed about what they saw as a too-clever-by-half presidency. The Washington Post's Howard Kurtz, in his book Spin Cycle, describes Bill Clinton's spinsters as trying "to defend the indefensible," by, for instance, insisting that White House coffees with donors were not "fund-raisers" because the money was raised beforehand.

But what Fleischer does, for the most part, is not really spin. It's a system of disinformation--blunter, more aggressive, and, in its own way, more impressive than spin. Much of the time Fleischer does not engage with the logic of a question at all. He simply denies its premises--or refuses to answer it on the grounds that it conflicts with a Byzantine set of rules governing what questions he deems appropriate. Fleischer has broken new ground in the dark art of flackdom: Rather than respond tendentiously to questions, he negates them altogether.

I. The Audacious Fib

Like any skilled craftsman, Fleischer has a variety of techniques at his disposal. The first is the one he used to such great effect at Ways and Means: He cuts off the question with a blunt, factual assertion. Sometimes the assertion is an outright lie; sometimes it's on the edge. But in either case the intent is to deceive--to define a legitimate question as based on false premises and, therefore, illegitimate. Fleischer does this so well, in part because of his breathtaking audacity: Rather than tell a little fib--i.e., attacking the facts most open to interpretation in a reporter's query--he often tells a big one, challenging the question in a way the reporter could not possibly anticipate. Then there's his delivery: Fleischer radiates boundless certainty, recounting even his wildest fibs in the matter-of-fact, slightly patronizing tone you would use to explain, say, the changing of the seasons to a child. He neither under-emotes (which would appear robotic) nor overemotes (which would appear defensive) but seems at all times so natural that one wonders if somehow he has convinced himself of his own untruths.

One month ago, for example, a reporter cited the administration's recent plan to build an education, health, and welfare infrastructure in Afghanistan and asked Fleischer when George W. Bush--who during the campaign repeatedly bad-mouthed nation-building--had come around to the idea. A lesser flack would have given the obvious, spun response: The Bush administration's policies in Afghanistan don't constitute nation-building for reasons X, Y, and Z. The reporter might have expected that reply and prepared a follow-up accordingly. But Fleischer went the other way, bluntly asserting that Bush had never derided nation-building to begin with. "The president has always been for those," Fleischer said. The questioner, likely caught off guard, repeated, "He's always been for..." when Fleischer interjected, "Do you have any evidence to the contrary?" In fact, Bush had denounced nation-building just as unambiguously as Archer had endorsed the national sales tax. "I don't think our troops ought to be used for what's called nation-building," said candidate Bush in the second presidential debate, to take one of many examples. The offending reporter, of course, didn't have any of these quotes handy at the press conference, and so Fleischer managed to extinguish the nation-building queries.

To take another example, after the coup in Venezuela last month, Fleischer announced that "it happened in a very quick fashion as a result of the message of the Venezuelan people." But once the coup was reversed, the administration's seeming support proved embarrassing. So at the next press conference, a reporter asked Fleischer, "Last Friday, you said that it--the seizure of power illegitimately in Venezuela--`happened in a very quick fashion as a result of the message of the Venezuelan people'; that the seizure of power, extraconstitutionally, that is, dissolution of the congress and the supreme court happened as a result of the message of the Venezuelan people."

Fleischer could have acknowledged the underlying fact--that the Bush administration initially endorsed the coup--but then expressed regret at its anti-democratic turn, a turn that the United States presumably opposed and perhaps even tried to prevent. Instead, he replied, "No, that's not what I said." And indeed, it wasn't exactly what he said--after quoting Fleischer verbatim reacting to the coup, the reporter went on to describe some of the things that happened after the coup. And that gave Fleischer his opening: "The dissolution that you just referred to did not take place until later Friday afternoon," he noted. "It could not possibly be addressed in my briefing because it hadn't taken place yet." By focusing on the latter, subordinate part of the reporter's question, Fleischer negated the verbatim quote of his earlier remarks--and thus neatly cut off discussion of the administration's early reaction to news of the coup.

The problem with this tactic is that it's always possible to get caught in an outright lie. Speaking to reporters on the morning of February 28, for instance, Fleischer said of Middle East peace negotiations under Clinton: "As a result of an attempt to push the parties beyond where they were willing to go, that led to expectations that were raised to such a high level that it turned to violence." The story went out that the administration blamed Middle East violence on its predecessor's peacemaking. That afternoon, Fleischer insisted he had said no such thing. "That's a mischaracterization of what I said," he protested. But Fleischer's earlier statement was too fresh in the press corps's mind to simply deny, and the press continued to hound him. Later in the day he was forced to issue a statement of regret.

What this episode illustrates is that stating unambiguous falsehoods carries certain risks--and no press secretary can afford to have his factual accuracy repeatedly challenged by the press. So while Fleischer may employ this tactic more frequently than most press secretaries, it is still relatively rare--the p.r. equivalent of a trick play in football: While spectacular to behold and often successful, more frequent usage would dilute its effectiveness and risk disaster.

The greater feat is to put yourself in a position where you don't have to lie. This can be accomplished in lots of ways--spinning is the preferred approach for most flacks, but that isn't Fleischer's style; candor, obviously, is out of the question. Fleischer's method of choice is question-avoidance. After all, you can't be accused of answering a question untruthfully if you haven't answered it at all.

II. The Process Non Sequitur

Fleischer has two ways of not answering a question. The first is the non sequitur, a banal statement that, though related to the general topic, sheds no light upon the question at hand. Here, again, Fleischer is an innovator: Whereas most spinners abhor questions about legislative process and try to turn them into questions about their boss's beliefs, Fleischer excels at turning specific questions about Bush's beliefs and intentions into remedial-level civics-class descriptions of process. For example, asked last month if Bush would sign an energy bill that didn't include new drilling in Alaska, here was Fleischer's response in full: "Again, the process, as you know, is the House passes a bill, the Senate passes a bill. And we'll go to conference and try to improve the bill from what the Senate passed. The purpose of energy legislation is to make America more energy-independent. And that's the goal of the conference, in the president's opinion." Will Bush sign a campaign finance bill that doesn't restrict union dues? Fleischer's reply in full: "The president is looking forward to working together to bring people together so he can sign a bill."

At his best, Fleischer can fasten together clumps of non sequiturs into an elaborate web of obfuscation. Last year Bush persuaded GOP Representative Charlie Norwood to back off his own patients' bill of rights just before the other co-sponsors held a press conference, effectively splitting up a bipartisan coalition. Yet patients' rights was popular, and Bush wanted to present himself as supporting the bill he had just scuttled. The task of disseminating this message fell to Fleischer, and the result was inspired. The transcript of that afternoon's press conference reads like dialogue from a David Mamet film:

Fleischer: [W]e're going to be prepared to work with a number of people to get it done. Q: You would work with the people, including the ones who put the bill forward today? Why won't you work with them? Fleischer: Absolutely. Absolutely we will. Q: So why are you asking lawmakers not to go with them, to stay with us? Fleischer: Again, I think the president is just in a position now where we want to begin the process, begin this year working directly with some of the more influential people who have been part of the patients' bill of rights in the past, and we'll continue to do that.

A few minutes later Fleischer stated, "We view what's happening today on the Hill"-- that is, the press conference Bush had pressured Norwood to abandon--"as very helpful to the process." But, a reporter asked, "If it's helpful ... why was Norwood asked not to attend today's event?" Fleischer explained, "I think congressmen decide every day whether they want to co-sponsor bills or not co-sponsor bills." His purpose in this exercise was not to make the press corps see Bush's side of the argument, or even to make any argument at all, but simply to befuddle them with non sequitur nonsense until they ran out of questions.

III. The Rules

After the non sequitur, the other kind of non-answer is more straightforward: the open refusal to reply. This is tricky business. A press secretary, after all, is supposed to provide information to the press, not deny it. The straight rebuff, then, must be couched in terms of some broader principle. And it is here that Fleischer's particular genius is on clearest display. As press secretary, Fleischer has developed a complex, arbitrary, and constantly shifting set of rules governing what questions he can answer. If a reporter's question can be answered simply by reciting talking points about process, Fleischer will comply. If he can't, he will find a way to rule it out of order.

Fleischer declines to answer any question he deems "hypothetical." This, too, is a common press-secretary tactic, but Fleischer has a talent for finding hypotheticals buried in what would seem to be extremely concrete questions. Earlier this year, for example, the administration praised an Arab League resolution supporting the Saudi peace plan, but dismissed as irrelevant a resolution condemning a possible U.S. attack on Iraq. A reporter asked why one Arab League resolution mattered but the other didn't. "I'm not going to speculate about plans that the president has said that he has made no decisions on and have not crossed his desk," Fleischer replied. "That wasn't my question," the reporter retorted. Fleischer insisted: "You're asking about an attack on Iraq, and the president has said repeatedly that he has no plans and nothing has crossed his desk. So that enters into the area of hypothetical." Fleischer redefined a question about something that had happened--the Arab League resolution--into a question about something that hadn't--a U.S. attack on Iraq--and then dismissed the latter as hypothetical.

Perhaps the easiest way for Fleischer to dismiss questions is to suggest that he is not the appropriate person to answer them--something he does with remarkable promiscuity. Do the administration and Pakistan agree on extraditing the killers of Daniel Pearl? "You'd have to ask Pakistan," Fleischer replied on February 25. Did Israel's offensive in the West Bank enhance its security? "That's a judgment for Israel to make," he said on April 16. In short, if a question can be said to pertain to another country, that discharges the White House from having to state an opinion.

Fleischer uses the same technique for discussions of domestic policy. Does the administration want Congress to move ahead with campaign finance reform? "The president does not determine the Senate schedule," Fleischer explained on March 19. "The Senate leadership determines the Senate schedule." (That hasn't stopped the White House from demanding the Senate take up other legislation on numerous occasions.) Does an anti-administration court ruling strengthen the U.S. General Accounting Office's case for demanding energy documents? "That's for the courts to judge, not for me," Fleischer demurred on February 28. What about the recent decision by Stanley Works to relocate to Bermuda, which several members of Congress condemned? "I can't comment on any one individual corporate action." Indeed, Fleischer will even pawn off questions involving other branches of the Bush administration. Asked this spring whether Army Secretary Thomas White has lived up to the standards Bush set out after Enron, Fleischer answered, "Anything particular to Enron, I would refer you to the Department of Justice." What sort of access did GOP donors get to White House officials at a recent fund-raiser? Ask the Republican National Committee, replied Fleischer. Has Colin Powell met with Ariel Sharon? Ask the State Department. Did the administration intervene to allow more pollutants in Alabama? Ask the Environmental Protection Agency. And so on.

When questions cannot be fobbed off on other departments, Fleischer often rephrases them to make them seem so complex and esoteric that he couldn't possibly be expected to answer them. Asked two weeks ago to comment on a blockbuster quote by Bush counterterrorism official Richard Clarke prominently featured in a front-page Washington Post story, he replied, "I do not receive a daily briefing on his verbatim quotes." One year ago Fleischer listed six members of Congress who would appear at an event with Bush. Asked how many were Democrats--this was two months into Bush's tenure, when he was making a big deal of meeting with members of the other party--Fleischer said, "I don't have any breakdown here." (The breakdown was six Republicans, no Democrats.) Last year Fleischer ticked off for the press Bush's legislative priorities. "Where does campaign finance rank in those priorities?" asked one. "I don't do linear rankings," Fleischer replied, as if to suggest that answering the question would require a sophisticated mathematical analysis.

o emphasize his inability to answer these complicated questions, Fleischer occasionally pleads lack of expertise. Last year he touted a drop in oil prices since Bush took office and plugged the president's energy plan. Would the energy plan, which would take effect over the long run, impact short-term prices? "I'm not an economist," he demurred. What does the administration think about an unfavorable court ruling? "I'm not a lawyer." Has Yasir Arafat been elected democratically? "I personally am just not expert enough to be able to answer that question.... That was before I came to this White House."

For any administration, the most damaging information often comes in the form of anonymous quotes from White House staffers. Leaks rarely happen in this administration; but when they do, they are often more damaging for their infrequency. So in order to avoid answering questions arising from such leaks, Fleischer simply denies their veracity. Asked, in the wake of the Venezuelan coup, about a quote in The New York Times attributed to a "Defense Department official," Fleischer went on the attack:

Fleischer: And what's the name of the official? Q: The official is unnamed. But it is-- Fleischer: Then how do you know he's "top"? Q: It says, according to The New York Times. So is this official mistaken? Fleischer: You don't know the person's name? Q: No, I don't know the-- Fleischer: The person obviously doesn't have enough confidence in what he said to say it on the record.... So I think if you can establish the name of this person who now without a name you're calling "top," we can further that. But I think you're--you need to dig into that.

(Fleischer himself, of course, makes a regular practice of speaking to reporters off the record.)

In the even rarer case that an administration official cuts against the party line on the record, Fleischer still manages to come up with a set of rules that enables him not to acknowledge it. A few weeks ago a reporter asked him if Bush agreed with Treasury Secretary Paul O'Neill, who had said he "can't find too many Americans who believe that they are overtaxed." Fleischer enthusiastically replied in the affirmative. The reporter, realizing Fleischer must have misunderstood the quote, helpfully repeated it. "Oh, I'm sorry. I thought your question was--I hadn't heard that Secretary O'Neill said that," Fleischer backtracked, proceeding to declare, "I have a long-standing habit in this briefing room, when a reporter describes to me the statements that are made by government officials, I always like to see those statements myself with my own eyes before I comment." Needless to say, that "long-standing habit" had not prevented Fleischer from commenting when he thought the statement concurred with Bush's own view.

Fleischer likewise reserves the right to close off topics because of timing. This applies first to events that have already taken place. Upon taking office, Fleischer wouldn't comment on allegations (fed by White House leaks) of massive vandalism by departing Clintonites because "the president is looking forward and not backwards." He wouldn't discuss the firing of Army Corps of Engineers head Mike Parker because it was "over and dealt with."

But Fleischer also refuses to address events that have yet to take place. When campaign finance reform moved through the Senate last year, he declined to explain Bush's position: "It's too early, yet, to say." After it passed, and went to the House, Fleischer continued to demur because "[i]t hasn't even made its way through the House yet." After it passed the House, he still wouldn't express a view, because "you just don't know what the Senate is going to do.... There's a lot of talk about will the Senate try to amend it, will they be unsuccessful in amending it? Will the Senate basically take the House bill and put it in a photocopier, and, therefore, send it directly to the president?" Well, a reporter asked, what if they do photocopy it? Fleischer retorted--you guessed it--"I don't answer hypotheticals."

The reporter tried, valiantly, to get an answer one more time, with a query that was clear, nonhypothetical, White House-related, and present tense: "Of the two bills that have been passed, is there any reason to veto either one?" Fleischer's answer? "We're going to go around in circles on this." You can't argue with that.

Commentary:

The mystery of the missing trifecta has been solved. Sort of.

In this space last week, it was noted that President Bush often tells audiences that he promised during the 2000 presidential campaign that he would allow the federal budget to go into deficit in times of war, recession or national emergency, but he never imagined he would "have a trifecta." Nobody inside or outside the White House, however, had been able to produce evidence that Bush actually said this during the campaign.

Now comes information that the three caveats were uttered before the 2000 campaign -- by Bush's Democratic opponent, Vice President Al Gore. The Post's Glenn Kessler found in the archives this promise from Gore: "Barring an economic reversal, a national emergency, or a foreign crisis, we should balance the budget this year, next year, and every year." Gore said that to the Economic Club of Detroit in May 1998, then repeated it at least twice more, in speeches in June and November of that year.

There is still no trace of Bush making such a caveat; in fact, shortly after taking office, he declared that "we can proceed with tax relief without fear of budget deficits, even if the economy softens." On the other hand, Bush can fairly argue that his top economic adviser, Lawrence B. Lindsey, endorsed the caveats during the campaign. When Kessler asked back then about Gore's three exceptions, Lindsey said the same caveats would apply for Bush.

Commentary:
How many times have you heard someone in the press call Bill Clinton or Al Gore a liar? A thousant times? The real liar in chief is Bush and the press continues to protect him

WASHINGTON -- The Department of Health and Human Services' inspector general is facing scrutiny for allegedly politicizing her nonpartisan office, forcing out longtime career civil servants and mishandling a government-issue gun.

Complaints about the performance of Inspector General Janet Rehnquist, daughter of Supreme Court Chief Justice William Rehnquist, have attracted attention from other inspectors general and from Iowa Republican Sen. Charles Grassley, soon to be the powerful Finance Committee's chairman.

The panel has asked the General Accounting Office to investigate why 19 nonpolitical employees in her office -- including five of six deputies -- have retired, quit or been transferred since Ms. Rehnquist took over 15 months ago. People familiar with the office say most left at her insistence or in dismay at the presidential appointee's volatile management style.</>

"They're cleaning out people that were doing their job of exposing things," Mr. Grassley says.

Staffers on Mr. Grassley's committee also are looking into Ms. Rehnquist's possession of an unloaded gun to see if she violated local laws or department rules. Ms. Rehnquist for a while kept the gun in her office -- with a target depicting a menacing assailant affixed to the wall -- until her staff persuaded her to instead practice aiming with a harmless laser gun.

Patrick McFarland, the Office of Personnel Management's inspector general and dean of the government's 57 inspectors general, has said privately that he would ask the President's Council on Integrity and Efficiency, the inspector generals' self-policing body, to look into Ms. Rehnquist's use of the gun, other federal employees say. "My best and only answer is 'no comment' regarding the gun situation," says Mr. McFarland, appointed by the first President Bush in 1990. Of high turnover in her office, he adds: "For any political appointee to come in and eliminate people -- if that's true, it's absolutely improper."

Ms. Rehnquist declined to be interviewed. Given the GAO inquiry, "I believe it would be inappropriate," she said in a statement, adding that she forwarded a reporter's written questions to the GAO. After the GAO inquiry was announced last month, an HHS spokesman said Secretary Tommy Thompson "thinks a management review would find an IG who has a strong record of fighting fraud," but the press office now declines to discuss Ms. Rehnquist on the record.

Every department and major agency has an inspector general; the HHS's 1,600-employee office is the biggest. Created in 1976, it was the model two years later when Congress installed inspectors general government wide. The HHS office is responsible for safeguarding $450 billion-plus in annual spending, including Medicare and Medicaid, giving it a big role in policing health-care fraud. It annually makes cost-saving recommendations totaling billions of dollars, participates in hundreds of criminal prosecutions and bars thousands of entities from government work.

Appointment Raised Questions

By law, inspectors general in big agencies must be appointed by the president and confirmed by the Senate "without regard to political affiliation." Ever since President Bush picked Ms. Rehnquist, critics have questioned if she got the job because of her name. But her supporters say she is a talented lawyer who pursued health-care fraud cases as an assistant U.S. attorney in Alexandria, Va.; she also worked for the first Bush White House and a Senate investigative panel. "I think she's terrific. She's doing everything she's supposed to be doing," says Tom Scully, the HHS official who oversees Medicare and Medicaid, who has known her since they both attended the University of Virginia.

The new inspector general quickly put her stamp on the office, easing antifraud measures and instead emphasizing voluntary compliance. She scaled back the use of "corporate integrity agreements," in which health-care companies found to have defrauded the government acquiesce to strict reporting conditions, saying she was "concerned about [their] financial impact" on providers.

The change has "weakened the system," says June Gibbs Brown, Ms. Rehnquist's predecessor. "It's really giving in to industry." Mr. Scully, the former head of a hospital-industry group, disagrees, noting that Ms. Rehnquist made Lewis Morris, a longtime inspector general official known as an aggressive fraud fighter, her chief counsel.

Ms. Rehnquist, the office's only political appointee, was so suspicious of civil-servant holdovers from the Clinton administration that she had to be talked out of requiring annual loyalty pledges from deputies, people familiar with the office say. New inspectors general usually make changes, but Ms. Rehnquist undertook a wholesale housecleaning, first detailed by Federal Paper, a weekly chronicle of executive-branch dealings. "She's looking for people to be loyal and do what she asks them to do," Mr. Scully says.

Deputy Inspector General Tom Roslewicz, 61 years old, retired a year early after Ms. Rehnquist tried to impose the loyalty pledge and denied him a bonus. "I'm really disappointed after 39 years of service with what's happened at the IG's office," he says. Another deputy, D. McCarty Thornton, 55, left under pressure. Both had won Meritorious Executive Presidential Rank Awards.

Ms. Rehnquist told two other deputies -- Michael Mangano, 56, and George Grob, 60 -- to look for jobs elsewhere and to make themselves scarce in the meantime, giving them token assignments but otherwise making them no-show employees for weeks, people familiar with the matter say. She offered no complaints about their work. Both had won the meritorious award and the more-coveted Distinguished Executive Presidential Rank Award. They now work for the government elsewhere, though Mr. Grob remains on the inspector general's payroll.

A Quick Temper

"I'm really stunned," says Ms. Gibbs Brown, an inspector general at four other agencies under Republican and Democratic presidents. "People have been asked to leave ... with little or no notice."

Ms. Rehnquist may have a quick temper. Several people close to the office say she once called a secretary from an airport, enraged that her reservation hadn't included a seating assignment; she always wants an aisle or exit-row seat. She yelled at the secretary, who explained that assigned seats weren't available when the reservation was made.

Sen. Grassley questions whether Ms. Rehnquist is acting independently of Bush administration superiors and politics. Inspector-general offices shouldn't "dance the tune of the department head or even the president," he says. "I'm just concerned that they have the independence to do their job."

One incident in particular raised eyebrows in the inspector general's office and is being looked into by the Finance Committee.

Florida Audit Postponed

Early this year, inspector general officials decided to audit Florida's pension fund amid indications that the Treasury, which contributes money to the fund for state employees who do federal work, had been overcharged. Shortly before auditors were to meet with state officials to start the process in April, Kathleen Shanahan, Gov. Jeb Bush's chief of staff and a former aide to Vice President Dick Cheney, got word to Ms. Rehnquist that Florida wanted a delay, people close to the inspector general's office said. She granted the request.

Subordinates suspected politics because the delay assured that the audit wouldn't be done until after Election Day, when the governor, who is President Bush's brother, was seeking another term. Two factors fueled the suspicions: Low-level employees typically handle scheduling matters, and the stated reason for the delay was the pending departure of the official who ran the fund -- but that office says it didn't seek the delay. Ms. Shanahan didn't return calls.

Ms. Rehnquist's interest in guns blossomed in June, when she was to accompany Mr. Thompson, the agency head and an avid hunter, to a shooting range for federal agents at Bolling Air Force Base in Washington, people familiar with the matter say. She visited the firing range beforehand with Vicki Shepard, the former head of the inspector general's California office and now deputy inspector general. Ms. Shepard is one of about 400 HHS inspector general employees authorized to carry firearms; the inspector general isn't one of them.

Ms. Rehnquist enjoyed shooting, and soon thereafter Ms. Shepard gave Ms. Rehnquist a government-issue gun, and Ms. Rehnquist hung the target in her office. Asked about it, Ms. Rehnquist told people she used it to practice her aim.

Ms. Rehnquist kept the gun unloaded and locked in a credenza. Underlings became concerned for safety reasons because they considered possession of the gun a violation of District of Columbia law and department policy. It is illegal for almost anyone except authorized law-enforcement agents and dealers to possess a gun in Washington.

Subordinates persuaded her to trade the weapon for a government-issue laser gun that emits a red dot. She since has visited a shooting range used by federal agents near Richmond, Va., and scheduled time at another near Kansas City, Mo.

Commentary:
It appears the second generation is as bad as the first. So much for family values, integrity and character.