Roll Call, a Capitol Hill newspaper, has breaking news:

HUTCHISON TO DROP OUT OF RACE
Sen. Kay Bailey Hutchison (Texas) begun telling her colleagues Tuesday morning that she will not run for Republican Conference chairman when the position comes up for a vote Thursday morning, according to sources. Her decision — which she is expected to make public later today — leaves a two-man race for the post between Sens. Lamar Alexander ( Tenn. ) and Richard Burr (N.C.).

Politico.com reported earlier today that Hutchison would probably get out of the race. She will remain as chairman of the Policy committee. KBH had two problems: She had angered conservatives with some recent votes, such as her support for the Democrats’ S-CHIP bill, and she is viewed as a short-termer who plans to leave the Senate to run for governor in 2010. John Cornyn would appear to be collateral damage of Hutchison’s withdrawal, as he had hoped to move up to the policy job, but I’m told that he’s in a win/win position, having already lobbied colleagues for the job when Hutchison leaves.

Here is the Politico story.

Conservative Hutchison alienates GOP
By: John Bresnahan
December 4, 2007 06:07 AM EST

Sen. Kay Bailey Hutchison (R-Texas), who is seeking the No. 3 Republican leadership post in the wake of Mississippi Sen. Trent Lott’s announced retirement, has alienated her conservative colleagues in recent months and endangered her chances of moving up the GOP ranks.

Hutchison voted in October with Democrats to defy a veto threat by President Bush over a proposed $35 billion expansion of the State Children’s Health Insurance Program.

Hers was one of only two GOP votes to end a Republican filibuster of the legislation.

And Democrats are expected to send a similar measure to Bush this week for another promised veto.

She also backed the DREAM Act, which would create a path to citizenship for the children of illegal aliens, another big blow to her conservative credentials on an issue that is a top priority for Republican voters nationwide.

After openly working with Senate Majority Whip Richard J. Durbin (D-Ill.) on the issue, Hutchison voted against a GOP filibuster on the bill, putting her at odds with Republican leaders.

The filibuster was upheld by other Republican senators.

Hutchison has supported the effort of Sen. Joe Biden (D-Del.) to create several autonomous zones for different ethnic groups inside Iraq , a move strongly opposed by the White House.

But Hutchison has said her endorsement of the Biden proposal does not conflict with her support of Bush on the war.

In addition, Hutchison, a member of the powerful Senate Appropriations Committee, has continued to push for tens of millions of dollars in spending earmarks in annual appropriations bills, even though such earmarks outrage the GOP’s conservative base.

“She is not the candidate that conservatives want to make the face of Senate Republicans,” said one top Senate GOP aide.

As chairwoman of the Republican Conference, Hutchison would be the point person for the GOP message machine if she were to win Thursday’s election.

“She is not someone they are totally comfortable with right now,” the aide said.

A Republican senator, speaking on the condition of anonymity, said that while he has talked with Hutchison about the GOP Conference chairmanship race, he’s going to support another candidate, possibly Sen. Richard Burr of North Carolina.

Sen. Lamar Alexander of Tennessee is the third Republican in the leadership race.

“I don’t understand what [Hutchison] is doing, what her goals are,” the senator said. “She is very good on some things, not so good on others.”

This senator called Hutchison’s vote on the SCHIP bill “especially troublesome” because it undermined a unified White House-GOP leadership stance on the legislation.

Hutchison has already publicly announced that she’s not seeking reelection in 2012.

And she has repeatedly declared her interest in running for governor of Texas in 2010, meaning that she could leave the Senate as early as 2009 to conduct a gubernatorial campaign.

So her decision to try to move up the leadership ranks baffled some GOP insiders, although none wanted to use their names in any negative comments about her.

She has also faced rumors in the past week that she intends to drop out of the leadership race because she might lose.

Her staff has denied the rumors, but some GOP senators and top aides said it was still a possibility before Thursday’s vote.

Hutchison already serves as chairwoman of the Senate Republican Policy Committee, the No. 4 GOP leadership post in the Senate.

Another Republican senator questioned why Hutchison “is running for leadership when she is leaving in 2009. She’s at a big disadvantage, because everyone knows she’s going to leave the Senate.”

Hutchison has not been available for comment since she announced her intention to seek the conference chairmanship.

Alexander and Burr have their detractors as well, especially Alexander, who is considered by some to be the front-runner in the race.

The Tennessee Republican has repeatedly pushed a bill to enact the Iraq Study Group recommendations, which include a proposal to set a “goal” to withdraw U.S. combat troops from Iraq.

Sen. Ken Salazar (D-Colo.) was the lead Democratic co-sponsor of the legislation.

Alexander also supported a bipartisan bill in October to require Bush to report to Congress on the status of plans to redeploy U.S. troops from Iraq .

Neither of the Alexander proposals has been approved by the Senate.

Alexander, though, has stood with Bush and party leaders in opposing any Democratic plan to set a firm withdrawal date for Iraq .

“Alexander has been really squishy on Iraq,” said a Republican senator. “All summer, he was working with Democrats on Iraq, and then he wants to be the spokesman [for the party]. That’s not going to fly.”

Alexander lost by only one vote when he challenged Lott for minority whip back in January, and Alexander’s staff has been playing that fact in pushing his candidacy for the conference chairman post.

Some GOP insiders explain the closeness of that vote as more anti-Lott sentiment than pro-Alexander support.

But that hasn’t dissuaded Alexander from running again, and according to some informal whip counts being kept in Republican offices, he’s the front-runner, although leadership races are notoriously hard to handicap.

Burr’s biggest problem, according to Republican insiders, is that he is only in his first term, making him one of the most junior senators in the Republican Conference.

The North Carolina Republican also never officially announced his candidacy, leading some to believe that he won’t challenge Alexander or Hutchison if he doesn’t see the race as a lock.

Burr, however, served 10 years in the House before winning his Senate seat in 2004, and Republican insiders have speculated that his natural base of support is likely fellow GOP senators who have done the same, such as Sens. John Thune of South Dakota, Tom Coburn of Oklahoma, Jim DeMint of South Carolina, Lindsey Graham of South Carolina, Saxby Chambliss of Georgia and others.

These senators have tended to be more hard-line conservatives than their older colleagues, a mold that Burr fits right into.

“I think this could be more than young versus old,” the senator said. “Burr is from the House, and that’s his natural constituency, guys who came over from the House too.”

Burr also got a 100 percent rating from the conservative Club for Growth for opposing pork spending, one of only three Republicans to do so.

Sen. Jon Kyl (R-Ariz.) is set to take over for Lott as minority whip, putting a more conservative stamp on the Senate Republican leadership than it had with Lott there.

In addition to Kyl, who himself upset conservatives by backing Bush on immigration reform, conservatives want another from their ranks to take over as conference chairman.

Burr has used that desire as the centerpiece of his campaign, and his backers have begun whispering campaigns against both Alexander and Hutchison, questioning their conservative credibility.

And the tactic seems particularly effective against Hutchison.

“They have hurt her, that’s for sure,” said the chief of staff to a Senate Republican who has been lobbied by all three candidates. “She has had to respond to it.”

Republican leadership aide said GOP senators “are scared of Hutchison, but not scared enough of her to make her” conference chairwoman.

The aide was referring to Hutchison’s personal lobbying of her GOP colleagues on issues of importance to her, such as funding projects in Texas .

“They really don’t know how to say no to her. They’re scared of her.”