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Eliot Spitzer is returning to Washington, D.C., but this time as an investor in the commercial real-estate market.

The former New York governor, who resigned in disgrace a year ago after getting caught patronizing a prostitute in a Washington hotel, has purchased a prominent office building blocks from the White House through his father’s real-estate company.

The Spitzers are paying $180 million to buy 1615 L St. NW, a 13-story dark-glass building whose tenants include the public-relations firm Fleishman-Hillard, the Washington outpost of the Nixon Presidential Library and the Institute of Scrap Recycling Industries.

The move is part of the ex-governor’s re-emergence into public life and a renewed interest in the successful real-estate business founded by his father, Bernard Spitzer. In an interview, Mr. Spitzer spoke about the investment, the economy and about his new life in business after “a detour along the way” as New York’s attorney general and governor.

“Obviously it brought great joy for a great period of time,” Mr. Spitzer said about his years in government. Mr. Spitzer declined to discuss the scandal that led to his resignation.

The purchase comes at an inauspicious time in commercial real estate, amid falling prices and high debt. Any deal of this size is getting a lot of attention for what’s happening to values.

The Spitzers are buying the building from a distressed seller that defaulted on part of its debt. Private-equity firm Broadway Partners bought the tower at the end of 2006 for $209 million, according to Real Capital Analytics. Broadway’s lenders have moved to foreclose on several buildings.

But the Spitzers aren’t paying a bargain-basement price. While $180 million is well below what the previous owner paid, it’s above what the building sold for five years ago, $124 million.  Mr. Spitzer said his family intends to hold the property for years and is unconcerned that values might fall further. “We aren’t trying to time the global market,” he said.

The building is one block from the Mayflower Hotel, the location of Mr. Spitzer’s tryst, which led to his undoing. Asked if the proximity to the hotel creates mixed feelings, Mr. Spitzer demurred. “No. We are buying a great building. That’s why we are buying it,” he said.

Mr. Spitzer reflected on his new professional duties in light of his time in government, during which he often tangled furiously with Wall Street’s titans. “There were folks in the market, on Wall Street in particular, who tried to challenge my dedication to the market and to market forces. I said to them repeatedly that I’m a capitalist who believes in the market, but also knows how to protect the market,” he said.

Mr. Spitzer said his positive outlook for real estate despite today’s troubles is girded by his father’s 60 years in the business. “We are optimists,” he said. As for the economy overall: “What we are facing is as much a psychological hurdle as a real economic hurdle,” he said.

The family’s company owns several prominent towers, including the Crown Building at 730 Fifth Ave. in Manhattan. They rarely sell property. “We have a longtime horizon and little debt,” Mr. Spitzer said.

The elder Mr. Spitzer built some of the largest and most expensive apartment buildings in Manhattan, including the 56-story Corinthian and several luxury buildings on Fifth Avenue.

This is the first major deal for the Spitzers in years, and represents as much Mr. Spitzer’s first act after his fall from grace as a passing of the torch. Mr. Spitzer falls short of saying he’s picking up the reins.

People familiar with the Washington deal say Mr. Spitzer worked closely on it. “Did I walk the floors? Yes. Talk to the tenants? Make sure the building was in every respect what we wanted? Yes.”

The purchase was made possible largely because the Spitzers will inherit a $138 million existing mortgage and will pay the balance — $42 million — in cash.

Mr. Spitzer sounds content in his new career. “I love the vitality and the dynamism and the competition of the marketplace. Asked if it’s better than government, he said: “They are different.”

WASHINGTON – A private measure of the nation’s manufacturing sector contracted for the 13th straight month in February, but at a slower pace than expected. Construction spending also shrank.

The reading suggested to some economists that the decline of the ailing factory sector could be bottoming out, though they expect a recovery is still far in the future.

The Institute for Supply Management, a trade group of purchasing executives, said Monday its manufacturing index actually rose to 35.8 from 35.6 in January. Analysts had expected a drop to 33.8, and a reading below 50 indicates the sector is shrinking.

The index, which is based on a survey of members of the Tempe, Ariz.-based group, has fallen steadily since August as the economy has deteriorated, hitting a 28-year low of 32.9 in December.

“Survey respondents appear generally pessimistic about recovery in 2009,” said Norbert Ore, chairman of the group’s survey committee. “Some express hope that the stimulus package will help their industry.”

The new report showed manufacturers cutting jobs at a rapid pace while new orders fell. The employment index fell to 26.1 in February, a new record low, from 29.9 the previous month. New orders dipped to 33.1 from 33.2.

The production index increased for the second straight month, to 36.3, from 32.1 in January.

None of the 18 industries covered by the survey — including wood products, primary metals, electrical equipment, transportation equipment and machinery — reported growth.

“While the index continues to show the manufacturing sector to be in a steep decline, the steady readings of the last two months suggest the decline is not accelerating,” David Resler, chief economist at Nomura Securities International, wrote in a note to clients.

Separately, the Commerce Department said Monday that construction spending dropped 3.3 percent in January, the fourth straight monthly decline. Wall Street economists surveyed by Thomson Reuters expected a 1.5 percent drop. Residential construction fell 2.9 percent and nonresidential activity dropped 4.3 percent, the biggest decline since January 1994.

The department also said that consumer spending rose in January after falling for a record six straight months, pushed higher by purchases of food and other nondurable items. Consumer spending rose 0.6 percent, even better than the 0.4 percent gain that economists expected, though the rebound was viewed mostly as a blip and not a sign of extended recovery.

President Barack Obama last month signed into law a $787 billion stimulus package in spending and tax cuts, but U.S. manufacturers are getting hammered by a global recession that is sharply cutting demand for domestic products and sinking American exports.

General Motors Corp. last week reported an annual loss of $30.9 billion. The Detroit automaker, which shed 10,000 jobs in February alone, has said it may need up to $30 billion from the government to keep it afloat.

Thousands more job cuts were announced last month by a variety of manufacturers, including Goodyear Tire & Rubber Co., welding products manufacturer Lincoln Electric Holdings Inc., flash memory maker Spansion Inc. and makeup company Estee Lauder Cos.

CHARLOTTE, N.C. – Struggling insurer American International Group Inc. will receive up to $30 billion in additional federal assistance in the fourth government rescue of the company, a person familiar with the matter told The Associated Press on Sunday.

The new infusion is intended to prop up AIG — once the world’s largest insurer — as it is expected to announce $60 billion in quarterly losses early Monday, the source said on the condition of anonymity because the discussions are still ongoing.

The company, which is considered too large to fail, previously received about $150 billion in loans from the government, which now has an 80 percent stake in the company.

Under the new deal, the U.S. Treasury and the Federal Reserve would provide about $30 billion in fresh capital to AIG from the government’s Troubled Assets Relief Program, or TARP. The money would be provided as a standby line of equity that AIG could tap as its losses mount, the source said.

AIG has already received $40 billion from TARP.

In exchange for the latest infusion, the Federal Reserve would take stakes in two international units, the source said.

Instead of paying back $38 billion in cash with interest that it has used from a Federal Reserve credit line, AIG now will repay that amount with equity stakes Asia-based American International Assurance Co. and American Life Insurance Co., which operates in 50 countries.

Under the plan, another $20 billion from a Federal Reserve credit line remains available for borrowing, the source said.

In order to strengthen the company, AIG also plans to combine its U.S. and foreign property-casualty insurance operations into a new unit, with a new name and separate management, the source said. About 20 percent of the property-casualty business would be taken public.

To further reduce its debt, AIG will turn $5 billion to $10 billion worth of debt into new securities backed by life insurance assets.

AIG spokesman Nick Ashooh declined to comment on the rescue package. The Federal Reserve Bank of New York, which is handling the government loan, did not return requests for comment Sunday evening. Treasury Department spokesman Isaac Baker also declined to comment.

The company’s board met Sunday to vote on the revised bailout plan.

Major credit rating agencies have already signed off on the deal, according to media reports. Without the support of the credit rating agencies, AIG would have faced crippling cuts to its ratings.

AIG has been forced to seek more help in part because the ongoing recession and its falling stock price, now well under $1.

Among its biggest problems: It can’t sell assets to pay back government loans because the credit crisis is preventing would-be buyers from getting financing to complete such deals.

As of Feb. 13, AIG had sold interests in nine businesses.

In November, the U.S. government restructured previous loans provided to AIG, giving the company about $150 billion in total as part of a rescue package to help the insurer remain in business amid the worsening credit crisis. That package replaced earlier loans, including the original $85 billion lent in September, after it became apparent the insurer needed more funds.

Problems at AIG did not come from its traditional insurance operations, but instead from its financial services units, and primarily its business insuring mortgage-backed securities and other risky debt against default.

Shares of AIG closed at 42 cents on Friday. The stock, which traded at $49.50 a year ago, has lost nearly all of its value since the market meltdown began in September.

House Speaker Nancy Pelosi, shown with Rep. Henry Waxman, said lawmakers have their work cut out for them.

WASHINGTON — President Barack Obama has made it clear he intends to reorder the nation’s priorities, but Congress must act to make that a reality.

It won’t be easy.

Mr. Obama is asking the 111th Congress for accomplishments that rival those of the 1933 Congress that passed the New Deal and the 1965 Congress that enacted the Great Society. But despite the pain of the current crisis, it doesn’t yet compare with the devastation of the Great Depression or the upheaval of the 1960s. And Congress’s pace in recent years has been anything but speedy.

In his prime-time speech and budget plan this week, Mr. Obama urged Congress to take on sweeping proposals he promoted during the campaign to address climate change and overhaul health care. In addition, the downturn is forcing lawmakers to simultaneously debate fixes for the mortgage crisis and the auto industry, along with ways to rewrite rules for the financial sector.

Democrats on Capitol Hill are also pushing items on their longtime agenda, such as giving the District of Columbia a vote in Congress, expanding funding for stem-cell research and requiring broader use of renewable energy. They hope to pass a 2010 budget by early April and will need to enact a dozen individual spending bills for next year.

Mr. Obama and the Democrats may have relatively little time to get all this done. The president has considerable political momentum now, but that might not last. By the middle of next year, the approaching November elections will make it much harder to strike legislative deals.

After outlining the agenda this week, House Speaker Nancy Pelosi told reporters, “Our work is well cut out for us.”

While the Republicans are in the minority, they still can create significant problems for the Democrats — especially in the Senate, where the majority often needs 60 votes to overcome parliamentary obstacles.

That task is harder because Al Franken of Minnesota, who could give the Democrats their 59th vote in the Senate, is embroiled in an election dispute with former Republican Sen. Norm Coleman. And Sen. Edward Kennedy (D., Mass.) suffers from brain cancer, making his schedule uncertain.

“This is going to require compromise and negotiation with Senate Republicans,” said Jim Manley, spokesman for Senate Majority Leader Harry Reid (D., Nev.). “The sooner everyone realizes that, the better off we’ll be.”

Senate Minority Leader Mitch McConnell and other Republicans can create obstacles for President Obama's agenda.

At a meeting Friday of the Conservative Political Action Committee, Senate Minority Leader Mitch McConnell (R., Ky.) and House Minority Leader John Boehner (R., Ohio) left little doubt about their readiness to fight the Democrats.

“The stimulus, the omnibus, the budget — it’s all one big down payment on a new American socialist experiment,” Mr. Boehner told cheering conservatives.

But managing the tensions within Democratic ranks also will be a challenge. On Thursday, moderate “Blue Dog” Democrats forced House leaders to delay a vote on a bill that would empower judges to rewrite the mortgages of people declaring bankruptcy. Critics say this would add dangerous uncertainty to the home-loan market, raising interest rates and making it even harder to get mortgages.

Beyond that, Congress, like any complex institution, can only accomplish so much at any given time. Bills must be considered by subcommittees and full committees, and lengthy negotiations often occur before legislation can be passed.

House and Senate Democrats have concluded that climate-change legislation and a health-care overhaul will probably be the toughest items to push through.

Rep. Henry Waxman (D., Calif.), chairman of the House Energy and Commerce Committee, has vowed to have a climate-change bill, including a cap-and-trade system for controlling harmful emissions, ready for floor action by Memorial Day. That would set the stage for votes in the full House this summer.

That means the battle over health care will probably be put off until later in the year, if only because many of the lawmakers involved in climate-change issues also specialize in health care.

Whatever happens, the road ahead carries risks for Democrats. Failure to deliver on the Obama agenda threatens to alienate voters. But delivering on those goals comes with risks, too, potentially forcing the majority party to explain why it raised taxes or eliminated cherished programs. And Republicans will have to balance their desire to block many of Democratic initiatives with the need to be something more than naysayers.

Despite the obstacles, the new Congress has already enacted several major laws this year, including a $787 billion economic-stimulus package and legislation on children’s health care and pay equity.

Those challenges pale next to what lies ahead. “We just did the easiest of the tough stuff,” Mr. Manley said. “It only gets harder from here on out.”