Senate Majority Leader Reid (D-NV) canceled the Senate’s planned recess next week to continue work on budget negotiations. The House was already scheduled to be in session next week. In the Senate, Budget Committee Chairman Conrad (D-ND) could unveil his FY12 budget resolution as early as next week, although he still wants to hold off on moving it forward while the budget negotiations are underway. Meanwhile, in his farewell address yesterday, Secretary of Defense Gates reiterated once again how important our civilian-led programs are to our national security.

Who’s In the News

Panetta sworn in as Obama’s second Pentagon chief (AP, Robert Burns)

In size, scope and spending power, the Defense Department dwarfs the CIA. And although Panetta is well versed in national security issues, the magnitude of challenges that await him at the Pentagon – from the wars in Iraq and Afghanistan to battles inside the defense bureaucracy and conflicts with Congress – is hard to overstate.

Gates departs Pentagon with Medal of Freedom (Washington Post, Jason Ukman)

In a written farewell message distributed to troops this week, Gates said it had been the highest honor of his life to serve as defense secretary. Speaking to an audience that included Obama, Vice President Biden and others, he said Thursday that the commitment of U.S. forces will always stay with him. “I’ll just say here that I will think of these young warriors — the ones that fought, the ones that keep on fighting, the ones that never make it back — until the end of my days,” he said.

Clinton outlines road ahead for Arab democracy (AP, Bradley Klapper)

“Today there are new democracies fighting for life, there are vicious autocrats clinging to power,” Clinton said in a speech at the “Community of Democracies” meeting. “This is an hour of need. And every democracy should stand up and be counted.” Drawing on the experience of Lithuania and other countries that opened up when the Iron Curtain came down 22 years ago, Clinton outlined a series of fundamentals she said were necessary for nations to make the transition to democracy: institutions rooted in law; equality for all, including women; a free press; economic opportunity; legitimate leaders.

Smart Power

Secretary Clinton Gets Serious About eDiplomacy (Foreign Policy Blogs, Oliver Barrett)

“We seek to support civil society efforts worldwide because we believe that civil society helps to make communities more prosperous and stable. It helps to drive economic growth that benefits the greatest number of people. And it pushes political institutions to be agile and responsive to the people they serve. So the United States is launching an initiative called Civil Society 2.0. This organized effort will provide new technologies to civil society organizations. We will send experts in digital technology and communications to help build capacity.”

G-20 Endorses World Food Programme Hedging (Center for Global Development, Ben Leo)

Last week, the G-20 agriculture ministers meeting in Paris issued a communiqué calling for the World Food Programme to develop hedging strategies to purchase food… Since its creation almost 50 years ago, the WFP often has to react to food crises, by appealing for donations to help the hungry, then purchasing food on global markets and shipping it to those who need it… While our colleagues have lamented the communiqué’s lack of new financial commitments for food security, we believe that the call for innovative food financing cannot come at a better time.

Politics/Foreign Policy

Debt talks stagnate as blame game goes on (Washington Post, Rosalind S. Helderman and Paul Kane)

Federal debt talks remained at a stalemate Thursday as both sides continued their week-long battle of blaming each other for the stymied negotiations to allow the Treasury to continue borrowing money to finance government operations. Even as senior officials suggested that a deal needed to be reached by July 22, allowing 11 or 12 additional days for legislative action, both sides engaged in showmanship.

U.S. military sees Iran behind rising troop deaths in Iraq (Washington Post, Tim Craig and Ed O’Keefe)

U.S. military commanders have said in recent months that they feared such an increase in violence would accompany the planned withdrawal of most American troops by the end of the year. Military officials in Baghdad and at the Pentagon blamed the mounting death toll on the growing sophistication of weapons that insurgents and Iranian-backed militia groups are using, including powerful rockets, armor-piercing grenades and jam-resistant roadside bombs suspected of coming from Iran.