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President Barack Obama speaks in the Roosevelt Room of the White House in Washington, Monday, March 23, 2009. Joining him, from left are, Treasury Secretary Timothy Geithner, the president, Federal Reserve Chairman Ben Bernanke. (Gerald Herbert/AP Photo)
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"Obama's $1 Trillion Plan to End Bank Crisis: Treasury Secretary Tim Geithner Hopes to Attract Private Investors to Buy Toxic Assets"
By MATTHEW JAFFE, SCOTT MAYEROWITZ and JAKE TAPPER, ABC News, March 23, 2009—
President Obama said today that his economic team is "very confident" that the administration's newest effort to stabilize banks -- a mix of public and private funds that could total $1 trillion -- will help to free up credit.
The president spoke shortly after Treasury Secretary Timonthy Geithner officially announced the long anticipated program.
The plan aims to remove so-called toxic assets -- many of them bad mortgage investments -- from the banks' balance sheets through a private-public partnership. The program will rely heavily on private investors, such as hedge funds and private-equity firms, to buy up $500 billion to $1 trillion of assets with the government providing incentives such as low interest loans and sharing in both the risk and possible profits. Obama described the Public-Private Investment Program as "one more critical element" in a multi-pronged effort to help the economy recover.
He gave an optimistic assessment that the steps the administration has taken are nudging the economy in the right direction.
Obama said there are "glimmers of hope in the housing market," as well as signs that there is easier access to student loans, small business and car loans.
With the announcement of the latest mega-money project to right the economy, Obama said, "I'm very confident that... we're going to be able to make it happen."
With the bad assets off their balance sheets, banks would be expected to start lending again.
Wall Street seemed buoyed by the announcement, with the Dow up more than 400 points in the day's trading. That was in contrast to last month when Geithner first indicated the administration was considering such a plan, but the lack of details sent the market into a nearly 400 point plunge.
Investment giant BlackRock was downright enthusiastic about the new program.
The investment management firm is applying to be one of the government-selected managers and is willing to raise $5 billion or so of private money to partner with taxpayer dollars, Curtis Arledge, co-head of US Fixed Income Portfolio Management Group, at BlackRock told ABC News.
"We think many of these assets are trading at prices well below their intrinsic value," Arledge said.
BlackRock has already been buying such investments for some of its clients but now hopes to purchase more assets. Arledge said the government dollars and risk guarantees will expand the number of people who enter the mortgage-backed securities market.
The $1 trillion program is Obama's latest attempt to pull the economy out of its dive, but it's not the last. On Tuesday, the administration wil lay out its plans to increase its regulation of Wall Street to ensure that the current crisis is not repeated.
The administration needs to address two problems. First, banks are not lending because their balance sheets are weighed down by these deteriorating toxic assets. Second, the assets are tough to price because of currently depressed pricing levels.
To solve these problems, the treasury's plan is guided by a program with three general principles.
The new program will use between $75 billion-$100 billion of Treasury funds from the Troubled Asset Relief Program and leverage $500 billion with the potential to expand to $1 trillion of private purchasing power with financing from the Federal Reserve System and the Federal Deposit Insurance Corp.
Using the Fed and the FDIC, the government will leverage private capital by co-investing with the private sector. If the private sector has financing provided by the government, buying these assets becomes a more attractive option.
Second, the administration wants the market, not the government, to set the price for these assets.
"The greatest waste of taxpayer dollars would be us paying too much," an official said.
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No Silver Bullet
Third, the private sector will invest alongside the taxpayer on an equal basis, so both parties share the downside risk and upside potential.
To accomplish this, the treasury will partner with the FDIC in a program where banks can bring assets they want to sell to the FDIC. The FDIC will provide leverage, then the assets will be sold in the market, where private market participants will bid on them, thereby setting the price. Then the government can co-invest with the private sector to buy pools of toxic assets and clean up the banks' balance sheets.
To address toxic securities, the treasury will partner with the Fed in a program building on an existing lending program. The Fed will provide leverage for private sector participants to buy securities.
Despite the enormous price tag attached to the program, Geithner said, "Our job is to try to fix this problem in our financial system at least cost to the taxpayer."
"This is not something that shields the private sector from risk," a senior administration official said. "If they do well, we will do well. If we do poorly, they will do poorly as well. So it avoids what's been so wrong in the past where you've had, as the president has said, 'Heads I win. Tails the taxpayer loses.'"
"We have seen and I expect to see a lot of interest from the private sector," Geithner said.
Some investors though might shy away, concerned about a populist revolt.
"There is a fear that if you do well off this, they are going to come after you," said Charles Biderman, CEO of TrimTabs Investment Research, which provides data to investors including many hedge funds. "I wouldn't want to participate with this. I don't want busloads of people coming to my house."
But Joel L. Naroff, president of Naroff Economic Advisors and chief economist for TD Bank, said that investors will participate.
"The question is: how much can they wring from the government to insulate themselves from this," Naroff said. "I don't think they are going to be tarred and feathered if they get involved in a partnership with the government and they make money off of it."
Besides, such profits wouldn't be seen for several years.
"If they are making money off it, it means that the market has moved forward, it means things are getting better and people's focus of attention will have changed," Noraoff said.
House Republican whip Eric Cantor called the plan "a shell game that hides the true cost of the program from the taxpayers that will be asked to pay for it."
The administration emphasizes that there is no "silver bullet" to solve this problem.
"This is a large problem that is going to take a long time to solve," a senior administration official said.
"We're attempting to coax a multitrillion-dollar market back to life in an extremely difficult economic and market environment and that's going to take time," the senior official said.
Today's detailed plan comes a month after the Obama administration first announced it would try to take the toxic assets off the banks' books. But the timing might be difficult.
"There is deep skepticism across the country, deep anger and outrage and frustration," Geithner said.
Because of that skepticism, he said, "We have to engender more confidence in the American people that we are going to use taxpayers' money effectively and wisely."
The public has grown weary of multibillion-dollar bailout after bailout, especially when learning about executives still buying private jets and receiving large bonuses. Last week, the nation learned that some executives at insurance giant AIG had gotten a total of $165 million in bonuses after the company gave received more than $170 billion in government bailouts to remain in business.
And today, ABC News revealed that JP Morgan is spending tens of millions on new corporate jets as well as a plush new hangar for its aircraft.
At the same time, government efforts to rein in such bonuses have made some banks and investors wary of doing business with the government.
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Obama Says Some Assets "Completely Worthless"
Obama made the case for today's massive program during his appearance Sunday on "60 Minutes" when he argued that it's necessary to team up with Wall Street because there are "systemic risks" in the economy.
"There are certain institutions that are so big that if they fail, they bring a lot of other financial institutions down with them," he told "60 Minutes."
Still, there is the problem of how to value these "toxic assets" and Obama suggested on "60 Minutes" that some of them may be "completely worthless." Nevertheless, the banks holding them expect to sell them.
"The banks are going to be looking for something like 60 cents on the dollar and that the investors would only be willing to pay 30 cents," Douglas Elliott of the Brookings Institute told "Good Morning America."
Christina Romer, head of the Council of Economic Advisers, told "Good Morning America" that about 8 percent of the investment money will come from private sources, but the rest of the money to buy the toxic assets will come from taxpayers.
She emphasized that the $1 trillion program is just part of the effort to lift the economy that has included money for banks, for small businesses, for homeowners and a stimulus program to spend billions on highways, bridges and other infrastructure programs.
Administration officials said the new program was better than the two other alternatives.
Bad option No. 1: let the toxic assets stay on the banks' balance sheets, "the kind of hands-off approach that has led to other countries having financial crises that lasted years and years as opposed to months and months."
Bad option No. 2: have a single public bank buy up all the toxic assets, an approach in which "the taxpayer would take all the risk instead of sharing the risk" and that could involve the public bank overpaying for the assets.
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ABCNew's Jonathan Karl contributed to this report
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www.financialstability.gov
On Tuesday, February 10th, 2009, Treasury Secretary Timothy Geithner outlined a comprehensive plan to restore stability to our financial system. In the address, Secretary Geithner discussed the Obama Administration’s strategy to strengthen our economy by getting credit flowing again to families and businesses, while imposing new measures and conditions to strengthen accountability, oversight and transparency in how taxpayer dollars are spent. And Secretary Geithner explained how the financial stability plan will be critical in supporting an effective and lasting economic recovery.
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"Obama administration moves against bad bank assets"
By Tom Raum, Associated Press Writer, March 23, 2009
WASHINGTON --The Obama administration aimed squarely at the crisis clogging the nation's credit system Monday with a plan to take over up to $1 trillion in sour mortgage securities with the help of private investors. For once, Wall Street cheered. The announcement filled in crucial blanks in the administration's financial rescue package and formed what President Barack Obama called "one more critical element in our recovery."
The coordinated effort by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. relies on a mix of government and private money -- mostly from institutional investors such as hedge funds -- to help banks rid their balance sheets of real-estate related securities that are now extremely difficult to value.
The goal, said Obama, is to get banks lending again, so "families can get basic consumer loans, auto loans, student loans, (and so) that small businesses are able to finance themselves, and we can start getting this economy moving again."
It was a huge gambit and one that came like a tonic to Wall Street, which had panned an earlier outline of the program that lacked detail.
Stocks soared, the Dow Jones industrial average shooting up more than 400 points, thanks to the bank-assets plan and a report showing an unexpected jump in home sales.
The plan is designed to help fix a value on the damaged mortgage loans and other toxic securities.
If the value of the securities goes up, the private investors and taxpayers would share in the gains. If the values go down, the government and private investors would incur losses.
"This will help banks clean up their balance sheets and make it easier for them to raise capital," Treasury Secretary Timothy Geithner told reporters.
The plan will take $75 billion to $100 billion from the government's existing $700 billion Troubled Asset Relief Program. The government will pair this with private investments and loans from the FDIC and the Fed to generate $500 billion in purchasing power.
Geithner said purchases eventually could grow to $1 trillion -- roughly half of the estimated $2 trillion of toxic assets on bank books now.
On the hot seat, Geithner has a lot personally tied to the success of the new program. His performance in the Cabinet, including his slowness in learning about multimillion dollar executive bonuses paid by insurance giant AIG after taking bailout money, has been severely criticized by some in Congress.
Geithner testifies on Tuesday before the House Financial Services Committee.
Under a typical transaction, for every $100 in soured mortgages being purchased from banks, the private sector would put up $7 and that would be matched by $7 from the government. The remaining $86 would be covered by a government loans.
The plan was introduced ahead of a summit next week in London of 20 major and developing economies struggling with the global recession.
Obama is trying to get other wealthy countries to do more to stimulate their economies with government spending, as the United States has done. However, other countries, particularly ones in Europe, are resisting U.S. calls for more stimulus and would prefer to see more internationally coordinated bank regulation.
The administration was expected to outline its plan for financial regulation overhaul later this week.
Geithner said taxpayers still could lose money on the deal but there was no fixing the system without risk.
Other options, such as having the government purchase the securities outright or letting them languish on bank balance sheets, would pose even greater vulnerabilities, he said, and it was important to find the right blend of risk versus reward.
"I am very confident this scheme dominates all the alternatives for trying to find that balance," he said.
The sentiment was echoed by congressional Democrats, who said risk seemed inevitable with any plan big enough to work.
But House Republican Whip Eric Cantor of Virginia called Obama's plan a "shell game" that hid the true cost.
He said he hoped the administration would consider instead an earlier Republican proposal to set up a government-sponsored insurance program for mortgage-related securities.
The administration plan "seems to offer little incentive for private investors to participate unless the subsidy is made so rich that it comes at the expense of the taxpayer," Cantor said in a statement.
The new program marks a return by the government to acquiring the hard-to-price toxic securities. Henry Paulson, who was treasury secretary in the final days of the Bush administration, abandoned plans to purchase these securities, largely because they were impossible to price.
The plan builds on earlier programs to pump money into banks, help some homeowners repay their mortgages and stimulate college, small business and other forms of lending.
"There's still great fragility in the financial systems, but we think that we are moving in the right direction," Obama said after meeting Geithner and Fed Chairman Ben Bernanke.
Obama said the plan will allow taxpayers to "share in the upside as well as the downside."
Treasury officials had no firm forecast on when the government would begin making the asset purchases although market expectations were that the process could begin within weeks.
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AP writers Martin Crutsinger and Anne Flaherty contributed to this story.
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"Obama confident in latest bank bailout"
The Boston Globe Online, Political Intelligence, Posted by Foon Rhee, deputy national political editor, March 23, 2009, 12:30 P.M.
President Obama said today that he is "very confident" that the latest plan to take toxic assets off the backs of banks and other financial institutions will work and ease the credit crunch.
He told reporters that the plan detailed this morning by his embattled treasury secretary, Timothy Geithner, will build on the progress already made with the $787 billion economic stimulus package and with his proposals to stem home foreclosures.
The plan Geithner outlined relies on public-private partnerships -- with the private firms lured by federal largess -- to buy up the bad assets.
"We believe that this is one more element that is going to be absolutely critical in getting credit flowing again. It's not going to happen overnight. There's still great fragility in the financial systems, but we think that we are moving in the right direction," Obama said after his daily economic briefing.
"And we are very confident that, in coordination with the Federal Reserve and the FDIC, other relevant institutions, that we are going to be able to not only start unlocking these credit markets, but we're also going to be in position to design the regulatory authorities that are necessary to prevent this kind of systemic crisis from happening again."
His full remarks are below, as is the transcript of Geithner's press briefing on the plan:
THE PRESIDENT: Well, good morning. As all of you know, we have been busy on a whole host of fronts over the last several weeks, with the primary purpose of stabilizing the financial system so banks are lending again, so that the secondary markets are working again, in order to make sure that families can get basic consumer loans, auto loans, student loans; that small businesses are able to finance themselves and we can start getting this economy moving again.
As I've said before, there are a number of legs in the stool in the economic recovery. Step one is making sure that we had a stimulus package that was robust enough to fill the huge gap in demand that was created by the recession. Step two was making sure that we had a effective homeowners' plan to try to keep people in their homes and to stabilize the housing market. Because of the work that's already been done, you are starting to see glimmers of hope in the housing market that stabilization may be taking place. Mortgage rates are at a very, very low level, and you're starting to see some activity in the housing market.
We then took a series of steps to improve liquidity in what had been secondary markets that had been completely frozen. And we are now seeing activity in student loans and auto loans. We announced last week a small-business initiative that ensures that we have more activity and you start seeing small businesses being able to get credit again in order to sell products and services and make payroll.
And this morning, Secretary Geithner announced the latest element in this multi-pronged approach, and that is a mechanism that he, in close consultation with the Federal Reserve and the FDIC, has initiated in order to allow banks to take some of their bad assets off their books, sell them into a market, but do so in a way that doesn't just obligate taxpayers to buy at whatever price they're willing to sell these assets; instead, involves a public-private partnership that allows market participants who have every interest in making a profit to accurately price these assets so that the taxpayers share in the upside as well as the downside.
And we believe that this is one more element that is going to be absolutely critical in getting credit flowing again. It's not going to happen overnight. There's still great fragility in the financial systems. But we think that we are moving in the right direction. And we are very confident that, in coordination with the Federal Reserve and the FDIC, other relevant institutions, that we are going to be able to not only start unlocking these credit markets, but we're also going to be in a position to design the regulatory authorities that are necessary to prevent this kind of systemic crisis from happening again.
And I'm looking forward to traveling to the G20 so that we ensure that the activities that we're doing here in the United States are effectively matched with comparable action in other countries. And Secretary Geithner has already traveled and met with the finance ministers of the G20 states so that we can make sure that we're all moving on the same page.
So the good news is that we have one more critical element in our recovery. But we've still got a long way to go, and we've got a lot of work to do. But I'm very confident that, with the team that we've got assembled, we're going to be able to make it happen.
All right. Thank you guys.
Q Can you offer any assurances to taxpayers who are skeptical?
THE PRESIDENT: You know, I'll have a full press conference tomorrow night, and you guys are going to be able to go at it.
Thank you, guys.
SECRETARY GEITHNER: Thanks for coming. Nice to see you. Obviously we're announcing this morning the next stage of our broad plan to help repair the financial system. But I want to start by stepping back, putting this in broader context.
Just to state again the start proposition that to get this economy back on track we need to get this very powerful stimulus program in place as quickly as possible. It will help get millions of Americans back to work, help support and stimulate private investment. But for that to work, we need to move very aggressively to get our financial system back to the point where it's providing the credit necessary for recovery.
That agenda, the financial agenda, which is such a critical complement of recovery, has several critical parts. And let me just walk through these first before I get to the details of today's announcement.
First, we have put in place a series of very powerful targeted programs to help address the housing crisis, to help catalyze small business lending. We are moving to start a –- you saw last week –- a broad-based program to get the secondary markets working again, too. Those markets, as you know, are very critical to the capacity of auto financed markets to work, muni markets, student lending markets, consumer credit markets, also small business markets. And you saw last week that in the first stage of this new fed Treasury program $9 billion in issuance, four times the level of -- more than the last four months alone. And that will make a material difference in bringing interest rates down.
We announced as the first step in our broad framework a plan to make sure that banks have enough capital to survive a deeper recession. We're going through this very carefully designed capital assessment process, that's designed to bring a more consistent, more conservative, more forward-looking view of the scale of losses banks may face in a deeper recession. But the critical part of that program is to make it clear that they will be able to raise capital from the government if they can't raise in the markets so that they can get through a deeper recession. That will help reduce the odds of a deeper recession, help make sure, again, they can provide a level of lending that will be necessary to support recovery.
I just want to start with those three things before I go into today's announcement again, and go through them again to make you understand how important they are.
First, targeted programs to help address the housing crisis which have already helped bring interest rates down, will help millions of Americans be able to refinance, take advantage of lower rates, reduce monthly payments, help reduce foreclosure risk. Targeted program directly at the constraints on small business lending; very strong broad-based program that will help get securitization in markets going again. You saw its first initial launch last week. And a program of insurance -- you could call it capital insurance for the banking system so that banks have the cushion of capital necessary to lend and expand even if the economy goes through a broader -- a deeper recession.
Now, today -- today we're announcing a innovative plan for helping to provide a market for the legacy assets that are a core of this basic problem in our financial system. Right now, you know, banks are still holding on to a large amount of loans that were made before the recession, during the four years in the run-up to the peak of the boom.
Because there's no financing available to the markets, because there's huge uncertainty about the path of the recession, because there's a lot of uncertainty about how to value these assets, these markets are stuck. And to help unfreeze these markets, provide a mechanism for working through these problems, we're announcing today a two-part program.
One piece is a financing mechanism to allow banks to sell pools of loans. One piece is a financing mechanism for investors to sell and purchase securities. Structures are similar, and let me walk through the basic parts of the structures. In each case we're going to put capital alongside capital from private investors with financing from the government. So private investors will share the risk alongside with the taxpayer, and the taxpayer will share returns alongside private investors.
Used as a market mechanism for establishing pricing and value, that will help protect the government from overpaying for these assets and taking risks greater than we should. And it will help bring professional management to these things, and again, all with the objective of reducing risk to the taxpayer, improving our capacity –- have the market work with us to help get out of this.
As you see in the proposals, we expect to put enough capital on the table initially to help leverage or generate between 500 and perhaps up to a million of purchasing power for these programs.
Now, if you think about this alongside the capital program, this will help banks clean up their balance sheets; it will make it easier for them to help raise private capital; it will help provide a market for these legacy assets that will help reduce these liquidity risk premium markets, help reduce the risk that people see further downward spirals in these asset prices, and overall, help increase the lending capacity of the financial system and reduce credit spreads and lending rates.
Now, like any plan, you've got to consider them against the alternatives. One alternative is just to let this dynamic we now see across the system continue. Our judgment is that would result in the risk of greater deleveraging, a deeper credit crunch, greater headwinds for the economy going forward, and a longer, deeper recession.
Another alternative is to have the government come in and purchase directly these assets and hold those, manage them, and sell them over time. That would involve the government assuming much more risk than under this program; create much greater challenges for managing these things sensibly over time; and again leave, in our judgment, the government more exposed, assuming more risk than it should, more exposed to loss over time, and in our judgment not a plausible, effective alternative.
Now, we're the United States of America. We are not Sweden. We have a very complicated financial system. Getting through this requires banks being strong enough again they can lend comfortably through a deep recession, but that's not enough. We have to complement this program to help strengthen the banking system with a range of approaches to help get these securities markets back to the point where they're working again.
So that again the basic mechanics that are so important to small business lending, large business borrowing, consumer borrowing, auto finance, student loans, et cetera -- that entire framework of mechanism is back to the point where it's working better for recovery. So our approach is designed to do both those two things.
Now, we are going through a very challenging environment now. There is deep skepticism across the country, deep anger and outrage, frustration about the point -- about the place we are in as a country, where people that were careful and prudent in their financial decisions, businesses that were conservative in how they chose how much leverage they took on, are facing substantial damage because of the actions of a range of institutions that took too much risk and brought our financial system and our economy to the point where we're facing such an acute, deep recession.
That anger and outrage is perfectly understandable and if we are going to get through this we have to engender more confidence in the American people that we're going to use taxpayer's money effectively and wisely to, again, help get credit flowing again, help reduce borrowing costs. And we want to make sure that our assistance is not going to reward failure, to benefit people who got us into this mess -- and that is critically important.
But as the President said, we also need to make it clear that our actions need to be guided by the basic objective of doing what is necessary to help get recovery back more quickly. And that requires that we have a better functioning financial system, where people are willing to come in and take risk.
The great risk we face now is that after a long period of irresponsibility and excessive risk-taking, that the system will not take enough risk now. And for these programs to work, investors have to be prepared to take risk. And for them to take risk, they have to be more confident than they are today that there's going to be a clear set of rules of the game applied consistently and enforced fairly going forward.
I'm happy to take any questions. Yes.
Q Sir, you mentioned the municipal market. Chairman Frank and about 25 other members of Congress sent you and Chairman Bernanke a letter to provide temporary relief to the short-term municipal debt market. I'm wondering if that's been considered by Treasury, if that's a possibility at all?
SECRETARY GEITHNER: We're taking a careful look at it.
Q Could you repeat the question?
SECRETARY GEITHNER: The question is -- I believe is, a number of members of Congress, governors, elected officials across the country, have encouraged us to explore ways to help bring about further improvements in the muni market. There has been some improvement in the muni market and we are looking at a range of options to see if we help reinforce those improvements, including the specific measures that Chairman Frank and others are considering.
Yes.
Q Tim, obviously you set out the structure and framework today, but for good reasons you haven't delved into the pricing. The pricing on which you make finance available to the private sector will obviously be crucial for understanding how this is likely to affect asset prices and, indeed, then the stock prices and capital needs of banks. Can you at least give us in conceptual terms some indication of what will guide the pricing decisions here on the loans?
SECRETARY GEITHNER: All right, two basic pricing things are at issue here. One is how the price for the assets is established. And the principal -- a principal virtue of this mechanism is to use the financial interests of investors to help set the price. Because they have money at risk, they're going to make better judgments about how to set the price of these assets than the government could hope to make.
There's a second issue about the terms of the financing the government makes available, and let me just establish a basic principle there too. As you see across the range of things that the Federal Reserve has done over the past two years, one basic principle that's important is to say that you establish the pricing so that as conditions normalize, the market will no longer want to or find it economic to rely on financing from the government.
Basic principle underpin all the things the Fed has done and that's why you see in some parts of the Fed programs, the Fed balance sheet is shrinking even though we have a financial system so under acute pressure.
Yes.
Q Have you gotten any interest from the private sector in getting involved in this program?
SECRETARY GEITHNER: We have seen and I expect to see a lot of interest from the private sector.
Q Can you give us any names?
SECRETARY GEITHNER: But, you know, just to say -- just to make a point. You're going to have people -- this is true of any financial crisis -- who want the government to take on much more risk. So there are people who say that we'd like the government to take more risk or a greater share of the losses than this program identifies or anticipates. But I think you're going to see a fair amount of interest in this.
Yes.
Q Yes, on the executive pay parts of this, the plan is to have passive investors not subject to that. But what about the asset managers? Will they be subject to any pay restrictions?
SECRETARY GEITHNER: I'm going to answer this carefully. The basic answer is no. If you're already an institution that's received TARP assistance, then you would be covered by the conditions -- the range of conditions that will apply to people who receive capital from the government.
But these programs are different programs. These are generally available programs. They're designed -- like our housing plan, like the small business plan -- to get these broader markets working again. And for those reasons the comp conditions will not apply to the asset managers and investors in the program.
Q Are you concerned about a backlash from AIG in making that decision?
SECRETARY GEITHNER: No, this was a judgment that -- that broad strategy approach has been at the core of our strategy from the beginning. It was clear in the proposals the President laid out on February 4th. It underpins the subsequent comp conditions that were passed as part of recovery too, and I think there's really broad support for that judgment.
Yes.
Q Thank you. What happens if you go to all this trouble to figure out how much the FDIC is going to offer, in terms of leverage, and get all this together, have the auction, the price comes in, and the bank says, we don't like that price, we don't want to hand over?
SECRETARY GEITHNER: Well, again, you can't know for sure how much participation you're going to get, and people get a chance to sort of assess what the balance is for them. And the incentives banks face are very -- you know, right now, again, you don't really have a viable market in which to unload and sell these assets. But because you're holding on to them, it is harder for banks to generate greater confidence among their creditors and their investors; it's harder for them to raise capital privately.
So they face a balance. This will make it easier for them to raise capital privately because they'll have a cleaner balance sheet; there will be more confidence in the -- externally, people's capacity to evaluate their risk in that context. And that will help induce participation, as well.
But as I said, you know, in financial crises, people always want the government to take more risk, or try to put more of the losses on the balance sheet of the government. And we're trying to find a balance that's better for the taxpayer.
Q How long do you think it'll take to get these things up and running? I mean, it seems like there's a lot of evaluation required by the FDIC and by the banks and by the investors before you could have an auction like this.
SECRETARY GEITHNER: Well, again, the full -- all the financial agencies that are relevant to this are going to work very hard to put it in place as quickly as possible.
One of the great virtues of this is it builds off an established mechanism. The FDIC has a lot of experience in operating and running, and they're optimistic that they can move quite quickly on this front, and we think we also moved quite quickly on the securities front, as well.
I've been going left. I want to go right.
Q What happens if you sent some of the assets they sell, they sell for a low price, and then some of the banks have to write down what they have and some of the new banks become insolvent?
SECRETARY GEITHNER: Well, I don't think you should be particularly worried about that risk in the way this is designed, this program is designed. Because, just to step back a little bit and look at the bank piece of it -- again, banks have a right to sell a pool of loans to a dedicated fund which will bring in private capital with government financing for that purpose, and that helps reduce that risk again.
But again, you should think about this in the context of a broader program where the government is going to provide a facility, in the form of capital, as insurance against the risk of a deeper recession. So you should think about these as complementary things.
In any case, you're going to see the -- remember, the government is -- what we're basically saying is we will make sure that there is sufficient capital in the system for these institutions to manage through -- comfortably manage through a deeper recession. The virtue of that, of course, is that with that confidence, you're going to have a greater lending capacity in the system, reduce risk of sort of progressive cycles of deleveraging, and that'll make it more likely that you get recovery back on track more quickly.
Yes.
Q On the -- Dr. Romer was making the rounds this morning on the program on the networks. And she said that across the programs on the issue of leverage net/net, she estimated that private investors would end up putting about seven to eight cents on the dollar into the programs across all of them at the end of the day. Can you comment on that, and if so, how do you get to that number?
SECRETARY GEITHNER: Well, without looking into exactly what they said, I don't want to comment on her particular thing, so let me just do the basic objectives and design thing.
Again, dollar of capital from the Treasury alongside dollar of capital from a private investor, there's financing available from the government on top of that. For that financing to be at risk, the private investor has to lose all its equity. Okay?
Now, again, you have to look at the structure against the alternatives. And the alternative structures all involve the government taking on much more risk with much less protection against the, you know, endemic problem that governments have in this context of overpaying adverse selection, getting stuck with a range of risks they don't understand and can't manage. So that's what this is designed against. But you're --
Q Do you have a ballpark number on -- at the end of the day, rough estimate where private investors be at risk, or generally maybe --
SECRETARY GEITHNER: The key thing is their capital would be at risk. That's the key thing. So that's the important benefit in that context. So rather than having the government assume all the risk in an asset purchase scheme, you're having substantial risk borne by private investors in this context, and that -- you know, we're not doing that for their benefit. We're doing it because we think that's the most effective way to get these markets working again, to get risk premium down, borrowing costs down, in ways that leave the taxpayer less exposed.
Q But the government will be taking the majority of the risk here once the -- if you're doing one-for-one losses --
SECRETARY GEITHNER: Look, there is no doubt the government is taking risk. You cannot solve a financial crisis without the government assuming risk. The only question is, how best to do it, and what's the best way to do it; what's the way to do it where you get the incentives better and you're maximizing the impact of a marginal dollar of taxpayer assistance. And that's what this is designed to do. And I am very confident this scheme dominates all the alternatives for trying to find that balance.
Yes.
Q The FDIC obviously is very involved here. I talked to individual investors, smaller investors, over the weekend, and some of the stuff that they're worried about is exactly what's going on with the FDIC: one, that the FDIC needed to get that $100 billion credit line; two, are they going to extend the size of deposit insurance, because people are worried about should I buy a $250,000 CD if the insurance is going to expire at the end of the year; and third, what about money markets? Does that -- does the money market insurance program need to expand past April -- the end of April?
SECRETARY GEITHNER: Well, I want to step back one sec, because this is a very important issue. Americans can be fully confident that their deposits in the banking system are fully safe and protected. The FDIC has proposed -- and we are very supportive of this -- a range of different measures to give them a little greater flexibility for managing through this, including, temporarily, through a larger credit line from the government than the Treasury. And I think that's a prudent, necessary step; we're perfectly comfortable about that -- perfectly supportive of that.
Now, it's also important that the FDIC has extended their temporary guarantee program for an additional surcharge, for -- that allows banks and bank holding companies to issue debt at longer maturities. And we've made it very clear that we want to make sure that the banking system has the ability to meet its broader commitments as we go through this challenging period, because that's important to make sure that we allow -- well, it's sort of -- it's just basically central to trying to make sure that, again, there's going to be enough credit and rates come down. So those things are all very important.
Money market guarantee fund is another complement to that. And again, very important for the American people to understand, that we're going to do what's necessary to protect the system, to prevent the kind of catastrophic failure that could cause greater damage to recovery and the financial fabric of the system as we work through this challenging period.
Q It's a very tough question. I mean, one of my friends asked me, should I be thinking about pulling my money out of the money market, you know, when we get to -- when we get to the middle of April?
SECRETARY GEITHNER: Absolutely not. And you see -- again, if you look at, across the system, about the basic response of investors and depositors, I think you see a appropriate degree of confidence that those resources are safe and comfortable.
Yes.
Q Looking at this program, it seems as if you're talking about the TALF, talking about the FDIC -- all of this seems to be designed without having to ask for additional congressional appropriations. Do you anticipate a scenario in which more funding would need to be allocated and appropriated?
SECRETARY GEITHNER: We have substantial resources already provided by the Congress that we're going to put to work in support of this broad program.
In the President's budget, we put a reserve fund in the budget against the possibility that we would judge that additional resources would be required to do this on a scale that would, again, help us get out of this more quickly, at least ultimate cost to the taxpayer. And we will work with the Congress to try to make sure that there are enough resources over time to do this right.
But the judgment about, you know, what's going to be required is a judgment that we don't need to make at this time and are not prepared to make at this time.
But the basic point I want to underscore is that we have substantial resources that we're going to deploy in support of these programs now, and we will work with the Congress over time to try to make sure that we're doing this in a way that has maximum impact on trying to get recovery established more quickly than would otherwise be the case.
And again, the basic lesson -- I'm sorry, you guys, just give me one sec -- basic lesson of financial crises is that you get -- recessions are shorter, they cause less damage, you get lower future deficits, you solve the crisis at least cost to the taxpayer, if you move more forcefully earlier.
Yes.
Q Sir, you need to win back the confidence of the markets and support for your program. You also need the confidence and support from your international partners. Would you say that after Horsham, after the meeting in Horsham, you've moved closer to that goal? And have you heard anything at Horsham that you really liked and thought useful and that you should implement?
SECRETARY GEITHNER: Horsham being, for those of you that don't know, where the U.K. government hosted the last meeting of G7 finance ministers and central bank governors. Am I right, that's what you're referring to? Okay.
Well, as I said, I think you saw very broad-based support around the table in that room among the world's major economies. Those people -- countries in the room represent I think roughly 85 percent of GDP across the globe. You saw very broad support for the basic strategy that you need to have strong, sustained, macroeconomic stimulus; aggressive efforts to help recapitalize, strengthen financial systems; very substantial support for the international financial institutions so that they can -- they can help counteract, respond to this big withdrawal of capital flows from emerging market economies. We want them to be able to deploy a larger amount of resources more quickly in targeted ways to help affect the countries -- to help the countries most affected by the crisis, all in a framework where we're all committing to avoid protectionist measures and reaffirm our commitment to openness to trade and investment.
And alongside that, of course, we want to shape a strong consensus on reform of the architecture of the financial system to help make sure a crisis like this doesn't happen again. And there is very broad support, very broad consensus, across those countries -- countries with very diverse conditions, very diverse financial systems -- on the core elements of a very ambitious set of financial reforms.
So, as I said after that meeting, I think there is a very broad-based consensus, very strong support about those -- about that basic strategy. And I think you see the world really moving with us on this, and I think that will continue, because I think there's broad appreciation across the -- across the world as a whole about the scale of the challenges this crisis presents.
Q Are you saying there is support, there is agreement around American program, that there are no disagreements, the reports about disagreements were incorrect?
SECRETARY GEITHNER: Well, there are -- you know, we all have slightly different financial systems, so the precise mix of tools that we're going to employ domestically will differ. In our system, as I said, you know, banks are a critical role of our system, but we have a very complicated capital market that complements our banking system, and so to get our system through this, we're going to have to do things that other countries don't need to do.
But if you look at the core elements of the program, they all involve a mix of guarantees, funding assurances, capital from the government so you're recapitalizing parts of the system that need to be recapitalized, and where it's necessary, targeted programs. You're seeing many countries follow the lead of the United States in this context -- in the U.K., in Japan, and even other countries -- to provide direct supports for the credit markets as a complement for interventions in the banking system.
So in the precise mix of plans countries will adopt, will vary, of course, as it should, because our systems are different, but on the basic premise that you want to move aggressively, alongside fiscal stimulus to make sure financial systems are working better, there's broad support for that.
Yes.
Q On the pricing question again, sir, you've said the (inaudible) securities are the core of the problem, and moving them is --
SECRETARY GEITHNER: Loans and securities.
Q Loans and securities, critical. Can you tell us just a little bit about the lack of clarity? Is it because -- on the pricing -- is it because you haven't quite --
SECRETARY GEITHNER: You mean the features of what the exact price is?
Q Well, the --
SECRETARY GEITHNER: We're using a -- let's just step back for a sec. What we're using is a market mechanism to establish the price. So people will have to compete for the ability to take advantage of the financing program and the capital in order to do that.
So, you know, until you see that process work, you won't know where the market will clear.
Q The point is, they -- the potential investors -- can't tell how much it's going to cost them from the documents you've put out because the terms of the loans are still not --
SECRETARY GEITHNER: We're using a established framework we used for laying out all these programs, where we put out broad details of terms, people have a chance to react, those evolve so we figure out what's the best mix for the interests of the taxpayer. We're using the same basic approach.
And the mechanism here, again, on the loan side is based on an established mechanism. The FDIC has a lot of experience in operating and running auctions in these process. And I think that, you know, again, you're going to find a lot of people who will say that we'd like the government taking on more risk, or they'd like us to provide -- put more risk on the table in this context.
But I think that this is a -- you know, we're laying out enough details on broad terms that we can get this process to the point where we're operational relatively quickly.
Q Just to follow up. So what you're saying is you have enough detail in hand to do these deals on a case-by-case basis, is that it, rather than having a full set of terms that you roll out for everybody to look at all at once, is that it?
SECRETARY GEITHNER: No, we're laying out enough detail on terms that we can get to the point where we can make these operational quickly. But, you know, you have to lay out a framework so you can have a little bit of iteration and flexibility, just as -- I mean, again, just to use other models, just as the FDIC does when it runs its basic programs; just as the Fed does when it designs its basic programs; just like we did on the term asset-backed securities lending facility that was launched last week. You know, there's just a -- there has to be a bit of iteration on terms to make sure that we're getting the balance basically right.
Yes.
Q Mr. Secretary, how will you know this is working, on the loans and securities? And more importantly, how will the taxpayers know it is working? What's the metrics you've developed here or all developing?
SECRETARY GEITHNER: The best metric is to watch what happens to the capacity of people to borrow, and the price of credit and the price of these assets. That's the ultimate test.
You won't be able to fully judge from participation because the existence of these facilities will affect behavior and incentives. You know, in some sense it operates like a backstop. So you can have a backstop facility have big effects on behavior and on the basic dynamics and markets, even if there's relatively limited use. The best thing to watch, again, is what's happening to issuance of securities -- just like you saw last week with the first funding of the TALF. Look what happened -- overall issuance -- look what's happening to risk -- credit risk in markets. That will be the ultimate test.
Q Do you have a goal --
SECRETARY GEITHNER: More important than me doing a target for what happens to credit -- no. I think again, if you -- you want to look at the overall pattern of availability, credit borrowing and in some ways the price -- it'll be the best measure. And, you know, there's some markets where you've seen very substantial changes -- best example is the mortgage markets now, where interest rates have come down very dramatically, you're seeing refinancing rates really surge. But other parts of the credit markets, too, you're seeing issuance start to increase and spreads start to come down. That's the best measure.
Yes.
Q Looking at the example you give in the fact sheet -- the first program -- you start with talking about $100 in bank loans, but the private investor only has to kick in $6 for -- seems to be on the hook for $6 at the end of the day, and the FDIC guarantees between there and whatever was paid for the bad loan.
Do you think a person outside this room, outside the Beltway, looking at that would feel like that's a -- you know, you've gotten a good deal by getting someone to kick in $6 for a loan that is valued at a $100, that's being purchased for $84.
SECRETARY GEITHNER: I'm very confident you and your colleagues will do a good job of framing this thing -- (laughter) -- but let me just come back to the basic point. Okay? The point is, relative to what? What our job is, is to try to fix this problem in our financial system at least cost to the taxpayer and ways to get the incentives right so we can have private capital come in and not have the government do all of it.
And the alternative strategies would have the government either taking on all that risk ourselves, having all those losses on our balance sheet -- or, sitting back and letting this process of deleveraging continue to weigh on the American economy, pushing viable businesses closer to the edge, where they have to shrink their businesses to get through this. And that's not an alternative we're prepared to support.
The key thing is, again, that you -- people have to compete for the right to get access to financing in this context and they have to put money at risk for it to work.
Yes.
Q Can you clarify under both plans who is actually holding the assets at the end of the day, and explain to taxpayers what the upside is to all of that? How are they going to share in the upside of this program?
SECRETARY GEITHNER: These funds -- purchase assets -- they're managed by professionals who know how to do this for a living. If there is a return to these over time, which we expect there will be, taxpayers will share in that return. So taxpayers are getting to take the benefits of providing this financing to the market. Now, of course investors will share, too, in that return, as you would expect. That's the simplest way to describe it I think.
Q Mr. Secretary, can I ask you, how concerned are you that if the AIG bonus tax passes Congress that it will deter private investors from participating because they'll fear rules can be changed retroactively? And would you advise the President not to sign the legislation, should it come to his desk?
SECRETARY GEITHNER: Let me just repeat what the President said. You know, we're going to have to work through this and find the right balance.
It is very important that we do things that ensure and raise confidence in the American people that compensation practice are not rewarding failure, that taxpayers' money is not being used to reward people who should not be rewarded, and that the resources we're providing are going to benefit the overall economy and the financial system by, again, getting credit flowing again and getting interest rates down.
We need to balance that basic objective that we not reward failure against the hugely important imperative that we get the financial system doing what it needs to do for recovery. And we'll find that balance. We'll get that balance. We'll work with Congress carefully to make sure we get to a point where we have an appropriate balance. I'm very confident that we'll work through this.
Q And on this specific legislation?
SECRETARY GEITHNER: And on the specific legislation, like on any, we're going to look carefully at how this works through the Congress and try to make sure that we get this balance right.
Q And your advice to the President?
SECRETARY GEITHNER: I have advice for the President on lots of things, but I'm not going to share that with you now.
Q But just a follow-up on that, are you concerned that the private investor, seeing what's going on with AIG, with the potential to make very large returns under this program, multiples of the TALF, that there's capital appreciation, are going to be concerned that they're going to be hauled up before Congress and seen to be taking too large of a return for the risk they're taking?
SECRETARY GEITHNER: Again, the risk we face for the economy as a whole is after a period where there was just much too much risk-taking that right now the system is not going to be prepared to take enough risk to get through this. And so we have to find programs that make it possible for investors to take the risks they need that we get out of this sooner. And that will require confidence among investors that there's clearly established rules of the game consistently enforced going forward. And as I said, I'm confident we're going to work through this in a way that gets the right balance.
Nice to see you guys. Thank you very much.
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Analysis: "Geithner scores points, faces more risks"
By Jim Kuhnhenn, Associated Press Writer, March 23, 2009
WASHINGTON – The White House says it does not live or die by the ups and downs of the stock market. But others do. And on Monday, that was good for Timothy Geithner.
With credit markets frozen, a public in high dudgeon and a Congress on a populist crusade, President Barack Obama's Treasury secretary needed a bit of an uptick. He got it Monday when the Dow Jones industrial average shot up nearly 500 points after he unveiled his private-public partnership to help relieve banks of the toxic assets that have plunged the financial system into its crisis.
But Geithner still has lots to prove — to financial markets, to Congress and to Americans seething over executive bonuses and diminished 401k retirement accounts.
Unpaid back taxes cost him votes in the Senate during his confirmation. Bonuses for executives at embattled American International Group Inc. drew Republican calls for his resignation. And the Wall Street that proved so friendly on Monday could just as easily turn on him as it did last month when his broad outlines for a rescue plan landed with a thud.
No stranger to tough times, Geithner this week faces yet another test of his short Cabinet tenure.
The multitasking Geithner is not only rolling out a new relief plan for banks, he's also juggling an overhaul of the regulatory regime for the financial sector, facing a couple of potentially contentious hearings before Congress, and planning the agenda for the April 2 summit of top foreign leaders in London.
So far, so good.
"He fed the beast enough details to keep the beast happy — today, today," said Robert Litan, senior fellow for economic studies at the Brookings Institution, emphasizing the fickle nature of the stock market. "It's a very hungry beast and it's a very forgetful beast."
Last month, Obama in a televised news conference promised Geithner would unveil details of a banking rescue. When Geithner offered only a sketch of a plan in a badly reviewed speech, the markets tanked.
This time, Geithner easily spelled out details of the plan off-camera to a roomful of reporters at Treasury and granted an interview to CNBC. Then Obama placed his own stamp on the plan, making brief televised remarks at the White House with Geithner and Federal Reserve Chairman Ben Bernanke at his side.
"This is one more element that is going to be absolutely critical in getting credit flowing again," Obama said. "It's not going to happen overnight. There's still great fragility in the financial systems. But we think that we are moving in the right direction."
The rescue plan might still need a good sales pitch. The Dow's surge notwithstanding, Geithner and the administration are facing an ideological attack from the left and the right. Rep. Eric Cantor of Virginia, the second-ranking Republican leader in the House, called the plan "fundamentally flawed."
"In it's current form, Secretary Geithner's plan is a shell game that hides the true cost of the program from the taxpayers that will be asked to pay for it," Cantor said.
And liberal economist Paul Krugman, whose views as a columnist for The New York Times influence opinion in Congress, said the plan was "more than disappointing" in his Monday column. "In fact," he added, "it fills me with a sense of despair." He called for the government to take temporary control of insolvent banks. "That's what Sweden did in the early 1990s," he wrote.
The Obama administration has not hidden its disdain for Krugman's criticisms, and Geithner made his clear on Monday. "We are the United States of America," he said tartly. "We are not Sweden."
Moreover, Congress's attempts to rein in compensation for companies that receive financial aid has made some private investors wary of entering into a partnership with the federal government. Geithner will be walking that tight rope on Tuesday when he testifies before the House Financial Services Committee.
The hearing is billed as an examination of the $165 million in bonus payments made last week to employees of AIG's Financial Products division. The House last week overwhelmingly approved legislation setting a 90 percent tax on bonuses for employees of firms that receive financial aid. Over the weekend, Obama's economic team warned of possible dangers with such a targeted tax measure. Geithner, doubtless, will be asked to explain.
Sitting with Geithner at the witness table will be Bernanke and William Dudley, president and CEO of the Federal Reserve Bank of New York. The Fed, a source of AIG's federal assistance, was aware of the bonuses and concluded they were legally binding.
On Thursday, Geithner will testify before the House Financial Services Committee again, this time to unveil the administration's proposed overhaul to financial sector regulations. The administration and Congress and working on a series of fronts, including increased oversight and controls of previously unregulated markets such as hedge and private equity funds. Lawmakers and the administration also have embraced the idea of an overarching regulator, such as the Fed, that would oversee financial firms that could pose risks to the entire banking system.
Risk has become the by-word of the current financial crisis. As Geithner emphasized Monday, too much risk caused it, too little risk is perpetuating it.
And for Geithner, the risks don't seem to end.
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EDITOR'S NOTE — Jim Kuhnhenn covers economics and politics for The Associated Press.
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"Treasury Details Plan to Buy Up Troubled Assets"
By BRIAN KNOWLTON and EDMUND L. ANDREWS, NY Times, March 24, 2009
WASHINGTON — The Obama administration formally presented the latest step in its financial rescue package on Monday, an attempt to draw private investors into partnership with a new federal entity that could eventually buy up to $1 trillion in troubled assets that are weighing down banks and clogging up the credit markets.
The Dow Jones industrial average was up sharply in afternoon trading on Monday, gaining more than 270 points. When the Treasury secretary, Timothy F. Geithner, spoke on Feb. 10 of a bank rescue plan without offering much detail, investors took that as a worrying sign and the Dow fell sharply, losing 380 points.
The Treasury secretary did not deny the uncertainties inherent in the new program on Monday but defended it as a practical approach. “There is no doubt the government is taking a risk,” Mr. Geithner said, “the only question is how best to do it.”
President Obama said later that he and his economic advisers were “very confident” that the program outlined by Mr. Geithner would start to unclog the credit markets.
“It’s not going to happen overnight,” the president said after meeting with his economic team. “There’s still great fragility in the financial systems. But we think that we are moving in the right direction.”
The president also reiterated his pledge “to design the regulatory authorities that are necessary to prevent this kind of systemic crisis from happening again.”
The success or failure of the plan carries not only enormous stakes for the nation’s recovery but certain political risks for Mr. Geithner as well. At least two Republican lawmakers have called for his resignation. And on Sunday, Senator Richard C. Shelby of Alabama, the ranking Republican on the Banking Committee, told Fox News that “if he keeps going down this road, I think that he won’t last long.”
Initially, a new Public-Private Investment Program will provide financing for $500 billion in purchasing power to buy those troubled or toxic assets — which the government refers to more diplomatically as legacy assets — with the potential of expanding later to as much as $1 trillion, according to a fact sheet issued by the Treasury Department.
At the core of the financing package will be $75 billion to $100 billion in capital from the existing financial bailout known as TARP, the Troubled Assets Relief Program, along with the share provided by private investors, which the government hopes will come to 5 percent or more. By leveraging this program through the Federal Deposit Insurance Corporation and the Federal Reserve, huge amounts of bad loans can be acquired.
The private investors would be subsidized but could stand to lose their investments, while the taxpayers could share in prospective profits as the assets are eventually sold, the Treasury said. The administration said that it expected participation from pension funds, insurance companies and other long-term investors.
The plan calls for the government to put up most of the money for buying up troubled assets, and it would give private investors a clearly advantageous deal. In one program, the Treasury would match, one for one, every dollar of equity that private investors invest of their own money in each “Public Private Investment Fund.”
On top of that, the F.D.I.C. — tapping its own credit lines with the Treasury — will lend six dollars for each dollar invested by the Treasury and private investors. If the mortgage pool turns bad and runs big losses, the private investors will be able to walk away from their F.D.I.C. loans and leave the government holding the soured mortgages and the bulk of the losses.
The Treasury Department offered this example to illustrate how the program would work: A pool of bad residential mortgage loans with a face value of, say, $100 is auctioned by the F.D.I.C. Private investors submit bids. In the example, the top bidder, an investor offering $84, wins and purchases the pool. The F.D.I.C. guarantees loans for $72 of that purchase price. The Treasury then invests in half the $12 equity, using funds from the $700 billion bailout program; the private investor contributes the remaining $6.
An attractive feature of the program is that it will allow the marketplace to establish values for the assets — based, of course, on the auction mechanism that will signal what someone is willing to pay for them — and thus might ease the virtual paralysis that has surrounded those assets up to now.
For a relatively small equity exposure, the private investor thus stands to make a considerable return if prices recover. The government will make a gain as well. In the worst case, the bulk of the risk would fall on the government. The presumption, of course, is that the auction will lead to realistic purchase prices.
One institutional investor said he was surprised that the government was lending so much of the money, saying that private investors have been willing to buy up pools of mortgage-backed securities with less “leverage” or outside borrowing than the Treasury proposed on Monday.
The true magnitude of the toxic-asset purchase program could amount to well over $1 trillion. Buried in Mr. Geithner’s announcement was the detail that the Treasury would sharply revise and expand its joint venture with the Federal Reserve, known as the Term Asset-backed Secure Lending Facility, which was originally created to finance consumer lending and some forms of business lending.
Starting soon, that program will be expanded to finance investors who want to buy existing mortgages and mortgage-backed securities, including commercial real estate mortgages. By allowing the so-called TALF program to buy up older assets, as well as new loans, the Treasury and Fed will be putting nearly an additional $1 trillion on the line — on top of all the money being provided through the F.D.I.C. program and the Treasury partnership programs announced on Monday.
The department defined three basic principles underlying the overall program. First, by combining government financing, involving the F.D.I.C. and the Federal Reserve, with private sector investment, “substantial purchasing power will be created, making the most of taxpayer resources,” the fact sheet said.
Second, private investors will share both in the risk and in the potential profits, the Treasury Department said, “with the private sector investors standing to lose their entire investment in a downside scenario and the taxpayer sharing in profitable returns.”
The third principle is the use of competitive auctions to help set appropriate prices for the assets. “To reduce the likelihood that the government will overpay for these assets, private sector investors competing with one another will establish the price of the loans and securities purchased,” the department said.
By emphasizing that private investors will share in the risk, the Treasury Department seemed to be seeking to reassure ordinary taxpayers that they will not bear the entire downside burden of yet another $1 trillion program.
At the same time, administration officials strove over the weekend to reassure potential investors that they would not be subjected to the sort of pressures, criticism and public outrage that followed reports of multimillion-dollar bonuses to executives of the American International Group.
The Treasury Department defended its approach as a compromise that would avoid the dangers both of being too gradual an approach and of burdening taxpayers with the entire risk.
“Simply hoping for banks to work legacy assets off over time risks prolonging a financial crisis, as in the case of the Japanese experience,” the department said. “But if the government acts alone in directly purchasing legacy assets, taxpayers will take on all the risk of such purchases — along with the additional risk that taxpayers will overpay if government employees are setting the price for those assets.”
The plan relies on private investors to team with the government to relieve banks of assets tied to loans and mortgage-linked securities of unknown value. There have been virtually no buyers of these assets because of their uncertain risk.
But some executives at private equity firms and hedge funds, who were briefed on the plan Sunday afternoon, are anxious about the recent uproar over millions of dollars in bonus payments made to executives of the American International Group.
Some of them have told administration officials that they would participate only if the government guaranteed that it would not set compensation limits on the firms, according to people briefed on the conversations.
Mr. Geithner made it clear on Monday that no limits on executive compensation would be imposed on companies that invest — unless the companies are already subject to such limitations as recipients of TARP money — because the government does not want to discourage investor participation.
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Eric Dash and Rachel L. Swarns contributed reporting from Washington, and Andrew Ross Sorkin from New York.
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"Krugman Not Alone In Dislike of Geithner Plan"
blogs.abcnews.com/theworldnewser - March 24, 2009
Paul Krugman went against the grain yesterday. When the details of President Obama's (and Tim Geithner's) bank rescue plan were rolled out the stock market surged. A slew of big names in the industry said they liked what they saw and would be willing to jump in and buy the bad assets.
But there seemed to be a lone voice of dissent. The Nobel Prize winning New York Times columnist Paul Krugman said the plan was a really bad idea: "...the Geithner scheme would offer a one-way bet: if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt. So this isn’t really about letting markets work. It's just an indirect, disguised way to subsidize purchases of bad assets."
Today he is joined by another Nobel Prize winning economist Joseph Stiglitz. Speaking at a conference in Hong Kong, Stiglitz also took exception to the idea that taxpayers will be used to ensure that those buying these toxic assets won't loose money. "Quite frankly, this amounts to robbery of the American people. I don't think it's going to work because I think there'll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer."
And, there is no guarantee once the banks get these toxic assets off their books that they'll start lending again...what America needs to get the economy humming again.
Krugman writes there is a blue print for how America can work its way out of this banking crisis: "...there’s a time-honored procedure for dealing with the aftermath of widespread financial failure. It goes like this: the government secures confidence in the system by guaranteeing many (though not necessarily all) bank debts. At the same time, it takes temporary control of truly insolvent banks, in order to clean up their books."
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"Financial Policy Despair"
By PAUL KRUGMAN, Op-Ed Columnist, March 23, 2009
Over the weekend The Times and other newspapers reported leaked details about the Obama administration’s bank rescue plan, which is to be officially released this week. If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.
This is more than disappointing. In fact, it fills me with a sense of despair.
After all, we’ve just been through the firestorm over the A.I.G. bonuses, during which administration officials claimed that they knew nothing, couldn’t do anything, and anyway it was someone else’s fault. Meanwhile, the administration has failed to quell the public’s doubts about what banks are doing with taxpayer money.
And now Mr. Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing.
It’s as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street. And by the time Mr. Obama realizes that he needs to change course, his political capital may be gone.
Let’s talk for a moment about the economics of the situation.
Right now, our economy is being dragged down by our dysfunctional financial system, which has been crippled by huge losses on mortgage-backed securities and other assets.
As economic historians can tell you, this is an old story, not that different from dozens of similar crises over the centuries. And there’s a time-honored procedure for dealing with the aftermath of widespread financial failure. It goes like this: the government secures confidence in the system by guaranteeing many (though not necessarily all) bank debts. At the same time, it takes temporary control of truly insolvent banks, in order to clean up their books.
That’s what Sweden did in the early 1990s. It’s also what we ourselves did after the savings and loan debacle of the Reagan years. And there’s no reason we can’t do the same thing now.
But the Obama administration, like the Bush administration, apparently wants an easier way out. The common element to the Paulson and Geithner plans is the insistence that the bad assets on banks’ books are really worth much, much more than anyone is currently willing to pay for them. In fact, their true value is so high that if they were properly priced, banks wouldn’t be in trouble.
And so the plan is to use taxpayer funds to drive the prices of bad assets up to “fair” levels. Mr. Paulson proposed having the government buy the assets directly. Mr. Geithner instead proposes a complicated scheme in which the government lends money to private investors, who then use the money to buy the stuff. The idea, says Mr. Obama’s top economic adviser, is to use “the expertise of the market” to set the value of toxic assets.
But the Geithner scheme would offer a one-way bet: if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt. So this isn’t really about letting markets work. It’s just an indirect, disguised way to subsidize purchases of bad assets.
The likely cost to taxpayers aside, there’s something strange going on here. By my count, this is the third time Obama administration officials have floated a scheme that is essentially a rehash of the Paulson plan, each time adding a new set of bells and whistles and claiming that they’re doing something completely different. This is starting to look obsessive.
But the real problem with this plan is that it won’t work. Yes, troubled assets may be somewhat undervalued. But the fact is that financial executives literally bet their banks on the belief that there was no housing bubble, and the related belief that unprecedented levels of household debt were no problem. They lost that bet. And no amount of financial hocus-pocus — for that is what the Geithner plan amounts to — will change that fact.
You might say, why not try the plan and see what happens? One answer is that time is wasting: every month that we fail to come to grips with the economic crisis another 600,000 jobs are lost.
Even more important, however, is the way Mr. Obama is squandering his credibility. If this plan fails — as it almost surely will — it’s unlikely that he’ll be able to persuade Congress to come up with more funds to do what he should have done in the first place.
All is not lost: the public wants Mr. Obama to succeed, which means that he can still rescue his bank rescue plan. But time is running out.
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"Geithner plan will rob American taxpayers: Stiglitz"
By Susan Fenton and Deborah Kan, Reuters, Tuesday, March 24, 2009
HONG KONG (Reuters) - The U.S. government plan to rid banks of toxic assets will rob American taxpayers by exposing them to too much risk and is unlikely to work as long as the economy remains weak, Nobel Prize-winning economist Joseph Stiglitz said on Tuesday.
"The Geithner plan is very badly flawed," Stiglitz told Reuters in an interview during a Credit Suisse Asian Investment Conference in Hong Kong.
U.S. Treasury Secretary Timothy Geithner's plan to wipe up to US$1 trillion in bad debt off banks' balance sheets, unveiled on Monday, offered "perverse incentives," Stiglitz said.
The U.S. government is basically using the taxpayer to guarantee against downside risk on the value of these assets, while giving the upside, or potential profits, to private investors, he said.
"Quite frankly, this amounts to robbery of the American people. I don't think it's going to work because I think there'll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer."
Even if the plan clears banks of massive toxic debt, worries about the economic outlook mean banks could still be unwilling to make fresh loans, while the prospect of a higher tax burden to pay for various government stimulus plans could further undermine U.S. consumers, he said.
Some Republican lawmakers have also expressed concern over the incentives offered by the government, which could end up providing private investors with more than 90 percent of the funds to buy the troubled assets. But President Barack Obama has said the plan was critical to a U.S. economic recovery,
Stiglitz, a professor at New York's Columbia University and a former World Bank chief economist, also urged G20 leaders at their London summit next month to commit to providing greater resources to developing countries and said China should be given bigger voting rights in the International Monetary Fund.
"The voices of developing countries, and countries like China that will provide a lot of the money, are not heard."
China would be hard pushed to reach its targeted 8 percent economic growth this year, but the important thing was that at least the Chinese economy was still growing, he said.
Stiglitz welcomed China's proposal on Monday for an overhaul of the world monetary system in which Zhou Xiaochuan, governor of the People's Bank of China, said the IMF's Special Drawing Right has the potential to become a super-sovereign reserve currency [ID:nPEK184558].
Stiglitz has long called for the U.S. dollar to be replaced as the only reserve currency. Basing a reserve system on a single currency whose strength depends on confidence its own economy is not a good basis for a global system, he says.
"We may be at the beginning of a loss of confidence (in the U.S. dollar reserve system)," he said. "I think there is support for some sort of global reserve system."
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(Editing by Kim Coghill)
(susan.fenton@thomsonreuters.com; +852 2843 6367; Reuters Messaging: susan.fenton.thomsonreuters.com@reuters.net)
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"U.S. Seeks Expanded Power to Seize Firms: Goal Is to Limit Risk to Broader Economy"
By Binyamin Appelbaum and David Cho, Washington Post Staff Writers, Tuesday, March 24, 2009; A01
The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.
The government at present has the authority to seize only banks.
Giving the Treasury secretary authority over a broader range of companies would mark a significant shift from the existing model of financial regulation, which relies on independent agencies that are shielded from the political process. The Treasury secretary, a member of the president's Cabinet, would exercise the new powers in consultation with the White House, the Federal Reserve and other regulators, according to the document.
The administration plans to send legislation to Capitol Hill this week. Sources cautioned that the details, including the Treasury's role, are still in flux.
Treasury Secretary Timothy F. Geithner is set to argue for the new powers at a hearing today on Capitol Hill about the furor over bonuses paid to executives at American International Group, which the government has propped up with about $180 billion in federal aid. Administration officials have said that the proposed authority would have allowed them to seize AIG last fall and wind down its operations at less cost to taxpayers.
The administration's proposal contains two pieces. First, it would empower a government agency to take on the new role of systemic risk regulator with broad oversight of any and all financial firms whose failure could disrupt the broader economy. The Federal Reserve is widely considered to be the leading candidate for this assignment. But some critics warn that this could conflict with the Fed's other responsibilities, particularly its control over monetary policy.
The government also would assume the authority to seize such firms if they totter toward failure.
Besides seizing a company outright, the document states, the Treasury Secretary could use a range of tools to prevent its collapse, such as guaranteeing losses, buying assets or taking a partial ownership stake. Such authority also would allow the government to break contracts, such as the agreements to pay $165 million in bonuses to employees of AIG's most troubled unit.
The Treasury secretary could act only after consulting with the president and getting a recommendation from two-thirds of the Federal Reserve Board, according to the plan.
Geithner plans to lay out the administration's broader strategy for overhauling financial regulation at another hearing on Thursday.
The authority to seize non-bank financial firms has emerged as a priority for the administration after the failure of investment house Lehman Brothers, which was not a traditional bank, and the troubled rescue of AIG.
"We're very late in doing this, but we've got to move quickly to try and do this because, again, it's a necessary thing for any government to have a broader range of tools for dealing with these kinds of things, so you can protect the economy from the kind of risks posed by institutions that get to the point where they're systemic," Geithner said last night at a forum held by the Wall Street Journal.
The powers would parallel the government's existing authority over banks, which are exercised by banking regulatory agencies in conjunction with the Federal Deposit Insurance Corp. Geithner has cited that structure as the model for the government's plans.
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"Afghan plan adds 4,000 US troops: Obama to include hundreds of civilian advisers"
By Farah Stockman and Bryan Bender, Boston Globe Staff, March 27, 2009
WASHINGTON - President Obama plans today to unveil his long-awaited new strategy for Afghanistan, which calls for sending as many as 4,000 more troops to train and advise the Afghan military along with hundreds more civilian advisers to help the Afghan government.
The reinforcements - aimed at beating back a Taliban resurgence in the country and preventing Al Qaeda from reestablishing a launching pad for terrorist strikes - are in addition to the 17,000 combat troops Obama already announced he would deploy this spring. They would bring the total number of US forces in the country to nearly 60,000; there are another 32,000 NATO troops.
Obama's decision to send additional US troops has drawn praise from many in Congress, who worried that the mission there suffered from neglect since 2003, as troops and resources flowed to Iraq, though some are wary. Last year, with 155 US military deaths in Afghanistan, was the bloodiest for US forces since the war began in 2001.
Senator John F. Kerry, chairman of the Foreign Relations Committee, applauded the renewed focus on Afghanistan but expressed concern yesterday that the new strategy should set out limited, realistic goals, and not be an open-ended commitment for more troops and more money.
"I want to hear with clarity what . . . the mission is," Kerry said. "Because there just have to be some limits."
Obama's plan will also expand a controversial program that sends social scientists to counsel the military on local customs and support counterinsurgency operations, two senior military officials said yesterday.
The expansion of the so-called "human terrain teams," which hire cultural anthropologists and other academics to help in the war effort, is likely to bring a mixed reaction. Anthropologists have protested that cooperation with military operations violates their code of ethics, and some analysts say the program has limited value, since it has trouble finding academics with deep knowledge of Afghanistan's languages and culture.
"There are not enough Afghan experts in the entire United States to staff more than one or two human terrain teams, which have been the Achilles' heel of the program from the start," said Chris Mason, a former State Department specialist on Afghanistan who is now a senior fellow at the Center for Advanced Defense Studies in Washington.
But military officials say the social scientist teams - which will increase from six to at least nine - are part of a "civilian surge" that will build up necessary institutions in the country and help the fledgling central government extend its authority to rural Taliban strongholds.
Secretary of State Hillary Rodham Clinton told reporters in Mexico yesterday that Obama is proposing "an integrated military-civilian strategy," and that the effective use of civilian trainers, aid workers, technical assistance is critical to success. It was not clear last night how many civilian advisers Obama will propose.
Yesterday, Obama's nominee for ambassador to Afghanistan - Lieutenant General Karl Eikenberry, a Harvard-educated military official who has served two tours in Afghanistan - appeared to set the stage for Obama's announcement, telling the Senate Foreign Relations Committee that additional US military trainers were badly needed to bolster the Afghan army.
He said the White House supported the Afghan government's goal to expand its army to 120,000 troops by next year. "This will be contingent on our ability to deliver a sufficient number of trainers," said Eikenberry, who said it has been evident since 2006 that "more energy was needed for the Afghan national army."
Although he did not specifically mention the terrain teams, he also said that Afghanistan needs more US civilian advisers to help Afghans tackle corruption and instill the rule of law. "Without real progress on these issues, success will be very difficult to achieve," he said.
Eikenberry said the Obama administration is also trying to beef up coordination with neighboring Pakistan to reduce safe havens for the Taliban and Al Qaeda, who strike at Afghanistan across a lawless border.
The State Department has already held a rare, trilateral meeting in Washington with top Pakistani and Afghan officials, and will hold another meeting in May aimed at intelligence cooperation, he said at his confirmation hearing.
Obama, who briefed congressional leaders in person and Afghan President Hamid Karzai and Pakistani President Asif Ali Zardari by phone late yesterday, was also expected to included increased humanitarian aid to Pakistan in his new strategy.
For more than a year, Kerry and Vice President Joseph Biden, the Foreign Relations Committee's former chairman, have sought to dramatically increase development aid to Pakistan, contingent on its government increasing its fight against militants. Yesterday Kerry said he would reintroduce the measure in a bill that would triple humanitarian aid to $1.5 billion a year - a move that officials said the White House supports.
Obama's plan is expected to include benchmarks that Afghanistan must meet to justify the increased troop levels and funding, the New York Times reported - a move that echoes the Bush administration's attempts to get Iraq to live up to specific goals during the darkest days of insurgency there.
Some analysts, however, said Obama's plan appears to rely too much on building up a strong central government, almost unknown in the country's history.
Mason, the former State Department official, said a bottom-up strategy focusing on alliances with local tribes would be more effective. He advocates deploying US troops in each of Afghanistan's 200 troubled districts, where they could interact with and protect people, rather than keep them in big military bases.
"When the history of this war is taught at West Point, the first thing the professor will say is: 'The enemy was present in the rural villages and districts 24 hours a day, seven days a week, 365 days a year, and we weren't."
But military officials say they have worked hard in recent years to come up with creative programs that can win the population's trust, crucial to any effective counterinsurgency strategy.
The human terrain program has become a cornerstone of that effort.
A Pentagon study completed this month recommended that the Joint Chiefs of Staff increase the number of such advisers across the military "by factors of three to five," along with a large expansion of cultural training for members of the military.
But the program has suffered setbacks since its inception in 2006. Three team members have been killed, one has been charged with espionage, and another pleaded guilty to manslaughter for killing a man who set his colleague on fire.
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Material from wire services was used in this report.
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Analysis: "New war strategy requires outside help"
By ROBERT BURNS, Associated Press Writer Robert Burns, Associated Press Writer, news.yahoo.com - ap, March 27, 2009
WASHINGTON – The success of President Barack Obama's new war strategy depends heavily on factors beyond his control: Afghan competence, Pakistani cooperation and a greater willingness by Europeans and other allies to adopt the American view that al-Qaida is at the core of the conflict.
Each of those has been missing or, at best, has fallen short despite years of U.S. pushing and prodding.
That is why, after more than seven years of inconclusive combat, hundreds of American deaths, billions in financial aid and incomplete efforts to build self-sustaining Afghan security forces, Obama saw a need Friday to retool strategy, clarify U.S. war aims and seek more help from NATO and other partners.
There are important factors that Obama does control, and these are central to prospects for prevailing. The extra troops he is ordering to Afghanistan in combat and advisory roles can make a difference, as can additional U.S. civilian specialists to help Afghanistan build governing competence.
But even those U.S. approaches have risks and limitations, as Obama made clear in explaining why he must overcome skepticism in Congress about spending billions of dollars more on State Department and foreign assistance programs.
"Make no mistake, our efforts will fail in Afghanistan and Pakistan if we don't invest in their future," he said.
As he deepened the U.S. commitment — declaring the war crucial to protecting Americans against a repeat of the 9/11 attacks — Obama set the country on a path that is likely to require far more help from the rest of the world than it took for President George W. Bush to turn around the war in Iraq.
The new strategy starts in Afghanistan.
Obama said a vital ingredient in his formula for success will be reconciliation among at least some adversaries within the country. However, leaders of the radical Taliban movement want to regain control of the nation they ruled from the mid-1990s until the U.S. invasion in the weeks following the Sept 11, 2001, attacks. And efforts by the Afghan government to reconcile with some elements have thus far failed.
Obama said he has "no illusions that this will be easy," and he acknowledged there is an "uncompromising core" of the Taliban that is beyond reconciliation and must be defeated militarily.
The Afghan government itself is part of the problem. Rife with corruption and unable to extend its authority beyond the capital, Kabul, the government has failed to instill confidence in its ability to provide basic services in much of the country. That has given the Taliban room to increase its influence.
Obama tied the prospects for success in Afghanistan to rooting out al-Qaida terrorists in neighboring Pakistan, which has become a haven for the group. He described al-Qaida as "a cancer that risks killing Pakistan from within." But to the Pakistanis, a more worrying threat has been its powerful neighbor and nuclear rival, India, with whom the Pakistanis have fought three wars over the past 60 years.
In Afghanistan, the Bush administration pleaded for years with NATO allies to provide more troops for combat and for training Afghan forces. The increases it got were modest, leaving an unmet need that U.S. commanders have cited in explaining why the Taliban has remained resilient and Afghan forces have developed slowly.
In his remarks Friday, Obama appealed to NATO to accept "a shared responsibility to act." And he said he would take that message to Europe next week for meetings with NATO and European Union leaders.
A fundamental disconnect between Washington and its European allies has been the nature of the extremist threat and the role of military force in addressing it.
The Europeans have been reluctant to accept the U.S. view — held in common by Obama and Bush — that al-Qaida is a threat to the existence of democratic societies. And the Europeans see political, economic and humanitarian aid as more important than military intervention in achieving stability in Afghanistan and Pakistan.
That is why Afghanistan has increasingly become an American war — and why Obama sees a need to change that. "This is not simply an American problem; far from it," he said. "It is, instead, an international security challenge of the highest order."
And it is why people like Sen. Richard Lugar, a leading voice on foreign affairs, worry about the growing U.S. role.
"We are unlikely to succeed if military and political efforts in that country trend toward greater U.S. domination," he said Friday.
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EDITOR'S NOTE — Robert Burns has covered national security affairs for The Associated Press since 1990.
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John Moore/Getty ImagesA US Marine on patrol listened to a radio message in a bazaar in Delaram, Afghanistan. (John Moore/Getty Images)
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"Afghan war to take years, Obama declares: Sets plan to defeat Taliban, Al Qaeda"
By Bryan Bender and Farah Stockman, Boston Globe Staff, March 28, 2009
WASHINGTON - President Obama warned the American people yesterday to prepare for years of war in Afghanistan, and he unveiled a new strategy that will send more military trainers, civilian advisers, and foreign aid to combat the growing threat from terrorists in the region.
Obama sought backing to "take the fight to the Taliban," strengthen the Afghan and Pakistani security forces, and build durable local institutions, saying the campaign that began after the Sept. 11, 2001, attacks in the United States by Al Qaeda terrorists has been shortchanged by the war in Iraq.
"I don't ask for this support lightly," Obama said, his national security team behind him on stage. "These are challenging times. Resources are stretched. But the American people must understand that this is a down payment on our own future."
For the first time in his presidency, Obama publicly named Al Qaeda's top leaders - Osama bin Laden and Ayman al-Zawahiri, who are believed to be hiding in the lawless border region - to make his case.
"Let me be clear: Al Qaeda and its allies - the terrorists who planned and supported the 9/11 attacks - are in Pakistan and Afghanistan," he said in an address that sometimes echoed the dire language of his predecessor, George W. Bush. "Multiple intelligence estimates have warned that Al Qaeda is actively planning attacks on the United States homeland from its safe haven in Pakistan. And if the Afghan government falls to the Taliban - or allows Al Qaeda to go unchallenged - that country will again be a base for terrorists who want to kill as many of our people as they possibly can."
The president did not set a timetable for the US mission. His plan, the product of a two-month review, specifically calls for 4,000 US military trainers, on top of the 17,000 additional combat troops he approved last month. That would bring the US force to nearly 60,000, the most ever, and more than will be left in Iraq after the withdrawal of most combat troops by August 2010. The reinforcements will confront a growing Taliban insurgency and train Afghan forces to protect the local population.
He said hundreds of additional civilians will also be dispatched to "help the Afghan government serve its people and develop an economy that isn't dominated by illicit drugs," a primary source of income for the Taliban and Al Qaeda.
The plan also calls for $1.5 billion a year in additional aid for the next five years for the government of Pakistan, which has failed to crack down on the Taliban and its allies. Obama insisted, however, that the assistance will be contingent on Pakistan demonstrating "its commitment to rooting out Al Qaeda and the violent extremists."
As if to underscore Pakistan's challenge, the strategy was unveiled hours after a Taliban suicide bomber killed dozens of worshipers at a mosque in Peshawar, near the Afghan border.
Husain Haqqani, Pakistan's ambassador to Washington, called the new strategy an "extraordinarily positive sign," while President Hamid Karzai of Afghanistan watched the speech and said "he was extremely gratified by it," Richard Holbrooke, Obama's special envoy to the region, relayed to reporters.
Obama's plan also drew bipartisan praise in Congress. "Victory there is imperative, and President Obama and our troops on the ground in Afghanistan have my full support," said Senator John Cornyn, a Texas Republican.
Sarah Chayes, who runs a farming cooperative in southern Afghanistan and advises General David McKiernan, the commander of US and NATO forces, said in an e-mail that she, too, was relieved by the new emphasis. "There has been a lot of pressure on President Obama from a lot of quarters to think small," she said by e-mail. "But thinking small is exactly what happened to Afghanistan since 2002, and the result has been vastly expanded sanctuaries for extremists."
Others welcomed the focus on building up Afghan institutions at the local level over the central government in Kabul, which is considered corrupt and weak.
"Tip O'Neill famously said, 'All politics is local,' " said Peter Mansoor, a retired Army colonel who now teaches military history at Ohio State University. "That is probably truer of Afghanistan than any place on earth. What happens at the local level matters much more to the Afghan people than what happens in Kabul. They want something better in their lives and so far the Afghan government hasn't shown them anything."
Still, support for more US military forces is far from universal. "I certainly support the president keeping the American people safe from Al Qaeda," said Representative James McGovern, a Worcester Democrat. "But I have deep concerns. I get this sinking feeling that we are getting sucked into a war without end."
James Dobbins, Bush's envoy to Afghanistan in the wake of the US invasion in 2001, said Obama's strategy was largely a continuation of Bush's in recent years. "I think that the administration would like to present this as a significant departure from the Bush administration," he said. "I tend to think that is largely an effort of rebranding."
And others expressed little confidence the plan would change the situation in Pakistan. "US interests are far greater in Pakistan than they are in Afghanistan, [but] the effort that we are going to undertake in Afghanistan greatly overshadows the effort we're going to take in Pakistan," said Andrew Bacevich, a Boston University professor and former Army officer."
But Obama and his top aides sought yesterday to allay those concerns by insisting that the new strategy will be carefully measured against key "benchmarks" to gauge success - including progress toward the goal of a 134,000-member Afghan army by 2011.
"We will set clear metrics to measure progress and hold ourselves accountable," Obama pledged.
Bruce Riedel, a top Obama adviser who helped lead the strategic review, told reporters that the benchmarks are still being laid out, but said they are likely to include lowering the number of attacks on civilians and military casualties. Nearly 700 US troops have died in Afghanistan since 2001, while nearly 20 other nations have suffered casualties.
Obama said he will appeal for support for his strategy overseas, beginning in Europe next week. "As America does more, we will ask others to join us in doing their part," he said, citing the United Nations and NATO, which has 32,000 troops in Afghanistan. He also called on the UN to set up a "contact group" to coordinate efforts among Afghanistan, Pakistan, Russia, Iran, China, India, and other regional players.
A Taliban spokesman, reacting to the president's speech, told the Al Jazeera television network that Obama is repeating the mistakes of the Soviet Union, which lost 15,000 soldiers when it tried to occupy Afghanistan in the 1980s. "If more troops were going to win the war, then the Russians would have won the war," the spokesman was quoted as saying.
But in soaring rhetoric, Obama insisted the United States is up to the challenge. "The United States of America stands for peace and security, justice and opportunity," he said. "That is who we are, and that is what history calls on us to do once more."
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Boston Globe correspondent Jillian Jorgensen contributed to this report.
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"'We will defeat you'"
The Boston Globe Online, March 28, 2009
Excerpts of President Obama's speech:
"The situation is increasingly perilous. It's been more than seven years since the Taliban was removed from power, yet war rages on, and insurgents control parts of Afghanistan and Pakistan . . . . Many people in the United States - and many in partner countries that have sacrificed so much - have a simple question: What is our purpose in Afghanistan? After so many years, they ask, why do our men and women still fight and die there? And they deserve a straightforward answer. . . .
"So I want the American people to understand that we have a clear and focused goal: to disrupt, dismantle, and defeat Al Qaeda in Pakistan and Afghanistan, and to prevent their return to either country in the future. That is the goal that must be achieved. That is a cause that could not be more just. And to the terrorists who oppose us, my message is the same: We will defeat you. . . .
"I remind everybody, the United States of America did not choose to fight a war in Afghanistan. Nearly 3,000 of our people were killed on September 11, 2001, for doing nothing more than going about their daily lives. Al Qaeda and its allies have since killed thousands of people in many countries. . . .
"So understand, the road ahead will be long and there will be difficult days ahead. But we will seek lasting partnerships with Afghanistan and Pakistan that promise a new day for their people. And we will use all elements of our national power to defeat Al Qaeda, and to defend America, our allies, and all who seek a better future."
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"The Price of Realism: President Obama's plan for Afghanistan and Pakistan is ambitious and expensive. It is also hard-headed."
The Washington Post, Editorial, Saturday, March 28, 2009; A12
THE STRATEGY for Afghanistan and Pakistan announced by President Obama yesterday is conservative as well as bold. It is conservative because Mr. Obama chose to embrace many of the recommendations of U.S. military commanders and the Bush administration, based on the hard lessons of seven years of war. Yet it is bold -- and politically brave -- because, at a time of economic crisis and war-weariness at home, Mr. Obama is ordering not just a major increase in U.S. troops, but also an ambitious effort at nation-building in both Afghanistan and Pakistan. He is right to do it.
Few Americans would dispute Mr. Obama's description yesterday of the continuing threat from Afghanistan and Pakistan's tribal areas. "Multiple intelligence estimates have warned that al-Qaeda is actively planning attacks on the U.S. homeland from its safe haven in Pakistan," he said. "And if the Afghan government falls to the Taliban -- or allows al-Qaeda to go unchallenged -- that country will again be a base for terrorists who want to kill as many of our people as they possibly can." The goal he stated was similarly simple and clear: "to disrupt, dismantle and defeat al-Qaeda in Pakistan and Afghanistan, and to prevent their return to either country in the future."
What distinguishes the president's plan -- and opens him to criticism from some liberals as well as conservatives -- is its recognition that U.S. goals cannot be achieved without a major effort to strengthen the economies and political institutions of Pakistan and Afghanistan. The Bush administration tried to combat the al-Qaeda threat with limited numbers of U.S. and NATO troops, targeted strikes against militants, and broad, mostly ineffective, aid programs. It provided large sums of money to the Pakistani army, with few strings attached, in the hope that action would be taken against terrorist camps near the Afghan border. The strategy failed: The Taliban has only grown stronger, and both the Afghan and Pakistani governments are dangerously weak.
The lesson is that only a strategy that aims at protecting and winning over the populations where the enemy operates, and at strengthening the armies, judiciaries, and police and political institutions of Afghanistan, can reverse the momentum of the war and, eventually, allow a safe and honorable exit for U.S. and NATO troops. This means more soldiers, more civilian experts and much higher costs in the short term: Mr. Obama has approved a total of 21,000 more U.S. troops and several hundred additional civilians for Afghanistan, and yesterday he endorsed two pieces of legislation that would provide Pakistan with billions of dollars in nonmilitary aid as well as trade incentives for investment in the border areas. More is likely to be needed: U.S. commanders in Afghanistan hope to obtain another brigade of troops and a division headquarters in 2010, and to double the Afghan army again after the expansion now underway is completed in 2011. Mr. Obama should support those plans.
Such initiatives are not the product of starry-eyed idealism or an attempt to convert either country into "the 51st state" but of a realistic appreciation of what has worked -- and failed -- during the past seven years. As Mr. Obama put it, "It's far cheaper to train a policeman to secure his or her own village or to help a farmer seed a crop than it is to send our troops to fight tour after tour of duty with no transition to Afghan responsibility." That effort will be expensive and will require years of steadiness. But it offers the best chance for minimizing the threat of Islamic jihadism -- to this country and to the world.
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"Obama pumps up his policy, regulatory agenda"
By Jim Kuhnhenn, Associated Press Writer, March 28, 2009
WASHINGTON --President Barack Obama and congressional Democrats are stepping through an economic minefield and sowing the ground with unprecedented initiatives that capitalize on the recession to rein in Wall Street and broaden government's reach.
Nothing better illustrated this watershed than the bustle and scope of the past few days.
Obama's treasury secretary, Timothy Geithner, touched off a Wall Street rally with a long-awaited plan to help rid banks of their toxic assets. Geithner rolled out a comprehensive overhaul of financial regulations in hopes of avoiding another meltdown. Congressional Democrats worked to put their own imprint on a budget full of ambition but saddled with deficits.
In each case, the policies showed a pumped up role for government: leveraging money from the private sector, taking over troubled institutions, better governing ever-expanding financial markets, and promising greater influence over health care, energy and education.
Just as government proved it could flex its muscle, it also showed where it could wilt.
After days of fuming over bonuses paid by insurer American International Group Inc., Obama and members of Congress checked their tantrums and moved on. The House and Senate budgets embraced Obama's policy priorities, but lawmakers delayed difficult decisions on how to pay for them.
The flurry coincided with and was partly motivated by Obama's first overseas trip, which starts with a stop in London for an economic summit Thursday of 20 major and developing nations. There are wide differences between the U.S. and Europe over how to prime economies. Also, China has suggested replacing the dollar with a new global currency.
"We're kind of at a critical point," says former Rep. Mickey Edwards, an Oklahoma Republican and Princeton University lecturer.
"Proposals that are being made are to have the U.S. government much more involved in financial and business decision making," Edwards said. "Whether it's leading up to the G-20 and saying how do we reassure the rest of the world of our leadership, or how do we have a regulatory system that works with what the world looks like now -- it's a big moment."
Obama's heaviest lifting came last week as he worked to save his domestic priorities and accommodate deficit-conscious Democrats while also standing squarely behind Geithner's bank rescue and financial regulation plans.
In the face of withering criticism from Republicans, who say his budget borrows, spends and taxes too much, Obama has used the economic crisis to justify his long-term fiscal blueprint, even though his own forecasts envision the country out of the recession by 2011.
"This budget is inseparable from this recovery, because it is what lays the foundation for a secure and lasting prosperity," he said during his prime-time press conference Tuesday.
Sen. Judd Gregg, the top Republican on the Senate Budget Committee, used his party's weekly radio address Saturday to slam Obama's grand spending plans. "We believe you create prosperity by having an affordable government that pursues its responsibilities without excessive costs, taxes or debt." said Gregg, R-N.H.
House and Senate budget writers trimmed some of Obama's spending proposals, cut his budget outlook from 10 years to five years, and refused to endorse administration plans for fees on greenhouse gas emissions and limits on tax deductions for wealthier earners. Still, they at least gave a symbolic endorsement of Obama's call to begin an overhaul of health care, reduce dependence on foreign oil and confront global climate change, leaving the politically crunching details for later.
The Democrats' budget plans also jettisoned $250 billion in spending that Obama had included in his budget as a placeholder for future bank rescues.
Geithner signaled the possibility of seeking more money when he spelled out a public-private partnership designed to leverage up to $1 trillion in purchases of such assets. But the request does not appear imminent. "We will work with the Congress to try to make sure that there are enough resources over time to do this right," he said.
The asset-purchase plan is certainly risky and could mean billions in losses for taxpayers. But it could rescue the banks and make money for both the government and the private investors down the road. That, at least, is Geithner's bet. And the stock market was, for the moment, betting with him. The Dow Jones industrial average shot up nearly 500 points the day of his announcement.
Covered in the afterglow, Geithner rolled out proposed rules for the financial sector, restructuring what many believe is a corroded regulatory framework dating back to the days of Franklin D. Roosevelt.
Geithner called for an entity that could seize large failing institutions, much like the Federal Deposit Insurance Corp. can take over banks. His plan also would set up an overarching authority to monitor Wall Street risk-taking and oversee markets that have operated in the shadows, such as hedge funds and exotic financial products.
As with the budget, the administration is capitalizing on the financial crisis to push for robust new rules. "We have a moment of opportunity now," Geithner said, "and we don't want to waste this opportunity."
Rob Shapiro, a former economic adviser to President Bill Clinton, said the question for the administration is how far it can push the sense of urgency before the public, and by extension Congress, becomes wary of the cost and perceives government intervention as intrusion.
"The hardest problem that they face, and consequently the country," said Shapiro, of NDN, a think tank formerly known as the New Democratic Network, "is the separation between what might be economically necessary and what is politically acceptable."
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On the Net:
G-20: http://www.g20.org/
White House: http://www.whitehouse.gov/
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"Overhaul Targets Money Market: Plan Also Limits Hedge Funds"
By Elizabeth Razzi, Special to The Washington Post, Sunday, March 29, 2009; G01
The broad regulatory overhaul outlined by Treasury Secretary Timothy F. Geithner last week is aimed at restoring confidence in the financial system, reducing the chances that people unknowingly invest in high-risk securities and boosting investors' protections from scam artists like Bernard L. Madoff. The effectiveness of the measures will probably depend on their final wording after Congress, regulators and the industry get through hashing out the details.
For individual investors, a few features are discernible based on the details released so far.
Money-market mutual funds are likely to be better protected against runs and panics.
Hedge funds will become cats with bells around their necks, much less likely to hide in, say, a too-big-to-fail insurance company called AIG.
The investment advisers and broker-dealers who handle your money are probably in for more scrutiny and tougher enforcement.
Money-market funds, in particular, were highlighted in the plan Geithner outlined last week. Investors have traditionally seen money-market funds as safe places to park cash, with a higher return than an insured bank account, without having to lock up the money for a long time. If you put in a dollar, you could always withdraw your dollar.
But when Lehman Brothers went into bankruptcy in September, the ripple effects caused one large money-market fund, Reserve Primary Fund, to "break the buck," meaning its net asset value dipped below one dollar a share and investors would lose some of their principal.
That sparked a run on money-market funds. "All of a sudden, there was risk where people had assumed risk not to exist," said Liz Ann Sonders, chief investment analyst for Charles Schwab.
The Treasury Department squelched the run by announcing a temporary guaranty program to cover money that people already had on deposit with money-market funds. More than 1,900 funds have chosen to participate in the Treasury's voluntary program.
The run may have been stopped, but the underlying risk still hasn't been addressed. The Treasury's protection covers only money that was already on deposit as of Sept. 19, 2008, and the program is set to expire on April 30. A Treasury spokesman said the department is considering an extension through Sept. 18.
Although money-market funds are already regulated by the Securities and Exchange Commission, Geithner has proposed that those regulations be strengthened to reduce the credit and liquidity risk of the funds.
The industry itself is advocating changes that would boost the liquidity and credit of money-market funds. Earlier this month, the Investment Company Institute's money-market working group recommended boosting funds' liquidity -- their ability to turn assets into cash -- by requiring that at least 5 percent of a fund's net assets be held in securities that can be tapped within one day, and that at least 20 percent of its net assets could be turned into cash within seven days. The group also advocated new measures to analyze the real credit risks of new investments held by money-market funds.
Some analysts expressed concern about the uncertainties involved with the government launching far-reaching "new rules of the road," as Geithner called his proposals.
Regulatory overreach is a concern, said Schwab's Sonders. "History is littered with post-crisis regulations," she said. "If there are undue restrictions on the operations of businesses, they may view it to be their job to get around them, and you sow the seeds of the next crisis."
But perhaps a regime of simpler and better-enforced rules would help coax investors back into investing some of the cash they have stockpiled on the sidelines. The stock market's rally over the past three weeks has tempted some money back into stocks, but investors' crisis of confidence has not yet lifted, Sonders said.
"It's better than it was last fall, but is it fully repaired? No," she said, "not even close. There's a fear factor in this environment that truly is unprecedented, because the land mines appear to be everywhere."
Michael Herbst, a mutual fund analyst with the Morningstar investment research company, said the industry could benefit from greater transparency regarding riskier financial instruments such as derivatives and credit-default swaps.
"It would enable the individual investor and adviser to make better-informed decisions," he said.
But he warned that overhauling the rules is not without risk. "If the government appears too heavy-handed or uninformed, they could actually spook investors worse."
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"Obama, Bankers Sit Face to Face: President Urges More Lending"
By Binyamin Appelbaum and Michael A. Fletcher, Washington Post Staff Writers, Saturday, March 28, 2009; D01
Lend more. Spend less.
That was President Obama's message yesterday during a meeting at the White House with the chief executives of the nation's largest banks. The president told the bankers he understood their critical role in renewed economic growth, and was committed to returning the industry to long-term health.
At the same time, Obama said the executives needed to understand and acknowledge the public's anger over the financial crisis and the massive paydays that have continued long after the industry went on the public dole.
"Excess is out of fashion," Obama said, according to participants in the gathering.
The president held himself up as an example, saying that he had not yet renovated the Oval Office and was still using George W. Bush's furniture, even noting the stains on the carpet. He urged the banks to show comparable "constraint and responsibility," adding that the nation had undergone a cultural shift.
The bankers, a roll call of industry titans including the heads of Bank of America, Citigroup and J.P. Morgan Chase, arrived with their own message: The government's steady support is a critical prerequisite for increased lending. The administration, they said, needs to provide more steadiness and support.
Several of the executives, each of whom had a chance to address the president, also offered specific accounts of their efforts to increase lending.
The meeting comes as the administration tries to craft a working relationship with an industry that is key to the nation's economic stability, while at the same time channeling a wave of public anger.
Just more than a week has passed since the outcry over bonuses to employees of American International Group led the president to call the payments an "outrage," and the House to pass a bill that would essentially seize through taxation the bulk of any bonus paid by a financial firm taking federal aid.
Obama has since tempered his rhetoric, and the Senate has slowed the legislation. Both moves are a response to warnings that hitting the banks would only hurt the economy.
Yesterday, Obama made this point explicitly, casting himself as a bulwark between an angry Congress and the banks who was seeking to push the industry toward necessary changes while shielding it from the consequences of populist rage.
"The president emphasized that Wall Street needs Main Street and that Main Street needs Wall Street," said White House press secretary Robert Gibbs.
"I think the president made a clean break with the rhetoric of last week," said Michael Paese of the Securities Industry and Financial Markets Association. Paese was one of several trade group representatives at the meeting.
The bankers also expressed optimism as they left the White House. "We look forward to working with the administration," said James Rohr, the chief executive of PNC, in a statement that summarized the public remarks of the others.
This account is based on the recollections and notes of several people who attended the meeting and who spoke on condition of anonymity because the session was private.
President Obama began by speaking about his concern for the continuing fragility of the financial system and his desire to find long-term solutions so that renewed lending could spark economic growth. He also said that systemic risks had been overlooked during the boom, and that there was a need for corrective action, a reference to the administration's blueprint for regulatory reform.
Treasury Secretary Timothy F. Geithner presented Congress earlier this week with an outline of the administration's financial regulatory plans. The issue is expected to be a major topic when the president meets next week in London with leaders of the world's largest industrial nations.
During the meeting yesterday, the president also returned several times to the need for the banks to behave modestly.
Obama at one point cast the issue through the eyes of "a single mom trying to make a mortgage payment," watching banks that get aid spending money on bonuses, and feeling what he described as justifiable anger. He added that such anger could derail the administration's efforts to help banks through programs designed to clear away troubled assets and provide new capital at public expense.
The president, however, spent most of the meeting listening. There were 13 executives seated with Obama, and he called on each in turn, beginning with Jamie Dimon, the chief executive of J.P. Morgan Chase.
Dimon told the president that banks had made mistakes: excessive lending, inadequate underwriting and paying some employees too much. He said, however, that the word "bank" had become an unfair shorthand for the wide variety of financial institutions that engaged in problematic behavior, including mortgage brokers, insurance companies and money-market mutual funds. He also expressed broad support for the administration's regulatory reform agenda.
Dimon was the first of several chief executives to tell the president that his bank has increased its lending.
The chief executive of Wells Fargo, John Stumpf, spoke of increased mortgage lending in recent months, which he described as a boon to the economy.
Richard Davis, the chief executive of U.S. Bancorp, told the president that his company was placing a particular emphasis on maintaining loans and lines of credit to longtime customers, particularly small businesses, even in cases in which the bank's risk models called for curtailing or ending those relationships.
Obama responded by encouraging all of the banks to maintain their relationships with existing customers, particularly small businesses. He told the banks that he was reading a lot of letters from smaller employers whose access to credit had been cut.
All of the banks at yesterday's meeting have received infusions of taxpayer money, and several of the executives told the president they were eager to repay those investments. The president said he would welcome repayments, but only if doing so would not curtail the banks' ability to make loans.
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"FDIC chief tells UMass audience she sees glimmer of hope amid economic chaos"
By MICHAEL McAULIFFE, mmcauliffe@repub.com, The Republican Newsroom, Friday, March 27, 2009, 10:22 P.M.
AMHERST - Sheila C. Bair, chairwoman of the Federal Deposit Insurance Corp., came home Friday, telling an audience at the University of Massachusetts at Amherst that while "there's still a lot of pain to go," she sees progress in the nation's fight to regain economic health.
"I see some glimmers of hope. I'm cautiously optimistic. The banks seem to be getting on better footing," Bair told an overflow audience in the Flavin Family Auditorium at the university's Isenberg School of Management.
Bair, who has been on leave from her post as an Isenberg professor since joining the FDIC in 2006, spoke for 30 minutes before taking questions. Afterward, a reception for her was held at the school.
Bair's appearance was open to the public, and the 220 seat auditorium was filled. People lined the walls and spilled out into the lobby, eager to hear the woman Forbes magazine last July ranked as the second most powerful woman in the world behind German Chancellor Angela Merkel.
"Taxpayers are right to be complaining loudly, and it's an unacceptable situation," Bair said of the current economic crisis.
Much current taxpayer ire stems from the conduct of insurance giant American International Group Inc., which received billions in bailout funds while executives took millions in bonuses.
Bair said Friday she believes an agency is needed with the authority to take over non-bank giants like AIG, as the FDIC does when a bank fails, and decide which employees stay and which go.
"We only have it for banks," Bair said, adding that the FDIC is a large agency with the expertise to handle such a task.
Bair also said the financial crisis "has gone far beyond where even I thought it would take us."
Bair, one of the first people to warn about the coming subprime lending crisis, said there were more than two million home foreclosures last year, with foreclosures "still rising this year."
On Monday, the Obama administration announced a plan to take over up to $1 trillion in toxic securities through a coordinated effort of the Treasury Department, Federal Reserve and FDIC. The plan relies on government and private money to help banks rid their balance sheets of real-estate-related securities that are extremely difficult to value.
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REUTERS
"Geithner won't say if more bailout money needed"
By Glenn Somerville, Sunday, March 29, 2009
WASHINGTON, March 29 (Reuters) - U.S. Treasury Secretary Timothy Geithner said on Sunday the government will have about $135 billion left after banks give back some bailout money and declined to say whether he will ask Congress for more.
Treasury expects the banks this year to return about $25 billion of money that they received from the government, because they were able to replace it with private capital or decided that they do not want money with strings attached.
"We have roughly $135 billion left of uncommitted resources. The rest is out the door," Geithner said on ABC-TV's "This Week with George Stephanopoulos" program. That means some $565 billion out of $700 billion approved by lawmakers last October already has been deployed and Geithner said banks still need help.
"A core part of our plan involves making sure banks have enough capital to provide the lending we're going to need to get recovery back on track," he said, adding that banks need to take risks and need to be in sound condition to do so.
"Some banks are going to need large amounts of assistance and we're going to make sure that assistance comes with conditions designed to make sure they restructure, provide accountability for management and ensure that these institutions are cleaner and stronger going forward."
SOME RETURN MONEY
A few banks, unhappy at limits on executive pay and other government scrutiny that has accompanied the bailout money, have said they intend to return the money to the Treasury.
Geithner said his estimate of funds remaining in the Troubled Asset Relief Program, or TARP, included "a very conservative judgment about how much money is likely to come back from banks that are strong enough not to need this capital now to get through a recession."
On NBC television's "Meet the Press" program, Geithner said it was essential the government step in to ensure that banks clean up their balance sheets, as it is doing so by promoting the establishment of public-private partnerships to rid banks of soured assets.
That program is supposed to take $500 billion of bad loans and assets off bank balance sheets, in the process attracting private capital into the bank-rescue effort and inducing banks to resume lending.
"We have two choices: we can leave it as it is, hope banks will earn their way out of this process over time, and I am certain that will create the risk of a deeper, longer recession," Geithner said.
On the ABC program, Geithner would not specify whether he expects to ask Congress for more money this year, though he did not rule it out.
A BRIDGE TO CROSS
"We have substantial resources, we're going to use them quickly, as carefully as we can ... to get credit flowing again and we'll cross that bridge when we come to it in terms of whether we'll need additional resources," he said.
Asked about aid for struggling U.S. auto companies, Geithner indicated it was coming provided that the automakers are ready to take tough measures to make sure they can make a competitive product for the long haul.
"That's going to require a lot of restructuring, and we're prepared as a government to help that process if we believe it's going to provide the basis for a stronger industry in the future," Geithner said.
President Barack Obama, on CBS television's "Face the Nation," said General Motors and Chrysler are "not quite there yet" with the restructuring progress needed to obtain more federal bailout money. Sacrifices are required from auto industry management, labor unions, shareholders, creditors, suppliers and dealers, he said.
In an acknowledgment of anger at bonuses that companies like insurer American International Group (AIG.N: Quote, Profile, Research, Stock Buzz) paid out while getting bailout money, Obama also said financial industry chieftains need to show some restraint if they want help.
"It's very difficult for me as president to call on the American people to make sacrifices to help shore up the financial system if there's no sense of mutual obligation and mutual help," he said.
Geithner was making a one-day trip to Colombia on Sunday to speak to the annual meeting of the Inter-American Development Bank, adding his voice to calls for institutions such as the International Monetary Fund to help counter the impact on emerging economies of the global financial downturn.
He will travel to London with Obama to attend a one-day session on Thursday of the Group of 20 rich and emerging-market countries where a commitment for increased funding for the IMF is widely seen as likely to be agreed.
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(Editing by Maureen Bavdek and Steve Orlofsky)
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"Obama’s big government in bed with big business"
By Jonah Goldberg, Sunday, March 29, 2009, www.bostonherald.com, Op-Ed
Maybe we have it all backwards.
Here’s the basic story President Obama wants to tell. The last eight years were an economic disaster because President Bush and the Republicans ignored necessary government regulations and “investments.” The economic crisis has discredited “market fundamentalism,” as some liberals call it. Now, thanks to Bush’s hands-off approach to the economy, Obama has no choice but to get government much more involved. “To kick these problems down the road for another four years or eight years,” Obama sighs, “would be to continue the same irresponsibility that led us to this point.”
Indeed, Obama doesn’t feel compelled to merely remedy the mistakes of his predecessor; he believes it is vital that we renew the New Deal-style economic policies we strayed from when Ronald Reagan was elected. Not only must we pour vast sums of money into highways and mass transit, along with social insurance programs, we need to “reset” the relationship between government and big business. Just this week, the administration announced that it wants new powers to control not just banks, but other financial institutions and businesses that are “too big to fail.”
What if they’re looking at the economy through the wrong end of the telescope? For starters, Bush was hardly a laissez-faire president who ignored Obama’s oft-stated domestic priorities. Sure, Bush was more laissez-faire than Obama. But that’s not a very high bar.
Education spending under Bush rose 58 percent faster than inflation. Medicare spending, thanks largely to Bush’s prescription drug benefit (the largest expansion in entitlements since the Great Society), went up 51 percent during the Bush years. Spending on health research and regulation rose 55 percent. Spending on highways and mass transit went up by 22 percent.
Maybe that’s too little in Obama’s eyes, but it hardly validates Obama’s fictions about the last eight years. Let us also recall that Bush’s Wall Street bailout efforts were largely indistinguishable from Obama’s. Indeed, Obama’s treasury secretary, Timothy Geithner, was the co-pilot for Bush’s treasury secretary, Hank Paulson. Now that Geithner’s in the captain’s chair, there haven’t been many course corrections.
But perhaps the bigger picture is backwards as well.
After all, the bigger the business, the more reliable the partner for big government.
That’s why any huge corporation that plays ball on health care, or “green jobs,” or countless other initiatives, is hailed as a “forward-thinking” or “progressive” company. Companies such as GE, which stands to make billions from Obama’s energy proposals, are vital sidekicks in the new era of public-private partnerships. Why is Obama working tirelessly to save Detroit automakers? Because GM is a wonderful poster boy for peddling nationalized health care and UAW is an indispensable cog in the Democratic Party.
Would Barney Frank rather work with one giant Fannie Mae that will always take his phone calls and do his bidding, or a thousand smaller firms that would need to be herded like cats? I think we already know the answer.
Everyone agrees that we are spending trillions of dollars on firms “too big too fail.” Many of these firms got so big because politicians in both parties liked to have important businessmen take their phone calls, do their bidding and fund their campaigns. And maybe, just maybe, the lesson from the financial crisis isn’t to get big business and big government even more involved with each other, but to finally bust the trust between them.
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Article URL: www.bostonherald.com/news/opinion/op_ed/view.bg?articleid=1161814
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"U.S. to Join U.N. Human Rights Council, Reversing Bush Policy"
By Colum Lynch, Washington Post Staff Writer, Tuesday, March 31, 2009; 4:15 PM
UNITED NATIONS, March 31 -- The Obama administration decided Tuesday to join the U.N. Human Rights Council, reversing a decision by the Bush administration to shun the United Nations' premier rights body to protest the influence of repressive states, according to U.N. diplomats and rights activists.
The United States will participate in elections in May for one of three seats on the 47-member council, joining a slate that includes Belgium, Norway and New Zealand. New Zealand has offered to step aside to allow the United States to run unchallenged, according to a U.S. official.
Human rights activists have been advocating U.S. membership in the council since its creation in March 2006. The United States is expected to announce its plan to join later Tuesday.
"This is a welcome step that gives the United States and other defenders of human rights a fighting chance to make the institution more effective," said a human rights advocate familiar with the decision. "I think everybody is just desperate to have the United States and Barack Obama run for the human rights council, and countries are willing to bend over backward to make that happen."
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"Congress votes on budget alternatives"
By David Espo and Andrew Taylor, Associated Press Writers, April 2, 2009
WASHINGTON --Congressional Democrats cast aside budget alternatives backed by conservatives and liberals alike on Thursday, a prelude to House and Senate passage of spending blueprints drawn to President Barack Obama's specifications.
The country wants "real change, and we have come here to make a difference," House Speaker Nancy Pelosi, D-Calif., said as both chambers worked on plans to boost spending on domestic programs, raise taxes on the wealthy in two years' time and clear the way for action later in the year on Obama's priority items of health care, energy and education.
Republicans in both houses accused Democrats of drafting plans that would hurt the recession-ravaged economy in the long run, rather than help it, and saddle future generations with too much debt.
"The administration's budget simply taxes too much, spends too much and borrows too much at a moment when we can least afford it," said the Senate Republican leader, Mitch McConnell of Kentucky.
Despite the rhetoric, there was no suspense as lawmakers engaged in an annual budget ritual destined to end in approval of the blueprints drafted by Obama's supporters and supported by the White House.
In the House, that meant voting first on doomed alternatives drafted by progressives, the Congressional Black Caucus, Republicans and a splinter group of conservatives. In the Senate, it meant a day of sifting through nonbinding proposals often meant to score political points.
The House plan called for spending $3.6 trillion in the budget year that begins Oct. 1, according to the Congressional Budget Office, compared with $3.5 trillion for the Senate version and $3.6 trillion for Obama's original plan.
The House plan envisioned a deficit of $1.2 trillion for 2010, falling to a projected $598 billion after five years. The comparable Senate estimates were $1.2 trillion in 2010 and $508 billion in 2014.
Obama's budget would leave a deficit of $749 billion in five years' time, according to congressional estimates -- too high for his Democratic allies.
To reduce the red ink, Democrats reduced Obama's proposed spending, ignored his call for another $250 billion in bailout money for the financial industry and assumed that his signature tax cuts of $400 for individuals and $800 for couples would expire in 2011.
The day's events capped a busy three months for the Democratic-controlled Congress that took office in January.
Moving with unusual speed, lawmakers have enacted a $787 billion economic stimulus measure, cleared the way for release of $350 billion in financial industry bailout funds, approved an expansion of children's health care and sent Obama legislation setting aside more than 2 million acres in nine states as protected wilderness.
While they represented victories for the administration, the budgets merely cleared the way for work later in the year on key presidential priorities -- expansion and overhaul of the nation's health care system, creation of a new energy policy and sweeping changes in education.
Major battles lie ahead, particularly over health care and energy. And while Obama made a series of specific proposals to fund his initiatives, congressional budget-writers avoided taking a position on his recommended curtailing of Medicare spending, for example, or imposing hundreds of billions of dollars in new costs on the nation's polluters.
The budget plans do not require Obama's signature, but the House and Senate will have to reconcile the two versions before they can move onto the next phase of Obama's agenda.
"We are not that far apart," said Rep. John Spratt, the South Carolina Democrat who chairs the House Budget Committee.
One difference, seemingly arcane, involved the ground rules to cover work later in the year on health care.
The House budget provides for a "fast-track" procedure that would bar Senate Republicans from attempting to filibuster the legislation Obama wants to remake the nation's health care system. Republicans have warned that the prospects for bipartisanship will all but vanish if majority Democrats attempt to muzzle them.
In a long day of debate in the House, Democratic liberals and Republican conservatives took turns Thursday presenting lost-cause alternatives that reflected varying priorities.
The Progressive Caucus advanced a plan to spend hundreds of billions more on domestic programs than Obama, while cutting back on his defense budget. It failed, 348-84.
Next came a proposal from the conservative Republican Study Conference that would have cut Obama's domestic spending proposals, and reduced taxes. It was defeated, 322-111.
The Congressional Black Caucus proposed immediately repealing Bush-era tax cuts for wealthy taxpayers, while adding a new tax on couples making over $1 million. It called for greater spending on domestic programs,including education, transportation and job training. It fell, 318-113.
House Republicans presented a comprehensive alternative, including a provision to eliminate the current government-run Medicare program for anyone currently under age 55. Upon turning 65, their Medicare coverage would come from plans operated by private insurance companies. Their costs would be paid at least in part with government funds.
The same proposal would have cut deeply into Obama's recommended spending levels for domestic programs such as education, parks and transportation, while cutting a variety of taxes and making sure that Bush-era tax cuts on the wealthy remained in existence.
Republicans said their alternative would have spent $4.8 trillion less than Obama's budget over 10 years, with significantly lower deficits.
Senate Republicans decided not to produce a comprehensive alternative budget, although Sen. John McCain, R-Ariz., and others advanced one that would have retained Bush-era tax cuts, spent more on defense, and curbed spending on Medicare and other programs. It failed, 60-38, on a near-party line vote.
Republicans also worked to limit Democratic options later in the year. They put the Senate on record against using fast-track rules to implement Obama's energy policy, which they said would impose a new energy tax of hundreds of millions of dollars.
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"Obama turns to survey researcher for census post"
By Hope Yen, Associated Press Writer, April 2, 2009
WASHINGTON --President Barack Obama on Thursday selected Robert M. Groves to be the next census director, turning to a survey researcher who has clashed with Republicans over the use of statistical sampling to lead the high-stakes head count.
The White House announced Obama's intention to nominate Groves, a former Census Bureau associate director of statistical design from 1990-92. If confirmed by the Senate, Groves will take the helm less than a year before the census, which has been beset by partisan bickering and will be used to apportion House seats and allocate billions in federal dollars.
Groves, 60, has spent decades researching ways to improve survey response rates, helping design surveys for agencies from the U.S. Bureau of Justice Statistics to the EPA and National Institutes of Health.
"The decennial census faces significant challenges, but I am confident that Robert's leadership will help us meet those challenges," said Commerce Secretary Gary Locke. "He is a respected social scientist who will run the Census Bureau with integrity and independence."
House Republicans expressed dismay over the selection of Groves, saying he raised serious questions about Obama's political intentions.
"We will have to watch closely to ensure the 2010 census is conducted without attempting ... statistical sleight of hand," said House Republican Leader John Boehner, R-Ohio.
When he was the bureau's associate director, Groves was among several officials who recommended the 1990 census be statistically adjusted to make up for an undercount of roughly 5 million people, many of them minorities in dense urban areas who tend to vote for Democrats.
But in a fierce political dispute that prompted White House staff to call advisers to the bureau and express opposition, the Census Bureau was overruled by Republican Commerce Secretary Robert Mosbacher, who called the proposed statistical adjustment "political tampering."
The Supreme Court later ruled in 1999 that federal law barred the use of statistical sampling to apportion House seats. Justices, however, indicated that adjustments could be made to the population count when redrawing congressional boundaries.
Locke has made clear that sampling will not be used for apportionment. He stated during his confirmation hearing that there are no plans to use sampling for redistricting, while indicating that sampling could be used to measure census accuracy or collect a wider range of demographic data.
Census experts have said it would be difficult at this point to make plans for sampling in the 2010 census for congressional redistricting purposes since the count is only a year away. It is more likely that Groves could have an impact on statistical methods as part of long-term planning for census surveys after 2010.
Groves, a professor at the University of Michigan, would take over at a critical time. Census officials acknowledge that tens of millions of residents in dense urban areas -- about 14 percent of the U.S. population -- are at high risk of being missed because of language problems and a deepening economic crisis that has displaced homeowners.
The government is devoting up to $250 million of the $1 billion in stimulus money for outreach, particularly for traditionally hard-to-count minorities.
But Hispanics, blacks and other groups are warning that traditional census outreach will not be enough, citing in particular rising anti-immigration sentiment after the Sept. 11, 2001 terror attacks.
Arturo Vargas, executive director of the National Association of Latino Elected and Appointed Officials, praised Groves as a well-regarded academic, calling the question of statistical adjustment in the 2010 census a "non-issue" because there are no plans for it.
Rep. William Lacy Clay, D-Mo., who chairs a House subcommittee on the census, said Groves will be a strong and effective manager for the bureau. "I look forward to working closely with him to reduce the undercount of minorities," said Clay, speaking also on behalf of the Congressional Black Caucus.
Republicans have been crying foul after the White House earlier this year indicated that it would take greater control over the census to address minority group concerns about Obama's initial nomination of GOP Sen. Judd Gregg as Commerce secretary.
Gregg later withdrew his nomination, partly citing disagreements over handling of the census. The White House has since made clear that Locke will make the final decisions regarding the 2010 head count.
Democrats and Republicans for years have disagreed on whether the census should be based on a strict head count or cross-checked against a "statistical adjustment" to include hard-to-track people, particularly minorities, who might have been missed.
Meanwhile, the cost of the 2010 census is estimated to be $15 billion, the most expensive ever, and experts have long said the Census Bureau must do more to reduce a persistent undercount among minorities, as well as to modernize what is basically a paper mailing operation that has been in place for decades.
On the Net:
Census Bureau: www.census.gov
Commerce Department: www.commerce.gov/
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"Analysis: But will it work?"
By Martin Crutsinger, AP Economics Writer, April 2, 2009
WASHINGTON --Will it all work? World leaders achieved the minimum at their London summit, cobbling together more resources for the International Monetary Fund and pledging to better regulate unruly financial markets. But no country would budge from its bottom line, so the biggest goals were not met.
Global markets cheered anyway, happy that the Group of 20 leaders were able to demonstrate unity in the midst of the worst financial crisis in decades.
In the end, the ability of President Barack Obama and the other leaders to paper over their differences may turn out to be the biggest achievement of all.
Despite some tough talk going into the meetings, including a threatened walkout by French President Nicolas Sarkozy if things didn't go his way, the leaders emerged with a show of common purpose.
Their final communique even contained a pleasant surprise in the form of a tidy $1.1 trillion pledged to help make sure emerging economies like those in Eastern Europe and Latin America can tap into sufficient resources at the International Monetary Fund to withstand the current turbulence.
That pile of money was easier to obtain because it won't force the United States or other countries to increase their deficits to supply the additional resources to the IMF. Instead, much of the increased support will come in the form of loans the major countries will agree to provide to the IMF if the agency needs more firepower.
The leaders also pledged to fill in the current gaps in financial regulation that have been laid bare by the troubles that began in subprime mortgage lending in the United States but have now spread to other types of loans not only in the U.S. but around the world.
Obama stood firm against a determined push from Sarkozy and German President Angela Merkel for creation of a global regulator to attack what the Europeans see as a U.S. brand of unfettered capitalism that brought the global economy to its knees.
In the end the U.S. argument prevailed. Instead of the more powerful global regulator, the summit called for better coordination among individual country regulators and increased transparency to provide more oversight of the so-called shadow banking system of hedge funds and other lightly regulated financial entities.
The approach adopted by the G-20 closely follows the outlines of a regulatory overhaul that U.S. Treasury Secretary Timothy Geithner unveiled last week.
Many economists believe this approach offers the best chance of repairing the flaws in the current system quickly, avoiding a long, drawn-out fight over creation of an all-powerful global overseer.
"I think the fact that the G-20 did not go for a global regulator was the right decision," said Morris Goldstein, a former top official at the IMF and now an analyst with the Peterson Institute for International Economics in Washington. "The key agreement they did achieve was to declare that any systemically important institution, such as hedge funds, will be regulated."
The G-20 empowered a renamed and expanded Financial Stability Board -- which will now include all the member countries in the G-20 -- to provide guidance and expertise in the regulatory overhaul effort. This group, formerly called the Financial Stability Forum, was created after the 1997-98 Asian currency crisis to provide a way for countries to discuss financial regulatory issues.
The G-20 also pledged an immediate effort to crack down on offshore tax havens, a loophole in the current global regulatory system that costs the United States and other nations billions of dollars in lost tax revenue each year. These offshore finance centers are also the home for many hedge fund operations.
But that effort's success could depend heavily on whether the major economies can bring enough pressure on countries such as Monaco and the Grand Cayman Islands.
Obama and his colleagues made all the right pledges to fight political pressure at home to raise protectionist barriers to protect domestic industries. The G-20 made the same pledge at their first leaders' summit last November in Washington. But since that time, 17 of the nations at that meeting, including the United States, have moved to protect domestic industries in the current downturn.
Even with that failure of will, analysts said, the problems would be much worse if there wasn't a G-20 process at work to keep nations from pursing the disastrous policies that turned the stock market crash of 1929 into the Great Depression of the 1930s.
"The main benefit of the G-20 is that it demonstrates that world leaders are working together and have a high level of commitment to quelling the crisis," said Mark Zandi, chief economist at Moody's Economy.com.
"They have taken a lesson from the Great Depression when countries didn't work together and that caused the whole system to crumble," Zandi said. "No one wants to see that happen again."
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EDITOR'S NOTE -- Martin Crutsinger has covered the economy for The Associated Press for 25 years.
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The Boston Globe Online - Editorial: "Short Fuse" - April 5, 2009
"Obama: the sagacity of 'note'"
President Obama's exercise in conflict resolution at the recent G-20 summit in London revealed to world leaders the skills he mastered as an author and editor. French President Nicolas Sarkozy had angered China's President Hu Jintao by insisting that the summit's concluding communiqué name and shame unregulated tax havens - including China's in Hong Kong and Macao. Obama took each leader aside separately and persuaded them to accept a single word change in the communiqué. So instead of "recognizing" a list of naughty tax havens, the communiqué merely "notes" that list. Now the world may note what happens when a Harvard Law Review editor and graceful author is head of state.
"Republicans: Credibility up in smoke"
House Republican leader John Boehner's press office gleefully sent around copies of an Associated Press story Wednesday that tweaked President Obama for breaking a campaign promise. At a September campaign stop in New Hampshire, Obama pledged that "Under my plan, no family making less than $250,000 a year will see any form of tax increase." But aha! Obama signed a bill to expand the children's health insurance program known as S-Chip, and it includes a 62-cent increase in the cigarette tax, which took effect April 1. Never mind that Obama almost always made clear he was speaking about his income tax plan. More to the point, 40 Republican House members voted to expand the S-Chip program, tax increase and all. Will Boehner be sending out a press release on them?
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Sandra Henriquez would oversee public housing units in the nation.
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"Obama taps Boston housing chief: Henriquez is credited with integrating units"
By Donovan Slack, Boston Globe Staff, April 14, 2009
President Obama has chosen a key Menino administration official to be an assistant secretary at the US Department of Housing and Urban Development.
Sandra B. Henriquez, the head of the Boston Housing Authority, is Obama's choice to be assistant secretary for Public and Indian Housing, according to a White House press release Friday.
"Our success in rebuilding America and laying the groundwork for a safer, more prosperous future depends in no small part on the talent, expertise, and dedication of public servants like these men and women," Obama said in the statement, which included other nominations. "I am confident that each of them will meet and exceed the high standard that the American people expect and deserve."
Henriquez, who has been BHA administrator since 1996, declined to comment yesterday, and her spokeswoman, Lydia Agro, said Henri quez would not be speaking publicly about the appointment until confirmed by the US Senate.
A HUD spokeswoman said a confirmation hearing has not been scheduled.
Mayor Thomas M. Menino said in a statement yesterday that Henriquez will be "sorely missed by all of us in Boston, but I wish her success with the Obama administration."
The mayor said that during her tenure, Henriquez pushed through public housing improvements worth $1 billion. And he said that public housing occupancy under Henriquez reached 97 percent and that federal assessors gave good grades to the physical condition of the housing units.
"Sandi has been an incredible and passionate advocate for affordable public housing, and I congratulate her on being nominated by President Obama for this wonderful opportunity," Menino said.
"We've been very fortunate to have her as BHA administrator for so long."
Henriquez's departure comes as Menino is preparing a potential reelection bid and leaves a large agency without a proven leader.
Menino spokeswoman Dot Joyce said a successor has not been identified.
Aside from the physical improvements to Boston's 54 public housing developments, Henriquez is credited with overseeing the transformation of the city's public housing agency from a civic embarrassment because of racial problems to a national model for addressing civil rights issues. Housing developments in South Boston and Charlestown were integrated, and racial incidents there decreased by 90 percent during Henriquez's tenure.
"She has been a star in the housing community within the Menino administration," Darnell Williams, president of the Urban League of Eastern Massachusetts, said yesterday. "He's going to have a tough act to fill her shoes."
In 2005, Henriquez told the Globe for a story about race relations that she believed the agency had "turned a corner in terms of our professionalism and responsiveness" to racial issues. She credited intensive staff training, tenant outreach, and a tough eviction policy.
Henriquez, who is African-American, also said she measured the progress by her own experience. In the late 1970s, Henriquez would visit the virtually all-white developments in South Boston and Charlestown only between 10 a.m. and 2 p.m., "and I generally didn't walk around unless I was escorted."
"Now, I walk everywhere," she told the Globe. "I don't have the same worries I had before."
City Councilor Rob Consalvo, chairman of the council's housing committee for the past two years, said yesterday Henriquez has been extraordinary to work with.
"No matter what the issue was, big or small, she was responsive," Consalvo said. "She returned phone calls, and she always worked with us to get the job done."
As assistant secretary for Public and Indian Housing, Henriquez would oversee HUD's public housing program, which assists about 3,000 public housing agencies that provide housing and housing-related aid to low-income families across the nation.
She also would oversee HUD's Native Hawaiian and Native American programs, which serve 562 federally recognized tribes.
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Slack can be reached at dslack@globe.com.
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A Reader's Comment - On 4/14/2009, "wtf021" wrote:
We are laying off teachers, cops and fireman yet ILLEGAL ALIENS get to live in public housing on our dime. And the person responsible for this is getting a promotion? Is it just me or is there something wrong with this picture. I think it is time to start over with our systems of government at all levels (local, state and federal).
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A BOSTON GLOBE EDITORIAL
"Cuba, sÃ! Embargo, no!"
April 15, 2009
AMERICA'S policy of trying to quarantine Cuba is the useless vestige of a vanished era. That policy never achieved its Cold War aims of hastening democratic change in Cuba and isolating the Castro regime, and in the two decades since the fall of the Berlin Wall it succeeded only in making the United States look foolish to Latin America and the rest of the world. So when President Obama lifted the ban on travel to the island by Cuban-Americans with family there and loosened restrictions on telecommunications providers, the move came as a belated adjustment to historical change.
Monday's ending of travel and spending prohibitions is justifiable on humanitarian, economic, and political grounds. The new policy can lighten the burden of poverty and restricted information for the population in Cuba. Americans with family in Cuba will no longer be hindered from visiting relatives on the island for as long and as often as they like. US telecommunications firms such as AT&T and Verizon will have a chance to compete for business in Cuba, bringing cellphone and Internet service, and satellite radio and TV.
However, Obama's policy change will be meaningful only if it foreshadows complete abolition of the trade embargo against Cuba and elimination of the ban on travel there for all US citizens. If the political objective of Cuba policy is to enable Cubans to see, hear, say, and write whatever they like, then the sooner the old Cold War barriers between them and the United States are brought down, the better.
Today, Cuba's 42,000 hotel rooms are occupied mostly by Canadians, Europeans, Asians, and visitors from other countries in Latin America. Once travel to Cuba becomes legal for all Americans, there will be an influx of US tourists. There will then be a boom not only in the tourist industry but in airline flights between the two countries.
In such a boom, economic activity would ramify throughout the island. US firms would be able to sell their products to a public that is already drawn to US brands. Eventually, this opening to Cuba is bound to result in grass-roots pressure for less state control of the economy, more access to unfiltered information, and a turn toward political pluralism.
If there was any doubt that the Cuban leadership is ready to accept an opening to America and Americans, it should have been put to rest by Fidel Castro, who wrote in a recent newspaper column that dialogue with the United States "is the only way to achieve friendship and peace between peoples." If the aging Cuban revolutionary is ready for a new relationship with the United States, only political inertia can stand in the way of a long-overdue reconciliation.
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Economy
"Obama Highlights Tax Breaks"
By Michael D. Shear, The Washington Post (Online), April 15, 2009
President Obama marked Tax Day 2009 with a White House event aimed at highlighting the tax breaks included in the stimulus bill and countering conservatives who launched nationwide tea parties to complain about taxes and rising government spending.
While a few hundred protestors dumped tea bags in Lafayette Square outside the White House, Obama presented nine taxpayers he said were better off financially because of his efforts.
"We have passed a broad and sweeping tax cut for 95 percent of American workers," Obama told reporters in the Old Executive Office building. "This tax cut was a core focus of my campaign, it was a core component of the American Recovery and Reinvestment Act, and it is the most progressive tax cut in American history. And starting April 1st, Americans saw this tax cut in the extra money that they took home with each paycheck."
In documents released to reporters, Obama touted 10 tax cuts that Americans are receiving as part of the government's overall effort to spur growth and consumer spending. Chief among those, he said, is a tax credit appearing now in people's pay checks and a first-time homebuyers tax credit.
He called the pay check tax cut "the most progressive tax cut in American history" and said it would help create a half-million jobs.
"For too long, we've seen taxes used as a wedge to scare people into supporting policies that increased the burden on working people instead of helping them live their dreams," he said. "That has to change."
The message from conservatives was very different, attacking Obama and Democrats in Congress for spending too much and failing to cut the tax burdens enough for most people.
In a statement issued just before Obama started talking, several conservative activists said that a "soaring tax and spend burden will cripple American taxpayers, stagnate the economy for years and stifle any real long term economic growth and stability."
The statement was signed by former attorney general Edwin Meese, Tony Perkins of the Family Research Council and Grover Glenn Norquist, President of Americans for Tax Reform, among others.
"There is no justification for the countless billions that citizens will have to pony up this tax season to fund liberalism's reckless abuse of the federal treasury," the statement said. "At exactly the time when working families could use a break, the Obama regime and the
liberal Democrats in Washington and state capitals are burdening them into a future of even more onerous tax days."
At his event, Obama presented taxpayers he said exemplify the benefits of the proposals he has made.
They included Chris and Guenna Wright of Marietta, Pa., a claims examiner at an insurance company who is married to a general manager at a Pottery Barn Kids outlet. White House aides said the couple qualify for the make work pay tax credit.
He also presented Clark Harrison of Preston, Md., a first-time home buyer who received an $8,000 home-buyers tax credit, and Alan Dale Givens of Manassas, Va., who the White House said is receiving thousands of dollars in tax incentives and tax credits.
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"The Small-Business Myth: The facts about who would pay proposed tax increases"
The Washington Post (Online), Editorial, Sunday, April 12, 2009; A16
SMALL BUSINESS is the cute puppy of American tax policy, along with its related breed, the family farm. Invoke small business, and the inevitable response is the policymaking equivalent of awwww, how sweet. Suggest that a proposed change might hurt small business, and you might as well be advocating torturing puppies. Now we like a cute puppy as well as the next editorial board, and we're all for small business, too. But the problem with the way this argument is deployed is that the facts often do not support the claims of harm.
Just recently, the small-business boogeyman came up in the debate over the estate tax -- specifically, whether it is unfair to impose a tax on estates in excess of $7 million per couple (the level this year) or whether the first $10 million of every estate should be exempt from taxation. Predictably, the advocates of the $10 million proposal, Sens. Jon Kyl (R-Ariz.) and Blanche Lincoln (D-Ark.), raised the small business/family farm canard. "Many have relatively low profit margins and are considered 'wealthy' by the government only because they own expensive equipment or land," they wrote in a letter to The Post.
In fact, nearly all small-business and family-farm estates are already shielded from having to pay estate tax. If the estate tax were kept at its current level, as President Obama advocates, only 430 business or farm estates would owe any tax whatsoever in 2011, according to an estimate by the Brookings Institution-Urban Institute Tax Policy Center. Moreover, it's not true that these estates would be forced to liquidate to come up with enough money to pay the estate tax. At current levels, 13 family farms and 41 family-owned businesses would not have had enough liquid assets to satisfy estate taxes in 2005, according to a study by the Congressional Budget Office. Even these would probably not have to be sold on account of a tax hit, because payments can be spread over a 14-year period.
The impact on small business is also deployed to argue against letting the Bush tax cuts for upper-income taxpayers expire. The Bush Treasury Department said that 7 percent of taxpayers with small-business income would be affected by a change in the top two tax rates; the Obama administration says that the correct number is 2 percent -- and that even this figure may overstate the number of what are generally considered small businesses, because it includes high-income partners in law firms, investment banks and the like.
Opponents of raising top marginal tax rates argue that this small slice of taxpayers is nonetheless responsible for generating a disproportionate share of small-business income -- about a quarter of the total, according to the Tax Policy Center -- and that higher rates would discourage entrepreneurship. As much as that seems like a matter of common sense, the evidence is far from clear. A 2006 study by Donald Bruce and Mohammed Mohsin found that "the top income tax rate has no economically significant effect" on entrepreneurship and that "it would take a 50-percentage-point cut in the top income tax rate to generate a one-percentage-point change in entrepreneurial activity." By that measure, the increase of three to five percentage points proposed by Mr. Obama hardly seems like a small-business job killer.
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"Professor Picked for Indian Affairs"
Associated Press, Saturday, April 11, 2009; The Washington Post (Online) - A05
A Native American who served as the attorney general of Idaho was nominated yesterday to become the head of the Bureau of Indian Affairs.
President Obama nominated Larry EchoHawk, a law professor at Brigham Young University in Utah and a member of the Pawnee tribe, to the post. As well as being a former attorney general, EchoHawk ran for Idaho governor in 1994, losing to Republican Phil Batt by fewer than 35,000 votes. Had he been elected, he would have been the nation's first Native American governor.
He became the first American Indian elected to a constitutional statewide office when he assumed the post of attorney general in the early 1990s, the White House said.
The embattled bureau has been without a leader since the resignation of Carl Artman last year. Artman took the post in 2007, and before that it had been vacant for two years.
The agency, which manages 66 million acres of land and oversees American Indian schools and other programs, and its parent, the Interior Department, have been embroiled in a lawsuit over trust land since 1996. The suit claims that Native Americans have been swindled out of billions of dollars in oil, gas, timber and other royalties since 1887.
Obama nominated Yvette Roubideaux last month as director of the Indian Health Service, part of the Department of Health and Human Services.
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"Hopeful cities, towns find limits on stimulus cash"
By Steve Leblanc, Associated Press Writer, Friday, April 17, 2009
BOSTON – Some town leaders say the federal stimulus package, with its promise of creating jobs, is neglecting to invest in the cornerstones of community life, from new city halls to recreation centers.
There's some money to hire police officers, but no money to rebuild the stations they work in. The opposite's true for firefighters. No money to hire more, but at least some funding to improve firehouses.
Money for wind turbines? Yes. New traffic signs? Yes. Hybrid car discounts? Yes.
Money for new libraries? No. New town halls? No. Swimming pools? No. School athletic stadiums? No.
While there may be some money to plunk solar panels on that aging municipal building, there's no money set aside to replace it.
"This is trickle-down stimulus," said Joseph Fernandes, town administrator in Plainville, Mass., a town of about 8,000 south of Boston. Fernandes was hoping for help building a new, $12.5 million fire, police and town hall complex, which he said could put people to work as quickly as some of the highway projects receiving stimulus dollars.
Early on, many state officials hoped the stimulus money would arrive in huge blocks with few strings. Most states pulled together what amounted to massive statewide wish lists, raising hopes for municipal makeovers.
In the end, Congress opted to funnel much of the money through existing federal channels and created a confusing hodgepodge of rules about which local projects might be eligible.
"Does it really matter if it's ... a police station or a fire station?" Fernandes said. "At the end of the day it's money that would have to be spent eventually."
Other local officials share that frustration.
When Chesterfield Township moved its library into one of Michigan's many abandoned factories in 2005, there was enough money to rehab only half of the aging structure. So when library director Marion Ashen Lusardi heard Congress was working on a stimulus package to spur construction, her eyes lit up.
"We thought this was great; maybe we can finish off the other half of the library," said Lusardi who spends her days assisting laid-off auto workers research jobs with the help of just eight Internet-connected computers.
Those dreams evaporated when Lusardi learned Congress hadn't set aside any stimulus money for projects like new libraries.
Jeffrey Simon, Director of Infrastructure Investment in Massachusetts, said he first imagined the stimulus package as a modern-day version of the New Deal-era Works Progress Administration, "where you end up with a whole series of phenomenally well-designed buildings that have lasting character."
"That's not what was in the legislation," Simon told The Associated Press. "It just plain didn't come out that way."
The frustration some municipal leaders feel must be balanced with the larger goal of putting as many people back to work as quickly as possible to help jump start the economy, according to Sen. Edward Kennedy.
"It's our hope and belief that the economic opportunity from this assistance will far outweigh the possible lost opportunities," said Kennedy, D-Mass.
Sen. Olympia Snowe, one of just three Republicans who voted in favor of the stimulus package, said some restrictions were needed to help guarantee the money is funneled to "shovel-ready," job-creating projects.
The sheer scale and complexity of the stimulus package has added to the confusion.
State officials were at first told there would be no money for the construction of new school buildings — in part because Senate moderates insisted on dropping a proposed school construction program before they would vote for the bill.
But the U.S. Department of Education has since said the law was worded in such a way that the construction of new elementary and high schools is authorized. Some stimulus money can even be spent on private schools, although religious schools aren't eligible.
Some communities are hoping they can find ways to work around the rules to help chip away indirectly at the costs of new buildings — such as tapping into stimulus dollars intended for renewable energy.
Jim Johnson, interim city administrator of Vernonia, Ore., is appealing for renewable energy stimulus money to help defray the cost of a new school building needed to replace the town's elementary, middle and high schools, damaged in a 2007 flood.
"We want to make the school one of the greenest schools in the country," said Johnson, who is hoping to use stimulus money to pay for a green roof for the school. "If you can't build the whole school, you might be able to build a green component."
In Barnstable, Mass., officials are looking for $910,000 to help equip a new community and youth center under construction with a wind and solar energy system, while officials in Ashburnham, Mass., hope for $2.3 million to build a new Department of Public Works building, one they said would feature a rooftop solar array and radiant heat floors.
And in Sanford, Maine, Town Manager Mark Green had begun to despair of seeing any stimulus money until he got word the town would receive $87,000 in energy grants. Green said it would help the town make its historic — and drafty — century-old town hall energy efficient.
"We had started doing energy conservation improvements but ran out of money," he said. "We're not looking for the federal government to do everything for us ... but we do appreciate the money we've gotten."
Mayors and town administrators may also be able to use some of the stimulus dollars to free up other money that they can then direct to projects that don't directly fall in the stimulus funding stream.
In Chesterfield Township, librarian Marion Ashen Lusardi isn't giving up hope of one day expanding her library to the other half of the factory building — or better yet, into a brand-new facility built on federal surplus land.
"People are really struggling here and as the public library we are doing everything we can," she said. "There is unfortunately a lot of empty factory space here."
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Analysis: "Obama policy on torture has two sides"
By Tom Raum, Associated Press Writer, April 18, 2009
WASHINGTON – President Barack Obama is trying to close a chapter in the nation's history that continues to haunt U.S. foreign policy.
Obama authorized the release of graphic "torture memos" that outlined the harsh interrogation tactics the CIA used during the administration of George W. Bush, but getting the abuses behind him is turning out to be more complicated than it may have seemed at first.
The disclosures have divided Obama's administration; some intelligence officials argued against the release. Also, Obama's decision to shield from prosecution those who carried out the practices is being challenged by human-rights activists and some Democrats.
Making the memos public was a victory for Attorney General Eric Holder.
Last July, Holder told a legal forum that the next president must move quickly to "reclaim America's standing in the world." To robust applause, Holder suggested closing the prison camp at Guantanamo Bay and ending "all U.S. programs and practices that are engaged in torture."
But where to send the remaining Guantanamo prisoners? And Obama's decision not to prosecute CIA operatives who engaged in now-banned harsh interrogation practices such as waterboarding is causing something of a political storm.
Much as President Ford's blanket pardon of former President Richard Nixon for Watergate crimes, Obama's decision is being questioned by those who say officials who committed wrongdoing should be held accountable. For instance, Sen. Patrick Leahy, D-Vt., chairman of the Senate Judiciary Committee, was quick to say that the memos only bolstered his argument for a proposed independent commission of inquiry.
Anthony Romero, the executive director of the American Civil Liberties Union, said Obama's amnesty proposal for those responsible "is simply untenable."
In deciding to release the four memos with little blacked out or otherwise censored, Obama sided with Holder, deputy attorney general in the Clinton administration.
The release went against the advice of other Obama advisers, including CIA Director Leon Panetta. He argued that releasing vivid descriptions of brutal tactics could set a dangerous precedent for future disclosures of intelligence sources and methods.
In fact, the release of the classified Bush-era memos was delayed for nearly a month in part because of strenuous objections from four previous CIA chiefs — Michael Hayden, Porter Goss, George Tenet and John Deutch.
Obama ultimately overruled those concerns.
Holder said the Justice Department would not prosecute CIA officers "who acted reasonably and relied in good faith on authoritative legal advice from the Justice Department that their conduct was lawful."
Furthermore, the department will represent and pay legal fees for any CIA officers who are sued or who face legal proceedings overseas, Holder said. There are several legal actions taken or in the works against Bush administration officials overseas.
Releasing the memos was the latest chapter in Obama's efforts to make amends for tactics of his predecessor in prosecuting "the war on terror," a term now banished from the White House lexicon.
In his first week in office, Obama revoked all Bush administration legal opinions that had been used to justify harsh interrogation tactics. He outlawed such interrogations and ordered closed secret CIA prisons overseas. He ordered the Guantanamo Bay prison in Cuba to be closed within a year.
Apologizing for past practices was a theme sounded on Obama's recent trip to Europe and the Middle East, where such interrogation and detainment policies had been roundly criticized by leaders of the region.
"I know that the trust that binds us has been strained, and I know that strain is shared in many places where the Muslim faith is practiced. Let me say this as clearly as I can: the United States is not at war with Islam," Obama said in a speech to Turkey's parliament.
James Zogby, president of the Arab American Institute, said Obama's "brave act of transparency must be followed by specific steps to hold Bush administration officials accountable for what they have done."
Sarah Mendelson, director of the Human Rights and Security Initiative at the Center for Strategic and International Studies in Washington, said the Obama administration "moved with stunning speed" in addressing past abuses.
"What people get really hung up about is the next step: whether there are going to be prosecutions, amnesties or commissions," she added. "And that part is going to play out over a long time."
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EDITOR'S NOTE — Tom Raum has covered national and international affairs for The Associated Press since 1973.
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"Jeffrey Zients is Obama's pick for chief performance officer: The president also names Aneesh Chopra as his choice for chief technology officer. Obama says he's ready to clean house, revamping 'government operations from top to bottom.'"
By Mark Silva - mdsilva@tribune.com - From the Los Angeles Times - April 19, 2009
Reporting from Washington — President Obama today named a business management consultant as his choice to serve as the government's first chief performance officer, part of the new president's pledge to gain control over wasteful spending.
Jeffrey Zients, a consultant and entrepreneur, is the president's second nominee for the post.
The first, Nancy Killefer, withdrew her candidacy earlier this year to spare the Obama administration the "distraction" of a candidate with a personal tax problem in Washington. Killefer, a business consultant, had failed to pay employment taxes on her household help.
She withdrew in the midst of public controversy over Obama's first nominee for secretary of Health and Human Services, former Senate Majority Leader Tom Daschle, who withdrew after paying more than $120,000 in back federal income taxes.
For Obama, who entered office with an inaugural pledge to initiate "a new era of responsibility," gaining control over wasteful spending is part of an attempt to restore public confidence in government at a time when the nation faces record budget deficits and spending, as well as a recession that has cost millions of people their jobs and some their homes.
The president, who will call on his Cabinet officers Monday to recommend budget cuts, said today in his weekly radio and Internet address that he will announce "the elimination of dozens of government programs shown to be wasteful or ineffective" in coming weeks.
"If we're going to rebuild our economy on a solid foundation, we need to change the way we do business in Washington," Obama said in his address, in which he also named Zients and a chief technology officer, Aneesh Chopra. "We need to restore the American people's confidence in their government -- that it is on their side, spending their money wisely, to meet their families' needs."
Zients, with 20 years of business experience, served as chief executive and chairman of the Advisory Board Co. and chairman of the Corporate Executive Board, firms that provide business performance benchmarks. He is the founder and managing partner of Portfolio Logic. In his role as chief performance officer, he also will serve as deputy of the Office of Management and Budget.
Chopra, now serving as Virginia's secretary of technology, previously worked as managing director for the Advisory Board Co. The White House says his role as chief technology officer will be to promote technological innovation in government.
The president, proposing a record $3.55-trillion federal budget for 2010, also faces record budget deficits, which he has pledged to cut in half by the end of his term.
In addition, Obama confronts persistent criticism from Republicans in Congress that his spending and deficits are irresponsible in the face of a recession. In addition to seeking a budget with new initiatives in healthcare, energy and more, he has won a $787-billion economic stimulus bill and committed hundreds of billions of dollars to federal bailouts of the banking, insurance and auto industries and home mortgage lending.
From the start, Obama's attempt to project a commitment to efficiency and "transparency" in government has been sidetracked by the personal financial problems of some of his top appointees, chiefly Daschle.
Killefer's failure to pay employment taxes on household help for a year and a half resulted in a tax lien being placed against her home.
"I recognize that your agenda and the duties facing your chief performance officer are urgent," Killefer wrote in her letter of withdrawal, allowing that "in the current environment" her tax problem "could be used to create exactly the kind of distraction and delay those duties must avoid."
"It's not news to say that we are living through challenging times," Obama said in his address today, delivered while he was at the Summit of the Americas in Trinidad and Tobago. He made note of "the worst economic downturn since the Great Depression, a credit crisis that has made that downturn worse and a fiscal disaster that has accumulated over a period of years.
"But as surely as our future depends on building a new energy economy, controlling healthcare costs and ensuring that our kids are once again the best educated in the world, it also depends on restoring a sense of responsibility and accountability to our federal budget," he said. "Without significant change to steer away from ever-expanding deficits and debt, we are on an unsustainable course."
On Monday, the president said, he will ask his Cabinet members to recommend specific budget cuts.
The magnitude of this task, in a government with a budget of more than $3 trillion, can be seen in one of the cuts that Obama cites as already underway: Homeland Security Secretary Janet Napolitano is ending consulting contracts to create new seals and logos that have cost the agency $3 million since 2003.
Defense Secretary Robert Gates is targeting billions of dollars in Defense contracting for elimination, while his own budget grows.
"In the coming weeks," Obama said today, "I will be announcing the elimination of dozens of government programs shown to be wasteful or ineffective. In this effort, there will be no sacred cows and no pet projects."
His team of management, technology and budget experts will "help us revamp government operations from top to bottom and ensure that the federal government is truly working for the American people," the president said.
"None of this will be easy," he said in his address. "Big change never is. But with the leadership of these individuals, I am confident that we can break our bad habits, put an end to the mismanagement that has plagued our government and start living within our means again."
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President Barack Obama gestures as he delivers a speech during the opening ceremony of the Summit of the Americas on Friday, April 17, 2009 in Port-of-Spain, Trinidad and Tobago. (AP Photo/Evan Vucci)
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"Obama: Like families, govt to make hard choices"
By Will Lester, Associated Press Writer, April 18, 2009
WASHINGTON --Families are making tough decisions about their money and so too will their government, President Barack Obama said Saturday, promising that spending cuts are coming -- and soon.
At a Cabinet meeting Monday, the president will ask department and agency heads for specific proposals for trimming their budgets.
"If we're going to rebuild our economy on a solid foundation, we need to change the way we do business in Washington. We need to restore the American people's confidence in their government -- that it is on their side, spending their money wisely, to meet their families' needs," Obama said in his weekly radio and Internet address, released while he attended the Summit of the Americans in Trinidad.
To help achieve his goal of an efficient government, Obama announced the appointment of Jeffrey Zients, a founder and managing partner of the investment firm Portfolio Logic, as chief performance officer. Zients, who also will serve as deputy director for management of the Office of Management and Budget, will work to streamline processes and cut costs.
On that front, Obama gave notice he wants to act quickly.
"In the coming weeks, I will be announcing the elimination of dozens of government programs shown to be wasteful or ineffective," he said. "In this effort, there will be no sacred cows and no pet projects. All across America, families are making hard choices, and it's time their government did the same."
Homeland Security Secretary Janet Napolitano is ending consulting contracts to create new seals and logos that, Obama said, have cost the department $3 million since 2003. Obama also cited Defense Secretary Robert Gates' plan to overhaul contracting procedures and eliminate billions in wasteful spending and cost overruns.
The president praised Sens. John McCain, R-Ariz., and Carl Levin, D-Mich., who are leading the effort in Congress.
Republicans have kept up a steady stream of criticism of Obama's spending, both of his $787 billion stimulus plan and his $3.6 trillion budget proposal.
"Earlier this week, President Obama said that we need to get serious about fiscal discipline by trimming waste in the federal budget," Rep. Kevin McCarthy, R-Calif., said in the GOP address. "Republicans couldn't agree more. We want to work with the president to get our financial house back in order."
"It's irresponsible to borrow more than all previous American presidents combined. And it must stop if we want to get our economy moving again," McCarthy said. "When will all this spending and borrowing end?"
Obama said he's determined to try to cut costs.
"That is why I have assembled a team of management, technology and budget experts to guide us in this work," he said, "leaders who will help us revamp government operations from top to bottom and ensure that the federal government is truly working for the American people."
Along with Zients at chief performance officer, Obama named Aneesh Chopra, currently the technology secretary for Gov. Tim Kaine of Virginia, as the country's chief technology officer.
On Feb. 3, Nancy Killefer withdrew her candidacy to be the first chief performance officer for the federal government, saying she didn't want her mishandling of payroll taxes on her household help to become a distraction for the administration. Killefer was one of several Obama choices for top positions who have dealt with tax problems.
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On the Net:
Obama address: www.whitehouse.gov
McCarthy address: www.youtube.com/RepublicanConference
Portfolio Logic: www.portfoliologic.com
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"Obamas made $2.7 million last year"
By Associated Press, Wednesday, April 15, 2009 - www.bostonherald.com - U.S. Politics
WASHINGTON - President Barack Obama and his wife Michelle, millionaires from his best-selling books, made $2.7 million last year and paid just under one-third of their adjusted income in federal taxes.
While the income, mostly his, was far more than the U.S. median household income of about $50,000, it was quite a decrease from the $4.2 million the Obamas made in 2007.
Both years, nearly all of the earnings came from Obama’s best-selling books. "Dreams from My Father" and "The Audacity of Hope" — brought in about $2.5 million in royalties last year, according to copies of the returns released by The White House on Wednesday, the federal filing deadline.
Obama earned $139,204 as a Democratic senator from Illinois last year before leaving his seat after winning the November election. Michelle Obama received a salary of $62,709 from the University of Chicago Hospitals, where she was an executive.
The couple’s total federal tax came to $855,323. That was 32 percent of their adjusted gross income of $2,656,902.
The Obamas overpaid by $26,014, and elected to apply that amount to their 2009 taxes.
The couple’s federal tax deductions included about $50,000 in home mortgage interest.
They reported contributing $172,050 to charity last year, including $25,000 each to the CARE international relief agency and the United Negro College Fund.
They gave a total of $1,400 to five churches. In contrast to 2007, they gave nothing to the Trinity United Church of Christ. Barack Obama was a longtime member of the church, and gave it $26,270 in 2007, but resigned from it and cut ties with its pastor, the Rev. Jeremiah Wright, after Wright made incendiary comments that became a campaign issue.
The Obamas’ total Illinois income tax was $78,765, their state return showed.
The White House also released Vice President Joe Biden’s tax returns. Biden and his wife Jill earned $269,256 last year.
The Bidens’ main sources of income were salaries from the Senate, Widener University, Delaware Technical & Community College and royalties from the audio rights to the vice president’s memoir, "Promises to Keep."
According to tax returns released by the vice president’s office, the Bidens paid $46,952 in federal income taxes and $11,164 in Delaware state income taxes. They donated $1,885 to charity.
Biden served in the Senate from 1973 until Jan. 15 of this year (2009).
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"Rolling down the track"
The Berkshire Eagle, Editorial, Monday, April 20, 2009
The proposal by President Barack Obama Thursday to jump-start the development of a high-speed rail network in the United States is an acknowledgment of America's failure to lessen its dependence on the automobile, which leaves the nation overly reliant upon domestic and foreign oil companies and polluting fossil fuel. In terms of the Berkshires, any expansion of passenger rail service, whether high-speed or the more traditional relaxed pace, would be welcome.
The president will designate $8 billion from the transportation stimulus package for high-speed rail, with regional transportation offices to compete for the funding. The Midwest Regional Initiative out of Chicago appears, to its credit, best prepared to hit the tracks running, providing additional incentive for other transit groups to get caught up. The president cited 10 corridors with high-speed potential, including northern New England and an east-west line in neighboring New York State.
There are obvious limits to what this $8 billion can accomplish, but if it can get America to think in terms of passenger trains it will have accomplished plenty beyond whatever high-speed rail is ultimately laid down. High-speed rail is common in other nations, among them Japan (a line linking major cities that averages 180 mph), Spain (150 mph average) and France (133 mph average). They are literally and figuratively racing ahead of us.
Amtrak's Acela Express between Boston and Washington D.C. averages 110 mph and is the only train in the nation at all worthy of being called high-speed. In Europe, where gas prices are far higher than they are here, there has long been an incentive for government investment in mass transit, as well as the development of high-mileage automobiles. Just because this has been "happening elsewhere, not here," as the president said Thursday, doesn't mean it cannot happen here.
Progress on rail came to a halt during the years when the oil lobby held sway in the White House, and today our highways are even more clogged, our airports even more congested. As the president pointed out Thursday, this reality blocks economic growth while contributing to air pollution, necessitating an ambitious rail program that will have the added benefit of job creation in a bad economy.
There was a time when creation of a high-speed line along the Massachusetts turnpike was at least being discussed, but even if that idea is not realistic, the Berkshires need passenger service beyond the modest Boston-Chicago Amtrak link that comes through Pittsfield. Governor Patrick is a proponent of rail, but his plans, now jeopardized by the budget crunch, were focused on the eastern end of the state.
It used to be possible to take the train from New York City to south Berkshire County or nearby Canaan, New York, as did many Gilded Age New Yorkers, and with the county's New York orientation, such a link would be a considerable boost for both business and cultural tourism. Unfortunately, the best option for that link, Metro North, makes only periodic northward lunges, most recently to Wassaic, New York on Route 22. That is welcome, but still a long way off, and considerable track work would surely be needed to again extend the line to the Berkshires.
Still, President Obama has at the very least reintroduced passenger rail travel to the national discourse. Now, let's see if we can get our trains up to speed.
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www.topix.net/forum/source/berkshire-eagle/T98UFE50Q33MMJ4MM
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"Stakes high as Congress returns"
By Thomas Ferraro and Richard Cowan, Reuters, Monday, April 20, 2009
WASHINGTON (Reuters) - Barack Obama's presidency has been a wild ride for the U.S. Congress and lawmakers are bracing for more turbulence when they begin returning on Monday to tackle an array of tough issues from healthcare to energy.
In the three months since Obama took office, his fellow Democrats in Congress have overcome Republican objections and unleashed a raft of spending to try to buoy the sinking economy.
With the Senate coming back on Monday and the House in on Tuesday, following a two-week recess, the Democratic leadership in both chambers will press its advantage, while undeterred Republicans dig in their heels.
"Now the agenda gets more ambitious, and by definition more contentious," said Andrew Taylor, chairman of the political science department at North Carolina State University, noting Democrats may have trouble within their own ranks over some of the most ambitious spending proposals.
"The whole notion of deficits is going to make some Democrats uneasy," Taylor said.
Democrats take heart from polls that show Obama remains highly popular and the public has more confidence in Democrats than in Republicans to solve the nation's problems.
Yet there is no sign Republicans, who opposed Obama's $787 billion economic stimulus package and $3.5 trillion budget plan, are about to cooperate with what they denounce as Obama's liberal "tax-and-spend" policies.
Instead, they see a political opportunity -- and last week aired a television and radio ad campaign targeting 43 potentially vulnerable House Democrats who they accused of endorsing "a reckless spending spree."
The Democrats are in largely conservative districts, which had close elections in 2008 and could tip to Republicans in the 2010 midterm vote.
"We will continue to hold these Democrats accountable for rubber-stamping (House of Representatives Speaker) Nancy Pelosi's agenda that will burden middle-class families and inflict further damage on an already fragile economy," said Ken Spain of the House Republican campaign committee.
SENATE BATTLEGROUND
Democrats, who extended their control of Congress in the 2008 elections, can ram a bill through the House on a majority vote. They may face increased problems in the Senate where they need 60 votes in the 100-member chamber to clear Republican roadblocks.
With 58 votes now, Democrats need at least a couple of Republican senators to hit 60. They won over three to help pass Obama's stimulus plan, but one of them -- Pennsylvania's Arlen Specter -- faces a tough re-election challenge and may be reluctant to cross party lines again on some issues.
One of the first agenda items will be Senate consideration of a bill backed by Democrats and some Republicans to tighten laws against financial fraud.
At stake on other fronts are some of the chief policy goals of the Obama administration, including its plan to restructure the U.S. healthcare system and to cut U.S. emissions of carbon dioxide and other pollutants blamed for climate change.
Some Republicans say they are willing to talk -- but only if the Democrats play ball.
"It can happen, but they have to get together with people like me. It's uphill. It's very complex," said Republican Senator Orrin Hatch.
An early test will come when House and Senate negotiators work to resolve differences between the budget plans, each totaling about $3.5 trillion, that their chambers approved for the new fiscal year that starts on October 1.
One point of contention will be whether to include provisions that would enable Democrats to "fast-track" legislation to overhaul healthcare -- a move Republicans oppose but may be unable to stop.
ECONOMY WILL DECIDE
Political analysts say poll results showing public support for Obama's economic agenda strengthens the Democratic hand in the short term.
"The polls give Obama the ability and leverage to say no to criticism that he's doing too much too fast," said Ethan Siegal of the Washington Exchange, a private firm that tracks Washington for institutional investors.
Republicans have been looking for political traction and last week helped back a national series of "tea party" anti-tax protests they hope will help their party's bid to be seen as a "fiscally responsible" alternative to Obama's Democrats.
"House Republicans share the American people's frustration and are proposing better solutions," House Republican leader John Boehner said in a statement supporting the protests.
While Republicans are now on the defensive, Obama and Democrats will be warily watching the economy.
"If the economy turns around, which it cyclically should do close to the 2010 election ... then these cat fights over healthcare, energy and education aren't going to make a difference," Siegal said.
"If the economy doesn't turn around, (voters) are going to remember it was bad when Obama came in and he has done nothing for me and therefore I'm voting Republican."
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(Additional reporting by Donna Smith, Jeremy Pelofsky, Susan Cornwell and Kevin Drawbaugh; Editing by Peter Cooney)
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(For more about the U.S. political scene please visit Reuters "Front Row Washington" online at blogs.reuters.com//frontrow/ )
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"Obama’s Revenue Plans Hit Resistance in Congress"
By CARL HULSE, The New York Times, April 20, 2009
WASHINGTON — President Obama is running into stiff Congressional resistance to his plans to raise money for his ambitious agenda, and the resulting hole in the budget is threatening a major health care overhaul and other policy initiatives.
The administration’s central revenue proposal — limiting the value of affluent Americans’ itemized deductions, including the one for charitable giving — fell flat in Congress, leaving the White House, at least for now, without $318 billion that it wants to set aside to help cover uninsured Americans. At the same time, lawmakers of both parties have warned against moving too quickly on a plan to auction carbon emission permits to produce more than $600 billion.
The unwillingness to embrace some of the major White House tax and revenue proposals has frustrated administration officials. They note that lawmakers, many of them supporters of the president’s ambitious agenda, clamor to hold down the deficit while balking at the proposals to finance his program.
Clint Stretch, a top tax policy analyst for the consulting firm Deloitte Tax, said, “The president and the budget committees have set very ambitious targets for revenue raising, and they did it against a set of proposals that are going to be very hard to enact.”
As Congress prepares to reconvene after a recess, senior lawmakers and aides say they are only now beginning to confront the lack of new sources of money, especially for moving the nation toward universal health coverage, a goal for which Democrats hope to deliver a plan this year.
“It is a challenge,” said the chairman of the Senate Budget Committee, Kent Conrad, Democrat of North Dakota. For the health care effort, “you are talking about hundreds of billions of dollars under any formulation.”
Among other setbacks for the White House, 10 Senate Democrats joined Republicans this month in pushing to protect more wealthy American families from the reach of the federal estate tax, a change that could cost the Treasury $100 billion over 10 years. Businesses and their Congressional allies are coming together to try to fend off an effort to close corporate tax loopholes.
Administration officials say they have not given up on pushing at least some elements of their original plans through Congress. Even if they cannot prevail, they say, they can find some new sources of revenue that, along with new efficiencies in care and savings in Medicare and Medicaid, will allow them to forge ahead with the health care plan.
“There are lots of different ways of skinning this cat and making the numbers work,” said Peter R. Orszag, director of the White House Office of Management and Budget.
The difficulty in winning support for tax changes in isolation has also convinced the administration that a broader rewriting of tax laws is the best approach, perhaps as soon as next year.
“All roads in the future lead to tax reform,” said Rahm Emanuel, the White House chief of staff.
In adopting a pair of budgets that House and Senate negotiators hope to reconcile in the next few weeks, Congressional Democrats put off the tough questions of how to pay for the president’s chief priorities.
But those budgets require that initiatives in health and energy be “deficit neutral” within a matter of years. That requirement, coupled with the opposition to the financing options pushed by the White House, has many lawmakers and senior aides predicting that Congress will have no choice but to take aim at taxing employer-provided health benefits, which now remain tax-free no matter how generous.
Senator Max Baucus, a Montana Democrat and chairman of the Finance Committee, has indicated that he is open to taxing some high-value coverage plans, and Mr. Conrad has said he also suspects that taxing high-end plans will ultimately have to be part of the health care equation.
But Mr. Obama campaigned against the idea of taxing health benefits when his Republican opponent, Senator John McCain of Arizona, proposed it during the presidential campaign. Just the other day Robert Gibbs, the White House press secretary, said that the president remained opposed to the idea and that it could run contrary to his pledge not to raise taxes on Americans earning less than $250,000 a year.
Any effort to dip into employer-paid health benefits, then, could put the Democratic-controlled Congress at odds with Mr. Obama or force him into a stark reversal, both unattractive options.
Given the difficulties in finding a way to pay for health care, and given the extended time that Democrats have allowed themselves before money to pay for it must catch up with the spending, Senator Judd Gregg of New Hampshire predicts that Democrats will not pay for it at all or will use gimmicks to mask the costs. “They are going to play games,” said Mr. Gregg, the senior Republican on the Budget Committee, “and ultimately they are going to add it to the deficit.”
But Democrats say they are committed to finding ways to pay for a significant health care overhaul, as well as a new energy policy and other Obama initiatives.
Administration officials say there is a tremendous amount of money to be found in savings gained through changes in health care delivery and information technology, and such savings will reduce the revenue Congress must find. “By combining Medicare and Medicaid savings and these game-changing efficiency improvements with some additional revenue,” said Mr. Orszag, the president’s budget chief, “I think a deficit-neutral health care reform is eminently doable.”
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"White House on defensive over spending cuts"
By Ross Colvin, Reuters, Monday, April 20, 2009
WASHINGTON (Reuters) - President Barack Obama challenged U.S. government departments on Monday to find $100 million in savings, but the move was mocked by critics who said the government spent that amount in just 13 minutes.
Obama, who has vowed to cut the country's ballooning deficit in half by 2013, told his Cabinet at their first meeting to identify the spending cuts and report back in three months.
Asked by a reporter after the meeting if the $100 million was not just a drop in the bucket, Obama acknowledged it was, saying: "$100 million there, $100 million here. Pretty soon, even in Washington, it's going to add up to real money."
He said his government had launched a number of initiatives to cut spending, which has exploded as his administration grapples with the worst economic crisis in decades.
"None of these savings by themselves are going to solve our long-term fiscal problems, but taken together they can make a difference, and they send a signal that we are serious about changing how government operates," Obama said.
But opposition Republicans derided the publicity given by Obama's Democrat administration to the $100 million savings drive, saying the government was projected to spend $4 trillion this fiscal year alone.
"That works out to $7.6 million in spending per minute. It will take about 13 minutes for the federal government to spend $100 million," Congressional Republicans said in a statement.
DEFICIT SPENDING
Republicans have accused Obama and Democrats in Congress of wasteful spending, saying the $3.6 trillion 2010 budget plan carries too much deficit spending. The United States posted a record $956.8 billion budget deficit for the first half of fiscal 2009 that began last October 1, the Treasury Department has said.
"I appreciate the efforts to save millions by identifying unnecessary or duplicative government spending. But let's not forget that at the same time they're looking for millions in savings, the president's budget calls for adding trillions to the debt," Senate Minority Leader Mitch McConnell said.
The Obama administration has repeatedly stressed that it inherited a $1.3 trillion deficit from the Bush administration and that much of the current spending has been to fund financial and economic rescue programs.
White House spokesman Robert Gibbs, however, found himself on the defensive over the $100 million plan at his daily news briefing when he faced questions over whether the normally media-savvy administration had stumbled in highlighting the effort to cut what amounts to a tiny fraction of the deficit.
"Only in Washington D.C. is 100 million not a lot of money ... It is for hundreds of millions of people," Gibbs said.
Obama's first Cabinet meeting on Monday had one person missing -- Kansas Governor Kathleen Sebelius, his nominee for health secretary. The Senate Finance Committee is expected to vote on her nomination on Tuesday. The Senate is expected to act on the nomination quickly.
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(Additional reporting by Matt Spetalnick, Richard Cowan, Thomas Ferraro and Donna Smith, editing by Philip Barbara)
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"Denting the Deficit: $100 million won't do it. Here are five changes that could."
A Washington Post Editorial, Wednesday, April 22, 2009
PRESIDENT OBAMA is requiring government agencies to find $100 million in savings. Next year's budget deficit will be $1.4 trillion. The new reductions would generate savings equal to 0.007 percent of that -- something like trying to deal with a $5,000 credit card debt by forgoing a pack of gum.
We understand the importance of symbolism, and we're all for telling the Department of Homeland Security, as Mr. Obama did, that the $3 million it has given to consultants to come up with new logos is more than enough. The trouble is not this acknowledged drop in the bucket; the trouble is that Mr. Obama is simultaneously emptying the bucket a lot faster with spending proposals and a reluctance to take steps to really dent the deficit.
Here are a number of policies the administration and Congress could consider if they wanted to go beyond symbolism. None would be easy, but they would have the potential to generate significant savings or revenue and generate at least some bipartisan support.
-- Raise the Social Security retirement age beyond the slated increase to 67 to 68. As people live longer, it makes sense that they work a bit longer, too. This change could be made gradually, and eventually would save $10 billion a year, with savings left over to strengthen the disability program to protect manual laborers and those who need to retire early.
-- Change the tax treatment of health insurance. The policy of taxing wages but not employer-provided health insurance leads to the over-consumption of health insurance, which contributes to growing health-care costs while creating an unfair tax break for those with high incomes. It would be more sensible to at least cap the tax break at the cost of an average plan, for a savings of $25 billion a year.
-- Reduce farm subsidies, which run well over $10 billion most years. Price supports have led to an industry overly dependent on government giveaways. They should be replaced with a fairer system of self-sustaining insurance. Mr. Obama has proposed a fairly timid version of subsidy reform, and even that is running into stiff opposition.
-- Reduce Social Security benefits for the well-off while protecting those who depend on the program. As controversial as Social Security reform is, every serious policy expert recognizes the need for changes, including benefit reductions. Better targeted reductions than across-the-board cuts.
-- The government's transportation trust fund is running out of money. Raise gas taxes, untouched since 1993, or establish a tax on vehicle miles traveled to help pay for the roads and rails that need rebuilding. Airlines and, especially, private aviation need to pay more to upgrade the air traffic control system.
All told, these policies could yield savings and revenue of roughly $75 billion a year. That's not enough to close the budget deficit or meet spending needs, but it's more than a hunt for loose change.
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"Credit Card Reforms Pressed by Obama"
By Michael A. Fletcher and Nancy Trejos, Washington Post Staff Writers, Friday, April 24, 2009
President Obama met with executives from 13 of the nation's largest credit card issuers at the White House yesterday and pressed them to curb excessive fees and provide consumers with more straightforward contracts.
Obama told the executives that he supports pending legislation to stamp out unfair practices, such as raising interest rates on outstanding balances even when consumers have paid their bills on time.
"I think that there has to be strong and reliable protections for consumers -- protections that ban unfair rate increases and forbid abusive fees and penalties," Obama said after the meeting. "The days of anytime, any reason rate hikes and late fee traps have to end."
Obama said plain language should be used in complicated credit card statements. "No more fine print, no more confusing terms and conditions," he said. "We want clarity and transparency from here on out."
The meeting came as anger grows against credit card companies, whose practices have come under intense scrutiny by consumers and legislators. At the same time, the companies have been hit by fast-rising default rates, which have strapped their businesses and, the companies say, have made it harder for them to extend credit at favorable rates.
Obama has been calling for tougher regulation of credit card lending since his days in the Senate. Yesterday's meeting is part of the White House's efforts to press middle-class issues with top financial executives. Several weeks ago, he met with banking executives, telling them to rein in bonuses and other extravagances.
At yesterday's session, Obama cited letters he has received from Americans complaining about sudden changes in their credit card terms. "He often gets letters from people that discuss their credit card rate increasing overnight, their bill date changing, their being charged enormous fees, and then interest on top of those fees," White House press secretary Robert Gibbs said.
White House officials said that while the meeting was cordial, industry officials told the president that pending Federal Reserve rules go far enough to protect consumers. The president disagreed. The executives also told Obama of the challenges they face, including raising money through securitization of their loans.
"It was a meeting where the president was very frank in talking to the execs, that he had concerns about some of the practices the industry has been engaged in," said Edward L. Yingling, president and chief executive of American Bankers Association, who attended the meeting. "But at the same time . . . he recognizes the importance of the industry, and both sides indicated that they needed to work together, to work through this and move on."
Other industry officials also struck a conciliatory tone.
"We are pleased and supportive of the president's message of increasing disclosures and consumer protection as well as recognizing the importance of credit cards as an important source of funding," said Scott Talbott, senior vice president at the Financial Services Roundtable, which represents large financial institutions.
The Federal Reserve in December passed new rules that would ban such practices as raising interest rates on existing balances except under certain circumstances, assessing late fees if the borrower was not given 21 days to make a payment and applying payments over the minimum in a way that maximized interest charges.
While the changes were sweeping, consumer advocates said they fell short because the card companies are not required to comply until July 1, 2010.
Earlier this week, the House Financial Services Committee passed a Credit Cardholders' Bill of Rights that would codify the Fed's regulations. The measure is expected to reach the floor next week. The Senate is considering a stronger measure, which would prohibit companies from charging more than one over-limit fee per billing period, charge interest on fees, charge a fee to make a payment and raise interest rates at anytime for any reason. The bill would also limit aggressive marketing by card issuers to borrowers under 21.
Obama told the credit card officials that he generally backs legislative action and that his administration would work with Congress to see that it becomes law.
Asked whether there has to be a balance between protecting consumers and allowing credit companies to make money, Obama was quick to respond.
"We think that it's been out of balance," he said. "And so we think we need to create a new equilibrium where credit is flowing, those who are issuing credit are able to make a reasonable profit -- but they're doing so in a way that is responsible and consumers are not finding themselves in a bad situation that they didn't anticipate."
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President Obama applauded Holocaust survivor Elie Wiesel during the Holocaust remembrance ceremony yesterday. (Chip Somodevilla/Getty Images)
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"At Holocaust remembrance, Obama warns against the dangers of silence"
By Associated Press - April 24, 2009
WASHINGTON - President Obama stood yesterday with Jewish leaders at a solemn Holocaust remembrance in a cavernous Capitol hall, proclaiming: "Never again."
Obama warned against what he called the dangers of silence, saying that every day, somewhere in the world people must resist the urge to turn away from scenes of horror, hate, injustice, and intolerance.
All people, he said, must "fight the impulse to turn the channel" from distressing TV images of suffering, the sort of inhumanity known not only in the time of Nazi Germany, but more recently in Rwanda and Darfur.
Obama declared that people cannot wrap themselves "in the false comfort that others' sufferings are not our own." The president also called for people to "make a habit of empathy, to recognize ourselves in each other."
The risk of genocide has not been eliminated since about 6 million Jews were systematically murdered by Nazi Germany and its collaborators during World War II, he said.
"We've seen it, in this century, in the mass graves and the ashes of villages burned to the ground and children used as soldiers and rape used as a weapon of war," Obama said.
Without naming names, he noted that some still deny the Holocaust. At the same time, Obama said that apathy in the face of such a mind-set must be fought at all times.
Iranian President Mahmoud Ahmadinejad recently caused a stir at a UN conference by accusing Israel of being a racist nation. Earlier in yesterday's ceremony, Holocaust survivor and Nobel laureate Elie Wiesel noted his disgust with Ahmadinejad's comments and thanked the Obama administration for boycotting the UN conference.
Obama said part of the responsibility for the Holocaust rests with people who "accepted the assigned role of bystander."
He paid tribute to those who risked their own safety to help those targeted by the Nazis escape, including five rescuers from Poland who participated in a candle lighting ceremony.
"They remind us that no one is born a savior or a murderer," he said. "They teach us that no one can make us into bystanders without our consent, and that we are never truly alone."
He also cited stories of hope, in places where vicious conflict has given way to forgiveness.
"Our fellow citizens of the world, showing us how to make the journey from oppression to survival, from witness to resistance, and ultimately to reconciliation," Obama noted.
The annual Holocaust Day of Remembrance event is organized by the United States Holocaust Memorial Museum.
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(AP Photo)
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The Boston Globe, Op-Ed, ANDREW J. BACEVICH
"Obama's sins of omission"
By Andrew J. Bacevich, April 25, 2009
THE HISTORY of American liberalism is one of promoting substantively modest if superficially radical reforms in order to refurbish and sustain the status quo. From Franklin Roosevelt's New Deal to Bill Clinton's New Covenant, liberals have specialized in jettisoning the redundant to preserve what they see as essential. In this sense, modern liberalism's great achievement has been to deflect or neutralize calls for more fundamental change - a judgment that applies to President Obama, especially on national security.
Granted, Obama has acted with dispatch to repudiate several of George W. Bush's most egregious blunders and for this he deserves credit. In abrogating torture, ordering the Guantanamo prison camp closed, and setting a deadline for withdrawing troops from Iraq, Obama is turning the page on a dark chapter in American statecraft. After the hectoring and posturing that figured so prominently in his predecessor's style, the president's preference for dialogue rather than preaching is refreshing.
But however much Obama may differ from Bush on particulars, he appears intent on sustaining the essentials on which the Bush policies were grounded. Put simply, Obama's pragmatism poses no threat to the reigning national security consensus. Consistent with the tradition of American liberalism, he appears intent on salvaging that consensus.
For decades now, that consensus has centered on what we might call the Sacred Trinity of global power projection, global military presence, and global activism - the concrete expression of what politicians commonly refer to as "American global leadership." The United States configures its armed forces not for defense but for overseas "contingencies." To facilitate the deployment of these forces it maintains a vast network of foreign bases, complemented by various access and overflight agreements. Capabilities and bases mesh with and foster a penchant for meddling in the affairs of others, sometimes revealed to the public, but often concealed.
Bush did not invent the Sacred Trinity. He merely inherited it and then abused it, thereby reviving the conviction entertained by critics of American globalism, progressives and conservatives alike, that the principles underlying this trinity are pernicious and should be scrapped. Most of these progressives and at least some conservatives voted for Obama with expectations that, if elected, he would do just that. Based on what he has said and done over the past three months, however, the president appears intent instead on shielding the Sacred Trinity from serious scrutiny.
What the president is doing and saying matters less than what he has not done. The sins of omission are telling: There is no indication that Obama will pose basic questions about the purpose of the US military; on the contrary, he has implicitly endorsed the proposition that keeping America safe is best accomplished by maintaining in instant readiness forces geared up to punish distant adversaries or invade distant countries. Nor is there any indication that Obama intends to shrink the military's global footprint or curb the appetite for intervention that has become a signature of US policy. Despite lip service to the wonders of soft power, Pentagon spending, which exploded during the Bush era, continues to increase.
There are differences, to be sure. Bush counted on high-tech manned aircraft above and mechanized ground forces below to make quick work of any foe, with Iraq the point of main effort. Ostensibly learning from Bush's failures, Obama is taking a modified approach, centering his attention on "Af-Pak." His preference is for high-tech unmanned aircraft, the weapon of choice for an expanded Israeli-style program of targeted assassination in Pakistan. Meanwhile, when it comes to ground forces, Obama's inclination is to park the tanks and get troops out among the people, as his intensified effort to pacify Afghanistan suggests.
Obama's revised approach to the so-called Long War, formerly known as the Global War on Terror, should hearten neoconservative and neoliberal exponents of American globalism: Now in its eighth year, this war continues with no end in sight. Those who actually expected Obama to "change the way Washington works" just might feel disappointed. Far than abrogating the Sacred Trinity, the president appears intent on investing it with new life.
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Andrew J. Bacevich, a professor at Boston University, is the author of "The Limits of Power: The End of American Exceptionalism."
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The Boston Globe, Op-Ed, MARY GRAHAM
"Transparency and the right to know"
By Mary Graham, April 25, 2009
WHAT DO THESE recent incidents have in common: home purchases based on misleading mortgage costs; deaths associated with widespread contamination of the blood thinner heparin; and huge financial losses suffered by even sophisticated investors on exotic debt instruments?
They all represent costly failures of government policies that are supposed to give the public crucial facts about hidden risks in everyday choices - in mortgage documents, medications, or investment opportunities.
President Obama, in his first full day in office, promised to make recommendations to improve transparency in 120 days. White House staff are tackling tough "right to know" issues - how to organize and tag government data to make it more easily searchable, how to encourage agencies to take an active approach to openness, what to do about Bush-era inventions like secret but unclassified information.
So far, however, they are not tackling the broken transparency policies that Congress designed to save lives, protect health, and reduce needless financial losses. The two assumptions behind such policies are right. First, Americans often make health care, investment, and other crucial decisions by themselves rather than handing them over to experts. Second, markets don't always provide the information that people need to make informed choices.
As a result, everyone needs more facts -- and those facts are supposed to be presented in standardized, timely, and understandable ways so people can compare mortgage lenders, credit card deals, surgery outcomes, and more.
But most transparency policies fail. They fail because they don't allow accurate comparisons. They fail because politics or conflicts of interest keep important risks hidden. Or they fail because disclosure doesn't keep pace with new risks created by fast-changing markets. Consider:
At least a third of home buyers can't tell from government-mandated disclosures when mortgages include large balloon payments, and half can't identify something as basic as the loan amount, according to the Federal Trade Commission.
Firms that rate complex debt instruments also have a stake in their sale, arguably distorting their ratings.
Government disclosures fail to provide easy comparisons of credit card penalty rates and other hidden fees.
Hospitals have successfully resisted performance measures directly related to health outcomes such as infections, re-hospitalizations, or mortality rates. Instead, government monitors such practices as hand-washing and appropriate medication.
Tracking systems designed to protect the nation from life-threatening food and drug contamination don't work in fast-changing international markets.
Product recalls leave unsafe medical devices in use because they are usually voluntary, do not transmit information well throughout the supply chain, and do not provide enforcement.
These are fixable problems. But the fixes require presidential leadership.
First, Obama should order his Cabinet to ensure that all transparency policies provide complete information that can be understood by ordinary citizens. There should be a premium on clarity and common sense.
Second, he should require officials responsible for designing these policies to talk to each other - whether they are working on disclosure requirements concerning financial risks, healthcare, airline safety, or energy conservation. There are common lessons in effective communication that can be learned through collaboration.
Finally, he could direct agencies to devise better ways of tracking unforeseen risks, whether they concern new financial instruments, drug side effects, or food contamination.
Why should a busy president take on another challenge? Because the challenge is unavoidable. Neither the economy nor healthcare can be fixed unless transparency policies are fixed. Markets and ordinary citizens can cope with risks as long as they can understand them. It's uncertainty that creates paralysis. Repairing transparency policies would give Obama a powerful new instrument for change.
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Mary Graham is co-author of "Full Disclosure: the Perils and Promise of Transparency," and co-directs the Transparency Policy Project at the Harvard Kennedy School.
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"Checking in on the Economy: Way too soon to break open the champagne"
The Washington Post, Editorial, Sunday, May 3, 2009
THE RECENT smattering of good economic news -- the stock market is up more than 25 percent from its low point in March, housing starts have increased and consumer confidence is finally on the rise -- has left some observers turning to the next phase of recovery. As reassuring as it is to have a few up arrows, there is a long way to go before anything resembling a sustainable recovery can be proclaimed. Far-reaching governmental action on the fiscal, monetary and financial sector fronts has been critical in putting a floor on this downturn. But a dramatic and steady "V-shaped" recovery can hardly be counted upon, given the many economic challenges remaining. The U.S. economy contracted 6.1 percent during the first quarter of the year. The International Monetary Fund projects that the global economy will contract by 1.3 percent this year and remain sluggish in 2010, and it predicts a total of $4 trillion in credit write-downs over the next two years. The message is depressingly clear: The world is not yet out of the woods.
One of the lessons of past recessions is that a premature attempt to return to business as usual can abort a fledgling recovery. Talk of a second stimulus package has subsided, but Washington may have to spend more to prop up the economy. Other countries, particularly those with more room to borrow, will have to step up as well. The Federal Reserve faces the challenge of using its many tools to bring down interest rates while preparing an exit strategy for when the risk of inflation starts to outweigh the risk of deflation. Even if officials do everything right, unemployment, currently at 8.5 percent, is likely to move into double-digit territory before heading down.
And then there is the central question that has yet to be addressed: What will be the driver of growth? For decades, the world has depended on the U.S. consumer to gobble up goods, helping to fuel global growth. But U.S. household wealth has fallen $13 trillion, or 20 percent; it is unlikely that consumers could return to prior levels of spending even if they learned nothing from this crisis. Over time the United States will have to increase its investment rate and exports, while countries that have been saving too much, particularly China, will have to find ways to increase domestic demand. So far old patterns persist, with the United States leading the way in borrowing its way out of this recession. Borrowing and saving nations have yet to come close to an understanding of how this imbalanced relationship will change.
Over time, again, the United States and other high-borrowing countries will have to set in place fiscal plans to get their debt levels under control while being careful not to implement the contractive policies before the recovery is stable. Necessary spending reductions and tax increases should be staggered and phased in gradually so as not to be destabilizing. Timing, and a new global grand bargain, will be key in securing a lasting recovery. Let's hope the good news keeps coming, but let's not underestimate the challenges ahead.
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"Cutting Off Competence: The administration's inflexible policy on lobbyists and lobbying is having some perverse effects."
The Washington Post, Editorial, Saturday, May 9, 2009
IN THE WAKE of the Jack Abramoff scandal, President Obama was right to err on the side of strictness in restricting lobbyists entering government, and we supported his rule. But we think it's worth asking whether the costs are outweighing the benefits.
The president was right to slow the revolving door so that those who serve in his administration cannot cash in quickly after leaving. The rules will prevent senior officials from lobbying the executive branch -- not just the departments in which they served -- for the remainder of Mr. Obama's service.
On the entry side of the revolving door, the administration barred those who had been registered lobbyists in the past two years from serving in departments that they had lobbied, even if their government work would not involve issues on which they had lobbied. This limitation had its silly aspects -- you want health-care experts at the Department of Health and Human Services, for example, and some very good health-care experts have been registered lobbyists -- but the administration built in some needed flexibility by allowing for waivers.
However, after an early waiver given to Raytheon Corp.'s chief in-house lobbyist, William J. Lynn, to become deputy defense secretary, the administration was bombarded with accusations of hypocrisy. The lesson that Team Obama took from this was not to use its waivers more wisely but to crack down on them -- and to broaden the prohibition, in practice, to exclude lobbyist candidates from consideration even for jobs in departments or agencies that they hadn't lobbied. As a result, too many qualified candidates have been denied positions for which they are suited simply because of a lobbyist taint.
This approach could have the perverse consequence of driving lobbying underground and reducing the openness that the Obama administration says it wants to promote. The decision about whether to register as a lobbyist isn't always clear-cut; in the past, many people registered out of an abundance of caution. Now, some are saying privately that they will avoid registering if at all possible, shedding less sunlight on lobbying activities.
The Obama administration is also making a mistake by barring lobbyists from, well, lobbying it in some circumstances. The administration's rules on distributing stimulus funds bar registered lobbyists from telephoning or meeting with government officials about specific projects; they can make contact only in writing, with documents to be posted on the government's Web site. We understand the good-government impetus here. But why distinguish between lobbyists and corporate executives or local government officials seeking the funds, who have the biggest interests at stake? The rules are up for review soon. They should be rethought.
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"The President's Budget: Leaving the hard choices for the next one"
The Washington Post, Editorial, Sunday, May 10, 2009
"WE CAN no longer afford to leave the hard choices for the next budget, the next administration or the next generation," declared President Barack Obama last week as he unveiled his budget. Well, yes, but that is exactly what he does. We just hope that it is only until the next budget rather than the next administration.
The White House has tried to produce as much hoopla as possible around a proposed $17 billion in savings. But while the savings are nice as far they go, they are part of a budget that will add trillions to the national debt. The budget relies on so much borrowing that it will cost taxpayers more than $4 trillion just to cover interest payments for the next 10 years -- more than twice what the federal government will spend on education, energy, homeland security and veterans combined. The president has made the point repeatedly that there is still more to do in fixing fiscal problems, but he is clearly front-loading his agenda with new spending priorities. The strategy of delaying the tough choices on entitlement and tax reform runs the risk of bumping up against that predictable refrain, "we can't do that in an election year!"
That's one reason we were encouraged by a speech last week by House Majority Leader Steny H. Hoyer (D-Md.). On Social Security, the dreaded "third rail," he delivered a firm scolding to both parties: Democrats, for persistent demagoguery on the issue, and Republicans for refusing to countenance any mention of tax increases. He mentioned specific reforms such as cutting benefits, raising the retirement age and increasing taxes. That provides a far more helpful foundation for discussions than an insistence that only tax increases on the very rich are needed, as some members of his party suggest.
On health care, Mr. Hoyer emphasized the importance of controlling costs rather than expanding coverage and said Congress would have to do more than what the administration is proposing to get health-care costs under control. In his plea for bipartisanship, he recognized Republican concerns that any tax increases would simply be swallowed up by new entitlement spending rather than getting deficits under control. At the same time, he reflected Democrats' worry that making changes to popular entitlement programs could undermine support for them.
Another local politician, Rep. Frank R. Wolf (R-Va.), has also pushed persistently for entitlement reform, championing a commission that would put all proposals on the table. In the Senate, Lindsey O. Graham (R-S.C.) has courageously tried to get Social Security reform moving while showing a willingness to talk about both spending and revenue options, which is refreshingly realistic from a conservative Republican. Congress is not exactly bursting with members who are willing to face up to the stark realities created by our unending appetite for borrowing to fund the budget; too many members fall back on "we don't have a problem" or "no new taxes." But if the president means what he says about not delaying the hard choices, there are a number of politicians who seem ready to join him.
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"Obama AWOL on gay rights"
By Eugene Robinson, Saturday, May 9, 2009, www.bostonherald.com - Op-Ed
WASHINGTON - Believe it or not, often I can see the other side of an argument. I know that tough gun control laws save lives, for example, but I also see clarity in the Second Amendment. I support affirmative action, but I realize that providing opportunity to some worthy individuals can mean denying opportunity to others. Thinking about some issues involves discerning among subtle shades of gray.
On some issues, though, I only see black and white. Among them is the “question” of granting full equal rights to gay and lesbian Americans, which really isn’t a question at all. It’s a long-overdue imperative, one that the nation is finally beginning to acknowledge.
Before his inauguration, President Barack Obama called himself a “fierce advocate of equality for gay and lesbian Americans.” Now, with the gay marriage issue percolating in state after state and the Pentagon’s “don’t ask, don’t tell” policy ripe for repeal, it’s time he put some of his political capital where his rhetoric is.
On Wednesday, Maine became the fifth state to legalize gay marriage; similar legislation in New Hampshire has been sent to the governor. Politicians in Washington who want to avoid what they see as a dangerous controversy have a convenient escape: They can say that the marriage issue should be left to the states, and that the question of whether a legal gay marriage in one state should be recognized everywhere has already been addressed by Congress and ultimately will be settled by the courts.
But that’s a dodge, not a stance. It certainly can’t be confused with leadership.
Favoring “civil unions” amounts to another dodge. Obama took the “civil unions” route during the campaign and has stuck with it.
I believe gay marriage should be legal, and it’s hard for me to imagine how any “fierce advocate of equality” could think otherwise.
Obama sensibly advocates the repeal of “don’t ask, don’t tell.” He should press the case by reminding opponents of letting gays serve openly in the military that their arguments - it would hurt morale and discourage re-enlistment - are often the same arguments made 60 years ago against racial integration in the armed forces. That was bigotry then, and it’s bigotry now.
Obama should also make the obvious case that forcibly discharging capable soldiers for being gay, at a time when our overstretched military is fighting two wars, can only be described as insane.
What the president shouldn’t do is stay away from the marriage debate on the grounds that it’s not a matter for the federal government. For one thing, he’s on record as favoring repeal of the 1996 Defense of Marriage Act, which blocked federal recognition of same-sex marriages and relieved states of any obligation to recognize out-of-state gay marriages.
I’m not being unrealistic. I know that public acceptance of homosexuality is still far from universal. But attitudes have changed - more than enough for a popular, progressive president to speak clearly about a matter of fundamental human and civil rights.
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"A Race Against Time in Pakistan's War on the Taliban"
By Omar Waraich, TIME, Islamabad, Monday May 18, 2009
An airborne camera slowly pans over a range of thickly forested and jagged mountains. "This is the area of Piochar," says Maj. Gen. Athar Abbas, citing the suspected hideout of the Swat Valley's Taliban leadership. The camera stops, and zooms in as crosshairs appear on the screen. "This is a training camp," adds the military's chief spokesman. "If you look, you can see where [the Taliban fighters] practice firing, where they live." Small, blurred makeshift battlements are faintly visible. There is a short sharp burst of fire from the fighter jet on which the camera is mounted, leaving a column of smoke rising from the target.
The video footage provided at a recent briefing offers a rare glimpse into the Pakistani military's battle to drive the Taliban out of the Swat Valley and its surrounds. Stung by criticism at home and abroad for dithering while the Taliban extended its grip on the country's northwest, the military three weeks ago launched a large-scale offensive against the militants - and it claims to have scored major successes, killing over 1,000 militants - including a slew of mid-level Taliban commanders - and hammering their infrastructure. In the face of the ferocious assault, say Army sources, the militants are shaving off their trademark beards and fleeing the area. But the battle, which has displaced 1.5 million civilians, is far from over, and the heaviest fighting still to come. And the military leadership fears that the longer it persists, the more likely that public support for the offensive will erode in the face of the heavy toll it has wrought. (See pictures of Pakistan beneath the surface)
There's no question that the Army is taking the fight to the Taliban to a degree unprecedented until now. Last week, it dropped commandoes into Piochar, headquarters of Swat Taliban commander Maulana Fazlullah, as fighter jets targeted militants from the air. The location was first identified as a Taliban stronghold in the closing months of former President Pervez Musharraf's term in office, but it was left unmolested until now. Although the military claims to have restored control of 80% of the Buner area, reports from the area suggest fierce fighting is still underway there - and also in Lower Dir, weeks after the military declared victory in that area. (See pictures of refugees fleeing the Swat fighting)
Military commanders are keen to wrap up the fight in Buner and Lower Dir within coming days in order to focus their fire in Swat, where an estimated 4,000 well-armed, well-trained militants are dug in on terrain favorable to insurgents. The army claims that the local Taliban there has been reinforced by militants from Waziristan, southern Punjabis who have fought in Kashmir, and jihadists from central Asia. "Ten per cent of the militants have come from outside," Gen. Abbas told reporters in Islamabad on Saturday. "There should be no doubt that the money, arms and equipment is coming from the border," he said, in a reference to Afghanistan as an alleged route for militants travelling to reinforce the militants fighting in Swat. (Read "How a Terror-Linked Charity is Finding New Life Amid Pakistan's Refugee Crisis)
The military's plan for retaking Swat, eliminating the Taliban's command structure has been given priority. "In an insurgency, the leadership is the center of gravity," says Gen, Abbas. Although the military claims to have killed a number of key local commanders during the current offensive, Fazlullah and his top lieutenants remain at large, some of them still using some 36 pirate radio stations to issue propaganda messages. "The transmission can be heard for two to three minutes before it is jammed," says Gen. Abbas, "but then they begin using a different frequency."
Aware that public support for the campaign is likely to ebb, the government and military recognize that they have a limited time-frame in which to work. Unlike previous military campaigns against militants on home soil, the Swat offensive enjoys widespread public support. "We feel this was our only option because the alternative vision presented by the Taliban - girls being flogged, people beheaded, schools burned - is not the Pakistan we want," says Mushahid Hussain, a prominent politician, echoing a growing mood. "There is more cohesion now between the politicians, the media, civil society and the army." In a bid to maintain that support, Army Chief of Staff Gen. Ashfaq Kayani has been giving closed door briefings to political leaders and senior Pakistani media figures.
"The army is now in the frame of mind that the longer [the operation persists], the more the difficulty will increase," says a parliamentary leader who attended a recent briefing but was not authorized to speak publicly about the discussion. "They want this to be over in the next four to six weeks." Winning the battle in Swat may, however, take longer than that - the military is anticipating a bloody battle for Swat's main town of Mingora, where the Taliban are hunkered down for an urban showdown. Even if Swat is cleared, fighting could spread, as retreating Taliban militants open new fronts. Fighting has flared up in new parts of Swat and in the tribal areas, as well as in parts of Bajaur cleared by the military earlier this year.
Still, the military is pressing ahead, determined that, as Gen. Abbas put it, "the militants and terrorists will be eliminated and wiped out from the area." But counterinsurgency experts have warned that tactical victories can be quickly reversed if they're not consolidated through local political and reconstruction efforts. Victory over the Taliban in Swat, warns the parliamentary leader briefed by the military, "has to involve the return of the refugees and their rehabilitation. There has to be a reconstruction process. The civil administration has to be re-establish itself, and they must also ensure that an adequate police force is in place."
For now, however, the focus is on dealing the Taliban a decisive blow before the political consensus behind the Army's campaign begins to crumble.
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Jonathan Melle:Andrea "Luciforo"::Barack Obama:Dick Cheney
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Chip Somodevilla/Getty Images
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"A Hispanic pick for high court: Obama names federal judge Sotomayor"
By Susan Milligan, Boston Globe Staff, May 27, 2009
WASHINGTON - President Obama nominated federal Judge Sonia Sotomayor to the US Supreme Court yesterday, selecting a woman who is a product of both New York City public housing and Ivy League universities, and who would become the first Hispanic and third female to serve on the high court.
Calling the 54-year-old Sotomayor "an inspiring woman," Obama praised her three-decade career as a corporate litigator, prosecutor, and federal appellate judge. But in his first chance to shape the closely divided high court, Obama also said her real-life experience filled his desire for a justice who has "a sense of compassion, an understanding of how the world works and how ordinary people live."
The president cited Sotomayor's humble upbringing, including her father's death when she was 9 years old, and the diabetes that ended her childhood dream of becoming a police officer or detective. Along the way, he added, "she's faced down barriers, overcome the odds, lived out the American Dream that brought her parents here so long ago" without losing touch with the inner-city community that nurtured her.
Should she be confirmed to replace retiring Justice David Souter, who voted with the court's liberals, Sotomayor would probably not change the Supreme Court's ideological makeup, in which conservatives - including Chief Justice John Roberts - hold the majority. President George H.W. Bush nominated her to the federal bench in 1992, and President Clinton promoted her to the federal appellate court in 1998.
In a brief, emotional statement, Sotomayor, the child of Puerto Rican parents, thanked her family and her mother, who worked two jobs to take care of her and her brother, and somehow scraped together private-school tuition in the process. "I am an ordinary person who has been blessed with extraordinary opportunities and experiences," she said.
Sotomayor, viewed as a moderate liberal, gave no indication of her judicial philosophy, or her views on such contentious issues as abortion, affirmative action, or gay marriage. But she said her personal story - from the South Bronx housing projects to Princeton University honors graduate to the editorship of the Yale Law Journal - and professional background helped her appreciate the "variety of perspectives" on cases she would hear on the high court.
"It has helped me to understand, respect, and respond to the concerns and arguments of all litigants who appear before me, as well as to the views of my colleagues on the bench," she said. "I strive never to forget the real-world consequences of my decisions on individuals, businesses, and government."
Women's organizations, Hispanic groups, and civil-liberties organizations like People for the American Way cheered Sotomayor's nomination and lauded the historic breakthrough for a Latina woman. The high court currently has just one woman - Justice Ruth Bader Ginsburg, who is battling pancreatic cancer - and no Hispanic has ever been nominated to it.
Democrats, who hold power in Congress, called for a speedy confirmation, and White House press secretary Robert Gibbs said yesterday that Senator Charles Schumer, a New York Democrat, will begin the process by escorting Sotomayor on customary visits to senators when Congress returns from this week's recess.
Several conservative organizations, meanwhile, derided Sotomayor as an "activist" jurist bent on a liberal agenda, a view Gibbs called premature. When her 17-year record on the bench becomes public, he said, "I don't think anybody could reasonably argue, based on looking at her cases, that she's somebody that legislates from the federal bench."
Leading Republican lawmakers, including Senator Jeff Sessions of Alabama, the ranking Republican on the Senate Judiciary Committee, congratulated Sotomayor and pledged to keep an open mind, but vowed to scrutinize her record during her confirmation hearings.
"We will engage in a fair and thorough examination of Ms. Sotomayor's previous judicial opinions, speeches, and academic writings to determine if she has demonstrated the characteristics that great judges share: integrity, impartiality, legal expertise, and a deep and unwavering respect for the rule of law," Sessions said in a statement.
Though Sotomayor's confirmation hearings could begin as early as July, Senator Orrin Hatch, Republican of Utah and a senior member of the Judiciary Committee, said it was unlikely the panel could finish the process before Congress's August recess.
Just examining Sotomayor's several hundred published opinions, aside from her speeches and other writings, will take time, said Kristi Remington, a former Bush administration Justice Department official who helped coordinate the confirmation process for Bush Supreme Court nominees.
In a statement, Senate majority leader Mitch McConnell, Republican of Kentucky, pledged to treat Sotomayor fairly, but his spokesman would not rule out a GOP filibuster if Republicans find her views unacceptable.
When Republicans were in the majority, senators toyed with eliminating the filibuster because Democrats used it to block several of President Bush's court nominees. But with Democrats holding the White House and a 59-40 Senate advantage - which could grow to a filibuster-resistant 60-40 majority, if Democrat Al Franken is seated as Minnesota's next senator - the GOP has had a change of heart, especially since the filibuster has become the party's only procedural weapon to block Democrats from ramming through legislation and nominations.
"We haven't ruled it out. Democrats changed the rules" when they tried to filibuster the nomination of conservative Justice Samuel Alito to the high court, said Don Stewart, McConnell's spokesman.
Senate Judiciary Committee chairman Patrick Leahy, a Vermont Democrat who was in Afghanistan yesterday when Obama called him to tell him of the pick, said in a statement he hoped his Republican colleagues would give Sotomayor a fair hearing, even though some conservative interests "have said they are 'spoiling for a fight,' no matter who was nominated."
"This will not be decided by the interest groups on the left or the right," he added.
Obama's nomination of Sotomayor puts Republicans in a quandary: if they easily confirm her, they will relinquish some of their power as the minority, but if they fight to defeat her and lose, they could appear weak, inhibiting their bargaining power on legislation on healthcare and finance policy. And while gunning for Sotomayor might please conservatives, it could also anger Hispanic voters, whom the GOP needs to rebuild, analysts said.
Bush enjoyed substantial support among Latinos, and took more than 40 percent of the Hispanic vote in 2004, but the party's stance on immigration angered voters during last year's election. Republican presidential nominee Senator John McCain of Arizona captured just 31 percent of the Latino vote.
"That's why they lost the election big time," said Larry Klayman, founder of both Freedom Watch and Judicial Watch, both conservative groups. `'The Republicans just blew it, and if they do it again, they're going to blow it even more."
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"Sonia Sotomayor"
By Boston Globe Correspondent Alan Wirzbicki, May 27, 2009
Born: June 25, 1954; New York, N.Y.
Education: Bachelor's degree, Princeton University, 1976; law degree, Yale Law School, 1979.
Experience: assistant district attorney, New York County, 1979-84; private practice, New York City, 1984-92; judge, US District Court, Southern District of New York, 1992-98; judge, US Court of Appeals for Second Circuit, 1998-present.
Family: Divorced; no children.
Quote: "I chose to be a lawyer, and ultimately a judge, because I find endless challenge in the complexities of the law. I firmly believe in the rule of law as the foundation for all of our basic rights."
SOURCE: Associated Press
Major cases
Racial preferences: In 2008, Sotomayor joined a three-judge panel that sided with the city of New Haven after the city was sued by a group of white firefighters. The plaintiffs claimed they had been unfairly denied promotions despite top scores on an exam. The US Supreme Court heard the firefighters appeal and is expected to deliver its ruling next month.
Environment: In 2007, Sotomayor ruled against a power plant, favoring a strict interpretation of Clean Water Act. The ruling was overturned by the US Supreme Court in an opinion written by Justice Antonin Scalia - one of six Sotomayor decisions that have been overruled.
Second Amendment: In 2009, she joined a three-judge panel in ruling that the Second Amendment did not protect the right to own nunchucks, a martial arts weapon. The plaintiff is seeking an appeal to the Supreme Court.
Foreign rulings: In a dissenting opinion to a 2000 case revolving around a child welfare treaty, Sotomayor argued that US courts should take into account judicial decisions in foreign countries that were also party to the same treaty. Many conservatives have opposed any use of foreign rulings in US court decisions.
Labor rights: In her best-known ruling outside legal circles, Sotomayor ended the Major League Baseball strike when she sided with players against owners in March 1995. The ruling preserved free agency and ended a 232-day work stoppage that had cancelled the 1994 World Series.
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"Cases, talks offer hints to her views"
By Michael Kranish and Alan Wirzbicki, Boston Globe Correspondent, May 27, 2009
WASHINGTON - Introducing Sonia Sotomayor yesterday as his first Supreme Court nominee, President Obama relished telling her up-from-poverty life story and highlighting her history-making ethnic roots. But he stressed that he picked her because of her intellect, judicial experience, and her determination "to approach decisions without any particular ideology or agenda."
Obama, however, was quickly challenged by critics who contended she was picked more for her personal story - and her gender and ethnicity - than her legal credentials. They buttressed their contention by noting that she recently joined a three-judge panel that ruled unanimously against white firefighters in a case that centers on racial preferences. Critics also pointed to two speeches - one in which Sotomayor suggested that "our experiences as women and people of color affect our decisions," another in which she said that judges sometimes make policy.
As a result, the Sotomayor storyline almost immediately split in two directions - a heartwarming narrative of Horatio Alger proportions to her defenders, and a cautionary tale of liberal judicial activism to her critics. While the Democratic-controlled Senate is expected to confirm her, Sotomayor's life and record nonetheless are certain to be hotly debated in the weeks to come.
"Her personal story is an impressive one," said Laurence Tribe, a Harvard Law School professor who advised Obama on the nomination and attended yesterday's announcement at the White House. Tribe strongly supports Sotomayor's nomination, but he agreed that the New Haven, Conn., firefighter case is one of the most divisive facing the Supreme Court in its term ending next month "and certainly her role in it will be a subject of continuing controversy."
Drawing widespread condemnation from conservatives, the three-judge panel that included Sotomayor backed the city of New Haven, which was sued by a group of white firefighters who claimed they were unfairly denied promotions when the city invalidated an exam because no African-Americans and only two Hispanics were likely to be made lieutenants or captains based on the results.
Conservative colleagues on the Second US Circuit Court of Appeals rebuked the panel, saying that its six-sentence ruling "failed to grapple with the questions of exceptional importance" raised by the case.
Sotomayor has been involved in one decision related to abortion, often the most contentious issue during confirmation hearings. In a 2002 case, she backed the Bush administration's policy of withholding foreign aid funding to groups that provide or support abortions, dismissing the groups' claim that the government was trampling on their First Amendment rights by denying funding. "The government is free to favor the anti-abortion position over the pro-choice position, and can do so with public funds," she wrote.
In an interview yesterday, Nancy Northup, president of the Center for Reproductive Rights, downplayed the ruling, which she noted upheld a prior precedent. Still, she called on senators to press Sotomayor on her stance on abortion in her confirmation hearing.
While Democrats praised Sotomayor, some Republican senators expressed concern. Senator John Cornyn of Texas said in a statement that Sotomayor "must prove her commitment to impartially deciding cases based on the law, rather than based on her own personal politics, feelings, and preferences."
Harsher criticism came from some analysts, including Ilya Shapiro of the libertarian Cato Institute. While Shapiro agreed that Sotomayor's personal story is extraordinary, he said that she "is not a star of the federal judiciary" and that she was nominated largely because Obama wanted to name the first Hispanic to the Supreme Court.
Sotomayor, 54, a self-described "kid from the Bronx," grew up in public housing. Her father, a welder, died when she was 9. Her mother often worked two jobs as she brought up Sotomayor and her brother. One day, while Sotomayor watched "Perry Mason" - the television defense attorney - she decided to be a judge.
Sotomayor won scholarships to Princeton University and Yale Law School, where she was editor of the law review. After serving as a local prosecutor in New York and working as a corporate lawyer, she was successfully nominated by President George H.W. Bush in 1992 to the federal district court, where she famously ended a baseball strike in a 1995 case in which she sided with the players' union. In 1997, President Clinton nominated her to the federal appeals court, and she was confirmed on a 68-to-28 vote in which she drew some bipartisan support, but all 28 "no" votes came from Republicans.
On the federal bench, Sotomayor has taken centrist to left-leaning positions on civil rights, business regulation, and privacy. But legal analysts cautioned that gauging Sotomayor's judicial philosophy from her rulings is unusually difficult because judges on the Second Circuit often work in three-judge panels, with only one judge writing a ruling. Indeed, in some cases, such as the one of the Connecticut firefighters, Sotomayor has never publicly explained her reasoning behind the decisions.
"It's hard to get a sense of her individually as opposed to whatever the panel decides," said Carl Tobias, a constitutional law professor at University of Richmond.
Several speeches also provide insights into her thinking, analysts say, and portions of them have been seized on by critics. In a 2001 speech at the University of California at Berkeley, she said that "America has a deeply confused image of itself that is in perpetual tension" between a nation proud of its ethnic diversity and the view that Americans should "function and live in a race and colorblind way." She then reeled off statistics that showed a dearth of Hispanic and female judges, which she called "sort of shocking."
"I wonder whether by ignoring our differences as women or men of color we do a disservice both to the law and society," she said, adding: "I would hope that a wise Latina woman with the richness of her experience would more often than not reach a better conclusion than a white male who hasn't lived that life."
Four years later at Duke law school, Sotomayor said the "court of appeals is where policy is made."
Critics have seized upon her comment as evidence that she would legislate from the bench, while her defenders said she was citing the difference between district and appeals courts. "I know this is on tape, and I should never say that because we don't make law. I know," she quickly added in the speech. "I'm not promoting it, I'm not advocating it."
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A BOSTON GLOBE EDITORIAL
"Sotomayor's journey"
May 27, 2009
IN NOMINATING federal appeals court judge Sonia Sotomayor for the nation's highest court yesterday, President Obama stressed her "extraordinary journey" from public housing in the South Bronx to the upper reaches of the judicial system. But despite her personal history, Sotomayor's professional record is notable less for its iconoclasm than for its steadiness and solidity.
Sotomayor, now a judge on the Second Circuit Court of Appeals, would become the first Hispanic on the Supreme Court. By any measure, she is well prepared for the job. A graduate of Princeton and Yale Law School, she has worked as a prosecutor and as a corporate lawyer in civil cases. And her previous service as a federal district court judge would be a crucial addition to the court.
Currently, only departing Justice David Souter has experience as a trial judge. By proposing Sotomayor as his replacement, Obama has answered his own complaint that current Supreme Court justices - most of whom entered the federal judiciary at the lofty appellate level - often consider cases through too abstract a prism.
Some liberal activists hoped that Obama would seek a firebrand to counter Antonin Scalia, the darling of the right. Yet Sotomayor has made her reputation not on hot-button social issues but on matters ranging from environmental regulation to the baseball business. While she presumably shares Obama's support for abortion rights, she upheld Bush-administration restrictions on family-planning activities by US-funded nonprofits overseas.
Even so, conservative groups have seized upon an offhand remark in 2005 - her description of federal appeals courts as the place "where policy is made" - as evidence that Sotomayor would legislate from the bench. The attack is disingenuous; appellate judges by necessity guide lower courts among competing interpretations of often ambiguous laws. Sotomayor's critics would fault her for even acknowledging the power that appellate judges wield.
Despite a strong Democratic majority in the Senate, Obama's nominee should be ready for probing confirmation hearings. In a crucial affirmative-action case, she voted to uphold New Haven's ability to throw out a promotion exam in which minority firefighters fared poorly, but the judges did not explain their reasoning. Senators should press for her analysis of the issue. Sotomayor also has little record on the limits of executive power - which has emerged as a vital issue in the years since Sept. 11.
Short of any unexpected revelations about her record or her philosophy, though, the Senate should confirm Sonia Sotomayor. However intriguing her personal background, she also has the experience to make an excellent Supreme Court justice.
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"Geithner to unveil stimulus tax credits in Boston"
By Steve LeBlanc, Associated Press Writer, May 27, 2009
BOSTON --Treasury Secretary Tim Geithner is set to announce the recipients of $1.5 billion in business tax credits.
He is to speak Wednesday in Boston about the New Markets Tax Credit program. It's designed to create and save jobs in areas hit hard by the economic downturn.
The program is funded through the federal stimulus package. President Barack Obama has said the stimulus package will save or create about 3.5 million jobs nationally. Critics have questioned how the administration plans to count saved jobs.
The tax credits can be used to help finance projects and businesses in economically stressed rural and urban communities.
Geithner plans to release the list of new recipients after visiting the site of a past recipient in Boston.
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"We simply cannot afford to postpone health reform any longer." -- President Obama
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"Obama lays out health overhaul: Open to requiring coverage for all; Wants public, private options"
By Lisa Wangsness, Boston Globe Staff, June 4, 2009
WASHINGTON - Laying out in the clearest terms yet what he wants in a healthcare overhaul, President Obama told Congress yesterday that he strongly believes Americans should have the choice of a new public health insurance plan that would compete against private insurers.
Obama said he is also "open" to requiring individuals to obtain insurance coverage - which he opposed during his campaign - as long as there is a hardship exemption for those who cannot afford it, an approach similar to the system in Massachusetts. He said he supports forcing employers to contribute to their employees' insurance but that there should be exemptions for small businesses.
In a detailed two-page letter to key senators released yesterday, the president wrote that he wants to "fully offset the cost of healthcare reform" by cutting an additional $200 billion to $300 billion from Medicare and Medicaid over the next decade, on top of the $309 billion reduction he has already proposed in the government's two main healthcare programs for the poor, elderly, and disabled.
Unlike the last president to attempt a healthcare overhaul - Bill Clinton, who submitted a 1,342-page bill to Congress in 1993 - Obama has left the drafting to lawmakers. But the letter to Senators Edward M. Kennedy, chairman of the health committee, and Max Baucus, chairman of the finance committee showed that Obama is now taking a more active, public role. On Tuesday, the president called in Democrats on the two committees beginning the monthlong process of writing healthcare legislation, which he said he wants delivered to his desk by October.
"We simply cannot afford to postpone health reform any longer," he wrote. "In short, the status quo is broken, and pouring money into a broken system only perpetuates its inefficiencies."
Healthcare costs are rising dramatically, and it would cost an estimated $1.5 trillion to cover the estimated 50 million uninsured Americans.
To find more savings in Medicaid and Medicare, Obama said he would consider a significant change in the workings of a commission of leading health economists and other specialists that advises Congress on changes to Medicare. Congress currently has to enact the panel's recommendations for them to become law.
Under one proposed approach, the commission's recommendations would become law unless Congress objected - a process similar to the one used to close military bases in the last two decades and one sure to be controversial among doctors and hospitals. They have strongly resisted some of the commission's ideas, such as lowering payments, and have successfully lobbied Congress to ignore them.
The proposal "would really change the game," said John Rother, director of legislation and public policy for AARP, which represents Americans over age 50.
"It would move reimbursement toward a more expert-based and less politically-based system, and I think it's probably a positive," he said. "But I'm sure you'd get a different view from provider groups."
The president also said he was strongly committed to cutting healthcare costs by improving how care is delivered, pointing specifically to the Mayo Clinic in Minnesota and the Cleveland Clinic in Ohio, two highly-regarded institutions whose costs fall well below the national average.
"We need to learn from their successes and replicate those best practices across our country," Obama wrote.
Obama also reiterated that no one should be denied coverage because of preexisting conditions, and that all insurance plans should provide basic coverage of preventive care and catastrophic illness. He said he would like to create a health insurance exchange - a kind of Travelocity for health insurance, something like the one Massachusetts created in its 2006 law - to make shopping for insurance easy and the prices transparent.
The letter pleased liberals, who said it sent a strong signal that the president would not abandon the idea of a public insurance option, which they see as critical to reining in the profits of the healthcare industry, but which Republicans view as a potentially deadly threat to private insurers.
"This will give them a better range of choices, make the healthcare market more competitive, and keep insurance companies honest," Obama wrote.
Richard Kirsch, head of the liberal coalition Health Care for America Now, said he was "thrilled" by the public option language in the letter: "It is now clearer than ever that this choice will be a fundamental part of the reform sent to the President's desk this year," he said.
The main insurance lobby, America's Health Insurance Plans, is waiting to see what is finally proposed, said its spokesman Robert Zirkelbach. "Consumers, providers, and employers have all raised concerns about the unintended consequences of a government-run plan and the impact it would have on the quality of care."
Obama opened and closed his letter with an appeal for cooperation with Republicans, and with business and health industry lobbies who helped torpedo the Clinton plan. Senator Chuck Grassley of Iowa, the ranking Republican on the Finance Committee and a vigorous opponent of a public insurance plan, praised the letter, which he said "doesn't draw lines in the sand," and the president's "commitment to a bipartisan outcome."
Senator Chris Dodd, a Connecticut Democrat who has been leading many of the health committee meetings in Kennedy's absence while he undergoes treatment for brain cancer, said he expected to unveil an outline next week of the panel's bill, which is supposed to be merged with Baucus's bill before the full Senate votes this summer.
Dodd said he still hoped for a bipartisan package, but acknowledged that some Republicans would not accept a public health insurance option. He said the committee was considering as many as five versions of the public plan, but "there is no consensus at this point" about how it would be structured.
The president reiterated his support to help pay for healthcare by rolling back tax deductions for the wealthiest families, but steered clear of a subject that is sure to flare up in the coming weeks: whether to tax a portion of employer-sponsored healthcare benefits, which are now exempt from federal income taxes.
After Tuesday's meeting at the White House, Baucus said that Obama suggested he was open to taxing healthcare benefits to help finance the bill, but the White House issued an immediate clarification that such a tax was not his first choice. Obama did not address the issue in his letter.
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Susan Milligan of the Globe staff contributed to this report. Lisa Wangsness can be reached at lwangsness@globe.com.
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Jewish settlers carried a Torah scroll on Thursday at a construction site on the West Bank. The White House wants a freeze on the growth of the settlements. (Rina Castelnuovo for The New York Times)
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News Analysis: "Obama Pins Mideast Hope on Limiting Settlements"
By ETHAN BRONNER, The New York Times, June 6, 2009
JERUSALEM — Iran seems to be hurtling toward nuclear weapons capacity, Hezbollah could win Sunday’s election in Lebanon and Hamas is smuggling long-range rockets into Gaza again. So why is President Obama focusing such attention on the building of homes by Israeli Jews in the West Bank?
That, in essence, is the question being angrily posed by the Israeli government of Prime Minister Benjamin Netanyahu and underscores one of the biggest shifts in American policy toward the Israeli-Palestinian conflict in three decades. While every administration has objected to Israeli settlement building in occupied lands, the Obama administration has selected it as the opening issue that could begin to untie the Gordian knot of the conflict.
American officials hope that by getting Israel to freeze settlement building on land where the Palestinians expect to build their future state, they can then press Saudi Arabia and other regional powers to offer Israel concessions like low-level trade or tourism. In addition, stopping the construction would remove a major concern of the Palestinians that their land is slowly disappearing under settler housing. In his Cairo speech on Thursday, the president again called for an end to the settlement building.
“Obama may have found the soft underbelly of Israel, because ending settlements is a consensus issue in the world, among American Jewry and even among a majority of Israelis,” said Yossi Beilin, a former leftist minister and member of Parliament who now runs a private consulting firm. “He needs a strong regional coalition to leave Iraq — and not to leave it to Iran. And it seems like he sees ending settlements as a way to start this process. The only question is whether Netanyahu can do what is needed.”
The administration is starting with settlements for two reasons. It wants to send a message to the Arab world that the previous eight years of siding consistently with Israel are over — hence the Cairo speech and the focus on improving relations with Muslims. And it is one place where it actually has leverage — given the American backing of Israel, it can push Israel to live up to its commitment far more easily than it can persuade Hamas to abandon violence.
A poll published in Friday’s Yediot Aharonot newspaper lends some credence to the view that most Israelis would be willing to go along. Asked whether Mr. Netanyahu should acquiesce to Mr. Obama’s demands or risk American sanctions, a small majority favored acquiescing. When asked whether Israel should freeze settlement construction, another slim majority agreed. But when asked about “natural growth” of families in the settlements, a majority favored making allowances.
The issue of natural growth has surfaced so prominently because while the Israeli government presents it as a simple humane need to make room for expanding families, the data show that settler growth has been enormous in recent years and nearly all of it has been labeled natural growth.
While stopping the bulldozers seems like a relatively easy request of Israel, it is politically dicey for Mr. Netanyahu and technically complicated. His governing coalition includes parties with right-wing constituencies whose central goal is to expand settlements. Moreover, 40 years of settlement building have created interlocking bureaucracies and constituencies that will be hard to stop.
As Yossi Verter, a political analyst, put it in the liberal newspaper Haaretz on Friday, Mr. Netanyahu “will have to decide over the coming weeks whom he would rather pick a fight with: the powerful American administration, whose president sees himself in an almost messianic role, or his own coalition and members of his party.”
Whether Mr. Netanyahu can do it and survive politically is not the only question here. A second is whether this new American approach holds any promise.
“I am not a Greater Israel guy and I have no objection to dismantling settlements as part of a peace deal, but getting so hung up on freezing settlement growth is not wise because it is not the most important issue out there,” argued Efraim Inbar, director of the Begin-Sadat Center for Strategic Studies at Bar Ilan University.
The far bigger concern, he said, is that the Palestinians are unable to make similar concessions because of their political divisions and weakness.
Israelis have turned rightward and most analyses suggest that the reason is a growing fear of regional threats, notably Iranian-backed parties like Hezbollah and Hamas, on Israel’s borders.
Sarah Honig, a columnist for The Jerusalem Post, a conservative paper, put it this way a week ago in a column: “Settlements aren’t the problem and removing them isn’t the solution. Israel foolishly dismantled 21 Gaza Strip settlements in 2005. Did peace blossom all over as a result? Precisely the reverse occurred. The razing of Israeli communities was regarded as terror’s triumph, expediting the Hamas takeover.”
The settlements are a complex issue that resonates in surprising ways here. Zionism began 125 years ago through the Jewish purchase of land in Palestine and the building of settlements on what the Jews saw as their ancient homeland. When Israel won additional territory in the 1967 war, a conflict it felt was imposed on it, many here viewed it as the miraculous continuation of Jewish national rebirth in the biblical heartland. Religious Jews began settling there, but others were attracted by low prices, open space and a pioneering ethos.
Criticism ensued immediately, including American government condemnation. The Fourth Geneva Convention forbids a country to settle its civilians in areas conquered militarily. Israel set up military outposts that turned into civilian settlements.
Palestinians were enraged. Some resorted to terrorism, leading some Israelis to argue that settlements were a vital front line to protect the heartland.
After Israel and the Palestine Liberation Organization agreed in 1993 to mutual recognition and began negotiating the terms of a Palestinian state, Israel ended construction of new settlements. But the boundaries of existing settlements were large, and over the next decade, the settler population more than doubled and now stands at nearly 300,000.
In 2003, Israel and the Palestinians signed the so-called road map for a two-state solution, calling on Israel to freeze all settlements, and on the Palestinians to dismantle terror networks. Neither has done so.
The Israelis say they had unwritten agreements with the Bush administration to continue building, as long as no new settlements were built. Bush officials say that is only partially true. The Obama administration says such winks and nods are over. It is signaling the Arab world that it is shifting policy. Whether it does so, and how the Netanyahu government responds, will make for high drama in the coming months.
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"Obama: 'Time to deliver' on health care"
By Erica Werner, Associated Press Writer, June 6, 2009
WASHINGTON --President Barack Obama said "it's time to deliver" on his health care agenda, using his weekly radio and Internet address to focus on his domestic priority even while traveling overseas.
His remarks airing Saturday were timed to gatherings in living rooms and coffee shops around the country by tens of thousands of people to discuss health care. The weekend events, organized by his campaign, were intended to try to build a groundswell of support for congressional action.
"If we do nothing, everyone's health care will be put in jeopardy," Obama said.
"Fixing what's wrong with our health care system is no longer a luxury we hope to achieve -- it's a necessity we cannot postpone any longer," said the president, who attended D-Day ceremonies in France on Saturday.
The first bill containing language to put in place his health care goals has begun circulating on Capitol Hill. Draft legislation from the Senate Health, Education, Labor and Pensions Committee would require employers to cover their employees or pay a penalty, and would guarantee coverage for all.
That parallels Obama's goals of lowering costs, ensuring choice, and providing coverage to some 50 million uninsured Americans.
Obama articulated those goals again in his radio address and in a videotaped message prepared for supporters at the community meetings.
"Any health care reform must be built around fundamental reforms that lower costs, improve quality and coverage and also protect consumer choice," Obama said in the radio address.
He said he supports a plan that would not add to the budget deficit, touching on a major issue that remains unresolved little more than a week away from the first scheduled votes in Senate committees.
Congress still hasn't figured out how to pay for a health overhaul that could cost $1.2 trillion to $1.5 trillion or even more over a decade. Obama has put forward some ideas, including cuts to Medicare and Medicaid. Others he's suggested, including limiting some tax deductions rich people can take, have already gotten shot down on Capitol Hill.
And despite Obama's stated preference for a bipartisan solution, that's looking hard to achieve.
Although he didn't mention the issue in his radio address, Obama supports a new public insurance plan that would give all Americans the opportunity of getting government-sponsored care.
Private insurers are adamantly opposed, fearing they'd be driven out of business, as are most Republicans. Senate Minority Leader Mitch McConnell spoke in the Senate almost every day this past week against the concept and reiterated the point in an interview with radio reporters Friday.
"The key to a bipartisan bill is to not have a government plan in the bill, no matter what it's called," said McConnell, R-Ky. "When I say no government plan, I mean no government plan. Not something described some other way, not something that gets us to the same place by indirection. No government plan."
Obama barely mentioned such opposition in his address.
"When you bring together disparate groups with differing views, there will be lively debate. And that's a debate I welcome," the president said. "But what we can't welcome is reform that just invests more money in the status quo -- reform that throws good money after bad habits."
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On the Net: www.whitehouse.gov
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ABC News: The Note, 6/10/2009
"Deeds & Words -- Can Obama reconcile with himself on health care reform?"
abcnews.com - June 10, 2009
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By RICK KLEIN
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On a day for outsiders (at least in Virginia), the outsider-turned-insider in the White House needs to win an inside game -- one he’s playing from the outside, too.
Members of the Obama army may or may not be the force the president wants them to be, but they’ve got quite a bit to reconcile in their marching orders already.
The path to health care reform has already led President Obama away from the campaign’s clarity -- the clarity that his supporters once signed up for, and that the opposition can’t wait to hold them to.
As the health care bill that’s the centerpiece of the Obama agenda takes shape, it looks increasingly likely to include items the president fought as a candidate -- with the possibility of one each from the primary (universal mandate) and the general (taxing health benefits)
That doesn’t even include other controversial items -- ones some Republicans are setting up as deal-killers: the public option, and penalties on employers that don’t provide coverage. (Don’t forget you have to pay for the whole thing, too.
Like much in the world of sound policy, the big items have uncertain constituencies inside Congress. And even though one of the concepts is borrowed from Sen. John McCain, R-Ariz., it’s not an idea with wide acceptance inside a Republican Party that’s rediscovering its commitment to fiscal discipline
“The great unknown of the health-care debate as it unfolds in the months ahead is whether the current political landscape will prove more hospitable to mandates, cost controls and tax increases -- all measures now on the table that helped doom the Clinton plan,” Shailagh Murray writes for The Washington Post. “Passage of a health-care bill of the scope Congress is contemplating would be an extraordinary feat, but it is fraught with political peril, win or lose. . . . Republicans are betting that the specter of ‘big government’ can still unsettle voters.”
With each new detail, a new ad campaign is born. (And just wait until the funding mechanisms -- read: taxes -- fall into place.
“Democratic leaders in both houses said they would require individuals to carry insurance and employers to help pay for it. But they have yet to decide how to raise the necessary tax revenue,” Robert Pear writes in The New York Times. “Leaders in both chambers said they wanted to establish a new public health insurance program, which would compete with private insurers. But they have not settled on the details.”
(Don’t miss the fact that Senate Minority Leader Mitch McConnell, R-Ky., is on the Senate floor daily to rail against the health plan. It worked for Gitmo…
Back in your court, Mr. President: “A Senate plan to overhaul the nation's health system is likely to include a new tax on some employer-provided health benefits that exceed the value of the basic plan offered to federal employees, currently about $13,000 a year for a family of four, the chairman of the Senate Finance Committee said yesterday,” Lori Montgomery writes in The Washington Post. “Sen. Max Baucus (D-Mont.) said he is drafting the health reform measure, which he expects to unveil next week. He told reporters that taxing employer-provided benefits is ‘perhaps the best way to raise money for an overhaul of the health-care system’ and offered details about the form that tax is likely to take.”
“For some Americans, especially the affluent and those with traditional job-based medical insurance, there could be new or higher taxes,” the Los Angeles Times’ Noam Levey writes. “Shadowing the debate, which is expected to dominate Washington's summer and extend into the fall, are the same vexing controversies that have derailed almost all previous efforts to reshape the U.S. healthcare system.”
Contours of compromise? “If those early drafts are any indication, the [Senate] HELP version [of the public plan] would look a lot like Medicare,” Time’s Karen Tumulty reports. “The House version, on the other hand, would have a government plan that looks a lot like a private insurance company. . . . That's a very big difference. Where the insurance industry says that it would go broke if it had to compete with a Medicare-like option, some of the big companies say privately they could live with a government plan, if it had to sustain itself (as they do) on the premiums they collect, and if it is subject to the same regulatory rules that they are.”
How many defections can Democrats afford? “I’m not open to a public option,” said Sen. Mary Landrieu, D-La., per The Hill’s Mike Soraghan.
The inside push: “House Speaker Nancy Pelosi and Majority Leader Steny Hoyer are double-teaming powerful chairmen and rank-and-file members to save health care reform from a repeat of the Democratic Party infighting that helped kill it in 1994,” Patrick O’Connor and Chris Frates write for Politico. “In a closed-door session Tuesday, Pelosi assured rank-and-file Democrats that she won’t move forward on a bill without their consent. ‘We have to hear from you,’ one participant quoted Pelosi as saying.”
Still shooting for bipartisanship: “The game plan is to keep the Republicans in the room,” Rep. Richard Neal, R-Mass., told The Boston Globe’s Lisa Wangsness after a meeting at the White House. “[The president] was very clear about that.”
But: “The battle over health care is already turning into a partisan brawl,” ABC’s Jonathan Karl and Kristina Wong report.
Said Sen. Jon Kyl, R-Ariz.: “Americans don't want government-run insurance companies any more than they want government-run car companies.”
Sensing a messaging theme? “Those are two words we hear a lot today: Washington takeover,” said Sen. Lamar Alexander, R-Tenn., per ABC’s Z. Byron Wolf.
Is there a plan yet, really, if it’s not paid for? “Democrats are postponing a decision on the contentious issue of how to pay for the health plan,” The Wall Street Journal’s Naftali Bendavid and Janet Adamy report. “The delay will give lawmakers time to get a better handle on cost estimates. It could also give them a chance to sell the public on the benefits of expanded health care before talking about how to pay for them.”
You really can’t have it all -- can you? “Just as Mr. Reagan glossed over the contradictions of his spending, tax cuts and deficit-reduction plan 30 years ago, the health-care reform folks today are ignoring the virtual impossibility of insuring everyone while cutting costs and giving consumers freedom to choose health providers and treatments,” Quinnipiac’s Peter Brown writes in the Capital Journal column.
Taking on some political weaknesses -- though not particularly strongly: “The ‘pay-as-you-go’ budget formula plan is significantly weaker than a proposal Obama issued with little fanfare last month,” per the AP’s Andrew Taylor. “It would carve out about $2.5 trillion worth of exemptions for Obama’s priorities over the next decade. His health care reform plan also would get a green light to run big deficits in its early years. But over a decade, Congress would have to come up with money to cover those early year deficits.”
“The PAYGO rules will apply to new tax cuts and mandatory spending, with four major exemptions -- any renewal of the 2001 and 2003 tax cuts, the continued efforts to ‘patch’ the Alternative Minimum Tax, any effort to address physician's payments in Medicare, and modifying the estate tax,” ABC’s Jake Tapper and Sunlen Miller report. “In addition, discretionary spending -- roughly 40% of the federal budget -- is not covered by PAYGO.”
“[Obama’s] congressional allies -- and his own actions -- threatened to undermine his message of fiscal discipline,” The Wall Street Journal’s Jonathan Weisman writes. “House appropriators on Tuesday unveiled spending numbers for the coming fiscal year that push up domestic outlays by 10.4%, after lawmakers used gimmicks to get around the pay-as-you-go rules Mr. Obama is embracing.”
About that discipline: It’s nice that the government is getting TARP money back, but deficit reduction?
“The president’s assertion that the national debt will be lessened by $68 billion seems less than certain,” ABC’s Jake Tapper and Sunlen Miller report. “During his Senate confirmation hearing on June 4, Herbert M. Allison Jr., nominee to the assistant secretary for financial stability, said any repayment could be extended to additional firms.”
Said White House press secretary Robert Gibbs: “I certainly wouldn't rule it out, but I also wouldn't rule it in.”
A battle that would be consuming a week under different circumstances: “A bill to fund the wars in Iraq and Afghanistan has turned into a major legislative challenge on Capitol Hill, as members press President Obama from the left and the right on a number of fronts: the logistics of closing the Guantanamo Bay detention facility, the release of photos showing abuse of detainees and a proposed loan to the International Monetary Fund,” Perry Bacon Jr. reports in The Washington Post.
The liberal blog FireDogLake is rallying the troops to urge Democrats to vote no.
Judge Sonia Sotomayor’s hearings are set for July 13 -- and Republicans are going to keep making noise about that being too soon.
We just hope the judge’s brother has cleared his calendar: “It's just insulting,” Juan Sotomayor tells ABC’s Claire Shipman about some of the name-calling since his sister was nominated for the high court. “Angry is just beginning of the emotion that I could describe.”
On the “wise Latina” comment: “I'm not going to pretend I know what she was talking about, and I'm sure it was done in a context that was meant totally different than it was taken out of. And it's not my place to say that,” Juan Sotomayor said, on “Good Morning America” Wednesday.
As for the hearings, the announcement of an early start date for hearings had the effect of “infuriating Republicans who said that they had been blind-sided and that the timetable would recklessly short-circuit the review process,” David M. Herszenhorn reports in The New York Times. “But as Republican leaders went to the Senate floor yowling in protest on Tuesday afternoon, they seemed virtually powerless to slow the confirmation proceedings.”
“Republicans claim they would have to read 76 cases per day of her record to be prepared for her hearings, math based on the fact that Judge Sotomayor has heard appeals on over three thousand cases in her current job on the Court of Appeals,” per ABC’s Sarah Tobianski. “But Sotomayor has only 264 published opinions on the Second Circuit, according to Democrats on the Judiciary Committee.”
A boycott in the making? “If I’m ready to attend, I will attend. If I’m not, I won’t,” said Sen. Tom Coburn, R-Okla., a member of the Judiciary Committee, per Politico’s Alex Isenstadt and Manu Raju.
NPR’s David Welna: “Committee rules say at least eight members must be present -- and at least two of them must be members of the minority -- for business to take place. So if at least six of the seven Republicans on the panel were to stay away, no executive action could be taken to advance the process, including voting to forward the nomination to the full Senate.”
A different strategy, per the Christian Broadcasting Network’s David Brody, who has the video: “The Christian group ‘Faith and Action in the Nation's Capitol’ has made its way to Capitol Hill and Supreme Court Nominee Sonia Sotomayor might be interested in what they did. They blessed the doors of Senate Hart Building Room 216 with prayer and oil because they believe this will be the room most likely used for her confirmation hearing which begins July 13th.”
In Virginia, a re-match is set -- with national implications, certainly and surely
Creigh Deeds beat Terry McAuliffe in Tuesday’s Democratic gubernatorial primary -- convincingly, and your marquee 2009 match-up is set, as Deeds takes on Republican Bob McDonnell.
“This time, the two men with deep roots in the state will not only battle for Virginia's highest office, but will do so in an election that is expected to draw intense national attention and be viewed as a bellwether for the Democratic Party,” Rosalind S. Helderman writes in The Washington Post. “Their 2005 race for attorney general was dominated by law-and-order issues. Now, the campaign will emphasize the serious pocketbook concerns facing Virginia voters and will trace the themes that dominated the primary: jobs, the environment, energy.”
“Both national parties are looking to the contest as a warm up for the 2010 midterm elections and for signs of how voters are responding to the policies of President Barack Obama and congressional Democrats,” Susan Ferrechio writes in the Washington Examiner.
“Deeds dominated his rivals, winning vote-rich counties such as Chesterfield, Henrico, Fairfax and Prince William and cities such as Richmond, Roanoke, Norfolk and Virginia Beach. He carried 10 of Virginia's 11 congressional districts; McAuliffe took the 3rd District,” Tyler Whitley and Jim Nolan write in the Richmond Times-Dispatch. “Political analysts said Deeds, as the most moderate of the three candidates, could have a better chance of defeating McDonnell on Nov. 3.”
The Macker, gracious in defeat: “Virginia needs Creigh Deeds,” Terry McAuliffe said.
A week into the general election in New Jersey: “Fresh from his Republican primary victory, former federal prosecutor Christopher Christie leads Democratic incumbent Gov. Jon Corzine 50 – 40 percent among likely voters in the New Jersey Governor’s race, according to a Quinnipiac University poll released today.”
Some clarity coming to Wall Street? “The Obama administration is dropping its plan to cap salaries at firms receiving government bailout money, leaving them subject to congressionally imposed limits on bonuses, according to people familiar with the matter,” per The Wall Street Journal. “The move is likely to end months of confusion on Wall Street about separate pay directives from the White House and Congress. The administration is expected to announce the compromise on Wednesday. In addition to standing behind the restrictions passed by Congress in February, the administration plans to push for broad changes in compensation practices across the financial-services industry, these people say.”
Who’s this designed to help recover? (And how many jobs will this save or create? Will that count the reporters assigned to gaffe-duty?)
“Vice President Joseph Biden will kick off what the White House is billing as his ‘Road to Recovery’ tour on Thursday, traveling to communities across the country to highlight stimulus bill projects,” Keith Koffler writes for Roll Call. “Congressional Democrats have been demanding a more public role from the White House in touting the stimulus and its effects on job creation.”
Before you run for president, you have to learn how to return phone calls: “Watching the dinner-speaker spectacle develop, then unravel, then redevelop (Will she or won't she speak/attend?) felt like watching a middle-school romance in which a friend tells another friend that so-and-so has a crush on you-know-who, but don't tell anybody. A little silly, in other words. And embarrassing,” Kathleen Parker writes in The Washington Post.
“Seven months after the election, Palin still can't shoot straight. Unless something changes dramatically and soon, ‘Missed Opportunity’ should be the title of her memoir,” Parker writes.
“It's a measure of the Republican Party's problems that its members managed to turn their biggest fundraising event this year into a circus highlighting their own differences. The question of whether Alaska Gov. Sarah Palin would show up eclipsed virtually anything said about President Obama or the party's vision,” The Washington Post’s Dan Balz writes.
Dissecting Sanford’s stand: Gov. Mark Sanford, R-S.C., “tried to decline the economic stimulus funds, intended for education and law enforcement. In a case that boiled down to a power struggle between two branches of state government, the court said the Legislature had allocated the money and Sanford had to apply for it,” Jill Lawrence writes for Politics Daily. “His stand is certainly a bracing antidote to empathy, a trait much maligned these days in conservative circles. But that's hardly the path to the White House, for Sanford or for his party.”
Team Romney finds a way to pay the bills. From the release going out Wednesday: “Four political veterans with a strong mix of campaign, government and private sector experience today announced the formation of the Shawmut Group LLC, a Boston-based strategic communications, public affairs and political consulting firm,” per the press release. “The Shawmut Group consists of Beth Myers, Peter Flaherty and Eric Fehrnstrom, all of whom served in senior leadership roles with former Massachusetts Governor Mitt Romney, and Rob Cole, a senior aide and political adviser to former New York Governor George Pataki.”
ABC’s John Berman goes from running for president back to playing pundit in his latest “Quick Fix” segment -- and George W. Bush and Britney Spears have something in common, if you know what I mean.
The Kicker:
“I think the only thing she said to me is, 'Hey, they paid for my flight to Washington.' ” -- Juan Sotomayor, on his sister’s reaction to being named to the Supreme Court, on “GMA” Wednesday.
“When I travel 250 miles to make a case on how to save the state a lot of money ... and the guy comes into his office and starts playing with his BlackBerry, I was miffed.” -- Billionaire Thomas Golisano, to the New York Daily News, in the first recorded instance of a legislative body switching party control because of a handheld electronic device.
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THE BOSTON GLOBE - POLITICAL NOTEBOOK: "Obama spars with insurers"
By Associated Press, June 24, 2009
WASHINGTON - President Obama squared off yesterday with the insurance lobby over industry charges that a government health plan he backs would dismantle the employer coverage Americans have relied on for a half-century and overtake the system.
The harsh exchange came after months of polite White House photo-ops at which the administration and insurers emphasized their search for common ground.
“If private insurers say that the marketplace provides the best quality healthcare . . . then why is it that the government, which they say can’t run anything, suddenly is going to drive them out of business?’’ Obama said in response to a question at a White House news conference.
“That’s not logical,’’ he said, responding to an industry warning that government competition would destabilize the employer system that now covers more than 160 million people.
“The public plan, I think, is an important tool to discipline insurance companies,’’ Obama said.
That’s not what the industry thinks. In a letter to senators released yesterday, the two largest industry groups warned in stark terms that a government plan would take over the system.
America’s Health Insurance Plans and the Blue Cross Blue Shield Association also said they don’t believe it’s possible to design a government plan that can compete fairly with private companies in a revamped market. “Regardless of how it is initially structured, a government plan would use its built-in advantages to take over the health insurance market,’’ said the insurers’ letter.
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"Obama says he’s still smoking a little"
WASHINGTON - It fell to President Barack Obama to confirm the gossip that his aides had spent weeks trying to snuff out: He still sneaks an occasional cigarette.
“There are times where I mess up,’’ Obama said at a White House news conference yesterday. But, the president hastened to add, he never smokes in front of his young daughters and not on a daily basis.
“Look, I’ve said before that as a former smoker I constantly struggle with it. Have I fallen off the wagon sometimes? Yes,’’ Obama said. “Am I a daily smoker, a constant smoker? No.’’
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"Obama leaves door open to health benefits tax"
The Boston Globe, By David Espo and Philip Elliott, Associated Press, June 25, 2009
WASHINGTON - President Obama left the door open to a new tax on healthcare benefits yesterday, and officials said top lawmakers and the White House were seeking $150 billion in concessions from the nation’s hospitals as they sought support for legislation struggling to emerge in Congress.
“I don’t want to prejudge what they’re doing,’’ the president said, referring to proposals in the Senate to tax workers who get expensive insurance policies. Obama, who campaigned against the tax when he ran for president, drew a quick rebuff from organized labor.
Obama also fielded a pointed personal question during an ABC News town hall at the White House yesterday. The prime-time program was the latest in a string of events designed to build public support for his plan to slow the rise in healthcare costs and expand coverage to the nearly 50 million uninsured.
Dr. Orrin Devinsky, a neurologist at the New York University Langone Medical Center, challenged Obama: What if the president’s wife and daughters got sick? Would Obama promise that they would get only the services allowed under a new government insurance plan he is proposing?
If “it’s my family member, if it’s my wife, if it’s my children, if it’s my grandmother, I always want them to get the very best care,’’ Obama said.
The United States is the world’s only developed country that lacks universal healthcare. About 50 million of the US population of 300 million have no health insurance. The poor and elderly receive government care, but most Americans rely on private insurance, usually received through their employers.
The administration and its allies pushed yesterday for a prominent display of progress in the Senate before Congress begins a weeklong vacation tomorrow.
Senate Finance Committee Chairman Max Baucus, a Democrat, labored in a series of meetings to produce at least an outline of legislation that could command bipartisan support. Of the five House of Representatives and Senate committees working on healthcare, Finance is the only one that appears to have a chance at such an agreement.
Key Republicans pressed the White House for assurances that any concessions made now would not merely lead to additional demands at a later date. “We want to know the president is working in good faith along the way as we are,’’ said Senator Olympia Snowe of Maine after meeting with Nancy-Ann DeParle, the top White House official on the issue.
Several officials said Baucus was negotiating with representatives of the nation’s hospitals, hoping to conclude an agreement that would build on an $80 billion weekend deal with the pharmaceutical industry.
Hospitals were being asked to accept a reduction of roughly $155 billion over the next decade in fees they are promised under government programs such as Medicare and Medicaid, according to numerous officials.
Officials at the American Hospital Association and the Federation of American Hospitals said they could not comment on any discussions.
Baucus is seeking similar concessions from nursing homes, insurance companies, medical device makers, and possibly others, noting that any legislation would create a huge new pool of customers for industry providers.
At its heart, any legislation is expected to require insurance companies to offer coverage to any applicant, without exclusions or higher premiums for pre-existing medical conditions.
Baucus has said he hopes to hold the size of any legislation to $1 trillion or less, and in private negotiations, there were discussions about further scaling back eligibility for insurance subsidies from the government.
Additionally, Baucus was still searching for ways to cover the cost of his emerging legislation, and numerous officials said he appeared roughly $200 billion shy of achieving that goal.
At the White House, Obama was asked if he was open to taxing healthcare benefits - a proposal he opposed vigorously in the campaign for the White House. “I have identified the ways that I think we should finance this. I think Congress should adopt them,’’ he said on ABC’s “Good Morning America.’’
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"Politics Takes Chunk Out of White House Payroll"
Yahoo! News - Real Clear Politics OPINION By Mike Memoli - July 2, 2009
During his two months on the campaign trail as Barack Obama's running mate, Joe Biden was fond of sharing his father's witticisms with audiences to illustrate a point. One of the more common ones went something like this: "Don't tell me what you value. Show me your budget, and I'll tell you what you value."
Barack Obama promised voters he would change the way Washington does business and turn the page the tired politics of the past. But newly-released documentation of White House employee salaries suggests that his administration has placed a premium on political counsel.
Among the 22 staffers earning the top salary of $172,200 is White House director of political affairs Patrick Gaspard. His deputy, Michael Dillon, earns $113,000 a year. And four regional directors in the Office of Political Affairs are paid a more modest $75,000 a year.
Each administration since President Reagan has had an Office of Political Affairs as part of the Executive Office of the President. President Bush employed as many as nine political aides in the White House during the election year of 2004. In 2005, the first year of his second term, that number shrunk to one.
But President Obama's decision to keep an Office of Political Affairs under the White House umbrella was a disappointment to lawmakers in both parties and good government advocates who see no benefit to the public in having a partisan operation in the West Wing financed at taxpayer expense. John McCain actually vowed to eliminate it if elected. And already, Obama's campaign organization (Organizing for America) is now embedded in the Democratic National Committee, separate from the White House.
That six employees account for more than a half million of the White House payroll further shows how politics is inseparable from policy. Not included but equally involved in political considerations, senior advisers David Axelrod and Peter Rouse are among the $172,200 salary club. So is Rahm Emanuel, now President Obama's Chief of Staff, but also a renowned partisan animal who once served as President Clinton's in-house political adviser and whose take no prisoners attitude as Chair of the DCCC helped Democrats recapture the House in 2006.
The upper echelon of earners in the Obama White House also includes a host of top advisers in legislative affairs, legal issues, and specific policy areas like health care and the environment. More than two dozen staffers at the "special assistant level" earn $130,000 for their roles in shaping Obama's busy agenda. Not far behind at more than $100,000 though is Reggie Love, the president's so-called "body man" who attends to the commander-in-chief's routine personal requests.
The annual disclosure of salary information of White House employees is a highlight for reporters looking for just this kind of information. But it's an unwelcome tradition for those working at 1600 Pennsylvania Avenue, one that the young crop of new staffers may not have considered even as they agreed to work in an administration that promised greater transparency.
To that end, the fact that the White House itself disclosed the information this year is notable. Typically, the figures are only made public after the required report to Congress each administration must make each year is leaked to the media. Instead, this year it was posted the White House blog Wednesday by Macon Phillips, director of New Media, "consistent with President Obama's commitment to transparency." Incidentally, Phillips is among the 123 staffers making six figures, at a salary $115,000.
In tough economic times, the information is likely to face additional scrutiny, particularly since the overall White House payroll would increase from 2008 if all staffers accrue their annual wage. All told, 455 White House employees earn on average $77,320, up four percent from 2008. The median salary is $62,000, which means that as many employees earn more than that as earn less; last year the figure was $55,400. Unlike past years, however, the top salary has remained the same, a result of a freeze Obama ordered immediately upon taking office.
The 22 most senior officials who earn that top wage also includes staff secretary Elizabeth Brown, press secretary Robert Gibbs and chief speechwriter John Favreau. Meanwhile, 51 junior staffers earn the minimum salary of $36,000, including West Wing receptionist Darienne Page, press assistant Kevin Lewis and assistant speechwriter Kyle O'Connor.
But for the sizable number of employees who transitioned from the campaign to the White House, even those at the lowest levels are enjoying a stimulus plan of sorts - higher pay in addition to a much more prestigious address.
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As chief negotiator for the N.H. employees’ union, Diana Lacey has fought for healthcare that is “responsible and affordable.’’ (Cheryl Senter for The Boston Globe)
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"Healthcare overhaul could limit tax breaks on benefits"
By Lisa Wangsness, Boston Globe Staff, July 4, 2009
WASHINGTON - For the secretaries and environmental engineers, game wardens and van drivers who work for the state of New Hampshire, surgery is free, even at Boston’s top teaching hospitals if it’s necessary. So are MRIs, CT scans, and X-rays.
Pregnant women pay nothing for prenatal care; alcoholics aren’t billed for short stints in rehab. Seeing a therapist costs just $10, as many as 20 visits a year, and prescription drugs top out at $30 for a three-month mail-order supply. New Hampshire state employees get $450 annually toward gym memberships, if they go regularly, or $200 toward their own treadmill - and there’s a $150 annual reimbursement for yoga classes, diabetes clinics, and nutritional counseling.
They have what some call “gold-plated’’ or “Cadillac’’ health insurance. For just $60 a month, state workers’ families get coverage worth $20,400 a year, about 62 percent more than the plan the average American family gets through work. And because the federal government excludes health benefits from taxation, they pay no income taxes on any of it.
But that may be about to change.
Desperate to find ways to pay for a healthcare overhaul that could cost more than $1 trillion over the next decade, Congress has begun to look longingly at limiting the tax exclusion on employer-sponsored health benefits, which cost the federal government an estimated $225 billion in foregone tax revenue in 2008.
Ending the tax break entirely is out of the question politically, but next week the Senate Finance Committee is likely to propose limiting it in some fashion - by requiring people with the most expensive insurance, or the highest incomes, or both, to pay some taxes on their health benefits. President Obama, who is urging Congress to send him a bill this year, dislikes the idea but has not ruled it out.
Opponents of the tax exclusion want to get rid of it because they say it is grossly unfair - it gives the biggest tax break to those with the highest salaries and the best benefits, while the millions of Americans who don’t get insurance through their employer get little or no help at all.
“It provides enormous tax breaks to those who need them least, and little or nothing for millions of working families who really need help,’’ said Robert E. Moffit, director of the conservative Heritage Foundation’s Center for Health Policy. “If you are going to give a tax break, you should give it to taxpayers evenly.’’
But Diana Lacey, the chair of collective bargaining for the New Hampshire state employees’ union, says it’s wrong to call their plan “Cadillac’’ coverage, or to encourage employers to offer workers skimpy coverage. A health overhaul, she said, should “bring people up to the standard we have - healthcare that is responsible and affordable and you don’t have to go bankrupt to get the treatment you need.’’
Defending the status quo is an unlikely set of allies - executives of major corporations, who like being able to use tax-free health benefits to attract and retain employees; labor union leaders, who argue their members have sacrificed higher wages over the years to gain and retain good coverage; and some liberals who believe all Americans should have a generous health plan.
The Laborers’ International Union of North America, which represents some 508,000 construction workers and government employees whose family plans can be worth $18,000 or more in the most expensive healthcare markets, has already begun running ads targeting senators who want to limit the tax exclusion.
“If they think they’re protesting in Iran, if they pass a healthcare bill that’s going to tax my members’ benefits, they ain’t seen nothing yet,’’ said Terry O’Sullivan, the union’s president.
The Laborers’ International and other unions argue that tax policy should support workers who put a high value on good health benefits, so they don’t face bankruptcy or need public assistance when they get sick. The New Hampshire state employees’ union estimates that its members earn 20 percent less than other public sector workers in the state after repeatedly giving up raises in contract negotiations to keep their the generous benefits. It was an arrangement that for years also suited the thrifty state of New Hampshire - it could offer its workers a valuable benefit at a discount.
“It was cheaper for them to do that than to pay us more money,’’ Lacey said. She said the union, now involved in protracted negotiations with the state, would probably renegotiate its contract if the tax exclusion were limited.
Critics of the tax exclusion say it contributes to out-of-control growth in healthcare spending: Not taxing health benefits lets employers offer healthcare plans at a discount, which leads to more generous coverage that encourages beneficiaries to use more medical services. And since the supply of medical care is limited, costs rise for everyone.
“They don’t have has much incentive to think about things that would hold down the cost of healthcare as those of us who have less benefits do,’’ said Paul Van de Water of the liberal Center on Budget and Policy Priorities.
Over time, the benefits that allowed Lacey to get great healthcare without falling into debt as a young single mother have become an enormous liability for New Hampshire taxpayers. In fiscal 2008, employees’ medical and dental bills added up to nearly $234 million, according to state figures, up from $77 million in 1999.
As a result, the state has gradually pressured workers to contribute more to their healthcare in the form of modest monthly contributions and small copays. It’s a trend happening around the country as employees are facing growing out-of-pocket costs, according to research by the Kaiser Family Foundation.
Limiting the exclusion, however, will not be easy politically.
Larry Levitt, vice president of the Kaiser Foundation, points out that its polling shows 54 percent of Americans oppose the idea. Most of those who were open to it instantly changed their minds when told it could result in fewer employers providing coverage, or that it would take away a benefit that some employees had accepted instead of wage increases. Most people, Levitt noted, have health insurance they like and would not welcome paying taxes on it.
“I think it will put more pressure on Congress to demonstrate the benefits to the middle class of the rest of the health reform plan,’’ Levitt said.
As a candidate, Obama assured voters he wouldn’t increase taxes on families earning less than $250,000 a year, and he spent millions of dollars on TV ads lambasting Republican John McCain’s proposal to replace the tax exclusion for health benefits with a tax credit for all Americans. With pressure mounting to pass a hugely expensive healthcare bill, Obama has said he would consider capping the tax break but would prefer to limit itemized income tax deductions for higher earners as a way to pay for the healthcare overhaul.
Capping tax-free health benefits at the price of a basic family plan offered to members of Congress - about $13,500 a year - would raise $420 billion over the next decade. The Senate Finance Committee is considering a higher limit of $17,000, or about $4,500 more than the average family plan costs.
“You’re going to have a fight on your hands no matter what,’’ said MIT economist Jonathan Gruber, an advocate of limiting the tax deduction, who is advising the administration and Congress. “It’s a trade-off between raising enough money to make the fight worth it and how many people you have to fight with.’’
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Lisa Wangsness can be reached at lwangsness@globe.com.
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"Taxing health benefits"
boston.com - July 4, 2009
Amount that would be raised in 2010-19 for healthcare overhaul if the income tax exclusion for healthcare benefits is capped at:
▸Value of a standard plan available to members of Congress, about $13,500 a year: $418.5 billion
▸Value of a standard plan for single taxpayers with adjusted gross income of more than $100,000 a year or couples filing jointly of more than $200,000 annually: $161.9 billion
▸50 percent of insurance premium amount for all taxpayers: $1.173 trillion
SOURCE: Joint Committee on Taxation
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OPINION - July 6, 2009
"Tilting at Windmill Jobs: The 'stimulus' promised a jobless peak of 8%; it's now 9.5%."
About the best we can say about yesterday's June jobs report is that employment is usually a lagging economic indicator. At least we hope it is, because the loss of 467,000 jobs for the month is one more sign that the economy still hasn't hit bottom despite months of epic fiscal and monetary reflation.
The report is in many ways even uglier than the headline numbers. Average hours worked per week dropped to 33, the lowest level in at least 40 years. This means that millions of full-time workers are being downgraded to part-time, as businesses slash labor costs to remain above water. Because people are working less, wages have fallen by 0.3% this year. Factories are operating at only 65% capacity, while the overall jobless rate hit 9.5%. Throw in discouraged workers who want full-time work, and the labor underutilization rate climbed to 16.5%.
The news is even worse for young people, with nearly one in four teenagers unemployed. Congress has scheduled an increase in the minimum wage later this month, which will price even more of these unskilled youths out of a vital start on the career ladder. One useful policy response would be for Congress to rescind the wage hike to $7.25 an hour (from $6.55) that is scheduled for July 24. But the union economic model that now dominates Washington holds that wages only matter for those who already have jobs. The jobs that are never created don't count.
The goods producing sector -- Americans who make things -- shed 223,000 more jobs last month. Asked about these job losses by the Associated Press yesterday, President Obama said Congress should pass his cap-and-tax on carbon energy because "If we're weatherizing every building and home in America, if we are creating windmills and solar panels and biofuel facilities, that is a huge promising area not only for jobs here in the United States, but also for export growth." But even under the most optimistic scenario, not every hard-hat worker in America can make windmill blades and solar panels. With manufacturing on its back, enacting a new energy tax to drive more jobs offshore is crazy even on Keynesian grounds.
Of course, the economy can't keep falling forever, and most forecasters still see a recovery starting this year. The decline in manufacturing slowed last month and housing sales have picked up -- both positive leading indicators. The plunge in inventories means industrial production and durable goods orders are bound to increase. Consumers are also spending more again, albeit with more caution than if gasoline hadn't increased by $1 a gallon in recent months and if they felt more confident about their job security.
The real question is how strong and sustained any expansion will be. If the "stimulus" were working as advertised, it ought to be very strong. Washington has thrown trillions of dollars at this recession, including that famous $787 billion in more spending that was supposed to yield $1.50 in growth for every $1 spent. This followed the $168 billion or so stimulus that George W. Bush and Nancy Pelosi promised in February 2008 would prevent a recession. The jobless rate that month was 4.8%.
Most of this government spending has gone to transfer payments -- Medicaid, jobless benefits and the like -- that do nothing for jobs or growth. The spending that might create jobs -- on roads, say -- is dribbling out with typical government efficiency. Meanwhile, the money for all of this has to come from somewhere, and Democrats are already saying it will require big (unstimulating) tax increases in 2011, and perhaps sooner.
The Administration argues that the recession would be worse without the stimulus, which is impossible to disprove. However, it's worth recalling that Mr. Obama's economists predicted late last year that the stimulus would keep the jobless rate from exceeding 8%. That was a percentage point and a half ago. It's far more likely that the economy would have been better off without the spending, and the higher taxes and debt financing that it implies.
As always, a sustained expansion and job creation must come from private investment and risk-taking. Yet as America's entrepreneurs look at Washington they see uncertainty and higher costs from a $1 trillion health-care bill; higher energy costs from the cap-and-tax bill that just passed the House (see below); new restraints on consumer lending in the financial reform bill; new tariffs and threats of trade protection; limits on compensation and banker baiting; and the possibility of easier unionization, among numerous other Congressional brainstorms.
None of this inspires "animal spirits." The best thing Mr. Obama could do to create jobs would be to declare he's dropping all of this and starting over.
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Printed in The Wall Street Journal, page A13
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"Congress Shifts Into High Gear to Tackle Full Agenda"
By NAFTALI BENDAVID and GREG HITT - JULY 6, 2009
WASHINGTON -- Lawmakers return to the Capitol on Monday for a five-week blitz that will help determine the fate of President Barack Obama's agenda.
The Senate will be occupied for much of the summer with confirmation hearings on Supreme Court nominee Sonia Sotomayor, beginning July 13, followed by a floor debate on her nomination. Democratic leaders also hope to push health plans through the House and Senate before their summer break begins Aug. 8.
It is a daunting schedule, and Senate Majority Leader Harry Reid (D., Nev.) and House Majority Leader Steny Hoyer (D., Md.) are keeping lawmakers in Washington for five-day workweeks in July, rather than their usual Tuesday-through-Thursday routine.
"This will be one of the most challenging periods in the legislative session," Reid spokesman Jim Manley said. "But with a little bit of cooperation from the Republicans -- cooperation that has been mostly absent -- we can get all of our work done."
Republicans say they have objected to the Democrats' initiatives because they involve massive spending with little benefit.
Several factors put pressure on Democrats to accomplish their major goals this year. Mr. Obama outlined an ambitious agenda upon taking office, in addition to programs to tackle the financial crisis and the ailing economy. A president's political capital often dissipates over his tenure, and legislative compromise is harder in election years. In addition, the Democrats may lose seats in Congress in 2010, as a president's party often does in midterm elections.
That means Democrats need to make big progress this month. Congress is pressing forward on the dozen must-pass spending bills for the fiscal year beginning Oct. 1, and Senate committees will tackle the climate-change bill recently passed by the House.
But Ms. Sotomayor's confirmation and the health-care battle are the big items. Supreme Court confirmation fights have become fierce in recent years, and this one will be no exception, though it appears likely the Senate will confirm Ms. Sotomayor, a federal appeals-court judge in New York.
Republicans wanted to wait until after the August recess to vote on her nomination, giving them more time to scrutinize her record. But Democrats insisted on the earlier vote, fearing the delay would give critics time to undermine her.
On health care, House Democrats hope to engineer a floor vote by the end of this month. Their legislation will include a public health plan to give consumers an alternative to private insurers, and they are looking at a range of potential funding sources, including a surtax on the wealthy.
"Money, money, money," said Rep. Charles Rangel (D., N.Y.), when asked about the remaining decisions on health care. Mr. Rangel, who is chairman of the tax-writing Ways and Means Committee, declined to discuss details, but added, "This is the roughest part of the process."
Still, Democrats want a House vote this month. "There is a clear understanding that health-care reform is the next item in the economic foundation we are building," said Nadeam Elshami, spokesman for House Speaker Nancy Pelosi (D., Calif.). "Our goal remains to get it passed in the House by the end of July."
In the Senate, Finance Committee Chairman Max Baucus (D., Mont.) is pursuing a centrist bill in hopes of winning Republican support. Rather than a public plan, Mr. Baucus is considering a network of nonprofit health cooperatives.
He is also weighing other financing options for the health overhaul, such as a tax on employer-provided health benefits for upper-income workers.
Even if Mr. Baucus can forge a bipartisan deal, it isn't clear that Democratic leaders can get a health bill through the Senate this month.
That is because the Baucus bill must be melded with a more-liberal alternative pushed by Sen. Chris Dodd (D., Conn.). Those negotiations could take days or weeks. And Democratic leaders have left themselves a narrow window for floor action on health care -- the two weeks between Ms. Sotomayor's confirmation hearing and the Aug. 3 floor debate on her nomination.
If a bipartisan deal emerges on health care, "the prospects for that are rapidly improved," said Sen. Evan Bayh (D., Ind.). But he is dubious about the notion of quick passage. "If history is any guide," he said, "it'll take longer than we expect."
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Write to Naftali Bendavid at naftali.bendavid@wsj.com and Greg Hitt at greg.hitt@wsj.com
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Printed in The Wall Street Journal, page A3
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"Obama to make history in Africa"
Boston.com - Political Intelligence - Posted by Foon Rhee, deputy national political editor, July 10, 2009
The first African-American president will arrive later today for his first visit to Africa. So understandably, there is quite a bit of buzz.
In Ghana, his public schedule on Saturday includes meeting Ghana's president at Christianborg Castle in Accra, then attending an event on maternal health at La General Hospital, and speaking to the Ghanaian parliament. Obama and Michelle Obama will travel to Cape Coast, where they will meet with Head Chief Osabarima Kwesi Atta II at his residence.
Obama's father was Kenyan, though he was raised by his Kansas-born mother. At the G-8 summit in Italy, Obama related his own family history as he pushed for more aid so that African countries can combat hunger and become self-sufficient in food.
"My father traveled to the United States a mere 50 years ago and yet now I have family members who live in villages -- they themselves are not going hungry, but live in villages where hunger is real," he said at the closing news conference today. "And so this is something that I understand in very personal terms, and if you talk to people on the ground in Africa, certainly in Kenya, they will say that part of the issue here is the institutions aren't working for ordinary people. And so governance is a vital concern that has to be addressed.
"Now keep in mind -- I want to be very careful -- Africa is a continent, not a country, and so you can't extrapolate from the experience of one country. And there are a lot of good things happening," he added. "Part of the reason that we're traveling to Ghana is because you've got there a functioning democracy, a President who's serious about reducing corruption, and you've seen significant economic growth.
"So I don't want to overly generalize it, but I do want to make the broader point that a government that is stable, that is not engaging in tribal conflicts, that can give people confidence and security that their work will be rewarded, that is investing in its people and their skills and talents, those countries can succeed, regardless of their history."
The White House put out a list of events being held in conjunction with Obama's speech by US embassies across Africa, below:
EXAMPLES OF WHAT U.S. EMBASSIES IN AFRICA ARE DOING TO ENGAGE AFRICAN PUBLIC ON THE PRESIDENT'S GHANA SPEECH
The U.S. Mission to the African Union (Addis Ababa, Ethiopia) will host a screening/panel discussion at the African Union’s historic plenary hall for over 200 representatives of 53 African countries.
Embassy Cotonou (Benin) will bookend its screening for over 100 with video highlights from President Obama’s inauguration and the AF Bureau’s 50th anniversary celebration (October 2008).
Embassy Freetown (Sierra Leone) will host screenings for over 500 at community cinema centers throughout the country, as the centerpieces of its traditional/new media outreach that has reached the bulk of the country’s population.
The Somalia Virtual Presence post (co-located in Kenya with Embassy Nairobi) will host a screening/discussion with the 50 Somali officials/media that are scheduled to be in Nairobi that day.
Embassy Djibouti (Djibouti) will host its screening/discussion the Ambassador’s residence for 100 guests.
Embassy Pretoria (South Africa) will cap the new media outreach that has reached millions with screenings for over 1000 invited guests in Pretoria, Johannesburg, Capetown and Durban.
Embassy Lilongwe (Malawi) had to rent a hall and utilize its American corner to accommodate the 200 guests invited to its screening.
Embassy Luanda (Angola) will conclude the traditional/new media outreach that has reached tens of thousands with a screening/discussions at the Ambassador’s residence.
Embassy Brazzaville (Republic of Congo) will host a screening/discussion for 100 at its Villa Washington community center.
Embassy Abidjan (Cote d’Ivoire) will use its network of three American Corners in addition to the Embassy to screen the speech for over 500 guests.
The State Department’s African Regional Media Hub arranged for Safaricom, Kenya’s leading mobile phone network provider, to streaming the speech live from a VOA feed. Safaricom’s subscriber base is 17 Million, and it reaches into the most remote corners of the country.
Our Embassy in South Africa partnered with MXit, a continent-wide social networking service, to solicit question an comments for the president. Hundreds of thousands of Africans responded.
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Analysis: "Obama returns to health, energy fights"
By Charles Babington, Associated Press Writer, July 10, 2009
L'AQUILA, Italy --Barack Obama's problems back in Washington, largely brought on by fellow Democrats, have hardly gone away while he's been off summiting in Europe and visiting Africa. In fact, they've gotten worse.
The president returns home this weekend vowing to keep fighting for his health care initiative, which has hit bumps in the Democratic-controlled House and Senate as lawmakers quarrel over what it should include how to pay for it. He's also trying to guide a bill to overhaul U.S. energy policy through the Senate, where members are unlikely to have been encouraged by the modest concessions he won on climate change from fast-growing nations.
And, as Obama acknowledged at a news conference Friday after the G-8 summit near Rome, the global recession continues to drive up social needs in the United States and other countries while making it tougher for governments to raise money to address them.
Obama, who will fly home late Saturday from Ghana, spent the week working on arms control, global warming and other knotty issues with an almost dizzying succession of leaders from nearly 40 countries. But Congress "is always tougher" to deal with, he told reporters with a smile.
Those words might have been a flattering bow to the lawmakers controlling the fate of his top domestic priorities. But they underscored the challenges that got even more challenging in the few days he was away.
That was especially true of his efforts to overhaul the nation's health care system by covering virtually every American, streamlining medical treatments and costs and giving people more insurance options.
"It is my highest legislative priority over the next month," Obama said.
But things have not gone well lately. Conservative House "Blue Dog" Democrats are demanding significant changes before supporting the legislation. They want more cost reductions and greater focus on rural health care, among other things, and their demands forced the House to delay action.
In the Senate, meanwhile, a potential bipartisan deal was undermined this week when Senate Majority Leader Harry Reid signaled displeasure with its call for a new tax on employer-subsidized health benefits.
With the goal of an early August accord looking in doubt, Obama said Friday: "I never believe anything is do-or-die. But I really want to get it done by the August recess" for Congress.
Obama offered no new negotiating stands but indicated he would continue to press Americans at large to demand action from Congress.
"My biggest job is to explain to the American people why this is so important and give them confidence that we can do better than we're doing right now," he said.
"We are closer to achieving serious health care reform that cuts costs, provides coverage to American families" and "allows them to keep their doctors and plans," the president said. "We're closer to that significant reform than at any time in recent history. That doesn't make it easy."
Obama said he expects to succeed in "tough negotiations in the days and weeks to come."
Another domestic priority is a wide-ranging energy bill, narrowly approved by the House last month but now facing hurdles in the Senate. Various Senate factions want concessions that could undo the narrow majority cobbled together in the House. Differences between the two chambers would have to be reconciled before a bill could be sent to Obama's desk.
Some senators want more offshore oil and gas drilling. Others want more power transmission lines. And liberals and conservatives are clashing on an issue that Obama dealt with extensively at the Group of Eight summit: how to slow global warming by restricting greenhouse gas emissions, mainly carbon. Those restrictions could result in higher energy costs for businesses and their customers.
In Italy, Obama repeatedly told world leaders about the U.S. House legislation, which calls for deep reductions in America's greenhouse gas emissions in the coming decades. If America can do it, he told fast-growing countries such as China, India and Brazil, then they should be willing to make commitments, too.
But those countries largely balked, leaving Obama with only modest gains in the effort to reduce heat-trapping gases worldwide by 2050.
That setback in climate talks could rob the president of political momentum that the House vote had triggered. Obama may find it harder to press senators to join his call to be world leaders on climate change if massive producers and consumers of energy, such as China, are not on board.
For three days in the central Italian mountains this week, Obama made his global-warming arguments to a diverse assemblage of elected leaders and diplomats. For the rest of the summer, he will toil in the far more circumscribed world of Capitol Hill and the White House.
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EDITOR'S NOTE -- Charles Babington covers the White House for The Associated Press.
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"The Stimulus Trap"
By PAUL KRUGMAN, Op-Ed Columnist, The New York Times, July 10, 2009
As soon as the Obama administration-in-waiting announced its stimulus plan — this was before Inauguration Day — some of us worried that the plan would prove inadequate. And we also worried that it might be hard, as a political matter, to come back for another round.
Unfortunately, those worries have proved justified. The bad employment report for June made it clear that the stimulus was, indeed, too small. But it also damaged the credibility of the administration’s economic stewardship. There’s now a real risk that President Obama will find himself caught in a political-economic trap.
I’ll talk about that trap, and how he can escape it, in a moment. First, however, let me step back and ask how concerned citizens should be reacting to the disappointing economic news. Should we be patient and give the Obama plan time to work? Should we call for bigger, bolder actions? Or should we declare the plan a failure and demand that the administration call the whole thing off?
Before you answer, consider what happens in normal times.
When there’s an ordinary, garden-variety recession, the job of fighting that recession is assigned to the Federal Reserve. The Fed responds by cutting interest rates in an incremental fashion. Reducing rates a bit at a time, it keeps cutting until the economy turns around. At times it pauses to assess the effects of its work; if the economy is still weak, the cutting resumes.
During the last recession, the Fed repeatedly cut rates as the slump deepened — 11 times over the course of 2001. Then, amid early signs of recovery, it paused, giving the rate cuts time to work. When it became clear that the economy still wasn’t growing fast enough to create jobs, more rate cuts followed.
Normally, then, we expect policy makers to respond to bad job numbers with a combination of patience and resolve. They should give existing policies time to work, but they should also consider making those policies stronger.
And that’s what the Obama administration should be doing right now with its fiscal stimulus. (It’s important to remember that the stimulus was necessary because the Fed, having cut rates all the way to zero, has run out of ammunition to fight this slump.) That is, policy makers should stay calm in the face of disappointing early results, recognizing that the plan will take time to deliver its full benefit. But they should also be prepared to add to the stimulus now that it’s clear that the first round wasn’t big enough.
Unfortunately, the politics of fiscal policy are very different from the politics of monetary policy. For the past 30 years, we’ve been told that government spending is bad, and conservative opposition to fiscal stimulus (which might make people think better of government) has been bitter and unrelenting even in the face of the worst slump since the Great Depression. Predictably, then, Republicans — and some Democrats — have treated any bad news as evidence of failure, rather than as a reason to make the policy stronger.
Hence the danger that the Obama administration will find itself caught in a political-economic trap, in which the very weakness of the economy undermines the administration’s ability to respond effectively.
As I said, I was afraid this would happen. But that’s water under the bridge. The question is what the president and his economic team should do now.
It’s perfectly O.K. for the administration to defend what it’s done so far. It’s fine to have Vice President Joseph Biden touring the country, highlighting the many good things the stimulus money is doing.
It’s also reasonable for administration economists to call for patience, and point out, correctly, that the stimulus was never expected to have its full impact this summer, or even this year.
But there’s a difference between defending what you’ve done so far and being defensive. It was disturbing when President Obama walked back Mr. Biden’s admission that the administration “misread” the economy, declaring that “there’s nothing we would have done differently.” There was a whiff of the Bush infallibility complex in that remark, a hint that the current administration might share some of its predecessor’s inability to admit mistakes. And that’s an attitude neither Mr. Obama nor the country can afford.
What Mr. Obama needs to do is level with the American people. He needs to admit that he may not have done enough on the first try. He needs to remind the country that he’s trying to steer the country through a severe economic storm, and that some course adjustments — including, quite possibly, another round of stimulus — may be necessary.
What he needs, in short, is to do for economic policy what he’s already done for race relations and foreign policy — talk to Americans like adults.
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"Sotomayor pledges impartial justice if confirmed"
By David Espo And Mark Sherman, Associated Press Writers, July 13, 2009
WASHINGTON – Her confirmation all but assured, Sonia Sotomayor pledged Monday to serve the "larger interest of impartial justice" rather than any narrow cause if she becomes the first Hispanic on the Supreme Court.
"My personal and professional experiences help me listen and understand, with the law always commanding the result in every case," Sotomayor told senators at a nationally televised confirmation hearing.
The remarks about judicial philosophy were her first since President Barack Obama nominated the South Bronx-born and Ivy League-educated veteran of 17 years on the federal bench. They appeared aimed at Republicans who have questioned her commitment to impartiality in light of a 2001 remark that experience as a "wise Latina" might give her an advantage over white males.
The 55-year-old appeals court judge spoke after several hours of speechmaking in which Democrats on the Senate Judiciary Committee praised her as a Hispanic pioneer well qualified for the high court and Republicans questioned her impartiality as well as President Barack Obama's views in nominating her.
Despite GOP misgivings, Sen. Lindsey Graham, R-S.C., told Sotomayor, "Unless you have a complete meltdown, you're going to get confirmed."
"And I don't think you will" have a meltdown, he added quickly as Sotomayor sat listening, her face in a half-smile.
In her remarks, Sotomayor said, "The progression of my life has been uniquely American," that of a child of Puerto Rican parents who moved to New York during World War II. "I want to make one special note of thanks to my mom," she said. "I am here today because of her aspirations and sacrifices for my brother Juan and me."
"Mom, I love that we are sharing this together," said Sotomayor, whose father died when she was 9. She turned as she spoke, whispering a thank-you to her mother, seated one row behind her in the packed hearing room.
Sotomayor, who spoke for only about five minutes, returns on Tuesday to begin hours of questioning from committee members who will cast the first votes on her appointment.
The role of racial politics in the day's proceedings became clear within minutes after Sen. Patrick Leahy, the committee chairman, rapped the opening gavel.
"She's been a judge for all Americans. She'll be a justice for all Americans," said the Vermont Democrat.
Leahy likened Sotomayor to other judicial pioneers, citing Thurgood Marshall, the first black justice, as well as Louis Brandeis, the first Jew, and Sandra Day O'Connor, the first woman.
"Let no one demean this extraordinary woman," Leahy said in a warning to committee Republicans to tread lightly in the days ahead.
Sen. Jeff Sessions of Alabama, the senior Republican, vowed a "respectful tone" and "maybe some disagreements" when lawmakers begin questioning Sotomayor on Tuesday.
Moments later, he took aim at Sotomayor's 2001 statement that her standing as a "wise Latina woman" would sometimes allow her to reach a better decision than a white male.
"I will not vote for, and no senator should vote for an individual nominated by any president who believes it is acceptable for a judge to allow their own personal background, gender, prejudices or sympathies to sway their decision," he said.
"Call it empathy, call it prejudice or call it sympathy, but whatever it is, it's not law," Sessions said. "In truth, it's more akin to politics, and politics has no place in the courtroom."
That was a reference to Obama's declaration — made before he named Sotomayor — that he wanted a person of empathy on the high court.
Sen. Sheldon Whitehouse, D-R.I., made a spirited rebuttal later in the morning. "The empathy that President Obama saw in you has a constitutionally proper place" in the judiciary," he said.
Obama named Sotomayor, 55 and a child of the South Bronx, to replace retiring Justice David Souter. While Souter was appointed by President George H.W. Bush, a Republican, he became a reliable member of the court's liberal faction.
If confirmed, Sotomayor is not expected to alter the court's balance on controversial issues such as abortion and affirmative action.
Sotomayor, who has served 17 years as a federal judge, including 11 on the appeals court, listened silently for hours to the senators until her time to speak arrived. She was sworn in before reading her statement.
Leahy and Sessions escorted her to her seat before the hearing began into the first Supreme Court nominee by a Democratic president in 15 years.
Other Republicans tried to straddle competing political demands, noting the historical nature of the occasion — Hispanics are the fastest growing portion of the electorate — while trying to keep faith with the criticisms raised by conservatives.
"I would hope every American is proud that a Hispanic woman has been nominated to sit on the Supreme Court," said Sen. Jon Kyl, R-Ariz.
Moments later, he added, "From what she has said, she appears to believe that her role is not constrained to objectively decide who wins based on the weight of the law but who, in her opinion, should win."
"The factors that will influence her decisions apparently include her gender and Latina heritage and foreign legal concepts that get her creative juices going." he said.
Sen. Orrin Hatch, R-Utah, broadened that line of skepticism to include Obama. He noted that as a senator, the president opposed Janice Rogers Brown, an African-American appointee to the appeals court by President George W. Bush.
"He argued that the test of a qualified judicial nominee is whether she can set aside her personal views" and decide cases on their merits, Hatch said.
Hatch added, "But today, President Obama says that personal empathy is an essential ingredient in judicial decisions."
Graham was the only senator of either party to touch openly on the underlying politics of the nomination.
"The Hispanic element of this hearing is important, but ... this is mostly about liberal and conservative politics more than it is about anything else," he said.
Graham hinted that he would vote to confirm Sotomayor, but he was the only Republican to sound so inclined.
The most fertile ground for Republican questioning appears to be on race and ethnicity, focused on Sotomayor's "wise Latina" comment and a ruling on white firefighters from New Haven, Conn., who won their Supreme Court case last month.
By a 5-4 vote last month, the high court agreed with the firefighters, who claimed they were denied promotions on account of their race after New Haven officials threw out test results because too few minorities did well. The court reversed a decision by a New York appeals court panel that included Sotomayor.
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"Defiant Obama seeks to revive health care overhaul"
By Erica Werner And Ricardo Alonso-zaldivar, Associated Press Writers, July 13, 2009
WASHINGTON – A defiant President Barack Obama sought Monday to revive his faltering plan to overhaul health care, delivering a full-throated promise to get comprehensive legislation and summoning lawmakers crucial to his effort to the White House.
"Don't bet against us. We are going to make this thing happen," Obama told a news conference intended to focus on his nominee for surgeon general, Dr. Regina Benjamin.
The appearance in the Rose Garden was the president's first public outing since his weeklong overseas trip — and the first after an up-and-down week in Congress. Consensus on his top domestic priority has proven elusive and the Democratic leadership's ambitious timetable for floor votes this summer has slipped.
While the president was out of the country sizing up foreign leaders, rank-and-file lawmakers took a look at the emerging details of health care legislation and many decided they didn't like what they saw. They called a time out. In the House, conservative Democrats rebelled over costs. In the Senate, the Democratic leadership pulled the plug on a controversial financing scheme that a moderate Democrat worked out with Republican counterparts.
Despite Obama's determination, there's no guarantee he'll succeed in the effort to get all Americans covered and try to better manage costs. With lawmakers concerned about costs above all else, Congress may decide to expand coverage slowly, phasing it in over a number of years.
House Speaker Nancy Pelosi, D-Calif., House Majority Leader Steny Hoyer, D-Md., and Senate Majority Leader Harry Reid, D-Nev., were to meet with Obama at the White House on Monday afternoon. Joining the leaders at the session were Senate Finance Committee Chairman Max Baucus, D-Mont., and House Ways and Means Committee Chairman Charles Rangel, D-N.Y.
Baucus and Rangel are in charge of the crucial job of coming up with how to pay for a comprehensive health care overhaul that would cost at least $1 trillion over 10 years, mostly for subsidies to help cover nearly 50 million uninsured Americans. But the two Democrats are taking very different routes. Rangel is shaping a bill that Democrats can support. Baucus is striving for a bipartisan compromise, which would have better chance of winning broad support, and which Obama says he wants.
Obama lost no time signaling that he intends to be in the forefront of the action.
"I just want to put everybody on notice, because there was a lot of chatter during the week that I was gone," the president said. "Inaction is not an option."
He also ruled out any tax increase affecting the middle class, complicating lawmakers' efforts to pay for overhaul.
"During the campaign I promised health care reform that would control costs, expand coverage and ensure choice and I promised that Americans making $250,000 a year or less would not pay more in taxes. These are promises that we're keeping as reform moves forward," Obama said.
House Democrats may be able to muscle a bill through the floor by August.
"We will be on schedule," Pelosi told reporters. Nonetheless, release of a bill — originally set for last Friday — was delayed until Tuesday. And Pelosi indicated more changes are likely as leaders try to keep intact a Democratic caucus that includes liberals and conservatives. "It won't be the final product," Pelosi said. "It is just the beginning."
Underscoring that political challenge, the campaign arm of the House GOP targeted more than 60 potentially vulnerable House Democrats on Monday with news releases asking whether they planned to support the Democrats' "massive government health care takeover" and "job-killing tax hike."
In the Senate, it's going to take longer than the House to even get started.
White House press secretary Robert Gibbs said Obama would urge lawmakers to forgo part of their August recess to continue working on health care legislation.
Up to now, the president has avoided debating policy details, choosing instead to make the broader case for a health care overhaul, and leaving the day-to-day negotiations to his aides. Yet if Congress is getting stuck in a policy swamp, Obama may the only one who can get things moving again. He hinted as much on Monday: "Muscles in this town to bring about big changes are a little atrophied but we are whipping people back into shape," he said.
A more direct role for the president would be fraught with political risks. He'd get the blame if the effort collapses.
"The president's role is going to be critical, but it needs to be wielded very carefully and at exactly the right moment," said Drew Altman, president of the nonprofit Kaiser Family Foundation, a clearinghouse for health care information. "I think we're at a point where most of the heavy lifting still has to be done in Congress."
Lawmakers face four major issues: the overall cost of expanding coverage and how to pay for it, whether to create a government health insurance plan, requiring employers to contribute to workers' coverage, and the benefits tax that blew up the Senate plan — but still retains some support.
House Democrats have proposed raising income taxes on the wealthy. That appears to face opposition in the Senate, where a bipartisan group of senators is trying to reassemble a financing package now missing a key component: an unpopular tax on high-cost health insurance benefits, which would have raised $320 billion out of a $1 trillion package.
On Monday, the Senate Health, Education, Labor and Pensions Committee pushed to complete a partisan bill by Tuesday that would create a government-run health plan to compete with private insurers and require employers to provide coverage. Sponsors say the legislation would lead coverage for 97 percent of Americans. Its incomplete price tag is $600 billion over 10 years as the panel — one of five in Congress working on health care — is leaving some major cost issues to the Senate Finance Committee.
Senate Republican leader Mitch McConnell of Kentucky warned that the Democratic proposals would push the nation deeper in debt without fixing the problems.
"Every proposal we've seen would cost a fortune by any standard," McConnell warned.
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Associated Press writer Philip Elliott contributed to this report.
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"Obama nominates new Peace Corps director"
AP via Boston.com - July 14, 2009
WASHINGTON - President Barack Obama says he will nominate a career international development specialist to be director of the Peace Corps.
Aaron Williams is the vice president for international business development with RTI International. He has helped design and manage assistance programs in Africa, Latin America, the Middle East and Asia.
Williams was a senior manager at the U.S. Agency for International Development and reached the rank of career minister in the Senior Foreign Service.
If confirmed, Williams will fill a slot that has been occupied in an acting capacity by Jody K. Olsen, the Peace Corps' deputy director since 2002. Williams is a former Peace Corps volunteer, serving in the Dominican Republic in 1967-1970.
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"Obama's financial reforms grind forward under fire"
By Kevin Drawbaugh, Reuters News Online, Wednesday, July 15, 2009
WASHINGTON (Reuters) – Two key components of the Obama administration's bold plan to reshape U.S. financial regulation came under attack on Wednesday, with lawmakers and lobbyists engaged in a reform debate of immense scope.
An informal panel of market experts issued a report in New York calling into question a core piece of the administration's plan -- putting the Federal Reserve in charge of monitoring big-picture, or systemic, financial risk in the economy.
The Fed is too "tarnished" and distracted by other duties to handle such a job, said the Investors' Working Group of big money management firms and two ex-chairmen of the Securities and Exchange Commission, William Donaldson and Arthur Levitt.
The report came amid growing skepticism on Capitol Hill about assigning the Fed systemic risk regulator duties, although the administration remains committed to the approach.
At the same time, the top financial reform architect in the U.S. House of Representatives defied the administration over its proposal to eliminate the federal thrift charter, the legal statute underlying the U.S. savings and loan industry.
Democratic Representative Barney Frank, chairman of the House Financial Services Committee, said the thrift charter should be altered, but not scrapped entirely.
Frank's stance on the thrift problem will greatly influence its solution.
Months of discussion and deal-making over such issues lie ahead for the Obama administration's plan, with changes to its original proposals seen as certain, alongside efforts to reconcile it with a parallel reform effort under way in the European Union.
But on Wednesday, with stock markets surging on hopes of recovery from a recession in its 19th month, parts of the Obama plan were already changing segments of the financial industry.
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Anthony Johnson, who is said to resemble President Obama, holds up the letter he wrote to the president. (Caroline Bonnivier / Berkshire Eagle Staff)
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"Special delivery"
By Benning W. De La Mater, The Berkshire Eagle, Saturday, July 11, 2009
PITTSFIELD -- They call him "Baby Obama."
Meet Anthony Johnson, a 5-year-old soon-to-be first-grader at Egremont Elementary School who bears a close resemblance to President Barack Obama.
Anthony is a big fan of the commander in chief, so much so he asked his grandmother, Maria Brodeur, if he could write the President a letter.
"I'm happy you are our President," penned Anthony on Jan. 31 in kindergarten script, replete with letters both big and small.
In the letter, the two included a photo Brodeur snapped of Anthony standing next to a cutout of Obama.
Just two weeks ago, Anthony heard back from his elder lookalike.
"Your kind words echo the message of millions of Americans who have welcomed me and my family to the White House with an outpouring of goodwill," wrote the President in what looks to be a form letter.
"We couldn't believe it," said Brodeur, also known as "Bamma" to Anthony.
The letter arrived in a manilla envelope at the Brodeur house on Deborah Avenue, where Anthony and his mother Sarah Reagan live.
The signature looks to be scrawled in pen, although there's a chance it's stamped.
Obama recently told the press that he takes time out of his busy schedule to read and reply to as many letters and e-mails as he can.
"I've taken to the practice of reading 10 letters ... every night, just to hear from voices outside of my staff," he said.
He's received at least 40,000 to date.
Brodeur said she plans on framing the letter, which is stamped with an official White House seal.
"This will be a keepsake for him," Brodeur said. "He'll have this forever."
Since Obama declared his run for the presidency, friends of the Brodeurs have commented on the resemblance between Anthony and Obama. Anthony thinks it's pretty "cool."
While playing T-ball and fiddling with Bakugan Battle Brawlers action figures may take a back seat to fixing the Middle East, Anthony is similar to Obama in that he's resolute about his future.
He already knows he wants to join the Navy, just like his uncle, Shaun Reagan, who served in the Iraq theater.
And it looks as though Obama has a fan for life.
"He's a nice guy," Anthony said. "I like him being my president."
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To reach Benning W. De La Mater: bdelamater@berkshireeagle.com, (413) 496-6243.
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www.topix.net/forum/source/berkshire-eagle/T6RSV3PG8VDIFH6JC
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Goldman Sachs chairman and CEO Lloyd Blankfein testifies before the House Financial Services Committee on Feb. 11, 2009.
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"Goldman Sachs' Financial Boom: A Political Mess for Obama?"
By MICHAEL SCHERER, WASHINGTON, TIME via news.yahoo.com - July 17, 2009
In a clear departure from the historical norm, the White House is not cheering the return of huge profits to Wall Street. On the contrary, the recent windfalls at Goldman Sachs and JPMorgan, and the promise of giant year-end paydays for banking executives and traders, has caused a bit of consternation in the West Wing, coming as it does so soon after the taxpayer bailouts saved the entire financial system from total collapse.
"If I were a Wall Street firm, I would perhaps be cognizant of the fact that the financial regulatory-reform process is only beginning in Congress," warns a senior White House official, speaking about the political problems that huge paydays at Wall Street firms could create later this year, when new laws to regulate the industry will be written on Capitol Hill. Officials have also begun to worry aloud whether the Wall Street firms learned anything from the catastrophic financial crisis that was largely of their making or whether they are now returning to the old business of making short-term profits that create long-term risks.
On July 14, Goldman Sachs posted second-quarter profits of $3.44 billion, more than the company made in all of 2008 and about on par with the precrisis gilded age, while announcing that it had set aside $11.4 billion this year to compensate workers, or $386,489 per employee. The huge profits were hailed on Wall Street as another sign that the crisis might be ending. On July 15, the Dow Jones industrial average jumped 3.1%, and other banking giants are expected to issue their own similarly glowing reports. On July 16, JPMorgan announced that it had earned $2.7 billion in the second quarter.
The good news for traders has created two distinct concerns for President Obama's advisers. The first problem is political. For much of the year, populist revulsion at Wall Street greed has been palpable. Obama, who prides himself on his cool countenance, has repeatedly channeled this fury, flashing anger and frustration at the logic of financial titans, who continued to justify huge paydays even as their banks begged financial lifelines from the U.S. taxpayer. "That is the height of irresponsibility," the President said in January, after a report emerged of large 2008 bonuses on Wall Street. "It is shameful."
But the President has thus far resisted calls for a heavy government hand in limiting financial paydays, aside from certain limits on senior executives at firms that have not paid back some taxpayer funds and a number of proposals for regulators to develop new ways of better tying compensation to long-term risks. That leaves the White House vulnerable in the coming months. If Wall Street decides to cash in on its recent winnings despite the public rhetoric of the Administration, the contrast with the nation's still growing unemployment rate couldn't be starker. "It's just got to feel wrong to a lot of people," says Douglas Elliott, a fellow at the Brookings Institution, speaking of the Goldman compensation announcement. "It seems to me a political mistake."
The eye-popping Goldman profits also create a policy problem for lawmakers, including the President, as they try to reform the financial system to ensure that history does not repeat itself. At issue is not just the safeguards that traders are using to ensure that another crisis of confidence doesn't occur, but whether traders on Wall Street are taking advantage of the public backstop against systemic failure to create personal profits. "We want financial systems to be healthy," says Robert Gibbs, the White House press secretary. But, he adds, "the President continues to have concerns that compensation will be based on risky behavior instead of performance."
Though both Goldman and JPMorgan have paid back their infusion of Treasury dollars, the recent crisis has made clear to investors that the firms are considered by U.S. policymakers to be "too big to fail." The crisis has also created a premium for those firms willing to take on more risk in trades. According to company data, Goldman - which converted to a commercial bank at the height of the crisis in order to gain easier access to cheaper government credit - has significantly reduced its leverage ratio, which measures how much money it borrows, from 27.9 at the beginning of 2008 to 14.2 today. At the same time, Goldman has increased the amount of money it is risking on a day-to-day basis, and the number of competitors it faces in the marketplace has significantly shrunk, with onetime stalwarts like Bear Stearns and Lehman Brothers becoming casualties of the crisis.
The President's financial reforms, which were sent to Congress earlier this summer, have yet to be acted upon by the banking committees in the House and Senate, and White House officials do not expect concrete legislative action until late this year at the earliest. That means that both the White House and Congress can expect many more months of needing to explain why it is O.K. for Wall Street to be thriving while the rest of the country, and much of the world, is suffering. As Gibbs explained on July 15, when asked about the big Wall Street paydays, "It is something that continues to be a great concern."
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www.time.com/time/politics/article/0,8599,1911056,00.html?xid=rss-fullnation-yahoo
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(Read "Despite the Economy's Struggles, Stock Market Soars.")
www.time.com/time/business/article/0,8599,1910819,00.html
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(Read "Obama Urges Congress Not to Block the Bailout.")
www.time.com/time/business/article/0,8599,1871532,00.html
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(Read "Obama's AIG Outrage: All Talk, No Action.")
www.time.com/time/politics/article/0,8599,1885668,00.html
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(Read "Goldman's Profits: Gambling with Taxpayer Money?")
www.time.com/time/business/article/0,8599,1891281,00.html
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Getty/photo illustration
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"White House Making Nice With Wall Street"
thepage.time.com - Tuesday, March 24th, 2009
WSJ: After months of criticism, the Obama team is now reaching out to the financial industry.
Geithner lobbied execs Monday to build support for his bailout plan.
Axelrod: "We can't have an economic recovery without Wall Street."
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mid-July of 2009
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"US military deaths in Afghanistan region at 667"
By The Associated Press, July 17, 2009
As of Friday, July 17, 2009, at least 667 members of the U.S. military had died in Afghanistan, Pakistan and Uzbekistan as a result of the U.S. invasion of Afghanistan in late 2001, according to the Defense Department. The department last updated its figures Friday at 10 a.m. EDT.
Of those, the military reports 499 were killed by hostile action.
Outside the Afghan region, the Defense Department reports 68 more members of the U.S. military died in support of Operation Enduring Freedom. Of those, three were the result of hostile action. The military lists these other locations as Guantanamo Bay Naval Base, Cuba; Djibouti; Eritrea; Ethiopia; Jordan; Kenya; Kyrgyzstan; Philippines; Seychelles; Sudan; Tajikistan; Turkey; and Yemen.
There were also four CIA officer deaths and one military civilian death.
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"US military deaths in Iraq war at 4,327"
By The Associated Press, July 17, 2009
As of Friday, July 17, 2009, at least 4,327 members of the U.S. military had died in the Iraq war since it began in March 2003, according to an Associated Press count.
The figure includes nine military civilians killed in action. At least 3,460 military personnel died as a result of hostile action, according to the military's numbers.
The AP count is one fewer than the Defense Department's tally, last updated Friday at 10 a.m. EDT.
The British military has reported 179 deaths; Italy, 33; Ukraine, 18; Poland, 21; Bulgaria, 13; Spain, 11; Denmark, seven; El Salvador, five; Slovakia, four; Latvia and Georgia, three each; Estonia, Netherlands, Thailand and Romania, two each; and Australia, Hungary, Kazakhstan and South Korea, one death each.
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The latest deaths reported by the military:
Three soldiers died Thursday when Contingency Operating Base Basra was attacked by indirect fire.
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On the Net: www.defenselink.mil/news/
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"Obama, Republicans spar on healthcare"
Boston.com - Political Intelligence, Posted by Foon Rhee, deputy national political editor, July 18, 2009
The high-stakes battle over healthcare takes today to dueling Internet and radio addresses.
In his weekly address, President Obama tells Americans that the status quo is unacceptable and the chance for fixing healthcare might not come again for years.
"This is an issue that affects the health and financial well-being of every single American and the stability of our entire economy," he says, after a week during which doubts grew in Congress about how to pay for the overhaul, the official budget keeper warned that the legislation would not control public spending on healthcare, and calls became louder for slowing down the process.
"It’s about every family unable to keep up with soaring out of pocket costs and premiums rising three times faster than wages. Every worker afraid of losing health insurance if they lose their job, or change jobs. Everyone who’s worried that they may not be able to get insurance or change insurance if someone in their family has a pre-existing condition.
"This is the system we have today. This is what the debate in Congress is all about: Whether we’ll keep talking and tinkering and letting this problem fester as more families and businesses go under, and more Americans lose their coverage. Or whether we’ll seize this opportunity – one we might not have again for generations – and finally pass health insurance reform this year, in 2009."
Obama also directly takes on his critics, asserting that it's "simply not true" that the overhaul will lead to record government deficits and saying that it's not true that the plan calls for government bureaucrats instead of families picking doctors.
"Finally, opponents of health reform warn that this is all some big plot for socialized medicine or government-run health care with long lines and rationed care. That’s not true either. I don’t believe that government can or should run health care," the president says. "But I also don’t think insurance companies should have free reign to do as they please."
In the Republican response, Senator Jon Kyl of Arizona warned about "a government takeover of the healthcare system," new "job-killing taxes" on small businesses, and "rationing" of care.
He also accused Democrats of trying to rush through legislation "because the more Americans know about it, the more they oppose it. Something this important needs to be done right, rather than done quickly."
"Republicans have put forward common-sense ideas, including rooting out Medicare and Medicaid fraud, reforming medical liability laws to discourage frivolous lawsuits, strengthening wellness and prevention programs that encourage healthy living, and allowing small businesses to band together and purchase health insurance like large corporations do," said Kyl, the No. 2 Republican in the Senate leadership.
“We know Americans would prefer us to work together to ensure access to affordable quality healthcare for all. But Americans do not want a government takeover of health care that will jeopardize their current coverage, ration care, and create mountains of new debt and higher taxes.
Obama's address can be viewed here, Kyl's can be seen here, and both their remarks are below:
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OBAMA'S REMARKS
Right now in Washington, our Senate and House of Representatives are both debating proposals for health insurance reform. Today, I want to speak with you about the stakes of this debate, for our people and for the future of our nation.
This is an issue that affects the health and financial well-being of every single American and the stability of our entire economy.
It’s about every family unable to keep up with soaring out of pocket costs and premiums rising three times faster than wages. Every worker afraid of losing health insurance if they lose their job, or change jobs. Everyone who’s worried that they may not be able to get insurance or change insurance if someone in their family has a pre-existing condition.
It’s about a woman in Colorado who told us that when she was diagnosed with breast cancer, her insurance company – the one she’d paid over $700 a month to – refused to pay for her treatment. She had to use up her retirement funds to save her own life.
It’s about a man from Maryland who sent us his story – a middle class college graduate whose health insurance expired when he changed jobs. During that time, he needed emergency surgery, and woke up $10,000 in debt – debt that has left him unable to save, buy a home, or make a career change.
It’s about every business forced to shut their doors, or shed jobs, or ship them overseas. It’s about state governments overwhelmed by Medicaid, federal budgets consumed by Medicare, and deficits piling higher year after year.
This is the status quo. This is the system we have today. This is what the debate in Congress is all about: Whether we’ll keep talking and tinkering and letting this problem fester as more families and businesses go under, and more Americans lose their coverage. Or whether we’ll seize this opportunity – one we might not have again for generations – and finally pass health insurance reform this year, in 2009.
Now we know there are those who will oppose reform no matter what. We know the same special interests and their agents in Congress will make the same old arguments, and use the same scare tactics that have stopped reform before because they profit from this relentless escalation in health care costs. And I know that once you’ve seen enough ads and heard enough people yelling on TV, you might begin to wonder whether there’s a grain of truth to what they’re saying. So let me take a moment to answer a few of their arguments.
First, the same folks who controlled the White House and Congress for the past eight years as we ran up record deficits will argue – believe it or not – that health reform will lead to record deficits. That’s simply not true. Our proposals cut hundreds of billions of dollars in unnecessary spending and unwarranted giveaways to insurance companies in Medicare and Medicaid. They change incentives so providers will give patients the best care, not just the most expensive care, which will mean big savings over time. And we have urged Congress to include a proposal for a standing commission of doctors and medical experts to oversee cost-saving measures.
I want to be very clear: I will not sign on to any health plan that adds to our deficits over the next decade. And by helping improve quality and efficiency, the reforms we make will help bring our deficits under control in the long-term.
Those who oppose reform will also tell you that under our plan, you won’t get to choose your doctor – that some bureaucrat will choose for you. That’s also not true. Michelle and I don’t want anyone telling us who our family’s doctor should be – and no one should decide that for you either. Under our proposals, if you like your doctor, you keep your doctor. If you like your current insurance, you keep that insurance. Period, end of story.
Finally, opponents of health reform warn that this is all some big plot for socialized medicine or government-run health care with long lines and rationed care. That’s not true either. I don’t believe that government can or should run health care. But I also don’t think insurance companies should have free reign to do as they please.
That’s why any plan I sign must include an insurance exchange: a one-stop shopping marketplace where you can compare the benefits, cost and track records of a variety of plans – including a public option to increase competition and keep insurance companies honest – and choose what’s best for your family. And that’s why we’ll put an end to the worst practices of the insurance industry: no more yearly caps or lifetime caps; no more denying people care because of pre-existing conditions; and no more dropping people from a plan when they get too sick. No longer will you be without health insurance, even if you lose your job or change jobs.
The good news is that people who know the system best are rallying to the cause of change. Just this past week, the American Nurses Association, representing millions of nurses across America, and the American Medical Association, representing doctors across our nation, announced their support because they’ve seen first-hand the need for health insurance reform.
They know we cannot continue to cling to health industry practices that are bankrupting families, and undermining American businesses, large and small. They know we cannot let special interests and partisan politics stand in the way of reform – not this time around.
The opponents of health insurance reform would have us do nothing. But think about what doing nothing, in the face of ever increasing costs, will do to you and your family.
So today, I am urging the House and the Senate, Democrats and Republicans, to seize this opportunity, and vote for reform that gives the American people the best care at the lowest cost; that reins in insurance companies, strengthens businesses and finally gives families the choices they need and the security they deserve.
Thanks.
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KYL'S REMARKS
“Hello. I’m Senate Republican Whip Jon Kyl, of Arizona.
“Republicans believe all Americans should have access to quality health care and that we must find ways to reduce health care costs.
“The debate in Washington is about how we can achieve these goals.
“Republicans have put forward common-sense ideas, including rooting out Medicare and Medicaid fraud, reforming medical liability laws to discourage frivolous lawsuits, strengthening wellness and prevention programs that encourage healthy living, and allowing small businesses to band together and purchase health insurance like large corporations do.
“These changes do not require government takeover of the healthcare system, or massive new spending, job-killing taxes, or rationing of care.
“Democrats in Congress have a different approach. Their plan would increase spending by more than two trillion dollars when fully implemented, and would, according to the nonpartisan Congressional Budget Office, “’add additional costs onto an already unsustainable system.’
“It would empower Washington, not doctors and patients, to make health care decisions and would impose a new tax on working families during a recession. A study by the respected Lewin Group shows it would also move millions of people who are happy with their current insurance to a new government plan.
“They propose to pay for this new Washington-run health care system by dramatically raising taxes on small business owners. Small businesses create jobs -- approximately two-thirds of new jobs in the last decade.
“With a shaky economy and the need for new jobs, the last thing the President and the Congress should do is impose new taxes on America’s small businesses. New taxes on small business would cripple job creation, especially jobs for low-wage earners.
“This week, the Director of the Congressional Budget Office told the Senate Budget Committee that the health care-reform measures drafted by Democrats would worsen our economic outlook by increasing deficits and driving our nation more deeply into debt. So, there’s good reason to be skeptical when the President tells us we need to pass the Democrats’ bill to help the economy.
“The President and Congressional Democrats have even proposed cutting Medicare to pay for their plan.
“How can we justify dipping into funds for seniors’ care to pay for a new government plan, especially since Medicare is already in financial trouble? This would ultimately lead to shortages, rationing, and the elimination of private-plan choices—something our seniors rightly fear.
“These are not the right steps to achieving the reform Americans want.
“But the President and some Democrats insist we must rush this plan through. Why? Because the more Americans know about it, the more they oppose it. Something this important needs to be done right, rather than done quickly.
“We know Americans would prefer us to work together to ensure access to affordable quality health care for all. But Americans do not want a government takeover of health care that will jeopardize their current coverage, ration care, and create mountains of new debt and higher taxes.
“We urge Democrats to support a plan that would lead to real reform and include the innovative ideas Republicans have put forward that would cut costs, improve access, and preserve the kind of care that millions of Americans already have and like. That’s the kind of reform Americans would be sure to support.”
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"Young, minority voters surged to polls in 2008"
Boston.com - Political Intelligence, Posted by Foon Rhee, deputy national political editor, July 20, 2009
The numbers tell the story of President Obama's success -- get your voters out to the polls, and keep the other guy's away.
New Census Bureau data out today shows that while overall voter turnout in percentage terms was the same last November as four years earlier, participation increased substantially among groups most enthused about Obama and most excited about the prospect of the nation's first black president.
About 131 million people reported voting in last year's presidential election, an increase of about 5 million from 2004 -- including 2 million more black voters, 2 million more Hispanic voters, and about 600,000 more Asian voters.
Also, voters 18 to 24 years old were the only age group to show a statistically significant increase in turnout, reaching 49 percent in 2008 compared with 47 percent in 2004. Blacks had the highest turnout rate among young voters -- 55 percent, an 8 percentage point increase from 2004.
On the other side, the number of non-Hispanic white voters remained statistically unchanged, and older white voters were less likely to vote last November.
That caused the overall 2008 voter turnout to remain statistically unchanged -- at 64 percent -- from 2004.
"The 2008 presidential election saw a significant increase in voter turnout among young people, blacks and Hispanics," Thom File, a voting analyst with the Census Bureau's Housing and Household Economic Statistics Division, said in a statement. "But as turnout among some other demographic groups either decreased or remained unchanged, the overall 2008 voter turnout rate was not statistically different from 2004."
To see the detailed figures, go here:
www.census.gov/population/www/socdemo/voting/cps2008.html
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"FACT CHECK: Obama's health care claims adrift?"
By Calvin Woodward And Jim Kuhnhenn, Associated Press Writers, July 22, 2009
WASHINGTON – President Barack Obama's assertion Wednesday that government will stay out of health care decisions in an overhauled system is hard to square with the proposals coming out of Congress and with his own rhetoric. Even now, nearly half the costs of health care in the U.S. are paid for by government at all levels. Federal authority would only grow under any proposal in play.
A look at some of Obama's claims in his prime-time news conference:
OBAMA: "We already have rough agreement" on some aspects of what a health care overhaul should involve, and one is: "It will keep government out of health care decisions, giving you the option to keep your insurance if you're happy with it."
THE FACTS: In House legislation, a commission appointed by the government would determine what is and isn't covered by insurance plans offered in a new purchasing pool, including a plan sponsored by the government. The bill also holds out the possibility that, over time, those standards could be imposed on all private insurance plans, not just the ones in the pool.
Indeed, Obama went on to lay out other principles of reform that plainly show the government making key decisions in health care. He said insurance companies would be barred from dropping coverage when someone gets too sick, limits would be set on out-of-pocket expenses, and preventive care such as checkups and mammograms would be covered.
It's true that people would not be forced to give up a private plan and go with a public one. The question is whether all of those private plans would still be in place if the government entered the marketplace in a bigger way.
He addressed some of the nuances under questioning. "Can I guarantee that there are going to be no changes in the health care delivery system?" he said. "No. The whole point of this is to try to encourage changes that work for the American people and make them healthier."
He acknowledged then that the "government already is making some of these decisions."
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OBAMA: "I have also pledged that health insurance reform will not add to our deficit over the next decade, and I mean it."
THE FACTS: The president has said repeatedly that he wants "deficit-neutral" health care legislation, meaning that every dollar increase in cost is met with a dollar of new revenue or a dollar of savings. But some things are more neutral than others. White House Budget Director Peter Orszag told reporters this week that the promise does not apply to proposed spending of about $245 billion over the next decade to increase fees for doctors serving Medicare patients. Democrats and the Obama administration argue that the extra payment, designed to prevent a scheduled cut of about 21 percent in doctor fees, already was part of the administration's policy, with or without a health care overhaul.
Beyond that, budget experts have warned about various accounting gimmicks that can mask true burdens on the deficit. The bipartisan Committee for a Responsible Federal Budget lists a variety of them, including back-loading the heaviest costs at the end of the 10-year period and beyond.
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OBAMA: "You haven't seen me out there blaming the Republicans."
THE FACTS: Obama did so in his opening statement, saying, "I've heard that one Republican strategist told his party that even though they may want to compromise, it's better politics to 'go for the kill.' Another Republican senator said that defeating health reform is about 'breaking' me."
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Associated Press writer Ricardo Alonso-Zaldivar contributed to this report.
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Analysis: "Obama putting more emphasis on restraint"
By Tom Raum, Associated Press Writer, July 23, 2009
WASHINGTON – At a critical moment in his presidency, Barack Obama finds increasing need to talk about taming federal deficits as he struggles with a dour economy.
It's not just that Republicans are keeping up a relentless and punishing attack on his health care overhaul and other spending priorities. It's also that Americans are losing confidence in Obama's ability to lead an economic recovery. Increasingly, they are worried about their jobs and the impact of the nation's mushrooming debt on future generations.
An Associated Press-GfK Poll shows public confidence has reversed on whether the president's $787 billion stimulus package, passed by Congress in February, will ultimately work to improve the economy.
In January, 58 percent were confident it would. Now, it's the opposite, with 58 percent saying they doubt the stimulus will bring any significant improvement.
Forty-seven percent still think it's too early to pass final judgment on whether the plan is working. But of those who say they are decided, three times as many say the stimulus has harmed the economy than those who say it has helped.
Other polls have shown similar slippage on Obama's economic stewardship, although his overall approval rating remains solid — 55 percent in the AP-Gfk poll conducted July 16-20. Still, that's down nine points from April.
In contrast to the increasing public gloom, many economists see fledgling signs of an economic recovery and expect the recession to end late this year. But economists also know that, historically, job losses nearly always continue long after a recession has officially ended.
The darkening mood comes as Obama tries to rally public support for overhauling the nation's health care system, his top legislative priority, but one expected to cost about $1 trillion over 10 years. His mission is to convince the public and Congress that his health care plan will benefit Americans as well as strengthen the economy in the long run.
It's been a hard sell.
Fiscally conservative Democrats are skeptical. And Republicans have seized on the change in public sentiment to pound Obama for failing to create or save the jobs he promised while greatly overburdening the federal budget.
South Carolina Republican Sen. Jim DeMint has predicted the health care legislation could be Obama's "Waterloo moment" and could break his presidency — a remark Obama now cites as the kind of partisan politics-as-usual in Washington he is seeking to end.
"I think the Republican attack on the deficit is succeeding because it's real," said Rob Shapiro, a former economic adviser to President Bill Clinton, and chairman of Sonecon, an economic-consulting firm.
Obama is factual in saying he inherited a trillion-dollar-plus deficit from predecessor George W. Bush, "but he made it worse," Shapiro said. The deficit in the current budget year is now estimated to come in at more than $1.8 trillion, pushed higher by the stimulus spending, bailouts and increasing war costs.
Shapiro said he believes White House officials are taking the GOP attacks very seriously. "They're also concerned about long-term deficits and the impact they could have on the economy and on the ability to act two, three years down the road — which of course is moving up to the re-election season," he said.
Obama clearly has been putting more emphasis on the importance of getting spending under control even as he tries to prod a recovery.
"We have to do what businesses and families do. We've got to cut out the things we don't need to pay for the things we do," Obama said at a town-hall style meeting Thursday in Shaker Heights, Ohio, a suburb of Cleveland. The meeting followed a prime-time news conference the night before in which Obama sought to rally public support for his health plan.
The AP-Gfk poll showed that 61 percent of those surveyed oppose any additional stimulus package. Nearly half, 49 percent, now say Obama is trying to change things too quickly, up from 32 percent in April. And 80 percent are worried that increasing federal debt will harm the future of their children and grandchildren. The national debt — the total of accumulated annual deficits — is currently $11.6 trillion.
The AP-GfK Poll was conducted July 16-20 and involved landline and cell phone interviews with 1,006 adults nationwide. It has a margin of sampling error of plus or minus 3.1 percentage points.
Democratic pollster Mark Mellman said "there's no question that, over time, the chief executive pays a price if things aren't going well in the economy." While Obama's overall approval rating is still strong, "the fact that it's declined makes it a little harder for him to wield the same kind of threat over Congress as he might have some months ago," Mellman said.
Some economists warn that this recession is so deep, it may take much longer than in the past for a rebound even after some economic growth resumes.
Job losses have now wiped out all the job gains since the last recession in 2001, the first time that has happened since the 1930s.
Heidi Shierholz, an economist at the Economic Policy Center, a labor-funded think tank, noted that the jobless rate continued to rise for 19 months after the 2001 recession was declared over.
"If the unemployment rate is still increasing, people are not going to feel good," Shierholz said.
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Associated Press writer Trevor Tompson contributed to this report.
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EDITOR'S NOTE — Tom Raum covers the economy and politics for The Associated Press.
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On the Net: AP-GfK poll: http://www.ap-gfkpoll.com
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"Obama offers 'Race to the Top' contest for schools"
By Libby Quaid, Ap Education Writer, July 24, 2009
WASHINGTON – Using money as bait, President Barack Obama challenged states and school districts Friday to raise their academic standards, improve teacher quality and allow more innovation if they want a chance at roughly $5 billion in new grants.
Obama said the broad goals are to give every child a chance to succeed and to boost the educational foundation of the nation's economy. Yet the "Race to the Top" program is also specifically targeted at expanding reforms the administration wants, such as linking teacher pay to how well students do on tests.
"This competition will not be based on politics or ideology or the preferences of a particular interest group," Obama said in an appearance at the Education Department. "Instead, it will be based on a simple principle: whether a state is ready to do what works."
The president added: "Not every state will win and not every school district will be happy with the results. But America's children, America's economy, America itself will be better for it."
Obama said the states and districts that apply for money will be evaluated by clear criteria, with rewards going to those that adopt strong standards and common tests; that get high-quality teachers in the classroom; and that allow expansions of charter schools, which are public schools that operate with more independence. He endorsed the idea of linking student achievement to teacher pay — a hotly debated idea in education — but said it should be just one factor in compensation.
As he has with other domestic priorities, Obama said reforming education has been talked about without enough action for years.
Speaking of the need to improve academics nationwide, he said: "We have no choice. And I'm absolutely confident that we can make it happen."
The $5 billion education fund, part of the economic stimulus law enacted this year, is seen as Obama's shot at revamping schools over the next couple of years.
A state will have to meet a series of conditions to earn points and boost its chances. Some of those conditions are controversial, especially among teachers' unions, which make up an influential segment of Obama's Democratic base.
For example, the administration says it will not award money to states that bar student performance data from being linked to teacher evaluations. Several states, including California, New York and Wisconsin, have such a prohibition.
But there are also elements the unions will embrace; states can earn points by submitting letters of support from state union leaders.
The Obama administration is using the stimulus not only to help schools ride out the recession but to try to transform the federal government's role in education. Education Secretary Arne Duncan envisions the dollars going to perhaps 10 to 20 states that can serve as models for innovation.
The $5 billion fund might not seem like much, considering the stimulus bill provided $100 billion for schools. But the fund is massive compared with the $16 million in discretionary money Duncan's predecessors got each year for their own priorities.
Moreover, the fund has taken on added importance because in many states, the bulk of the stimulus money is being used to fill increasingly larger budget holes, and not for the innovations Obama wants.
A report from the Government Accountability Office earlier this month said school districts are planning to use the money mostly to prevent teacher layoffs.
"Most did not indicate they would use these funds to pursue educational reform," the report said. The GAO is the investigative arm of Congress.
Already, the promise of an extra $5 billion has helped Duncan prod state legislatures to do the administration's bidding.
For example, he warned Tennessee lawmakers they could lose out on the money if they kept blocking a bill to let more kids into charter schools; within weeks, the bill was enacted and signed into law.
"It's amazing the amount of progress, literally, without us spending a dime," Duncan said.
The Education Department will gather public comment on its rules for the $5 billion fund for the next 30 days; applications will be available in October, and the first round of money should be awarded early next year.
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"Antitrust chief sees industry resistance: Some Democrats question fairness to smaller firms"
By Stephen Labaton, New York Times, July 26, 2009
WASHINGTON - President Obama’s top antitrust official and some senior Democratic lawmakers are preparing to rein in a host of major industries, including airline and railroad giants, moving so aggressively that they are finding some resistance from officials within the administration.
The official, Christine A. Varney, the antitrust chief at the Justice Department, has begun examining complaints by the phone companies Verizon and AT&T that their rivals - major cable operators like Cablevision and Cox Communications - improperly prevent them from buying sports shows and other programs that the cable companies produce, industry lawyers said.
At the request of some lawmakers, notably Senator Bernard Sanders, independent of Vermont, Varney is examining whether small agricultural operations are being hampered unfairly by large food processors, particularly in the milk industry, congressional aides said.
Varney has also challenged agreements that the Federal Trade Commission and consumer groups say discourage pharmaceutical companies from marketing more generic drugs. And she is examining a settlement between Google and book publishers and authors to make more books available online.
These efforts, described in interviews with officials at the White House, the Justice Department, other agencies and Congress, amount to a major policy reversal. Under the Bush administration the Justice Department did not prosecute cases in which some dominant companies engaged in potentially anticompetitive behavior, often because those officials did not believe such behavior was harmful to consumers.
Democrats have spent years trying to gain the support of businesses, and the policy changes under way may have long-term political implications for their party. Some companies would like to see more aggressive antitrust enforcement against their rivals, while others could be hurt by it.
In some cases, though, the new approach is being opposed by administration officials. Some fear that the crackdown is coming at a bad time, as corporate America reels from the recession. Other officials embrace the Bush administration’s view that larger companies and industry alliances can provide consumer benefits by making their businesses more efficient.
One clash played out recently when the Transportation Department, rejecting many of Varney’s recommendations, approved an antitrust immunity request involving a global alliance of nine airlines; Continental Airlines wanted to join the alliance to share routes, marketing and revenue.
The antitrust division argued the immunity was unnecessary for approving the newly reconstituted alliance and that it could lead to rates rising from 6 percent to 15 percent for many routes, according to public filings.
The Transportation Department rejected that analysis for most of the routes and instead endorsed a policy popular during the Bush administration that favored such industry agreements out of a desire for efficiency.
The disagreement became so heated that the president’s chief economic adviser, Lawrence H. Summers, was called in to mediate.
Administration officials said that Summers did not take sides in the dispute but urged the two agencies to reach an agreement as they sought to balance the interests of the industry against those of consumers.
In a second area, senior Democrats are proposing legislation to eliminate an exemption from antitrust law for commercial railroad companies. It would give the antitrust division the authority to scrutinize the railroads for anticompetitive practices.
The proposal has been sought by a coalition of railroad shippers. But so far the administration has not taken a position on the measure.
The antitrust division under Varney scrapped the Bush administration’s monopoly guidelines, which had sharply limited the government’s ability to prosecute large corporations that used their market dominance to elbow out competitors.
Now the division has opened inquiries in the financial services and wireless phone industries. The division’s wireless inquiry is looking at, among other things, whether it is legal for phone makers to offer a particular model, like the iPhone or the Palm Pre, exclusively to one phone carrier. It is examining the sharp increase in text-messaging rates at several phone companies. And it is scrutinizing obstacles imposed by the phone companies on low-price rivals like Skype.
Though Varney has the backing and encouragement of senior Democratic lawmakers in the House and Senate, some agencies have been less open to the change in policy.
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Alan Solomont
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"Demcocrat fundraiser soon may be ambassador"
By Dave Wedge, Saturday, July 11, 2009, www.bostonherald.com - Local Politics
Massachusetts Democratic fund-raiser Alan Solomont, who helped raise $800,000 for President Obama, is close to being tapped for an ambassador’s post to Spain, several sources told the Herald.
Solomont, one of the nation’s biggest Democratic money men, is in Washington receiving official State Department training for the plum position, sources said.
Solomont was unavailable for comment yesterday, and his secretary said only that he is in Washington until July 20.
But several sources close to Solomont confirmed he is the president’s choice for the Madrid post. An official announcement is expected soon, and his appointment will need Senate approval.
Solomont has long been rumored to be in line for an ambassadorship as a reward for his early support of Obama and his massive fund-raising effort. Under Solomont, the New England Obama committee raised more money per capita than any other region.
A Boston-based nursing home mogul and Jewish philanthropist, Solomont is recognized as one of the most powerful fund-raisers in the party, reportedly helping bring in $35 million for U.S. Sen. John F. Kerry’s failed 2004 presidential run.
He currently chairs the board of the Corporation for National and Community Service, which oversees the AmeriCorps volunteer program under Obama. Solomont recently was criticized for supporting the firing of the corporation’s inspector general, who uncovered financial scandals involving Obama supporters.
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"Obama calls for deeper U.S.-Chinese ties"
By Steve Holland And Paul Eckert, 7/27/2009
WASHINGTON (Reuters) – The United States urged China on Monday to spend more at home to help put the global economy back on a sustainable path, saying the two countries shared common ambitions despite their divisions.
Opening two days of bilateral talks, President Barack Obama said the United States and China needed to overcome mutual wariness and deepen cooperation on everything from the global economic crisis to climate change and North Korea.
"Let's be honest: we know that some are wary of the future," Obama said, acknowledging the two countries would never see eye to eye on every issue but needed to think of themselves as partners rather than rivals.
"The relationship between the United States and China will shape the 21st century, which makes it as important as any bilateral relationship in the world," he said. "That reality must underpin our partnership."
At the start of the U.S.-China Strategic and Economic Dialogue, both Obama and Treasury Secretary Timothy Geithner urged Beijing to encourage more domestic consumption, but did not repeat previous appeals to revalue its currency, the yuan.
"As Americans save more and Chinese are able to spend more, we can put growth on a more sustainable foundation, because just as China has benefited from substantial investment and profitable exports, China can also be an enormous market for American goods," Obama said.
Geithner also said China could boost the world economy by encouraging domestic consumption.
"China's success in shifting the structure of the economy toward domestic-led growth, including a greater role for spending by China's citizens, will be a huge contribution to more rapid, balanced and sustained global growth," he said.
The Obama administration has sought to tread gently on sensitive issues that have separated the two countries in the past, although the president risked Beijing's displeasure by urging it to respect its ethnic and religious minorities.
RIGHTS OF MINORITIES
"Just as we respect China's ancient culture and remarkable achievements, we also strongly believe that the religion and culture of all peoples must be respected and protected, and that all people should be free to speak their minds," Obama said.
"That includes ethnic and religious minorities in China, as surely as it includes minorities within the United States."
The comments will be seen as a reference to unrest among ethnic Uighurs and Tibetans in western China and subsequent crackdowns from Beijing.
Most of Obama's remarks focused on the need to deepen cooperation to help restore economic growth because the current crisis knows no borders.
"That is why we must remain committed to strong bilateral and multilateral coordination," he said.
The U.S.-Chinese economic relationship is complicated. The United States has consistently been China's best customer for products from shoes to furniture, creating a yawning trade deficit that has caused economic and political friction.
The deep U.S. recession has forced many Americans to cut back on spending and boost savings. Still, the United States ran a record $268 billion trade deficit with China in 2008.
The top Chinese official at the talks, Wang Qishan, said the world economy is at a critical moment, moving out of crisis and toward recovery.
Wang said China's economy had responded to stimulus efforts and "is showing increasing signs of stabilization and rebound."
"I'm confident this crisis will finally be over," he said.
Obama said the United States and China can promote financial stability through greater transparency and regulatory reform, pursue free and fair trade and seek to conclude "an ambitious and balanced Doha Round," referring to long-running global trade talks.
Secretary of State Hillary Clinton praised Chinese cooperation in dealing with North Korea's nuclear weapons but said the path ahead would not always be easy.
"We cannot expect to be united on every issue at every turn, but we can be of one mind and heart on the need to find this common ground as we build a common and better future."
The United States needs to sustain Chinese resolve over North Korea, where tensions are escalating after several missile launches and the testing of a nuclear device in May.
Obama said the United States and China "must continue our collaboration to achieve the denuclearization of the Korean peninsula and make it clear to North Korea that the path to security and respect can be traveled if they meet their obligations."
He also called for greater unity on efforts to prevent Iran from acquiring a nuclear weapon and ending the suffering in Sudan's troubled Darfur region.
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(Additional reporting by Glenn Somerville, Sue Pleming and Emily Kaiser; Editing by Alan Elsner and Simon Denyer)
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Op-Ed: "Health reform will empower families against market constraints"
By Health and Human Services Secretary Kathleen Sebelius, The Yahoo! Newsroom, Tuesday, July 28, 2009
Washington, DC — For decades, Washington has talked about fixing a broken health care system. And for decades Washington failed to act – allowing the special interests to stall reform while the cracks in the system turned into crevices, then craters.
But today, we are closer than ever to the change we need. Key committees in Congress have reached a striking degree of consensus about how to control costs, guarantee coverage, and provide more choices for every American. America’s doctors and nurses have announced their support. And even hospitals, drug and insurance companies have pledged to do their part to control costs.
Change is never easy and recently, some defenders of the status quo have made themselves heard.
One Republican Senator said, “If we’re able to stop Obama on this, it will be his Waterloo. It will break him.” And a leading political strategist urged fellow Republicans to “resist the temptation” to be “constructive or, at least responsible,” and instead work to “kill” health care reform.
These opponents of change may understand how to score political points in Washington, but they don’t seem to understand the stakes for the country. The health care status quo is unacceptable and unsustainable for our families, our businesses, and our nation as a whole.
Today nearly 46 million Americans are uninsured and are one illness or accident away from losing everything. Millions more are under-insured. Since 2004, the number of under-insured families – those who pay for coverage but are unprotected against high costs – rose by 60 percent.
Even Americans with insurance find themselves paying more and getting less. In the past decade, premiums have doubled, rising three times as fast as wages and leaving families scrambling to close the gap. Last year, more than half of Americans skipped their medications or postponed medical because they couldn’t afford it.
Businesses – especially small businesses – aren’t faring much better. Skyrocketing health costs are making it even harder to compete in today’s global economy and forcing business owners to choose between staying afloat and providing health care for their workers.
At the same time, health care spending today consumes 30 percent more of state and local budgets than it did 20 years ago, forcing governments to choose between cutting services and raising taxes. And our national budget faces the same threat, with health care costs representing the single largest contributor to exploding long-term deficits.
America can’t afford to wait any longer for health care reform.
Some opponents of reform will try to scare Americans into thinking they’ll lose what they already have. Millions of Americans are happy with the coverage they have now, so let’s be clear: under any plan the Obama administration will support, if you like your health insurance you can keep your health insurance; if you like your doctor you can keep your doctor.
In fact, the real threat to what works in our system comes from doing nothing. Without action, prices will continue to spiral out of control. More Americans will not be able to afford insurance at all, and those who can will continue to pay more for less.
So what will reform actually look like?
First, to provide Americans with more affordable choices, we’ll set up a marketplace where you can compare plans and pick the one that’s right for you. None of the plans would be allowed to deny you coverage because of a pre-existing condition. And one of the options should be a public plan that would increase competition and keep private insurance companies honest.
Second, we have to align incentives for doctors and hospitals so that they’re rewarded based on the quality of care they provide, not on how many tests or procedures they prescribe.
Third, we need to move from a sickness system to a wellness system. By investing in prevention and emphasizing healthy lifestyles, we can save money while improving health.
Finally, reform must not add to our deficit over the next ten years. To that end, we have already identified hundreds of billions of dollars in savings – savings from money that’s already being spent on health care, but is funding waste and overpayments to insurance companies.
Put together, these changes will make quality, affordable coverage available to every American while bending the cost curve so that we don’t bury our children in debt. Fixing the system has never been so critical, and it has never been more squarely within our reach. Now it’s time to make reform a reality.
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Kathleen Sebelius is the Secretary of Health and Human Services in President Barack Obama's Cabinet. She was the Democratic governor of the state of Kansas from 2003 to 2009.
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Analysis: "Tough decision time for Obama on health"
By Charles Babington, Associated Press Writer, 7/28/2009
WASHINGTON – After months of talk, decision time is nearing for President Barack Obama on health care.
Bipartisan Senate negotiators are weakening some of his top priorities, leaving the president with a difficult choice: He can give ground, and implore disappointed liberals to go along with him. Or he can try to ram through a Democratic bill with his wishes intact, infuriating Republicans.
His eventual decision could be a pivotal moment in his presidency. Remaking health care is Obama's top domestic priority. He wants to expand coverage, contain costs, make insurance more competitive and change the way doctors and hospitals are compensated.
Liberals, noting that Democrats control the House, Senate and White House, see no need for serious compromises. Some moderates and independents, however, say a one-party solution would undermine public confidence in the plan and poison the atmosphere in Congress for the rest of Obama's term.
For now, the president continues to hold his cards close, giving lawmakers more time to seek a compromise that could attract some Republican votes. But many Democrats are impatient, ready for Obama to insist that Republicans either endorse the main elements of his proposal or step aside as a Democrats-only bill is enacted.
"He's going to have to choose pretty soon," Sen. Lindsey Graham, a South Carolina Republican, said Tuesday.
If Obama decides to run roughshod over the Republicans, Graham said, "he'll ruin his administration" by destroying his image as a political healer under a big tent.
But many Democrats want Obama to stand firm on his campaign proposals.
"Because we want three Republicans to come along on this, we betray what the American people want?" said Sen. Sherrod Brown, D-Ohio. "I don't think so."
The outlines of Obama's approaching choice are taking shape. Bipartisan negotiators on the Senate Finance Committee — the panel making the biggest effort to gain support from both parties — are starting to show details of their thinking. In several crucial respects, they fall well short of Obama's health care proposals.
For instance, Obama's campaign called for large employers either to provide their workers with health insurance or pay into a national fund to subsidize insurance for low-income people. The Senate Finance plan would require some type of contribution from large employers, but senators said Tuesday they believed it wouldn't go as far as Obama's "pay or play" plan.
Obama also proposed to help pay for health care by trimming tax deductions taken by high-income earners. Lawmakers rejected the idea months ago, and the Senate Finance plan offers no alternative means of extracting new revenue from wealthy people.
Most troubling to many liberal Democrats, the Senate Finance plan does not call for a robust government-run option for buying health insurance. It calls for an insurance cooperative, but liberals such as Sen. Bernard Sanders, a Vermont Independent, say that's unacceptable.
"I think we have the votes to pass a strong bill," he said, which would include a public option for health insurance that is comparable to Medicare in its reach and cost controls. If Republicans don't agree, Sanders said, then Senate Democrats can use a strong-arm tactic called "reconciliation" to pass major elements of Obama's plan without any GOP votes.
Asked if he would like Obama to speak out more forcefully for his campaign proposals, Sanders answered: "Yeah."
White House adviser David Axelrod said it's too early for Obama to fully endorse the Senate Finance Committee's bipartisan approach or the liberals' call to stand firm.
"This is the legislative process," Axelrod said Tuesday. "The important thing is to keep the process moving forward."
"There's no doubt that what we'll have at the end of the day will not fully satisfy any major player in this process," he said. The most important goal, he said, is to improve the nation's health care system.
"Everyone is going to have to give a little to get there," Axelrod said.
But in a political system dominated by Democrats, some liberals say a down-the-middle approach will give conservatives and Republicans more influence than they have earned. Instead of everyone giving a little, they wonder if either GOP lawmakers or liberal activists will have to give a lot.
Obama has more power to answer that question than anyone. Decision time is coming.
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EDITOR'S NOTE: Charles Babington covers the White House for The Associated Press.
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"Obama stresses consumer protections in healthcare bill"
Boston.com - Posted by Foon Rhee, deputy national political editor, July 29, 2009
President Obama takes his healthcare road show today to two Southern states that proved pivotal to his election in November.
And with healthcare overhaul bills mired in legislative muck and public support dropping, he's retooling his message to speak directly to consumers.
The president held a town hall at Broughton High School in Raleigh, N.C., then will hold another Q&A with employees at the Kroger supermarket in Bristol, Va., at about 4:15 p.m. EST. Obama became the first Democratic presidential candidate to win both states in more than a generation, contributing to his electoral landslide.
In his primetime news conference last week and in appearances since, Obama has reached out to Americans who already have insurance or Medicare, trying to reassure them that they won't be hurt by the overhaul, either by losing care or getting smacked by higher costs.
Today, he is stressing the protections for consumers that he will insist be in any overhaul bill.
"First of all, nobody is talking about some government takeover of healthcare," Obama told the crowd in Raleigh. "I'm tired of hearing that.... Under the reform I’ve proposed, if you like your doctor, you keep your doctor. If you like your healthcare plan, you keep your healthcare plan. These folks need to stop scaring everybody."
"But what a lot of the chatter out there hasn’t focused on is the fact that if you’ve got health insurance, the reform we’re proposing will also help you because it will provide more stability and security," he added. "Because the truth is, we have a system today that works well for the insurance industry, but it doesn’t always work well for you. What we need, and what we will have when we pass these reforms, are health insurance consumer protections to make sure that those who have insurance are treated fairly and insurance companies are held accountable."
(His full remarks and answers to questions are are below.)
The consumer protections include:
-- Banning insurance companies for refusing to offer coverage due to pre-existing medical conditions.
-- Capping how much insurers can charge annually for out-of-pocket expenses, deductibles, or co-pays.
-- Requiring insurers to fully cover regular check-ups and tests, including mammograms and eye and foot exams for diabetics.
-- Prohibiting insurers from dropping or reducing coverage for those who become seriously ill.
-- Banning insurers from charging people based on gender.
-- Stopping insurance companies from placing annual or lifetime caps on benefits.
-- Making sure that young adults as old as 26 can be covered under family insurance policies.
-- Requiring insurers to renew policies as long as premiums are paid in full, even if the policyholder becomes ill.
UPDATE: Obama, en route to Virginia, issued a statement noting the progress in Congress today.
In the Senate, key negotiators said they had pared the costs of a plan to cover 95 percent of Americans by 2015 to about $900 billion over 10 years, putting the price tag under the unofficial $1 trillion target the White House has set. In the House, the leadership, the White House, and fiscally conservative Blue Dog Democrats worked out a deal that will allow a bill to move forward in committee, but will delay a floor vote until September.
“I want to thank the members of both the Senate and House of Representatives for continuing their work on health reform to provide more stability and security for Americans who have insurance, and quality, affordable coverage for those who don’t," Obama said. "I’m especially grateful that so many members, including some Blue Dogs on the Energy and Commerce Committee, are working so hard to find common ground. Those efforts are extraordinarily constructive in strengthening this legislation and bringing down its cost.”
OBAMA'S REMARKS AND Q&A IN RALEIGH
THE PRESIDENT: Hello, North Carolina! (Applause.) Thank you so much. All right, please, everybody have a seat. I am so excited to be back in Raleigh, to be back in North Carolina. (Applause.) This is a community and a state that has been so good to me. (Applause.) And I know that part of the reason is because I travel with one of your home boys, Reggie Love. (Applause.) But I hope it's more than that.
A couple of people I want to acknowledge very quickly. First of all, I just want to thank Sara Coleman for the wonderful introduction. Give her a great round of applause. (Applause.) She brought me a Cupcake Factory teeshirt -- (laughter) -- but no cupcakes. (Laughter.) I mean, I know I've been talking about health care a lot, but I think cupcakes are good for your health. (Laughter.) So, next time.
I also want to acknowledge the Broughton High School Jazz Ensemble. (Applause.) I want to thank Gardner Taylor for the invocation -- (applause) -- Tom Gill for the Pledge of Allegiance -- (applause) -- Chelsea Cole for the National Anthem -- (applause) -- Del Burns, our Wake County Public Schools Superintendent. (Applause.)
I want to thank Stephen Mares, the Broughton High School principal. (Applause.) I want to thank your own Governor, Bev Perdue, who is here. (Applause.) Unfortunately, Senator Kay Hagan, Senator Richard Burr, and Congressman Brad Miller can't be here because they're all working hard in Washington. Give them a big round of applause. (Applause.)
We also have the Raleigh Mayor, Charles Meeker, is here. Where's Charles? There he is, right here. (Applause.) We've got the Speaker of the House right here. Give them a big round of applause. (Applause.) I hear that the former governor, Jim Hunt, is in the hall -- right? (Applause.)
There are a lot of elected officials, I'm starting to get into trouble. (Laughter.) So I'm going to stop there and just say thank you to all of them for their outstanding service.
It is not only great to be back in Raleigh, it is also nice to get out of Washington. (Laughter.) With all the noise and the fussing and the fighting that goes on, it's pretty easy for the voices of everyday people to get lost, and for folks to forget why they're there.
So when I took office in January, I asked to receive 10 letters -- to see 10 letters from people across the country every day. They're just selected by the mail room. We get about 40,000 letters a day; they send me about 10 a day, and I read through them. And some of them are heartbreaking, people talking about the tough times they're going through; some of them are inspiring. Most of the letters these days are about one thing, and that's the economy. So this is a town hall meeting, but before I take your questions, I want to spend a few minutes just talking about where we are and where we need to go on the economy.
I don't know whether you've seen the latest cover of Newsweek magazine on the rack at the grocery store, but the cover says, "The Recession is Over." Now, I imagine that you might have found the news a little startling. (Laughter.) I know I did. Here is what's true. We have stopped the freefall. The market is up and the financial system is no longer on the verge of collapse. (Applause.) That's true. We're losing jobs at half the rate we were when I took office six months ago. (Applause.) We just saw home prices rise for the first time in three years, so there's no doubt that things have gotten better. (Applause.)
We may be seeing the beginning of the end of the recession. But that's little comfort if you're one of the folks who have lost their job and haven't found another. Unemployment in North Carolina is over 10 percent today. A lot of small businesses like Sara's are still struggling with falling revenue and rising costs. Health care premiums, for example, are rising twice as fast as wages, and much more for small businesses -- something that I'll talk about a little bit later. So we know the tough times aren't over. But we also know that without the steps we have already taken, our troubled economy -- and the pain it's inflicting on North Carolina families -- would be much worse.
So let's look at the facts. When my administration came into office, we were facing the worst economy of our lifetimes. We were losing an average of 700,000 jobs per month. It was nearly impossible to take out a home loan or an auto loans or a student loan and loans for small business to buy inventory and make payroll. And economists across the ideological spectrum -- conservatives and liberals -- were fearing the second coming of a Great Depression.
At the time, there were some who thought doing nothing was somehow an option. I disagreed. We knew that some action was required. We knew that ending our immediate economic crisis would require ending the housing crisis where it began, or at least slowing down the pace of foreclosures. That's why we took unprecedented action to stem the spread of foreclosures by helping responsible homeowners stay in their homes and pay their mortgages. We didn't stop every foreclosure; wouldn't help every single homeowner who had gotten overextended. But folks who could make their payments with a little bit of help, we were able to keep them in their homes.
Ending this immediate crisis also required taking steps to avert the collapse of our financial system, which, as Federal Chairman Bernanke said the other day, was a real possibility. Now, let me just say this about banks. I know it didn't seem fair to many Americans to use tax dollars to stabilize banks that took reckless risks and helped to cause this problem in the first place. It didn't seem fair to me, either. And even though the bank bailout began under the previous administration, and I wasn't always happy with the lack of accountability when it was first begun, I do believe that it was actually necessary to step in, because by unlocking frozen credit markets and opening up loans for families and businesses, we helped stop a recession from becoming a depression. And by the way, taxpayers are already being paid back by the banks -- with interest.
We also took steps to help a struggling auto industry emerge from a crisis largely of its own making. Again, some folks thought, why are we doing that? There was a strong argument to let General Motors and Chrysler go under, and I know many of you probably share that view. And if we had been in ordinary times - not teetering on the brink of depression -- we might have exercised other options, because if you make a series of bad decisions that undermine your company's viability, the folks back here, they probably wouldn't get bailed out, your company wouldn't be in business. And many folks didn't see why these companies should be treated any differently. But in the midst of a recession, their collapse would have wreaked even worse havoc across our economy.
So I said if GM and Chrysler were willing to do what was necessary to make themselves competitive, and if taxpayers were repaid every dime they put on the line, it was a process worth supporting. We saved hundreds of thousands of jobs as a result. And we expect to get our money back.
Now, even as we worked to address the crisis in our banking sector, in our housing market, in our auto industry -- and by the way, there was a flu that came by during that process -- (laughter) -- we also began attacking our economic crisis on a broader front. Less than one month after taking office we enacted the most sweeping economic recovery package in history. And by the way, we did so -- (applause) -- we did so without any earmarks or wasteful pork barrel projects, pet projects, that we've become accustomed to. Not one was in there. (Applause.)
Now, there's a lot of misinformation about the Recovery Act or the stimulus, whatever you want to call it. So let me just lay out the facts, because I think some folks are confused. As I was driving in, everybody was -- there were some folks cheering and then were some folks with signs. (Laughter.) So I hope they're paying attention, because I want to make sure everybody understands exactly what the Recovery Act was all about.
To date, roughly a quarter of the Recovery Act's funding has been committed; over 30,000 projects have been approved; thousands have been posted online, as part of an effort to uphold the highest standards of transparency and accountability when it comes to our economic Recovery Act.
Now, the Recovery Act is divided into three parts. And I know a lot of people think, oh, this is just blown-up government and wasting money. Let me describe exactly where this money went, just so if your friends or neighbors talk to you, you can give them the right information.
One-third of the entire Recovery Act is for tax relief for you, for families and small businesses -- one-third of it. (Applause.) Ninety-five percent of you got a tax cut. You may not notice it -- (laughter) -- because it's appearing in your paycheck on a weekly -- every time you get a paycheck, as opposed to you getting a lump sum. Because it turned out that by spreading it out, it had more of a potential to stimulate the economy. That's what the economists advised us to do. But a third of it is going to tax breaks, to individuals and small businesses. That's money in your pocket to buy cupcakes and other necessities of life. (Laughter.)
So for Americans struggling to pay rising bills with shrinking wages, we have kept a campaign promise to put a middle class tax cut in the pockets of 95 percent of working families -- that began showing up in your paycheck about three months ago. (Applause.) We also cut taxes for small businesses on the investments that they make.
So just remember this, one-third of it -- if you think about the recovery, it was a little under $800 billion -- a third of it went to tax cuts. And all those folks who are complaining about growing government and all that stuff -- we are actually cutting your taxes; giving your money back so you can spend it. That's a third.
Another third of the money in the Recovery Act is for emergency relief that is helping folks who've borne the brunt of this recession. For Americans who were laid off, we expanded unemployment benefits -- a measure that's already made a difference for 12 million Americans. (Applause.) So we extended unemployment insurance; that's made a difference in 12 million Americans, including 300,000 folks here in North Carolina who would have been cut off from unemployment insurance if we hadn't extended it. (Applause.)
We're making health insurance 65 percent cheaper for families who were relying on COBRA while looking for work. (Applause.) So let me just see a show of hands. How many people know what COBRA is? All right. So you know that if you lose your job, you're allowed to keep your health insurance by paying premiums through COBRA. Here's the problem: If you've lost your job and your premium is $1,000 right at a time when you've got no job, it's hard to come up with that money, right? So what we did in the recovery package was to say, we're going to give -- 65 percent of those costs we will pick up so that you can keep your health insurance while you're looking for a job. (Applause.)
And for states who were facing historic budget shortfalls -- I was just talking to the Governor and the Speaker. We provided assistance that has saved the jobs of tens of thousands of teachers and police officers and firefighters. (Applause.)
So that's the second third. I just want to remind everybody: first third, tax cuts; second third was providing emergency relief to families who had lost their jobs, for their insurance, and to support them with unemployment insurance, and states that otherwise would have billions of dollars in shortfalls.
Now, that's two-thirds of the money of the Recovery Act. And if we hadn't put that in place, imagine the situation that people would be going through right now. It would be a lot worse, and the states would be going through a lot tougher times, having to make cuts that they don't want to make.
All right, so this brings us to the last third -- and this is where the critics will say, okay, well maybe we agree with the tax cuts, maybe we agree with the assistance to the states and individuals, but what about that last third, all those investments? Well, you know what, we decided that the last third should be for short-term and long-term investments that are putting people back to work, and build a stronger economy for the future. (Applause.)
And I want you to know this money is not being wasted. We're seeing the results of these investments here in Raleigh and across North Carolina. The Beltline is being resurfaced between Wake Forest Road and Wade Avenue. (Applause.) The Raleigh Durham Airport is renovating its runways. (Applause.) The City of Raleigh's transit system is building a new operations and maintenance facility. (Applause.) Over 500 people are going to work as part of a summer youth work initiative. (Applause.) Water treatment plants are being renovated throughout the Triangle.
These are the kinds of projects being launched across the country -- to rebuild crumbling roads and highways and bridges and waterways -- with the largest new investment in our national infrastructure since Eisenhower built the Interstate Highway System in the 1950s. And that puts people to work right away, but it also creates a long-term, sustainable economic future.
Now, I know that there are some critics in Washington -- maybe out there -- (laughter) -- they say, well, you've been too slow getting these projects started. They're saying we should have broken ground on all our highway projects on the first day. Well, that's impossible, especially because I wanted to be sure we did our homework and invested our tax dollars only in those projects that actually created jobs and jumpstarted our economy. (Applause.)
So we knew that it was going to take a few months before these projects got online. That takes time -- if you're going to do it right. And we've already eliminated wasteful projects that didn't meet this test -- because every taxpayer should have the assurance that we're investing their hard-earned tax dollars responsibly.
So just remember, if somebody asks you about the stimulus or the recovery: one-third of it is in your pocket in tax cuts; one-third of it is unemployment insurance relief, help on COBRA, and making sure that states don't have to make cuts that would make things worse; one-third of it, investments in roads and bridges, putting people back to work. So it will take time to achieve a complete recovery. We're not going to rest until anyone who's looking for work can find a job. (Applause.) But there should be little debate that the steps we took, taken together, have helped stop our economic freefall.
That's the story of the first six months. It's cost some money to do this, although I've got to say, when I hear critics talk about out-of-control spending, I start scratching my head. I can't help but remember those same critics contributed to a $1.3 trillion deficit that I inherited when I took office. (Applause.) I mean, seriously. I'm now President so I'm responsible for solving it, but I do think we shouldn't have a selective memory -- (laughter) -- in terms of spending habits. You hand me a $1.3 trillion bill and then you're complaining six months later because we haven't paid it all back. (Applause.)
A debt, by the way, that was partially a result of two tax cuts that went primarily to the wealthiest few Americans and a Medicare drug program that wasn't paid for. (Applause.) These are the same folks who are now complaining about, well, health care, we can't afford health care. You passed the prescription drug plan -- didn't pay for it -- (applause) -- handed the bill to me.
Now, because of that debt, a lot of people are saying we can't go any further in tackling our problems; we definitely can't do health care -- too much debt, too big deficits. Look, I understand the concern about debt. I have to -- I'm looking at these spreadsheets every day. We dug ourselves a deep hole. And because of the recovery package that we put together, that has added to it. So we now have problems. We're going to have to tighten our belt. But we can't do it in the middle of the stimulus. We can't do it in the middle -- just as the economy is coming out of recession. No economist would recommend that.
And I do understand people who feel like they've had to cut back, so why shouldn't the government have to cut back; why start a new government program now? So let me just explain why the health of the American people and the American economy demands health insurance reform. I want to just explain briefly reform, what it will mean for you. And then we'll start taking questions.
First of all, nobody is talking about some government takeover of health care. I'm tired of hearing that. (Applause.) I have been as clear as I can be. Under the reform I've proposed, if you like your doctor, you keep your doctor. If you like your health care plan, you keep your health care plan. These folks need to stop scaring everybody. (Applause.) Nobody is talking about you forcing -- to have to change your plans.
But if you're one of the 46 [million] Americans who don't have coverage today, or you've got that coverage where you got a $10,000 deductible, so it's basically house insurance, it's not health insurance -- (laughter) -- you pay the premiums so you won't lose your house if you get hit by a bus, heaven forbid -- then you'll finally be able to get quality, affordable coverage.
But what a lot of chatter out there hasn't focused on is the fact that if you've got health insurance, then the reform we're proposing will also help you because it will provide you more stability and more security. Because the truth is we have a system today that works well for the insurance industry, but it doesn't always work well for you. (Applause.) So what we need, and what we will have when we pass these reforms, are health insurance consumer protections to make sure that those who have insurance are treated fairly and insurance companies are held accountable.
Let me be specific. We will stop insurance companies from denying you coverage because of your medical history. (Applause.) I've told this story before -- I will never forget watching my own mother, as she fought cancer in her final days, worrying about whether her insurer would claim her illness was a preexisting condition so they could wiggle out of paying for her coverage. How many of you have worried about the same thing? (Applause.) A lot of people have gone through this. Many of you have been denied insurance or heard of someone who was denied insurance because they got -- had a preexisting condition. That will no longer be allowed with reform. (Applause.) We won't allow that. (Applause.) We won't allow that.
With reform, insurance companies will have to abide by a yearly cap on how much you can be charged for your out-of-pocket expenses. No one in America should go broke because of an illness. (Applause.)
We will require insurance companies to cover routine checkups and preventive care, like mammograms and colonoscopies -- (applause) -- eye and foot exams for diabetics, so we can avoid chronic illnesses that cost not only lives, but money. (Applause.)
No longer will insurance companies be allowed to drop or water down coverage for someone who's become seriously ill. That's not right, it's not fair. (Applause.) We will stop insurance companies from placing arbitrary caps on the coverage you can receive in a given year or in a lifetime. (Applause.)
So my point is, whether or not you have health insurance right now, the reforms we seek will bring stability and security that you don't have today -- reforms that will become more urgent and more urgent with each passing year.
So, in the end, the debate about reform boils down to a choice between two approaches. The first is projected to double your health care costs over the next decade, make millions more Americans uninsured, bankrupt state and federal governments, and allow insurance companies to run roughshod over consumers. That's one option. That's called the status quo. That's what we have right now.
I want everybody to understand this. If we do nothing, I can almost guarantee you your premiums will double over the next 10 years because that's what they did over the last 10 years. It will go up three times faster than your wages, so a bigger and bigger chunk of your paycheck will be going into health insurance. It will eat into the possibility of you getting a raise on your job because your employer is going to be looking and saying, I can't afford to give you a raise because my health care costs just went up 10, 20, 30 percent. And Medicare, which seniors rely on, is going to become more and more vulnerable. On current projections, Medicare will be in the red in less than 10 years.
So that's the status quo. When everybody goes around saying, why is Obama taking on health care -- that's the answer. That's one option. I don't like that option. You shouldn't either. (Applause.) That plan doesn't sound too good. That's the health care system we have right now.
So we can either continue with that approach, or we can choose another approach, one that will gradually bring costs down; will improve quality and affordability for every American when it comes to their health care; and will help get our exploding deficits under control. That's the health care system we can bring about with reform.
So back in Washington, there's been a lot of talk about the politics of health care and who's up and who's down, and what it will mean for my party if this -- will my presidency be damaged severely if we don't pass health care. I keep on saying to people, I've got health care. (Laughter.) This is not for me. (Applause.)
Here in North Carolina you know this isn't about politics. This is about people's lives. This is about people's businesses. This is about the future. (Applause.) I want our children and our grandchildren to look back and say this is when we decided to take the politics out of it and start doing something for the future of this country. (Applause.)
I'm going to need your help, Raleigh, let's go do it. (Applause.)
Thank you. Thank you. Thank you very much. All right. I was getting fired up there at the end. (Laughter.) Okay. So this is the town hall portion.
AUDIENCE MEMBER: (Inaudible.)
THE PRESIDENT: Sorry, I can't hear you, sir. Sir, I'll be happy to take your question, but -- all right, I'll be happy to take your question, but maybe let's do it in an orderly fashion. Thank you, sir, we appreciate you.
Where was I? Here's what we're going to do. We're going to go girl-boy-girl-boy -- (laughter) -- we're going to go around the room. I'm going to try to take as many questions as I can. If you can keep your answers short -- or your questions short, I'll try to keep my answers short. And just raise your hand -- I won't be able to get to everybody. There are people with microphones in the audience, so if you can wait until somebody with a microphone finds you, that way we'll be able to hear your questions. People with the microphones, can you wave, just so I can see you? All right, there they are.
All right, so I said girl-boy-girl-boy -- we'll start with this young lady right here. She's coming with the microphone -- the one in the white blouse. And please introduce yourself if you don't mind. Why don't you stand up so everybody can see you.
Q Okay. I'm so honored to be here and thank you for taking my question first. Well, I'm really nervous. I guess I want to ask --
THE PRESIDENT: What's your name?
Q My name is Kim.
THE PRESIDENT: Hey, Kim.
Q And I'm here from the Chapel Hill area.
THE PRESIDENT: Great.
Q As the wife of a family physician, we see people not only coming into that specialty less and less often, but also leaving that specialty because it's so, so hard as a young family to make that work -- long hours, not great reimbursement, not great pay, with huge amounts of debt when you come out of medical school. So what are you thinking of to entice more people to come into that speciality? Because you can insure every person in America and if there's not a physician there to see that person you still don't have health care. So what are you going to do to entice people to come -- (applause.)
THE PRESIDENT: This is a great question. Just so everybody understands what we're talking about here, it used to be that the most common type of doctor was the family physician. You'd go in and they knew you and they knew your family. And every once in a while you'd go to a specialist, but basically you were dealing with a family doctor. Increasingly, the economics of being a primary care physician or a family doctor is a bad deal for a lot of medical students, because they come out with hundreds of thousands of dollars of debt.
But it turns out that a primary care physician, as Kim just pointed out, their reimbursement rates are lower; the system doesn't reimburse for things like preventive care. If they stop one of their patients from smoking, they don't get reimbursed for that. But they do get reimbursed if they're a surgeon and they have to open up somebody's chest. Now, actually that first part of it is probably more valuable to the person's health and to the society as a whole, but if it's not rewarded, then fewer and fewer people go into that branch of medicine.
If we pass health reform -- when we pass health reform -- then what we're going to -- (applause) -- and more people now have access to the system, it is going to be vital that we increase the number of primary care physicians.
The best way for us to do it is twofold: One is to change how we reimburse; changes in the delivery system. So what we're trying to do is we're trying to say, in all these systems, insurance companies, they should reimburse for preventive care. If a health system is making sure that a diabetic is taking their meds or monitoring their diet, they should get reimbursed for that, not just getting reimbursed for the $30,000 foot amputation after somebody gets into real medical trouble. So one thing to do is to change reimbursement so that the incomes of primary care physicians are more comparable with specialists.
The second thing is to provide scholarships and financial incentives for young medical students who are willing to go into the primary care field. If you combine those two things -- (applause) -- if we combine those two things, then we can change I think the incentives for a lot of doctors so that we get more and more primary care physicians.
All right? Okay. It's a man's turn. This gentleman right here. We've got to find a mic for you.
Q Thank you, Mr. President. My brother is -- he has a family of four and two children. His daughter is a disabled child -- MS -- and he receives Medicaid. He managed -- he works a job -- he managed to save $3,000, and at this point Medicaid stopped all benefits helping him. And I want to know, does your health care plan include reforms for the Medicaid system and these kind of injustices? (Applause.)
THE PRESIDENT: We have reforms for Medicare and Medicaid in terms of the delivery system. Now, what you're referring to is benefit levels and how they're calculated, and that has not been the central focus of the reform initiatives we've been putting forward. We're going to have to examine some of those benefit mechanisms. I have to tell you, though, it's always a little bit tricky because, on the one hand, you're right that your brother should be able to save up some money for emergencies or for a college fund or what have you, and not suddenly lose all their -- the Medicaid benefits. On the other hand, we've got to make sure that Medicaid isn't used by people who could afford to pay for health care themselves. So trying to find that balance is always difficult.
Without looking at your brother's particular situation, I could not tell you exactly what needs to be done to modify it. But I do think that under Medicaid and Medicare, we can make the system more efficient, and we can encourage better practices that will reduce the cost overall, so that would reduce cost for taxpayers and reduce cost for your brother. And that is a goal, I think, that is a win-win for everybody. It's not going to solve all these problems but it's important.
Okay, I'm going to turn back to one of these small businesses. It's a lady's turn, though, sorry. (Laughter.) So we got one right here.
Q Mr. President, is this on?
THE PRESIDENT: Yes.
Q My name is Patty Briguglio. I own a company called MMI Public Relations. I have 20 employees and I provide health care benefits for them. And so I wouldn't blow it, I've written down my question. What current long-term social program created and run by the government should we look to as a model of success and one that we as taxpayers should be confident that a new government-run health care system would be better than the current system in place? In other words, what are you going to do differently?
THE PRESIDENT: Well, let me say this. Just in the health care arena, I point to two areas: Medicare and the VA are both government-run health care programs that have very high satisfaction rates. Generally, if you look at surveys, they have actually very high satisfaction rates.
Now, the VA, because it's a self-contained system, meaning that people see patients year after year because they're not -- it's not dependent on what job they have -- they can actually do some things in terms of prevention and wellness and some of the things that I just talked about that have helped to lower their costs and improve quality of care in a pretty impressive way.
Medicare is a different situation because seniors really like Medicare generally, they appreciate the security that it provides. And by the way, we're in the 44th anniversary of the passage of Medicare. Prior to that, senior citizens were extraordinarily vulnerable. And so it is a successful program.
The problem with Medicare is the same problem that we have with the health care system generally, which is health care inflation has driven costs up. That's not unique to Medicare. In fact, this is something that's important to know -- that health care inflation under Medicare has actually gone down at a -- has actually increased at a lower rate than in the private sector, all right?
So let me repeat what I just said, because everybody always says, well, government can't run anything. Medicare costs have gone up more slowly than health care costs in the private sector. So the private insurance that you're getting, you have actually seen your premiums go up faster than Medicare has cost taxpayers, even though seniors have high satisfaction rates with Medicare.
Now, having said all that, it's all relative. Medicare still needs to be a lot better and more efficient. And there are examples of how we can make the entire health care system more efficient. We know where these examples are -- the Mayo Clinic, the Cleveland Clinic, Geisinger, Kaiser Permanente -- there are health systems around the country that actually have costs that are as much as 20 or 30 percent lower than the national average and have higher quality.
And so the question is, why is that? What is it that they're doing differently than other systems? And there are some patterns that start coming into place. For example, number one is that they have a patient-focused practice where instead of worrying about how they're billing -- so how many tests they're ordering or how many procedures they're ordering -- all they're focused on is the patient. And part of what helps is their doctors are all on salaries so they don't even know what the economics of any decisions that they're making are.
Then it turns out you also have a group practice so that when you come in, the family physician, your primary care physician, has already coordinated with all the specialists. So instead of having to go to four different doctors and four different tests, you go take one trip and you see all of them all at once, and they all help diagnose you and coordinate your care throughout the process.
They've got health information technologies so that when you take a test, it actually gets forwarded to the next doctor and the next doctor and to the nurse and the pharmacist, so that there aren't any errors. (Applause.) So there are a whole range of practical things that they're doing that are improving quality and lowering costs at the same time.
Now, there's no reason that we can't duplicate that in both private and public settings across the board. But in order to do that we're going to have to change how we reimburse for exams. So we've got to say to doctors and hospitals, we're not going to reimburse you for the number of tests you provided -- we're going to reimburse you instead for the quality of the outcome.
Here's another example. Right now we just reimburse hospitals no matter how many times they readmit you. Now, if you took your car to the shop and they fixed it, or you thought they fixed it, and then two, three weeks later you go back in and they're having to do the same thing, you wouldn't feel good about paying twice for the exact same thing that you thought had been fixed. But under Medicare there is no penalty to hospitals for having very high readmission rates compared to their peers.
So those are the kinds of things that can be changed.
Now, your broader question may just be: I don't have confidence in government. But as I pointed out -- I just want to go back to my original point, Medicare costs have gone up more slowly than private sector health care costs. That is documented.
Q Sorry, you do say that we know Medicare has this problem, that they're paying for readmittance. Why don't we reform that now? That's a government program. Why are we allowing that?
THE PRESIDENT: That's exactly what I want to reform. (Applause.) No, no, maybe I'm just -- I don't understand your question. That's exactly the changes that we want to make. Those are exactly the changes that we want to make. That's what we're proposing.
And what happens when we propose that is, then people start trying to scare you by saying -- I mean, I've got seniors right now who are writing to me -- let me address the seniors in the audience -- I've been getting letters, people saying, I hear that you're going to take my Medicare away. I've received letters that say, I don't want a government-run program, I don't want socialized medicine, and by the way don't touch my Medicare. (Laughter.) No, I do.
Because what's happened is, in this debate, on the one hand, people are worried about change -- they're nervous that even though they may not be satisfied with what they have, what we create might be worse; and every proposal that you make, it's very easy to use scare tactics to make people think that you're going to lose your Medicare, we're going to ration your care, et cetera -- this is going to cost way too much.
And so part of my job is just to try to get the facts in front of people. I want to make these reforms that you just talked about as part of the overall change in health care. And by the way -- here's an important point -- you've been hearing these figures that say, it's going to cost a trillion dollars for this new health care program. So then of course people think, well, we can't afford that; a trillion dollars, that's a lot of money. First of all, just to keep it in perspective, that's a lot less than we spend on the war on Iraq, but that's -- (applause) -- but it's still a lot of money. Two-thirds of the cost to cover everybody in America -- two-thirds of it could actually be paid for by money that's already in the health care system that taxpayers are paying that's being wasted.
So let me give you an example: $177 billion over 10 years is spent on subsidies to insurance companies under something called Medicare Advantage. There's no showing that seniors are healthier using Medicare Advantage than using regular Medicare, but taxpayers, you fork over an additional $177 billion to them over 10 years. You take that out, that right there helps pay for millions of people who could get coverage.
So we've already identified $500 billion to $600 billion worth of savings that are already being spent by taxpayers that would help pay for the reforms that we're talking about. (Applause.) But you wouldn't know that from watching the news. And by the way, that -- so a trillion dollars is over 10 years, so that's $100 billion a year -- $600 billion of it already paid for by money that you're already using -- that's already being used, but just not used wisely in the health care system. That's what we're talking about. And for that we can have 40 million people who don't have health insurance getting health insurance.
And small businesses, you're already paying health insurance -- so you're already paying; you would get a tax credit -- we're putting $43 billion on the table to help reduce your costs directly, for your care. (Applause.) So 95 percent of small businesses would benefit from subsidies if they're already providing health insurance for their employees.
And if they're not providing health insurance for their employees -- the problem is small businesses typically have a much tougher time getting health insurance and they pay higher premiums because you've got a smaller pool. You're only 20 people -- it's not like some big Fortune 500 company with a thousand people, they can drive a harder bargain. You'll be able now to join and access health care through a health care exchange that we set up so that you're able to be part of a pool that can leverage lower prices. (Applause.)
This is not something that is impossible to do, but we've got to overcome the understandable skepticism that somehow Washington can never get anything right. I mean, that's the biggest challenge we have right now, is just people sort of generally have skepticism about Washington. And I -- look, I understand that. That's why I ran for President, because I was skeptical about what was happening in Washington. (Applause.)
All right, it's a man's turn. This gentleman right up in front here. He's got a -- he looks quite popular. Everybody was pointing at him.
Q Thank you very much, Mr. President. My name is Bill Purcell. I'm one of those primary care doctors you were talking about, a pediatrician. I also have a little job in the North Carolina Senate. (Laughter.) But I can see in my practice a patient and make a correct diagnosis and prescribe the right medicine, but if a patient can't afford the medicine, they don't get treatment. What can we do about the high cost of prescription drugs in America? (Applause.)
THE PRESIDENT: Since I gave a very long answer on the last one, I'll try to keep this one short. We pay 77 percent more for prescription drugs in America than any other country does -- 77 percent more than any other country. Now, if you talk to the pharmaceutical industry, they'll say, well, a lot of the research and development is done in this country, and that's how we're developing the great new drugs. That accounts for maybe 20 to 30 percent of the difference in the cost. The rest of it has to do with marketing. It has to do with the fact that basically the pharmaceutical industry can get away with it.
And what happened when the prescription drug bill was passed several years ago under Medicare, they specifically prohibited you -- they prohibited Medicare from negotiating with the drug companies for the cheapest available price on drugs; specifically said you cannot negotiate. So what we've said is, in this reform process, we are going to turn that around. (Applause.)
And to the pharmaceutical industry's credit, they have sat down and started negotiating and they've already said -- they've already put $80 billion in deep discounts and rebates on the table that would help to close the so-called doughnut hole that a lot of seniors are suffering under Medicare. They've already committed to that. That would cut the costs of the doughnut hole in about half. So that's a significant savings. I think we can obtain more savings.
One other thing that's being debated right now on Capitol Hill, though, that people need to keep an eye on -- one of the way to lower prescription drug costs is to move to generics. And the problem right now is, is that the drug companies want, after they've come up with a drug, they want to keep that patent for 12 years. And there's a debate about can we lower that to seven years before it goes generic so that people can enjoy lower prices on those drugs.
Those are some of the debates that will be taking place alongside the health care reform debate. But overall, there's no reason why we should not be able to at least pay in the ballpark of what other countries are paying for the exact same drug, and that will be a major focus in this health care reform legislation. (Applause.)
All right. It's a woman's turn -- young lady right there who's on the rail.
Q Good afternoon, Mr. President.
THE PRESIDENT: Good afternoon.
Q First I wanted to thank you for your Supreme Court nomination -- I mean, appointment. (Applause.)
THE PRESIDENT: She's going to do well.
Q And all the hard work that you've been doing on the economy and with the health care reform. (Applause.) I had the opportunity with my family last year to meet you in Bristol, Virginia. My father gave you the cane to help you out doing the health care reform. But my current question is, I consider myself an average American. I worked for a corporate 500 company for 25 years and been unemployed for the past two years. And I prepared to teach mathematics in the middle school system in my hometown in Virginia, which I haven't gotten the opportunity to do that yet, but I volunteered in the school system and on your campaign. So my question is, I believe that most average Americans are for the health reform,