So now what?

The Senate Finance Committee had barely voted on the big health care legislation when the infinitesimally short attention span of Capitol Hill shifted to the next step. And it sounds like the debut of a 1950’s doo-wop band: ladies and gentlemen, give it up for Harry Reid and the Bill Blenders.

That would be the majority leader, Senator Harry Reid of Nevada, and the team of senators, aides and White House officials who will meld the Finance Committee bill with an alternate version of the health-care legislation that was approved back in July by the Senate Health Education Labor and Pensions (HELP) Committee.

Mr. Reid will gather the group in his office on the second floor of the Capitol for its first official meeting on Wednesday. The group includes Senator Max Baucus, Democrat of Montana and the Finance Committee chairman; Senator Christopher J. Dodd, Democrat of Connecticut, who was acting chairman of the HELP committee when it passed its health care bill; and representatives of the White House.

Jim Manley, a spokesman for Mr. Reid, said that Senator Olympia J. Snowe of Maine, the lone Republican on the Finance Committee to vote in favor of the bill, would be invited to future sessions. And Mr. Manley said the Democratic leader was prepared to go to substantial lengths to keep Ms. Snowe’s support.

“He is prepared to do what he can to keep her on board while putting together a bill that can get the 60 votes necessary to overcome a Republican filibuster,” Mr. Manley said.

Senate Democrats have already held some preliminary discussions about blending the two bills, and the White House lobbying team is already fully deployed across the Capitol.

The more liberal HELP bill was approved on a strict party-line vote,
with Republicans unanimously opposed. And in many ways, it was only half of a bill, because the Finance Committee has jurisdiction over
the tax provisions needed to finance the legislation, as well as
spending on Medicare and Medicaid.

The HELP bill, for instance, anticipated a major expansion of
Medicaid, the state-federal insurance program for the poor, but it is the
Finance Committee bill that includes the expansion, which extends
eligibility to all Americans earning less than 133 percent of the federal
poverty level, including childless adults currently excluded.

Speaking of the other side of the Capitol, the House speaker, Nancy Pelosi, continues to work on her own blending project, pulling together the bills reported out by three different committees into a single legislative proposal for full floor debate.

The House bill will include a government-run insurance plan, or public option, to compete with private insurers. But Mr. Reid, and perhaps President Obama himself, may have to mediate that issue in the Senate.

Liberal senators want the public option. But Ms. Snowe is firmly opposed. She has expressed openness to a compromise that would allow a government-run health plan to be “triggered” in states where the legislation otherwise does not succeed in providing affordable insurance.

WASHINGTON (CNN) -- The Inter-American Court of Human Rights has been asked to investigate whether Panama tortured an Ecuadorian citizen who was being held as an illegal immigrant, an official hemispheric human rights organization said.

Jesus Tranquilino Velez Loor was arrested November 11, 2002, and deported to Ecuador on September 10, 2003. During that time, he was held without receiving procedural guarantees, the right to be heard and the right to present a defense, said the Inter-American Commission on Human Rights.

"The case also involves the lack of investigation of complaints of torture presented by Mr. Velez Loor before the Panamanian authorities, as well as the inhumane conditions of detention under which he was held in several Panamanian penitentiaries," the human rights commission said in a release Tuesday.

The human rights panel, which is part of the 35-nation Organization of American States, said it referred the case to the court last week because Panama did not adopt sufficient measures to address issues raised in a previous commission report.

Velez Loor "was sentenced to a prison term for having repeatedly entered Panama illegally. ... Panamanian law provides that foreign nationals, who repeatedly enter Panama, without the necessary papers, will be imprisoned for two years and then deported," Panama said in a 2006 report.

Velez Loor admitted he had gone into Panama without proper papers or visas.

The commission said it received an e-mailed complaint from Velez Loor on February 10, 2004, "in which he claims to have undergone torture, forced isolation, and mistreatment at the hands of Panamanian police officers at two Panamanian detention centers without being given the opportunity to defend himself, without the benefit of any court of law, without being allowed to make a telephone call and while being deprived of all medical care."

Panama denied those allegations in the 2006 human rights commission report.

Officials at the Panamanian embassy in Washington did not return a telephone request Tuesday from CNN for comment on the latest development.

The human rights commission consists of seven members who act in a personal capacity, without representing any country, and who are elected by the OAS General Assembly.

The federal pay czar is trying to force the American International Group to reduce $198 million in bonuses promised to employees of its trading unit, where problems posed a threat to the global financial system last year.
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But the Treasury’s special master for compensation, Kenneth Feinberg, is running into legal hurdles because those bonuses fall outside new rules against bonus payments at companies receiving government assistance. The bonus agreements at issue were struck before last year’s emergency rescues by the Treasury and the Federal Reserve, and thus are not directly covered by the new rules.

The problem is a recurring one. A.I.G. payments early this year to the same employees elicited public outrage, though government officials said then that they had little legal authority to rescind pre-existing contracts.

To strengthen his hand, Mr. Feinberg is threatening to reduce the compensation packages he does control, according to a person close to the talks. That could mean shrinking the pay of other A.I.G. executives — including its new chief, Robert Benmosche — if the firm does not claw back part of the bonuses for the people in its trading unit, known as A.I.G. Financial Products.

At companies that received extraordinary government support, Mr. Feinberg’s task is to monitor and enforce rules governing new pay packages. He can approve or reject cash pay that exceeds $500,000 for top executives.

Mr. Benmosche, hired by A.I.G. late this summer, received a compensation package that includes $3 million initially and about $4 million in stock that he must hold for five years, as well as annual bonuses based on performance.

A.I.G. has a variety of employee bonus programs. The Financial Products group began a two-year retention program in January 2008, before its government rescue, designed to keep skilled employees from leaving and jeopardizing its derivatives portfolio .

After A.I.G. paid $165 million in retention bonuses to that group in March, it promised to try to recover much of the money to quell the uproar that ensued.

But the insurance company has recovered only $19 million of the $45 million it asked the recipients to repay, according to an audit of its compensation program and the government’s oversight.

A company spokeswoman, Christina Pretto, said in a statement that the people who had received that money had “until the end of the year to fulfill their commitments,” and that the company believed those people would honor them.

But the special inspector general for the Troubled Asset Relief Program, Neil M. Barofsky, who conducted the audit, said some of the money appeared to be unrecoverable, because the employees had resigned rather than return the pay.

Other people are still weighing tax issues arising from those bonuses, and some have asked the insurer to dock their paychecks in the future, rather than make a single payment now.

The inspector general’s audit will be the subject of a hearing Wednesday by the House Oversight and Government Reform Committee.

The report stated that Mr. Feinberg had “informally advised A.I.G. not to pay the full $198 million,” scheduled for payment next March, but did not reveal how sharply Mr. Feinberg hoped to pare the bonuses.

The amount of the bonuses at A.I.G. is quite small relative to the record amount of government assistance received by the firm over the last year, roughly $182 billion.

The $165 million in bonus pay made last March coincided with the news that A.I.G. had just posted the biggest loss in American history and would need a bigger rescue package. That led to stormy Congressional hearings and tours of the suburbs where some bonus recipients lived.

Company officials argued at the time that only a handful of the employees of financial products bore responsibility for the disastrous derivatives trading, and it was unfair to blame everybody for the harm caused by a few. The company also said it wanted to honor its commitments because skilled people might resign en masse if bonuses were rescinded.

The new audit pointed out that the bonus program for the Financial Products unit was unusual because it included payments to unessential people. It cited a $7,700 bonus for a kitchen assistant, a $7,000 bonus for a mailroom assistant and $700 for a file administrator.

The audit also described the lack of coordination between the Federal Reserve and the Treasury over A.I.G.’s compensation program. It said Fed officials had their own conversations with company officials about compensation last fall, and were further briefed over the winter by compensation specialists at Ernst & Young brought in to help.

But the Fed did not convey any of the information it had gathered to the Treasury until just before the bonuses were scheduled to be paid in March. Then, the Fed sent an e-mail message to the general counsel at the Treasury, the report stated, warning that the looming bonuses had “garnered press and congressional attention” and would “not be easy for Treasury and the Fed to defend.”

That message promised to supply more detail, but nothing followed for about a week.

“Despite the strong language” of the Fed’s messages, the audit found “that the e-mail did not raise any flags in Treasury.”

Stephen Labaton contributed reporting.

MADRID, Spain (CNN) -- Spanish police arrested a well-known Basque politician linked to the armed Basque separatist group ETA on Tuesday, along with nine suspected collaborators, the Interior Ministry said in a statement.
Former leader of banned Basque party Batasuna Arnaldo Otegi after his arrest.

Former leader of banned Basque party Batasuna Arnaldo Otegi after his arrest.

The politician, Arnaldo Otegi, is a leader of the former Batasuna party, outlawed for its ties to ETA, which is blamed for more than 800 deaths in its four-decade fight for Basque independence.

Otegi and the others were arrested in northern Spain for trying to regroup the leadership of the so-called Basque left movement in order to "carry out ETA's orders," the statement said.

Otegi and four others were arrested during a meeting at an office of the Basque union LAB in San Sebastian. Two others were arrested on the street in the nearby town of Hernani, and three others were arrested in Pamplona, including one for allegedly possessing documents from another suspect's home in an attempt to avoid having them seized by police, the statement said.

The operation is being directed by anti-terrorism Judge Baltasar Garzon of Spain's National Court, and the suspects were due to be taken to Madrid to appear before him in the coming days, the statement said.

Otegi has been in trouble before with the law. In 2007, he was arrested shortly after Spain's Supreme Court upheld a lower-court's conviction of him in 2006 for glorifying terrorism at a memorial in December 2003 for a dead ETA leader.

Otegi was sentenced to 15 months in jail. But at the time of his 2007 arrest, he had been free on $300,000 bail in a separate terrorism case of inciting violence.
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A senior government source who insisted on anonymity said last month that officials had been expecting Otegi to try to step forward soon as an interlocutor promising to help end ETA's violence and negotiate a deal with the government.

The aim, according to the source, was to permit a rebranded Batasuna to run for local office again, on the promise it would seek to end ETA's violence once it had regained elected government positions.

But government officials have said publicly there can be no further talks with ETA, which is listed as a terrorist group by Spain, the European Union and the United States. Video Watch background behind ETA's decades-long struggle »

When ETA declared a unilateral "permanent" cease-fire in March 2006, the government began steps toward a peace process, but ETA then bombed Madrid's airport in December 2006, killing two men and causing extensive damage.

ETA in 2007 called off its cease-fire, which the government had already considered finished.

The government has said since then that the only way to end more than 40 years of violence will be for ETA to renounce its campaign and lay down its arms or face its demise through a police crackdown.

Yet ETA has continued its killings and bombings, including fatal attacks in the Spanish island of Majorca in August.
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But police in Spain and in neighboring France -- ETA's traditional rearguard base -- have cracked down hard, arresting dozens of ETA suspects, including four of its alleged top leaders.

The arrest of Otegi and others on Tuesday comes two days after police detained two of the most-wanted ETA suspects in France. They were allegedly involved in ETA logistics and police later found weapons and material to make car bombs, the Interior Ministry said in a statement.