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Democrats in the U.S. House of Representatives have already stood up to President Bush this week, refusing to approve a controversial Senate bill that would immunize telephone companies from lawsuits alleging illegal spying. Now they're being forced to defend their actions against those who contend that inaction endangers national security--and who wonder what happens next.

At a Capitol Hill press conference on Friday afternoon, House Majority Leader Steny Hoyer (D-Md.) said he, Judiciary Committee Chairman John Conyers (D-Mich.), and Intelligence Committee Chairman Silvestre Reyes (D-Texas) have already begun trying to resolve what has become a very public disagreement. The leaders said they met with Senate Intelligence Committee Chairman Jay Rockefeller (D-W.Va.) earlier that day to begin discussing how to work out a protracted clash over updates to electronic surveillance law that the Bush administration argues are necessary to keep Americans safe from terrorist threats.

Both the House and Senate are currently beginning a 12-day recess, which means any serious votes won't occur until they return. But between now and then, Hoyer said he's trying to loop Republicans into the discussions, with the hope that some work toward a compromise will occur during each day of the break.

The major sticking point, of course, is whether the final bill should grant legal immunity to telecommunications companies that may have assisted the National Security Agency in conducting warrantless wiretaps in violation of federal law. A bill passed by the Senate on Wednesday would grant such protection, but a version passed by the House in November would not.

Hoyer and the others refused to divulge any details about what a final product might look like--and how it would resolve the key, divisive question of "retroactive" immunity for telephone companies.

Reyes, for his part, said he was keeping an "open mind" about immunity but rejected assertions made by Bush and other Republican leaders that failure to immunize telephone companies from legal action would endanger Americans' security.

Meanwhile, Bush isn't letting up on his dire warnings that failure to extend and expand electronic surveillance law will spell doom for Americans.

After emerging from a Friday morning meeting with congressional Republican leaders, he again berated House Democrats for their failure to pass the Senate bill before a temporary expansion of the spy law, called the Protect America Act, expires Saturday.

"By blocking this piece of legislation our country is more in danger of an attack," Bush said, according to a transcript of his remarks. "By not giving the professionals the tools they need, it's going to be a lot harder to do the job we need to be able to defend America."

The trio of House Democratic leaders was equally unwilling to retreat on their entrenched position, which is that such warnings from Republican leaders are bogus.

They argued that existing surveillance law already permits intelligence agents to obtain court orders--even 72 hours after eavesdropping begins in an emergency situation--and that court orders issued under the expiring Protect America Act are good for up to a year, meaning snooping authorized under that law can continue without interruption while congressional leaders work out a more lasting compromise solution.

This week's unrelenting war of press releases and rhetoric about the surveillance bill, which continued on Friday, sure doesn't bode well for eventual peacemaking between the parties. Still, the Democratic leaders maintained they'll be able to find support for a final bill, whatever it ends up looking like, from both chambers and from the as-yet unamused president.

With Congress seeking more time to finalize a soon-to-expire expansion of the government's electronic spying powers, President Bush on Wednesday issued an ultimatum: No more delays.

In a brief morning speech delivered from the Oval Office, the president praised the U.S. Senate's passage on Tuesday of a six-year law that would give the administration more latitude to conduct surveillance without a court order. The controversial measure would also immunize telephone companies from past and future lawsuits accusing them of illegal cooperation with government spy agencies. The whole package is intended to be a more permanent replacement to the so-called Protect America Act, which is scheduled to expire Saturday.

Complicating the prospects of meeting that deadline, however, is lingering disagreement over that legal immunity for corporations. The House of Representatives opted not to include such a provision in the spy law rewrite it passed last fall, which means the two chambers will have to work out their differences before they can send a final bill to the president.

Democratic leaders are now arguing they need more time to do that. Later on Wednesday, the House plans to vote on a bill that would give the chambers 21 more days to deliberate.

But Bush shot down that idea in his speech on Wednesday. He said there's no excuse for the House not to accept the Senate bill, especially since it passed by a vote of 68-29, with members of both parties voting for it (not one Republican voted against that bill).

"The lives of countless Americans depend on our ability to monitor these communications," the president said. "Our intelligence professionals must be able to find out who the terrorists are talking to, what they are saying, and what they're planning."

Democratic leaders may not back down so easily, though. Reps. John Conyers (D-Mich.) and Silvestre Reyes (D-Texas), who led the drafting of the House version, have said they're not convinced that the Bush administration made a good case for granting retroactive immunity. (A number of more conservative Democrats, however, do support immunity.)

And after Bush's speech, Senate Majority Leader Harry Reid, who voted against the final Senate bill and advocated for more time to improve it before passage, said Bush and his Republican allies are bullies who are "more interested in politicizing intelligence than they are about finding real solutions."

A soon-to-expire ban on Internet access taxes must be made permanent by Congress, two cabinet-level Bush administration officials urged Wednesday.

In a joint statement, U.S. Department of Commerce Secretary Carlos Gutierrez and Treasury Department Secretary Henry Paulson said the "vast potential economic and social benefits of electronic commerce" depend on immortalizing an almost decade-old moratorium on Internet access taxes and discriminatory e-commerce taxes.

"Preventing the taxation of Internet access will help sustain an environment for innovation, ensure that consumers continue to have affordable access to the Internet, especially high-speed Internet, and strengthen the foundations of electronic commerce as a vital and growing part of our economy," they said.

The officials' statement is likely geared toward lighting a fire under a U.S. Senate committee scheduled to vote Thursday on a bill that would merely extend the tax ban for four more years, as opposed to making it everlasting. President Bush in the past has also advocated for the tax halt.

If the moratorium is allowed to expire on November 1, states would be allowed to levy taxes on digital subscriber line, cable modem, wireless and even BlackBerry-type data services. They would also be free to charge different tax rates for goods sold on the Internet and goods sold offline. It's unclear how many states would have immediate plans to enact such laws, though, if the ban lapses.

Because none of the pending permanent tax ban bills has been called up for a vote in the Senate Commerce Committee on Thursday, a temporary extension appears more likely. That approach represents a compromise of sorts with state and local officials who have balked at the idea of never having the opportunity to revisit the potential for Internet access taxes as a revenue source. (Some states are still allowed to levy such fees because of "grandfather" provisions in existing law.)

Both Sen. Daniel Inouye (D-Hawaii), who leads that Senate panel, and Senate Majority Leader Harry Reid (D-Nev.), who exercises ultimate control over the Senate's voting schedule, have pledged to renew the ban, but neither has gone so far as to call for making it permanent--in contrast to some of their Republican colleagues on the chamber's High Tech Task Force.

Editor's note: This story was updated at 10:16 a.m. PDT.

WASHINGTON--A group of state prosecutors led by California on Tuesday told a federal judge that they plan to file a request that Microsoft antitrust oversight be extended until 2012.

Right now, most portions of the settlement reached with the Bush administration and state prosecutors in 2002 are set to expire November 12. Those provisions primarily deal with "middleware," or applications that sit on top of the operating system. One section relating to server protocol licensing has already been extended until 2009.

U.S. District Judge Colleen Kollar-Kotelly said she wasn't immediately prepared to rule on the California group's request or to reach conclusions about the consent decree's effectiveness over the past five years. U.S. Department of Justice and Microsoft attorneys told her they weren't immediately prepared to comment because they both heard about the proposal last week.

Microsoft attorney Rick Rule did say that it was "premature" to talk about extending the server protocol licensing a second time so long before its 2009 expiration date.

The California group's request, which is expected to be described in more detail in a written court filing by October 15, was hardly unexpected. A few weeks ago, that group of plaintiffs--which also includes Connecticut, Iowa, Kansas, Minnesota, Massachusetts and the District of Columbia--filed a report with the court that argued the agreement reached with the government has been largely ineffective in accomplishing its stated goals. They also suggested that a 10-year term, which they characterized as "standard" practice, for the consent decree would be preferable to the existing five-year life span, particularly since Microsoft only recently released Windows Vista.

"The key product markets here are still entirely dominated by Microsoft," Stephen Houck, the attorney representing California, told the judge on Tuesday. He argued that because Redmond's "market power remains undiminished" in the PC operating system and Web browser markets, "there's no guarantee that emerging technologies" will be protected unless the oversight period is extended.

Rule indicated it was curious that the California group was simultaneously decrying the effectiveness of the consent decree while calling for its extension. "We think the picture of the computer industry is much rosier," he told Kollar-Kotelly. "We think the decree has done its job."

The Justice Department and a group of state plaintiffs led by New York also told the judge they believe the decree has been doing its job, echoing statements made in their late-August filing.

"Obviously we'll continue to monitor matters," Justice Department attorney Aaron Hoag said, adding Vista has undergone testing by a technical committee that all parties agree has played a key role in enforcing the settlement.

Kollar-Kotelly, for her part, said she was "prepared to listen" to whether the oversight period should be lengthened but reminded the plaintiffs to consider what she called the "narrow" framework of previous court findings. Namely, Microsoft was never found to have illegally "obtained" a monopoly in the Intel-based operating system market, she said--rather, it was found to have maintained one by unlawful means. And the goal of the antitrust settlement was not to reduce the company's market share but to "improve" users' opportunities to get access to competing middleware, she added.

"If there are going to be requests to extend (the consent decree)," she said Tuesday, "it would have to be for an identifiable purpose the court would have to consider."

Much has been made of an El Paso Times interview last week in which Director of National Intelligence Mike McConnell acknowledged the "private sector" has assisted in the president's so-called Terrorist Surveillance Program. Some opponents of the phone-call-and-email-snooping regime promptly pounced on the remarks, suggesting they implicate telephone companies like AT&T and Verizon, which have been accused in numerous lawsuits of consumer privacy violations and illicit cooperation with the Bush administration.

"Now if you play out the suits at the value they're claimed, it would bankrupt these companies," McConnell told the paper, according to a transcript. He didn't, however, mention any firms by name.

Arguably revelatory statements like those have prompted new questions about the Bush administration's ability to continue evoking the "state secrets" privilege in the various cases against the telcos, which are currently pending before U.S District Judge Vaughn Walker in San Francisco federal court.

The McConnell interview may play a role in Walker's courtroom on Thursday afternoon, when he's scheduled to hear arguments about dismissal of a set of now-consolidated class action suits against Verizon and then-separate MCI. Those companies have been accused of operating a content surveillance "dragnet" and of turning over subscriber records to the NSA without a warrant. (Verizon, for its part, has publicly denied providing such information to the spy agency.)

Attorneys for the plaintiffs in those suits recently submitted the McConnell transcript for the court record, in an attempt to blunt the government's contentions that proceeding with the case will endanger national security by exposing state secrets.

Not so, the Bush administration countered in a Wednesday court filing seen by CNET News.com. The Justice Department attorneys argue McConnell's statements did nothing to change the fact that it hasn't ever confirmed any of the activities alleged by the class action plaintiffs--and has, in fact, denied the existence of any sort of "dragnet." The arguments made by the class action plaintiffs rest on nothing but "speculation," the attorneys wrote. In the Justice Department's view, litigating the case would still require exposing how the program actually does work--which, it says, would in turn endanger national security.

Verizon declined to comment, but its attorneys have also argued in recent court filings that the state secrets privilege must apply. Walker, for his part, has so far declined to grant that immunity in a related high-profile case against AT&T, and a federal appeals court panel recently indicated unwillingness to side with the government on that front.

Update: Click here for CNET News.com's coverage of Thursday's court arguments about dismissal of this case.

By now, the news has hit the wires (and the blogs) that Peter Moore, corporate vice president of interactive entertainment at Microsoft, is leaving Redmond to be president of the sports division at game publisher Electronic Arts (EA). An EA representative confirmed to CNET News.com that there is no press conference planned, but a release (now posted on Kotaku, which first reported the news) has been sent out.

It's by no means the only recent major executive shuffle in the game console world, as PlayStation creator Ken Kutaragi famously stepped down in April. But Moore's timing is interesting--he's departing just as the releases for some big Xbox and Games for Windows titles have been finalized in the pipeline, such as Halo 3. In essence, he's in the clear.

What's even more interesting is that even though Halo 3 was undoubtedly the centerpiece of Microsoft's rather theatrical press event at the E3 Business and Media Summit last week, Moore made a pretty big deal out of the EA Sports title Madden NFL 2008, with New Orleans Saints running back Reggie Bush coming onstage to demo the game (though his appearance was with Jeff Bell, corporate vice president of Microsoft global marketing, not Moore). Yes, Microsoft and EA are partners in this sense, so it was also positive hype for the Xbox, but talk about making EA Sports stand out.

One CNET writer quipped that Moore must have "told reporters they would only get the first half of his acceptance speech...and the rest would be up on Xbox Live Marketplace for 400 Microsoft Points." Moore, it should also be noted, is seminotorious for having tattoos of the Grand Theft Auto 4 and Halo 2 logos. No word on whether he's made plans for some EA Sports-worthy additions.

When Estonian President Toomas Ilves dropped by the Oval Office for a visit with the president on Monday, a recent wave of cyberattacks with suspected Russian origins was high on the European leader's mind.

"It is a serious issue if your most important computer systems go down in a country like mine, where 97 percent of bank transactions are done on the Internet," Ilves said, according to a transcript provided by the White House. "When you are a highly Interneted [sic] country like we are, then these kinds of attacks can do very serious damage."

In a photo opportunity with the president, Ilves said he believes warfare of the digital kind is "the wave of the future" and called on highly wired nations like his and the United States to work together to fight that scourge.

Bush, for his part, deemed the attacks "an interesting subject, and one that I can learn a lot about." In lieu of offering up a plan of action, he praised the Estonian president.

"This President, one, understands the issue well; two, has got some ideas, including a NATO center of excellence in Estonia to deal with this issue," Bush said. "And I really want to thank you for your leadership, and thank you for your clear understanding of the dangers that that imposes not only on your country, but mine and others, as well."

The meeting came just days after a congressional committee attempted to ratchet up the pressure on the U.S. Department of Homeland Security to beef up its responses to cybervulnerabilities. There was no mention at the presidents' appearance, however, of the malware that reportedly knocked the Pentagon's e-mail system offline last week.