The Note: Canceling the ‘Grand Bargain’

We learned an awful lot about fear in this busy week on the campaign trail and on Capitol Hill. To review: All the Republican candidates are scared of Fred Thompson. Lots of them are afraid of Mitt Romney -- or, at least, what his wallet can do for him in Iowa. Rudy Giuliani is afraid of lightning. John Edwards fears fading into the second tier. Hillary Clinton is terrified of Barack Obama's fund-raising. And the Republican Party is very, very afraid of the immigration bill they helped kill last night in the Senate.

The failure of immigration reform in another Congress (President Bush, slowed down by a stomach ailment in Europe, is still hopeful about the bill's chances, but doesn't he have to be?) has too many causes to count, as reflected in a final tally that left the Senate 15 votes short. It leaves a long trail of deeply disappointed politicians -- Bush, Sen. John McCain, R-Ariz., and Sen. Edward Kennedy, D-Mass., prominent among them. ABC's Jake Tapper reports that the measure collapsed under its own weight because it was "a true compromise in the sense that there was something in it for everyone to hate."

The failure belongs to Washington itself, and a political culture that can't find consensus on Iraq, healthcare, energy security, or Social Security, either. "To those far removed from the backrooms of Capitol Hill, what happened will fuel cynicism toward a political system that appears incapable of finding ways to resolve the nation's big challenges," writes The Washington Post's Dan Balz, penning a debate line for one or more 2008ers.

As for what's next, there is no purer test of Bush's remaining effectiveness as a leader. Witness this challenge delivered by Senate Majority Leader Harry Reid, D-Nev.: "We need some support and I hope the president understands that there's only about 16 months until there is an election and a new president," Reid said, per The Wall Street Journal's David Rogers and Sarah Lueck.

Ah yes -- 2008. Reverberations are still being felt from the decisions by McCain and former mayor Rudolph Giuliani, R-N.Y., to skip the Iowa straw poll. Former governor Mitt Romney, R-Mass., is scaring the field away from Ames: Former governor Jim Gilmore, R-Va., is now bypassing the straw poll as well, and he could get company in the form of former senator Fred Thompson, R-Tenn., and former governors Mike Huckabee, R-Ark., and Tommy Thompson, R-Wisc., according to campaign advisers. Any Little Leaguer knows that winning by forfeit is no fun, but this fear of Romney could build him up as much it brings him down.

Then there's the dread of Fred. McCain could see his already lagging fund-raising suffer further as Fred Thompson prepares to enter the race, just weeks before the end of the second-quarter money race, The Washington Post's Matthew Mosk writes. This killer quote is from John Dowd, McCain's former personal lawyer and fund-raiser who's now with Thompson: "It's a difficult thing to leave a friend and go to another friend. But we lost the John McCain I knew."

Odds and ends from the campaign trail:

On the eve of an AFL-CIO forum tomorrow in Detroit, Sen. Hillary Rodham Clinton's chief strategist, Mark Penn, announced that he will recuse himself from his consulting firm's work on behalf of the management side in labor disputes, Marc Ambinder reports in his Atlantic blog. That's nice, but hasn't Penn always claimed never to have been involved those activities in the first place?

Michael Moore is set to strike again, and this time it's Clinton, D-N.Y., he's got in his sites. "His conclusion is that she sold out," Politico's Ben Smith reports after watching Moore's forthcoming film, "Sicko." Smith says Moore faults Clinton for staying silent on the issue of universal healthcare after her plan died early in her husband's presidency. "For her silence, Hillary was rewarded. And she has been the second-largest recipient in the Senate of healthcare industry contributions," Moore says in the film, per Smith.

Sen. Barack Obama's fund-raising tally is taking another (small) hit because of his ties to Tony Rezko, the indicted Chicago dealmaker. Obama, D-Ill., is donating another $16,500 donated by Rezko associates, bringing to more than $33,000 the total amount he's had to shed because of Rezko ties, Ray Gibson and David Jackson report in the Chicago Tribune.

Clinton is bouncing back in Hollywood, after early indications that Obama would be the choice of the rich and beautiful Left Coasters. "It's starting to look like Hollywood's infatuation with Sen. Barack Obama was just a flirtation before it settles down with its longtime girlfriend," Tina Daunt writes in the Los Angeles Times.

The New York Times' Robin Toner looks at the split between Democrats and Republicans on the military's "don't ask, don't tell policy," with all the Democrats supporting a repeal and all of the Republicans wanted to keep it intact. "It shows the Democrats returning to yet another issue that confounded them in the past -- like universal health care -- with the conviction that the public is more ready for change this time," Toner writes.

Former senator John Edwards, D-N.C., is escalating his long-distance feud with Giuliani, in one of those classic political shouting matches that both sides like. After a speech in New York yesterday, Edwards said of Giuliani, "He'll never be elected president of the United States," citing the former mayor's support for the president's foreign policy, ABC's David Muir and Raelyn Johnson report. Rudy's camp reminded Edwards that he knows plenty about losing a presidential campaign: "John Edwards' track record of predicting election outcomes speaks for itself."

Romney is putting some distance between himself and the president when it comes to Iraq, telling Associated Press reporters and editors that he does not favor a "Korea-type setting with 25-50,000 troops on a near-permanent basis remaining in bases in Iraq." He also had this to say about his flip-flopping reputation: "In the style of Mark Twain, I would suggest rumors of my changes in position have been greatly exaggerated."

New York Times columnist Paul Krugman takes Romney -- and the media -- to task over Romney's debate suggestion that more weapons inspections would have revealed that Saddam Hussein had no weapons of mass destruction, when in fact weapons inspectors were ordered out of the country by Bush after they found nothing. "Mr. Romney's remark should have been the central story of the debate. But it wasn't," Krugman writes.

When in doubt, why not tee up a veto? Immigration couldn't move, but Democratic leaders in Congress did have the votes to pass a stem-cell bill. They did that yesterday, but not with nearly enough support to override the solemnly promised presidential veto. When it comes, it will be veto No. 3 for Bush.

The kicker:

"I still do believe, without regard to Paris Hilton, that, uh, we have two Americas and I think what's important is, it's obvious that the problem exists," John Edwards, commenting on what really was the biggest story of the day.

" 'That is good,' said the fish/ " 'He's gone away, yes/ But your mother will come/ She will find this big mess,' " Harry Reid, quoting Dr. Seuss on the Senate floor but unable to sort out the messiness of immigration reform.