Lawmakers are vowing action following a massive public outcry around bonuses at the bailed-out insurance giant AIG. On Tuesday, Senate leaders said they would introduce a measure imposing a special surtax to recoup taxpayer money. House Financial Services Committee Chair Barney Frank said Congress should remember that the US government now owns 80 percent of AIG.

Rep. Barney Frank: “But I think we can look at it from the standpoint of us as the owner. We’re the owner of that company, in fact. Now, there are some covenants that have kept us from doing that. I think the time has come to exercise our ownership rights — we own most of the company — and then say, as owner, 'No, I'm not paying you the bonus. You didn’t perform. You didn’t live up to this contract.’ Presumably, the bonuses had some merit stuff in it.”

The Treasury Department, meanwhile, said it would deduct the $165 million in AIG bonuses from the government’s next infusion of $30 billion in bailout funds.

As the AIG controversy grows, other bailed-out firms are reportedly secretly discussing how to shield future bonuses from public scrutiny. The Wall Street Journal reports executives at Citigroup and Morgan Stanley are mulling ways to keep their bonuses without violating anticipated new government rules. The options include increasing base salaries for top employees. Citigroup has received $45 billion in taxpayer money, while Morgan Stanley has received $10 billion. Last week, Wells Fargo said it had increased the base salaries of its CEO and two other top executives. Wells Fargo has received $25 billion under the Wall Street bailout.

President Obama continues to lobby for congressional approval of his $3.5 trillion budget. Speaking at the White House, Obama criticized Republican opponents.

President Obama: “'Just say no' is the right advice to give your teenagers about drugs; it is not an acceptable response to whatever economic policy is proposed by the other party. The American people sent us here to get things done. And in this moment of enormous challenge, they are watching and waiting for us to lead. Let’s show them that we’re equal to this task before us. Let’s pass a budget that puts this nation on the road to lasting prosperity.”

The Obama administration is reportedly considering widening US attacks inside Pakistan. According to the New York Times, the strikes would extend to the province of Baluchistan beyond the currently targeted tribal areas. Hundreds of people have been killed in the US attacks on Pakistani soil.

President Obama is set to appoint a special envoy on the crisis in the Sudanese region of Darfur. The New York Times reports Obama will name Major General J. Scott Gration later today. The move comes as Secretary of State Hillary Clinton intensified criticism of Sudan on Tuesday at the State Department.

Secretary of State Hillary Clinton: “The real question is what kind of pressure can be brought to bear on President Bashir and the government in Khartoum to understand that they will be held responsible for every single death that occurs in those camps, because by their expulsion of the aid workers who came from all over the world to assist with the health and the sanitation and the security and the education of the refugees, they are putting those 1.4 million lives at risk.”

Sudanese President Omar Hassan al-Bashir expelled thirteen aid groups from Darfur after the International Criminal Court indicted him on charges of war crimes and crimes against humanity.

Also on Tuesday, UN General Assembly President Miguel D’Escoto Brockmann criticized the indictment, saying it has tinges of racism and could undermine peace talks.

UN General Assembly President Miguel D’Escoto Brockmann: “It was unfortunate, unfortunate, and I think it does a disservice to the people’s perception of international justice. It helps to deepen a perception that international justice is racist, because this is the third time that you have something from the ICC [International Criminal Court], and for the third time it has to do with Africa.”

In Israel and the Occupied Territories, talks on a prisoner exchange between the Israeli government and Hamas have broken down after Israel rejected a deal. Hamas is seeking the return of hundreds of prisoners in return for the captured Israeli soldier Gilad Shalit. The talks reportedly collapsed around an Israeli demand that Palestinians detain or deport most of the prisoners once they’re released.

The South African Archbishop Desmond Tutu is among a group of sixteen leading war crimes investigators and judges calling for a UN inquiry into war crimes committed during Israel’s attack on Gaza. The group has written a letter to UN Secretary-General Ban Ki-moon.

bq.Archbishop Desmond Tutu: “It isn’t that we want to sensationalize. It’s just that some very serious things have happened, and if we are hoping to have a world that is stable, a world that abides by the rule of law, then it has to apply to everybody.”

Other signatories joining Tutu include former Irish President Mary Robinson and Richard Goldstone, the former chief prosecutor for Yugoslavia and Rwanda.

The State Department has quietly signed a deal that keeps the company formerly known as Blackwater in Iraq despite an Iraqi government ban. The Washington Times reports the US signed a new contract with Blackwater in February, just days after the Iraqi government said it wouldn’t renew Blackwater’s operating license. The $22 million contract extension runs through September of this year. In 2007, Blackwater guards killed seventeen Iraqi civilians in an unprovoked massacre in Baghdad’s Nisoor Square. The company recently changed its to name to Xe as part of a rebranding campaign.

The Obama administration is set to endorse a UN gay rights declaration that the Bush administration refused to sign. Approved last December, the declaration calls for the decriminalization of homosexuality and guaranteeing equal rights for gays, lesbians and transgendered people. The US was the only Western country to oppose, joining Russia, China, the Vatican and several Arab states. The Associated Press reports the White House made the move after an emergency review of the US stance.

In Canada, hundreds of protesters gathered in Calgary Tuesday outside President Bush’s first foreign trip since leaving office. Bush was speaking before an invite-only crowd at a private event. At least four people were arrested. Activists constructed a giant shoe cannon in a symbolic tribute to the Iraqi journalist who threw his shoes at Bush last year. Bush entered Canada without any apparent trouble after the Canadian government ignored a request from a group of Canadian lawyers for his arrest or deportation as a war criminal.

In Madagascar, an opposition leader has declared himself interim president after former president Marc Ravalomanana stepped down. The new president, Andry Rajoelina, says he will hold elections within two years. Rajoelina is a former disc jockey who was dismissed by Ravalomanana as the mayor of the capital last month.

Back in the United States, a coalition of academic and civil liberties groups is calling on the Obama administration to reverse Bush administration policies of banning foreign scholars under anti-terror laws. In a letter released today, the coalition says the policy of “ideological exclusion… compromises the vitality of academic and political debate in the United States at a time when that debate is exceptionally important.” The call comes ahead of a federal appeals court hearing next week on the case of one of the most prominent Muslim intellectuals in Europe who was barred from a teaching job in the United States. The scholar, Tariq Ramadan, was offered a position at the University of Notre Dame in Ohio in 2004. The Bush administration initially barred his entry without explanation and then said it was because he once gave money to a French-based Palestinian charity. The charity is legal in France.

And in military news, the Pentagon says reports of sexual assault in the armed forces rose eight percent last year. The reports were up 25 percent in Iraq and Afghanistan.