**Health Care
*Selling health care in Wisconsin yesterday, Obama said that a health care overhaul will cost "money up front" when "we don't have a lot of extra money to spend," but he added that reform is crucial for the country's economic future, USA Today reports.

*Senate Democrats are considering a plan for "co-ops" as a compromise measure to appease Republican opposition to a public health care option. But Nancy Pelosi rejected the idea yesterday. "In our caucus, our members have been very clear about what their concerns might be about a public option, and I agree it should be sound, it should be administrative it should be self sufficient it should be a competitor with the private sector and not have an unfair advantage ... When you say public option, you have to say right next to it -- level playing field."

*The AMA clarified their position on a public health care option, Ambinder notes. "The AMA opposes any public plan that forces physicians to participate, expands the fiscally-challenged Medicare program or pays Medicare rates, but the AMA is willing to consider other variations of the public plan that are currently under discussion in Congress," it said in a statement.

*Check out Harry Reid's argument for why a public option is good: "Say I want to send something to one of my children in Nevada, the products that I choose can be sent by FedEx, UPS, DHL, or the United States Postal Service. The Postal Service may not be perfect, but the public option is there, and the private companies, FedEx, UPS, know they cannot rip you off or [be] slacking on their service."

*The Hill: "Senate Democrats are bracing for what they expect will be a huge price tag connected with revamping the nation's healthcare system. The soon-to-be-delivered estimate on Democratic healthcare reform proposals is expected to be so expensive that lawmakers are talking about changing the chamber's normal accounting procedures."

**President Obama
*How long can President Obama keep blaming Bush for problems he inherited? Not much longer, the New York Times suspects. "At a certain point, a new president assumes ownership of the problems and finds himself answering for his own actions. For Mr. Obama, even some advisers say that moment may be coming soon." David Axelrod: "Nobody's trying to duck responsibility or make excuses for them. But it is important at times to put it into perspective, not to fix blame but to underscore that some of these problems are complex and they're going to take time to solve."

*A supplemental appropriations bill to fund wars in Iraq and Afghanistan cleared the House after the Obama administration "dropped its request for a provision that would bar the release of photos that show abuse of detainees in U.S. custody in Iraq and Afghanistan," the Washington Post reports.

*Former Virginia lieutenant governor Donald Beyer is the latest big donor rewarded with a plum ambassadorship, Washington Times notes.

**Palin Watch
*Sarah Palin "brushed aside David Letterman's olive branch to appear on his show, while adding, 'It would be wise to keep Willow away from' him," Newsday reports.

*Asked on "Today" about the Letterman jokes, Palin said of the "slutty fight attendant" line: "My first thought was, hey don't disparage flight attendants." She also called Letterman's comment about his daughter a "sad commentary" on society, and said: "Willow would no doubt want to stay away from David Letterman." She said Letterman shouldn't apologize to her, but to young women for joking about statutory rape.

Asked about 2012, and if she's a frontrunner: "Absolutely not necessarily." On her role in the party: "I want to be able to help the cause." The cause being, "big government is not the answer."

*Palin was originally on the show to trumpet a pipeline deal between Trans Canada and Exxon. She had said yesterday it was "very encouraging and exciting, but certainly no surprise, because AGIA was crafted to allow just this type of commercial alignment to take place."

But former Gov. Walter Hickel, who chaired Palin's '06 campaign, slammed it. "Because of her national ambitions, she is promoting an agenda that will allow Outside corporations to dominate Alaska's resources, including our energy and the jobs it provides," he said in a statement.

**Scandal Watch: The chair and ranking member of the House Ethics Committee dropped "a political bomb" Thursday night, announcing they would review " the practice of lawmakers steering money and contracts to favored companies, and then receiving campaign contributions in return." Top Democrats on the Appropriations Committee, Reps. John Murtha, Pete Visclosk and Jim Moran, each "received significant campaign donations from lobbyists from a defunct firm, PMA, and its clients -- companies that got money for pet projects."

**Campaign Stuff
*Creigh Deeds, who was the only candidate in the primary not from Northern Virginia, is moving his campaign headquarters there for the general election. "In the general election, we're going to have to do very well in Northern Virginia," said Deeds, who also plans to have field offices in other cities. "That means we have to be closer to our volunteer base there. We have to be strategically positioned to take advantage of the resources there."

*Chris Christie put his stamp on the New Jersey GOP, pleasing conservatives with his choice of Assemb. Jay Webber to be party chairman, the Inquirer reports.

*Washington University law professor Thomas Schweich, who flirted with a Senate run in Missouri and was backed by John Danforth, announced he would back Roy Blunt in the race just "hours before the biggest Missouri Republican Party fundraiser of the year." "I have concluded that my entering the race would be divisive and probably lower the chances of keeping Sen. Bond's seat in Republican hands," Schweich said in his statement, per the St. Louis Post-Dispatch.

*Wisconsin Gov. Jim Doyle (D) looks fairly safe at this point if he seeks a third term, according to a new Kos/Research2000 poll. Russ Feingold, up in 2010, also has room to work with in hypothetical matchups.

*Mike Huckabee's latest celebrity guest: Ric Flair. The two "tag-teamed" at a fundraiser in North Carolina.

*The Utah Senate primary got even more crowded, with actress Cherilyn Edgar becoming the latest candidate to announce a challenge to Sen. Bob Bennett (R). Also in: state Attorney General Mark Shurtleff and small-business owner James Russell Williams III.

*Rep. Mike Castle (R-Del.) is turning down an offer to serve as the ranking member on the education and labor committee in the next Congress, saying he couldn't commit that he'd run for another term. The move fuels speculation of a pending retirement or Senate run, CQ Politics says.

*"Dirty diapers will likely dot the campaign trails of both heavyweight Democratic candidates in the 2010 U.S. Senate race," the Lexington Herald Leader reports. Lt. Gov. Daniel Mongiardo announced that he's expecting a child in December; Attorney General Jack Conaway had announced that his wife is expecting earlier this year.

**Sports Alert: The Magic lose in OT to put the Lakers one win away from another NBA Title. The Stanley Cup Finals has a do-or-die Game 7 tonight. And the Yanks just can't beat the Red Sox, blowing a lead in the 8th to go 0-8 over the hated rivals on the season.