But during the first hearing into a growing IRS scandal that could preoccupy Washington for months, Republicans did learn that a top official in President Barack Obama’s administration knew that the IRS was looking into targeting by the tax agency nearly a year ago.

That detail could encourage Republicans’ efforts to link the scandal to the White House as the administration faces a series of setbacks that threaten to derail Obama’s second-term priorities, which include revamping immigration laws and reaching a budget deal with Republicans.

Friday’s hearing was dominated by lawmakers’ grilling of acting IRS Commissioner Steven Miller, who provided few clear answers while apologizing for the extensive questioning and years-long delays that many conservative groups have experienced after applying for tax-exempt status.

Miller, who was fired by Obama on Wednesday, said the overly aggressive scrutiny of such groups was the result of mismanagement, not partisan politics. His comments echoed the findings of a Treasury Department inspector general’s report released this week.

“I think what happened here is that foolish mistakes were made by people trying to be more efficient,” said Miller, who will leave his post next week and be replaced by Daniel Werfel, a budget specialist in the administration.

Miller said he did not know who had come up with the idea to single out groups that appeared to be politically conservative for intense reviews of whether they qualified to be tax-exempt.

He said that although the added scrutiny was wrong, he did not think that IRS employees had broken any laws.

That claim drew the ire of Republicans on the House of Representatives Ways and Means Committee, as did Miller’s shrugs when lawmakers pressed him over why he had not told Congress about the probe even though he learned about it a year ago.

“This is offensive, to hear this testimony,” said Representative Tom Reed, a Republican from New York.

A LINK TO THE WHITE HOUSE?

The hearing did seem to yield some fruit for Republicans who are trying to cast the targeting of conservative “Tea Party” and “Patriot” groups as a political initiative encouraged by the Obama administration, a claim the White House rejects.

Critics have hammered the White House this week on the IRS scandal, its handling of the deadly attack on the U.S. mission in Benghazi, Libya, and the Justice Department’s seizure of phone records of Associated Press journalists in a criminal probe into intelligence leaks.

The Treasury Department’s internal watchdog, J. Russell George, told the House panel that Deputy Treasury Secretary Neal Wolin, an Obama political appointee, learned nearly a year ago that a government watchdog was looking into inappropriate targeting by the IRS.

Wolin, the No. 2 official at Treasury, is due to testify next week before the House Oversight and Government Reform Committee.

In a statement, the Treasury Department said it made the probe public last fall in an annual report that listed more than 200 other internal investigations.

Treasury Secretary Jack Lew was told about the investigation when he took office in March, the department said, but neither he nor Wolin was told about its findings even as a preliminary version circulated elsewhere within the department.

Miller’s often-defiant appearance on Friday was unlikely to satisfy Republicans who have accused Obama’s Democratic administration of using the machinery of government to target political foes.

They also have accused Miller of misleading Congress last year.

Miller acknowledged that he learned that IRS investigators were looking into the issue a year ago, but he did not mention the probe to lawmakers until the news became public last week. He said he had not misled lawmakers by keeping quiet about the issue in prior appearances on Capitol Hill.

“I was answering the questions that I was asked” by Congress, he told the House committee.

Miller appeared to grow irritated over the course of the four-hour hearing, repeatedly interrupting questioners, flashing quizzical looks and shrugging his shoulders.

Miller said the IRS has had trouble keeping up with the flood of 70,000 tax-exempt applications it has received in recent years, and asked for money to hire more examiners.

Several Republicans responded that the IRS should instead be shrunk.

The IRS has seen the number of groups applying for 501(c)4 status nearly double in the wake of January 2010 Supreme Court decision that loosened campaign-finance rules.

That status allows groups to keep their donor lists secret while engaging in limited political activity. Political campaigns, by contrast, must make their donor lists public.

Several Democrats on the committee said the IRS needed to take a harder look at those applications to ensure that political groups do not exploit the tax code to shroud political activities in secrecy.

Miller said the IRS needs clearer guidance from Congress to determine what constitutes political activity.

FACEBOOK POSTS, BOOK LISTS

The scandal has angered lawmakers in both parties, but Miller’s appearance appeared to further inflame Republicans who see it as a symptom of a federal government that has grown too large and is overly intrusive into Americans’ lives.

Tea Party groups investigated by the IRS say the tax agency made unusually extensive demands, such as asking the groups to provide social-media posts and lists of books that members had read, and tell agents whether any members of the group planned to run for public office in the future.

The questioning in some cases took nearly three years, preventing some groups from participating in the 2010 and 2012 elections.

The Treasury Department report did not identify individuals in the IRS’s Washington headquarters or its Cincinnati field office who were responsible for coming up with the criteria used to single out conservative groups. The watchdog is continuing its investigation.

Republicans have vowed to find out who was involved, but Miller did not provide much of a road map.

“Who is responsible for targeting these individuals?” asked Representative Kevin Brady, a Texas Republican.

“I don’t have names for you,” Miller responded.

Republicans accused him of dodging their questions.

“I’m hearing, ‘I don’t know, I don’t remember, I don’t recall, I don’t believe,’” said Representative Dave Reichert of Washington. “You don’t even know who investigated the case, but yet you say it was investigated.”

Democrats seemed more inclined to accept Miller’s explanation.

“I am not convinced that this is a great big political conspiracy,” Democratic Representative Danny Davis said.

Two other congressional committees will hold IRS hearings next week. One of them, the House Oversight and Government Reform Committee, plans to question five lower-level IRS employees over whether they played a role in the targeting of conservative groups.

Wolin and Douglas Shulman, who was IRS commissioner when the targeting occurred, also are scheduled to testify.

(Additional reporting by Karey Van Hall, Patrick Temple-West and Susan Heavey; Writing by Andy Sullivan; Editing by David Lindsey, Jackie Frank and Jim Loney)

Republicans and Democrats said senior IRS officials should have alerted Congress last year when they found out that their examiners were singling out Tea Party groups for intense scrutiny when the groups applied for tax-exempt status.

“That isn’t being misled. That’s lying,” said Republican Dave Camp, the chairman of the House of Representatives Ways and Means Committee.

The acting head of the agency, Steven Miller, apologized for the IRS’s actions and said they stemmed from poor management, rather than a partisan desire to punish conservative groups.

“I did not mislead Congress or the American people,” said Miller, who was fired by President Barack Obama on Wednesday. “I think what happened here is that foolish mistakes were made by people trying to be more efficient.”

Obama, a Democrat, is racing to get in front of a scandal that threatens to eclipse his second-term agenda. He has twice appeared in public to condemn the IRS’s actions and has promised to cooperate with three congressional investigations and a Justice Department probe. He has, however, resisted demands for a special prosecutor to look into the allegations.

Republicans have angrily accused Obama’s administration of using government powers to target political foes. They say the IRS scandal is one example of a federal government that has grown too large and intrusive.

“Is this still America?” asked Republican Representative Kevin Brady of Texas.

AN EXPLOSION OF ADVOCACY GROUPS

An internal IRS watchdog reported this week that IRS investigators had singled out groups that had conservative-sounding phrases such as “Patriot” and “Tea Party” in their titles when they applied for a tax-exempt status.

Such status allows groups to keep their donor lists secret while engaging in limited political activity. Political campaigns, by contrast, must make their donors lists public.

Tea Party groups say they were asked for information such as what books they read. The questioning in some cases took nearly three years, preventing certain groups from participating in the 2010 and 2012 elections.

The IRS watchdog blamed the scandal on ineffective management and bureaucratic confusion.

The IRS has seen the number of groups applying for so-called 501(c)4 status double in the wake of a January 2010 Supreme Court decision that loosened campaign-finance rules at a time when it has struggled to monitor existing tax-exempt groups.

The top Democrat on the committee, Representative Sander Levin, warned Republicans not to turn the investigation into a partisan witch hunt.

However, he noted that Lois Lerner, the IRS official who made the scandal public last week, did not bring it up when she testified in front of the committee a few days earlier.

“That is wholly unacceptable and one of the reasons we believe Miss Lerner should be relieved of her duty,” Levin said.

Two other committees, the House Oversight and Government Reform Committee and the Senate Finance Committee, also will hold IRS hearings next week.

(Additional reporting by Patrick Temple-West and Susan Heavey; Editing by David Lindsey and Jackie Frank)

The messages could help bolster Height Securities LLC’s
claim that its analyst was essentially doing what reporters,
lobbyists and others in Washington do every day: trying to
figure out what the government is going to do next.

The small research shop is among the brokerages, law firms
and other “political intelligence” operations that have drawn
scrutiny over concerns that they may have facilitated insider
trading by passing along tips that moved markets.

Height Securities has drawn inquiries from the Securities
and Exchange Commission and Iowa Republican Senator Charles
Grassley since it correctly predicted on April 1 that President
Barack Obama’s administration would keep certain medical payment
rates in place, prompting a spike in healthcare stocks before
the official announcement came out.

The analyst who prepared the report, Justin Simon, reached
out to a healthcare lobbyist shortly before he issued his
market-moving research bulletin, the emails show.

“I’m tracking down a rumor … any chance you have heard
that POTUS/WH have stepped in” to keep the Medicare rates in
place, Simon asked, using shorthand for Obama and the White
House.

Other documents indicate the lobbyist, whose name was
redacted from the report, is Stacey Hughes, a founding partner
of the Nickles Group who used to work for several Republican
senators. She could not be reached for comment.

“That is the rumor,” Hughes responded, adding that it was “a
little more likely” that the Centers for Medicare & Medicaid
Services would not cut payment rates for healthcare providers
after the acting head of the agency that oversees the two
programs, Marilyn Tavenner, met with staffers of the Senate
Finance Committee.

Hughes wrote that the White House could decide to keep the
current payment rates for the popular health programs as a way
to convince lawmakers in the Senate to make her post permanent.

“Just my opinion,” Hughes wrote.

Simon released his report about an hour later, prompting a
spike in health stocks that stood to benefit from the decision.

“Did you see what I did to the stock in the final 30 min of
trading?” Simon wrote Hughes after his report came out. “We
heard the same story from like 30 people so we went with it.”

A Height spokesman said the emails reviewed by Reuters
confirm that Simon based his report on multiple sources of
information, rather than a single Obama administration insider
who would have had direct knowledge of the decision.

“We appreciate the fact that the released documents validate
our claim all along – Height did not receive or disseminate
material non-public information,” the spokesman said.

That appeared unlikely to satisfy Grassley, who wants
“political intelligence” firms to be subject to the same
disclosure laws as lobbyists.

Grassley’s office said Height was not cooperating as much as
they would like and appeared to be giving inconsistent
information.

“Senator Grassley continues to try to unwind the events
leading up to the stock spike on April 1 and previous trading
anomalies in the prior two weeks,” spokeswoman Jill Gerber said.

Michael Asaro, a lawyer who represents Simon, declined to
comment.

Iowa Republican Senator Charles Grassley, who is investigating whether one such “political intelligence” firm engaged in insider trading last month, will introduce a bill shortly that would shed light on the industry, a spokeswoman for Grassley said.

A similar effort passed the Democratic-controlled Senate last year as part of a crackdown on insider trading by lawmakers and staffers, but it was stripped out of the broader bill in the Republican-controlled House of Representatives.

It’s not clear whether Grassley’s bill will fare better this year, but it could get a boost from the investigation into Height Securities LLC, a company that helps interpret Washington for investors.

Height Securities drew the scrutiny of Grassley’s staff and the Securities and Exchange Commission because of its April 1 research report that prompted a surge in healthcare stocks. The report correctly predicted that President Barack Obama’s administration would keep certain medical payment rates in place, rather than cutting them as previously announced.

Height’s report came out 18 minutes before the U.S. Centers for Medicare and Medicaid Services made its official announcement. The alert enabled Height clients to bargain that health stocks would rise before other investors were able to profit from the information.

Height said it did nothing wrong and based its report on several sources, including information that had leaked out a few weeks earlier.

“We are a registered, highly regulated securities firm that conducts investment research like thousands of other financial analysts across the country in complete compliance with the law,” said Adam Goldberg, a spokesman for Height Securities. He said the firm is cooperating with both the SEC and Grassley’s office.

The investigation has highlighted the political intelligence industry, a loosely defined contingent of consultants who interpret regulations and politics for Wall Street players. Housed in brokerage firms, lobbying shops and free-standing research outfits, the industry has become more prominent in recent years as events like the Wall Street bailout and Obama’s healthcare reform have underscored Washington’s impact on the economy.

Critics say political intelligence firms are an outgrowth of a pay-to-play culture that gives Wall Street and other interests unfair access to the powerful.

“In a system in Washington that’s already awash in money, here is yet another advantage that moneyed interests have,” said Meredith McGehee, policy director at the Campaign Legal Center, a nonprofit group that seeks greater disclosure.

JUST LIKE LOBBYISTS?

Grassley’s bill last year would have required political intelligence firms to list their names and client lists, much like the disclosure now filed by lobbying firms.

This year’s bill will be similar, an aide said. New York Democratic Representative Louise Slaughter is expected to sponsor a similar bill in the House.

That could make it easier for regulators and law enforcement officials to uncover cases of insider trading, said Kenneth Gross, a partner at Skadden Arps’s political law practice.

But the measure will almost certainly face resistance from financial companies and other groups that argued the measure was too broad. A group of 40,000 business lawyers said last year that it could interfere with routine legal research, client discussions and communications with regulators.

Deciding whether a company would have to register under the proposal could be difficult. Some are registered as brokerages or investment advisers, while others are consulting firms not subject to regulatory scrutiny.

Height Securities, for example, is a Washington-based broker-dealer that is regulated by the Securities and Exchange Commission and the Financial Industry Regulatory Authority. Its research arm, Height Analytics, is an investment adviser overseen by state securities regulators in Washington, D.C. and Connecticut.

(Editing by Marilyn Thompson and Eric Walsh)

During a lobbying blitz in the past month, roughly 130 tugboat and barge operators fanned across Capitol Hill, meeting with lawmakers and congressional staffers.

The shipping executives argued that the U.S. government should spend $150 million more each year to upgrade the Depression-era locks and dams that enable them to ship soybeans, coal and other commodities down the nation’s major rivers. In return, the shippers said, they would pay more in fuel taxes.

For an industry that already is subsidized heavily by the U.S. government – and whose growth in moving domestic freight is being outpaced by rail and interstate trucking – pushing such an argument at a time of budget cutbacks is navigating upstream.

But barge operators have cultivated a bipartisan group of river-state lawmakers, including Republican Senator Lamar Alexander of Tennessee and Democratic Senator Bob Casey of Pennsylvania, who appear ready to fight for the industry’s interests when the Senate takes up the issue next week.

The “Battle of the Barges” may not command the public’s attention the way that the debates over gun control and immigration have. But the outcome could signal whether the traditional way of doing business on Capitol Hill – coalition-building, campaign donations and face-to-face lobbying – can still get results in an era when partisan conflicts have made it hard to advance legislation of nearly all types.

Barge executives leading the lobbying effort include Peter Stephaich of Campbell Transportation Co in Pennsylvania.

“It does seem to be unusual these days to have both sides come together and support something like this,” Stephaich said last month, as he wrapped up a meeting with Alaska Democratic Senator Mark Begich and headed to a fundraiser for Republican Representative Bill Shuster of Pennsylvania.

Begich and Shuster have not announced their positions on the shipping industry’s call for more government funding.

Opposition to the industry’s push hasn’t become public in the Senate, but that is likely to change soon. Taxpayer watchdogs and environmental groups see the industry’s current subsidies as overly generous, and vow to fight any increase.

“The idea of expanding a subsidy to the most subsidized form of transportation this side of space travel is not going to happen,” said Steve Ellis of Taxpayers for Common Sense. “It’s really beyond the pale.”

Conservative groups such as the Club for Growth also are signaling they could join the shipping industry’s opponents – a move that would get the attention of Republicans wary of facing a challenge from the right when they run for re-election.

The shipping industry has a long history of support in Congress, dating to the early days of the country when rivers were the most reliable form of cargo transportation.

In recent decades, freight rail and interstate trucking have eclipsed the shipping industry. In 1980, 27 percent of domestic freight moved by water; by 2009 that figure had dropped to 11 percent, according to the U.S. Department of Transportation.

Waterborne transportation still plays a key role in moving grain, coal and other bulk commodities from the nation’s interior states down the Mississippi River to Louisiana, where they are sent around the world.

Through a fuel tax, the industry pays about 10 percent of the $800 million or so spent each year to keep the nation’s rivers open for navigation. The government covers the rest.

By contrast, a fuel tax on car and truck drivers covers about 80 percent of the cost of maintaining the nation’s highway system. Freight rail operators cover all of their costs.

The barge fuel tax is supposed to cover half the costs of new construction, but it has not increased since 1994 and does not generate enough revenue to build new locks and dams in a timely manner. At the current pace, some planned projects won’t be completed for 77 years, according to an industry trade group.

Industry officials also say they need more help to repair existing structures – a problem they say was vividly illustrated in 2011, when a 280-foot section of canal south of Chicago collapsed, disrupting commercial traffic.

A WORTHY INVESTMENT?

Some analysts question whether a massive new spending push would yield the benefits that the shipping industry claims.

Decaying locks and dams can contribute to delays in shipping, but the system’s reliability is affected much more by droughts, floods and other weather events that largely are beyond human control, said Don Sweeney, a transportation specialist at the University of Missouri-St. Louis.

“Are these expenditures likely to yield the kind of economic benefits that would make them good expenditures?” he asked. “I’m not convinced at all.”

The shipping industry’s proposal would boost its contribution by 30 to 45 percent, to about $110 million a year. In return, the government would more than double its annual contribution to $270 million, on top of the $500 million to $600 million it spends each year on dredging and other waterway maintenance. The government would pay for any cost overruns.

The industry aims to insert the proposal into a broad water-resources bill that the Senate will take up next week.

To push the plan, the Waterways Council, an industry trade group, boosted its spending on lobbyists to $315,000 in the first three months of this year, much more than past year.

The industry’s lobbyists include John Breaux, a former Democratic senator from Louisiana, and Bob Livingston, a former Louisiana Republican who oversaw spending issues as chairman of the House Appropriations Committee during the 1990s.

SUPPORT FROM RIVER STATES

The shipping industry’s backing in Congress dates to at least 1848, when Congressman Abraham Lincoln fought President James Polk’s push to make the industry pay its own way.

More recently, Congress turned back efforts by presidents Bill Clinton, George W. Bush and Barack Obama to get users to pick up a greater share of their costs.

Republican lawmakers often are skeptical about increasing domestic spending, but those from states with significant river traffic have joined Democrats in expanding funds for the U.S. Army Corps of Engineers, which maintains commercial waterways.

That pattern is apparent in the Democrat-led Senate, where Alexander and Casey back the industry’s plan.

In the Republican-led House, a similar bill is supported by Democratic and Republican lawmakers from states such as Alabama and Illinois that see a large amount of barge traffic. The bill’s lead sponsor, Ed Whitfield of Kentucky, represents a district that borders the Ohio and Mississippi rivers.

While outside groups like Club for Growth use the threat of a primary challenge to wield influence over lawmakers, the shipping industry has taken the opposite approach. Industry employees donated $28,000 to Whitfield last year.

This year, the industry has sent donations to other lawmakers who could prove influential in the debate – including Shuster, who will draft his own water-resources bill as head of the House Transportation and Infrastructure Committee.

American Waterways Operators, an industry trade group, gave $2,500 to Shuster in February and hosted a fundraising dinner in April. The amount raised is not yet public.

A Shuster spokesman said the congressman had not decided whether to back the shipping industry’s plan. Stephaich, the industry executive, sounded confident of Shuster’s support.

“We’ve got a desire, a will on both Congressman Shuster’s side and in the Senate, with the help of Senator Casey, to hopefully have all of this come together,” Stephaich said.

(Editing by David Lindsey and Lisa Shumaker)

Those callers got what they wanted: Begich voted no – one of four Democrats from gun-friendly states to do so – and the most ambitious gun-control push in two decades went down to defeat.

It was an impressive show of force by the National Rifle Association, which reaffirmed its reputation as one of Washington’s most powerful interest groups by turning back one of President Barack Obama’s top second-term priorities.

The NRA mobilized a disciplined, grassroots army that flooded Republican and conservative Democratic lawmakers’ offices with phone calls and e-mails.

The NRA and its supporters also followed a tightly woven script that accused Obama of not following up on thousands of gun buyers each year who fail background checks under existing laws. The association’s talking points, often repeated word for word by lawmakers and NRA supporters, cast the new background checks plan as an infringement on the constitutional right to bear arms of law-abiding citizens.

After the measure fell six votes short of the 60 votes it needed to advance in the 100-member Senate, Obama acknowledged that gun-control supporters have a way to go before they can match the sustained passion that has allowed the gun lobby to steadily loosen firearms laws over the past 18 years.

Now, with the push for gun control in a holding pattern on Capitol Hill, gun-control groups are vowing to meet Obama’s challenge to beat the NRA at its own game.

Gun control has a deep-pocketed sponsor in New York City Mayor Michael Bloomberg, who spent $12 million on ads in March targeting key lawmakers.

Organizing for America, an advocacy group spawned from Obama’s re-election campaign, plans to mount rallies to pressure lawmakers who voted against the bill.

Separately, the Progressive Change Campaign Committee, an independent liberal group, plans to run newspaper ads criticizing Montana Democratic Senator Max Baucus for voting against the bill, the first of what the group says could be many targeted pressure campaigns aimed at lawmakers who will face re-election next year.

That effort could backfire, analysts say.

The Democratic Party – which controls 55 seats in the Senate – needs conservative Democrats such as Begich and Baucus to win re-election next year in order to retain control of the chamber. Efforts to punish them for their vote could hand those seats to Republicans.

Going after Begich or Baucus would “blow up in their face,” said Jim Manley, a former spokesman for Senate Democratic Leader Harry Reid. “They have to decide whether they want an issue or whether they want to win.”

INTENSITY TRUMPS POPULARITY

As Wednesday’s vote showed, the NRA can count on their 4.5 million members to leap into action when it counts. Gun-control groups have yet to match that type of enduring intensity.

“People who own guns care about guns,” said Richard Feldman, a former NRA lobbyist who now heads a gun-rights group called Independent Firearm Owners of America that supported the background-check legislation.

“People who don’t own guns, they have the same vote but they don’t care about guns,” he said.

Wednesday’s vote was the NRA’s toughest test in nearly 20 years.

The December massacre of 20 school children and six adults in Newtown, Connecticut, pushed gun control to the top of Obama’s agenda and galvanized advocates such as Bloomberg.

The NRA also was coming off an election that called its influence into question. Only 5 percent of the $19 million the group spent on television ads and other forms of electoral communication in 2012 went toward winning candidates, according to the Center for Responsive Politics, which tracks political spending.

Demographic trends are working against the NRA as well. Fewer than one-third of U.S. households owned guns in 2011, down from 54 percent in 1977, according to the University of Chicago’s General Social Survey.

The NRA’s stance against expanding background checks to people who buy guns over the Internet and at gun shows, reversing its earlier support, put the NRA at odds with 80 percent to 90 percent of the public.

But as Wednesday’s vote showed, a motivated minority that cares passionately about an issue often carries more weight in Washington than a majority that is not quite as focused on that single issue.

“It’s intensity versus preference,” said anti-tax activist Grover Norquist, a member of the NRA’s board of directors. “While 90 percent will tell you, ‘Sure, I’m for that,’ 5 percent will really hate that, and on Election Day the only people who remember your position are the 5″ percent, he said.

Gun-control advocates could make headway in the coming months by making enough noise at the grassroots level to let lawmakers such as Baucus and Begich know that they would not pay a significant price if they changed their minds, said Matt Bennett, a co-founder of the centrist Democratic think tank Third Way.

That could allow the bill to come back up for another vote before the 2014 elections, he said.

“Showing a bit of anger is useful,” Bennett said.

Perhaps, but after this week’s vote, Baucus, for one, made clear that he believed that rural Montana voters would punish him if he supported a measure seen as limiting gun owners’ rights.

Gun-control groups will have to match an NRA political machine that maintains a vigorous presence at all levels of government. In February alone, the group donated to three state legislature candidates in Rhode Island and 16 congressional candidates and campaign groups, according to federal records.

Despite the NRA’s setbacks in last year’s elections, the gun lobby’s tactics and legislative success remain an imposing force, said Sheila Krumholz, executive director of the Center for Responsive Politics.

Gun-rights groups have donated $596,000 to the sitting members of the Senate since 2007, while gun-control groups have donated only $5,000.

The NRA and other gun-rights groups “are perennially among the most powerful interest groups in Washington,” Krumholz said.

(Editing by David Lindsey and Eric Walsh)

Those callers got what they wanted: Begich voted no – one of four Democrats from gun-friendly states to do so – and the most ambitious gun-control push in two decades went down to defeat.

It was an impressive show of force by the National Rifle Association, which reaffirmed its reputation as one of Washington’s most powerful interest groups by turning back one of President Barack Obama’s top second-term priorities.

The NRA mobilized a disciplined, grassroots army that flooded Republican and conservative Democratic lawmakers’ offices with phone calls and e-mails.

The NRA and its supporters also followed a tightly woven script that accused Obama of not following up on thousands of gun buyers each year who fail background checks under existing laws. The association’s talking points, often repeated word for word by lawmakers and NRA supporters, cast the new background checks plan as an infringement on the constitutional right to bear arms of law-abiding citizens.

After the measure fell six votes short of the 60 votes it needed to advance in the 100-member Senate, Obama acknowledged that gun-control supporters have a way to go before they can match the sustained passion that has allowed the gun lobby to steadily loosen firearms laws over the past 18 years.

Now, with the push for gun control in a holding pattern on Capitol Hill, gun-control groups are vowing to meet Obama’s challenge to beat the NRA at its own game.

Gun control has a deep-pocketed sponsor in New York City Mayor Michael Bloomberg, who spent $12 million on ads in March targeting key lawmakers.

Organizing for America, an advocacy group spawned from Obama’s re-election campaign, plans to mount rallies to pressure lawmakers who voted against the bill.

Separately, the Progressive Change Campaign Committee, an independent liberal group, plans to run newspaper ads criticizing Montana Democratic Senator Max Baucus for voting against the bill, the first of what the group says could be many targeted pressure campaigns aimed at lawmakers who will face re-election next year.

That effort could backfire, analysts say.

The Democratic Party – which controls 55 seats in the Senate – needs conservative Democrats such as Begich and Baucus to win re-election next year in order to retain control of the chamber. Efforts to punish them for their vote could hand those seats to Republicans.

Going after Begich or Baucus would “blow up in their face,” said Jim Manley, a former spokesman for Senate Democratic Leader Harry Reid. “They have to decide whether they want an issue or whether they want to win.”

INTENSITY TRUMPS POPULARITY

As Wednesday’s vote showed, the NRA can count on their 4.5 million members to leap into action when it counts. Gun-control groups have yet to match that type of enduring intensity.

“People who own guns care about guns,” said Richard Feldman, a former NRA lobbyist who now heads a gun-rights group called Independent Firearm Owners of America that supported the background-check legislation.

“People who don’t own guns, they have the same vote but they don’t care about guns,” he said.

Wednesday’s vote was the NRA’s toughest test in nearly 20 years.

The December massacre of 20 school children and six adults in Newtown, Connecticut, pushed gun control to the top of Obama’s agenda and galvanized advocates such as Bloomberg.

The NRA also was coming off an election that called its influence into question. Only 5 percent of the $19 million the group spent on television ads and other forms of electoral communication in 2012 went toward winning candidates, according to the Center for Responsive Politics, which tracks political spending.

Demographic trends are working against the NRA as well. Fewer than one-third of U.S. households owned guns in 2011, down from 54 percent in 1977, according to the University of Chicago’s General Social Survey.

The NRA’s stance against expanding background checks to people who buy guns over the Internet and at gun shows, reversing its earlier support, put the NRA at odds with 80 percent to 90 percent of the public.

But as Wednesday’s vote showed, a motivated minority that cares passionately about an issue often carries more weight in Washington than a majority that is not quite as focused on that single issue.

“It’s intensity versus preference,” said anti-tax activist Grover Norquist, a member of the NRA’s board of directors. “While 90 percent will tell you, ‘Sure, I’m for that,’ 5 percent will really hate that, and on Election Day the only people who remember your position are the 5″ percent, he said.

Gun-control advocates could make headway in the coming months by making enough noise at the grassroots level to let lawmakers such as Baucus and Begich know that they would not pay a significant price if they changed their minds, said Matt Bennett, a co-founder of the centrist Democratic think tank Third Way.

That could allow the bill to come back up for another vote before the 2014 elections, he said.

“Showing a bit of anger is useful,” Bennett said.

Perhaps, but after this week’s vote, Baucus, for one, made clear that he believed that rural Montana voters would punish him if he supported a measure seen as limiting gun owners’ rights.

Gun-control groups will have to match an NRA political machine that maintains a vigorous presence at all levels of government. In February alone, the group donated to three state legislature candidates in Rhode Island and 16 congressional candidates and campaign groups, according to federal records.

Despite the NRA’s setbacks in last year’s elections, the gun lobby’s tactics and legislative success remain an imposing force, said Sheila Krumholz, executive director of the Center for Responsive Politics.

Gun-rights groups have donated $596,000 to the sitting members of the Senate since 2007, while gun-control groups have donated only $5,000.

The NRA and other gun-rights groups “are perennially among the most powerful interest groups in Washington,” Krumholz said.

(Editing by David Lindsey and Eric Walsh)

The new state laws, a small fraction of the 1,500 or so gun-related bills that have been proposed at state level, reflect the vast political and ideological differences in the debate over gun rights – a gulf that helps explain why lawmakers in Washington find it so difficult to reach a consensus on the issue.

Several Democrat-controlled states have tightened their already tough gun laws, while a dozen Republican-leaning states have loosened the few restrictions they have on the constitutional right to bear arms.

The net effect has been to increase the disparities in the nation’s patchwork of gun laws, and widen the divide between urban areas where gun ownership is viewed with suspicion and rural regions where guns are firmly embedded in the culture.

In New York, a new law authorizes police to track ammunition sales and prevents gun owners from buying ammunition magazines that hold more than seven bullets.

Under a new Maryland law, gun buyers will have to be fingerprinted and licensed. In Connecticut, where the massacre of 20 young children and six teachers at Sandy Hook Elementary School in Newtown inspired the gun-control legislation now before the U.S. Senate, those who own high-capacity magazines will have to register with the state.

In many southern and western states, however, legislators are moving in the opposite direction.

Arkansas now allows guns in churches, bars and liquor stores. A new law in Wyoming allows judges to carry guns in their courtrooms. South Dakota school administrators will be able to arm teachers.

State legislators have introduced more than 1,500 gun-related bills since January, according to the Sunlight Foundation. Roughly half of these new proposals would strengthen gun laws, while the other half would weaken them, the nonprofit group found. Of those, around 50 have been enacted into law.

Because weapons can be easily carried across state lines, states that try to impose tight controls on gun purchases can be undercut by other states that are more permissive, analysts say.

“There’s no metal detectors at the borders,” said Northeastern University criminologist James Alan Fox. “Any state’s ability to deal with the gun problem is limited by that fact: They’re not isolated islands.”

Gun-control advocates say that’s one reason Congress needs to strengthen federal background checks of prospective gun buyers, limit the size of magazine clips and ban military-style “assault” weapons.

“State legislatures that enact irresponsible laws truly do put lives at risk not just in their own state but in neighboring states as well,” said Laura Cutilletta of the Law Center to Prevent Gun Violence.

Gun-rights activists say states are rightly fulfilling their roles as “laboratories of democracy,” allowing policymakers to see what approaches work and what doesn’t. They say the differences in laws also mean that gun owners can move to states with expansive gun rights, if they wish.

“I think diversity is good,” said Joseph Tartaro, president of the Second Amendment Foundation. “From a personal liberty standpoint, any time you have more options you’re better off.”

FEDERAL LAWS FACE TOUGH OPPOSITION

The Second Amendment of the U.S. Constitution guarantees the right of individuals to own firearms, but courts have ruled that right is not unlimited even as they have struck down some of the most restrictive laws, such as the District of Columbia’s handgun ban.

In Washington, gun-control advocates scored a victory on Thursday when the Senate began debate on new gun control legislation. But measures that enjoy broad public support – such as an expanded background check system that would include sales made online and at gun shows – could be weakened or made unpalatable to many lawmakers during the weeks of debate coming up in the Senate.

Even if they clear the Senate, such proposals face a more difficult path in the Republican-controlled House of Representatives.

Other measures, such as an assault weapons ban and limits on large-capacity magazines, are widely seen as unlikely to pass either chamber.

Gun-control advocates say that whatever happens in Congress, the action at the state level shows that momentum is on their side.

While many of the pro-gun laws that have passed so far have been incremental expansions of rights that already exist, the new laws in Colorado, New York, Maryland and Connecticut would impose major new restrictions.

“We’re hopeful that the rest of the country will follow our lead, both for their sake and our sake,” said Vincent DeMarco, president of Marylanders to Prevent Gun Violence, who pushed for his state’s new requirement to fingerprint and license handgun buyers.

Gun-control advocates also point to gains in states where they traditionally have had little success.

In Alabama, the governor vetoed a bill that would have allowed armed volunteers in schools. Legislation that would have allowed college students to carry guns on campus fell short in Republican-controlled Georgia.

In gun-friendly Montana, the governor vetoed a bill that would have nullified federal firearms laws in the state. And in Utah, one of the most solidly Republican states in the country, the governor vetoed a bill that would have allowed gun owners to carry concealed weapons without a permit.

On the other side of the ledger, broad gun-control bills fell short in Illinois and Minnesota, states with Democratic governors and Democrat-controlled legislatures.

Richard Feldman, a former National Rifle Association lobbyist who now heads the Independent Firearm Owners Association, said one-third of the U.S. population now lives in states with gun laws that his groups sees as restrictive. That could spur a backlash among gun owners, he said.

“As an advocacy group working those states, it makes my job much easier because people realize how tenuous their rights are,” he said.

(Editing by David Lindsey and Claudia Parsons)

Obama’s budget proposal for the 2014 fiscal year, which begins October 1, calls for more military “hackers” to head off escalating cyber threats from China, Iran, Russia and other countries. It would also bolster defenses for government and private-sector computer networks.

Intelligence officials said last month that cyber attacks and espionage have supplanted terrorism as the top security threat facing the United States, and military officials sounded the alarm as well.

“Lock your doors,” Air Force General Robert Kelher told space and cyber industry executives at a conference in Colorado on Tuesday night. “Someone from halfway around the world is trying to get into your network looking to steal what you are developing.”

The administration is making cybersecurity a priority at a time when it is cutting back or holding the line on spending across wide swaths of the government.

Obama’s budget, released on Wednesday, proposes to boost Defense Department spending on cyber efforts to $4.7 billion, $800 million more than current levels, even as it plans to cut the Pentagon’s overall spending by $3.9 billion.

The Pentagon said it plans to expand its Cyber Command, a team of military hackers conducting what it calls “reconnaissance, surveillance, development, maintenance and analysis.” The Pentagon also said it would expand efforts to protect its own computer networks.

Under the budget proposal, the Department of Homeland Security would spend $44 million more on a government-wide information-sharing effort even as its overall budget would shrink by $615 million, or 1.5 percent. The department also would fund more cybersecurity research and help private businesses and local governments bolster their online defenses.

Much of the cybersecurity spending is contained in classified reaches of the government that do not make their budgets public, making quantifying the overall proposed increase sought by the president impossible.

“The budget includes increases and improvements to a full range of cyberspace activities,” the Obama administration said about its classified activities.

(Additional reporting by Andrea Shalal-esa in Colorado Spring, Colorado; Editing by Alistair Bell and Will Dunham)

The president would pay for the expansion in part by eliminating tax breaks and subsidies for oil, gas and coal industries. Previous efforts by Obama’s fellow Democrats to repeal the $4 billion worth of fossil-fuel subsidies have fallen short.

Obama’s budget plan for fiscal 2014, which begins October 1, would boost clean-tech spending by 40 percent over current levels, marking one of the largest increases in a blueprint that otherwise would cut spending in a wide range of other programs, from environmental protection to retirement benefits.

The president’s budget proposal stands a slim chance of becoming law in its current form.

Republicans who control the House of Representatives have criticized Obama’s clean-energy initiatives as wasteful boondoggles, pointing to the high-profile bankruptcies of companies like solar-panel maker Solyndra that benefited from federal backing.

But the budget proposal signals that clean energy will remain a priority for Obama in his second term in office.

“These increases in funding are significant and a testament to the importance of clean energy and innovation to the country’s economic future,” the administration wrote in its budget proposal for the coming fiscal year.

Obama has transformed the Energy Department from a low-profile agency largely focused on managing the nation’s nuclear stockpile into a research and development powerhouse.

The department has underwritten everything from automotive battery startups to research projects that aim to turn “biofuels” like algae into the gasoline of the 21st century, thanks to a $35 billion boost for clean-tech and energy efficiency funding in the 2009 economic stimulus measure.

The effort has not always panned out. Most recently, Fisker Automotive, a hybrid sports car maker that tapped nearly $200 million in government loans, laid off most of its employees in a last-ditch effort to stave off bankruptcy.

But the administration can point to successes as well. Since 2008, the United States has nearly doubled its energy generation from wind, solar, geothermal and other renewable energy sources. Support for energy research could lead to breakthroughs in the years to come, the administration says.

While many government agencies would see minimal increases or spending cuts under Obama’s budget proposal for fiscal 2014, the Energy Department would get an increase of 8 percent over current levels, to $28.4 billion.

It would boost spending on advanced vehicles by 75 percent in the coming year to $575 million, and make vehicle research less subject to the whims of Congress by setting up a fund that would hand out $200 million each year.

In an effort to make solar and wind power as affordable as conventional energy sources, the administration would spend 29 percent more than it currently does to integrate those types of energy into the national electric grid.

The budget would increase support for biofuels by 24 percent and boost funding for physics and other forms of basic science research by 5.7 percent.

It would set up a $200 million competition to encourage state governments to boost energy efficiency, modeled on the administration’s Race to the Top education program.

(Reporting by Andy Sullivan; Editing by Fred Barbash and Will Dunham)