Rep. Raul Grijalva (Wikimedia Commons)

Phoenix — The possibility that President-elect Barack Obama will select Rep. Raul Grijalva (D-Arizona) as his secretary of interior has environmentalists, Interior Dept. employees, Native Americans and Latino groups giddy.

If appointed and confirmed by the Senate, the three-term Democrat, who represents the state’s 7th Congressional District, is expected to launch widespread reforms at Interior, which has been riddled with scandal, plummeting employee morale and deteriorating conditions in the nation’s national parks.

Illustration by: Matt Mahurin

“He’s ramped up and ready to go,” said Travis Longcore, science director of the Los Angeles-based Urban Wildlands Group and co-author of a Dec. 1 letter signed by 60 prominent conservation biologists and environmental scientists urging Obama to appoint Grijalva.

Natalie Luna, Grijalva’s spokeswoman, said Monday that the Obama transition team “has been looking at him,” but she could not say whether a final decision was near. Grijalva’s name first surfaced as a contender for the job more than two weeks ago.

The 61-year-old son of a migrant Mexican farm worker has been sharply critical of the Bush administration’s management of the 500 million acres controlled by Interior. If appointed, Grijalva would become the third Arizonan to lead the department. Stewart Udall served as its secretary under President John F. Kennedy, and former Arizona Gov. Bruce Babbitt held the post under President Bill Clinton.

Grijalva, who was elected co-chairman of the Congressional Progressive Caucus last month, has a reputation for being politically combative. He has been extremely outspoken in his opposition to what he sees as the anti-labor and anti-immigration policies of congressional Republicans. He has taken shots at his own party, branding Democratic leaders “spineless” for failing to take on comprehensive immigration reform. And he’s called leaders of anti-amnesty groups “cockroaches.”

“The word extremist could get tossed around to describe Grijalva,” the Tucson Citizen noted in Nov. 28 commentary. “He compromises when he must but prefers conquest to consensus.”

Grijalva’s strident nature may cost him the Interior appointment. A Washington Post columnist wrote Tuesday that a source close to the Obama transition team said that Grijalva had fallen off the short list.

Grijalva’s claim to the Interior Dept. job rests in part on his aggressive attacks on the administration’s handling of the nation’s public lands and natural resources. In a 23-page summary of its policies released last month, he lambasted the administration for a “concerted strategy of reducing the protections for our public lands, parks and forests and opening up these lands for every type of private, commercial and extractive industry possible.”

Grijalva has also clashed with Interior Secretary Dirk Kempthorne on opening up more than 1 million acres adjacent to Grand Canyon National Park to uranium mining and considering a plan to reopen a massive coal strip mine on the Navajo and Hopi Indian reservations in northeast Arizona.

As chairman of the House subcommittee on national parks, forests and public lands, Grijalva has criticized Interior’s tendency to put politics above science. “Under Bush, dedicated career employees have been driven out because they refused to comply with unethical activities, science has been manipulated to enrich industry, and environmental laws and regulations have been subverted to push forward damaging activities,” Grijalva wrote in the preface to his report, “The Bush Administration Assaults on our National Parks, Forests and Public Land (A Partial List).”

The Interior Dept. has a $16-billion budget and oversees the National Park Service, the U.S. Fish & Wildlife Service, the Bureau of Reclamation, U.S. Geological Survey, the Minerals Management Service, the Office of Surface Mining and the Bureau of Indian Affairs. It raises $12 billion a year from the sale of natural resources, including oil, gas, minerals, timber, grazing leases and other federal land development.

Grijalva’s main competition for the job is Rep. Mike Thompson (D-Calif.), who is strongly backed by hunter and fishermen groups. What’s more, Obama told Field and Stream magazine before the election “that having a head of the Department of Interior who doesn’t understand hunting and fishing would be a problem” and that “whoever heads up” the agency “is probably going to be a sportsman or sportswoman.”

Scientists who support Grijalva are urging Obama to look beyond that narrow requirment to the broad array of environmental challenges that Interior must address, including implementing reforms to manage climate change.

“We believe [it] is far more important to have a secretary who understands ecosystem science and is committed to science-based decision making,” urges the Dec. 1 letter signed by scientists. Among the signers are Michael E. Soule, founder of the Society for Conservation Biology; Cole Crocker-Bedford, retired chief of natural resources and research at Grand Canyon National Park; and Philip Hedrick, professor of conservation biology at Arizona State University.

Grijalva also has the backing of more than 130 local and regional environmental groups across the country, including the Grand Canyon Trust, Southern Utah Wilderness Society and the Center for Biological Diversity. A letter of support signed by the groups’ leaders was released Monday by the Public Employees for Environmental Responsibility, a Washington advocacy group dedicated to exposing political manipulation of science.

National environmental groups are reportedly lobbying on Grijalva’s behalf too, but most have not publicly endorsed a candidate for the top job at Interior. Grijalva has been endorsed by Friends of the Earth and the National Conservation and Parks Assn.

Daniel Patterson, southwest director for Public Employees for Environmental Responsibility, said many Interior employees support Grijalva because he is seen as a leader who “will first and foremost restore the focus to serving the public interest and not just big industry.” He said employee morale at the department is extremely low in the wake of an oil-sex scandal that rocked the Mineral Managements Agency in September. “Many of the employees feel like they have completely lost their ability to serve the public interest,” Patterson said.

Latino groups, including the Mexican American Legal Defense Fund and the Southwest Voter Registration and Education Project, told Obama’s transition team leaders last week that Grijalva had their “100 percent support,” according to a Dec. 4 report in the Arizona Daily Star. And some Native American leaders, who work closely with the Bureau of Indian Affairs in managing tribal lands, have lined up behind Grijalva.

Vernon Masayesva, a former Hopi Tribal chairman and executive director of the Black Mesa Trust, a coalition opposed to coal mining on the Hopi and Navajo Indian reservations, said, “We are just praying that Grijalva will be the next secretary.”

Update: The original version of this story said that the 60 prominent conservation biologists and environmental scientists urging Obama to appoint Grijalva were all from the Interior Dept. They are not all Interior Dept. biologists. We regret the error.

Gov. Janet Napolitano (Arizona Governor's Office)

PHOENIX—If Arizona Gov. Janet Napolitano becomes the new secretary of homeland security, this centrist Democrat could have the opportunity to institute nationwide reforms to address continuing problems with illegal immigration and border security. These reforms could grow out of the policies and programs that Napolitano has tested in her 15 years of public service in a state that is ground zero in America’s struggle to control its borders.

Napolitano, 50, is now frequently mentioned as President-elect Barack Obama’s leading candidate to run the Dept. of Homeland Security, a sprawling bureaucracy with 200,000 employees and a $50 billion budget that is responsible for protecting against future terrorist attacks, securing borders from illegal entry and responding to natural disasters through oversight of the much-maligned Federal Emergency Management Agency. The department also includes the Secret Service, the U.S. Coast Guard and other agencies.

Illustration by: Matt Mahurin

As governor, Napolitano developed expertise in many of homeland security’s primary missions. She gained a national profile when she demanded in 2006 that the federal government pay for deploying National Guard troops along the border to help the overwhelmed U.S. Border Patrol, a move that foreshadowed President George W. Bush’s deployment of guard troops to the Mexican border. Those troops have since been withdrawn, and last week Napolitano called for their redeployment.

A former U.S. attorney and state attorney general, Napolitano has been widely popular in a conservative, Republican-leaning state since winning the governorship in 2002. She carried every legislative district in her 2006 re-election.

Critics say Napolitano gained notoriety more through shrewd political decisions, like her call for the National Guard deployment, than by taking tough stands on important issues, including human-rights matters, that could be major considerations for a homeland security secretary.

Critics also point to her actions while U.S. attorney for Arizona in the mid-1990s. Napolitano soft-pedaled a Justice Dept. investigation into the notorious Maricopa County jails operated by Sheriff Joe Arpaio, who remains a powerful political force in Arizona. Arpaio, a Republican, later supported Napolitano in her first gubernatiorial campaign — a race she won narrowly.

If appointed and confirmed as DHS secretary, Napolitano is expected to take a pragmatic approach in dealing with the nation’s porous borders and its estimated 12 million illegal immigrants. She’s against the concept of “sealing the border” with a wall, instead favoring high-tech solutions across the Southwest.

Napolitano has said she has no time for “unrealistic” demands to round up and deport every undocumented worker. At the same time, she’s not about to extend a blanket amnesty, like that approved by President Ronald Reagan in the 1980s. She has talked instead about a strict protocol for allowing immigrants to remain in the United States, including stiff fines and requiring a history of paying taxes.

Napolitano is also poised to reform the nation’s visa system to increase the needed supply of workers — whether skilled, high-tech experts or seasonal migrant farm workers. But that won’t be a back-door entry, Napolitano insists, because she supports tough employer sanctions for companies that knowingly hire undocumented workers.

Napolitano has steered this meandering course during her six years as governor in a state where voters have passed a series of initiatives that have made life far more difficult for illegal immigrants, including denying welfare benefits. She vetoed more than a dozen bills that she deemed too harsh or too expensive to implement. But, at the same time, she has demanded that the federal government take immediate steps to control the border and has insisted that the state be reimbursed for the costs of imprisoning illegal immigrants.

Arizona has had to deal with the expenses of severe overcrowding in its prison system because it incarcerates illegal immigrants that are the federal government’s responsibility. Napolitano has sent the Justice Dept. a bill for $500 million to cover unreimbursed costs over the last six years, including a $500,000 penalty for each year delinquent and $11 million in interest, calculated at 1.8 percent.

She has also been pro-active in developing bi-national agreements with Mexico to strengthen border security.

Napolitano has managed large-scale emergency response operations that should give her a head start on strengthening FEMA. She has been tested, literally under fire, in developing a statewide emergency response plan for natural disasters that has proven effective in reducing the dangers of catastrophic wildfires that threaten much of Arizona’s 2.5 million acres of Ponderosa pine forest. Her experience could offer insights when trying to strengthen the nation’s emergency response system in era of global warming and powerful hurricanes.

The Arizona governor also has a leg up on anti-terrorism strategies. In 2004, Napolitano opened the Arizona Counter Terrorism Information Center, considered one of the best regional intelligence-gathering operations. The center is staffed with more than 200 detectives, special agents, analysts and other personnel representing 34 state, local and federal agencies.

But it is Napolitano’s handling of illegal immigration that has attracted national attention. Illegal immigrants have overwhelmed many of Arizona’s public schools, hospitals and prisons, especially since stronger border enforcement in California and Texas has funneled millions of immigrants toward Arizona. They hike across the Sonoran Desert, a dangerous trek that kills hundreds each year. Arizona, with a population of 6.2 million, has an estimated 650,000 illegal immigrants.

Doris Meissner, former director of the Immigration and Naturalization Service in the Clinton administration who is now at the Migration Policy Institute, a Washington nonpartisan think tank, said Napolitano “has been outspoken about the need for effective federal action” to control the border while “stressing the importance of comprehensive immigration reform legislation.”

Meissner said Napolitano “would be an excellent choice” to lead homeland security’s 22 different agencies. “She has impeccable law-enforcement and leadership credentials,” Meissner said, “and as a border-state governor has direct knowledge and experience of how our broken immigration system is affecting her state and the nation.”

Roy Beck, president of Numbers USA, a policy group that seeks to reduce immigration, criticized Napolitano, saying she supports “amnesty” for illegal immigrants, though he still praised her efforts in taking steps to “secure the border.” In what may be a signal that Napolitano could face tough questioning from Republicans, many Numbers USA members harshly criticized Beck’s recent statement in his blog, that “Obama could do a lot worse” in picking Napolitano.

Randall Larsen, director of the nonpartisan Institute for Homeland Security, which advocates containing terrorism, said Napolitano’s “resume is very impressive for what you are looking for in a secretary of homeland security.” However, Larsen said he was concerned that Napolitano lacked Washington experience, so who she selects as her deputy could be “very important.”

Rodolfo Espino, a professor of political science at Arizona State University, said Napolitano could face a relatively easy confirmation process, in part because Republicans in Arizona are eager to see her leave, for it would open the way for the Republican secretary of state, Jan Brewer, to succeed her as governor.

Espino said Napolitano has steered a centrist course on immigration policy, angering both the extreme left and far right. He predicted that Napolitano could push states to cooperate more on border security. “She’s going to take a very pragmatic approach that immigration forces are tied to economic trends,” Espino said.

Napolitano, who has declined to comment on her possible appointment, outlined her comprehensive plan on immigration policy in a February 2007 speech to the National Press Club in Washington. The speech provides a window into the policies that Napolitano clearly wanted Congress to implement only a month after she and Obama held a lengthy meeting to discuss a wide range of issues.

“We have to acknowledge that illegal immigration is a supply-and-demand problem, and that Congress must address both sides of that equation,” Napolitano said. The governor said Washington must take a two-pronged approach to addressing illegal immigration by not only cutting off the undocumented workers from across the border, or the supply of labor, but also increasing penalties on employers who hired illegal workers.

She dismissed anti-immigration leaders’ demands to seal the border with a wall as a “simplistic” solution, doomed to fail. She repeated her often-used phrase of “show me a 50-foot wall, and I’ll show you a 51-foot ladder.” Napolitano also said that rounding up an estimated 12 million “undocumented workers” for deportation is a “joke” and “not reality-based.”

Instead of a building an expensive 700-mile-long wall across vast stretches that could be difficult to maintain, Napolitano said there should be additional federal spending on developing “technology-driven” border controls, including ground-based sensors, radar and unmanned aerial vehicles backed by more Border Patrol agents.

The governor also said in her 2007 speech that she wants to reform the nation’s visa policies to “widen the legal labor pool” and revise quotas, so that nations are awarded visas on a more equitable basis. She noted that the Dominican Republic, with a population of 8 million, is granted more visas on a per capita basis than Mexico, with a population of 100 million. “No wonder it takes, on average, more than 10 years to get a legal immigrant visa from Mexico,” she said, “talk about incentive to cross illegally.”

Napolitano signaled that she would support a nationwide requirement that all employers must verify the legal status of employees through a federal database called E-Verify. “Employers who hire illegal immigrants — and know it — should be held accountable and penalized,” she said.

In 2007, Napolitano signed the nation’s toughest employer sanction’s law for hiring illegal immigrants after Arizona voters overwhelmingly approved a referendum. The law required employers to use E-Verify on new hires after Jan. 1, 2008. There have been few complaints from businesses since the law was implemented last July. Anecdotal evidence suggests that many illegal immigrants are leaving Arizona.

As far as the estimated 12 million illegal immigrants living in the country, Napolitano said the “only realistic alternative” is to “create a strict, stringent pathway to citizenship.” That pathway, the governor said, “must involve a substantial fine, learning English, having no criminal history, keeping a job, paying taxes, then getting in the back of the line and waiting your turn.”

Napolitano has been an advocate of strengthening the state’s ability to respond to emergency situations and be on the frontline of detecting and stopping terrorists. Her philosophy merges with a report last week in The Wall Street Journal that Obama’s advisers have said that the Dept. of Homeland Security may be in for a major overhaul, with a particular focus on redefining the relationship between the department and state and local officials.

Napolitano has earned a reputation of being a quick study, with an ability to bring divergent interests together for a common solution -– skills that will be imperative in running homeland security. Soon after taking office, Napolitano established a statewide task force to develop plans to restore forest health and reduce the risk of catastrophic wildfires in the aftermath of a June 2002 fire that burned 467,000 acres of woodland.

Napolitano championed various solutions, included thinning thousands of acres of overgrown and drought-weakened pine forests near populated areas. These preventive steps helped contain to less than 100 acres what might have been a serious wildfire that erupted near Flagstaff in 2006.

“She created a space for people to sit down and respectively build an agreement and then develop strategies that could be successfully implemented,” said Todd Schulke, senior policy adviser with Center for Biological Diversity, a Tucson-based environmental group. “We will miss her.”

Gov. Janet Napolitano (Arizona Governor's Office)

PHOENIX — In late February 2007, when Illinois Sen. Barack Obama asked for a private meeting with Arizona Democratic Gov. Janet Napolitano, it was the ambitious, smart and politically savvy Napolitano who was making political history. She was the nation’s first woman chair of the National Governors Assn.

Three months before announcing his improbable candidacy for the Democratic nomination for president in May 2007, Obama and Napolitano held a long discussion on a wide range of policy issues during a break at the governors’ winter meeting in Washington. “From that point forward,” Napolitano spokeswoman Jeanine L’Ecuyer said, “she began thinking about him as a viable presidential candidate.”

Illustration by: Matt Mahurin

Over the next 21 months, the two developed a close relationship. Napolitano, 50, became an early supporter of Obama, endorsing him some weeks before Arizona’s Feb. 5 primary, one of those held on Super Tuesday. The endorsement reportedly upset Sen. Hillary Rodham Clinton (D-N.Y.), then the party front-runner. She went on to win the state’s primary, 50 percent to 42 percent.

Napolitano continued to support and campaign for Obama and is said to have acquitted herself well on the hustings. Now, she has been named to the 11-member transition advisory committee assisting the president-elect in the selection of hundreds of high-level officials — the only elected official on the panel.

The Arizona governor is even being mentioned as a possible member of the Obama administration. Napolitano, a graduate of the University of Virginia law school, is a leading candidate to be the next U.S. attorney general, or, barring that, head of Homeland Security. With two years remaining on her second gubernatorial term, she refuses to discuss the possibility of joining the new administration — but she hasn’t taken herself out of the running either.

“Janet is an exceptionally talented person, both intellectually and politically, so it is not a surprise to me that the president-elect would have to seriously consider her for membership on his team,” said Don Bevins, the Arizona Democratic Party chairman.

In an interview last summer with the American Prospect, a liberal magazine, Napolitano expressed an interest in serving as attorney general, citing her experience as Arizona’s former attorney general and U.S. attorney. State Republican and Democratic political observers agree she’s highly qualified to run the Justice Dept. and restore it’s tattered reputation under former Atty. Gen. Alberto Gonzales. In November 2005, Time magazine named her one of the five best governors in the country.

Napolitano made her mark in a state controlled by a conservative Republican legislature. Using common sense and relying on the veto pen — she has rejected more than 125 bills — the Arizona governor signed budgets that increased spending on education.

Her pragmatic approach to illegal immigration scored her political points nationally. She called for the deployment of the Arizona National Guard on the border with Mexico to stem the flow of illegal immigrants four months before President George W. Bush announced a similar plan. She supports comprehensive immigration reform along the lines pushed by Sen. John McCain before the presidential campaign.

“She would be a great attorney general,” said Paul Charlton, a Republican former U.S. attorney for Arizona, who was one of the eight U.S. attorneys fired by Gonzales in November 2006 for political reasons. “It would be a great opportunity for somebody like Janet to go in and rewrite the ethic that these people practice under.”

“Is she qualified to be the attorney general of the United States? I certainly believe so,” said Barry Dill, an Arizona Democratic political consultant and former staffer for former Sen. Dennis DeConcini. “But is it a job she wants to do?”

Dill said Napolitano has many options to consider — including preparing for a 2010 run for Senate seat now held by McCain.

Chuck Coughlin, a GOP political consultant, believes Napolitano would jump at the opportunity to join the Obama administration, especially at a time when Arizona is facing severe budget shortfalls.

Napolitano’s appointment to Obama’s transition team is political plum in its own right. The advisory committee includes eight former Clinton administration officials, including two Cabinet members: Federico Pena, who served as secretary of transportation and then secretary of energy, and William Daley, who served as commerce secretary. Others with ties to Clinton include the former EPA administrator, Carol Brower, and a former deputy chief of staff, Christopher Edley.

But Napolitano’s rising national political star is a mixed blessing for Bevins and other Arizona Democrats. If she goes to Washington, the Republican secretary of state, Jan Brewer, would become governor and preside over a GOP-controlled state Legislature looking to slash spending to erase a mounting $1.3 billion deficit.

“A lot of programs put in place by Napolitano would be in jeopardy with a new Republican governor,” said Jim Pederson, a former state Democratic Party chairman. “Instead of a scalpel, you would see a meat ax hit the state budget in Arizona.”

Napolitano’s political career was launched when Bill Clinton appointed her as U.S. attorney for Arizona in 1993. Before then, she had attracted national attention during the 1991 Clarence Thomas Supreme Court confirmation hearings. She was one of two attorneys representing Anita Hill, who accused Thomas of sexual harassment. Napolitano’s nomination as U.S. attorney was held up for almost a year because Republicans were so angry over her representation of Hill.

As U.S. attorney, Napolitano played a prominent role in the Oklahoma City bombing investigation. She oversaw the case against Michael Fortier of Kingman, Ariz., who pleaded guilty to knowing about the plot by Timothy McVeigh and Terry Nichols to bomb a federal building. He later testified against the two. Napolitano also served as chairman of the U.S. attorney’s advisory committee to then Atty. Gen. Janet Reno.

Charlton, an assistant U.S. attorney when Napolitano ran the U.S. attorney’s office in 1990s, said that she displayed “good leadership qualities” and that her experience would be invaluable if chosen U.S. attorney general. “There would not be any learning curve,” Charlton said. “She knows the prosecutors’ job is to do what’s right, and not what’s politic.”

Napolitano’s record is not without blemishes. She was criticized for signing a consent agreement with politically powerful Maricopa County Sheriff Joe Arpaio on her last day as U.S. attorney, thereby ending a federal investigation of allegedly inhumane jail conditions in county jails.

Napolitano was elected Arizona attorney general in 1998. Her tenure was marked by efforts to protect children, women, senior citizens and the environment. When she left office, Napolitano had reduced the backlog on child dependency cases from more than 6,000 to 1,200. She initiated prosecution of the Arizona Baptist Foundation in one of the nation’s biggest fraud cases. She was the first Arizonan to argue a death-penalty case in the World Court and appeared before the U.S. Supreme Court on a different death penalty case.

Her strong performance as a prosecutor positioned Napolitano to run for governor in 2002, a race she won by about 21,000 votes — less than 1 percent of the vote. But once in office, her political skills and strong support for education has made her one of Arizona’s most popular governors in decades.

“After winning the governor’s race by a slim margin, she won every county in the state in her next election,” Bevins said.

Jose Cardenas, a Phoenix attorney, has known Napolitano since 1983, when she joined his law firm, Lewis & Rocca. “She was one of the brightest, smartest people you would ever meet,” he said. “She was superstar in our firm as a young lawyer.”

“She knows the importance of integrity in a law firm,” he said. “I think she could restore the reputation of the Justice Dept.”

Washoe County, Nev. (Flickr: Ken Lund)

RENO, Nev.—Three hours after Alaska Gov. Sarah Palin, the Republican vice presidential nominee, held a campaign rally down the street, the Washoe County GOP chairwoman Heidi Smith was puzzled as she looked over early-voting numbers. Democrats were turning out in droves.

Four hours east of San Francisco, Washoe County is the leading swing county of Nevada, a battleground state. Sen. John McCain needs a win here to keep his flickering presidential hopes alive.

For decades, Washoe County was considered a lock for Republicans. The last time a Democratic presidential nominee won Washoe County was Lyndon B. Johnson in his landslide of 1964. But last week, county registrar Dan Burk released stunning news: registered Democrats outnumbered Republicans by 1,284 voters.

Illustration by: Matt Mahurin

“How did this happen?” Smith said as she shuffled through papers on her desk and eight volunteers in the strip-mall office manned the phones and occasionally handed out McCain-Palin signs.  “This was a strong Republican county. And all of a sudden — it is Democrat.”

The Democratic takeover of Washoe County has Republicans across the state reeling because it opens the door for Sen. Barack Obama to win Nevada’s five electoral votes on Nov. 4.  Smith and other top GOP officials are considering a law suit to challenge the validity of new voter registrations that has turned a 17,500-voter registration advantage for Republicans in August 2007 into a 1,300-registration advantage for Democrats.

Traditionally, Nevada’s electorate has been divided between the Democratic stronghold of Clark County, which includes Las Vegas and its suburbs, and the GOP-dominated rural areas. The GOP could usually count on places like Washoe County, which includes Reno, to tip statewide elections in its favor. Until now.

“No one thought [a Democratic takeover] would happen this fast with this kind of numbers in Washoe County,” said Chuck Muth, a GOP strategist from Carson City, Nev. “Washoe County had a large Republican registration four years ago, when [George W.] Bush barely carried the state.”

Polls show that the presidential race in Nevada continues to be a tossup. But Obama’s grass-roots-driven campaign is steadily attracting support for the Illinois senator, and Democrats are turning out to vote.  “The early numbers are encouraging, to say the least,” said Jeff Giertz, an Obama campaign spokesman.

Illustration by: Matt Mahurin

Democrats were ready to hit the polls on Oct. 18, the first day of early voting which continues through Oct. 31. “[It] was like a tailgate party for Obama,” said Eric Herzik, a political science professor at University of Nevada, Reno, and a registered Republican. To stoke the fires, Obama held campaign rallies before large crowds Saturday in Las Vegas and Reno.

Meanwhile, McCain’s fortunes in the state seem to be fading. He failed to lock down Nevada’s independents and reassure nervous conservative Republicans. Add to that a faltering economy and Obama’s 4 to 1 spending advantage.

“This thing is crumbling before their eyes,” said Jon Ralston, a Las Vegas Sun political columnist.

Nevada unions have played a major role in registering voters, particularly Latino voters — expected for the first time to play a significant, perhaps pivotal, role in the election here. About half the Culinary Union’s 60,000 members in Nevada are Latino and there has been a strong push by the union to register members. “There is a a lot of coalescing around Sen. Obama,” said Chris Bohner, a Culinary Union spokesman. “His support is very high among Latinos.”

The union does not give out voter registration totals by ethnicity, Bohner said, but “there are thousands of new voters in our union” and he expects turnout is “going to be very high in the Latino community.”

Latinos, unofficially, make up about 11 percent of the registered voters in Nevada, and are roughly 24 percent of the population. The Nevada secretary of state does not track voter registration by ethnicity, but Latino organizing groups report registering more than 53,000 Latinos in Nevada over the last year, led by The We Are America Alliance, which conducted a national Latino voter registration drive.

Political scientist and Latino voting expert Matt Barreto of the University of Washington predicts a nationwide turnout of more than 9 million Latinos in 2008, compared with 7.6 million in 2004.

“They are energized to vote,” said Xio Rodriquez, a Latina Democratic Party volunteer in Reno. “They know some of the issues, they know the candidates and they know Obama and what he stands for.”

Giertz, the Obama campaign spokesman, said the Latino voter “certainly can make a difference in the election.”

Political analysts here say that Obama’s caucus win last January was a turning point in reshaping Nevada’s political map. Working outside Democratic Party powerbrokers, Obama managed to create a network of supporters at the precinct level who carried him past Sen. Hillary Rodham Clinton.

Since then, the Obama campaign, with the help of the state Democratic Party, has continued to organize at the precinct level, according to David Damore, a political science professor at the University of Nevada, Las Vegas. “Now you are going to see what a community organization does,” Damore said.

Washoe County, Nev. (Wikimedia)

Obama’s grass-roots network, which in the past year has grown to more than 4,500 volunteers, has registered tens of thousands of Democratic voters. Its success is evident here in Washoe County.

“We haven’t had Democrats in the lead in Washoe County in 30 years,” said Herzik.

“It was something we thought we would never see happen,” said Paul Kincaid, spokesman for the Nevada state Democratic Party.

Herzik said it’s too early to tell whether the Democratic registration advantage is more than a short-term phenomenon, inspired by Obama. But there are indications that Democrats are digging in for the long haul.

Amy Curtis-Weber, executive director of the Washoe County Democratic Party, said more than 8,000 new voters were registered on the day of the Democratic caucus.  That was the beginning of the big surge in Democratic registrations that pushed the party’s edge in the state to more than 110,000, according to the Nevada secretary of state. A year ago, the margin was 4,200 voters. When President George W. Bush carried Nevada by 20,000 votes in 2004, registered Republicans outnumbered Democrats by 4,000.

While Obama’s campaign is taking it to the streets in Nevada, McCain’s campaign seems a virtual no show other than Palin’s Oct. 21 appearance, which drew about 3,000 supporters, about half the size of her audience in September. “The other day, I saw three different groups of Obama supporters walking through my neighborhood,” said Muth, the GOP strategist.  “I have yet to see one McCain person.”

That pretty much dooms McCain in Nevada, contends Paul Davis, a veteran Republican activist and political science professor at Truckee Meadows Community College and the University of Nevada, Las Vegas. He partly based his prediction on the overwhelming support for Obama by his students, many of whom have already voted. “I believe that as far as Washoe County is concerned, not only is Obama going to win — he’s going to win big,” Davis said.

There’s more troubling news for McCain. About one-third of Davis’ Republican colleagues tell him they are planning to vote for Obama because of the country’s financial crisis. “They want something passed to stop the bleeding in the stock market,” Davis said. “They are afraid if McCain gets elected, it will be gridlock all over again.” Davis said he already “gladly” cast his vote for Obama.

McCain hasn’t been to Nevada since Aug. 9, and his absence has further hurt his standing with the conservative Republican base here. “Being a maverick doesn’t really help him,” said Herzick. “They wanted a true fiscal conservative.”

McCain’s vote for the $700-billion Wall Street bailout package also alienated a segment of Nevada’s conservative voters, who may turn to Bob Barr, the Libertarian candidate. That vote undermines McCain’s attempt to paint Obama as a “socialist”, said Muth. “You can’t make that argument with moral authority when you just supported the government bailout and nationalization of the banks,” he said. “That just makes you a hypocrite.”

Last Wednesday, a steady stream of voters turned out at the downtown Reno public library, a designated voting site. Bryant Broxson, 46, and his wife, Lani, 38, voted for McCain. “If [Obama] becomes president, America will change and will never recover and never be the same again,” Lani Broxson said.

Mario Lopez, 39, a court clerk, said he voted for Obama because the “Republicans are responsible for the condition of the economy.”

Six other voters all said they favored Obama, citing his positions on health care and the economy, his poise and the greater likelihood that he would restore America’s international standing. “It’s been a miserable eight years,” said Amber Armstrong, 29, a registered independent.

About 273,800 votes have been cast in Clark County in early voting through Tuesday. Democrats have a commanding 66,600-vote advantage — 147,600 Democrats have cast ballots, compared with 81,000 Republicans and 45,700 independents and other parties.

At 54 percent, Democratic early voting turnout in the county far exceeds that of four years ago, when it was 46 percent. Democratic Sen. John Kerry, the Democratic nominee won Clark County, 52 percent to 47 percent. But Bush won the state by carrying Nevada’s rural counties along with Washoe County.

This year, however, there are clear indications that McCain cannot rely on Washoe County to tip Nevada into his corner. In Washoe County, 68,250 early ballots cast have been cast through through Tuesday, and Democrats have widened their lead to 7,300 voters. Democrats cast 31,900 votes, while Republicans cast 24,560.

“This is by far the largest number of early voters that we have ever seen,” said Burk, the Washoe County registrar. “Nothing else comes close.”

The strong Democratic turnout has Republicans mulling possible legal challenges. “We question whether these are valid registrations,” said Smith, the Washoe County GOP chairwoman.

While talking to Smith, she was interrupted by a cell phone call, which she inadvertently put on the speakerphone. It was the state GOP executive director Zachery Moyle, and the two discussed what could be done about the tsunami of Democratic Party registrations.

“I’m looking for people to sign on to a lawsuit,” Moyle said to Smith, who fumbled with the phone while turning off the speaker. “You didn’t hear that,” she said glancing in my direction.

When asked later that day about the potential for a lawsuit, Moyle said there was no “definitive plan” to go to court. “There’s been obviously concern with voter fraud across the country,” he said.

Democratic Party leaders said the only evidence of voter fraud so far in Nevada was a series of phone calls made to Democratic Latino voters telling them they could vote by phone and didn’t have to go to the polls. “The Republicans who are complaining about voter fraud are doing it simply to scare people,” contended Kincaid, the Democratic Party spokesman.

Moyle said he was still confident that Republican voters would turn out in big numbers for early voting and on Election Day, and that McCain would win Nevada.

“Yes, we are losing the early voting now,” Moyle said. “But in order for the Democrats to win and for us to be scared, we have to see [Democrats] to continue to turn out the vote.”

Sen. John McCain (WDCpix)

PHOENIX—When you talk to current and former members of Arizona’s congressional delegation about Sen. John McCain’s legislative style, one element runs through all the accounts — the Republican presidential nominee’s combustible temper.

McCain’s often-cited outbursts are a hallmark of his career, but what triggers them is subject to debate. Some former Democratic colleagues and non-political observers say McCain’s ego is easily bruised; and when that happens, the result can be explosive rage. Republican supporters, however, say that what many describe as “rage” is McCain’s passion to fight for what he believes is right — particularly when defending the downtrodden.

McCain’s Senate office and his presidential campaign office did not respond to a repeated telephone calls and email queries for comment.

Illustration by: Matt Mahurin

Former Sen. Dennis DeConcini, a Democrat who represented Arizona from 1977-95, says, for example, that the GOP presidential nominee does not take criticism well. “[McCain] has a terrible time with anybody questioning his judgment,” said DeConcini, “If you cannot accept somebody questioning your judgment, whether it is to invade Iran or impose sanctions on Russia, how can you come to sound conclusions for the national interest?”

Rep. John Shadegg (R- Ariz.) sees McCain’s reputed sensitivity to criticism differently. “He’s intense, he’s passionate,” Shadegg said. “That’s what has always caused me to admire him” — and that’s what makes him a great leader.

Shadegg doesn’t dispute McCain’s fiery nature, but insists McCain’s temperament doesn’t stop him from consulting a wide range of opinion before making major decisions. “He’ll give your argument thoughtful consideration,” said Shadegg, who has represented Arizona’s 3rd Congressional District since 1994 and is considered to be in the toughest reelection race of his career.

McCain is most likely to factor in differing opinions when it comes to matters affecting Arizona, many former Arizona congressmen say, especially if he is not well versed in those issues. The Grand Canyon state, they insist, has always been of secondary interest to McCain.

“John McCain was a national senator from the very beginning, and he didn’t give much attention to Arizona issues,” said retired GOP Rep. Jim Kolbe, now a fellow at the German Marshall Fund. “But when he did get involved, it was at a level that he really knew and understood the issues. On immigration reform, he was deeply involved.”

On legislative matters important to Arizona, McCain typically defers to his fellow GOP senator, Jon Kyl, according to former Rep. Matt Salmon. A Republican, Salmon served in the House from 1994-2000 before narrowly losing to Democrat Janet Napolitano in the 2002 governor’s race.

“He acknowledged on certain issues that Jon Kyl was more the expert,” said Salmon, now president of Competitive Telecommunications Assn., an industry trade group, “If he was dealing with military issues and Indian affairs, John usually took more of the lead.”

One former GOP congressman, who asked to speak off the record, said that McCain “carefully picked what he wanted to get involved with.” As the congressman describes it, “He had bigger fish to fry.”

Former Sen. Dennis DeConcini (Wikimedia)

DeConcini’s harsh appraisal of McCain perhaps stems, at least in part, from their time as part of the infamous Keating Five. DeConcini believes McCain leaked confidential documents in an attempt to damage him before the Senate Ethics Committee’s 1990-91 hearings into the five senators’ role in seeking banking regulatory relief for financier Charles H. Keating Jr. McCain has denied under oath that he leaked the documents.

In the fall of 1989, a number of confidential Ethics Committee documents were leaked to major newspapers, including the New York Times, The Washington Post, The Wall Street Journal and The Arizona Republic, that portrayed DeConcini and the Democrats Don Riegle of Michigan and Alan Cranston of California as the most culpable of the senators. In September 1990, The New York Times, citing “congressional sources,” reported that the committee’s investigator, Robert M. Bennett,  had confidentially recommended to the panel that Sen. John Glenn of Ohio and McCain be cleared.

A 1992 investigation into the leaks by special prosecutor Peter Fleming found circumstantial evidence of McCain’s role. “Sen. McCain, his staff, as well as his counsel all deny that they knew Bennett’s recommendation. These denials are contradicted by the evidence,” Fleming wrote in his report. However, he continued, “there is no direct evidence to show that McCain made the disclosures to The New York Times.”

The Boston Globe reported in 2000 that an earlier GAO investigation had found overwhelming circumstantial evidence that McCain was involved in the leaks. Clark B. Hall, a former FBI agent, told The Globe that McCain lost his temper during his interview about the leaks. “His reaction that day was to point the finger at others,” Hall said, “He said I ought to look at DeConcini, I ought to look at Riegle.” Hall said that he found McCain’s finger-pointing “contemptible” and “consistent with the leaks themselves, which were intended to shift the blame elsewhere.”

Hall told The Globe that the ethics committee ignored the evidence implicating McCain. The panel, he said, “smoothed it over.”

In the larger matter of whether McCain had acted improperly, the committee ruled that McCain exercised “poor judgment.” DeConcini was found to have given the “appearance of being improper.”

DeConcini, who served with McCain during the Vietnam War hero’s first 12 years in Congress, claims to “know McCain well.” He said McCain is prone to viewing criticism of his ideas as an attack on his patriotism as well as a personal affront. When McCain does defer to others, “he becomes somewhat erratic,” DeConcini said, “like his recent handling of economic issues.”

McCain’s thin skin became evident early in his Senate career, according to DeConcini. He recalled an incident when McCain voted against a bill DeConcini sponsored. DeConcini made derogatory comments about McCain’s vote, and “he just laid into me on the floor of the Senate, saying ‘How dare you begrudge my name?’ I just walked away.”

Other senators developed different tactics to deal with McCain’s temper. One time, DeConcini said, McCain was upset that Sen. Timothy Wirth, a Democrat from Colorado, refused to move to the Senate floor a bill that both McCain and DeConcini supported.

“McCain started putting his finger into Wirth’s chest,” demanding that Wirth allow the bill to move forward, DeConcini recalled. Wirth responded by getting into McCain’s face, whereupon he “calmed down.”

DeConcini said that Wirth later told him that House members had learned to use this in-your-face tactic when McCain, who served in the lower chamber from 1982-1986, lost his cool. “Whenever John blows up, you move in close to him,” DeConcini said Wirth told him. “He can’t take it.”

Shadegg sees a noble motive behind McCain’s forceful tactics. “He doesn’t like to see the little guy get hurt by big powerful interests.”

Shadegg cites McCain’s investigation of lobbyist Jack Abramoff as an example of McCain’s willingness to go up against powerful interests — even those with close ties to the GOP. “John McCain didn’t give a damn about the fact that he was going after a Republican,” Shadegg said. “He was fighting for what he saw as an injustice.”

McCain was chairman of the Senate Indian Affairs Committee from 2005-2007 and led an investigation into Abramoff’s dealings with Indian tribes and development of casinos. The committee investigation was parallel to a federal criminal probe that led to Abramhoff pleading guilty to three federal counts of mail fraud, conspiracy and tax evasion. Abramoff was sentenced in September to four years in prison. He was already serving a six-year sentence on state charges from Florida.

McCain’s willingness to fight a pitched battle across ideological or party lines has cost him dearly with conservatives, many of whom remain lukewarm about his presidential run. “To the frustration of some Republicans,” Shadegg said, “he doesn’t have a ‘Republican’ or a ‘conservative’ filter. He has a ‘right’ and ‘wrong’ filter.”

Pat Murphy, the former publisher and editor of The Arizona Republic, has closely followed McCain’s political career from its start in 1982. Now retired and living in Idaho, he was one of few Arizona journalists with a record of taking on McCain. His newspaper paid for it. For months at a time, McCain would not talk to the state’s largest daily newspaper.

Murphy said McCain liked to attach himself to causes that would attract attention, rather than doing the work of delving deeply into complex legislation that might effect Arizona — like water rights and mining reform.

“He had his ear turned to issues he could exploit and capitalize on,” Murphy said. Campaign-finance reform and going after certain high-profile defense contracts generated a lot of attention for McCain, Murphy said.

Murphy, a Democrat, disputes the idea that McCain’s irascible temperament should be overlooked because his primary interest is serving his country. “He doesn’t give a crap about the country,” Murphy claims. “It’s all about John McCain.”

Cindy McCain addresses the Republican National Convention. (Wikimedia)

PHOENIX—Sen. John McCain’s wife and father-in-law continued a lucrative business partnership with disgraced financier Charles H. Keating Jr. for 11 years after the GOP presidential nominee said he ended his close friendship with Keating in March 1987.

Cindy McCain’s business partnership with Keating in a real-estate development between 1986 and 1998 netted her a tidy profit, in addition to years of significant tax benefits. Her father, who died in 2000, earned similar returns.

Illustration by: Matt Mahurin

McCain’s campaign and his Senate office did not respond to repeated phone calls and emails concerning Cindy McCain’s investment with Keating. McCain and his wife file separate tax returns and signed a pre-nuptial agreement before their marriage in May 1980. Cindy McCain owns one of the nation’s largest beer distributorships, Hensley & Company.

On Monday, McCain’s attorney, John Dowd, said in a conference call with reporters that McCain was not aware of his wife’s and father-in-law’s investment with Keating at the time it was made. “John was unconnected to that and unaware of it at the time and did not participate in it,” Dowd said.

However, during the Keating Five Senate Ethics Committee hearings in 1990-91, McCain testified that he was aware of the family investment with Keating in early 1986.

Under questioning from Dowd, McCain said he learned of the investment from a Hensley & Co. executive.

“I was told …they were going to invest in a shopping center and that the investment –- the project — was being put together by a subsidiary of American Continental,” McCain told the ethics committee. “He [the executive] later told me that had happened. And I had no interest in it and just noted in passing that this investment took place.”

The GOP presidential candidate writes in one memoir that a turbulent 30-minute verbal altercation in his Senate office on March 24, 1987, ended his six-year friendship with Keating. The argument began after McCain heard from another senator that Keating had called him “a wimp.”

“We never met again,” McCain wrote in his 2002 memoir, “Worth the Fighting For.” “I never had another conversation with him.”

The rupture in their personal relationship, however, didn’t stop McCain from attending two meetings the next month with federal banking regulators at Keating’s insistence. McCain’s attendance at the April meetings nearly halted his political career. The Senate Ethics Committee, which investigated McCain’s actions on behalf of Keating, who was seeking regulatory relief for his savings and loan business, found that McCain used “poor judgment” in his dealings with Keating.

Nor did the end of McCain’s relationship with Keating affect his immediate family’s business relationship with the financier. Cindy McCain and her father, James Hensley, remained investors in the Keating real-estate partnership that included a north Phoenix shopping center. The center sold in July 1998 for $15.4 million.

Their business relationship with Keating began April 15, 1986, when the two bought an 8 percent stake in Fountain Square Associates Ltd. Partnership. Cindy McCain and her father made the $359,100 investment through Western Leasing Co., a partnership they jointly owned.

Fountain Square Associates was structured as a tax shelter for wealthy investors. Its only asset was the Phoenix shopping center, which was built by another Keating-controlled company. The shelter allowed investors to use real-estate depreciation as a tax deduction, a provision later banned by Congress.

The Fountain Square Associates’ prospectus promised investors a 37 percent annual return on their investment. Cindy McCain and Hensley were among 54 investors in the partnership, most of whom were Keating employees and associates. Western Leasing purchased six shares in the partnership, Keating bought two and most of the remaining investors one share or less. Each share sold for $59,850.

Fountain Square Associates’ general partner, which oversaw daily operations, was American Continental Resources Corp., a subsidiary of Keating’s Phoenix-based American Continental Corp. American Continental also owned Lincoln Savings & Loan, the thrift that Keating asked McCain and the four other senators to protect from regulators.

In 1989, American Continental filed for bankruptcy, leaving more than 23,000 investors holding worthless bonds. Many bondholders were elderly and thought thought their investments were insured because Keating had sold them at federally insured Lincoln Savings branches.

Keating was convicted on 73 counts of bankruptcy and wire fraud in 1993, and sentenced to 12 years in federal prison. Four years later, his conviction was overturned on a technicality. In 1999, Keating pleaded guilty to four counts of fraud and was sentenced to time served.

Despite the bankruptcy, American Continental Resources managed to keep control of the shopping center owned by Fountain Square Associates, which allowed Cindy McCain and Hensley to take advantage of its tax breaks. After the shopping center sold, McCain’s 1998 Senate financial disclosure statement reported under “unearned income” that his wife made between $100,001 and $1 million on the sale of the property. In previous years, McCain’s financial statements had valued the Fountain Square partnership at less than $1,000, generating income of less than $200.

In 1998, Cindy McCain held millions of dollars worth of assets in stocks, municipal bonds and other securities, including a partnership share worth at least $1 million in the Arizona Diamondbacks. She also had investments in two other real estate projects, each worth at least $1 million, including a master planned community in Yuma, Ariz., and 160 acres of undeveloped property in Mesa, Ariz.

The same year, Cindy McCain also owed more than $1 million to a Phoenix bank, and had more than $200,000 in loans from the family’s beer distributorship.

Sen. McCain’s only income in 1998, besides his Senate salary, was his $49,688 Navy pension. He also listed three bank accounts totaling less than $31,000. He reported no liabilities.

The Fountain Square sale generated the second largest amount of income from Cindy McCain’s array of investments in 1998, according to Sen. McCain’s financial disclosure statement. Only dividends from Cindy McCain’s investment in Hensley & Company stock, which exceeded $1 million, generated more income.

Cindy McCain’s and Hensley’s 1986 investment in Fountain Square earned the father and daughter team a nice return. Its greater value to the family, however, may have had more to do with politics than money. Their investment was made the same year that McCain was running for the Senate seat held by the retiring Barry M. Goldwater. Keating and his employees contributed more than $50,000 to McCain’s campaign, bringing their total contributions to McCain since 1982 to at least $112,000.

Sen. John McCain (WDC Pix)

PHOENIX— In one of the most contested exchanges from the first presidential debate, Sen. Barack Obama attacked Sen. John McCain’s voting record on alternative energy.

“Over 26 years, Sen. McCain voted 23 times against alternative energy like solar and wind and bio-diesel,” Obama said.

McCain dismissed Obama’s statement as if it were an absurd claim. “No one in Arizona is against solar,” McCain retorted.

Illustration by: Matt Mahurin

Moments later, Obama sought to make another point about McCain and Arizona. The Arizona senator interrupted the Democratic presidential nominee to make a sweeping assertion about his unwavering support for alternative energy development: “I have voted for alternate fuel all of my time,” McCain said, “and no one can be opposed to alternate energy.”

McCain’s legislative record shows otherwise.

Michael Neary, president of the Arizona Solar Energy Industries Association, a non-profit trade association, said McCain frequently says he supports renewable energy development, but his deeds do not match his words. McCain, Neary said, has skipped many important votes or voted against measures that would spur alternative sources like solar and wind.

“If he was truly an ally of alternative energy, he would have taken the time to get out there and vote and maybe rally some of the troops on the Republican side to get [measures] passed,” Neary said. “That’s something he hasn’t done, and this is extremely important to Arizona.”

McCain’s underwhelming support of alternative energy is well known to Arizona’s solar industry leaders, several of whom were surprised to hear the GOP presidential candidate proclaim his strong support for solar during the first debate. McCain’s campaign and Senate office did not return numerous phone calls and emails seeking comment.

Vivian Harte, chairwoman of the Arizona Solar Energy Assn., a statewide solar-advocacy group, said McCain’s backing was needed last winter when a renewable energy tax-incentive bill came within one vote of clearing the Senate. McCain, however, failed to go to the Senate floor and cast a vote — though he was in the Washington area.

Harte said her ears perked up during the debate when McCain declared that no one in Arizona is against solar. “I was surprised to hear that,” she said, “because he has voted against incentives in the past.”

McCain’s resistance to passing tax incentives threatens to derail Arizona’s solar industry just as it is poised to become one of the biggest players in the world. The state, experts say, has the potential to provide a significant share of the nation’s electricity supply. But so far, there has been relatively little interest in developing Arizona’s most plentiful natural resource — sunshine.

Harte said industry technical studies indicate that 10,000 square miles of solar-energy generating facilities in the state’s Southwestern deserts could produce electricity for the entire county. “We have the space and we have the sun,” she said. “Certainly, the Southwestern U.S. should be using a lot of solar power.”

Arizona’s fledgling solar industry heaved a sigh of relief Friday, when President George W. Bush signed the $700-billion Wall Street bailout bill, which included legislation extending and expanding tax incentives for alternative energy that were set to expire at the end of 2008.

The incentives, says Arizona Public Service Co. spokesman Jim McDonald, are vital to the development of alternative energy here. “It’s important to Arizona,” he said.

McCain voted in favor of the financial-rescue bill last week. In doing so, he reversed his history of opposing tax incentives for renewable energy.

In 2004, McCain introduced an amendment that would have eliminated the alternative energy tax credits. In March 2006, he voted against extension of the incentives. In 2007, the senator missed three votes to extend the tax credits set to expire this year.

McCain’s claim during the first presidential debate to support renewable energy is an extension of assertions made in his campaign ads that have come under fire from environmental groups. One ad links McCain to renewable energy, stating that it would be used to “transform our economy, create jobs and energy independence.”

The Sierra Club said the ad is “completely false and misleading” because McCain “has a long record of consistently voting against renewable energy.” The environmental group said in a statement that McCain voted twice in August to block extending renewable-energy incentives to push through offshore oil drilling legislation.

The environmental group also criticized McCain for being the only senator not present for the February vote on an economic stimulus bill that included incentives for renewable energy. McCain’s campaign plane had arrived at Dulles International Airport, about 20 miles west of Washington, shortly before the vote. McCain skipped the debate and vote, telling the Associated Press that he was “too busy” and “focused on other stuff.”

The bill received 59 votes, one short of that needed to cut off debate and allow it to proceed to the floor, where only 51 votes were needed for passage. The next day, McCain voted for a revised economic stimulus bill — one stripped of incentives for clean energy — and it passed the Senate.

Uncertainty over whether the incentives would be renewed has played havoc with solar projects in Arizona. Some were canceled because there wouldn’t be time to finish them this year to qualify for the tax credits. “The whole solar industry was starting to drag,” said a state economic development official.

One threatened project was construction of the world’s largest solar electric generating station, to be built about 70 miles southwest of Phoenix. The Solana power plant would have been derailed if the 30 percent tax credit on the cost of construction had not been extended another eight years.

Abengoa Solar Inc., a Spanish energy company, is planning to build the $1.2-billion facility near the small town of Gila Bend, Ariz. The facility will produce 280 megawatts of power when completed in 2011, enough electricity for 70,000 homes.

Arizona Public Service, the state’s largest electric utility, has a contract to purchase all the electricity produced by the solar plant, estimated to be worth $4 billion over 30 years. Plant construction is expected to create about 1,500 jobs, and the facility is expected to employ 85 skilled technicians. The plant stores energy in saltwater tanks, allowing it to produce electricity for several hours after the sun sets.

In testimony last March before the House Select Committee on Energy Independence and Global Warming, a representative of the Arizona Public Service warned that without the incentives, construction of emission-free sources of electricity like Solana would not happen. “Without these tax credits, large scale solar projects, including Solana, are simply not affordable today,” Barbara Lockwood, APS manager of renewable resources, said in a statement.

Passage of the law clears the way for APS and Abengoa to move forward. Lockwood said the utility is committed to making Arizona “the solar capital of the world and bringing affordable renewable energy to all of its customers.”

Reaching this goal won’t be easy. APS is now reliant on nuclear power, coal and natural-gas-fired generating plants. The utility operates the largest commercial nuclear generating station in the world, with 3,825-megawatt capacity. It owns 29 percent of the triple-reactor Palo Verde Nuclear Generating station, 50 miles west of Phoenix.

The amount of solar power used in Arizona remains a tiny fraction of the energy produced by fossil fuels and nuclear power. APS has installed only 5 megawatts of solar power in the last 20 years. The utility is also planning to build a second large solar facility, working with Nevada utilities, that would generate approximately 250 megawatts. But to keep up with growing demand, APS would have to build one 250-megawatt solar plant a year.

Arizona regulators are pushing the state’s public utilities to generate more power from alternative sources. APS and other utilities must generate at least 15 percent of its energy from renewable sources by 2025 under new regulatory rules.

Congress has tried to pass legislation requiring the nation’s utilities to produce more power from renewable sources. McCain has voted against implementing federal standards.

McCain has close ties to APS, and its parent company, Pinnacle West Capital Corp. Robbie Aiken, Pinnacle West’s chief Washington lobbyist, is an unpaid volunteer for the McCain campaign. He is helping with advance fieldwork and fund-raising. Aiken was also involved in McCain’s 2000 presidential campaign.

Pinnacle West executives, including Aiken, have made personal contributions totaling at least $25,000 to the McCain’s presidential campaign since January 2007. Meanwhile, Pinnacle West chairman, William Post, has raised at least $100,000 for McCain by bundling contributions. Steve Betts, president of SunCor, a Pinnacle West real-estate subsidiary, has also raised at least $100,000 for McCain.

Rather than supporting renewable energy, McCain has made expansion of nuclear energy the centerpiece of his energy policy. During the Sept. 26 debate, he said construction of 45 nuclear power plants would create 700,000 jobs and help the U.S. reduce reliance on foreign energy.

McCain’s call for more nuclear energy has triggered concern in northern Arizona, where widespread radiation contamination from the postwar uranium mining boom, whicht continued until the 1970s, harmed the health of thousands of people.

Harte, of the Arizona Solar Energy Assn., said she doesn’t expect McCain to do much for renewable energy if elected president. “He talks with passion about nuclear power,” she said. “That’s really where his focus is.”

The “Keating Five” scandal became the symbol of the collapse of the nation’s savings and loan industry and the ensuing $124 billion government bailout.

Black and Gray testified before the Senate Ethics Committee in 1990 that McCain, along with Sens. Dennis DeConcin (D-Ariz.), Alan Cranston (D-Calif.), John Glenn (D-Ohio) and Don Riegle (D-Mich.), pressured Gray to relax an investment regulation opposed by Charles Keating. The committee ruled that McCain exercised “poor judgment” for his role in the affair.

Black, now an associate professor of economics and law at the University of Missouri-Kansas City, told me that McCain has long opposed regulation of the financial markets.

“McCain has gotten this stuff wrong from the beginning,” Black said. “One his first acts as a member of the House was trying to stop the re-regulation of the thrift industry” by opposing efforts by regulators to increase capital reserves and reduce the amount of money thrifts could invest, as well as other revisions sought by regulators.

With the economy heading into recession, Obama is bringing up McCain’s unsavory ties to Keating in an attempt to focus the blame for the current financial crisis on the man who was in the eye of the last financial storm to plague the nation the nation–the S&L crisis.

It’s a strategy that could work.

Sen. John McCain (WDCpix)

PHOENIX—Lost amid the Senate’s Wednesday night passage of a $700-billion Wall Street bailout plan was an effort by Sen. John McCain and others to “fix” an accounting rule that they believe has helped create the crisis.

The Securities and Exchange Commission and the Financial Accounting Standards Board, or FASB, on Tuesday issued “clarifications” regarding the rule, known as mark-to-market. The new directive allows companies to value their assets according to their estimated future cash flow, rather than current market prices.

Illustration by: Matt Mahurin

There are few buyers for many of the assets on the books of financial institutions, especially mortgage-backed securities. That makes them difficult to value. The price uncertainty has driven their market value down as much as 80 percent, threatening the solvency of many banks.

Banks and securities firms have already written down $500 billion worth of mortgage-backed paper as home prices have fallen and foreclosures skyrocketed.

The Senate bill calls for the SEC to issue a report to Congress on the effect of mark-to-market accounting on the financial industry within 90 days of the legislation becoming law. It also gives the SEC authority to suspend the mark-to-market rule.

The bill now moves to the House, where a vote is expected Friday. Members of the House Republican Study Committee are saying they want the mark-to-market rule scrapped.

McCain first called for repeal of the accounting rule in March. His presidential campaign issued a statement Tuesday supporting the SEC decision to relax the rule.

“John McCain is pleased to see that the SEC had finally decided to permit alternative accounting methods to mark-to-market accounting for securities where no active market exists,” McCain’s senior policy advisor Doug Holtz-Eakin said.

The American Bankers Assn. also praised the SEC’s action, saying “This guidance will help auditors more accurately price assets that are difficult to value under current market conditions.”

Critics, however, contend that allowing companies to base the value of their assets on unknown future cash flows will only cloud their true financial condition.

William Black, former deputy director of the Federal Home Loan Bank Board, said Tuesday that the SEC’s decision to relax the rule is an attempt to “cover up” the extent of the financial problems facing lenders. Black blames a similar accounting change for worsening the savings and loan blowup in the 1980s.

The SEC, McCain and others “want to use the same phony accounting to try and cover up losses, which will only make the losses much greater in the future,” said Black, now an assistant professor of law and economics at the University of Missouri at Kansas City.

But many economists, business leaders and politicians are urging modification or suspension of mark-to-market accounting for lenders holding huge amounts of mortgage-related securities that have no market.

“Assets should not be marked to unrealistic fire-sale prices,” wrote William Isaac, former Federal Deposit Insurance Corp. chairman, in a Sept. 19 Wall Street Journal op-ed article.

Bob McTeer, former president of the Federal Reserve Bank of Dallas and now at the National Center for Policy Analysis in Texas, said on NYTimes.com on Wednesday that suspending the mark-to-market rule “would make a big difference” in easing the financial turmoil. “Mark-to-market was never intended for use in a declining market,” he said.

And in a commentary appearing Monday on Forbes.com, former House Speaker Newt Gingrich urged Congress to suspend the mark-to-market standard to “relieve stress on banks and corporations.”

Accounting groups, consumer advocates and bank analysts, however, oppose scuttling the mark-to-market rule.

The Center for Audit Quality, a nonprofit group funded by accounting firms, sent a letter Tuesday to Congress urging lawmakers not to abandon the rule, arguing that proposals to revoke it “are not in the best interest of investors or the capital markets.”

“The principles of mark-to-market accounting are rooted in the fundamental virtue of transparency and are central to informed market decisions and efficient allocation of capital,” Cynthia M. Fornelli, the group’s executive director, stated in the letter.

Representatives of the nation’s big four accounting firms also object to the rule change. “It’s just bad for investors,” Beth Brooke, global vice chair at Ernst & Young LLP, in Washington, told The Wall Street Journal Wednesday. “Suspending mark-to-market accounting, in essence, suspends reality.”

And Barbara Roper, director of investor protection for the Consumer Federation of America, told The Journal that, “Allowing companies to lie to investors and lie to themselves is not the solution to the problem–it is the problem.”

Black, the former bank regulator, said there is substantial evidence that many lenders have already abandoned mark-to-market accounting by overstating the value of their mortgage-related assets. He said the recent takeovers of Washington Mutual by JP Morgan Chase and Wachovia by Citigroup revealed that losses at the two acquired banks were far greater than anticipated.

“These were enormous losses in the subprime mortgage market that they pretended didn’t exist,” Black said. “That’s called fraud.”

Rather than suspend mark-to-market accounting, Black said federal regulators should conduct more thorough bank examinations of all lenders heavily invested in the mortgage-backed securities. “Look for the ones that have heavy subprime exposure and take supervisory control of the institutions,” Black urged.

Sen. John McCain (WDCpix)

PHOENIX—In April 1987, William Black watched five U.S. senators, including Sen. John McCain, now the Republican presidential nominee, try to strong-arm federal-thrift regulators on behalf of Charles H. Keating Jr., a Phoenix businessman who owned Lincoln Savings & Loan.

At the time, Black was deputy director of the Federal Home Loan Bank Board, which oversees the nation’s thrift institutions. He had joined his boss, Edwin Gray, in the meeting with the five senators, who took turns pressuring Gray to exempt Lincoln from a regulation on how much capital the thrift could directly invest in assets — a regulation Keating vehemently opposed.

Gray’s regulators had found that, by the end of 1986, Lincoln Savings had exceeded the investment regulation by $600 million — and had unreported losses of more than $130 million.

Two years later, press reports about the meeting triggered Common Cause, a non-partisan watchdog group, to request that Congress investigate into whether the senators violated ethics rules by pressuring Gray.

The Senate Ethics committee began an investigation; leading to a high-profile, 23-day hearing in late 1990, during which the media labeled the senators the “Keating Five.” In February 1991, the committee rebuked McCain for exercising “poor judgment” by being at in the meeting — a decision McCain later agreed was appropriate. It was “the wrong thing to do,” McCain acknowledged.

Black, now an associate professor of economics and law at the University of Missouri-Kansas City, said in a telephone interview Wednesday that McCain’s long-standing opposition to regulation of the financial markets and his support for relaxed accounting standards that allow institutions to mask losses makes him unqualified to handle the financial crisis that threatens an economic Armageddon for the country.

“McCain has gotten this stuff wrong from the beginning,” Black said. “One his first acts as a member of the House was trying to stop the re-regulation of the thrift industry” by opposing efforts by regulators to increase capital reserves and reduce the amount of money thrifts could invest, as well as other revisions sought by regulators.

McCain was elected to the House in 1982, and served two terms before moving on to the Senate in 1986. “McCain was very much in favor of accounting forbearance — to game the accounting system,” Black said. “That was his position in 1983. And here we are 25 years later. And he’s learned nothing.”

Black asserts that McCain’s behavior remains unchanged because of McCain’s call last March for a meeting of the nation’s top accountants to relax accounting rules that would allow financial institutions to delay accounting for the decline in value of assets.

Black has been a longtime critic of McCain. He labeled McCain the most culpable of the senators who attended the April 9 meeting in the office of former Sen. Dennis DeConcini, an Arizona Democrat. In addition to McCain and DeConcini, Sens. Alan Cranston (D-Calif.), John Glenn (D-Ohio) and Don Riegle (D-Mich) were also there.

The week before, on April 2, Gray had met with McCain, Glenn, Cranston and DeConcini, who kicked off the proceedings with a reference to “our friend at Lincoln.” Keating had ties to all five senators. He and employees of his companies had contributed $1.3 million to the senators’ campaigns and other related groups, including get-out-the-vote efforts.

All five senators had close relationships with Keating. Keating’s holding company, American Continental Corp., was based in Phoenix and was a major employer there — which drew McCain and DeConcini into his circle. Lincoln Savings, meanwhile, was based in Cranston’s home state of California.

Glenn also viewed Keating as a constituent, because the banker had a business headquartered in Ohio and was a protege of the Cincinnati business icon Carl Lindner. Riegle was a member of the Senate Committee on Banking, Housing and Urban Affairs, and Keating had a big hotel investment in Michigan.

Lincoln Savings failed in 1989 because of bad loans and mounting losses in direct investments, ultimately costing taxpayers more than $3 billion. Keating was convicted on 73 federal counts of wire and bankrutpcy fraud in 1993, and spent four years in prison before his conviction was overturned on appeal. Faced with a second trial, he pleaded guilty to four counts of fraud, and was sentenced to time served.

While McCain and Glenn received the mildest rebukes from the ethics committee, Black contends that McCain’s long-term relationship with Keating made him the only senator who stood to personally benefit from getting regulators to back off from Lincoln Savings.

McCain’s wife, Cindy, and his father-in-law had a $360,000 investment with Keating and others in a shopping center at the time of the 1987 meeting. If the Federal Home Loan Bank Board moved to enforce the direct investment regulations on Lincoln Savings, Keating may have had to dispose of that property at a possible loss. McCain has dismissed Black’s self-dealing allegation — stating that he and his wife maintain separate finances through a prenuptial agreement.

But Keating was also a close friend of McCain. The high-flying banker had paid for McCain and his family to vacation with him in the Bahamas on several occasions. McCain paid Keating $13,400 to cover expenses after the 11 trips were disclosed, years later.

Keating and employees of American Continental, which controlled Lincoln Savings, had also contributed $112,000 to McCain’s campaigns. The Arizona senator has said that Keating’s contributions to his first House campaign, in 1982, played an important role in that win.

Black says that the two meetings in April of 1987 were among a series of actions, including opposition to increasing capital requirements and tighter regulation of assets, taken by McCain that helped contribute to the S&L crisis, which ultimately required a $125-billion taxpayer bailout.

In an interview Tuesday with National Public Radio’s “Here and Now”, Black was particularly critical of McCain’s role to support the Reagan administration’s unsuccessful effort in getting two Keating associates appointed to the Federal Home Loan Bank.

“I’ll tell you the biggest thing Sen. McCain — then Rep. McCain — tried to do,” Black said on NPR. “The administration attempted to give Charles Keating control over the federal agency regulating savings and loans. There were three presidential appointees and there were to be two members chosen by Charles Keating. Sen. McCain was not only aware of that effort but supportive of it. Had that occurred, the savings and loan crisis, instead of being $125 billion to $150 billion, would have been over a trillion dollars.  It would have probably still been our worst political scandal in history.”

Black said on the phone Wednesday that McCain opposed the bank board’s effort to tighten regulations on the S&L industry, which had grown rapidly after Congress gave thrifts additional lending powers in the early 1980s.

Thrifts began lending to, and in some cases, making direct investments in, risky projects — including racetracks, office buildings in cities with high vacancy rates and undeveloped land. The boom was not accompanied by enhanced supervision, Black said.

By the mid-1980s, the Federal Home Loan Bank Board sounded an alarm: depositors’ funds — insured by the Federal Savings and Loan Insurance Corp. up to $100,000 — were at risk.

To head off a crisis, the bank board regulators moved to institute tougher accounting standards and increase the amount of capital that thrifts had to hold in reserve. But Congress resisted. According to Black, McCain supported the continuation of accounting rules –- dubbed “Keating accounting” by Black– that allowed thrifts to mask their losses for years by overstating the value of their assets, including intangibles like “goodwill” in the thrift’s net worth.

When the subject of the Keating Five came up in McCain’s interview with WKYC-Cleveland reporter Tom Beres last week, the GOP presidential nominee did not say, as he had previously, that attending that April 1987 meeting with Gray was “the wrong thing to do.” Instead, he insisted the “key” to the episode was that Robert Bennett, the lead investigator of the Senate Ethics Committee, recommended that Glenn and McCain be dropped from the case.

“I had done nothing wrong…I was kept in that investigation for political purposes,” McCain told Beres. “It was a very unhappy period in my life,” McCain continued. “But the fact is that I moved forward, and I have been the greatest voice for reform and against corruption in Washington than anybody.”

But Black said McCain has still not learned the lessons of strong financial regulation and strict accounting standards. As evidence, he points to the senator’s March 25 speech on the housing crisis. McCain called for a national meeting of accounting professionals to discuss changing  the “current mark to market” accounting system — that requires lending institutions to price assets at current market value.

“We are witnessing an unprecedented situation as banks and investors try to determine the appropriate value of the assets they are holding,” McCain said, “and there is widespread concern that this [mark-to-market] approach is exacerbating the credit crunch.”

These were terrifying words to the former banking regulator, who had witnessed firsthand the consequences of accounting rules that did not accurately value the assets of thrifts. “McCain’s answer,” Black charges, “is to get the accountants in the room to make sure we create phony capital by not recognizing our losses.”

The current financial crisis and credit crunch, Black said, is the result of a loss of trust in financial markets that began when investors and financial institutions refused to take each others’ word that the prices of their assets were accurate. “Once the trust is lost, it’s very hard to get it back without regulation,” he said. “Why would you trust a fellow banker when you know you are cheating?”

But Black isn’t confident that Congress and the administration will come up with an effective plan to unclog the financial system’s arteries. He is no friend of the Bush administration’s $700-billion bailout proposal. He worries that the government will buy toxic assets at prices far above their market value. “The government gets to be the chump in the market and taxpayers get to bear the losses,” he said.

He also isn’t confident that the crisis will spur widespread regulatory reform and tougher accounting rules. McCain, Black believes, certainly doesn’t understand the need for regulatory reform and rigorous accounting.

“When you deregulate, you just are not losing the ability to find individual losses and frauds,” Black said. “You lose the scouting function that tells you the lay of the land.”

Without knowledge of what may lurk over the horizon, disaster can strike. “That’s when you walk into ambushes,” Black said.