Hold on to your seats Understanding Government readers: the Bush administration says "we do not think it is likely" that they will negotiate a peace settlement between Israel and Palestine by the end of the year. I always assumed that George W. Bush spends his weeks in Crawford on the phone extracting compromises from Palestinian security forces. But the Washington Post’s Glenn Kessler reports that the White House made little discernible progress since the Annapolis summit last summer that brought together Arab and Israeli leaders.

It’s maybe piling on to snark about a difficult, major goal the Bush administration set out to achieve but didn’t. But it’s also fairly absurd that the White House would release this announcement right after the election. Will they announce other failures? "We do not think it is likely we will find Osama Bin Laden by the end of the year," said White House spokeswoman Dana Perino.

The Washington Post’s Anne E. Kornbult and Karen DeYoung report on the appointment of Rep. Rahm Emanuel (D-Ill.) as Barack Obama’s Chief of Staff and give the latest conventional wisdom on Obama’s cabinet picks.  Emanuel, the erstwhile no. 4 Democrat in the House and Bill Clinton political director, is perpetually labeled as "hot-tempered," which might mean he’ll give Obama the tough liaison he needs with both the Cabinet and Congress. Or it means he’s hot-tempered, which is usually associated with a jerk no one can get along with. We’ll see.

Meanwhile, there are still the same rumors flying for other cabinet posts– Robert Gates may stay on as Defense Secretary, John Kerry might be Sec. of State. One eyebrow-raising rumor is that environmental lawyer Robert F. Kennedy, Jr. will be head of the Environmental Protection Agency.

The Post calls Kennedy a "potentially controversial" candidate but fails to provide the obvious reason why: he’s lead the completely disproved campaign to say that vaccines cause autism. Because of Kennedy, children have contracted preventable diseases because they didn’t get a vaccine. This is not once sitting on a non-profit board with William Ayers. This is a really, really big blemish.  Maybe the selection of Kennedy is in order for outgoing EPA head Stephen "Stonewall" Johnson to not look too bad.-MB

The New York Times’ Jeff Zeleny and Jackie Calmes report on the economic team Barack Obama is assembling to deal with the financial crisis. At first it reads like the status quo of business-friendly Democrats– former Treasury Secretary’s Lawrence Summers and Robert Rubin, New York Fed Chairman Timothy Geither. But one interesting name on the list is Michigan Gov. Jennifer Granholm. It appears that Obama has sought advice from Granholm in passing a more robust stimulus package that would do things like increase food stamp benefits and start infrastructure projects.

Whatever Obama’s economic team decides, they’ve already decided that they’re not in this together with the Bush administration. Space at the Treasury Dept. hq opened up for the Obama team has gone noticeably unused. As the Times notes, Obama is unlikely to ignore the Bush team to the same extent FDR ignored Herbert Hoover in 1932. But Obama also will likely indicate, whether it’s artfully done or not, that he shouldn’t be held accountable for Treasury Sec. Henry Paulson’s flurry of decisions.-MB

The Washington Post’s David Cho, Peter Whoriskey and Neil Irwin report that the Treasury Dept. will expand what companies are eligible for a slice of the first $250 billion of the $750 billion financial rescue plan. Instead of merely traditional banks, these could be insurance companies and auto financing firms. The only rule seems to be that these companies have to qualify as financial firms in some way.

What does Barack Obama think about this? Well, the Treasury Dept. claims they delayed the announcement for their new bailout plan until after the election. Obama is meeting with his economic team in Chicago today.

Whether or not Treasury sees eye-to-eye with Obama, they’re disagreeing with Sheila Bair, the FDIC chairwoman. This Post piece also reports that Treasury finds her $40 billion plan to help homeowners flawed.-MB