_{CHICAGO – President-elect Barack Obama will meet Monday with John McCain in talks that Obama's transition office said would focus on ways they can cooperate on an array of troublesome issues facing the country.}

_{The meeting will be the first since Obama, the Democratic Illinois senator, beat McCain, the Arizona Republican senator, by an Electoral College landslide in the Nov. 4 election.}

_{"It's well known that they share an important belief that Americans want and deserve a more effective and efficient government, and will discuss ways to work together to make that a reality," Obama spokesman Stephanie Cutter said in announcing the meeting.}

_{Advisers to both men say they do not expect Obama to consider McCain for a position in his administration, as he is with former primary rival Hillary Rodham Clinton for secretary of state. But he'd like to have McCain as a partner in the Senate on legislation they both have advocated on the campaign trail, like climate change, earmark reform and torture.}

_{Cutter also said the two will be joined at Obama's Chicago transition office by Republican Sen. Lindsey Graham of South Carolina, a McCain confidant, and Rep. Rahm Emanuel, the Illinois Democrat whom Obama has chosen to be his White House chief of staff.}

_{In his first two weeks as president-elect, Obama has struck a bipartisan tone. He paired a Republican and a Democrat to meet with foreign leaders this weekend on his behalf in Washington, for example, and his aides emphasized the bringing together of both sides in announcing the meeting with McCain.}

_{Republican and Democratic officials say Emanuel and Graham arranged in a postelection conversation to have Obama and McCain meet at the earliest possible time and Monday was it. Emanuel and Graham have worked together before on issues on Capitol Hill, and Graham jumped to Emanuel's defense when Republicans criticized his appointment as Obama's chief of staff.}

_{Since the election, McCain has had few public appearances. He appeared on the "Tonight Show" with Jay Leno on Tuesday and campaigned in Georgia for Sen. Saxby Chambliss, who faces a runoff next month.}

_{Obama met in Chicago with Clinton Thursday afternoon, said a Democratic official, who asked not to be publicly identified the information was not authorized for public release.}

_{The motorcade of Clinton, who receives Secret Service protection as a former first lady, was seen leaving the office complex shortly before Obama left for the day. Clinton spokesman Philippe Reines would say only that "Senator Clinton had no public schedule yesterday."}

_{Obama has surrounded himself with several former staffers of Bill Clinton's presidency. Others are thought to be under consideration for secretary of state, including Sens. John Kerry, D-Mass., and Chuck Hagel, R-Neb.}

_{WASHINGTON – President-elect Barack Obama's top choice for attorney general is Eric Holder, a former No. 2 Justice Department official in the Clinton administration and Obama campaign aide who would become the first African American to serve as the nation's chief lawyer.}

_{The Obama transition team has gone so far as to ask senators whether they would confirm Holder, who reviewed Clinton's controversial pardon of fugitive Marc Rich just leaving office, an Obama official and people close to the matter said Tuesday.}

_{But the Obama official said the decision has not been finalized, and transition spokesmen said no decision has been made.}

_{Holder did not return messages seeking comment Tuesday. Asked Monday by The Associated Press whether he expected to be nominated, he responded in an e-mail: "Who knows?"}

_{One person involved in the talks said the Obama team has received some assurances that, while the pardon would certainly come up during hearings, the nomination likely wouldn't be held up.}

_{All spoke on condition of anonymity to describe private conversations.}

_{Sen. Arlen Specter of Pennsylvania, the top Republican on the Senate Judiciary Committee, said the pardon "would be a factor to consider."}

_{"I wouldn't want to articulate it among the top items but it's worthwhile to look at," he told reporters.}

_{Asked if Holder would be a good choice for attorney general, Specter said it was too soon to say.}

_{"I know something of Holder's work in the Clinton administration and that's about it," he said. "I'd have to take a much closer look at his record and talk to him and think about it."}

_{Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., had not been informed about Holder, his spokeswoman said.}

_{On the last day of Clinton's term, Holder, then the deputy attorney general, was asked whether Clinton should pardon Rich, a wealthy commodities dealer who had spent years running from tax charges. Holder said he was "neutral, leaning toward favorable" on the pardon. Clinton later cited that as among the factors that persuaded him to issue the pardon.}

_{Holder has publicly apologized for what he said was a snap decision that he should have paid more attention to. Had he taken more time to review the case, he would have advised against a pardon, he said.}

_{Holder, 57, also a former judge and U.S. attorney in Washington, is widely respected in legal circles and among Justice Department career lawyers. He has been on Obama's short list to be attorney general since before the election, and already has had private conversations about how he would run the department.}

_{One of his top priorities, according to a person familiar with his thinking, is to rebuild the department's reputation after its fiercely independent image was tarnished by charges of political meddling by the White House during the Bush administration.}

_{For that reason, Holder has been reluctant to lobby for the attorney general's post for fear the Rich pardon would invite a bloody nomination process and further strain the department's credibility, this person said.}

_{Holder has been one of Obama's most trusted advisers. He was a member of the team that helped select Sen. Joe Biden as Obama's running mate. The two have known each other only briefly, however, after meeting at a dinner party four years ago.}

_{Holder has other deep ties to Obama's team. Holder's wife, an obstetrician, delivered incoming White House chief of staff Rahm Emanuel's daughter.}

WASHINGTON – President-elect Barack Obama is on track to nominate Hillary Rodham Clinton as secretary of state after Thanksgiving, an aide to his transition said Thursday.

One week after the former primary rivals met secretly to discuss the idea of Clinton becoming the nation's top diplomat, the two sides were moving quickly toward making it a reality, barring any unforeseen problems.

The transition aide told The Associated Press that the two camps have worked out financial disclosure issues involving Clinton's husband, former President Bill Clinton, and the complicated international funding of his foundation that operates in 27 countries. The aide said Obama and Hillary Clinton have had substantive conversations about the secretary of state job.

Clinton has been mulling the post for several days, but the transition aide's comments suggested that Obama's team does not feel she is inclined to turn it down.

Some Democrats and government insiders have questioned whether Clinton is too independent and politically ambitious to be an effective secretary of state. But Obama is said to admire her talents and experience, as do many other Democrats.

Clinton would have to surrender her New York Senate seat, which she has held for eight years, to take the job.

Clinton spokesman Philippe Reines would not comment Thursday night, except to say that anything about Cabinet appointments is for Obama's transition team to address.

The president-elect also is likely to choose Arizona Gov. Janet Napolitano to be secretary of homeland security, top Obama advisers and several Democrats said Thursday as the shape of Obama's Cabinet begins to emerge.

The Obama advisers cautioned that no final decision has been made on putting Napolitano in charge of the Homeland Security Department, the massive agency created by Congress after the Sept. 11, 2001, terrorist attacks. But the advisers said she was easily the top contender.

Thus far, Obama has informally selected Washington lawyer Eric Holder as attorney general and former Senate Majority Leader Tom Daschle as health secretary. The plans could be sidetracked by unexpected glitches in the final vetting process, officials note.

Among other Cabinet posts: Senior Democrats say there is a strong possibility that Defense Secretary Robert Gates would stay temporarily and later give way to former Navy Secretary Richard Danzig. Even so, Republican Sen. Chuck Hagel of Nebraska and Democratic Sen. Jack Reed of Rhode Island also are said to be under consideration.

Democrats also say that several people remain in the running for treasury secretary, including Timothy Geithner, president of Federal Reserve Bank of New York; Lawrence Summers, former treasury secretary and one-time Harvard University president; and former Federal Reserve Chairman Paul Volcker.

Several news organizations reported Thursday that Chicago businesswoman Penny Pritzker, who was Obama's national campaign finance chairman, was his leading choice to become commerce secretary. However, Pritzker issued a statement Thursday saying she is not a contender for the post.

Officials say Laura D'Andrea Tyson, the former chair of White House Council of Economic Advisers in the Clinton administration, is in the running for the Commerce job.

The Obama advisers and Democrats discussed the Cabinet positions only on grounds of anonymity because of the private nature of the screening process.

Obama appears to be assembling a team that includes a mix of longtime aides, Washington insiders and a sprinkling of Democratic governors. Besides Napolitano, strong contenders for Cabinet posts include New Mexico Gov. Bill Richardson and Kansas Gov. Kathleen Sebelius.

Sebelius and Napolitano, who once was Arizona's attorney general, were among the first governors to commit to Obama's candidacy. Richardson endorsed Obama after ending his own presidential bid, angering the Clintons.

As governor, Napolitano has fought to curb illegal immigration, but she has been skeptical that building a fence along the border will solve the problem. She once said, "You build a 50-foot wall, somebody will find a 51-foot ladder."

Last year, her state passed a law that requires all Arizona businesses to use the federal online database, E-Verify, to confirm that new hires have valid Social Security numbers and are eligible for employment. This has been a cornerstone of the Bush administration's immigration policy.

As governor, she has overseen wildfires and severe flooding and worked with the Federal Emergency Management Agency, now part of the Homeland Security Department.

_{CHICAGO – President-elect Barack Obama pledged to make deficit reduction a goal of his administration Tuesday — but only after recovery from the financial crisis is well under way. "We are going to have to jump start the economy," he said.}

_{At his second news conference in as many days, Obama claimed a "mandate to move the country in a new direction," and promised to consult with Republicans as he goes about it.}

_{"I think what the American people want more than anything is just commonsense, smart government. They don't want ideology, they don't want bickering, sniping, they want action and effectiveness. When it comes to the budget, people don't want to continue argument about big government or small government, they want smart government and effective government."}

_{The president-elect announced Peter Orszag would be his budget director, charged with scrutinizing spending with a goal of "eliminating those programs we don't need and insisting that those we do need operate in a cost-effective way." As an example that needs review, he cited reports that more than 2,700 millionaires received farm payments between 2003 and 2007, even though it wasn't clear they were eligible.}

_{"Budget reform is not an option. It's a necessity," he said, adding he would ask his economic aides to "think anew and act anew."}

_{Orszag is the director of the Congressional Budget Office, a man who the president-elect said "knows where the bodies are buried."}

_{Obama's focus on careful federal spending marked something of a contrast from Monday, when he declared that restoring the economy to health took priority. Then, he urged Congress to prepare an economic stimulus program for him to sign as soon after Inauguration Day as possible. Estimates of the measure range from $500 billion to $700 billion over two years.}

_{In Tuesday's remarks, he said, "As soon as the recovery is well under way, we need to set up a long-term plan to reduce the structural deficit and make sure we are not leaving a mountain of debt for the next generation."}

_{The deficit has soared during President Bush's tenure, and could well approach the once-unthinkable level of $1 trillion this year by the time the costs of the financial bailout and economic stimulus are taken into account.}

_{Federal red ink hit a record $455 billion in fiscal 2008, ending Sept. 30, more than double the previous year.}

_{"We are going to have to jump-start the economy ... but we have to make sure that those investments are wise. We have to make sure we are not wasting money in every area," Obama said Tuesday, defining the two objectives that will guide his economic program.}

_{Elected on Nov. 4 in an Electoral College landslide, Obama claimed "a mandate to move the country in a new direction and not continue the same old practices that have gotten us into the fix we are in."}

_{At the same time, he said, after gaining only 53 percent of the popular vote," we enter into the administration with a sense of humility and a recognition that wisdom is not the monopoly of any political party."}

_{Along with Orszag, Obama named Robert Nabors as deputy budget director. Nabors has been the top staff aide on the House Appropriations Committee, which prepares spending legislation.}

_{Earlier appointments included New York Federal Reserve President Timothy Geithner as treasury secretary and former Treasury Secretary Lawrence Summers to head National Economic Council.}

_{WASHINGTON – Most Americans sorely knew it already, but now it's official: The country is in a recession, and it's getting worse. Wall Street convulsed at the news — and a fresh batch of bad economic reports — tanking nearly 680 points. With the economic pain likely to stretch well into 2009, Federal Reserve Chairman Ben Bernanke said Monday he stands ready to lower interest rates yet again and to explore other rescue or revival measures.}

_{Rushing in reinforcements, Treasury Secretary Henry Paulson, who along with Bernanke has been leading the government's efforts to stem the worst financial crisis since the 1930s, pledged to take all the steps he can in the waning days of the Bush administration to provide relief. Specifically, Paulson is eyeing more ways to tap into a $700 billion financial bailout pool.}

_{On Capitol Hill, House Speaker Nancy Pelosi, D-Calif., vowed to have a massive economic stimulus package ready on Inauguration Day for President-elect Barack Obama's signature.}

_{That measure — which could total a whopping $500 billion — would bankroll big public works projects to generate jobs, provide aid to states to help with Medicaid costs and provide money toward renewable energy development. Crafting such a colossal recovery package would mark a Herculean feat: Congress convenes Jan. 6, giving lawmakers just two weeks to complete their work if it is to be signed on Jan. 20.}

_{President George W. Bush, in an interview with ABC's "World News," expressed remorse about lost jobs, cracked nest eggs and other damage wrought by the financial crisis. "I'm sorry it's happening, of course," said Bush. The president said he'd back more government intervention.}

_{None of the pledges for more action could comfort Wall Street investors. The Dow Jones industrials plunged 679.95 points, or 7.70 percent, to close at 8,149.09.}

_{It was another white-knuckle day, punctuated by grim economic reports. An index of manufacturing activity sank to a reading of 36.2 in November, a 26-year low, the Institute for Supply Management reported. Construction spending fell by a larger than expected 1.2 percent in October, the Commerce Department said.}

_{Adding to the gloom, the National Bureau of Economic Research, a group of academic economists, concluded Monday that the country has been suffering through a recession since December 2007.}

_{With NBER's decision, the United States has fallen into two recessions during Bush's eight years in office. The first one started in March 2001 and ended in November of that year.}

_{The economy jolted into reverse in the final three months of last year. After a short spring rebound, it contracted again in the summer. Economists say it is still shrinking and will continue to do so through at least the first quarter of next year.}

_{Unlike past recessions, consumers are bearing the brunt of this one. Clobbered by job losses, hard-to-get credit and hits to their wealth from sinking home values and plunging portfolio investments, consumers have cut back sharply on their spending, throwing the economy into chaos.}

_{Watching customers' appetites wane, employers have throttled back on hiring. The unemployment rate in October zoomed to 6.5 percent, a 14-year high. So far this year, 1.2 million positions have disappeared. The jobless rate is likely to climb to 8 percent or higher next year.}

_{Against that backdrop, many economists believe the current recession will be the worst since the 1981-82 downturn.}

_{To help ease the pain, Bernanke said additional interest-rate cuts are "certainly feasible," but he warned there are limits to how much such action would revive the economy, which is likely to stay mired in weakness well into next year.}

_{The Fed's key interest rate now stands at 1 percent, a level seen only once before in the past half-century, and many economists predict Bernanke and his colleagues will drop the rate again at their next meeting on Dec. 15-16.}

_{The Fed can lower its key rate only so far — to zero — and it's getting ever closer. Given that constraint, Bernanke said there are other ways to bolster economic activity.}

_{The Fed, for instance, could buy longer-term Treasury or agency securities on the open market in substantial quantities, he said. This might lower rates on these securities, "thus helping to spur aggregate demand," Bernanke said.}

_{Because the Fed can go only so low in reducing interest rates, the central bank over the past year has resorted to a flurry of other radical and often unprecedented actions with the hope of busting through credit jams and getting financial markets operating more normally.}

_{The bracing impact of the Fed's aggressive rate reductions, however, has been somewhat stymied by the credit and financial crises, Bernanke said. Despite lower borrowing costs, skittish banks have been reluctant to lend money to people and businesses, a vicious cycle that has seriously hobbled the U.S. economy.}

_{"Even if the functioning of financial markets continues to improve, economic conditions will probably remain weak for a time," Bernanke warned.}

_{Paulson, meanwhile, has been working closely with the incoming administration, including New York Fed President Timothy Geithner, Obama's pick to be the next treasury secretary, to pave the way for a smooth transition.}

_{"We are actively engaged in developing additional programs to strengthen our financial system so that lending flows into our economy," Paulson said, referring to tapping the $700 billion bailout fund. "When these programs are ready for implementation, we will discuss them with the Congress and the next administration," he added.}

_{Paulson did not provide specifics on what type of programs the administration was weighing other than to say that it was looking at ways to boost capital injections into financial institutions.}