And the new N.Y. Senator is...

Albany is abuzz with Gov. Paterson's pick for New York's senate seat to replace now Secretary of State Hillary Clinton. Caroline Kennedy's out of the race. Democrats predict State A.G. Andrew Cuomo.

But looks like Paterson throws a curve ball -- it's Kirsten Gillibrand, considered by many to be a moderate Democrat. She's won elections with the backing of the National Rifle Association and opposition to TARP.

Democratic activists are already protesting the selection and planning to unseat her in the next election.

Caroline Kennedy halts senate bid

Is she or isn't she? Today we have confirmation that Caroline Kennedy withdraws her bid as a New York Senator. Although there's been reports of various exchanges between her and Gov. Paterson, the NYT claims it's all about her taxes and a household employee:

Problems involving taxes and a household employee surfaced during the vetting of Caroline Kennedy and derailed her candidacy for the Senate, a person close to Gov. David A. Paterson said on Thursday, in an account at odds with Ms. Kennedy’s own description of her reasons for withdrawing.

The account emerged 14 hours after Ms. Kennedy announced that she was taking her name out of contention for the Senate seat vacated by Hillary Rodham Clinton, and as Mr. Paterson appeared to be leaning toward selecting Representative Kirsten E. Gillibrand, an upstate lawmaker in her second term in Congress.

Hard feelings toward Ms. Kennedy were clearly building among the governor’s staff on Thursday, after a dramatic evening in which she was reported to be dropping out, then wavering, then ultimately, shortly after midnight on Thursday, issuing a statement ending her candidacy.

The likely appointment now? State Attorney Andrew Cuomo.