By BRAD SCHILLER

"I can make a firm pledge . . . no family making less than $250,000 a year will see any form of tax increase." Remember that? It was Barack Obama, campaigning to become president last Sept. 12 in Dover, N.H.

Indeed, he promised repeatedly that 95% of American families would get a tax cut. So it’s especially fitting that he chose April Fools Day to implement his first tax increase — which will fall mostly on individuals and families who do not make anywhere near $250,000 per year.

Early in February, the president signed a law to triple the federal excise tax on cigarettes — which will jump from 39 cents per pack to $1.01 today. His administration projects this tax hike will bring in at least $38 billion over the next five years.

If you don’t smoke, maybe you don’t care. Maybe you even think a higher "sin tax" is a good thing. But health issues aren’t the only concern here. There are also questions of fairness, federalism, macroeconomic impact, and crime.

The fairness issue is particularly troubling. According to the Centers for Disease Control and Prevention, only one in five Americans smokes, so the excise targets a minority — and over half of all smokers are low income, and one of four are officially classified as poor.

Mr. Obama prefers to tout his tax cuts for low-income households. But his "stimulative" Make Work Pay tax cut gets dribbled out at $8-$10 a week. A pack-a-day smoker will pay half of that back in higher cigarette taxes. Smokers getting welfare, unemployment or disability checks instead of paychecks won’t get as much in tax cuts, but they will still pay the whole cigarette tax increase. Anyone concerned about widening income inequality should have second thoughts about this distribution of the tax burden.

We should also note how this tax increase affects state finances. State governments rely on their own cigarette excise taxes for hefty revenue streams. In 2008, according to the National Tax Foundation, state governments took in $15.4 billion in cigarette taxes. Hard-hit Michigan, Pennsylvania, and California each took in over $1 billion; New York and Texas took in $1.5 billion each.

Higher taxes discourage cigarette sales. Nobel economist Gary Becker pegs the long-run price elasticity of demand for cigarettes at 0.8 — i.e., a 10% increase in price causes an 8% decline in unit sales. The Obama tax hike translates into a 13.3% increase in the average pack price. That implies a 10.6% decline in unit sales — which the National Tax Foundation has calculated adds up to a $1 billion overall revenue loss for hard-pressed states.

Because Southern states have low tax rates (most less than 40 cents per pack), the federal tax hike raises their cigarette prices by a larger percentage and thus cuts deeper into their unit sales. New York, by contrast, has the highest state taxes ($2.75 a pack) and prices, so it gets hit less in percentage terms. The Tax Foundation estimates a 12.6% revenue loss for South Carolina this coming fiscal year, and a 6.7% loss for New York.

None of this is good for the economy. Consumers and state governments are already having a tough time making ends meet. Burdening them with a new $38 billion tax and a $1 billion cut in revenues isn’t going to help create jobs. Estimates by the National Association of Tobacco Outlets of the job losses in cigarette manufacturing and distribution alone exceed 100,000.

Smugglers and counterfeiters won’t lose their jobs, though. Both the General Accounting Office (GAO) and the Alcohol, Tobacco, and Firearms (ATF) agency have concluded that the multibillion-dollar cigarette-smuggling business grows with every excise tax increase. The ATF and GAO also believe that cigarette-smuggling is a form of cash laundering and profits for both organized crime and terrorist organizations.

Clearly, we were fools to believe that if we weren’t wealthy, Mr. Obama wasn’t going to raise our taxes. We’ll be even bigger fools if we acquiesce to further tax increases of this kind.

By JAY SOLOMON

WASHINGTON — President Barack Obama appealed directly to the Iranian government and its people to forge a new relationship with the U.S. in a sign of his administration’s intensifying efforts to use diplomacy to end Tehran’s nuclear program and support of Middle East-based militant groups.

Mr. Obama sent a videotaped message Friday to the people of Iran marking the celebration of Nowruz, a Persian holiday signaling the arrival of spring. He said in his message that the festivities could mark a "new day" of relations between Washington and Tehran if Iran’s leadership seized on his overtures for engagement.

"My administration is now committed to diplomacy that addresses the full range of issues before us, and to pursuing constructive ties among the United States, Iran and the international community," Mr. Obama said in the message. "This process will not be advanced by threats. We seek instead engagement that is honest and grounded in mutual respect."

The White House said the video with Farsi subtitles is being given to select news outlets with reach in the region, under an embargo to air at 8 a.m. Iran time. At the same time, the video will be available online in English with Farsi captions.

Mr. Obama campaigned on a platform of engaging American adversaries, such as Iran, Syria and Russia, in a bid to stabilize many of the region’s hot spots. Since taking office, he has taken increasingly direct steps to forge a dialogue with Tehran that has largely been frozen since an Islamist movement overthrew the U.S.-backed Shah in 1979.

In recent weeks, Mr. Obama’s government has invited the Iranian government to an international conference on Afghanistan that is to be convened in the Netherlands on March 31. U.S. diplomats are also joining Iranian diplomats at a Russian conference on Central Asia next week in Moscow. According to American officials, Mr. Obama’s administration is considering lifting a 40-year ban on most contacts between American and Iranian diplomats.

"So on the occasion of your New Year, I want you, the people and leaders of Iran, to understand the future that we seek," Mr. Obama said. "It’s a future with renewed exchanges among our people, and greater opportunities for partnership and commerce. It’s a future where the old divisions are overcome."

By DAVID K. REHBEIN

‘If you were injured in Iraq or Afghanistan and you have not paid your co-pay, please press 1. If you were injured during military training and you have not yet reached your deductible, please press 2. If your family has reached its maximum insurance benefit, please call back after you have purchased additional coverage. Thank you for your service."

Before the leaders of other veteran’s groups and I met with President Barack Obama at the White House on Monday, I believed a phone call like the one described above unimaginable. Now it seems all too possible.

President Obama made clear during our discussion that he intends to force private insurance companies to pay for the treatment of military veterans with service-connected disabilities. He is trying to unfairly generate $540 million on the backs of veterans.

The proposed requirement for private companies to reimburse the Department of Veterans Affairs (VA) would not only be unfair, but would have an adverse impact on service-connected disabled veterans and their families. Depending on the severity of the medical conditions involved, maximum insurance coverage limits could be reached through treatment of the veteran’s condition alone. That would leave the rest of the family without health-care benefits.

Currently, when veterans go to a VA hospital or related health-care facility for treatment of a service-connected disability, they receive the care without any billing to the veterans or the veterans’ insurance. (On the other hand, those veterans who choose the VA for the treatment of nonservice-connected disabilities pay a co-pay, and the VA bills private insurance companies reasonable charges.)

Perhaps nobody would be hit harder by the Obama administration’s proposal than the thousands of veterans who own small businesses. Not only will their private insurance premiums be drastically elevated to cover service-connected disabilities, but many will be forced to cut staff as a result. The unemployment rate for veterans may climb even higher, as businesses avoid hiring these heroes for fear of the impact they would have on insurance rates.

This plan is as unfair as it is unnecessary. According to the U.S. Constitution, it is the president and Congress who send troops in harm’s way, not the CEO of Blue Cross Blue Shield.

As head of the nation’s largest veterans organization, I was startled by this radical shift of position the president has taken. Last October, candidate Obama listed several proposals he had for the VA and none of them included billing veterans’ insurance providers.

In fact, when asked how he would improve the funding formula for the VA’s health-care system, then-Sen. Obama told the American Legion Magazine, "It starts with the president saying that if I’m budgeting for war, then I am also budgeting for VA. If I’ve got a half-a-trillion-dollar Pentagon budget, then I’d better make sure that I make some of those billions of dollars available to care for the soldiers once they come home. It should be a non-negotiable proposition that people are receiving the services that they need. This is the reason I joined the Veterans Affairs Committee — because I believe deeply in that principle."

So I ask President Obama now, for all America’s veterans, where is that principled stance today? By abandoning its responsibilities to the heroic men and women who answered our nation’s call, the federal government is breaking a sacred promise. Moreover, it is unnecessary.

The 2.6 million member American Legion has long advocated for Medicare to reimburse the VA for its treatment of Medicare-eligible veterans. Veterans pay into the Medicare-system, yet they are unable to use Medicare benefits in the VA health system, which was created specifically for them. The Indian Health Service is successfully billing and collecting needed revenue for both Medicare and Medicaid. We also believe that direct billing between two federal agencies will reduce the opportunities for waste, fraud and abuse that tend to occur when for-profit corporations enter the mix.

Our military veterans have already served this country. They have given us their blood, sweat and devotion. Under President Obama’s proposal, the most severely wounded veterans could easily exceed their maximum insurance benefit, leaving their family without any additional coverage. This is hardly the thanks of a grateful nation.

Mr. Rehbein, a former U.S. Army sergeant of the Vietnam War era, is national commander of the 2.6 million-member American Legion, the nation’s largest wartime veterans organization.

Rep. Maxine Waters, center, with Earvin "Magic" Johnson, left, and Ms. Waters’s husband, Sidney Williams, at the 2009 BET Honors Reception in Washington, D.C.

By SUSAN SCHMIDT

WASHINGTON — When Rep. Barney Frank was looking to aid a Boston-based lender last fall, the Massachusetts Democrat urged Maxine Waters, a colleague on the House Financial Services Committee, to "stay out of it," he says.

The reason: Ms. Waters, a longtime congresswoman from California, had close ties to the minority-owned institution, OneUnited Bank.

Ms. Waters and her husband have both held financial stakes in the bank. Until recently, her husband was a director. At the same time, Ms. Waters has publicly boosted OneUnited’s executives and criticized its government regulators during congressional hearings. Last fall, she helped secure the bank a meeting with Treasury officials.

Her involvement isn’t new. Ms. Waters has detailed her financial ties in a series of federal disclosure forms and has been vocal in public in support of the bank. Those ties, however, have received little public attention. Nor is it well known how the influential lawmaker has over the years acted to support the bank and its executives.

Such potential conflicts of interest are more serious as the banking system’s crisis has led the government to take an increasingly active role in overseeing financial institutions, including OneUnited. The financial-services committee on which Ms. Waters sits oversees banking issues, and the lawmaker is a potential future chairman.

Representatives of the bank and Ms. Waters didn’t return calls seeking comment. Ms. Waters’s congressional staff didn’t respond to written questions about her and her husband’s relationship with the bank.

Sheila Krumholz, executive director of the Center for Responsive Politics, a watchdog group, says Ms. Waters should have recused herself from any matters involving the bank. If her support helped OneUnited, "it was a disservice to her constituents," Ms. Krumholz says.

Ms. Waters, who represents inner-city Los Angeles, hasn’t made a secret of her family’s financial interest in OneUnited. Referring to her family’s investment, she said in 2007 during a congressional hearing that for African-Americans, "the test of your commitment to economic expansion and development and support for business is whether or not you put your money where your mouth is."

OneUnited’s executives have donated $12,500 to Ms. Waters’s election campaigns.

Through a series of acquisitions, OneUnited grew to become what it says is the largest African-American-owned bank in the country. It once counted the late Motown Records boss Jheryl Busby as a vice chairman.

Ms. Waters and her husband, Sidney Williams, were investors in two African-American owned California banks that merged with other lenders in 2002 to form OneUnited. Congressional financial-disclosure forms show Ms. Waters acquired OneUnited stock worth between $250,000 and $500,000 in March 2004, as did Mr. Williams. Mr. Williams joined the board of OneUnited that year.

Each sold shares in September 2004 — including Ms. Waters’s entire stake — but Mr. Williams continued to hold varying amount of the company’s stock. In the lawmaker’s most recent financial-disclosure form, dated May 2008 and covering the prior year, Ms. Waters reported that her husband held between $250,000 and $500,000 worth of the bank’s stock.

Mr. Williams also received interest payments from a separate holding at the bank, also worth between $250,000 and $500,000. The 2008 form doesn’t specify what that is. Mr. Williams stepped down from the bank’s board last spring. It couldn’t be learned whether he still owns stock in the bank. Mr. Williams didn’t return calls seeking comment.

At a hearing on minority lending in 2007, Ms. Waters criticized regulators for not doing enough to help minority banks stave off mergers with non-minority institutions. The lawmaker said she had contacted the Federal Deposit Insurance Corp. in 2002 over such concerns and "I was told that there was nothing that could be done."

In her 2007 remarks, Ms. Waters alluded to two banks, Independence Bank of Washington, D.C., and "another bank that was about to be acquired by a major white bank out of Illinois."

Ms. Waters didn’t mention that OneUnited had been an unsuccessful suitor of Independence, which had been taken over several years earlier. The second bank, which she didn’t name, appears to have been Family Savings Bank of Los Angeles. In 2002, that bank backed out of a merger agreement with FBOP Bank of Oak Brook, Ill., and shortly afterward was acquired by OneUnited.

News reports at the time credited the intervention of Ms. Waters and others for Family Savings’s change of heart.

At the hearing, Ms. Waters praised OneUnited’s senior counsel, Robert P. Cooper, as "typical of the young, brilliant minds that have been amassed at OneUnited Bank."

OneUnited’s minority-lending record is mixed. The bank received "outstanding" Community Reinvestment Act ratings for lending in Los Angeles. It has weak ratings in Massachusetts and failed to meet minimum standards in Florida.

In January, Ms. Waters acknowledged she made a call to the Treasury on OneUnited’s behalf. The bank’s capital, which was heavily invested in shares of Fannie Mae and Freddie Mac, was all but wiped out with the federal takeover of the two mortgage giants, and the bank was seeking help from regulators.

OneUnited eventually secured bailout funds under the government’s $700 billion Troubled Asset Relief Program, which was set up later that month.

In a brief interview in January, Ms. Waters said she was unaware the bank received $12 million of TARP money, which arrived in December. OneUnited was "just a small" bank, she said.

A provision designed to aid OneUnited was written into the federal bailout legislation by Mr. Frank, who is chairman of the financial-services panel. Mr. Frank has said he inserted the provision to help the only African-American owned bank in his home state. He said in an interview that Ms. Waters’s interest "had zero impact on the outcome because I would have done it anyway."

In October, regulators demanded that OneUnited raise fresh capital and name an independent board. The bank was ordered to stop paying for a Porsche used by one of its executives and its chairman’s $6.4 million beachfront home in Pacific Palisades, Calif., a luxury enclave between Malibu and Santa Monica.

By JOEL MILLMAN WSJ

PHOENIX — This week, an Arizona gun shop goes on trial in state court in what law-enforcement officials are calling a landmark case against gun dealers who sell weapons that end up in the hands of Mexican drug cartels, fueling horrific violence south of the border that killed more than 6,000 people last year.

X-Caliber Guns LLC, is accused of knowingly selling hundreds of weapons, mostly AK-47s, to buyers who were posing as fronts for Mexican drug gangs. The gun store’s owner, 47-year-old George Iknadosian, has maintained his innocence in court filings.

While the U.S. has long pressed Mexico to stop the flow of illegal drugs such as cocaine from crossing the border heading north, Mexico has complained that the U.S. doesn’t stop the flow of guns heading south. Mexican and U.S. officials estimate that more than 90% of the weapons used by Mexican drug cartels come from the U.S.

Consider what happened last year in the Mexican border city of Nogales. The chief of the Sonora state anti-drug unit, Juan Manuel Pavón, was murdered by cartel hit men, just hours after attending a U.S. seminar on how to resist the tide of American firearms surging into Mexico. Several weapons linked to the crime traced back to X-Caliber Guns.

"The three highest priorities for me in terms of U.S. cooperation in the drugs war are these: guns, guns, guns," Mexican Attorney General Eduardo Medina Mora said in a recent interview with The Wall Street Journal. "These drug groups intimidate society and government because of their firepower. And their firepower comes from the U.S."

No one knows how many weapons cross the border into Mexico each year. Unlike contraband drugs, which are consumed, contraband guns "remain in circulation until they are captured," says Terry Goddard, the Arizona Attorney General bringing the case against X-Caliber Guns.

The number of U.S. guns in Mexico is growing. The Justice Department’s Bureau of Alcohol, Tobacco, Firearms and Explosives, or ATF, says more than 7,700 guns sold in America were traced to Mexico in the fiscal year ending last September. That’s twice the 3,300 recorded the previous year and more than triple the 2,100 traced the year before that.

U.S. officials acknowledge that U.S. gun laws are partly to blame. The 1994 ban on the sale of assault weapons like AK-47s in the U.S. led to a decrease of such weapons south of the border. But the ban expired in 2004, and the numbers in Mexico spiked. Last week, U.S. Attorney General Eric Holder said the Obama administration would seek to reinstate the ban. Contributing to the problem is the fact that Mexico’s customs control is famously weak, and authorities rarely check inbound traffic from the U.S.

Meanwhile, Mexican drug gangs are stocking up on deadlier weapons. ATF officials say they have registered more purchases of high-powered FN Herstal rifles and pistols — the Belgian-made weapon called "matapolicias" in Mexico, or "cop killers," for their ability to fire through body armor. Such items are sold in hundreds of Arizona gun shops, or by private owners advertising online.

Although U.S. gun laws generally forbid the sale of weapons to noncitizens, the X-Caliber case shows how Mexican purchasers used intermediaries — or "straw buyers" — to flout the rules.

The scheme, according to the prosecution, was simple: The buyers, usually 19- to 22-year-old U.S. citizens with no police record, declared that the firearm was for personal use, but instead passed it along to an associate of a Mexican cartel. The buyer filled out a standard form used by the ATF to track firearms. Lying on the form is punishable by up to 10 years in prison. But ATF agents here say buyers in the X-Caliber case were paid a fee to run that risk — up to $100 on each transaction.

Gun shops generally rely on ATF recordkeeping to check them before selling to the wrong buyer. Ken Logan, a manager at the Shooters World gun store in Phoenix says the ATF form, once approved after being checked against a national data base, relieves the store of responsibility. "The ATF says ‘yea’ or ‘nay,’ on who I can sell a gun to," he says.

Gun stores run the risk of lawsuits if they’re deemed to be "profiling" — refusing to sell guns to young Latinos, for instance. Mr. Logan concedes he has seen men enter gun stores, point out to a girlfriend what weapon they should buy, and leave. The girlfriend fills out the form, attesting the firearm is for her personal use.

Getting bullets is even easier. Gun dealers here must report anyone purchasing more than one handgun during a single five-day period, but there is no restriction on ammunition. Last Christmas Eve, salesmen at Cabela’s Sporting Goods store in Phoenix were surprised when two Hispanic men bought 24,000 rounds of 5.7 caliber bullets — the same caliber used in FN "cop killers." They paid in cash — more than $10,000. When the buyers were seen loading their purchase into a car with Mexican license plates, store managers summoned police. Authorities found 12 FN rifles and three "cop killer" handguns.

Police arrested the buyers, but only because they were foreign nationals, thus forbidden from possessing arms in the U.S.

The murder of Mr. Pavón last year illustrates how Arizona’s gun-friendly culture contributes to mayhem in Mexico. Last October, the men under Mr. Pavón’s command fought gangs of narco-pistoleros in gun battles across the state. On October 24, a caravan of heavily armed assassins descended on Nogales, only to be repelled, leaving 10 gunmen dead. A week later, they attacked a police substation about a mile from the U.S. border crossing.

Days later, Mr. Pavón was in Arizona for consultations with U.S. officials.

At a farewell picnic at a federal shooting range in Tucson, the Mexican policeman was invited to test fire a powerful American weapon that has been surfacing lately in the narco-gangs’ arsenals: the 50 caliber Barrett rifle, powerful enough to pierce a tank’s armor.

"We had a shootout," recalls Mr. Newell, the ATF agent. "He won."

The following night, Commander Pavón was ambushed as he entered a Nogales hotel.

By LAURA MECKLER

President Barack Obama has chosen Kansas Gov. Kathleen Sebelius to head the Department of Health and Human Services and will announce the decision at the White House Monday, administration officials said Saturday.

Ms. Sebelius, 60, was an early backer of Mr. Obama’s presidential campaign and a contender for the vice presidential spot, but many assumed she did not wish to join the Cabinet when the initial round of nominations was made and she was not among them. But the president and the governor were given a fresh opportunity when his first choice, former Senate Majority Leader Tom Daschle, pulled out amid controversy over late-paid taxes.

Before becoming governor, Ms. Sebelius was a two-term state insurance commissioner, overseeing the regulation of health insurance in Kansas, where she won a reputation as a consumer advocate. She was also president of the National Association of Insurance Commissioners. While Mr. Obama envisions a system whereby the federal government would have a strong hand regulation of health insurance, traditionally this has been the province of the states.

But her efforts as governor to expand health coverage often have been rebuffed in the Legislature.

She has also attracted intense opposition of abortion opponents who contend she is too close to a Kansas doctor who performs late-term abortions, citing a reception she once held for him and donations he has given to her campaign. Administration officials have said they are not bothered by the complaints and note that any person chosen to lead HHS in the Obama administration will be a supporter of abortion rights.

The announcement comes as the White House gears up to push ambitious health care legislation through Congress aimed at controlling costs and extending health coverage. On Thursday, the president offered $634 billion over 10 years in funding for the initiative, and he will convene a summit of health care leaders this coming Thursday to discuss, among other things, how the money should best be spent.

Ms. Sebelius is in the middle of her second gubernatorial term and is barred by term limits from seeking a third term. There was widespread speculation that she might run for the Senate in 2010.

By EVAN PEREZ and SUSAN SCHMIDT

WASHINGTON — The Justice Department is preparing to bring terrorism-related charges in civilian court against Ali al-Marri, a native of Qatar who is the last enemy combatant held in custody on U.S. soil, two people familiar with the matter said.

The filing of criminal charges against Mr. Marri — alleged by the government to be an al Qaeda sleeper agent — would likely forestall a U.S. Supreme Court ruling on a key constitutional question: whether the president has the authority to indefinitely detain a wartime captive picked up on U.S. soil.

 

Ali al-Marri has been accused of being an al Qaeda sleeper agent and held in U.S. custody since December 2001.

Mr. Marri was a legal U.S. resident and a graduate student in Peoria, Ill., when he was detained in December 2001 as a "material witness" in the Sept. 11, 2001, terror attacks. Government officials alleged that Osama bin Laden sent Mr. Marri to the U.S. to prepare follow-up attacks after 9/11.

Two years later, President George W. Bush declared Mr. Marri an enemy combatant. Since then, he has been held without charge at the naval brig in Charleston, S.C.

The U.S. Supreme Court had agreed to hear his case after a federal appeals court in Richmond, Va., last July granted Mr. Marri the right to a habeas corpus proceeding, allowing him to argue against being classified as an enemy combatant. Mr. Marri has denied any wrongdoing, according to Jonathan Hafetz, an attorney with the American Civil Liberties Union who represents him.

President Barack Obama announced shortly after taking office that he had ordered a review of Mr. Marri’s case.

Federal prosecutors have been working for more than a year building a case against Mr. Marri, according to people familiar with the matter. It isn’t clear when the government plans to make public any charges it files, these people said. A Justice Department spokesman declined to comment.

Mr. Hafetz said the government hasn’t informed him of its plans. But he said he expected the government to charge Mr. Marri after Mr. Obama’s order to review the case. "This is a positive step," Mr. Hafetz said. "But it is something that should have happened more than seven years ago, when he was first arrested."

One unanswered question in any trial of Mr. Marri would be whether the prosecution or defense might seek testimony by al Qaeda leaders held in U.S. prisons.

The government alleged Mr. Marri was directed in the U.S. by 9/11 mastermind Khalid Sheikh Mohammad, now in military custody at Guantanamo Bay. Mr. Mohammed is one potential witness.

But prosecutors have been trying to steer clear of allegations that would allow either side to call Mr. Mohammad or other al Qaeda figures as witnesses, according to one person familiar with the case.

A declaration the Pentagon presented in court in connection with Mr. Marri’s challenge to his detention said Mr. Mohammed and Osama bin Laden decided in the summer of 2001 that Mr. Marri should travel to the U.S. "to establish cover," and become "a point of contact for al Qaeda operatives arriving in the United States."

Mr. Marri, his wife and his five children arrived in the U.S. on Sept. 10, 2001. They traveled to Peoria, where Mr. Marri enrolled as a graduate student in computer science at his alma mater, Bradley University.

Mr. Marri was taken into custody three months later. The government subsequently dropped the material-witness warrant and charged him with making false statements and credit-card fraud.

Federal Bureau of Investigation agents told the court that Mr. Marri’s computer was filled with research on buying chemicals to create deadly hydrogen cyanide. They also stated that they found materials suggesting that Mr. Marri was targeting dams, reservoirs and railways.

In June 2003, shortly before he was to face trial in Peoria, President Bush declared Mr. Marri an enemy combatant and had him transferred to military custody in South Carolina.

President Bush said in 2007 that Mr. Marri was casing the New York Stock Exchange and one of the nation’s military academies along with other targets.

Years before his alleged association with al Qaeda, Mr. Marri spent a decade as a student in the U.S. During his youth, his family moved from a camel farm in Saudi Arabia to Qatar, where he was granted citizenship, entitling him to government-paid education in the West.

By JESS BRAVIN

WASHINGTON — A Guantanamo Bay detainee the U.S. once charged with helping Osama bin Laden commit terrorist acts will be released and sent home to Britain, a sign that President Barack Obama is moving quickly to carry out his promise of closing down the offshore prison.

Binyam Mohamed, an Ethiopian-born man who holds British residency, won’t face criminal charges or special security restrictions when he returns home, the British Foreign Office said Friday in announcing the release, though his immigration status will be reviewed. He is the first Guantanamo inmate to go through the Obama administration’s review of indefinite detentions at the naval base in Cuba.

The announcement came the same day the Justice Department appointed a veteran federal prosecutor and national-security official, Matthew Olson, to head the review process. Attorney General Eric Holder is scheduled to visit the prison Monday.

Mr. Obama pledged shortly after taking office to close Guantanamo within a year. Some inmates may be moved to the U.S. to face trial, while others may be released. Mr. Mohamed had a clear destination once released: Britain, where there was widespread opposition to the indefinite detentions at Guantanamo, had long requested the return of its residents imprisoned there. The U.S. is pushing other European nations to accept some Guantanamo prisoners, and some European leaders have expressed willingness to consider the idea.

The White House declined to comment on Mr. Mohamed’s release. The move would bring an abrupt end to a case involving serious allegations against both the detainee and the U.S. officials who apprehended him.

Mr. Mohamed was arrested at the Karachi, Pakistan, airport in April 2002, allegedly while traveling with Jose Padilla, a U.S. citizen the Bush administration later accused of planning terrorist acts on American soil. Mr. Padilla was permitted to travel on to Chicago, where he was arrested, detained as an "enemy combatant" and later tried in civilian court for separate terrorism-related charges.

Mr. Mohamed disappeared from view until 2004, when he was transferred to Guantanamo Bay. During that period, Mr. Mohamed says, U.S. agents took him to Morocco, where he says he was tortured by Arab interrogators.

A Justice Department spokesman said the U.S. denied abusing Mr. Mohamed. The spokesman said he had no ready information on the Morocco allegations.

In 2005, Mr. Mohamed was charged with conspiracy. After the Supreme Court ruled the Bush tribunals set up at Guantanamo illegal, Congress authorized a modified version and the charges were refiled. Those charges were canceled in October 2008 by the Bush official overseeing the trials. She provided no explanation.

In addition to Mr. Mohamed’s allegations of torture, the CIA has said another prisoner identified as his co-conspirator, Abu Zubaydah, was interrogated through waterboarding or simulated drowning, which Obama administration officials have described as torture.

By ELIZABETH WILLIAMSON

HOT SPRINGS, Va. — Republican members of the House of Representatives took a break earlier this month from bashing the Democrats’ $800 billion stimulus bill and journeyed here to the Homestead Resort, an 18th-century mountain spa, where the diversions include golf, skiing, skeet shooting and falconry.

Republican lawmakers paid for their travel and lodging, mostly with campaign funds. Staffers’ bills and the rest of the tab was picked up by the Congressional Institute, which is funded by 54 "patrons," including General Electric Co. and the National Association of Home Builders. About 45 lobbyists attended a dinner on opening night.

House Republican Conference spokesman Matt Lloyd, said Republicans accept partial corporate funding of the retreat because "We don’t believe in using taxpayer money."

Alamy

The Breakers Palm Beach, site of a coming Republican fund-raiser.

A few days later, as the stimulus bill inched forward, Democrats held a two-day issues conference at the Kingsmill Resort & Spa in Williamsburg, Va., a property owned by brewer Anheuser Bush-Inbev NV and whose spa is known for its hops and chamomile massage. Taxpayers helped foot the bill, which was paid partly with money appropriated for congressional office expenses.

"Our issues conference, especially this year, was a very serious working session," said Emily Barocas, spokeswoman for the Democratic Caucus. President Barack Obama took his maiden Air Force One voyage to rally support from fellow Democrats for the stimulus plan.

The sour economy and public outrage have put a damper on corporate junkets to posh resorts, especially for banks that took taxpayers’ money as part of the financial rescue plan.

But as they fume over inflated salaries and lavish travel by executives whose companies are on the federal dole, members of Congress are getting a raise, and making travel plans.

Last month, when 600,000 Americans lost their jobs, the House and Senate allowed themselves a $4,700 cost-of-living raise, bringing their annual salaries to $174,000. This week, House Speaker Nancy Pelosi and other Democratic House leaders said they would forgo a similar increase next year. So far the Senate hasn’t followed suit, but a spokesman for Senate Majority Leader Harry Reid of Nevada said they plan to.

As the stimulus bill made its way through Congress, companies with a stake in provisions buried in the bill’s more than 600 pages had plenty of opportunities to meet with lawmakers at events the companies helped to bankroll. Such meetings are commonplace, but they have taken on added importance as the stimulus plan, the financial bailout and other spending bills offer Congress unusual power to choose corporate winners and losers.

Lobbyists may not directly pay for lawmakers’ travel and meals, under recently strengthened Congressional ethics rules. So instead, corporations contribute to tax-exempt groups — and those groups pay for lawmakers to attend events.

Sometimes the events — and the networking and socializing that go with them — take place in Washington. Last week, prominent Democrats including Sens. Debbie Stabenow of Michigan, Amy Klobucharof Minnesota, and Minnesota Rep. Keith Ellison shared a dais at the Marriott Wardman Park hotel with energy and environmental lobbyists at the sprawling "Good Jobs, Green Jobs" conference.

The event was organized by the Blue Green Alliance, a coalition of labor unions and environmental groups. Sponsors included BP PLC, Alcoa Inc. and the American Wind Energy Association, which lobbied hard for generous renewable energy incentives in the stimulus bill. At an invitation-only VIP event attended by sponsors and lawmakers, Speaker Pelosi was presented with the Blue Green Alliance Green Jobs Champion Award.

Asked about Ms. Pelosi’s award, her spokesman Brendan Daly said, "The Speaker remains committed to transparency and will continue to monitor the Lobbying Disclosure Act to ensure that the aims of the lobbying reforms are met."

Spokesmen for Rep. Ellison and Sen. Stabenow said they accepted speaking invitations because sustainable energy and green jobs are priorities for them. An aide to Sen. Klobuchar said the only individual she spoke with at the meeting was the steelworker who introduced her.

In November, as the federal government worked to rescue financial markets, four Republican and four Democratic lawmakers were in Amsterdam on a trip sponsored by the Franklin Center for Global Policy Exchange. Every year, the group takes members of Congress on a weeklong trip to an international capital "to discuss varying views on important international issues," according to a statement of its purpose. The group stayed at the five-star Grand Hotel Amrath, a historic art nouveau hotel and wellness spa.

The nonprofit group’s board of directors includes lobbyists from UAL Corp., Exelon Corp. and Duke Energy Corp., according to a list supplied by spokesman Trent Duffy. A separate bipartisan "honorary board" is composed of members of Congress.

Travelers on the Netherlands trip Nov. 9-14 included Rep. Joe Baca (D., Calif.); Rep. Ellison; Rep. Luis Gutierrez (D., Ill.); Rep. James Lamborn (R., Colo.); Rep. Frank Lucas (R., Okla.); Rep. James Moran (D., Va.); Rep. Jean Schmidt (R., Ohio); and Rep. F. James Sensenbrenner (R., Wis.).

The group discussed climate change, economic policy, health care and other topics with European officials, diplomats, corporate executives and lobbyists.

Spokespeople for Reps. Ellison, Gutierrez and Moran said the meetings were directly related to their work in Congress, and an opportunity to discuss those issues with European counterparts. Reps. Lamborn, Lucas and Schmidt said they valued the exchange with foreign policy makers on trade, defense and national security. Aides to Reps. Baca and Sensenbrenner didn’t respond to requests for a comment.

Spokesman Trent Duffy declined to name the center’s financial backers, saying support comes "from foundations and private donations." Its trips, he said, undergo a "very open" and thorough congressional ethics review.

Next up for Congress this month, once the stimulus debate is done: an overhaul of financial services regulation; help for homeowners — and two Senate fund raisers in Florida. Senate Democrats will host their biggest campaign contributors at the Ritz-Carlton in Naples, with a Greg Norman-designed golf course and 51,000 square-foot spa. Republicans chose The Breakers in Palm Beach, a Renaissance-style landmark on 140 oceanfront acres, where the lowest-price room this time of year lists at $600, when available. The bills are paid with campaign funds, more of which the parties hope to garner on the trips.

Spokesmen for the Democratic Senatorial Campaign Committee and the National Republican Senatorial Committee declined to comment on the plans.