The Internal Revenue Service will allow victims of Bernard L. Madoff’s investment fraud to claim a lucrative tax deduction related to the bulk of their losses, the I.R.S. commissioner testified Tuesday morning before the Senate Finance Committee .

The commissioner, Douglas H. Shulman, told lawmakers that the agency was offering guidelines for taxpayers who are victims of losses from Ponzi schemes like Mr. Madoff’s.

The plan represents the first time that the I.R.S. has come forward with a policy regarding how it will treat Mr. Madoff’s victims. The subject has been a point of debate and anxiety for the victims and their accountants, given the uncertainty and lack of clarity in the tax code over how the matter should be dealt with.

The plan, which applies to victims of all Ponzi schemes, is likely to provide major relief to the victims of Mr. Madoff, who pleaded guilty last week to orchestrating what prosecutors say is the largest Ponzi scheme ever — one that could reach $65 billion and cover 13,000 investors.

The plan would ease existing rules governing what are known as theft-loss deductions, which are losses claimed by investors who are cheated by their investment advisers and others in Ponzi schemes and other frauds.

Under the plan, which has been reviewed by the congressional offices, the I.R.S. will allow investors who are not suing Mr. Madoff to claim a theft-loss deduction equal to 95 percent of their investments, minus any withdrawals, reinvested gains and payouts from Securities Investor Protection Corporation, the government-chartered fund set up to help protect investors of failed brokerage firms.

Investors who are suing Mr. Madoff, and who thus may have some prospect of recovery, can claim a deduction equal to 75 percent of their investments.

Hawaii Superferry, which operates an Oahu-Maui catamaran that can accommodate 836 passengers and about 200 vehicles, was forced into the move Monday.

The high court rejected a state law that allowed the company to operate while an environmental study is being conducted.

Superferry said in a statement that it was "hugely disappointed" in the decision.

In order to proceed prudently, the company said it had "decided to cease operations for the present."

Superferry says it will make one additional Honolulu-Maui round trip Thursday to get vehicles back to their home islands.

In a conversation focused heavily on the economy, Obama met in the Oval Office with Brazilian President Luiz Inacio Lula da Silva. It was the latest in a series of talks the president has had with his counterparts around the world before a pair of international meetings where the economic crisis will dominate.

Both leaders will attend the Group of 20 countries summit in London on April 2, and the Summit of the Americas in Trinidad in mid-April.

Obama said the notion that the U.S. and Europe are already taking sides, with America pushing for more stimulus spending and European nations favoring tighter regulation of the financial industry, is a "phony debate."

A top economic aide to President Obama defended the administration’s multi-front strategy to tackle a number of economic issues at once, calling it “the right medicine,” while a House GOP leader criticized those plans as a “lack of focus.”

“It is an economic war,” said Christina Romer, chairwoman of the Council of Economic Advisers. “We have inherited a crisis like none since we had the Great Depression. So absolutely, it is something we need to deal with. I think we are.”

Speaking on NBC’s “Meet the Press,” Romer acknowledged, “We haven’t won yet. We have staged a wonderful battle. So we have put in place just a host of programs: the stimulus package, the financial rescue plan, the housing plan. We think it’s the right medicine and we think it will work.”

Romer cited a “focus on fundamentals” by the administration. “The other thing I think is so important, the president has actually said in terms of fundamentals, we need to make changes,” she said. “That’s why he’s focusing on energy, education, getting the budget deficit under control...”

However, House Republican Whip Eric Cantor , R-Va., also appearing on the program, criticized the administration for not targeting the fiscal crisis first.

“I want to believe that we’re going to get out of this mess. I think all Americans do,” he said. “But I’ll tell you, on Friday I met with 25 small-business people in my district, and times our tough. I mean, we know that 650,000 people lost their job last month. If my math is correct, that works out to be about 15 jobs a minute that people are losing. ...

“I think we’re seeing out of the Obama administration is a lack of focus on how to get things going again. If we’re going to get things going again, how can we have a budget that doubles the debt on our children?”

The White House reportedly will announce Monday that it will provide an estimated $10 billion to thaw out credit markets specifically for small businesses.

The decision could make it harder for some minority candidates to win election and for southern Democrats, in particular, to draw friendly electoral boundaries after the 2010 Census.

The 5-4 decision, with the court's conservatives in the majority, came in the case of a North Carolina plan that sought to preserve the influence of African-American voters even though they made up just 39 percent of the population in a state legislative district.

While not a majority, the black voters were numerous enough to effectively determine the outcome of elections, the state argued in urging the court to extend the civil rights law's provision to the district. The case dealt with the section of the law that bars states from reducing the chance for minorities to "elect representatives of their choice."

But Justice Anthony Kennedy, announcing the court's judgment, said the court would not extend the law to those so-called crossover districts. The 50 percent "rule draws clear lines for courts and legislatures alike," Kennedy said in striking down a North Carolina legislative district.

In 2007, the North Carolina Supreme Court struck down the district, saying the Voting Rights Act applies only to districts with a numerical majority of minority voters. The district also violated a provision of the state constitution keeping district boundaries from crossing county lines, the court said.

He also suggested longer school days — and years — to help American children compete in the world.

In his first major speech on education, Obama said the United States must drastically improve student achievement to regain lost international standing.

"The future belongs to the nation that best educates its citizens," he said. "We have everything we need to be that nation ... and yet, despite resources that are unmatched anywhere in the world, we have let our grades slip, our schools crumble, our teacher quality fall short and other nations outpace us."

His solutions include teacher pay and charter school proposals that have met resistance among members of teachers unions, which constitute an important segment of the Democratic Party.

Obama acknowledged that conflict, saying, "Too many supporters of my party have resisted the idea of rewarding excellence in teaching with extra pay, even though we know it can make a difference in the classroom."

Despite their history on the issues, union leaders publicly welcomed Obama's words, saying it seems clear he wants to include them in his decisions in a way President George W. Bush did not.