Blake Lively denied to a passerby in Soho that she and Penn Badgley were dating while Badgley told someone else moments later that he and Lively were in fact an item. CNBC's Maria Bartiromo noted that Barack Obama will likely raise the capital-gains tax from 15 percent to 25 percent. Katie Couric and Jimmy Fallon danced together at the Fresh Air Fund gala at Tavern on the Green. Diddy wants to be known as Puff Daddy again. Brandon "Greasy Bear" Davis polished off two bottles of Cristal he didn't pay for and sweated on a bunch of models at Lily Pond in the Hamptons. Some lady chastised Donna Hanover for talking about a patient's diagnosis in public on her cell phone because she thought Hanover was a real doctor. (She just played one on One Life to Live.)
Vogue intern Sean Avery hung out in the paddock before the Belmont Stakes. John McCain is catching heat for divorcing his first wife, former swimsuit model Carol McCain, after he returned home from war and found that she'd been disfigured in a car accident. (He has also confessed to cheating on her.) Denise Richards and Charlie Sheen are still battling in court over how much of Sheen's money and assets Richards is entitled to. Molly Sims showed up for her reservation at the Surf Lodge in Montauk an hour late because she was hanging out on the beach. Julia Roberts ate toast while her son gobbled Cheerios at Norma's at Le Parker Meridien. Three of the contestants on NBC's upcoming Celebrity Circus have injured themselves during filming. B.J. Novak and four buddies hung out at Rose Bar in the Gramercy Hotel. In his upcoming book, The Case Against Israel's Enemies, Alan Dershowitz calls Jimmy Carter a "critical threat" to the existence of Israel as well as a bigger threat than Hamas and Palestinian terrorists. Cindy Adams says Tom Cruise and Paramount have come to terms on a deal for Mission Impossible: 4, and that this time around Cruise is getting virtually zero money upfront. Liz Smith thinks that Penélope Cruz will get a Best Supporting Actress nod for her role in Woody Allen's Vicky Cristina Barcelona, in which she makes out with Scarlett Johansson.