Faced with mounting calls for a cease-fire with Hamas, Israeli Prime Minister Ehud Olmert says Israel will set up a “humanitarian corridor” in Gaza to allow Palestinians access to food and other necessities. Relief convoys today will be permitted into the territory periodically to dispense medicine and foodstuffs. Olmert told Haaretz that Israel does not want a prolonged offensive in Gaza, adding: “We did not set out to occupy Gaza or kill every terrorist. We set out to bring change to the south.” The premier said he’s talking with other world leaders and that Israel supports UN efforts to find an “active” resolution to the crisis.

President-elect Barack Obama vowed that his stimulus package—which could cost $1 trillion if not more—would be free of pork-barrel projects. "We are going to ban all earmarks, the process by which individual members insert projects without review," he told reporters on the Hill Tuesday as he tried to build support for the measure. Aides hope that $300 billion in tax cuts will help win bipartisan approval.

With all eyes on Leon Panetta’s appointment to head the CIA, there’s another nomination certain to make waves: Obama has tapped CNN and CBS medical correspondent Dr. Sanjay Gupta be the next surgeon general. The president has reportedly offered the job to the neurosurgeon, who is definitely interested. Vetting is in its final stages and a formal announcement could come over the next few days.

Dubya may be many things, but a procrastinator he’s not: With 14 days to go until Obama’s inauguration, White House press secretary Dana Perino says Bush is already packing his things in preparation for his big move to Dallas. “The president’s style is always to be one that’s a little bit prepared early, and he and Mrs. Bush have been working to box things up,” she said. Perino added that Bush and the first lady don’t have a lot to move, so reporters shouldn’t expect to “see a big Ryder truck pulling up to the White House…They didn’t come with a lot of things; they didn’t bring a lot of furniture here. So mostly what they have are books, obviously their clothes, and then some of the things that they’ve picked up along the way on their travels as they’ve traveled.”

Apple is cutting the price of select songs on iTunes to 69 cents (from 99 cents before tax) and for the first time, songs will be free of copy protection, meaning users can duplicate tracks and transfer music to non-Apple devices. Apple marketing exec Philip Schiller announced the changes at Macworld in San Francisco on Tuesday. The new pricing model includes three tiers, to be determined by record companies: 69 cents, 99 cents, and $1.29.

So that’s what he meant by “Southwest Asia”! Joe Biden, in his last trip abroad before being sworn in as vice president, will visit three of the countries sure to be at the top of the Obama administration’s agenda: Iraq, Afghanistan, and Pakistan. He stressed today his mission is strictly fact finding. “What I hope to accomplish is to get a sort of baseline. This will be my God-knows-how-many trips, I guess my 10th or 11th trip into Iraq, and I don’t know how many times in Afghanistan and Pakistan,” he said today. “And I think it’s very important that we have sort of an independent baseline as to where things stand.” He’ll be joined on the trip later this week by Senators Kerry, Reed, Collins, and Graham.

Fans of the drama-filled Minnesota Senate race can rejoice: It doesn’t look as if Norm Coleman will concede anytime soon. A day after the state’s Canvassing Board certified Al Franken’s overtime win, incumbent Coleman says he’ll file a lawsuit to challenge the result. The Republican asserts that absentee ballots for Franken were counted twice and that the standards for reviewing rejected absentee ballots were not uniform. “Until these issues are settled,” Coleman said, “any attempt to seat a senator who is not properly certified violates Senate precedent, and usurps the will of the people of Minnesota.” Coleman’s lead attorney says he expects the race to take another two months to be resolved; the Senate today declined to seat Franken along with the other new senators.

Add one of Germany’s wealthiest businessmen to the growing list of victims of the financial crisis. Billionaire Adolf Merckle, 74, head of a conglomerate that includes the Ratiopharm group and HeidelbergCement, threw himself in front of a train last night in southwest Germany. Said to be worth 7 billion euros, Merckle was despondent over the impending demise of his pharmaceutical empire and losing hundreds of millions of euros through risky VW share trading. “The economic distress in his companies as the result of the financial crisis and the associated uncertainties of the last weeks, as well as his sense of impotence at no longer being able to act, destroyed this passionate family entrepreneur, and he ended his life,” his family said in a statement.

His dad thinks he’d be great, but it seems the time’s not right for a Jeb Bush Senate run. The former Florida governor, who left office in 2007, has just announced he won’t seek Senator Mel Martinez’ seat when he retires in 2010. Former state House Speaker Marco Rubio tells Politico’s Ben Smith that Bush “said it just wasn’t the right timing” and that he wants to explore other professional avenues outside of politics. An interesting twist: The decision opens the way for Rubio to pursue his own Senate ambitions. He’s meeting with Republican officials in Washington next week.

Roland Burris, appointed by disgraced Illinois Governor Rod Blagojevich to take over President-elect Barack Obama's Senate seat, was denied the opportunity to do so on Tuesday. The secretary of the Senate turned him away, Burris told reporters at the Capitol building. "There's nothing wrong with Roland Burris and there's nothing wrong with the appointment," Burris had said in an interview before he was left out from Senate dealings. Burris is now exploring his options as to how to proceed.

More than 40 people were killed when a school maintained by the United Nations in the Gaza Strip was hit by an Israeli strike. BBC News, citing Palestinian medical sources, said the al-Fakhura school in the Jabaliya refugee camp was being used as a safe house of sorts from the ongoing fighting between Hamas and the Israeli military, now in its 11th day.

In the face of criticism from lawmakers that D.C. power broker Leon Panetta might not be the most qualified person to head the CIA, vice president-elect Joe Biden told reports that he regrets Senators were not consulted before Obama's selection was leaked to the press. "I think it was just a mistake," he said. "I'm still a Senate man and I always think this way. I think it's always good to talk to the requisite members of congress." Yesterday, Sen. Diane Feinstein had complained: "My position has consistently been that I believe the agency is best served by having an intelligence professional in charge at this time."

Need another sign that we’re in a deep recession? Consider this: Eight years after Hillary was given $8 million by Simon & Shuster to write her memoirs, that same publishing company has given Laura Bush…$1.6 million. The advance is even less than the $2 million former first ladies Nancy Reagan and Betty Ford received. According to the attorney who negotiated the deal for Laura, eight publishing companies were in the running for the book, which Scribner publisher Susan Moldow sure seems excited about. “As a rare witness to the private moments of one of our country’s most consequential presidencies, and as a First Lady who has maintained a notable level of discretion, her memoir will provide a candid and personal perspective and an enduring record, of the years that have already determined the course of the 21st century,” she said.

Barack Obama’s political appointees have something in common: They’re all workaholics. According to Michelle Cottle in The New Republic, Rahm Emanuel, Janet Napolitano, Peter Rouse, and Pete Orszag all fit the bill. Valerie Jarrett, writes Cottle, “has an all-hours BlackBerry-cell phone doublefisting habit that, whatever else it achieves, makes her a thrill behind the wheel. (Trust me on this.)” This is markedly different from Bush’s team of late-risers, and is probably just what the country needs, but burnout may be a problem down the road. “In the relentless crucible of the White House,” Cottle asks, “how can Obama avoid driving his uber-committed workforce into the ground?”

Sarah Palin's potential mother-in-law, Sherry Johnston, appeared alone at an Alaska court to plead not guilty on Monday to six felony counts of possessing and selling OxyContin. Johnston, who admitted to selling OxyContin pills to an informant, received a public defender for the case. The 42-year-old is the mother of Wasilla teen Levi Johnston, the father of 17-year-old Bristol Palin's newborn baby.

While many Americans are reveling in lower gas prices, other will be shivering as shrinking oil revenues have forced Venezuela to end its program providing home heating-oil assistance to poor Americans. The three-year-old program had helped 200,000 low-income people in 23 states. But with President Hugo Chavez's current campaign to eliminate presidential term limits, he needs all the domestic support he can get. That means selling oil instead of giving it away and then pumping that money back into Venezuela. "He is deciding to worry about his own domestic politics instead of ours," said the director of Latin American studies at the Council on Foreign Relations. "He's shoring up all the domestic political support he can get." The cutoff of the program was announced yesterday by Joseph P. Kennedy II, who chairs Citizens Energy, which administered the program.

On Monday night, The Drudge Report claimed Ann Coulter’s Tuesday morning appearance on the Today show was canceled and that she wouldn’t be seen on NBC and MSNBC outlets. Instead of Today, Coulter was welcomed by CBS’ Early Show on Tuesday (anchor Harry Smith called her "goofy" and "sophomoric”). Now, Coulter says Today bumped her to Wednesday morning, when she’s scheduled to appear twice. But will she appear? The commentator, who’s promoting her new book Guilty, told Fox News she’d cancel on Today at the last minute to get back at her.

Are Wall-E fans being left in the dust? The Directors Guild of America has reportedly decided that the critically acclaimed Andrew Stanton flick is ineligible for a nomination for Outstanding Achievement in Feature Film because it is “animated.” The decision could backfire, New York’s Vulture blog hopes, and lead Wall-E to an Oscar nod.

The foodies over at Gourmet have a few predictions for the New Year. "Easy, comforting recipes" and "necessary luxuries" like chocolate and wine will be hot to counteract the cooldown on dining out. Other predictions? Ice cream made of goat's and sheep's milk, and a boom in the "neutraceutical market" with an overload of probiotics added to foods. Continued buzz for the scotch-swilling Mad Men is predicted to bring simple drinks back…to the home, that is. More prevalent calorie counts on menus, universal hunger pangs for Korean and Indian food (two cuisines, they note, whose ingredients are relatively inexpensive) and an increase in vacation exoduses to Iceland and Cuba (President Obama, they say, will patch relations with Cuba). And lastly, the magazine (half-jokingly) foresees food going extremely local, with chefs bringing meals back to their roots—by sprinkling dirt around the plates of homegrown and sustainable fare.

Barack Obama’s last major appointment won’t go down as his most popular. Yesterday, word leaked that Obama had named Leon Panetta, a veteran D.C. power player, as head of the CIA. The initial reaction from Sen. Diane Feinstein: “My position has consistently been that I believe the agency is best served by having an intelligence professional in charge at this time.” According to The Times, Obama struggled to find anyone who that description who wasn’t knee-deep in Bush Era interrogation and detention programs. Obama had been prepared to appoint John O. Brennan to the job before a firestorm of criticism from the left led Brennan to withdraw.

Fugitive filmmaker Roman Polanski wants a fair shake and he doesn't think he can get it in Los Angeles. So his lawyers are asking that a judge outside of the city decide his motion to have a 30-year-old sex offense case dismissed. Polanski's team is arguing that the entire Los Angeles County Superior Court system should be disqualified from the case because of statements made by court spokesman Alan Parachini. Last month after Polanski's lawyers announced their intention to file for dismissal, Parachini said that the famed director would have to personally appear at the hearings. Polanski's lawyers say that the statement shows the court has pre-judged a central issue of their motion. After spending 30 years in exile, Polanski is trying to get charges dismissed after what the defense has called "extraordinary new evidence" came to light in a 2008 HBO documentary.

Bernard Madoff can't even give out presents without getting in trouble. This holiday season, Madoff and his wife shipped out $1 million worth of cufflinks, watches, and other personal property to family and friends, and federal prosecutors want him in jail for it. They claim that the gifts constitute a "dissipation of assets" that could harm investors trying to recoup their losses from investing with Bernie. "This is a man who should never have been out on bail," said Howard Kleinhendler, an attorney for a bilked investor. "He shouldn't be able to continue to communicate in an unfettered way to continue to move assets around." Ira Sorkin, Madoff's attorney, downplayed the prosecutor's request, explaining that some of the items were heirlooms.

Sad coda for the Bush administration: Muhammad Saad Iqbal was never charged with a crime, but the six years he spent in U.S. custody were a nightmare. Iqbal was arrested in Indonesia in 2002 and judged by American officials not to be a threat. (He had bragged about building a shoe bomb.) But he was taken to Egypt anyway, where he says he was given electric shocks and beaten and made to stand for days. At Guantanamo, he repeatedly tried to commit suicide. Iqbal is now planning to sue the United States. “Who is responsible for the seven years of my life?” he said.

Bad news for Caroline Kennedy’s campaign to replace Hillary Clinton in the Senate. A new poll out today finds her popularity has taken a “major hit,” with 44 percent of New York voters saying they have a lesser opinion of her now than they did before she started making noises about going to Washington. In a faceoff with state Attorney General Andrew Cuomo, 58 percent (and 54 percent of Democrats) prefer him over Kennedy; a month ago, Cuomo was the top choice for just 23 percent of Democrats. Fortunately for Kennedy, this Senate seat isn’t up to New York voters—it’s Gov. David Paterson’s opinion that matters most.

It was another bloody day in Gaza. The Israeli army says it has killed 130 militants since its ground campaign began last weekend while suffering a few casualties of its own; according to The New York Times, as many as five Israelis died in friendly fire incidents yesterday. Meanwhile, Hamas continued to fire rockets into Israel. One landed in the city of Gedera, which is the northernmost point that a rocket has reached. In Gaza City, airplanes dropped propaganda leaflets reading, “Hamas is getting a taste of the power of the Israeli military after more than a week and we have other methods that are still harsher to deal with Hamas. They will prove very painful. For your safety, please evacuate your neighborhood.” Those who picked up their phones would have received a terser recorded message: “We are getting rid of Hamas.”

So who’s responsible for the Bill Richardson mess? Depends on whom you ask. Obama sources tell The Washington Post that Richardson was less than forthcoming on the grand jury probe into his gubernatorial office, downplaying its importance and failing to reveal that his office might be at risk. The New Mexico governor also failed to disclose the investigation a background-check questionnaire. But Richardson surrogates say he did nothing wrong and that the transition team knew all there was to know about the grand jury probe. If they failed to identify it as a problem, a senior Richardson aide said, that's their own fault. The probe is focused on David Rubin, a Richardson donor, who secured a lucrative state highway contract in New Mexico.

Get this: after President Bush creates three national monuments in the Pacific today, he will have set aside more square miles of ocean for protection than any other political leader in history. The three new swaths of protected waters, containing some of the world's most diverse populations of coral, fish, and geological formations, will add 195,000 square miles to the nearly 140,000 he set aside in 2006. The designation bans seafloor mining, most commercial fishing, and limits recreational fishing. Environmental groups were disappointed by some concessions made to commercial fishers and the shrinking of one of the monuments. But they were generally pleased with the actions from a president no one would describe as a tree hugger. "We're getting less than we wanted, but that's OK," said Agnes McPhetres, vice chairwoman of a group called Friends of the Monument.

So much for spending ourselves out of the recession. Americans' new-found love of frugality is worsening the economic downturn. U.S. household debt is down for the first time since 1952 and consumer spending growth declined for the first time in nearly 20 years. It's what economists are calling "the paradox of thrift." The new mentality emphasis on saving instead of splurging may be good for self-interests, but it's compounding collective problems for retailers, automakers and communities.