**Gallup Polling
*"Gallup polling conducted on June 30, the deadline for U.S. forces to withdraw from urban areas of Iraq, finds Americans largely pessimistic about the impact this change will have on that country. Overall, 58% of Americans believe the security situation in Iraq will worsen now that much of it is in the hands of Iraqi security forces; only 36% believe security will stay the same or improve."

*"The Obama administration reacted Monday to the final declaration of President Mahmoud Ahmadinejad as the winner of Iran's disputed election with Secretary of State Hillary Clinton simply saying, 'these internal matters are for Iranians themselves to address.' Such a stance may be welcomed by Iranians, 75% of whom in 2008 disagreed with the statement, 'The U.S. will allow people in this region to fashion their own political future as they see fit without direct U.S. influence.' "

**President Obama
*Washington Post notes that at yesterday's health care town hall in Virginia, four questions were selected by Obama's staff. And of the three audience members randomly called on, "all turned out to be members of groups with close ties to his administration: the Service Employees International Union, Health Care for America Now, and Organizing for America, which is a part of the Democratic National Committee. White House officials said that was a coincidence."

*Wall Street Journal says the president is "is signaling flexibility on many of his previous stances as he tries to put a health-care deal together."

*The Daily News highlights "the hug" at the town hall, as Obama "played the comforter-in-chief Wednesday when a woman with kidney cancer, no insurance and little hope went looking for help at his health care summit."

*Sens. Ted Kennedy and Chris Dodd have revised their version of legislation, which includes a public option and they say will cover 97 percent of Americans. The CBO price tag is down to $611 billion, down from the $1 billion version last submitted, AP reports.

*A potential distraction? MSNBC.com reports: Nancy-Ann DeParle, President Barack Obama's health policy czar, served as a director of corporations that faced scores of federal investigations, whistleblower lawsuits and other regulatory actions, according to government records reviewed by the Investigative Reporting Workshop at American University.

*A CNN poll finds that only one in eight voters feels that an economic recovery is underway; half think the economy has simply stabilized.

*The New York Times reports on the new offensive in Afghanistan; the goal "is to put pressure on the Taliban militants" and show Afghans that the U.S. is committed to letting them set up their own institutions.

*Broder: "The implicit message, delivered by the Supreme Court majority in two of the most important decisions of the term that ended this week, is that racial discrimination is no longer as big a problem as we once thought. ... If that reading of the court's majority is correct, then two things are clear. Judge Sonia Sotomayor will certainly challenge the prevailing view if she is confirmed by the Senate to join that bench. And over a longer period, President Obama is likely to find himself in conflict with the court on the question of race."

**The Sanford Affair
*Politico: "Fourteen GOP state senators -- more than half the Senate Republican caucus -- have already called for Sanford's resignation, joining a list that, as of Wednesday afternoon, included 11 Republican members of the state House and six of the state's biggest newspapers. And three leading South Carolina Republican officeholders, including the state's two U.S. senators, called Sanford today for what sources close to the lawmakers described as frank conversations about the governor's ability to carry out his job."

*The State: "Gov. Mark Sanford says he's staying put -- despite friends' and political allies' pleading with him Wednesday to step down in the wake of his latest confessions about an extramarital affair and inappropriate behavior with other women." From his own mouth: "When told his political support has evaporated, Sanford responded to one confidant, 'Well, I'll be here until they throw me out.'"

*It's gotten so bad that even friends are questioning his mental health, the paper adds.

*The Hill takes a closer look at Jenny Sanford and her influence on her husband's political career.

*In somewhat unrelated scandal news, is John Edwards being investigated? Former aide Andrew Young, "who claimed he fathered a child born to the mistress of the two-time Democratic presidential candidate spent Wednesday," was in a federal courthouse in North Carolina yesterday, the AP reports. "Edwards acknowledged in May that federal investigators are looking into how he used campaign funds. Grand jury proceedings are secret, and the U.S. Attorney's Office in Raleigh has declined to confirm or deny an investigation."

**Campaign Stuff
*L.A. Times, on WH in swing districts: "The itinerary laid out by the White House for its just-announced "Rural Tour" includes several politically competitive districts, which would give the Obama administration a chance to make its case to people who voted Republican in past congressional races but are now represented by Democrats up for reelection in 2010."

*NY Sen: NY Times looks at the "lonely" road to the Senate for Rep. Carolyn Maloney (D-N.Y.). "Ms. Maloney finds herself very much alone these days. Defying the wishes of Democratic leaders, she plans to announce a Senate bid in the coming days. And that has left Ms. Maloney, a quintessential New York liberal usually embraced by the party, something of an outcast."

*PA Sen: "Rep. Joe Sestak (Pa.) said Wednesday he will challenge Sen. Arlen Specter (Pa.), becoming the second House Democrat in the past few hours seeking to unseat an incumbent Senate Democrat," The Hill reports. Politico notes that Sestak's staff tried to walk it back and say he made no formal declaration just yet. But audio of the local newspaper's interview makes it sound convincing.

*O. Kay Henderson reports that someone is polling Iowans about 2012, "offering choices of Huckabee, Palin, Gingrich, Jindal, and Jeb Bush.

*CA Gov: Meg Whitman has given her campaign $4 million, and raised another $6.5 million.

*AL Gov: State Supreme Court Chief Justice Sue Bell Cobb said yesterday she won't run for governor. The only Democrat on the high court, she would have had to resign to pursue a bid. "Some power players in the Alabama Democratic Party have approached Cobb, state Sen. Roger Bedford, Montgomery County Circuit Judge Charles Price and other Democrats because of their apparent discontent with the current candidates, U.S. Rep. Artur Davis, D-Birmingham, and Agriculture Commissioner Ron Sparks."

*FL Gov: Both party's candidates are facing ethics complaints over their use of state aircraft.

*RI Gov: Lt. Gov. Elizabeth Roberts (D) announced she won't run for governor yesterday. In the "surprise announcement," she "offered no direct explanation for her decision, saying only that she would seek another term in her current office," Providence Journal reports.

*AK Gov: Holis French (D), a state senator who led the Trooper-gate investigation and one of Gov. Sarah Palin's (R) top critics, will run for governor in 2010, the Daily News-Miner reports.

**Strategy Memo Note: Strategy Memo is doing the same thing tomorrow that you are -- taking a day off. See you Monday.

--Kyle Trygstad and Mike Memoli