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History > 2012 > USA > Politics > White House / President (I)




Prisoner in Iraq Tied to Hezbollah

Faces U.S. Military Charges


February 23, 2012
The New York Times


WASHINGTON — The Obama administration has approved military commission charges against a Lebanese man accused of helping kill United States troops in Iraq, expanding the scope of the current tribunal system to include a defendant who is not accused of being part of the war with Al Qaeda.

The defendant, Ali Musa Daqduq, is accused of being a Hezbollah operative and was the last detainee held by American forces in Iraq. He was turned over to Iraqi custody in December before they withdrew. On Jan. 3, military prosecutors swore out an eight-page charge sheet for Mr. Daqduq, a copy of which was obtained by The New York Times, accusing him of murder, perfidy, terrorism and espionage, among other war crimes.

A military spokesman, Lt. Col. Todd Breasseale, confirmed the charges and said the government was “working with Iraq to effect Daqduq’s transfer to a U.S. military commission consistent with U.S. and Iraqi law.”

“We are seeking the fastest possible way to bring him to justice,” he said.

He provided no explanation for why the charges were kept quiet, including not being posted on the military commissions system Web site. The White House declined to comment.

It is not clear whether the administration was actively seeking Mr. Daqduq’s extradition, or whether the charges were prepared as a backup measure in hopes of keeping him locked up should Iraqis fail to prosecute him or should he be acquitted by an Iraqi court. Officials have expressed concerns that the government of Iran may pressure Iraq to release him.

While prosecutors have submitted the sworn charges to the official in charge of the commissions, the retired Vice Adm. Bruce MacDonald, he has not yet approved a trial. But whether or not Mr. Daqduq ever comes before a tribunal, the charges are a significant precedent.

Every previous defendant in the current system — the first version of which was established by President George W. Bush after the terrorist attacks of Sept. 11, 2001 — has been a detainee at Guantánamo Bay, Cuba, who was linked to the war against Al Qaeda and the Taliban.

“Mr. Daqduq’s alleged crimes are serious violations of the law of war that were committed against U.S. service members in Iraq in association with ongoing hostilities,” the chief prosecutor of the military commissions system, Brig. Gen. Mark S. Martins, said in a statement.

It was also not clear whether Mr. Daqduq had been notified of the charges. A military lawyer assigned last month to represent him, Cmdr. Patrick J. Flor of the Navy, said he had asked the Pentagon for permission to visit his client in Iraq, and to see the evidence, but had received no answer.

Mr. Daqduq is accused of conspiring with several groups, including the Quds Force of Iran’s Islamic Revolutionary Guards Corps, to train Shiite militias to use roadside bombs and other insurgent tactics. The most serious charges stem from what prosecutors say was his role in helping organize a raid in January 2007 by insurgents who wore American-style uniforms and carried forged identity cards. They killed five American soldiers in Karbala, Iraq; one in the raid, and four others who were captured and whose bodies later dumped by a road.

Mr. Daqduq was captured later that year, and is said to have confessed during interrogations that did not include harsh techniques.

As the deadline for withdrawing from Iraq neared last year, the administration wrestled with taking Mr. Daqduq out of Iraq for prosecution. But under an agreement signed by the Bush administration, the Iraqi government controlled decisions about such prisoners.

Prime Minister Nuri Kamal al-Maliki would not let American forces summarily remove Mr. Daqduq from Iraq, insisting that formal legal processes had to be followed. American officials did not want to violate Iraqi sovereignty at the moment of transition, and the United States transferred Mr. Daqduq to Iraqi custody in mid-December.

David Lucas, whose brother was one of the victims of the raid Mr. Daqduq is accused of orchestrating, said his family had not been informed of the charges.

“It’s good the government didn’t give up on it totally, but obviously I’m still skeptical,” he said. “We’ve been kept out of the loop, and it’s tough to make a decision about how I feel about it.”

Were Mr. Daqduq to be extradited, it would raise the question of where a commission trial would take place. The administration last year explored the possibility of holding a tribunal at a military base in Charleston, S.C., while Republicans called for taking him to Guantánamo, where the other trials so far have been held. But the administration, which has resisted adding to the inmate population there, said Iraqis would not consent to transferring anyone there.

“We have long understood that the transfer of Daqduq to Guantánamo is a nonstarter for our Iraqi partners and would only prevent us from obtaining custody of him,” Colonel Breasseale said.



This article has been revised to reflect the following correction:

Correction: February 24, 2012

Due to a web production error, a headline with an earlier version of this article

on the home page gave the wrong nationality of Ali Musa Daqduq.

He is from Lebanon, not Iraq, as correctly stated in the article.

    Prisoner in Iraq Tied to Hezbollah Faces U.S. Military Charges, NYT, 23.2.2012,






Obama Sends Apology as Afghan Koran Protests Rage


February 23, 2012
The New York Times


KABUL, Afghanistan — The potential scope of the fallout from the burning of several copies of the Koran by American military personnel this week became chillingly clear on Thursday as a man in an Afghan Army uniform shot and killed two American soldiers, while a crowd nearby protested the desecration of the Muslim holy book.

In the third successive day of deadly violence over the Koran burning, seven Afghans were killed in three provinces on Thursday and many more were injured, most in skirmishes with Afghan security forces. The Afghan government, which had responded slowly on the first day of protests, was in high gear on Thursday as officials tried to tamp down emotions ahead of the Friday day of prayer. Western and Afghan authorities feared that there could be emotional demonstrations after the prayer that the Taliban and extremist elements would try to exploit.

Afghan officials quoted from a letter from President Obama in which he, among other things, apologized for the Koran burning. For President Hamid Karzai, the episode has fast become a political thicket. He and other government officials share with the Afghan populace a visceral disgust for the way American soldiers treated the holy book, but they recognize that violent protests could draw lethal responses from the police or soldiers, setting off a cycle of violence.

Complicating matters is that some of Mr. Karzai’s allies in Parliament and elsewhere, including former mujahedeen leaders, have openly encouraged people to take to the streets and attack NATO forces. Mr. Karzai has not spoken out against them publicly, but his government’s overall message on Thursday suggested that he did not want more violence.

Mr. Karzai met with members of both houses of Parliament at the presidential palace and urged them to help to try to contain the protests.

“The president said that ‘according to our investigation we have found that American soldiers mistakenly insulted the Koran and we will accept their apology,’ ” said Fatima Aziz, a lawmaker from Kunduz who attended the meeting.

“He said, ‘Whoever did this should be punished, and they should avoid its repetition. Insulting holy books and religion is not acceptable at all.’ ”

Ms. Aziz, who said she wept when told of the Koran burning, also said Mr. Karzai told Parliament members that the protesters’ violent response was “‘not proper.’ ”

Ms. Aziz, along with many educated Afghans, some of whom registered their views on Facebook, said she was dismayed by the exploitation of the incident for political gain and accused Iran and Pakistan of behind-the-scenes manipulation. Both countries would like to see the American military under pressure, and the reaction to the Koran burning has accomplished that.

The Taliban released two statements on Thursday: one urged Afghans to attack foreign troops and installations as well as Afghan forces who are defending them, and the second urged Afghan security forces to turn their guns on their NATO colleagues.

“The Islamic Emirate of Afghanistan calls on all the youth present in the security apparatus of the Kabul regime to fulfill their religious and national duty,” the statement said, “to repent for their past sins and to record their names with gold in the history books of Islam and Afghanistan by turning their guns on the foreign infidel invaders instead of their own people.”

Mohammed Salih Suljoqi, a lawmaker from Herat, said the episode “has been used as a tool of propaganda.”

“The noble and pure emotions of our fellow countrymen are being misused by the intelligence agencies of neighboring countries,” he said, adding that some groups “are trying to destabilize the situation and lead the country into chaos.”

“All these tragic incidents can spread a dark shadow and negatively impact the relationship of Afghanistan and the United States,” Mr. Suljoqi said.

President Karzai’s office quoted from what it called a letter of apology from Mr. Obama that was delivered Thursday by Ambassador Ryan C. Crocker to signal to the Afghan public that the United States understood the distress the episode had caused.

In the letter, according to Mr. Karzai’s press office, Mr. Obama wrote: “I wish to express my deep regret for the reported incident. I extend to you and the Afghan people my sincere apologies.” Mr. Obama’s office would not release the text of what it called a three-page letter on a “host of issues” between the two countries, “several sentences of which relate to this issue.”

One of the Republican candidates for president, Newt Gingrich, issued a statement that harshly criticized Mr. Obama for his apology, calling it an “outrage.”

“It is Hamid Karzai who owes the American people an apology, not the other way around,” the statement said.

Four Afghans were killed in confrontations with the police in Oruzgan Province and one in Baghlan Province. In Nangarhar Province, two Afghans protesting the Koran burning were shot to death outside an American base in Khogyani District, said Mujib Rahman, the doctor on duty at the hospital in the district center.

It was unclear whether they were shot by Afghan soldiers or NATO troops, but a NATO spokesman, Lt. Cmdr. James Williams, said NATO troops would shoot only if they were in mortal danger, and the protesters did not constitute mortal danger.

About the same time as the protest and the shootings outside the base, an Afghan Army soldier turned his gun on NATO soldiers at the base, according to other protesters and elders. Two American soldiers were killed. Mr. Karzai and the religious leaders and elders he had assigned to investigate how the Koran burning came about released a statement calling for restraint by the Afghan people and demanding that those responsible be tried swiftly.

“In view of the particular security situation in the country, we call on all our Muslim citizens of Afghanistan to exercise self-restraint and extra vigilance in dealing with the issue and avoid resorting to protests and demonstrations” that could be used by extremist groups to incite violence, the statement said, adding that NATO officials had “agreed that the perpetrators of the crime be brought to justice as soon as possible” in an open trial.

A NATO inquiry into the burning continues, a spokesman said, adding that the United States would take disciplinary action if “warranted.”


Reporting was contributed by Sangar Rahimi, Sharifullah Sahak

and Jawad Sukhanyar from Kabul, and an employee of The New York Times

from Nangarhar Province.

    Obama Sends Apology as Afghan Koran Protests Rage, NYT, 23.2.2012,






Obama Offers to Cut Corporate Tax Rate to 28%


February 22, 2012
The New York Times


WASHINGTON — President Obama will ask Congress to scrub the corporate tax code of dozens of loopholes and subsidies to reduce the top rate to 28 percent, down from 35 percent, while giving preferences to manufacturers that would set their maximum effective rate at 25 percent, a senior administration official said on Tuesday.

Mr. Obama also would establish a minimum tax on multinational corporations’ foreign earnings, the official said, to discourage “accounting games to shift profits abroad” or actual relocation of production overseas.

With the framework for changes that the Treasury secretary, Timothy F. Geithner, will outline on Wednesday, Mr. Obama will enter an election-year debate with Republicans in Congress and in the presidential race who seek even lower taxes for businesses. But an overhaul of the corporate code is unlikely this year, given that political backdrop and the complexity of an undertaking that would generate a lobbying frenzy as businesses vie to defend old tax breaks or win new ones.

The campaign of Mitt Romney, a Republican candidate for president, signalled that he would outline on Wednesday an expanded version of his own tax proposals, which he said on Tuesday would call for a “flatter, fairer, broader-based tax system” that would do more to encourage economic growth. The various Republican candidates, who are scheduled to debate on Wednesday night, have called for cutting the corporate income tax, differing somewhat in the details.

The administration plan to revamp a corporate code that is widely derided as inefficient and anticompetitive has been in the works at Treasury for two years, and is a priority of Mr. Geithner. Yet he has been preoccupied with crisis management, and is unlikely to see the project through since he plans to leave office after this year.

The proposed overhaul “will help level the playing field for businesses and allow the government to collect needed revenue while promoting economic growth,” Mr. Geithner told a Congressional committee last week, without details.

Republicans and business groups complain that the 35 percent corporate tax rate is among the highest in the world, leaving American companies at a competitive disadvantage. They typically seek a 25 percent rate, with many of them saying that the current tax breaks should be kept in place as well.

Nonpartisan tax analysts consistently find that corporations here on average pay just slightly more than their competitors in other developed countries after exploiting the many tax breaks and loopholes. Recent news accounts have highlighted the low effective rates paid by companies like Google, Boeing and General Electric.

One analysis concluded that 115 of the 500 companies in the Standard and Poor’s stock index paid a total corporate tax rate — federal and otherwise — of less than 20 percent over a five-year period. A study by the Government Accountability Office in 2008 found that 55 percent of American companies paid no federal income taxes during at least one year in a seven-year period it studied.

“Under the current tax system, the United States will soon have the highest statutory corporate tax rate among developed countries, within a system that features a large number of tax expenditures for special interests,” said a senior administration official, who did not want to speak ahead of Mr. Geithner except on condition of anonymity.

“This puts American businesses — especially those in areas like manufacturing that are subject to more intense international competition — at a disadvantage. And this system is also unnecessarily complicated for America’s small businesses.”

Earlier this year, Mr. Obama proposed to end tax breaks for companies that move jobs overseas and to create new breaks for those that bring jobs back.

Corporate taxes make up an increasingly small share of the federal government’s revenue, in part because of tax-avoidance maneuvers by businesses.

Mr. Obama is proposing that the simplification of the corporate code should not add to the deficit, and that most or all revenue raised by closing tax breaks should be used to lower rates or offset the cost of new or existing tax breaks favoring manufacturing, clean energy, and research and development activities, according to administration officials.

Mr. Obama is not proposing to overhaul the tax code for individuals, though he was spoken of it as a goal. Both codes were last revamped a quarter-century ago and the accretion of tax breaks in recent years has given rise to widespread calls, including from Mr. Obama’s 2010 Bowles-Simpson fiscal commission, to overhaul the tax systems in a way that raises enough revenue to both lower rates and reduce annual budget deficits.

But every tax break has its defenders, from homeowners who want their mortgage-interest deduction to corporations protective of depreciation tax breaks.

In October, Dave Camp of Michigan, the chairman of the House Ways and Means Committee, proposed a 25 percent corporate rate without saying how he would offset the sizable revenue loss.

An analysis in November from Congress’s nonpartisan Joint Committee on Taxation, which was requested by House Democrats, reported that even if every corporate tax break were scrapped, the 35 percent corporate rate could not be reduced below 28 percent without adding to deficits. Republicans disputed that, citing a group of relatively obscure tax breaks that the Congressional analysts did not count.

Even so, the administration and Congress would have a political and mathematical challenge in eliminating or reducing tax breaks enough to lower corporate rates as they propose to do without adding to deficits. Underscoring the difficulty, just two popular tax breaks — for accelerated depreciation of businesses’ capital investments and write-offs of research and experimentation costs — account for the bulk of the revenue the government foregoes to benefit corporations.

Not only are those two provisions unlikely to be repealed; the Obama administration and both parties in Congress also support making a separate research credit permanent.

While Mr. Obama has emphasized federal policies to help manufacturers since he took office at the height of the recession — most prominently by rescuing the auto industry — his attention has become even more pronounced as he seeks re-election in battleground states like those in the Midwest where manufacturing is a mainstay.

For tax purposes, however, the administration would have a challenge in defining manufacturing to determine what companies would benefit from a lower rate.

While details were sketchy, an official said Mr. Obama’s tax framework would “refocus the manufacturing deduction and use the savings to reduce the effective rate on manufacturing to no more than 25 percent, while encouraging greater research and development and the production of clean energy.”

For multinational corporations, officials say the administration will oppose any shift to a territorial system of taxing offshore profits, which could exempt most of corporations’ foreign earnings from American income taxes. Mr. Camp and many other Republicans and corporations favor such a change, and are certain to oppose Mr. Obama’s proposal for a minimum tax on foreign earnings.

While the United States is virtually alone in taxing multinational companies’ foreign earnings, it allows the companies to avoid taxes indefinitely by keeping profits overseas. But that encourages accounting schemes and offshore investments, critics say.

    Obama Offers to Cut Corporate Tax Rate to 28%, NYT, 22.2.2012,






Obama to Return Major Donations Tied to Fugitive


February 6, 2012
The New York Times


Two American brothers of a Mexican casino magnate who fled drug and fraud charges in the United States and has been seeking a pardon enabling him to return have emerged as major fund-raisers and donors for President Obama’s re-election campaign.

The casino owner, Juan Jose Rojas Cardona, known as Pepe, jumped bail in Iowa in 1994 and disappeared, and has since been linked to violence and corruption in Mexico. A State Department cable in 2009 said he was suspected of orchestrating the assassination of a business rival and making illegal campaign donations to Mexican officials.

When The New York Times asked the Obama campaign early Monday about the Cardonas, officials said they were unaware of the brother in Mexico. Later in the day, the campaign said it was refunding the money raised by the family, which totaled more than $200,000.

As recently as January of last year, one of Mr. Cardona’s brothers in Chicago, Carlos Rojas Cardona, arranged for the former chairman of the Iowa Democratic Party to seek a pardon from the governor for Pepe Cardona, according to prosecutors in that state. None was forthcoming.

Last fall, Carlos Cardona and another brother in Chicago, Alberto Rojas Cardona, began raising money for the Obama campaign and the Democratic National Committee. The Cardona brothers, who have no prior history of political giving, appeared seemingly out of nowhere in the world of Democratic fund-raising, Democratic activists said.

The money Alberto Cardona raised put him in the upper tiers of fund-raisers known as bundlers, according to a list released last month by the campaign. He and Carlos Cardona each gave the maximum $30,800 to the Democratic National Committee, and a lesser amount to a state victory fund. A sister, Leticia Rojas Cardona of Tennessee, donated $13,000 to the national committee, and another relative in Illinois gave $12,600, records show. There is no record of Pepe Cardona making a donation.

Although the two brothers live and work in Chicago, they maintain ties to Pepe Cardona in Mexico. Alberto Cardona operates an advertising agency in Mexico that has worked for political candidates backed by his brother, according to public records and Mexican news reports. Public records also show that the domain name for the Web site of a restaurant Pepe Cardona owns is registered to Alberto Cardona.

Obama campaign officials said most of the money raised by the Cardona brothers came from themselves and other relatives, donations of about $200,000. In addition, the campaign was identifying other donations, believed to total less than $100,000, that was bundled from other people.

“On the basis of the questions that have been raised, we will return the contributions from these individuals and from any other donors they brought to the campaign,” said Ben LaBolt, a spokesman for the Obama campaign.

Pepe Cardona is one of the largest players in Mexico’s violent and tumultuous casino trade. In 2007, he survived an assassination attempt that was attributed to members of organized crime. The State Department cable, which was part of the cache made public by WikiLeaks, said he was suspected of illegally funneling $5 million into Mexican political campaigns in 2006.

Multiple messages left for Alberto and Carlos Cardona over several days were not returned. A sister-in-law, Sarah Westall of Minnesota, said in a telephone interview that it would be wrong to tar other members of the family with the negative publicity surrounding Pepe Cardona.

Ms. Westall, who is married to another Cardona brother, Gabriel, said Alberto and Carlos took up Democratic fund-raising because their extended family had long been involved in helping the Latino community and because they supported the president. There were no other reasons beyond those, she said. “I understand that it looks real bad,” she said. “But the rest of the family are really good people. Pepe is actually a good person too.”

Whatever the family’s motivation, the president cannot pardon someone for state crimes. On Monday, Democratic fund-raisers who have had encounters with Alberto and Carlos Cardona expressed surprise upon learning about their family history. Manuel Sanchez, a Chicago lawyer who is deeply involved in Latino outreach for the Obama administration, said he first met them in December at a finance committee meeting for the president’s campaign in Washington.

He said he had been told that they were involved in “marketing and advertising.” They impressed him as “very smart young guys who wanted to support the president,” he said.

“I did get the distinct impression that both of them are very well-to-do and successful in their businesses,” Mr. Sanchez said, adding that he “had no idea” they had a brother in Mexico or what his background was.

In Johnson County, Iowa, the authorities are well acquainted with Pepe Cardona’s past.

One of nine children of Mexican parents who grew up in Iowa, Pepe Cardona, who was born in Mexico, was active in civil rights issues at the University of Iowa and became president of the Student Senate. While at the university in 1990, he was accused of misspending student government money, and a year later he was criminally charged with defrauding associates in a telemarketing company he started, according to court records.

He was sentenced to five years in prison, and while free pending an appeal, he was arrested in New Mexico on charges of trying to smuggle marijuana across the border, court records show. He pleaded guilty to federal drug charges in 1994, but disappeared while out on bail, later surfacing in Mexico.

In 1998, federal prosecutors obtained approval from a judge to quash the drug indictment, wiping clean Pepe Cardona’s federal court record. However, his current legal status in Iowa, where a county judge had ordered him jailed in 1992, is more precarious.

On Monday, the Johnson County attorney, Janet Lyness, said there was still an outstanding warrant for his arrest on a probation violation charge. She said that at least twice over the last four years, a lawyer approached the Iowa governor’s office asking about a pardon for Pepe Cardona.

The last such request came in the final days of the term of Gov. Chet Culver, a Democrat, and was filed by Gordon Fischer, a lawyer who is a former chairman of the Iowa Democratic Party. In his pardon application, Mr. Fischer explained that he knew Pepe Cardona from his days at the University of Iowa. Mr. Fischer declined to comment on Monday, citing attorney-client privilege.

Ms. Lyness, also a Democrat, said she had been told that the application had been initiated by members of Pepe Cardona’s family in the United States. She opposed it, and it was not granted.

“I can think of few people who are less deserving of a pardon than Pepe Rojas-Cardona,” Ms. Lyness wrote in her response to the pardon request, adding that it would be “a travesty of justice.”

The first campaign donations by Alberto and Carlos Cardona came shortly after news articles revealing Pepe Cardona’s criminal past appeared in the United States and Mexico last fall.

One of them, a long exposé in September by a Mexican magazine, Proceso, chronicled Pepe Cardona’s relatively swift rise to fortune and notoriety in Mexico after fleeing the American authorities. He obtained Mexican gambling licenses, and with help from investors in Louisiana, he started opening casinos in and around Monterrey, eventually becoming known as Mexico’s “casino czar.”

The article reported that Tango Media, an advertising company it said is owned by Alberto Cardona, worked on the campaigns of politicians favored by Pepe Cardona in communities where he owned casinos. It also said Carlos Cardona was involved in one of Pepe Cardona’s business deals.

A review of public records found that several of the Cardona brothers’ business activities have intersected in the United States and in Mexico, sharing common addresses and doing work for one another’s companies. For instance, another brother, Arturo Rojas Cardona — Pepe’s main business partner in his casino and entertainment businesses — has an architecture and design firm that has done work for his brothers in the United States, including Alberto Cardona.

The nature of Alberto Cardona’s business is not exactly clear. On campaign finance reports, he listed his employer as Tango Latin, a Chicago company that seems to be connected to Tango Productions, a small video production, marketing and photography studio that Carlos Cardona listed as his employer.

A check of public records found that Alberto Cardona is the registered owner of domain names for the Web sites of Tango Media and 40 West, a restaurant owned by Pepe Cardona, both in Mexico.

Ms. Westall, the sister-in-law, said she did not know what sort of dealings Alberto and Carlos had with Pepe Cardona, but she added that it would not be unusual for large families to help each other in their business activities.

“If someone in the family does Web design, and Pepe needed someone to do that, he would hire that person first,” she said. “In Mexico, that’s the way it works.”

    Obama to Return Major Donations Tied to Fugitive, NYT, 6.2.2012,






White House Offers Plan to Lure Jobs to America


February 2, 2012
The New York Times


WASHINGTON — In his State of the Union address, President Obama called for a wide-ranging package of policies to help create American manufacturing jobs, including trade enforcement measures, business tax breaks and worker training programs.

In many ways, the proposal is surprising, as few economists now consider manufacturing a potent engine for job growth in the United States. Manufacturers have added about 330,000 jobs in the country in the last two years. But the growth followed three decades of decline, during which companies like automakers and textile companies slashed payrolls by about 7.5 million. That has led many economists to say the recent turnaround might be nothing more than a correction from the depths of the recession.

But the administration argues that big trends — like rising wages in developing countries, falling wages in America and a weaker dollar — have made moving work to or keeping work in the United States a much more viable option. And they say that manufacturers will continue to add jobs domestically, especially with a little help from Washington.

“We have a huge opportunity, at this moment, to bring manufacturing back,” Mr. Obama said in his address to Congress. “But we have to seize it. Tonight, my message to business leaders is simple: Ask yourselves what you can do to bring jobs back to your country, and your country will do everything we can to help you succeed.”

The proposal stems from a belief that after “a long period where people felt the wind was in our face, the wind is with us,” said Gene Sperling, director of the White House National Economic Council. “It’s not fighting against the trends. It’s actually working with them.”

Workers might command relatively high wages in the United States, but wages are climbing rapidly in countries like China and Brazil. High energy prices have increased shipping costs. And manufacturers argue that American workers frequently produce higher-quality goods and that American factories are closer to the markets for more sophisticated goods.

Those trends have led some companies to repatriate manufacturing jobs in the last few years, a development called on-shoring. General Electric has decided to move production of a water heater to Louisville, Ky., from China, for instance. NCR, a maker of self-service kiosks and automated teller machines, has shifted jobs to Columbus, Ga.

It is difficult to determine how many jobs American manufacturers are sending overseas or bringing back. But in a November survey by MFG.com, a site that connects manufacturers with suppliers, one in five North American manufacturers said they had brought production back from a “low-cost” country, up from about one in 10 manufacturers in early 2010.

Economists said that the administration could help sustain the trend. But they warned that the administration’s proposal seemed unlikely to lead to major job growth, and said that many businesses would still hire lower-cost workers overseas.

“We’re not going to get very labor-intensive, relatively low-skilled jobs in America, and I don’t think we want them,” said A. Michael Spence, a professor at New York University and Nobel laureate in economics. “But sometimes it makes sense to have a little help developing technologies that will make us competitive. And sometimes public support for upgrading workers’ skills makes sense.”

“The best we could possibly get is continued modest growth in manufacturing jobs,” said C. Fred Bergsten, director of the Peterson Institute for International Economics, a research group in Washington.

Mr. Bergsten noted that manufacturing continued to become more efficient, meaning companies needed fewer and fewer workers. American manufacturers produced roughly the same amount of goods in 2010 as they did a decade before, but they did so with six million fewer employees on their payrolls. Mr. Bergsten also argued that sending jobs to other countries continued to make sense for many global firms. “You’re trying to buck two major trends,” he said.

Some economists also questioned whether Washington should be giving manufacturing a hand at all.

“It’s totally implausible to think that there’s going to be a surge in manufacturing jobs,” said Lawrence F. Katz, an economist at Harvard. Broader measures to improve American infrastructure and education, he said, would be more effective in creating middle-class jobs.

But the White House says that manufacturing offers significant potential for new jobs — jobs that require more skills and offer better pay than the assembly lines 30 or 40 years ago. And it says that even modest incentives might make a difference.

To that end, the administration has put together a far-ranging set of proposals: cutting taxes for manufacturers that produce goods in the United States, taking away tax breaks for businesses that move jobs offshore, doubling a tax deduction for makers of high-tech goods, providing support to businesses investing in areas where factories are closing, expanding worker training programs and creating a new task force to better enforce trade rules and intellectual property rights. Closing a loophole that allows companies to shift profits abroad would pay for the tax credits, the White House says.

It all adds up to what economists might call an industrial policy, the out-of-favor practice of using tariffs, taxes and other measures to help a particular industry. The White House avoids the term because it implies that the government is picking winners and losers. It argues that its proposals are a moderate plan to aid businesses deciding whether to move jobs overseas.

Countries like Germany, Japan and China offer far larger tax breaks and financing support to their manufacturers, the administration argues. Such countries have “been in a bear hug” with manufacturers, said Fred P. Hochberg, president of the Export-Import Bank of the United States, a federal agency. “We’ve held them at arm’s length.”

Mr. Hochberg said a focus on manufacturing and exports might lead to more sustainable growth. “For the last three decades, we’ve relied on the U.S. consumer for growth,” he said. “But now we’re seeing growth coming from an investment in infrastructure happening in the emerging economies,” where American companies should be selling their wares and expertise.

The administration also called for a focus on manufacturing because of its spillover effects on the economy. “We do believe that manufacturing punches above its weight economically,” said Mr. Sperling of the National Economic Council. “Advanced manufacturing is critical to your innovative capacity as a country.”

    White House Offers Plan to Lure Jobs to America, NYT, 2.2.2012,






Civilian Deaths Due to Drones Are Not Many, Obama Says


January 30, 2012
The New York Times


WASHINGTON — President Obama on Monday defended the use of drones to strike suspected terrorists in Pakistan and elsewhere, saying the clandestine program was “kept on a very tight leash” and enabled the United States to use “pinpoint” targeting to avoid more intrusive military action.

Mr. Obama, in an unusually candid public discussion of the Central Intelligence Agency’s covert program, said the drone strikes had not inflicted huge civilian casualties. “We are very careful in terms of how it’s been applied,” he said. “It is important for everybody to understand that this thing is kept on a very tight leash.”

The president made the remarks in answer to questions posed by people during a live Web interview sponsored by Google Plus, the social media site of Google. He also spoke about the economy, laughed at a comedian’s impersonation of him, and declined a woman’s request to sing or do a dance.

The subject of drones came up when a viewer asked Mr. Obama about a report in The New York Times on Monday about the State Department’s use of drones for surveillance purposes to protect its diplomatic installations in Iraq. Mr. Obama confirmed their use for surveillance, but said he thought the article was “a little overwritten.” He added that drones were a key part of the country’s offensive against Al Qaeda.

The C.I.A.’s drone program, unlike the use of armed unmanned aircraft by the military in Afghanistan and previously in Iraq, is a covert program, traditionally one of the government’s most carefully-guarded secrets. But because of intense public interest — the explosions cannot be hidden entirely — American officials have been willing to discuss the program on condition of anonymity.

Until Monday, Mr. Obama, who has overseen a dramatic expansion of the use of drones in Pakistan and on a smaller scale in Yemen and Somalia, had spoken only indirectly about the program. For example, after a C.I.A. drone strike in September killed Anwar al-Awlaki, the American-born Qaeda propagandist hiding in Yemen, Mr. Obama never mentioned the agency, its unmanned aircraft or the missiles they fired.

Instead, speaking at a Virginia military base, he said Mr. Awlaki “was killed” in what he said was “a tribute to our intelligence community.” The secrecy has prevented an open debate on legal and ethical questions surrounding the strikes, since neither intelligence officials nor members of Congress can speak openly about them.


Scott Shane contributed reporting.

    Civilian Deaths Due to Drones Are Not Many, Obama Says, NYT, 30.1.2012,






President to Offer Way for Easing Home Debt


January 25, 2012
The New York Times


WASHINGTON — The White House plans to propose legislation that could allow a few million homeowners to reduce monthly mortgage payments by refinancing their current loans into new ones guaranteed by the Federal Housing Administration.

The program would broaden the availability of government-backed mortgages to include many borrowers whose loans are held by private companies and who have been unable to persuade those lenders to reduce their interest rates. Existing federal programs focus mostly on borrowers whose loans are owned by the government.

The new plan would require Congressional approval, a difficult hurdle for any legislation in the current polarized environment. Still, some Republicans have expressed support for expanding the availability of refinancing, and White House officials insisted that the plan was not an act of theater.

“I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates,” Mr. Obama said Tuesday night in his State of the Union address. “No more red tape. No more runaround from the banks.”

Administration officials said they would release the full proposal in the near future.

The new program will be directed at people whose mortgage debts exceed the value of their homes, according to a senior administration official who spoke on the condition of anonymity because the details have not yet been finalized. The official estimated that the program could benefit two million to three million homeowners who have loans that are not guaranteed by the government, and that the program’s cost would not exceed $10 billion.

The proposal is the latest in a long series of largely unsuccessful efforts by the administration to bolster the housing market. Like most of its predecessors, the plan is focused not on borrowers facing foreclosure but on those who have been able to keep making the payments on their homes. Reducing housing payments for those borrowers will allow them to spend more money on other things. It also could help to stabilize housing prices by encouraging them to stay in their homes.

In October, the administration announced that it would increase eligibility for an existing refinancing program for homeowners whose loans were held by the government-owned mortgage finance companies Fannie Mae and Freddie Mac. Those changes did not require Congressional approval, but many Republicans expressed opposition.

“The right course is to let markets work,” the Republican presidential candidate Mitt Romney said at the time. Mr. Romney has since suggested he would be open to working with lenders to stabilize the housing market.

This new program would extend a similar refinancing opportunity to borrowers whose loans are held by private companies.

Many such borrowers already have refinanced, taking advantage of interest rates below 4 percent, among the lowest ever available for mortgage loans. But millions more have been unable to do so, because their financial profiles are no longer strong enough to qualify or because their mortgage debts exceed the value of their homes.

The F.H.A. is a government program that guarantees loans made by private companies, allowing the companies to offer lower interest rates. The program historically focused on lower-income borrowers, but its role has expanded dramatically since the collapse of the housing market began in 2006, and it now guarantees about 30 percent of new loans.

The proposal requires legislation because current law restricts the ability of the F.H.A. to refinance loans that exceed the value of the borrower’s home. Such loans are considered riskier because borrowers have no equity to lose if they stop payments. If the F.H.A. loses money on such loans, taxpayers could be on the hook. The program covers losses from fees on the loans it guarantees, but its reserves already are on the verge of exhaustion.

To limit the risk to taxpayers, the administration will propose that any costs should be covered with part of the proceeds from a fee on the banking industry. That, too, is waiting for Congressional approval.

    President to Offer Way for Easing Home Debt, NYT, 25.1.2012,






A Tax Proposal Is Brought Out Again


January 25, 2012
The New York Times


WASHINGTON — President Obama, stymied for three years on his promise to end tax incentives that move jobs overseas, went back to the well on Tuesday night with tax proposals that he said would promote domestic corporate growth.

Ever since his 2008 presidential campaign, Mr. Obama has vowed to change tax measures that he says lure American companies to invest and expand overseas. It was a huge applause line on the campaign trail, but for three years the proposals have gone nowhere in the face of stiff, often angry opposition from corporations — especially high-tech firms — that say the proposals would kill their economic competitiveness.

The proposals tied to his State of the Union address on Tuesday night would simplify those earlier measures while adding carrots to the sticks of higher taxes on overseas profits. Mr. Obama proposed creating an international minimum tax that companies with overseas profits would have to pay. An administration official said the White House would not specify that rate. Instead it will be a principle enshrined in a broader corporate tax package that will be released next month with the president’s budget plan for the 2013 fiscal year.

In that way, it is a business analogue to his “Buffett Rule,” which stipulates that wealthy taxpayers should not pay a smaller percentage of their income in taxes than middle-class households but does not prescribe how that tenet would be achieved.

“My message is simple: It’s time to stop rewarding businesses that ship jobs overseas and start rewarding companies that create jobs right here in America. Send me these tax reforms, and I’ll sign them right away,” he said.

Currently, companies with overseas operations can park their foreign profits offshore indefinitely and tax free. Those profits face the 35 percent United States corporate tax rate only if and when they are brought into the country. Mr. Obama’s first budget, and every budget since, has tried to curb the value of what is known as deferral. For instance, companies would not be able to deduct from their taxes the interest on loans from overseas expansions.

The thinking has been that if tax breaks are more generous at home, companies would keep more operations domestic. But all Mr. Obama has to show for those proposals are some of the earliest public fights between his White House and the business community.

To the stick of an international minimum tax, Mr. Obama would add a carrot, a lower tax rate for domestic manufacturers and additional tax breaks for high-tech manufacturing. He would also offer a new tax credit to help finance the construction of facilities at shuttered military bases or in regions hit hardest by companies moving overseas. And he would deny tax deductions for moving expenses when businesses shift facilities abroad, while creating a new tax credit for moving production back home.

Jared Bernstein, a former Obama White House economist, said the proposals sounded like a strategic retreat.

“The rhetoric sounds like something designed to perhaps go down easier than the measures that had been in the budgets before, such as ending deferrals,” Mr. Bernstein said in an interview.

The administration official said that was not so. The earlier proposals will be repeated in the coming budget but will be supplemented, the official said.

The business and trade proposals of the address seemed at least attuned to the presidential race if they were not directly inspired by them. Rick Santorum has also proposed sharp reductions in tax rates for domestic manufacturers as he campaigns for the Republican nomination. And Mitt Romney has made unfair trade practices on the part of China a centerpiece of his economic policy prescriptions.

On that, too, Mr. Obama followed suit, proposing a new trade enforcement unit charged with investigating unfair trade practices. He pointedly singled out China.

“There will be more inspections to prevent counterfeit or unsafe goods from crossing our borders,” the president said. “And this Congress should make sure that no foreign company has an advantage over American manufacturing when it comes to accessing finance or new markets like Russia.”

But Mr. Obama also circled back to unfinished business that has weighed down his political prospects.

For at least the third time, he proposed a plan to get the housing market going. He promised an effort to help “responsible” homeowners refinance their mortgages at record low rates. “No more red tape, no more runaround from the banks,” he promised, holding out the hope that beleaguered homeowners would save about $3,000 a year.

On smaller matters, Mr. Obama was remarkably prescriptive. He said states should be allowed to simply make it illegal for students to leave high school until they are 18, a command solution to the dropout problem. And he threatened to withhold federal assistance from universities that do not control their rising tuition costs.

Gov. Mitch Daniels of Indiana hit on that prescriptive theme in the Republican response when he said Mr. Obama “seems to sincerely believe we can build a middle class out of government jobs paid for with borrowed dollars.”

“In fact, it works the other way: a government as big and bossy as this one is maintained on the backs of the middle class, and those who hope to join it,” Mr. Daniels said.

    A Tax Proposal Is Brought Out Again, NYT, 25.1.2012,






Obama Urges Tougher Laws on Financial Fraud


January 24, 2012
The New York Times


WASHINGTON — President Obama called on Congress Tuesday to toughen laws against securities fraud and to strengthen the ability of the Securities and Exchange Commission to punish Wall Street firms that repeatedly violate antifraud statutes.

In his State of the Union address, Mr. Obama also said he would ask the attorney general to establish a special financial crimes unit to prosecute cases of large-scale financial fraud.

It is not clear how that effort would differ from the Financial Fraud Enforcement Task Force, a cross-agency group that Mr. Obama established in November 2009. Its mission, as the White House put it then, was to “hold accountable those who helped bring about the last financial crisis and to prevent another crisis from happening.”

The two initiatives represent an attempt to give financial regulators a greater ability to police the financial markets. In addition, the proposals seek to acknowledge the continuing frustration among many Americans — exemplified by the Occupy Wall Street movement — that few financial executives have been prosecuted for their actions leading up to the crisis.

Given the election-year pressures and the continuing gridlock on Capitol Hill, neither measure is certain to win approval in this session of Congress.

The issue of how to deal with Wall Street firms that repeatedly violate securities laws has come into focus in recent months as the S.E.C. has stepped up its efforts to bring cases related to the financial crisis. Many of those cases involve financial companies that have violated the same laws many times before.

A New York Times analysis of S.E.C. enforcement actions over the last 15 years, published in November, found at least 51 cases in which the S.E.C. concluded that Wall Street firms had broken antifraud laws that, as part of settlements of earlier fraud cases, they had pledged never to breach. The 51 cases spanned 19 firms, including nearly all of the biggest financial companies — Goldman Sachs, Morgan Stanley, JPMorgan Chase & Company and Bank of America among them.

Mr. Obama first outlined his plans to crack down on repeat offenders in an economic speech in December in Osawatomie, Kan. “Too often, we’ve seen Wall Street firms violating major antifraud laws because the penalties are too weak and there’s no price for being a repeat offender,” Mr. Obama said. “No more. I’ll be calling for legislation that makes those penalties count so that firms don’t see punishment for breaking the law as just the price of doing business.”

Mary Schapiro, the chairwoman of the S.E.C., similarly called on Congress in November to raise the maximum penalties the commission could assess for securities laws violations, and to allow it to assess greater fines for repeat violations of antifraud statutes.

Currently, the S.E.C. can try to bring contempt charges only if a company has broken previous vows not to violate the law. In a letter to members of the Senate Banking Committee, Ms. Schapiro said that enhancing the S.E.C.’s ability to crack down on repeat offenders would “substantially enhance the effectiveness of the commission’s enforcement program by addressing existing limitations that have resulted in criticism regarding the adequacy of commission actions against those who violate the securities laws.”

The S.E.C. has also been criticized recently for its practice of allowing companies to settle allegations of securities fraud while neither admitting nor denying the charges. That is a standard practice used for years by the S.E.C. as well as other regulatory agencies, but it has come under increasing scrutiny since the financial crisis.

Most recently, Judge Jed S. Rakoff of the Federal District Court in Manhattan rejected a proposed $285 million settlement in a case between the S.E.C. and Citigroup over a complex mortgage security that it marketed in 2007, as the housing market was beginning to crumble.

In his opinion, Judge Rakoff said the settlement’s “neither admit nor deny” terms left him with no conclusive evidence with which to determine whether the proposed punishment was just.

Judge Rakoff said such settlements, which often involve penalties of tens or hundreds of millions of dollars, were frequently viewed by the settling companies “as a cost of doing business imposed by having to maintain a working relationship with a regulatory agency, rather than as any indication of where the real truth lies.”

In the State of the Union address, Mr. Obama said that banks and financial companies should be held accountable for their actions and should face the same type of consequences as anyone else who has been charged with breaking the law.

    Obama Urges Tougher Laws on Financial Fraud, NYT, 24.1.2012,






Critiques for Capitalists in Obama’s Speech,

With One in Particular in His Sights


January 25, 2012
The New York Times


WASHINGTON — President Obama did not mention Mitt Romney on Tuesday evening, but he didn’t need to. Mr. Romney, whom the president’s aides still view as his most likely opponent in the fall, was the unspoken adversary in Mr. Obama’s call for a more equitable society — the natural foil for his proposals to level the playing field for middle-class Americans, from taxes to trade policy.

When Mr. Obama talked about levying a millionaires’ tax, he might have been referring to Mr. Romney’s newly released tax return, which disclosed he paid a tax rate of 13.9 percent on income of more than $20 million in 2010.

When he referred to his administration’s bailout of the auto industry, noting that “some even said we should let it die,” he could have been talking about Mr. Romney’s argument that the carmakers should have been allowed to fail. And when he said he would oppose “any effort to return to the very same policies that brought on this economic crisis in the first place,” he could have been referring to Mr. Romney’s call for a rollback of regulations on Wall Street.

Nine months before he faces the voters, Mr. Obama seized what is likely to be one of his most prominent platforms of the year to draw a bright line between himself and Mr. Romney — and, in the process, try to appeal to those frustrated by the deepening economic divide.

Gone was the soaring language of his last State of the Union address, when the president spoke of winning the future — a challenge he likened to “our generation’s Sputnik moment.” With the tents of the Occupy protesters catching snow in American cities, he was tapping into a national sense of grievance.

“When Americans talk about folks like me paying my fair share of taxes, it’s not because they envy the rich,” Mr. Obama said, answering Mr. Romney’s charge that the president engages in the “bitter politics of envy.” “It’s because they understand that when I get tax breaks I don’t need and the country can’t afford, it either adds to the deficit or somebody else has to make up the difference.”

It is a theme he has struck repeatedly as his campaign has geared up, and nowhere more forcefully than last month in Osawatomie, Kan., where he invoked the spirit of Theodore Roosevelt, a Republican aristocrat who nevertheless broke up monopolies and campaigned for a progressive income tax.

Mr. Obama’s appeal on Tuesday, studded as it was with the policy proposals that fill these addresses, did not match that populist fury. But in the august setting of the Capitol, squaring off against an often-hostile Congress, the president rolled out an election-year message that offers voters a stark choice between his vision and what he paints as the Darwinian approach of Mr. Romney and other Republicans.

To some extent, Mr. Obama was also aiming his words at Florida, where Mr. Romney and the rest of the Republican field are competing in a primary next week over the right to challenge the president.

Every word in a State of the Union address is carefully chosen. So it was no accident that when the president discussed the auto industry and the future of American manufacturing, he said: “What’s happening in Detroit can happen in other industries. It can happen in Cleveland and Pittsburgh and Raleigh.”

Those cities happen to be in Michigan, Ohio, Pennsylvania and North Carolina — battleground states totaling 69 electoral votes.

But much of the president’s message was clearly intended to push back at his Republican rivals and their critiques of his record.

Lest anyone forget Mr. Romney’s background at Bain Capital as an avid buyer and seller of companies, Mr. Obama offered a paean to permanence — to companies built on a sturdy foundation of manufacturing and skilled workers. These businesses, he said, are the basis of a competitive economy.

Mr. Obama also seemed to have Mr. Romney in mind when he announced new housing assistance and declared that “responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief.” Last year, Mr. Romney went to Nevada, the state hardest hit by foreclosures, and told a Las Vegas newspaper that the housing market needed to bottom out.

Mr. Obama also said he would oppose efforts to repeal financial regulations, and he drew a direct link between the policies of his predecessor, George W. Bush, and the economic mess that has consumed his own presidency.

In recent weeks, Mr. Obama has had a useful surrogate in Newt Gingrich, the former House speaker, who has accused Mr. Romney of destroying jobs while at Bain and pressured him to release his tax returns.

But Mr. Gingrich, whose victory in the South Carolina primary has turned him into a real competitor, did not escape a few jabs Tuesday night. Mr. Obama called for new rules to reduce the influence of lobbyists. Left unsaid was Mr. Gingrich’s disclosure on Monday that he had been paid $1.6 million to advise the mortgage giant Freddie Mac.

Mr. Romney was not silent on Mr. Obama’s big day, earlier laying out his own case for leadership in a speech at a shuttered factory in Tampa, Fla. He argued that his 25 years in business had given him the skills to turn around the economy. The president, Mr. Romney said, “puts his faith in government; we put our faith in the American people.”

“Ours is the party of free enterprise, free markets and consumer choice,” he said. “The Republican Party stands for personal responsibility and equal opportunity. We don’t demonize prosperity; we celebrate success.”

Mr. Obama countered that he had turned things around, pointing to the revived auto industry, a recovering economy and three million private-sector jobs. And he flatly rejected the contention of Mr. Romney, Mr. Gingrich and other Republicans that he is presiding over a country in decline.

“Anyone who tells you otherwise,” the president said, “anyone who tells you that America is in decline or that our influence has waned, doesn’t know what they’re talking about.”

Jonathan Weisman contributed reporting.

    Critiques for Capitalists in Obama’s Speech, With One in Particular in His Sights, NYT, 25.1.2012,






In Address, Obama Makes Pitch for Economic Fairness


January 24, 2012
The New York Times


WASHINGTON — President Obama pledged on Tuesday night to use government power to balance the scale between America’s rich and the rest of the public, trying to present an election-year choice between continued leadership toward an economy “built to last” and what he called irresponsible policies of the past that caused an economic collapse.

Declaring that “we’ve come too far to turn back now,” the president used his final State of the Union address before he faces the voters to showcase the extent to which he will try to contrast his core economic principles with those of his Republican rivals in a time of deep economic uncertainty. While many Americans remain disappointed with the state of the economy and the president’s handling of it, Mr. Obama nonetheless tried to bring into relief the difference between where the country was when he took over and where it is now.

“The state of our union is getting stronger,” he declared in time-honored tradition. “In the last 22 months, businesses have created more than three million jobs.” He pointed to renewed hiring by American manufacturers and — borrowing the “built to last” phrase from the auto industry he helped save — he sketched out, albeit vaguely, what he called a blueprint for economic growth in which the wealthy play by the same rules as ordinary Americans.

Republicans challenged Mr. Obama’s assessment of the economy, and asserted that his policies had made the situation worse. But with their own poll numbers diving, Congressional Republicans were subdued in their response to the speech, careful not to boo or seem disrespectful. And the president disputed their claim that he was practicing the politics of division.

“You can call this class warfare all you want,” Mr. Obama said of his call to create a more even economic playing field. “Most Americans would call that common sense.” He characterized the choice as one between whether “a shrinking number of people do really well while a growing number of Americans barely get by” or his own vision — “where everyone gets a fair shot.”

In returning to his 2008 campaign motif of these being “not Democratic values or Republican values, but American values,” Mr. Obama presented a somewhat modest list of initiatives he could enact through executive authority coupled with more ambitious proposals unlikely to advance in Congress. It was an address meant to show a president still interested in governing and a leader putting the interests of the American middle class at the top of his agenda.

Many of his proposals centered on changes to the tax code, including limiting deductions for companies that move jobs overseas, rewarding companies that return jobs to the United States and increasing taxes on wealthy Americans.

Taking aim at financial institutions that engaged in risky lending practices that many believe tipped the country into financial crisis, Mr. Obama said he was asking Attorney General Eric H. Holder Jr. to create a special unit of federal prosecutors and state attorneys general to expand investigations into abusive lending. The new unit, he said, “will hold accountable those who broke the law, speed assistance to homeowners and help turn the page on an era of recklessness that hurt so many Americans.”

Mr. Obama also proposed a new trade enforcement unit that would add to the number of government investigators pursuing unfair trade practices and that would be responsible for filing lawsuits against foreign countries, namely China. He called for new legislation to make it easier for Americans to refinance their homes if their interest rates are above market rates. And he proposed a bound-to-be-contentious way to allocate any savings from ending the war in Iraq and winding down the war in Afghanistan: by using half of the war savings on infrastructure projects and the other half to reduce the deficit.

“We will not go back to an economy weakened by outsourcing, bad debt and phony financial profits,” Mr. Obama said. Though his advisers have vowed a campaign against Congress, he expressed a willingness to “work with anyone in this chamber” and said he would “oppose any effort to return to the very same policies that brought on this economic crisis in the first place.”

In an emotional moment, Representative Gabrielle Giffords, an Arizona Democrat who was wounded in the Tucson shooting last year, returned for the speech before her imminent resignation from the House to concentrate on her recovery. Although the president is often criticized for his aloofness, he embraced Ms. Giffords for a long 10 seconds, rocking and almost seeming to be dancing with her.

Mr. Obama again proposed changes to the tax code so the wealthy pay more, a position he has indicated he will continue to press in this election year against Republican opposition. He called for Congress to put into place his “Buffett Rule” — named after the Berkshire Hathaway chairman Warren E. Buffett — whereby people making more than $1 million a year would pay a minimum effective tax rate of at least 30 percent in income taxes.

To illustrate his point, he provocatively used Mr. Buffett’s secretary, Debbie Bosanek, as one of his props, seating Ms. Bosanek — whose effective tax rate is higher than Mr. Buffett’s, he has said — in the chamber with the first lady, Michelle Obama.

Mr. Obama’s income tax proposal on Tuesday night was particularly charged, coming as it did less than 24 hours after Mitt Romney, a Republican presidential candidate, released tax returns showing that he and his wife, Ann, had an effective federal income tax rate in 2010 of 13.9 percent and an income ranking among the top one-10th of 1 percent of all taxpayers in 2010.

Mr. Obama would like the new tax to replace the alternative minimum tax, which was created decades ago to make sure that the richest taxpayers with plentiful deductions and credits did not avoid income taxes, but which now affects millions of Americans who are considered upper middle class.

An upbeat Mr. Obama delivered his remarks standing in the chamber of the House of Representatives, an arena ruled by his political adversaries, given the Republican majority that the president and fellow Democrats have criticized as blocking much of the White House agenda.

But in the official Republican response to the address, Gov. Mitch Daniels of Indiana said it had been Congressional Republicans who had acted to improve the economy, only to be thwarted by the president.

“The president did not cause the economic and fiscal crisis that continue in America tonight,” Mr. Daniels said. “But he was elected on a promise to fix them, and he cannot claim that the last three years have made things anything but worse.”

While he was addressing Congress and assembled dignitaries, Mr. Obama was trying to reach the far greater national television audience of American voters, and his speech, while deep in policy initiatives, served in many ways as a prime-time kickoff of his re-election campaign.

In fact, most of the first lady’s guests on Tuesday night came from states that figure heavily in Mr. Obama’s re-election plans. Included were North Carolina, from where Mr. Obama selected both a worker and an employer, to demonstrate the benefits of public-private partnerships, and Florida, from where he chose a homeowner who was able to keep her house thanks to Mr. Obama’s housing refinance program.

Mr. Obama said a major part of his agenda would be the expansion of domestic energy supplies, both from traditional fuels like oil and natural gas and from cleaner sources like wind and the sun. He singled out the rapid growth of domestic natural gas production through the technique known as hydraulic fracturing, or fracking, which the government says has unlocked a 100-year supply that now makes the United States the Saudi Arabia of natural gas.

Reflecting the heavy emphasis on the economy in an election year, the president’s speech was relatively short on national security, where most political observers and indeed his own aides believe his performance has been much stronger than on the economy. In fact, Mr. Obama ended his speech with the American assault last year that finally, after 10 years, killed Osama bin Laden, and talked of that fateful day last May when he monitored the attack from the White House.

He called on the country to emulate the unity of the Navy Seal team that conducted the raid. “When you’re marching into battle, you look out for the person next to you,” the president said, “or the mission fails.”


John M. Broder contributed reporting.

    In Address, Obama Makes Pitch for Economic Fairness, NYT, 24.1.2012,






Obama at Pentagon to Outline Cuts and Strategic Shifts


January 5, 2012
The New York Times


WASHINGTON — President Obama outlined a broad new military strategy for the United States on Thursday, one that refocuses the armed forces on threats in Asia and the Pacific region, continues a strong presence in the Middle East but makes clear that American ground forces will no longer be large enough to conduct prolonged, large-scale counterinsurgency campaigns like those in Iraq and Afghanistan.

In an unusual appearance in the Pentagon briefing room, Mr. Obama put his mark on a military strategy that moves away from the grinding wars he inherited from the Bush administration and relies more on naval and air power in the Pacific and the Strait of Hormuz as a counterbalance to China and Iran.

Mr. Obama’s strategy embraces hundreds of billions of dollars in cuts to the military, making it an awkward codicil to the uneasy relationship he has shared with the military since his first days in office.

In a letter accompanying the new strategy, the president wrote, “We must put our fiscal house in order here at home and renew our long-term economic strength.”

But in an election year when he has been under assault from Republican presidential candidates for cutting the military budget and for what they say is his weak response to Iranian threats, Mr. Obama also said that the United States would “avoid repeating the mistakes of the past when our military was left ill-prepared for the future.”

To that end, the president wrote, his administration will continue to invest in counterterrorism, intelligence gathering, cyberwarfare and countering the proliferation of nuclear weapons.

Mr. Obama arrived at the Pentagon early Thursday to describe the new strategy with his defense secretary, Leon E. Panetta, and with Gen. Martin E. Dempsey, the chairman of the Joint Chiefs of Staff. Officials said it was the first time in history that a president had held a news conference at the Pentagon.

“Now, we’re turning the page on a decade of war,” Mr. Obama said in his prepared remarks.

He said the country needed to remain prepared. “We cannot afford to repeat the mistakes of the past—after World War II, after Vietnam—when our military was left ill-prepared for the future,” he said. “So, yes, our military will be leaner, but the world must know—the United States is going to maintain our military superiority.”

Mr. Panetta has concluded that the Army has to shrink even below current targets, dropping to 490,000 soldiers over the next decade, but that the United States should not cut any of its 11 aircraft carriers, according to Pentagon officials and military analysts briefed on the secretary’s budget proposals.

The new military strategy is driven by at least $450 billion in Pentagon budget cuts over the next decade. An additional $500 billion in cuts could be ordered if Congress follows through on plans for deeper reductions.

As part of the new reality, Mr. Panetta is expected to propose cuts in coming weeks to next-generation weapons, including delays in purchases of the F-35 Joint Strike Fighter jet, one of the most expensive weapons programs in history. Delaying the F-35 would leave its factories open, giving the manufacturer, Lockheed Martin, a chance to work out continuing problems in developing the plane while freeing up money that otherwise would be devoted to buying it in the next year or two.

In the past few days, senior aides to both Mr. Panetta and General Dempsey said few specific details on Pentagon budget cuts would be released before the final budget proposal is finished later this month. But a number of Pentagon officials, military officers and military budget specialists briefed on Mr. Panetta’s plans discussed specific programs on the chopping block on the condition of anonymity.

The defense secretary has made clear that troop reductions should be carried out carefully, and over several years, so that combat veterans are not flooding into a tough employment market and military families do not feel that the government is breaking trust after a decade of sacrifice, officials said.

A smaller Army would be a clear sign that the Pentagon does not anticipate conducting another expensive, troop-intensive counterinsurgency campaign, like those waged in Afghanistan and Iraq. Nor would the military be able to carry out two sustained ground wars at one time, as was required under past national military strategies.

Instead, the military would be required to fight and win one war, spoil the military aspirations of another adversary in a different region of the world, and all the while be able to conduct humanitarian relief operations and other contingencies, like continuing counterterrorism missions and enforcing a no-fly zone.

The size of the Marine Corps is also expected to be reduced, although it would be expected to benefit from a renewed focus on the Asia-Pacific region, with Marines deployed aboard ships as well as at bases west of Hawaii.

Mr. Panetta is also examining personnel costs, with cuts to future retirement benefits and fees for health care offered to Defense Department retirees on the table.

Some areas of Pentagon spending will be protected. The defense secretary will not advocate cuts in financing for defense and offense in cyberspace, for Special Operations forces or for the broad area of intelligence, surveillance and reconnaissance.

In general, the new “Defense Strategic Review” outlined Thursday will try to define American national security interests in what officials said would be more realistic, narrow terms — to allow the acquisition of required military capabilities with a reduced budget.

    Obama at Pentagon to Outline Cuts and Strategic Shifts, NYT, 5.1.2012,




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