We will finish our work on this bill this week to ensure that these critical protections and accountability for Wall Street are in place as soon as possible, Reid said in a statement.

The House of Representatives has already approved the measure and Democrats are eager to send a final version on to President Barack Obama to sign into law.

Analystsand opponents of the bill — expect the bill to ultimately reach Obamas desk. Its a question of when, Republican Senator Judd Gregg, an opponent, told CNBC.

Passage would give Obamas Democrats a second major legislative achievement, alongside healthcare reform, to show voters as they try to minimize Republican gains in elections this November.

PUBLIC DISGUST

It also would allow them to capitalize on public disgust with Wall Street, which sucked up hundreds of billions in bailout funds as the financial meltdown pushed the wider economy into a deep recession.

By cleaning up Wall Street were going to make sure big bankers cant again gamble away our economy, Reid said on the Senate floor.

The crucial test could come as soon as Wednesday, when Reid will need to muster 60 votes to overcome an expected Republican procedural hurdle. Reid will probably move on Tuesday to set up that vote, an aide said. If successful, final passage of the legislation could come soon after.

At this point, Reid can probably count on 59 lawmakers to back the bill. With most Republicans firmly in opposition, a handful of lawmakers could determine its fate.

Democratic Senator Ben Nelson said he still had questions about the final bill and declined to say whether he would vote for it.

Nelson, who voted for an earlier version of the legislation, told reporters he was concerned about how regulators would implement the bill once it becomes law.

Mostly were looking at what we dont know. When we figure out what we dont know itll be helpful, he said.

Republican Charles Grassley is also viewed as a possible backer, though an aide said he has qualms about the final version.

ROUNDING UP VOTES

If both Nelson and Grassley decide to oppose it, Reid could wait until West Virginia Governor Joe Manchin names a successor to temporarily fill the seat of Democratic Senator Robert Byrd, who died at age 92 last month.

Manchin is expected to appoint a Democrat who would back the bill, but he will not act until state officials sort out plans to elect a permanent successor, according to a spokesman. That may take until at least Sunday.

The legislation would impose a range of new restrictions on the financial industry, from increased scrutiny of consumer loans to limits on their trading activities.

The KBW Banks Index closed up 0.16 percent on Monday, in line with the broader markets. Since hitting a 2010 high in April, the index has fallen nearly 15 percent as concern grew that the legislation would reduce industry profits.

Brown, Collins and Snowe all were able to shape the bill to address their concerns. Snowe won protections for small business and Collins added a provision that will require many banks to set aside more capital to ride out tough times.

Brown softened the bills impact on mutual funds and other significant players in his home state of Massachusetts.

The industry softened the impact of many of its harshest provisions during a final all-night negotiating session at the beginning of July, and will have a chance to soften it further in coming years as regulators gradually put it into effect.

Lawmakers are also expected to revisit the topic with a technical corrections bill to fix errors in the 2,300-page bill. That could address questions like whether new restrictions on the 615 trillion derivatives market would apply to existing contracts.

Additional reporting by Rachelle Younglai and Donna Smith Editing by David Storey source

Passage of the bill would give them a second major legislative achievement, alongside healthcare reform, to show voters as they try to retain control of Congress in elections this November.

In the Senate, Reid can count on 57 Democratic votes for the measure, which would create new consumer protections and saddle financial firms with tough new restrictions.

Republicans Susan Collins and Scott Brown have indicated that they are inclined to support it as well.

But that still leaves Reid one vote short. Republicans Olympia Snowe and Charles Grassley have backed the bill earlier in the legislative process, but neither has said whether they will support the final version.

Reid could pick up another Democratic vote if West Virginia Governor Joe Manchin promptly appoints a successor to fill the seat of the late Senator Robert Byrd.

While Manchin is expected to name a Democrat who supports the Wall Street reform bill, it is unclear if he will name a successor in time for a vote this week, in which case Democrats may have delay action.

Analysts, however, expect Reid will ultimately get the votes he needs to send the measure to Obama, as moderate Republicans will be hard-pressed to justify a no vote after winning a wide range of key concessions.

I think everyones pretty comfortable that they have the numbers, said Jodi Lashin, a lawyer at Pryor Cashman who has been tracking the bill closely.

Alan Lancz, president of Alan B. Lancz amp Associates in New York, said a failure to move the bill to a final vote would add another layer to the concerns of investors.

If it doesnt pass, there will be a slight positive, but there will be worry as to whether it will come back in a worse form down the road, Lancz said. If its just delayed, it might actually worry investors more as to what else is being planned or added to the bill.

Since hitting a 2010 high in April, the KBW Banks Index has fallen nearly 15 percent as concern grew on how the legislation would crimp industry profits.

COULD HAVE BEEN TOUGHER

With a nervous eye on the coming elections, Democrats hammering out the sweeping bill rode a wave of public disgust against Wall Street, perhaps the only address in America less popular with voters than Capitol Hill.

Despite the best efforts of industry lobbyists, the legislation actually got tougher over the past year as it moved through the chambers of Congress.

Financial firms will face a range of new restrictions, from increased scrutiny of consumer loans to limits on their trading activities.

But the industry managed to soften the impact of many of the bills harshest provisions during a final all-night negotiating session.

Banks would be barred from trading for their own profits under a provision named after former Federal Reserve Chairman Paul Volcker. But lawmakers softened the Volcker Rule to allow banks to maintain small investments in hedge funds and private-equity funds, and gave them further leeway by opting to loosen the way they measure those stakes.

Though consumer loans will come under new scrutiny from a consumer-protection authority, auto dealersamong the largest players in this area — won a hard-fought exemption.

And while Wall Street banks will have to spin off much of their lucrative swaps-dealing activity into separately capitalized affiliates, lawmakers at the last minute allowed banks to keep many types of swaps in-house.

Even when Obama signs the bill into law, its ultimate impact will not be known until regulatory agencies put it into an effecta process that will take years.

In broad and significant areas, the legislation endows regulators with wholly discretionary authority to write and interpret new rules, lawyers at Skadden Arps wrote in a research note.

The bill has been criticized for failing to make changes to Fannie Mae and Freddie Mac, the government sponsored mortgage finance companies that have taken more than 145 billion from taxpayers since being seized in 2008.

White House spokesman Robert Gibbs said Republicans should not use that as an excuse to vote against the financial reform bill. We are going to reform Fannie Mae and Freddie Mac, Gibbs said Sunday on NBCs Meet the Press.

Reporting by Andy Sullivan Additional reporting by Matthew Lynley in New York and Corbett B. Daly in Washington Editing by Tim Dobbyn source

Gregoire, a Democrat, has needed to cover a combined 12 billion shortfall in Washington over three years, on an annual budget of roughly 32 billion.

A biannual report, The Fiscal Survey of States, released by the NGA in June, showed fiscal year 2010 was the toughest for state budgets since the Great Depression. Combined state budgets tumbled by more than 10 percent from fiscal 2008 to fiscal 2010, a drop of some 74 billion.

State revenue typically lags behind any national recovery, meaning for 2011, states will have to make additional spending cuts or increase taxes to close their budget gaps, actions that will slow the economic recovery, the report said.

Yolanda Kodrzycki, an economist at the Boston Federal Reserve, warned that many towns and cities will be crying out for more help from the states in 2011, when falling property tax revenues threaten to choke off municipal budgets.

You have a tough fiscal environment. Next year will be at least as tough, said Kodrzycki, director of the Boston Feds New England Public Policy Center.

UNIONS UNDER FIRE

New Jersey Governor Chris Christie opened the three-day meeting with a blistering attack on public service unions and resumed that theme on Saturday. The Republican said it was galling that one sector of our population had been protected from the recession.

Many governors kept up pressure on Congress to continue for another six months the additional Medicaid benefits that have been part of the federal stimulus bill.

Congress has stalled action on bills worth about 40 billion to help states pay for Medicaid programs and to retain teachers. State aid from 2009s 787 billion stimulus package is due to run out at the end of this fiscal year.

Some states, including Illinois and Pennsylvania, included millions of dollars in prospective payments in their recently enacted fiscal 2011 budgets and would face the need to cut jobs if the funds are not available.

Supporting the Medicaid budget would be a short-term but badly needed fix for the states, said Arkansas Governor Mike Beebe, a Democrat.

Even so, we cant be hypocrites and ask the federal government to bail us out of everything and then decry deficit spending, Beebe said.

Over time, though, more fundamental issues face states in terms of defining the governments role, said Wyoming Governor Dave Freudenthal, a Democrat,

Discussions on redesigning government always come down to how you deal with supply side issues but what about the demand side issues, regarding what services the public expects the government is going to pay for he said.

For programs like Medicare, youre going to have to trim back what that provides, to more basic services.

The NGA meeting is often a showcase for governors to step up onto the national stage.

One high-profile governor skipping the meeting was Minnesotas Tim Pawlenty, discussed as a potential Republican presidential contender in 2012. Pawlenty instead visited neighboring New Hampshire, a state pivotal to national politics, for the third time in seven months.

The NGA meeting drew a small crowd protesting Arizona Governor Jan Brewer and her states new law ordering police to crack down on illegal aliens. Others carried signs expressing support for Brewer.

The Arizona immigration law is set to take effect July 29 but is being challenged by the federal government.

From comments that Ive heard, many, many are supporting the state of Arizona because they too understand the problems and the issues that we face, because our border is not secure, Brewer said.

Reporting by Ros Krasny Editing by Bill Trott source

The U.S. Justice Department said shortly after the takeoff that the exchange of 10 agents released by Washington and four freed by Moscow had been successfully completed.

The plane landed at Domodedovo airport outside Moscow a few hours later. Shielded from cameras, the Russians stepped off and were driven away in a convoy of SUVs, sedans and buses.

Later, a plane believed to be carrying Russians freed in the swap landed at Dulles airport outside Washington, CNN said. It was unclear how many of the four were on board.

The conclusion to the espionage drama was played out after spymasters brokered the deal on the instructions of presidents keen not to derail breakthroughs in Russian-U.S. relations.

In the first step of the carefully choreographed swap, the 10 Russian agents pleaded guilty on Thursday in a New York court to charges against them and were immediately deported.

Around midnight in Moscow, Russian President Dmitry Medvedev signed a decree pardoning four Russians serving long prison terms in their homeland on charges of spying for the West. The Kremlin said he also pardoned 16 other convicts.

The spy scandal broke at an awkward time for U.S.-Russian ties, just days after U.S. President Barack Obama and Medvedev met in Washington last month.

U.S. and Russian lawmakers are considering ratification of a nuclear arms reduction treaty signed by the presidents in April, and Russia is counting on U.S. support for its bid to join the World Trade Organizationsensitive cooperation neither side wants to jeopardize.

Medvedev is trying to present a warmer face to Western governments and investors concerned about problems with corruption, property rights, the rule of law and treatment of Kremlin critics in Russia.

Obama wants Russia on his side for efforts to rein in Irans nuclear program, keep supply lines open to forces in Afghanistan and advance his goal of further nuclear arms cuts.

Shortly after taking office in January 2009, he initiated a reset in ties with the Kremlin, strained to breaking point by Russias war with Georgia in 2008 after deteriorating during the administrations of George W. Bush and Vladimir Putin, now Russias powerful prime minister.

Russias Foreign Ministry said the swap gives reason to expect that the course agreed on by the leaders of Russia and the U.S. will be consistently implemented in practice and that attempts to knock the parties off this course will not succeed.

But the exchange may add fuel to U.S. Republican accusations that Obama is too soft on Moscow. An 11th suspect disappeared after being granted bail following his arrest in Cyprus.

SPY SWAP

Relatives of the jailed Russians on both sides of the swap had waited anxiously in Russia for news of the exchange. All bar one of the 14 involved are Russian citizens.

Irina Kushchenko, the mother of one of those arrested in the United States, Anna Chapman, left her apartment building in southwestern Moscow. By Friday night, neither mother nor daughter had returned to the apartment.

Chapman was the star of the spy scandal, labeled a party-going sexy redhead by newspapers worldwide that splashed her picture across their pages.

Russias Foreign Intelligence Service declined comment on details of the affair.

Moscow has always prided itself on bringing agents back home and Washington has agreed to swaps before.

The largest known Cold War spy swap was in 1985 when more than 20 spies were exchanged between East and West on the Glienicke Bridge in the then-divided city of Berlin.

Spymasters on both sides say that despite generally warmer relations, the two former Cold War foes still fund generous intelligence operations against each other.

The scandal broke when the United States said on June 28 it had uncovered a ring of suspected Russian agents who used false identities to gather intelligence on the United States.

FBI agents said the Russians had communicated with Moscow by concealing invisible text messages in photographs posted on public Internet sites. Some had met Russian diplomats from the U.S. mission in New York.

Russian diplomats said the timing of the announcement, just days after Obama and Medvedevs June 24 summit in Washington, could be an attempt by U.S. hard-liners to torpedo the so-called reset in ties that Obama has championed.

Igor Sutyagin, one of the four Russians sent westward on Friday, was sentenced to 15 years in prison in 2004 for passing information to a British firm prosecutors said was a CIA front. Supporters saw him as a political prisoner.

Sutyagin said the information was available from open sources and Kremlin critics said his convictionwhich cast a chill on Russian scientists — was part of a crackdown on scholars with Western ties under Putin, president at the time.

Sutyagins brother, Dmitry, told Reuters late on Friday that relatives had not heard from Sutyagin and did not know where he was. He said Sutyagin had been told as the swap was planned that he would be sent to London via Vienna.

Additional reporting by Amie Ferris-Rotman, Alexei Anishchuk, Heleen Van Geest, Sylvia Westall and Timothy Gardner Writing by Guy Faulconbridge and Steve Gutterman Editing by Ralph Boulton and Peter Cooney source

The Treasurys semiannual currency report, originally due on April 15, said Chinas yuan remains undervalued. But it noted Beijing made a significant move last month by ending a peg between the value of the yuanalso called the renminbi — and the dollar.

What matters is how far and how fast the renminbi appreciates, Treasury Secretary Timothy Geithner said in a statement issued with the report.

We will closely and regularly monitor the appreciation of the renminbi and will continue to work toward expanded U.S. export opportunities in China, he said.

No country was named a currency manipulator, a designation that could trigger negotiations leading to possible trade sanctions against the offending country.

The Treasurys semiannual reports on exchange rate policies of foreign countries examine whether a country is manipulating its currency for purposes of preventing effective balance of payments adjustments or gaining unfair competitive trade advantage in international law.

One week before a meeting of group of 20 leaders in Canada last month, Beijing freed its currency from a nearly two-year-old peg to the dollar. The yuan has risen 0.74 percent since then.

The reports conclusions were fully expected and, within minutes, drew the attention of both Democratic and Republican lawmakers who indicated they remain displeased over what many in Congress perceive as Beijings unfair tactics in piling up huge trade surpluses.

This report is as disappointing as it is unsurprising, U.S. Senator Charles Schumer, a Democrat, declared. Its clear it will take an act of Congress to do the obvious and call China out for its currency manipulation.

NOT HAPPY AT OUTCOME

Senator Charles Grassley, a top Republican, also criticized the decision and called for a formal trade case against Beijing on the issue.

Everyone knows China manipulates its currency. If the president continues to avoid acknowledging Chinas currency manipulation and fails to address it in a meaningful way, Congress will have to act, Grassley said in a statement.

Many U.S. lawmakers believe that Chinas currency is undervalued as much as 40 percent, which they say gives China an unfair advantage in international trade, and they have pressed for action on a bill that would allow new duties on some Chinese goods.

Schumer has called for legislation to lower the threshold for punitive action against countries whose currencies are found to be fundamentally misaligned.

Similarly, the chairman of the U.S. House of Representatives Ways and Means Committee, Sander Levin, said the United States should keep all options open to pressure China on its currency.

He said the move to end the currency peg was a first step, but clearly, only that and suggested all remedies should be kept handy to ensure that yuan appreciation continues.

Toward that end, Congress and the Administration should fully explore the option of challenging Chinas current practices through a World Trade Organization complaint, Levin, a Democrat, said.

The head of the Senate Banking Committee, Christopher Dodd, another Democrat, said he planned to summon Geithner to testify on the report, but he did not set a date.

Derek Scissors, China economist at the Heritage Foundation, said the Obama administrations decision takes the heat off for now as Washington gears up for congressional elections in November.

Treasury can stall Congress until October and then no legislation gets passed before the poll, which is what most people in Congress want anyway, he said. The next Treasury report on currency practices is due on October 15.

The Treasury said the size of Chinas foreign currency reserves is an indication of how its currency is undervalued. In the period from February-December 2009, China boosted its reserves by 487.1 billion, six times more than any other country as Beijing intervened heavily to hold the yuan pegged to the U.S. dollar.

Eswar Prasad, a senior fellow at the Brookings Institution, praised the Treasury report for striking a fine balancecontinuing to push China to allow its currency to appreciate by noting the currencys undervaluation but not letting things boil over by calling China a currency manipulator.

Meanwhile, the Commerce Department remains under pressure from Congress to investigate whether Chinas undervalued currency is a trade subsidy that should be offset with U.S. countervailing duties on Chinese goods.

Commerce officials said in April they would consider the issue in two cases involving paper and aluminum products from China, but have not yet decided whether to launch a probe.

Reporting by Doug Palmer and Glenn Somerville editing by Leslie Adler and Carol Bishopric

Additional reporting by Emily Kaiser, David Lawder and Paul Eckert in Washington source

Tauro agreed with the states argument and said DOMA forces Massachusetts to discriminate against its own citizens.

The federal government, by enacting and enforcing DOMA, plainly encroaches upon the firmly entrenched province of the state, and in doing so, offends the Tenth Amendment, Tauro said. For that reason, the statute is invalid.

The Tenth Amendment of the U.S. Constitution says The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

The Justice Department argued the federal government can determine eligibility requirements for federal benefits, including requiring that those benefits go only to couples in marriages between a man and a woman.

CONSERVATIVES CONFIDENT

The federal government has 60 days to decide whether to appeal Tauros rulings to the U.S. Court of Appeals for the First Circuit, also in Boston.

Conservative groups predicted the ruling would be overturned.

This activist decision must be appealed, and when appealed, I am confident it will be reversed, said Mathew Staver, founder of the legal group Liberty Counsel, based in Orlando, Florida.

History and common sense show that marriage between a man and a woman has a procreative component absent from same-sex unions, Staver said.

In a second case, filed by civil rights group Gays amp Lesbian Advocates amp Defenders GLAD, Tauro ruled that DOMA violates the Constitutions equal protection clause.

Under the ruling, the plaintiffsseven married same-sex couples and three widowers from Massachusetts — would be entitled to the same federal spousal benefits and protections as opposite-sex married couples.

Nancy Gill, one of the plaintiffs in GLADs suit, is a 22-year employee of the U.S. Postal Service who cannot cover her wife, Marcelle Letourneau, on her family health and vision insurance plans.

I am thrilled that my family will now be treated in the same way as those of my married co-workers at the post office, Gill said.

Chad Griffin, spokesman for the American Foundation for Equal Rights, applauded the rulings.

Our courts exist to protect Americans constitutional rights when they are violated, and this decision affirms the equal rights of gays and lesbians, Griffin said.

Congress enacted DOMA when it seemed that Hawaii was on the verge of legalizing gay marriage, and opponents feared that the movement would become a nationwide trend. States allowing same sex marriage are still a small minority.

Reporting by Ros Krasny Editing by Xavier Briand source

The gubernatorial race in California, the nations most populous state, may also serve as a political bellwether in a year when political analysts say the still-lagging U.S. economy has left Democrats and incumbents vulnerable.

Republican Arnold Schwarzenegger, a former film star and political moderate, cannot run for re-election again after serving two terms, the limit for Californias governor.

The Field Poll, which surveyed a random sample of likely voters between June 22 and July 5, found that about four in 10 held positive impressions of each candidate, with four in 10 others holding negative views.

Pollsters Marvin Field and Mark DiCamillo said that represented a downward trend for Brown, who served two terms as California governor from 1975 to 1983 and who last year was regarded favorably by most voters.

Whitman has apparently improved her standing with voters, after posting a favorable rating of only 17 percent in March of 2009.

Californias next governor will almost certainly inherit a budget mess this November. The state began the fiscal year last week with no spending plan or hope of one soon.

State leaders have failed to approve a budget on time in 19 of the past 25 years and Schwarzenegger said that without a fiscal plan, the state, with few exceptions, would cut the pay of state employees to the minimum required by federal law, or 7.25 an hour.

Recession, the housing slump, battered financial markets and a state jobless rate topping 12 percent have cut hard into state revenue, and few see a credible budget in the works.

Editing by Eric Beech source

A delay in naming a replacement for Byrd, a Democrat, could complicate Democratic efforts to pass the overhaul of financial regulations, an important priority for President Barack Obama.

Democrats are several votes short of the 60 they need to advance legislation in the 100-seat chamber.

Without a reliable Democratic vote in Byrds former seat, backers of the overhaul will probably have to win the support of at least three moderate Republicans.

Republican senators Susan Collins and Scott Brown backed an earlier version of the legislation and have indicated over the past week that they may support the final version, which has already passed the House of Representatives.

Two other Republicans senators who backed an earlier version, Olympia Snowe and Charles Grassley, have not indicated how they will vote.

Manchin said he wanted the state to hold a special election soon for a replacement to fill Byrds seat. The Democratic governor, who said he would not appoint himself as interim senator, did say he would be interested in running for the seat in a special election.

Once the attorney general makes his ruling on the election law, Manchin said he would speak with state legislators about the process.

If a decision is made to hold a special election, Manchin said he would make an appointment for an interim senator to hold the seat until the election.

Reporting by Deborah Charles and Andy Sullivan Editing by David Storey source

The lawsuit is part of a broader approach by President Barack Obama to deal with the 10.8 million illegal immigrants believed to be in the country, arguing that immigration is the responsibility of the federal government not each state.

Seeking to address the issue through a patchwork of state laws will only create more problems than it solves, U.S. Attorney General Eric Holder, said in a statement.

The legal action, filed while Congress was on a week-long break, is a political gamble by the administration as a Pew Research Center poll showed 59 percent of people approve of the Arizona crackdown.

And the legal fight also comes at a critical juncture, four months ahead of the mid-term congressional elections, and the Hispanic community has been a major voting bloc that typically has sided with Democrats but Republicans have tried to woo.

The Justice Department filed the lawsuit in federal court in Arizona and asked for an injunction to prevent the law from taking effect on July 29.

Arizona Governor Jan Brewer condemned the lawsuit as a waste of taxpayer funds and said the state law was needed because the federal government had not done its job.

As a direct result of failed and inconsistent federal enforcement, Arizona is under attack from violent Mexican drug and immigrant smuggling cartels. Now, Arizona is under attack in federal court from President Obama and his Department of Justice, Brewer, a Republican, said in a statement.

Brewer vowed to fight the lawsuit and said she had set up a legal defense fund to cover legal fees stemming from the federal challenge and other lawsuits.

LEGITIMATE CONCERNS RAISED

The Justice Department acknowledged that Arizona legislators had legitimate concerns about illegal immigration but noted that the U.S. Constitution gave the federal government sole authority over immigration matters.

The Arizona law would also divert critical law enforcement resources and would cause the detention and harassment of authorized visitors, immigrants and citizens who do not have to carry identification papers, the department said.

Some immigration provisions provide exceptions to illegal immigrants on humanitarian grounds, whether the individuals were fleeing natural disasters or political persecution, the Justice Department added.

The Obama administration warned in the lawsuit that other states were considering similar immigration measures which would result in further and significant damage to U.S. relations with countries like Mexico, which last month joined a lawsuit seeking to derail the Arizona law.

Mexicos Foreign Ministry on Tuesday expressed satisfaction at the Obama administrations move to challenge the state law.

The Mexican government will continue to follow this process closely, and stands by its firm commitment to protect the rights of Mexicans abroad, the ministry said in a statement.

The lawsuit drew fierce criticism from Russell Pearce, the Arizona state legislator who authored the law. Shame on them. This is malfeasance and they are in violation of their oaths of office, he told Reuters after the lawsuit was filed.

A Justice Department official said that if the court refused an injunction, the federal government would closely monitor enforcement of the Arizona law for possible illegal racial profiling or other civil rights violations.

Obama has warned that the Arizona law could lead to a patchwork of different laws passed by the various U.S. states and said that the matter should be resolved at the federal level by Congress.

The U.S. leader last week gave his first major speech on immigration reform since taking office, calling for both parties to join together to pass a comprehensive measure, but the issue has largely been overshadowed by the economic crisis and the Gulf of Mexico oil spill.

Obama has backed allowing undocumented immigrants in good standing to pay a fine, learn English and become citizens. He also has supported tightening border security and clamping down on employers that hire undocumented workers.

But opposing Republicans have said that border security must be significantly improved before dealing with the millions of illegal immigrants, many of them Hispanics, in the country.

Obama has pledged to spend an extra 600 million and send up to 1,200 National Guard troops to the U.S.-Mexico border to tighten security, however the initial steps to do so have been criticized by Republicans as too little to address the matter.

The suit came after the U.S. Supreme Court said last week that it would decide whether another Arizona law that punishes employers who knowingly hire illegal immigrants infringed on federal immigration powers.

The case is United States of America v. State of Arizona et al Case No. 10-cv-1413 in U.S. District Court for the District of Arizona.

Additional reporting by David Schwartz in Phoenix editing by Paul Simao source

State voters rather than the legislature should decide the issue, she added.

Nationwide, voters have consistently rejected same-sex marriage.

Five statesIowa, Connecticut, Massachusetts, New Hampshire and Vermont — and the District of Columbia allow same-sex marriage, through judicial or legislative actions.

A California federal court is considering whether that states ban on gay marriage breaks equal protection and due process guarantees in the federal constitution, a case that supporters and opponents want to appeal as far as the U.S. Supreme Court.

Five states have laws that give same-sex couples marriage-like benefits, including, California, Oregon, New Jersey, Nevada and Washington. The vast majority of U.S. states define the term marriage as a union between a man and a woman.

Reporting by Peter Henderson Editing by Eric Walsh source