WASHINGTON – Despite a vaguely worded veto threat by President Barack Obama, the House was expected Thursday to easily adopt a major defense policy bill that calls for continued development of a costly alternative engine for the Pentagon’s next generation fighter jet.

The move comes as the House debated the annual defense authorization bill to guide the Pentagon budget for the fiscal year that began last week.

After House approval, the measure would go to the Senate for final congressional action and then on to the White House for Obama’s signature.

Obama’s veto threat involves a program to develop an alternative engine for the F-35 Joint Strike Fighter, the Air Force’s multi-mission fighter for the future. The second engine would be built by General Electric Co. and Rolls-Royce in Ohio, Indiana and other states. The main F-35 engine is built in Connecticut by Pratt & Whitney.

The administration promised in June to veto the legislation if it would “seriously disrupt” the F-35 program, a vague test at best. It says that spending on a second engine is unnecessary and impedes the progress of the Joint Strike Fighter program. The legislation recommends $560 million for the program in 2010. The Pentagon says the Pratt & Whitney engine is performing well and that the second engine adds unnecessary costs and would delay the program. Supporters of the program say it provides competition that would boost contractors’ performance and tamp down costs.

Lawmakers have parsed the Obama threat and decided not to take it seriously.

“I think if they … were going to carry it out, they would have been more explicit,” said Rep. John Spratt Jr., D-S.C., a senior member of the Armed Services Committee.

“It would be a shock to me” if Obama vetoed the measure, said the panel’s top Republican, Howard “Buck” McKeon of California. In fact, the Pentagon is already backpedaling.

“Our position on this is that if the final bill … calls for further investment in the second engine, the department will carefully evaluate the impact on the overall Joint Strike Fighter program before making recommendations to the president about whether or not to veto the legislation,” said Pentagon spokesman Bryan Whitman.

Obama and Defense Secretary Robert Gates, however, did prevail in a battle to kill the over-budget F-22 fighter program, which has its origins in the Cold War era and is poorly suited for anti-insurgent battles in Iraq and Afghanistan.

The compromise measure also heeds Obama’s call to terminate the VH-71 replacement helicopter program for the presidential fleet. The program is six years behind schedule, and estimated costs have doubled to more than $13 billion.

The $680 billion measure doesn’t actually fund the Pentagon’s budget but provides policy guidance that is typically followed closely by the appropriations committees.

It also approves Obama’s $130 billion request to conduct the wars in Iraq and Afghanistan.

The legislation approves a 3.4 percent pay raise for military personnel, a half-percentage point over the president’s request. The measure also prohibits any transfer of detainees held at the Guantanamo Bay prison into the US until 45 days after the Obama administration submits a comprehensive plan for closing the controversial prison.

Republicans were irate that the so-called hate crimes legislation was attached to the bill. It would give people attacked because of their sexual orientation or gender federal protections and significantly expands the reach of hate crimes law.

The measure also would make it easier for federal prosecutors to step in when state or local authorities are unable or unwilling to pursue hate crimes.

“I’m in a dilemma today,” said Rep. John Carter, R-Texas, adding that enclosing the hate crimes legislation in a bill supporting the U.S. military would force people to vote against their beliefs.

“It is simply inappropriate to use a defense bill as a vehicle for divisive, liberal social policies, wholly unrelated to our countrys national security,” said Rep. Mike Pence, R-Ind.

WASHINGTON  – The White House is turning to the Internet to hit back at a Web posting that claims to show President Barack Obama explaining how his health care reform plans eventually would eliminate private insurance.

The 3-minute White House video features Linda Douglass, a former network television correspondent and now White House Office of Health Reform communications director, sitting in front of a computer screen showing the Drudge Report Web site. That site carries a series of video clips from another blogger who strings together selected Obama statements on health care to make it appear he wants to eliminate the private health insurance business.

In the video Douglass says the site is “taking sentences and phrases out of context, and they’re cobbling them together to leave a very false impression.”

Separately Tuesday, the leading health insurance trade group hit back at Democrats’ growing criticism of the industry. Karen Ignagni, president of America’s Health Insurance Plans, contended the attacks were motivated by increasing public doubts about the introduction of a new public insurance plan to compete with the private market. Obama and Democrats support such a plan but insurers contend it would drive them out of business.

People in the health insurance industry “do not deserve to be demonized or vilified as part of a campaign to distract attention away from the sinking support for a government-run program,” Ignagni said on a media conference call.

Ignagni did not name names and declined to say whether her group, which has been working with lawmakers and is running positive TV ads supporting bipartisan health reform, would walk away from the table or go negative against Obama’s agenda. She said insurance industry employees were being encouraged to attend town hall meetings being held by members of Congress this month to make their views known.

In recent weeks Obama has taken to referring to his health care overhaul initiative as “health insurance reform” instead of “health care reform.” House Speaker Nancy Pelosi, D-Calif., and other congressional Democrats have noticeably heightened their attacks on the health insurance industry, with Pelosi accusing insurers last week of making “obscene” and “immoral” profits.

WASHINGTON  – President Barack Obama’s chief spokesman says the popular cash for clunkers rebate program may not survive beyond Friday if the Senate doesn’t provide a $2 billion cash infusion.

The program ran out of money last week. The House voted to provide another $2 billion before leaving for summer break last Friday. But the Senate must also vote before its August vacation starts Friday.

White House spokesman Robert Gibbs says the rebate program is up and running. He says anyone who wants to trade in a less fuel-efficient vehicle for a higher-mileage one should do so.

But if the Senate fails to act by Friday, Gibbs says it’s unlikely the program will be available next weekend and beyond.

RALEIGH, N.C.  – Contractors with unsold homes would get more time to pay property taxes on them in a bill approved by North Carolina lawmakers.

The House agreed by a wide margin Thursday to allow construction firms to defer local property taxes on homes they’ve been unable to sell for up to three years.

Legislative staff says the bill could delay $35 million in taxes during the first year of the program, which expires in 2013.

Co-sponsor Rep. Harold Brubaker of Randolph County said the deferral would help struggling home builders that are otherwise the backbone of the economy. Rep. Leo Daughtry of Johnston County voted no because he said it would cost his county $1 million in delayed revenues.

The measure now goes to the Senate.

RALEIGH, N.C.  – The state Senate has approved a stopgap spending measure for North Carolina state government if budget negotiations with the House don’t wrap up before July 1.

The Senate agreed Tuesday to approve a so-called “continuing resolution” to allow government to keep operating past the end of June without a final budget in place.

The bill now goes to the House for consideration.

It tells Gov. Beverly Perdue to keep spending levels at no more than 85 percent of what was allocated in the past year’s budget because lawmakers are reducing spending due to declining tax collections.

The temporary spending plan is unusual because there is no expiration date. And the Senate rolled out the “resolution” early – a week before the fiscal year ends.

RALEIGH, N.C.  – A House panel has rejected a bill that would have given a $6,000 annual tax credit to North Carolina parents who put their special-needs children in private school.

The House Education Committee voted 26-21 on Tuesday against approving the measure.

Supporters such as GOP Rep. Paul Stam of Wake County said the tax credit would help families when the public schools can’t meet the needs of a child with disabilities.

Education groups representing teachers, school administrators and boards opposed the idea, saying it’s better to keep investing in public education to help these children.

Stam said the credits would actually save government millions of dollars overall for the public schools in the cost of teaching children.

RALEIGH, N.C.  – Their marathon budget week now over, House Democrats soon must get to work again on crafting a compromise with their Senate counterparts over the right mix of spending cuts and higher taxes.

The negotiation clock started early Saturday when the state House gave final approval after midnight to its $18.6 billion budget for state government next year that would include taking in $784 million more taxes.

The bill passed on a largely party-line vote of 64-53 following a three-hour debate during a rare Friday night session.

Democrats who drew up the House plan called it a balanced approach to handle the state’s worst fiscal situation in a generation: more than $2 billion in cuts, combined with the taxes and federal stimulus money.

“With the new revenues focused squarely on education and helping those who genuinely need our help, we have avoided the worst of the cuts,” said House Speaker Joe Hackney, D-Orange.

The House tax package would raise the sales tax by a quarter-penny so that most residents would pay 7 percent. It would also add two new marginal income tax rates for the wealthy and create or raise taxes on liquor, movies and digital downloads.

Passage of the House plan allows Democrats in the House and Senate to begin negotiating a final two-year spending plan in earnest in the coming week. The Senate passed a budget bill in April. Senate Democrats are lobbying hard for their own tax package that would raise more revenues but change dramatically sales and income taxes and lower their rates.

Democratic Gov. Beverly Perdue wants to have input on the bill, and wants it ready to sign before the new fiscal year begins July 1, but that deadline will be hard to meet.

“I’m expecting it to be a long process,” said Rep. Mickey Michaux, D-Durham, senior co-chairman of the House Appropriations Committee. “I’m hoping that it’s not.”

The competing House and Senate plans are far apart in sheer size, the result of the Senate drawing up its proposal weeks before lawmakers were told dwindling tax collections had deepened the budget hole by $1.5 billion.

House Democratic negotiators may have an advantage at the bargaining table since their proposal was based on the more realistic tax projections. The outcome will depend largely on what level of additional taxes lawmakers believe they can bear politically and citizens can bear in their wallets.

Regardless, some cuts are more likely to take effect because they appear in both plans. They include:
- Elimination of funding to pay salaries for 3,400-6,000 public schoolteachers as average class sizes are increased.
- Elimination of an undetermined number of vacant and filled jobs within state government. Remaining employees should expect no pay raises, and furloughs are possible.
- Coverage reductions for Medicaid patients and frozen or decreased payments for doctors who treat them.
- Closing of several prisons.
Michaux said a key fight in negotiations may center on the University of North Carolina system, which historically has had strong allies in the Senate.

Any tax hikes carry political risks.

“A lot of folks in my area that contacted me, they couldn’t afford additional taxes at this time,” said Rep. Van Braxton of Lenoir County, one of two Democrats who voted with the Republicans in opposing the House budget bill.

And raising income tax rates that are already the highest in the southeastern U.S. may be a deal-breaker for some Democratic senators who believe it would discourage companies from moving to the state. The rate was raised temporarily in 2001 but didn’t expire for six years.

“I’ll never vote for that – ever, never,” Sen. David Hoyle, D-Gaston, one of the authors of the Senate tax plan, said recently. “It’s just anticompetitive.”

Republicans, who are in the minority in both chambers, have argued unsuccessfully the budget could be balanced without new taxes that would delay the economy’s recovery.

“I am convinced there are hundreds of millions of dollars in cuts that wouldn’t harm citizens,” said House Minority Whip Thom Tillis, R-Mecklenburg.

Negotiations begin as more outside groups try to step up pressure on legislators.

Together NC, a coalition of more than 80 nonprofits and service providers, scheduled a Monday evening rally outside the Legislative Building to urge lawmakers to consider more taxes.

The American Beverage Institute said it would run full-page ads in the state’s two largest newspapers Sunday to oppose the House proposed 1.5 percent tax increase on liquor.

Lawmakers have already raised taxes on liquor this decade.

“Now they want to tax your drink even more to pay for their bloated budget,” one ad reads. “Tell legislators it’s time they cut spending, rather than taxing your cocktails.”

RALEIGH, N.C.  – House Democrats have been largely unifiedwhen it’s counted as a budget proposal for North Carolina government makes its way through the chamber.

Their big test comes Friday night when the House meets to vote on an $18.6 billion spending plan that would raise taxes by more than $780 million next year.

On Thursday, the House voted to add the tax package to the budget because they said the revenues would ease the most painful spending cuts. Only one Democrat voted no with the Republicans as it passed 64-52.

Democrats had disagreed earlier this week over the level of taxes they would be willing to accept.

Two votes are required for the budget. The second would occur just after midnight Friday.

RALEIGH, N.C.  – The House will consider a nearly $18 billion budget proposal for North Carolina state government next year that would grow if a $940 million tax plan is also approved.

The chamber’s two largest committees are expected Tuesday to consider the spending bill for the next two years and a separate tax package that would increase sales and income tax rates and taxes on cigarettes and alcohol.

Rep. Paul Luebke of Durham County is the chief architect of the tax package. He said additional revenues would target cuts in education and health care that lawmakers and advocates consider the most onerous.

House Democrats are in the majority and want a budget approved by the end of the week. Republicans say they won’t support higher taxes.