This is big news.
Souter has recently been referred to as one of the Court's “liberals”. This is a stretch, but it is clear that Souter showed an amazing degree of independence from the Republicans who appointed and supported him. I've always been impressed by his writing and work on the court.
For instance, in this week's oral argument on the preclearance provision of the Voting Rights Act:
It was expected that Obama would have opportunities to make one or more appointments early in his term. Just this week rumors surfaced that Clarence Thomas has floated the idea of retiring if he can reach an accommodation with Obama on a replacement. Whoever is appointed to replace Souter will not change the balance of power on the Court, but it does give Obama a chance to start making an impression on the Court's makeup and direction.
Obama ought to make an awesome choice on this. Of course, this was the thought I had on the FISA Bill that he voted for. (The law includes retroactive immunity for the big Telecom companies that gave the gov’t private records without a warrant and pretty much curtails investigation into the extent of Bush’s warrantless wiretapping.)