The New York Times leads with a look at how thousands of school districts across the country have made cuts to summer school programs. Education Secretary Arne Duncan has urged school districts to use some of the stimulus cash for summer schools, but faced with decreasing revenues many have decided to ignore his pleas. The Washington Post leads with news that five days before last week's deadly subway train accident, a key part of the system that is designed to prevent crashes was replaced and malfunctioned. No one noticed the problem at the time, and it's not clear whether the equipment was faulty or poorly installed. USA Today uses the reopening of the Statue of Liberty as a jumping off to look into how Americans' attitudes toward terrorism and security have evolved since Sept. 11. On Saturday, a small group of visitors will be allowed to climb to the crown of the Statue of Liberty for the first time since the 2001 attacks.

The expectation that unemployment will continue to increase well into next year "may exert a powerful drag on the recovery," notes the LAT. Many of the layoffs in this recession have been permanent rather than temporary as companies often shut down units and pursued structural changes rather than simply cut back. Also, as has been widely reported, many employees who managed to keep their jobs are working fewer hours, meaning that employers are likely to increase the hours of current workers rather than hire new ones. All this instability in the job market means people are likely to want to save their money rather than spend it, which, in turn, means it could take longer for businesses to recover and hire new employees. Even those who do want to spend are likely to find it difficult to get credit.

Khatami, an influential cleric who served as president for eight years, had largely remained silent after the Iranian regime warned against more protests after the election. But yesterday, he posted a statement accusing Iran's leaders of carrying out a "velvet coup against the people and democracy" and also criticized "a poisonous security situation." A moderate reform party called the election a "coup d'etat." Meanwhile, Mousavi announced he will be forming a political party that will make public all the allegations of fraud during the election.

The LAT says these most recent statements suggest the reformers are shifting tactics and will focus on "trying to tarnish the government's reputation and credibility, weakening its ability to govern, and to sabotage its agenda." The WP points out that a pro-government member of parliament said a group of lawmakers will be filing a court case against Mousavi. The WSJ says that while the government has so far avoided moving strongly against the opposition leaders, "there are signs that their dissent won't be tolerated for long."

European Union officials were in discussions yesterday about whether to withdraw the ambassadors of its member nations from Iran to protest the detention of the British Embassy employees. Iran says it has released all but one of the employees. European officials emphasized they haven't made a decision, and the NYT talks to diplomats who say the EU would rather avoid taking such a strong action. Facing the possibility of diplomatic isolation from its biggest trading partner, Iran decided to go on the offensive. The government threatened to cut off relations with EU countries unless they apologized for even considering removing their diplomats. A military official said that unless European countries apologize for their "interference," they could forget about any further negotiations on Iran's nuclear program.

The WP off-leads word that a Securities and Exchange Commission investigator realized that there was something fishy going on with Bernard Madoff's firm in 2004. But she wasn't able to pursue her suspicions because she had to turn her attention to the mutual fund industry, a particularly hot topic at the time. One of her supervisors was Eric Swanson, who married Madoff's niece in 2007. Over 20 years, the SEC investigated Madoff at least five times, but it seems Genevievette Walker-Lightfoot actually came close to unraveling the whole mess. Or, at the very least, she was asking the right questions. She had previously worked at the American Stock Exchange and specialized trading strategies were her forte. While reviewing Madoff's documents Walker-Lightfoot saw they were filled with inconsistencies and didn't seem to follow the financier's stated trading strategy. When the SEC's New York office took over the case it never consulted Walker-Lightfoot and ended up finding only three minor violations.

The NYT and WP front news that almost 4,000 U.S. Marines are taking part in a push into the volatile Helmand River valley in southwestern Afghanistan, which is being billed as the first test of the administration's new counterinsurgency strategy. Operation Khanjar will send the troops into villages into one of the deadliest provinces in Afghanistan, a major opium-producing region of the country that is a Taliban stronghold. As part of the mission, troops will build and live in small outposts among the local population in order to protect civilians from the Taliban. "A key to establishing security is getting the local population to understand that we're going to be staying here to help them—that we're not driving in and driving out," one officer said.

The WP fronts a look at the newly declassified accounts of the FBI interrogations of Saddam Hussein in 2004. The documents summarize 20 formal interviews and five "casual conversations." Although all the documents were released with few deletions, the account of the last formal interview was completely redacted for some reason. In the conversations, Hussein said he wanted the world to believe he had weapons of mass destruction because he was afraid of Iran. "Hussein stated he was more concerned about Iran discovering Iraq's weaknesses and vulnerabilities than the repercussions of the United States for his refusal to allow UN inspectors back into Iraq," the FBI agent wrote. Hussein also said he never met Osama bin Laden and didn't share his beliefs.

Michael Jackson's 2002 will was filed in court yesterday, and while much of the details had already been revealed, it did contain one big surprise. In the will, Jackson appointed Diana Ross, who helped Jackson start his career in the 1970s, as the second choice to be the guardian of his children if his mother could not fulfill that role. After much speculation, Jacksons' family said the King of Pop won't be buried in Neverland. Although they are supposedly planning a public memorial service, no details have been released. Meanwhile, the LAT takes a front-page look at Debbie Rowe, the mother of Jackson's children, who still hasn't said whether she intends to try to obtain custody. Even though she previously renounced her parental rights, legal experts say she could still make a strong case for custody.

The NYT reports that Michael Jackson continued to break records even after his death. Jackson had the three best-selling albums in the United States last week, and in total sold more than 40 times the albums he did in the previous week. In addition, 2.3 million downloads of single tracks were sold, marking the first time an artist broke the 1 million mark in one week. In all of last year, Jackson had sold a total of 2.8 million tracks. "The level of dominance by Michael Jackson on the top pop catalog albums chart is unlike anything we've ever seen on any Billboard chart, regardless if it occurred pre- or post-death," said Billboard's director of charts.

USA Today leads with, and is alone in fronting, the Yemenia Airways Airbus A310 that crashed yesterday in the Indian Ocean, 12 miles away from the island nation of Comoros, carrying 153 people. European officials said that a 2007 safety inspection found the jet had "faults," but Yemeni officials say those problems were fixed. A 14-year-old girl appears to have been the only survivor. The Wall Street Journal's world-wide newsbox leads with the withdrawal of American combat troops from Iraqi cities. The Iraqi government declared the day a national holiday and was officially in celebration mode, which included fireworks and parades. But a car bombing in the northern city of Kirkuk that killed at least 34 people served as a reminder of the challenges that Iraq's security forces will have to confront. The Los Angeles Times leads with news that California lawmakers and Gov. Arnold Schwarzenegger failed to reach a budget agreement last night. If the two sides are unable to agree before Thursday, the state's controller will begin issuing IOUs as payment to contractors and some citizens.

The WP highlights that while the Democrats "now have their largest majority in the Senate since 1978," that doesn't mean President Obama's agenda is now on easy street. With 60 votes—including those of two independents—Democrats should theoretically be able to avoid filibusters, but the truth is that two of the party's senior senators, Sens. Robert Byrd and Edward Kennedy, haven't been in the Senate much lately due to medical problems. And, of course, some conservative Democrats have also shown a willingness to break with their party. Franken himself tried to talk down the significance of being vote number 60. "Sixty is a magic number, but it isn't," Franken said. For their part, Republicans weren't having any of that and were eager to emphasize that Democrats only have themselves to blame if they can't pass effective legislation. "With their supermajority, the era of excuses and finger-pointing is now over," said Sen. John Cornyn of Texas.

Hours before U.S. troops formally withdrew from cities, four American soldiers were killed south of Baghdad, "a grim reminder of the vulnerability of U.S. troops as more of them are deployed to rural outposts," notes the WP. In a front-page piece, the NYT says that all the official excitement about the handover "rung hollow for many Iraqis," who fear for their safety and don't really believe the government's claims that Iraq has achieved "independence." President Obama was low key about the whole thing, declaring the withdrawal "an important milestone" while also warning that the country will face "difficult days ahead."

The WSJ reports that some Shiite extremist groups say they are increasing attacks in Iraq "in tandem with Tehran's post-election crackdown on protesters." The turmoil in Iran has apparently increased the resolve of hard-liners to exert their influence in Iraq, and they're pressuring militants to increase attacks. "We are coming back, and we have new missions now," a member of a Shiite extremist group said. Sunni militants will also be in the spotlight, and Defense Secretary Robert Gates said he expects al-Qaida to launch new attacks now that American troops have left the cities.

The WP's Dan Balz points out that the United States still has around 130,000 troops in Iraq, and the "real drawdown will not begin in earnest until after the national elections in January 2010." But the issue that was often at the center of the presidential campaign has now "faded into the background" to such an extent that Obama's withdrawal plan barely caused a debate. Unless there's a dramatic development, it seems possible that "what happens in Iraq may play out largely outside the consciousness of the American public," writes Balz. "Who would have thought that was possible not so very long ago?"

Everyone reports that a much-hyped public auction where energy companies could bid to work in Iraq's oil fields was pretty much a failure. The event lasted all day, and was broadcast live on national television, but the government managed to strike just one deal. A joint venture of BP and the China National Petroleum Corporation were awarded the right to develop the giant Rumaila field in southern Iraq. Other companies said they're eager to get their foot in Iraq, but balked at the strict financial terms the government had attached to the 20-year technical-service contracts.

In a story written in conjunction with ProPublica, a non-profit investigative journalism organization, the WP reveals that staff for Sen. Daniel Inouye got in touch with federal regulators last fall to find out the status of a bailout application for Central Pacific Financial, a Hawaiian bank that the senator helped start. At the end of 2007, Inouye and his wife owned shares of Central Pacific worth $350,000 to $700,000, which represented at least two-thirds of his total reported assets. Although Central Pacific "was an unlikely candidate" for a bailout, and the Federal Deposit Insurance Corp. had already recommended against giving the bank federal cash, it ended up receiving $135 million. Inouye insists he wasn't trying to influence the process by asking about it, and administration officials insist their decision was made independently. Experts say that even if Inouye had made the call himself he would not have broken any Senate rules.

The NYT and WP both front an analysis of the Supreme Court's term and state that the nation's highest court is likely to continue moving to the right, "even as the recent elections moved the nation to the left," as the NYT points out. Under Chief Justice John Roberts, the court is likely to continue down this path as it seems unlikely that Obama will get the opportunity to replace a conservative justice with a liberal. Over the last few months, the court may have "avoided the blockbuster decisions that at one point seemed inevitable," notes the WP, but the steady shift to the right was unmistakable. The NYT says Roberts has "emerged as a canny strategist" who was often able to stick to his stated belief in minimalism while also making it clear "that the court is only one decision away from fundamental change in many areas of the law." Justice Anthony Kennedy continued to be the court's swing vote, but it seems Roberts has "found a reliable ally when it counts." Roberts and Kennedy agreed 86 percent of the time.

The WSJ fronts news that Wal-Mart parted ways with most other large companies by telling the White House that it supports the idea of requiring large employers to provide health insurance. The National Retail Federation said it was "flabbergasted" by Wal-Mart's position. Most large companies have strongly come out against an employer mandate, but having the support of the nation's largest private employer could "give momentum to one of the most-contentious aspects" of the healthcare legislation currently being discussed on Capitol Hill. Meanwhile, the NYT reminds readers that not all health insurance is created equal. The paper looks into the fact that three-quarters of the people who were forced into bankruptcy by medical problems had insurance to note that even if everyone in the country was suddenly covered, it wouldn't "be enough to fix what is wrong with the system" because many people have "what essentially is fake insurance," as a former Cigna executive told lawmakers last week.

The LAT has a few more details about what may have been Michael Jackson's last will that the WSJ wrote about yesterday. An entertainment attorney who worked with Jackson produced the will yesterday and the family was apparently evaluating its validity. The will names Jackson's mother as guardian of his children and orders all of his assets to be moved into the Michael Jackson Family Trust. Meanwhile, there was talk of a memorial service, but like most Jackson-related developments there was "a storm of rumor, supposition and educated guess interrupted by snatches of information more intriguing than complete." One source tells the paper there are discussions about holding a memorial service at the Staples Center in Los Angeles, which would be followed by a procession to the Neverland Ranch.