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History > 2009 > USA > Politics > White House / President (II)




President Obama,

at his White House news conference on Monday night,

where he discussed the Democratic stimulus plan

and opposition to it by Republicans.

Ruth Fremson/The New York Times

Taking on Critics, Obama Puts Aside Talk of Unity


















Obama Issues Ultimatum to Carmakers


March 31, 2009
The New York Times


WASHINGTON — President Obama announced what amounts to a do-or-die ultimatum for the struggling automobile industry on Monday, laying out strict standards that the carmakers must meet to get more government aid and declaring that the industry must survive because it is “like no other, an emblem of the American spirit.”

A failure of leadership “from Washington to Detroit” over the years has led the industry to the brink of collapse, the president said, and in more recent days both General Motors and Chrysler have failed to come up with plans adequate to justify the billions more in government help that they are requesting.

“And so today, I am announcing that my administration will offer G.M. and Chrysler a limited period of time to work with creditors, unions and other stakeholders to fundamentally restructure in a way that would justify an investment of additional tax dollars; a period during which they must produce plans that would give the American people confidence in their long-term prospects for success,” the president said at the White House.

Speaking a day after the White House pushed out the chairman of G.M., Mr. Obama said Chrysler has been instructed to form a partnership with the Italian automaker Fiat within 30 days as conditions for receiving another much-needed round of government aid.

The president said he was designating Edward Montgomery, a former deputy labor secretary, to oversee the auto-recovery effort. His mission will be far-reaching, to cut through government red tape and identify initiatives to support those communities hit hard by the industry’s troubles.

Other salient features of the latest plan to pull Detroit out of its decades-long skid include a tax break, being started by the Internal Revenue Service at once, for auto purchases made between Feb. 16 and the end of 2009; incentives for people to turn in older, less fuel-efficient vehicles and buy more energy-efficient cars, and government-backed warrants to assure customers that they have nothing to fear by buying a car from G.M. or Chrysler.

While the president’s announcement embodies firm government control of the car industry, at least for the time being, he said, “These companies — and this industry — must ultimately stand on their own, not as wards of the state.”

Mr. Obama said his administration has been working closely with the Canadian government, which was to announce its own “specific commitments” later Monday. Both G.M. and Chrysler have extensive operations north of the border.

The concept of encouraging people to buy more fuel-efficient cars, which has been tried with considerable success in Europe, will require the cooperation of Congress. Mr. Obama said he would work with lawmakers to identify portions of the recently enacted multibillion-dollar stimulus package that could be trimmed to finance the purchase-incentive idea — and make it effective at once.

General Motors, in a statement released after the president’s comments, said that over the next 60 days, the company would try to “address the tough issues to improve the long-term viability of the company, including the restructuring of the financial obligations to the bond holders, unions and other stakeholders.”

“Our strong preference is to complete this restructuring out of court,” G.M. said. “However, G.M. will take whatever steps are necessary to successfully restructure the company, which could include a court-supervised process.”

The president tried to project optimism as he summoned images of Detroit’s mighty past, even as he spoke of decades of complacency and problems left for another day “even as foreign competitors outpaced us.”

“Well, we have reached the end of that road,” he said. “And we, as a nation, cannot afford to shirk responsibility any longer.”

The president did not mention Ford, the other company in Detroit’s Big Three. While it has had problems, Ford has not yet found it necessary to seek government assistance.

The president envisioned an auto industry much different, almost surely smaller, and more nimble. Yet in doing so, and voicing confidence that the industry can travel that road, he recalled an earlier Detroit that “built an arsenal of democracy that propelled America to victory in the Second World War, and that powered our economic prowess in the first American century.”

The decision to ask G.M.’s chairman and chief executive, Rick Wagoner, to resign caught Detroit and Washington by surprise, and it underscored the Obama administration’s determination to keep a tight rein on the companies it is bailing out — a level of government involvement in business perhaps not seen since the Great Depression.

“This is not meant as a condemnation of Mr. Wagoner, who has devoted his life to this company; rather, it’s a recognition that it will take a new vision and new direction to create the G.M. of the future,” Mr. Obama said.

The president made clear that some form of bankruptcy, or something close to it — a quick, court-supervised restructuring, as officials described it in advance — could still be an option for G.M. or Chrysler or both. “What I am not talking about is a process where a company is broken up, sold off, and no longer exists,” the president said.

Mr. Obama’s auto industry task force, in a report released Sunday night assessing the viability of both companies and detailing the administration’s new plans for them, concluded that Chrysler could not survive as a stand-alone company.

The report said the company would get no more help from the government unless it can finalize a proposed alliance with the Italian automaker Fiat by April 30. It must also reduce its debt and health-care obligations.

If a deal is reached between Chrysler and Fiat, the administration says it would consider another loan of $6 billion to Chrysler.

G.M., on the other hand, has made considerable progress in developing new energy-efficient cars and could survive if it can cut costs sharply, the task force reported. The administration is giving G.M. 60 days to present a cost-cutting plan and will provide taxpayer assistance to keep it afloat during that time.

Although some observers of the auto industry have attributed Detroit’s troubles in part to generous wages and health benefits for assembly line workers, the president made no mention of those factors. “The pain being felt in places that rely on our auto industry is not the fault of our workers, who labor tirelessly and desperately want to see their companies succeed,” he said. “And it is not the fault of all the families and communities that supported manufacturing plants throughout the generations.”

Rather, he said, there has been a failure of leadership.

Along with Mr. Wagoner’s ouster, the task force said most of the company’s board would be replaced over the next few months. In a statement Monday, Mr. Wagoner said he had been urged to “step aside” by administration officials, “and so I have.”

His resignation is the latest example of the government taking a hands-on role in making major decisions at companies it is bailing out. The government has already pushed banks to make management changes and sharply reduce or eliminate their dividends, and it also is directing many of the decisions at the troubled insurance giant American International Group, which is nearly 80 percent owned by the government after its rescue.

In deciding to urge Mr. Wagoner to step down, the Obama administration seemed mindful of the public’s growing outrage over bailouts of private companies, as well as the bonuses paid to employees of A.I.G.

Mr. Obama is well aware that he cannot afford to give the appearance of using tax dollars to reward executives who have done a poor job, and he began signaling as early as last week that he would take a tough stance with the automakers.

The plan Mr. Obama announced on Monday will also include government backing of warranties for G.M. and Chrysler cars and trucks, to give consumers enough confidence to buy them, even if one or both are forced into bankruptcy.

Mr. Wagoner has presided over a steep drop in G.M.’s domestic market share, which has led to tens of billions of dollars in losses. His critics have said that management’s failure to move aggressively to address the company’s problems contributed to its dire financial situation.

G.M. and Chrysler have almost exhausted the combined $17.4 billion in federal aid they have received since December. G.M. has asked for up to $16.6 billion more, and Chrysler has requested another $5 billion.

Bondholders are under pressure to convert two-thirds of the $27 billion owed them into G.M. stock, while the United Auto Workers union is being asked to substitute stock for 50 percent of their health care benefits for retirees. Both groups have resisted those changes.

Administration officials say they have enough money to offer the assistance they envision under plans already approved by Congress. Even so, Mr. Obama may face skepticism on Capitol Hill and from the public.

As part of the companies’ original agreement for the loans, both were required to submit restructuring plans. Mr. Wagoner’s removal underscores how much more G.M. needs to cut than was proposed in the plan the company submitted.

Administration officials stressed that the company needed a fresh approach and leadership changes; they said Steven Rattner, the former investment banker who co-chairs the auto task force, delivered the news to Mr. Wagoner.

Frederick A. Henderson, G.M.’s president, will succeed Mr. Wagoner on an interim basis as chief executive; Kent Kresa, a board member, will assume the chairmanship. Members of the auto panel spoke with Mr. Henderson recently and came away with a favorable impression of him, people familiar with the panel’s discussions said.

G.M. collapsed last fall when new-vehicle sales in the United States plummeted to their lowest level in 25 years. G.M. lost more than $30 billion in 2008, and has been subsisting on government loans since the beginning of the year.

The administration briefed lawmakers on the plan Sunday night. Afterward, Representative Thaddeus G. McCotter, Republican of Michigan, whose district is just outside Detroit, expressed frustration over the ousting of Mr. Wagoner and with administration officials for not being clearer about the potential job losses that lie ahead.

“Why would you ask Rick Wagoner to resign when you are giving G.M. 60 days to meet a new target, but you aren’t saying what the new goal is yet,” Mr. McCotter said in an interview.


Sheryl Gay Stolberg reported from Washington and Bill Vlasic from Detroit. Micheline Maynard and Nick Bunkley contributed reporting from Detroit and David M. Herszenhorn from Washington.

    Obama Issues Ultimatum to Carmakers, NYT, 31.3.2009, http://www.nytimes.com/2009/03/31/business/31auto.html






Obama Unveils Afghan Plan to Add Troops and Set Goals


March 26, 2009
The New York Times


WASHINGTON — President Obama said on Friday that he plans to further bolster American forces in Afghanistan, increase aid to Pakistan, and for the first time set benchmarks for progress in fighting Al Qaeda and the Taliban in both chaotic countries.

In strikingly ominous tones, Mr. Obama warned — just as President George W. Bush did repeatedly over the years — of intelligence estimates that al Qaeda “is actively planning attacks on the U.S. homeland from its safe haven in Pakistan.”

“The situation is increasingly perilous,” he told government officials, top military officers and diplomats in remarks at the White House.

He added, “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.”

But President Obama promised neither to write a “blank check” nor to “blindly stay the course” if his risky new strategy does not achieve its ambitious goals.

In imposing conditions on the Afghans and Pakistanis, Mr. Obama is replicating an approach used in Iraq two years ago both to justify a deeper American commitment and prod shaky governments in the region to take more responsibility for fighting insurgents and building lasting political institutions. The new strategy, officials said, will send 4,000 more troops to train Afghan security forces on top of the 17,000 extra combat troops that he already ordered to Afghanistan shortly after taking office.

For now, Mr. Obama has decided not to send additional combat forces, they said, although military commanders at one point had requested a total of 30,000 more American troops. Even so, the strategy he endorsed on Friday effectively gives Mr. Obama full ownership of the war just as its violence is spilling back and forth across the border with Pakistan.

He called on Congress to approve legislation authorizing $1.5 billion in aid to Pakistan every year over the next five years for strengthening its democratic institutions and for basic infrastructure improvements like building roads and schools.

Prominent Democrats in Congress expressed support for the president’s approach.

House Speaker Nancy Pelosi of California said the president’s plan “is wisely centered on dismantling al Qaeda and denying safe havens in both Afghanistan and Pakistan to those who would attack the United States.”

Reaction was favorable on the other side of the Capitol as well.

“We’ve said for some time that we must refocus our resources on threats like Al Qaeda and the Taliban in the Afghanistan-Pakistan border region,” Senator Harry Reid of Nevada, the majority leader, said in a statement. “I strongly support the president’s decision to do just that.”

Senator John Kerry of Massachusetts, the chairman of the Senate Foreign Relations Committee, issued a statement calling the president’s approach “realistic and bold in a critical region where our policy needs rescuing.” Mr. Kerry and the committee’s ranking Republican, Richard G. Lugar of Indiana, will introduce the legislation authorizing the $1.5 billion in aid to Pakistan.

Senator Russell D. Feingold, a Wisconsin Democrat who sits on the Foreign Relations Committee, said he, too, was encouraged, particularly by Mr. Obama’s focus on Pakistan. But Mr. Feingold said he was concerned that the new strategy “may still be overly Afghan-centric when it needs to be even more regional.”

He said the bombing in Pakistan on Friday made it clear that “we need to fully address the inextricable links between the crisis in Afghanistan and the instability and terrorist threats in Pakistan.”

A Republican, Senator Olympia J. Snowe of Maine, also praised the president’s plan.

“Today, the president presented Congress and the American people with an honest assessment of our strategic position in Afghanistan and underscored that America’s core mission must be redefined,” she said.

But Ms. Snowe said increased American aid must be “carefully targeted,” that the Pakistan and Afghanistan must be pressured to do their part.

On Thursday, Senator Carl Levin, Democrat of Michigan and the chairman of the Armed Services Committee, emerged from a briefing with Defense Secretary Robert M. Gates to declare that in his judgment the administration’s review “was right on track.”

Although the administration is still developing the specific benchmarks for Afghanistan and Pakistan, officials said they would be the most explicit demands ever presented to the governments in Kabul and Islamabad. In effect, Mr. Obama would be insisting that two fractured countries plagued by ancient tribal rivalries and modern geopolitical hostility find ways to work together and transform their societies.

American officials have repeatedly said that Afghanistan has to make more progress in fighting corruption, curbing the drug trade and sharing power with the regions, while they have insisted that Pakistan do more to cut ties between parts of its government and the Taliban. Mr. Obama telephoned President Hamid Karzai of Afghanistan and President Asif Ali Zardari of Pakistan on Thursday to share the main elements of the strategic review.

Setting benchmarks for Pakistan could be particularly difficult. For years, the United States has simply paid bills submitted by the Pakistani government for counterterrorism operations, even during truces when its military was not involved in counterterrorism. Pakistan has resisted linking its aid to specific performance criteria and officials acknowledged that developing those criteria could be problematic.

The key elements of Mr. Obama’s plan, with its more robust combat force, its emphasis on training, and its far-reaching goals, foreshadow an ambitious but risky and costly attempt to unify and stabilize Afghanistan and Pakistan. Mr. Obama is unveiling his approach at a time when the conflict is worsening, the lives of the people are not visibly improving, and the intervention by American-led foreign powers is increasingly resented.

He said that “an uncompromising core of the Taliban,” the fundamentalist party that America and its allies ousted seven years ago, must be defeated militarily, but that other opposition forces “who have taken up arms because of coercion, or simply for a price,” must be drawn back into the fold.

The goals that Mr. Obama has settled on may be elusive and, according to some critics, even naïve. Among other things, officials said he planned to recast the Afghan war as a regional issue involving not only Pakistan but also India, Russia, China, the United Arab Emirates, Saudi Arabia and the Central Asian states.

His plan envisions persuading Pakistan to stop focusing military resources on its longstanding enemy, India, so it can concentrate more on battling insurgents in its lawless tribal regions. That goal may be especially hard to achieve given more than a half century of enmity — including a nuclear arms race — between Pakistan and India.

All told, the 21,000 additional American troops that Mr. Obama will have authorized almost precisely matches the original number of additional troops that President George W. Bush sent to Iraq two years ago, bringing the overall American deployment in Afghanistan to about 60,000. But Mr. Obama avoids calling it a “surge” and resisted sending the full reinforcements initially sought by commanders.

Instead, Mr. Obama chose to re-evaluate troop levels at a series of specific moments over the next year, officials said. Approaching the issue in increments may be easier to explain to members of Mr. Obama’s own party who fear he is getting the country as entangled in Afghanistan as Mr. Bush did in Iraq.

Mr. Obama is framing the American commitment as a counterterrorism mission aimed at denying havens for Al Qaeda, with three main goals — training Afghan security forces, supporting the weak central government in Kabul and securing the population. While the new strategy calls for expanding Afghan security forces more rapidly, it does not explicitly endorse the request from American commanders to increase the national police and army to 400,000.

At the same time, Mr. Obama would need more than the $50 billion in his budget plan for military operations and development efforts. Asked on Thursday by lawmakers whom he briefed on the plan about the prospect of reconciliation with moderate members of the Taliban, officials said Mr. Obama replied that he wanted to sift out hard-core radicals from those who were fighting simply to earn money.

Senator Levin, who was part of a bipartisan group that pressed Mr. Bush to set benchmarks for Iraq two years ago, embraced the idea of doing the same again for Afghanistan. “There is a determination to set some benchmarks for Afghanistan, and that will be incredibly important,” Mr. Levin said. “We haven’t had them in Afghanistan.”

Dennis C. Blair, the administration’s director of national intelligence, said on Thursday that the United States still lacked intelligence about the power structures inside the country and other basic information necessary for a counterinsurgency campaign. “We know a heck of a lot more about Iraq on a granular level than we know about Afghanistan,” he said.

Speaking with reporters, Mr. Blair estimated that up to three quarters of the Taliban’s rank and file in Afghanistan could be peeled away from the Taliban’s leadership, most of whom are hiding in sanctuaries across the border in Pakistan.


David E. Sanger and Mark Mazzetti contributed reporting.

    Obama Unveils Afghan Plan to Add Troops and Set Goals, NYT, 26.3.2009, http://www.nytimes.com/2009/03/26/washington/28prexy.html?hp






Obama Turns to Web to Bypass News Media


March 26, 2009
Filed at 7:41 a.m. ET
The New York Times


WASHINGTON (AP) -- Call it Round Two of the news conference, with a big Internet twist.

President Barack Obama took questions from the White House press corps on Tuesday in a prime-time, East Room session that represented the most formal and time-honored of president-and-reporter interactions. On Thursday, he is taking to that same room for another public grilling -- this time by regular folks armed with questions submitted via the Internet and in person, as part of a political strategy to engage Americans directly.

''It's a way for the president to do what he enjoys doing out on the road, but saves on gas,'' press secretary Robert Gibbs told reporters Wednesday.

By 7 a.m. Thursday, the White House Web site had already logged more than 77,000 questions.

Obama used the Internet to build a grass-roots movement that delivered the presidency and raised unheard-of money. Now in power, he is employing the same online network and style to speak -- unfiltered -- with Americans.

The president already has taken that tactic on the road, spending two days on the West Coast last week at town hall-style meetings and appearing on Jay Leno's late-night talk show. It offered easier questions and a chance to get his message to the widest possible audience.

''It's not a whole lot different than were we in California doing the meeting,'' Gibbs said. ''It's just we'll have people hooked up from a lot of different places all over the country, but he'll be able to do all that from the East Room.''

Already, the White House is connecting the old-school press conference with the new-media event. It will be an easy contrast between skeptical reporters and supporter-selected questions.

Political operatives say the White House's strategy is a way to reach a demographic key to Obama's election.

''In the new world of online media, formal press conferences are just one element or program to get the message out -- to those, usually older, who watch such things on TV. The online version he is doing is an alternative way to get out the same message, in this case on the budget, targeted toward a different audience, usually younger,'' said Morley Winograd, a former adviser to Vice President Al Gore who now runs the Institute for Communication Technology Management at the University of Southern California.

''In both cases the questioners are just props -- or, in some cases, foils -- for the star, Obama, to deliver his message. But in the latter case, they get to self-nominate instead of be selected by elites,'' Winograd said.

In a way, it's part campaign-style politics and part ''American Idol,'' said political strategist Simon Rosenberg.

''Barack Obama is going to reinvent the presidency the way he reinvented electoral politics,'' said Rosenberg, president of the New Democrat Network and a veteran of presidential campaigns. ''He is allowing everyday people to participate in a way that would've been impossible in the old media world.''

Obama's campaign allowed supporters to organize themselves to go door-to-door and raise money. Because of that, many felt an ownership of the campaign and devoted countless hours to giving Obama the Democratic Party's nomination and then the presidency.

Obama's aides are taking that step forward, incorporating tools that let visitors to the White House Web site pick the questions Obama will answer, turning the president's Thursday event into a democratic press conference.

''Average people get to shape the outcome, like 'American Idol,''' Rosenberg said. ''This is not a couch-potato age. Average people are expecting to be part of the process.''

Yet the process lends itself to softer questions and ones the White House is eager to answer, Republicans noted.

''The president is going back to the safe confines he was always most comfortable with, in this case a friendly audience where the focus is on the sale rather than the substance,'' GOP strategist Kevin Madden said.

Obama remains a popular figure, although the country and Congress are reluctant to embrace his budget proposals. Aides say that the more the president talks about his plans -- and frames his budget proposal through real-world needs -- the more Americans would be swayed.

In that vein, Obama aides want to keep the questions about energy, health care and education, the three key priorities in his first budget document. Some of the questions will be from the Web site, others via YouTube and some from an audience of about 100 people representing teachers, nurses and small-business employees.

''The president just thinks it's another opportunity to talk directly with the American people about the challenges that we have, the choices and the decisions that we're making, and the path that we're taking to get us back to prosperous days,'' Gibbs said.


On the Net:

White House online town hall: http://www.whitehouse.gov/openforquestions/

    Obama Turns to Web to Bypass News Media, NYT, 26.3.2009, http://www.nytimes.com/aponline/2009/03/26/washington/AP-Obama-Online.html







Watershed Moment on Nuclear Arms


March 25, 2009
The New York Times

During the 2008 campaign, President Obama promised to deal with one of the world’s great scourges — thousands of nuclear weapons still in the American and Russian arsenals. He said he would resume arms-control negotiations — the sort that former President George W. Bush disdained — and seek deep cuts in pursuit of an eventual nuclear-free world. There is no time to waste.

In less than nine months, the 1991 Start I treaty expires. It contains the basic rules of verification that give both Moscow and Washington the confidence that they know the size and location of the other’s nuclear forces.

The Bush administration made little effort to work out a replacement deal. So we are encouraged that American and Russian officials seem to want a new agreement. Given the many strains in the relationship, it will take a strong commitment from both sides, and persistent diplomacy, to get one in time.

When President Obama meets Russia’s president, Dmitri Medvedev, in London on April 1, the two should commit to begin talks immediately and give their negotiators a deadline for finishing up before Dec. 5. For that to happen, the Senate must quickly confirm Mr. Obama’s negotiator, Rose Gottemoeller, so she can start work.

Mr. Bush and then-President Vladimir Putin signed only one arms-control agreement in eight years. It allowed both sides to keep between 1,700 and 2,200 deployed warheads. Further cuts — 1,000 each makes sense for the next phase — would send a clear message to Iran, North Korea and other wannabes that the world’s two main nuclear powers are placing less value on nuclear weapons.

Mr. Obama and Mr. Medvedev should also pledge that these negotiations are just a down payment on a more ambitious effort to reduce their arsenals and rid the world of nuclear weapons. The next round should aim to bring Britain, France and China into the discussions. In time, they will have to cajole and wrestle India, Pakistan and Israel to the table as well.

There is a lot President Obama can do right now to create momentum for serious change. We hope his expected speech on nuclear weapons next month is bold.

He can start by unilaterally taking all of this country’s nuclear weapons off of hair-trigger alert. He should also commit to eliminating the 200 to 300 short-range nuclear weapons this country still has deployed in Europe. That would make it much easier to challenge Russia to reduce its stockpile of at least 3,000 short-range weapons. These arms are unregulated by any treaty and are far too vulnerable to theft.

Mr. Obama must also declare his commitment to include all nuclear weapons in negotiated reductions — including thousands of warheads that are now held in reserve and excluded from cuts. And he must make good on promises to press the Senate to ratify the Comprehensive Test Ban Treaty (opponents are already quietly organizing) and the international community to adopt a pact ending production of weapons-grade nuclear fuel.

Mr. Obama must reaffirm his campaign pledge to transform American nuclear policy that is still mired in cold war thinking. His administration’s nuclear review is due by year’s end. It must make clear that this country has nuclear weapons solely to deter a nuclear attack — and that this administration’s goal is to keep as few as possible as safely as possible. The review must also state clearly that the country has no need for a new nuclear weapon and will not build any.

Two decades after the fall of the Berlin Wall, Russia and the United States together still have more than 20,000 nuclear weapons. It is time to focus on the 21st-century threats: states like Iran building nuclear weapons and terrorists plotting to acquire their own. Until this country convincingly redraws its own nuclear strategy and reduces its arsenal, it will not have the credibility and political weight to confront those threats.

    Watershed Moment on Nuclear Arms, NYT, 25.3.2009, http://www.nytimes.com/2009/03/25/opinion/25wed1.html?hpw






Obama to Critics: I'll Bend, but Not Break


March 25, 2009
Filed at 5:58 a.m. ET
The New York Times


WASHINGTON (AP) -- With Congress pushing back against his proposals for energy, taxes and other matters, President Barack Obama is taking a bend-but-don't-break posture.

He will compromise on certain details if he must, he signaled at his news conference Tuesday evening, but not on the heart of his key initiatives.

His strategic retreats are a nod to political reality. He is angling to avoid confrontations he probably can't win, but to sacrifice no more than is absolutely necessary.

On energy, for instance, influential Democratic lawmakers have joined Republicans in opposing Obama's bid to reduce greenhouse gases through a program that would let companies buy and sell a limited number of permits to pollute.

''When it comes to cap and trade,'' the president said, using the proposal's nickname, ''the broader principle is that we've got to move to a new energy era. And that means moving away from polluting energy sources towards cleaner energy sources.''

''I think cap and trade is the best way,'' Obama said, but he stopped well short of insisting on it.

He did not retreat on contentious issues on which he holds the upper hand. Lifting a federal ban on embryonic stem cell research, he said, was the ''right thing to do'' despite criticisms from various quarters. Asked why he hasn't asked Americans to do more to weather the economic crisis, he said, ''I think folks are sacrificing left and right.''

Obama was less certain and dismissive on topics in which he faces potentially bruising battles with Congress. For example, he minimized a Senate leader's proposal to end Obama's signature tax cut for most working families after 2010.

''When it comes to the middle-class tax cut,'' the president said, ''we know that that's going to be in place for at least the next two years.''

''If Congress has better ideas in terms of how to pay for it, then we're happy to listen,'' he said.

Obama said the main thrust of his massive budget proposal is moving the nation in the right direction to turn around the ailing economy. ''This budget is inseparable from this recovery,'' he said, ''because it is what lays the foundation for a secure and lasting prosperity.''

He said he expects ''serious efforts at health care reform,'' but not lawmakers' approval of every proposal in his $3.6 trillion budget. ''We never expected, when we printed out our budget, that they would simply Xerox it and vote on it,'' he said.

Obama used the 55-minute news conference's last question, on Middle East peace efforts, to summarize his strategy of pressing his main goals while letting critics nibble at the margins if they must.

''When it comes to domestic affairs,'' he said, ''if we keep on working at it, if we acknowledge that we make mistakes sometimes, and that we don't always have the right answer, and we're inheriting very knotty problems, that we can pass health care, we can find better solutions to our energy challenges, we can teach our children more effectively, we can deal with a very real budget crisis that is not fully dealt with in my -- in my budget at this point, but makes progress.''

The closest he came to smugness was in noting that once-fierce criticism of Treasury Secretary Timothy Geithner has abated this week.

''It was just a few days ago or weeks ago where people were certain that Secretary Geithner couldn't deliver a plan,'' Obama said of proposals to bail out the financial sector. ''Today, the headlines all look like, 'Well, all right, there's a plan.' And I'm sure there will be more criticism, and we'll have to make more adjustments, but we're moving in the right direction.''

Obama's bend-not-break strategy will get a test Wednesday, when he travels to the Capitol to meet privately with Senate Democrats. Some of them are his most troubling critics on energy, health care, taxes and spending.

    Obama to Critics: I'll Bend, but Not Break, NYT, 25.3.2009, http://www.nytimes.com/aponline/2009/03/25/washington/AP-Obama.html






In a Volatile Time, Obama Strikes a New Tone for Crisis


March 25, 2009
The New York Times


WASHINGTON — For just under an hour on Tuesday night, Americans saw not the fiery and inspirational speaker who riveted the nation in his address to Congress last month, or the conversational president who warmly engaged Americans in talks across the country, or even the jaunty and jokey president who turned up on Jay Leno.

Instead, in his second prime-time news conference from the White House, it was Barack Obama the lecturer, a familiar character from early in the campaign. Placid and unsmiling, he was the professor in chief, offering familiar arguments in long paragraphs — often introduced with the phrase, “as I said before” — sounding like the teacher speaking in the stillness of a classroom where students are restlessly waiting for the ring of the bell.

The session in the East Room came at a volatile moment for the new president as he sought to quell Democratic misgivings about his ambitious economic agenda and deflect strong Republican opposition. Speaking past the reporters in the room to the tens of millions of viewers tuning in at home, he tried to reassure the nation that he could solve the crisis that has gripped the economy for more than a year.

“We’re beginning to see signs of progress,” he said, calling for a “renewed confidence that a better day will come.”

As balky senators from his own party began carving some of the signature proposals out of his budget, Mr. Obama signaled that he could compromise in the short term on a middle-class tax cut and a cap on carbon emissions. But he indicated that he would stand firm on four top priorities, insisting that Congress make progress in those areas.

“We never expected when we printed out our budget that they would simply Xerox it and vote on it,” Mr. Obama said, expressing flexibility about the details as long as his central goals were met. “The bottom line is that I want to see health care, energy, education and serious efforts to reduce our budget deficit.”

At a time of anger and anxiety in the country, Mr. Obama showed little emotion. He rarely cracked a joke or raised his voice. Even when he declared himself upset over the $165 million in bonuses paid this month by the American International Group despite its taxpayer bailout, his voice sounded calm and unbothered. “I’m as angry as anybody about those bonuses,” he said, adding that executives needed to learn that “enriching themselves on the taxpayers’ dime is inexcusable.”

To a certain extent, Mr. Obama’s demeanor could have been calculated — an effort, aides said, to lower the temperature after a supercharged week and nudge the country toward what Mr. Obama considers the more pressing issues of fixing the banking system and reviving the economy. Even after excoriating the A.I.G. executives, he cautioned that “the rest of us can’t afford to demonize every investor or entrepreneur who seeks to make a profit.”

The only time he seemed irritated came when he was asked why the attorney general of New York, Andrew M. Cuomo, seemed to have more success getting A.I.G. executives to return some bonuses than his own administration. Pressed on why he did not express outrage immediately upon learning of the bonuses, Mr. Obama said sharply, “Well, it took us a couple of days because I like to know what I’m talking about before I speak.”

Even on one of the most polarizing subjects in American life, race relations, Mr. Obama deviated little from the median. Asked about his impact as the first African-American president, he said the nation experienced “justifiable pride” at his inauguration.

“But that lasted about a day,” he said, in perhaps his only joke of the night. “Right now the American people are judging me exactly the way I should be judged and that is, are we taking the steps to improve liquidity in the financial markets, create jobs, get businesses to reopen, keep America safe?”

He showed his usual comfort with a wide array of subjects, even as he excluded the nation’s big newspapers from the questioning in favor of a more eclectic mix. He signaled that the new conservative government in Israel could make achieving a peace deal more difficult. He expressed patience about dealing with Iran. And he defended his proposal to increase the tax burden on the wealthy.

This was Mr. Obama as more enervating than energizing, a reminder of the way he could be in his early days as a presidential candidate, before he became defined by rapturous crowds.

“He doesn’t seem to emote any real urgency or anger,” said Matthew Dowd, a former Republican strategist who has often been complimentary of the new president. “So at times it comes across as a bit distant and intellectual.”

Joe Trippi, a Democratic consultant, said: “He said all the right things. But sometimes his confidence makes him seem flat.”

Still, the news conference came as Mr. Obama is moving from the flush of his inauguration into the grind of Congressional negotiations and shifting public opinions.

Over the past month, he has gone from offering near apocalyptic views of the economy to expressing optimism in its underlying strength.

Appearing on “60 Minutes,” he laughed in talking about the problems he faced, leading his interviewer to ask if he was punch-drunk.

That was not a question that seemed pertinent Tuesday. He did demonstrate an ability to take a punch, though, and to deliver one. Even beforehand, Republicans criticized his economic agenda, noting that it would amass more debt than the 43 previous presidents combined. Representative John A. Boehner of Ohio, the House Republican leader, called for “a do-over” on the budget.

“I just think that this might be the most irresponsible piece of legislation I’ve seen in my legislative career,” Mr. Boehner said.

Mr. Obama fired back hours later: “Some of the Republican critics have a short memory, because as I recall, I’m inheriting a $1.3 trillion deficit, annual deficit, from them.”

But his Democratic allies are more immediately troublesome as they busily dismantle his budget and rewrite it to their own taste. Mr. Obama, who is scheduled to visit Capitol Hill on Wednesday to meet with Senate Democrats, indicated that plans for a middle-class tax cut and a market-based cap on carbon emissions did not necessarily have to be included in the final version of the budget.

Instead, he said he could pursue them independently. The $787 billion stimulus plan already passed by Congress authorized a $400 tax credit for two years, so he has time to find ways to finance it permanently. And he suggested that Congress could take steps toward alternative energy in the budget without necessarily incorporating the so-called cap-and-trade system because committees could work on that separately.

Throughout his time in public life, Mr. Obama has confronted questions about whether he was too detached, too analytical, too intellectual. In the campaign, he was as likely to be compared to Adlai E. Stevenson as he was to John F. Kennedy. And if there is a pattern to Mr. Obama, it is to lumber through periods like this and then become intense and animated at the first sign of trouble.

Over the long term, Mr. Obama’s calm has served him well, in particular at the critical moment in the campaign when the economy began its steep slide. “That is one of the things people like about him,” Mr. Trippi said.


Sheryl Gay Stolberg contributed reporting.

    In a Volatile Time, Obama Strikes a New Tone for Crisis, NYT, 25.3.2009, http://www.nytimes.com/2009/03/25/us/politics/25obama.html







Mr. Obama and the Rule of Law


March 22, 2009
The New York Times

As much as it needs to happen, we never expected President Obama to immediately reverse every one of President George W. Bush’s misguided and dangerous policies on terrorism, prisoners, the rule of law and government secrecy. Fixing this calamitous mess will take time and care — and Mr. Obama has taken important steps in that direction.

But we did not expect that Mr. Obama, who addressed these issues with such clarity during his campaign, would be sending such confused and mixed signals from the White House. Some of what the public has heard from the Obama administration on issues like state secrets and detainees sounds a bit too close for comfort to the Bush team’s benighted ideas.

There are times when the president seems to be making a clean and definitive break. On his second day in office, he ordered the closing of the prison at Guantánamo Bay and directed his cabinet to formulate new policies on detaining and interrogating people suspected of terrorist acts or of supporting terrorists.

Last week, the administration notified a federal court hearing appeals by Guantánamo inmates that it was dropping Mr. Bush’s absurd claim that he could declare anyone an “enemy combatant” and deprive that prisoner of judicial process. The administration affirmed its commitment to the laws of war, the Geneva Conventions and long-standing military doctrine.

But the break does not always seem complete enough. Even as they dropped the “enemy combatant” terminology, Mr. Obama’s lawyers did not seem to rule out indefinite military detentions for terrorism suspects and their allies. They drew a definition of association with Al Qaeda that is too broad (simply staying in a “safe house,” for example). Worse, they seemed to adopt Mr. Bush’s position that the “battlefield” against terrorism is the planet. That became the legal pretext for turning criminal defendants into lifelong military captives.

On Thursday, we were delighted to see Attorney General Eric Holder reverse the Bush policy on releasing documents under the Freedom of Information Act. Mr. Bush’s first attorney general, John Ashcroft, directed the government to assume that documents should not be released and to find pretexts to keep them secret. Mr. Holder directed all agencies to presume that “in the face of doubt, openness prevails.” And he said the policy applied to pending lawsuits against the Bush administration for refusing to disclose information.

It was great news, but also recalled our distress that the Justice Department had abandoned transparency just last month in a case before the United States Court of Appeals for the Ninth Circuit. The case involves five men who were seized and transported to American facilities abroad or countries known for torturing prisoners.

The Obama administration advanced the same expansive state-secrets argument pressed by Mr. Bush’s lawyers to get a trial court to dismiss the case without any evidence being presented. Even the judges seemed surprised, asking whether the government wanted a delay to reconsider its position.

The Obama team should have taken the delay. It should now support bipartisan legislation to fix this problem by expanding judges’ powers to examine evidence the government wants to keep secret and decide whether to admit it based on facts rather than claims of presidential power. It is hard to fathom what signal Mr. Obama is trying to send by stifling cases that must be heard.

On the filing in the Guantánamo appeals, administration officials say — quite rightly — that they took an important step by declaring that their treatment of prisoners would be based on the law and not theories about executive power. They said that they had a deadline to file the document and that its discussion of prisoner policies pertained only to the Guantánamo inmates.

These arguments are persuasive for now. The test is whether they will be fully reflected in the results of the continuing policy reviews — and we assume they will. It is vital for Mr. Obama’s team to be as thorough and detailed as possible, ensuring that American policy respects the limits so clearly laid out by the nation’s laws and Constitution.

Mr. Obama also should stop resisting an investigation of Mr. Bush’s policies on terrorism, state secrets, wiretapping, detention and interrogation. We know he is struggling with many Bush-created disasters — in the economy, in foreign policy and on and on. But understanding all that has gone wrong is the only way to ensure that abuses will truly end. That investigation should be done calmly rather than under the pressure of some new, shocking revelation.

Former Vice President Dick Cheney is still proclaiming that waterboarding detainees prevented another attack. Among other things, an investigation would examine that assertion — for which Mr. Cheney offers no evidence, and which others have challenged.

Everyone wants to move forward. The only way to do that, and make sure the system of justice is working properly, is to know exactly how Mr. Bush broke it.

    Mr. Obama and the Rule of Law, NYT, 22.3.2009, http://www.nytimes.com/2009/03/22/opinion/22sun1.html






Op-Ed Columnist

Has a ‘Katrina Moment’ Arrived?


March 22, 2009
The New York Times


A CHARMING visit with Jay Leno won’t fix it. A 90 percent tax on bankers’ bonuses won’t fix it. Firing Timothy Geithner won’t fix it. Unless and until Barack Obama addresses the full depth of Americans’ anger with his full arsenal of policy smarts and political gifts, his presidency and, worse, our economy will be paralyzed. It would be foolish to dismiss as hyperbole the stark warning delivered by Paulette Altmaier of Cupertino, Calif., in a letter to the editor published by The Times last week: “President Obama may not realize it yet, but his Katrina moment has arrived.”

Six weeks ago I wrote in this space that the country’s surge of populist rage could devour the president’s best-laid plans, including the essential Act II of the bank rescue, if he didn’t get in front of it. The occasion then was the Tom Daschle firestorm. The White House seemed utterly blindsided by the public’s revulsion at the moneyed insiders’ culture illuminated by Daschle’s post-Senate career. Yet last week’s events suggest that the administration learned nothing from that brush with disaster.

Otherwise it never would have used Lawrence Summers, the chief economic adviser, as a messenger just as the A.I.G. rage was reaching a full boil last weekend. Summers is so tone-deaf that he makes Geithner seem like Bobby Kennedy.

Bob Schieffer of CBS asked Summers the simple question that has haunted the American public since the bailouts began last fall: “Do you know, Dr. Summers, what the banks have done with all of this money that has been funneled to them through these bailouts?” What followed was a monologue of evasion that, translated into English, amounted to: Not really, but you little folk needn’t worry about it.

Yet even as Summers spoke, A.I.G. was belatedly confirming what he would not. It has, in essence, been laundering its $170 billion in taxpayers’ money by paying off its reckless partners in gambling and greed, from Goldman Sachs and Citigroup on Wall Street to Société Générale and Deutsche Bank abroad.

Summers was even more highhanded in addressing the “retention bonuses” handed to the very employees who brokered all those bad bets. After reciting the requisite outrage talking point, he delivered a patronizing lecture to viewers of ABC’s “This Week” on how our “tradition of upholding law” made it impossible to abrogate the bonus agreements. It never occurred to Summers that Americans might know that contracts are renegotiated all the time — most conspicuously of late by the United Automobile Workers, which consented to givebacks as its contribution to the Detroit bailout plan. Nor did he note, for all his supposed reverence for the law, that the A.I.G. unit being rewarded with these bonuses is now under legal investigation by British and American authorities.

Within 24 hours, Summers’s stand was discarded by Obama, who tardily (and impotently) vowed to “pursue every single legal avenue” to block the bonuses. The question is not just why the White House was the last to learn about bonuses that Democratic congressmen had sought hearings about back in December, but why it was so slow to realize that the public’s anger couldn’t be sated by Summers’s legalese or by constant reiteration of the word outrage. By the time Obama acted, even the G.O.P. leader Mitch McConnell was ahead of him in full (if hypocritical) fulmination.

David Axelrod tried to rationalize the lagging response when he told The Washington Post last week that “people are not sitting around their kitchen tables thinking about A.I.G.,” but are instead “thinking about their own jobs.” While that’s technically true, it misses the point. Of course most Americans don’t know how A.I.G. brought the world’s financial system to near-ruin or what credit-default swaps are. They may not even know what A.I.G. stands for. But Americans do make the connection between their fears about their own jobs and their broad understanding of the A.I.G. debacle.

They know that the corporate bosses who may yet lay them off have sometimes been as obscenely overcompensated for failure as Wall Street’s bonus babies. As The Wall Street Journal reported last week, chief executives at businesses as diverse as Texas Instruments and the home builder Hovnanian Enterprises have received millions in bonuses even as their companies’ shares have lost more than half their value.

Since Americans get the big picture of this inequitable system, that grotesque reality dwarfs any fine print. That’s why it doesn’t matter that the disputed bonuses at A.I.G. amount to less than one-tenth of one percent of its bailout. Or that CNBC — with 300,000 viewers on a typical day by Nielsen’s measure — is a relatively minor player in the crash. Or that Edward Liddy had nothing to do with A.I.G.’s collapse, or that John Thain, of the celebrated trash can, arrived after, not before, others wrecked Merrill Lynch.

These prominent players are just the handiest camera-ready triggers for the larger rage. Passions are now so hot that even Bernie Madoff’s crimes began to pale as we turned our attention to A.I.G.’s misdeeds, just as A.I.G. will fade when the next malefactor surfaces.

What made Jon Stewart’s takedown of Jim Cramer resonate was less his specific brief against CNBC’s cheerleading for bad stocks than his larger indictment of the gaping economic inequality that defined the bubble. As Stewart said, there were “two markets” — the long-term market that Americans earnestly thought would sustain their 401(k)’s, and the fast-moving, short-term “real market” in the back room where high-rolling insiders wagered “giant piles of money” and brought down everyone with them.

No one is more commanding on this subject than our president. In his town-hall meeting in Costa Mesa, Calif., on Wednesday, he described the A.I.G. bonuses as merely a symptom of “a culture where people made enormous sums of money taking irresponsible risks that have now put the entire economy at risk.” But rhetoric won’t tamp down the anger out there, and neither will calculated displays of presidential “outrage.” We must have governance to match the message.

To get ahead of the anger, Obama must do what he has repeatedly promised but not always done: make everything about his economic policies transparent and hold every player accountable. His administration must start actually answering the questions that officials like Geithner and Summers routinely duck.

Inquiring Americans have the right to know why it took six months for us to learn (some of) what A.I.G. did with our money. We need to understand why some of that money was used to bail out foreign banks. And why Goldman, which declared that its potential losses with A.I.G. were “immaterial,” nonetheless got the largest-known A.I.G. handout of taxpayers’ cash ($12.9 billion) while also receiving a TARP bailout. We need to be told why retention bonuses went to some 50 bankers who not only were in the toxic A.I.G. unit but who left despite the “retention” jackpots. We must be told why taxpayers have so little control of the bailed-out financial institutions that we now own some or most of. And where are the M.R.I.’s from those “stress tests” the Treasury Department is giving those banks?

That’s just a short list. In general, it’s hard to imagine taxpayers shelling out billions for a second bank bailout unless there’s a full accounting of every dime of the first, and true transparency for the new plan whose rollout is becoming the most attenuated striptease since the heyday of Gypsy Rose Lee.

Another compelling question connects all of the above: why has there been so little transparency and so much evasiveness so far? The answer, I fear, is that too many of the administration’s officials are too marinated in the insiders’ culture to police it, reform it or own up to their own past complicity with it.

The “dirty little secret,” Obama told Leno on Thursday, is that “most of the stuff that got us into trouble was perfectly legal.” An even dirtier secret is that a prime mover in keeping that stuff legal was Summers, who helped torpedo the regulation of derivatives while in the Clinton administration. His mentor Robert Rubin, no less, wrote in his 2003 memoir that Summers underestimated how the risk of derivatives might multiply “under extraordinary circumstances.”

Given that Summers worked for a secretive hedge fund, D. E. Shaw, after he was pushed out of Harvard’s presidency at the bubble’s height, you have to wonder how he can now sell the administration’s plan for buying up toxic assets with the help of hedge funds. It will look like another giveaway to his own insiders’ club. As for Geithner, people might take him more seriously if he gave a credible account of why, while at the New York Fed, he and the Goldman alumnus Hank Paulson let Lehman Brothers fail but saved the Goldman-trading ally A.I.G.

As the nation’s anger rose last week, the president took responsibility for what’s happening on his watch — more than he needed to, given the disaster he inherited. But in the credit mess, action must match words. To fall short would be to deliver us into the catastrophic hands of a Republican opposition whose only known economic program is to reject job-creating stimulus spending and root for Obama and, by extension, the country to fail. With all due deference to Ponzi schemers from Madoff to A.I.G., this would be the biggest outrage of them all.

    Has a ‘Katrina Moment’ Arrived?, NYT, 22.3.2009, http://www.nytimes.com/2009/03/22/opinion/22rich.html






Obama Makes Pitch for Budget Priorities


March 21, 2009
Filed at 11:12 a.m. ET
The New York Times


WASHINGTON (AP) -- President Barack Obama demanded Saturday that any budget passed by Congress must cut the deficit, overhaul health care, invest in education and reduce U.S. dependence on foreign oil.

After a week dominated by outrage over enormous corporate bonuses at bailed-out companies, Obama used his weekly radio and Internet address to turn the focus back on his budget proposal and getting it through Congress.

But even as he outlined his four major requirements for a spending plan that would top $3.6 trillion, there was growing unease on Capitol Hill over a budget that congressional auditors say will generate $9.3 trillion in red ink over the next decade.

''I realize there are those who say these plans are too ambitious to enact,'' Obama said. ''To that I say that the challenges we face are too large to ignore. I didn't come here to pass on our problems to the next president or the next generation -- I came here to solve them.''

Republicans, however, slammed Obama's budget as a breathtaking spending spree. As states and families are struggling to cut spending, the president's budget ''spends too much, taxes too much and borrows too much,'' said Gov. Haley Barbour of Mississippi, in the weekly Republican address.

Obama spent two days in California this week taking his sales pitch directly to the people. The campaign took him from town-hall meetings to Jay Leno's ''The Tonight Show'' set in an effort to garner support for a budget that will pay for his priorities. At the same time, he is promising to cut the deficit in half by the end of his four-year term.

His message, however, was drowned out for much of the week by revelations that American International Group Inc. paid out $165 million in bonuses to employees, including to traders in the financial unit that nearly caused the insurance giant's collapse. The public outrage was followed by congressional efforts to impose punitive taxes on those payouts.

In his Saturday message, Obama contended that ordinary Americans are more concerned about having a paycheck and being able to pay their college or medical bills more than they are about ''the news of the day in Washington.''

And those are the concerns, he said, that he addresses in his budget, calling it an economic blueprint for the future. It is, he said, ''a vision of America where growth is not based on real estate bubbles or over-leveraged banks, but on a firm foundation of investments in energy, education and health care that will lead to a real and lasting prosperity.''

With a nod to Capitol Hill, he said the specific dollar amounts in his budget plan will likely change, but in the end his four priorities must be met.

Those are plans to boost investments in clean energy technologies, including wind and solar power; increased funding for childhood education programs, affordable college costs and higher standards for schools; health care reform that will lower costs, including Medicare and Medicaid; and a scrutiny on domestic spending that will lead to cuts in the deficit.

''The American people sent us here to get things done, and at this moment of great challenge, they are watching and waiting for us to lead,'' Obama said. ''Let's show them that we are equal to the task before us.''


On the Net:

Obama address: http://www.whitehouse.gov

    Obama Makes Pitch for Budget Priorities, NYT, 21.3.2009, http://www.nytimes.com/aponline/2009/03/21/washington/AP-Obama-Budget.html






White House Memo

As the Public Simmers, Obama Lets Off Steam


March 21, 2009
The New York Times


WASHINGTON — To win the White House, Barack Obama grew adept at navigating obstacles. But few of those challenges tested his communications and political skills as much as this week’s outbreak of populism, in which he sought to contain, control and, finally, channel the searing outrage over bonuses paid by companies being kept afloat by the government.

By week’s end, after making a dozen public appearances in settings from the East Room in the White House to the stage of “The Tonight Show,” Mr. Obama had run the gamut from saying he inherited the problems to accepting the blame. And he tried to keep his options open as he waited to see if the fury subsided, pointedly not promising to sign a measure making its way through Congress that seeks to get back the bonuses by imposing a new tax on them.

Along the way, he turned to anger, an emotion rarely used in his presidential race.

“I don’t want to quell anger. I think people are right to be angry. I’m angry,” Mr. Obama said, his voice reaching a peak seven days after learning of the bonuses given to employees of the American International Group. “What I want to do, though, is channel our anger in a constructive way.”

While Mr. Obama never explicitly said how he believed that anger should be channeled, he essentially suggested that Americans should follow his lead: let off a little steam and move on. He wants to prevent the disgust over the A.I.G. bonuses from derailing his agenda and the broader concerns about the economy.

The tornado of populism that swept through Washington this week presented the kind of challenge that forced him to improvise as he worked to catch up with public opinion. As administration officials struggled to reconcile precisely when they learned about the bonuses, Mr. Obama sought to stop the finger-pointing by declaring, “The buck stops with me.”

It is not clear whether the spasm of anger set off by news of the bonuses paid to A.I.G. executives was a one-week affair or a sign of a larger political shift driven by a sense that American-style capitalism in the last several decades has become fundamentally unfair.

Either way, the White House initially underestimated the controversy that the bonuses would create, advisers said, which is why the president waited to address it directly. It was a pattern that became familiar during his presidential campaign: detecting trouble on the horizon, failing to act swiftly before finally moving to reclaim control of the message.

“Washington can get stuck on one thing,” said David Axelrod, a senior adviser to the president. “The most important thing that we’ve learned is to keep your eye on the ball and not get so bogged down in the frenzy of the moment that you lose sight of your objectives.”

In the Oval Office on Friday evening, Mr. Obama recorded an interview with “60 Minutes,” the final piece of business in a frenzied week of television interviews and public events in Washington and California. Even if support for some of his policies has waned, Mr. Obama remains popular, so his schedule is purposefully packed so he can be seen as the face of the administration.

But the frequent appearances by the president also helped showcase a day-by-day — or hour-by-hour — shift in how Mr. Obama responded to the outrage at the A.I.G. bonuses.

“Part of the president’s job is communicating to the American people through a difficult period of time,” said Rahm Emanuel, the White House chief of staff. “We understand their frustration, but we’re not going to govern out of anger.”

As Mr. Obama grappled with a response to the A.I.G. bonuses, there was not a consensus among his advisers about what he should say. By Wednesday afternoon, he was borrowing a line from President Harry S. Truman — “The buck stops with me” — in answering a reporter’s question.

Some of his aides said that the phrase took them by surprise, but it was those words that were repeated on the television news.

“Presidents have never gotten in trouble when they say, ‘The buck stops with me’ or ‘I wish we could have done that better,’ ” said Bob Shrum, a longtime Democratic strategist. “I’m perfectly willing to be critical of him on some things, but I think he handled this about as well as he could have.”

While the early analysis suggested that Mr. Obama was suffering a near cataclysmic week, at least politically speaking, his advisers argued that the long-term view would be far less dire. Like his presidential campaign, which is often seen as an exercise in political perfection when viewed through the rearview mirror, the real-time evolution was often perceived as a much bumpier road.

“It’s a hell of a difficult time to be president, that’s for damned sure,” said Bill Carrick, who has advised Democratic candidates for decades. “There are a lot of moving parts here. I don’t think it’s going to be easy to apply the rules of campaign discipline to this.”

On Saturday night, when many commentators who criticized his performance this week will be attending the annual white-tie Gridiron dinner in Washington, Mr. Obama will not be seated at the head table as most of his predecessors have been. He will be at Camp David watching the N.C.A.A. basketball tournament and preparing for another week that begins on Monday morning in the Oval Office.

    As the Public Simmers, Obama Lets Off Steam, NYT, 21.3.2009, http://www.nytimes.com/2009/03/21/us/politics/21memo.html






US Endorses UN Gay Rights Text


March 18, 2009
Filed at 3:54 p.m. ET
The New York Times


WASHINGTON (AP) -- The Obama administration on Wednesday formally endorsed a U.N. statement calling for the worldwide decriminalization of homosexuality, a measure that former President George W. Bush had refused to sign.

The move was the administration's latest in reversing Bush-era decisions that have been heavily criticized by human rights and other groups. The United States was the only western nation not to sign onto the declaration when it came up at the U.N. General Assembly in December.

''The United States supports the U.N.'s statement on human rights, sexual orientation and gender identity and is pleased to join the other 66 U.N. member states who have declared their support of the statement,'' said State Department spokesman Robert Wood.

''The United States is an outspoken defender of human rights and critic of human rights abuses around the world,'' Wood told reporters. ''As such, we join with other supporters of this statement, and we will continue to remind countries of the importance of respecting the human rights of all people in all appropriate international fora.''

The Associated Press reported on Tuesday that the administration would endorse the statement.

Gay rights groups hailed the move.

''The administration's leadership on this issue will be a powerful rebuke of an earlier Bush administration position that sought to deny the universal application of human rights protections to lesbian, gay, bisexual and transgender (LGBT) individuals,'' said Mark Bromley of the Council for Global Equality, which promotes equal rights for homosexuals.

''This is long past overdue and we are encouraged by the signal it sends that the rights of lesbian, gay, bisexual and transgender people will now be considered human rights,'' said Rea Carey, the executive director of the National Gay and Lesbian Task Force.

Human rights groups had criticized the Bush administration when it refused to sign the statement when it was presented at the United Nations on Dec. 19. U.S. officials said then that the U.S. opposed discrimination on the basis of sexual orientation but that parts of the declaration raised legal questions that needed further review.

According to negotiators, the Bush team had concerns that those sections could commit the federal government on matters that fall under state jurisdiction. In some states, landlords and private employers are allowed to discriminate on the basis of sexual orientation; on the federal level, gays are not allowed to serve openly in the military.

But Wood said a ''careful interagency review'' by the Obama administration had concluded that ''supporting this statement commits us to no legal obligations.''

When it was voted on in December, 66 of the U.N.'s 192 member countries signed the nonbinding declaration, which backers called an historic step to push the General Assembly to deal more forthrightly with anti-gay discrimination. It was endorsed by all 27 European Union members as well as Japan, Australia and Mexico.

But 70 U.N. members outlaw homosexuality -- and in several, homosexual acts can be punished by execution. More than 50 nations, including members of the Organization of the Islamic Conference, opposed the declaration.

Some Islamic countries said at the time that protecting sexual orientation could lead to ''the social normalization and possibly the legalization of deplorable acts'' such as pedophilia and incest. The declaration was also opposed by the Vatican.

    US Endorses UN Gay Rights Text, NYT, 18.3.2009, http://www.nytimes.com/aponline/2009/03/18/washington/AP-Obama-Gay-Rights.html






Obama to Sign Spending Bill, Push for New Rules


March 11, 2009
Filed at 6:14 a.m. ET
The New York Times


WASHINGTON (AP) -- President Barack Obama plans to sign a massive spending bill to keep the federal government running, but he is cracking down on lawmakers' penchant for stuffing such legislation with billions of dollars in pet projects.

Obama could sign the $410 billion spending package as early as Wednesday, although he remains ''troubled'' by the so-called earmarks in the bill that Republicans and moderate Democrats have eviscerated as unworthy pork-barrel spending. The president was to announce earmark reforms on Wednesday.

White House officials in recent weeks have dismissed criticism of the earmarks in the bill, saying the legislation was a remnant of last year and that the president planned to turn his attention to future spending instead of looking backward.

White House spokesman Robert Gibbs said Obama wouldn't be the first president to sign legislation that he viewed as less than ideal. Asked whether Obama had second thoughts about signing the bill, Gibbs' reply was curt: ''No.''

''This is necessary to continue funding government,'' Gibbs said. ''It represents last year's business. Although it's not perfect, the president will sign the legislation, but demonstrate for all involved rules moving forward that he thinks can make this process work a little bit better.''

It's that process that administration official planned to focus on Wednesday, not a bill signing that might take place in private. Aides said the administration would move to introduce new ''rules of the road'' that could allow Obama greater sway over lawmakers, particularly on politically embarrassing spending that generated mockery from pundits and rival politicians.

During his presidential campaign, Obama promised to force Congress to curb its pork-barrel-spending ways. Yet the bill sent from the Democratic-controlled Congress to the White House on Tuesday contained 7,991 earmarks totaling $5.5 billion, according to calculations by the Republican staff of the House Appropriations Committee.

While the White House would say only that Obama would announce new rules on earmarks on Wednesday, it was clear he wanted to rein in spending, particularly on the pet projects lawmakers inserted into the spending bill.

The 1,132-page bill has an extraordinary reach, wrapping together nine spending bills to fund the annual operating budgets of every Cabinet department except Defense, Homeland Security and Veterans Affairs. Among the many earmarks are $485,000 for a boarding school for at-risk native students in western Alaska and $1.2 million for Helen Keller International so the nonprofit can provide eyeglasses to students with poor vision.

Most of the government has been running on a stopgap funding bill set to expire at midnight Wednesday. Refusing to sign the newly completed spending bill would force Congress to pass another bill to keep the lights on come Thursday or else shut down the massive federal government. That is an unlikely possibility for a president who has spent just seven weeks in office.

The $410 billion bill includes significant increases in food aid for the poor, energy research and other programs. It was supposed to have been completed last fall, but Democrats opted against election-year battles with Republicans and former President George W. Bush.

The measure was a top priority for Democratic leaders, who praised it for numerous increases denied by Bush. It once enjoyed support from Republicans.

But the bill ran into an unexpected political hailstorm in Congress after Obama's spending-heavy economic stimulus bill and his 2010 budget plan, which forecast a $1.8 trillion deficit for the current budget year.

The bill's big increases -- among them a 14 percent boost for a popular program that feeds infants and poor women and a 10 percent increase for housing vouchers for the poor -- represent a clear win for Democrats who spent most of the past decade battling with Bush over money for domestic programs.

Generous above-inflation increases are spread throughout, including a $2.4 billion, 13 percent increase for the Agriculture Department and a 10 percent increase for the money-losing Amtrak passenger rail system. The measure also contains a provision denying lawmakers the automatic cost-of-living pay increase they are due next Jan. 1.


On the Net:

Taxpayers for Common Sense: http://www.taxpayer.net

House Appropriations Committee: http://appropriations.house.gov/

    Obama to Sign Spending Bill, Push for New Rules, NYT, 11.3.2009, http://www.nytimes.com/aponline/2009/03/11/washington/AP-Obama-Spending.html






Obama Outlines Plan for Education Overhaul


March 11, 2009
The New York Times


WASHINGTON — President Obama called for sweeping changes in American education on Tuesday, urging states to lift limits on charter schools and improve the quality of early childhood education while also signaling that he intends to make good on his campaign promise of linking teacher pay to performance.

Having secured tens of billions of dollars in additional financing for education in the economic stimulus package and made clear his intent to seek more in his budget, Mr. Obama used a speech here to flesh out how he would use federal money and programs to influence policy at the state and local level.

His proposals reflected his party’s belief that education at all levels was underfinanced in the Bush years and that reform should encompass more than demands that schools show improved test scores. But they also showed a willingness to challenge teachers’ unions and public school systems, and to continue to demand more accountability.

The president said it was time to erase limits on the number of charter schools, which his administration calls “laboratories of innovation,” while closing those that are not working. He said 26 states and the District of Columbia now had caps. Teachers’ unions have opposed charter schools in some places, saying they take away financing for public schools, while supporting them in others.

Putting limits on charter schools, even in places where they are performing well, “isn’t good for our children, our economy or our country,” Mr. Obama said.

In his recent budget message, he said that he hoped to double financing for charter schools eventually, another campaign promise, and that the Department of Education would help create “new, high-quality charter schools” while supporting the closing of those guilty of “chronic underperformance.”

He called on states to impose tougher curriculum standards, and in an echo of language often used by President George W. Bush, he chided states that he said were “low-balling expectations for our kids.”

Saying he would “cultivate a new culture of accountability in America’s schools,” Mr. Obama said states and school districts should weed out bad teachers.

But he also pledged to pursue programs that would provide more incentives and support for teachers and indicated he would back a program in up to 150 school districts that would reward teachers “with more money for improved student achievement.”

The teacher-pay provision and his support for more charter schools could complicate Mr. Obama’s ability to win support for his plan in Congress and in state legislatures, where teacher unions hold considerable sway with Democrats.

Mr. Obama acknowledged the partisan divisions about how to proceed, even as he appealed to all sides to compromise.

“For decades, Washington has been trapped in the same stale debates that have paralyzed progress and perpetuated our educational decline,” Mr. Obama said, in a speech here to the Hispanic Chamber of Commerce. “Too many supporters of my party have resisted the idea of rewarding excellence in teaching with extra pay, even though we know it can make a difference in the classroom. Too many in the Republican Party have opposed new investments in early childhood education, despite compelling evidence of its importance.”

Union leaders reacted cautiously to the speech. Dennis Van Roekel, president of the National Education Association, said his union’s 3.2 million members “welcome the vision” laid out by the president.

Randi Weingarten, president of the 1.4-million-member American Federation of Teachers, said her union embraced “the goals and aspirations” outlined by Mr. Obama. “As with any public policy,” Ms. Weingarten said, “the devil is in the details, and it is important that teachers’ voices are heard as we implement the president’s vision.”

While unions generally dislike linking pay to specific measures of performance like rising test scores, there have been some successful experiments around the country with plans that take account of performance, especially in districts where unions are deeply involved.

The address on Tuesday was the first step in laying out the president’s agenda to improve schools, officials said, with more specifics to be outlined to Congress soon.

Mr. Obama noted that the recently enacted stimulus package called for spending some $5 billion on the Early Head Start and Head Start programs — an investment that he said would be rewarded by lower welfare rolls, fewer health care costs and less crime, as well as better classroom performance. He said he would ask Congress to finance a program that would provide grants to states that improve their early childhood programs.

His speech elated advocates of charter schools. “With 365,000 students on charter waiting lists, there is no excuse for state laws that stifle the growth of these schools,” Nelson Smith, the president and chief executive of the National Alliance for Public Charter Schools, said in a statement.


Jeff Zeleny contributed reporting.

    Obama Outlines Plan for Education Overhaul, NYT, 11.3.2009, http://www.nytimes.com/2009/03/11/us/politics/11web-educ.html







Science and Stem Cells


March 10, 2009
The New York Times


We welcome President Obama’s decision to lift the Bush administration’s restrictions on federal financing for embryonic stem cell research. His move ends a long, bleak period in which the moral objections of religious conservatives were allowed to constrain the progress of a medically important science.

Even with this enlightened stance, some promising stem cell research will still be denied federal dollars. For that to change, Congress must lift a separate ban that it has imposed every year since the mid-1990s.

Mr. Obama also pledged on Monday to base his administration’s policy decisions on sound science, undistorted by politics or ideology. He ordered his science office to develop a plan for all government agencies to achieve that goal.

Such a pledge should be unnecessary. Unfortunately, for eight years, former President George W. Bush did just the opposite. He chose scientific advisory committees based on ideology rather than expertise. His political appointees aggressively ignored, distorted or suppressed scientific findings to promote a political agenda or curry favor with big business.

This cynical approach seriously hampered government efforts to address global warming and encourage sound family planning practices, among other issues.

President Obama was appropriately cautious, warning that the full promise of stem cell research remains unknown and should not be overstated. Some of the benefits, he said, might not appear in our lifetime or even our children’s lifetime. But scientists hope that stem cell therapies may eventually lead to treatments or cures for a wide range of degenerative diseases, such as Parkinson’s and diabetes, and Mr. Obama rightly promised to pursue the research with urgency.

In one of his first acts as president, Mr. Bush restricted federal financing for embryonic stem cell research to what turned out to be 20 or so stem cell lines that had been created prior to his announcement. Those lines are too limited in number, variety and quality to allow the full range of needed research.

With the end of the Bush restrictions, scientists receiving federal money will be able to work with hundreds of stem cell lines that have since been created — and many more that will be created in the future. The full range of additional research allowed won’t become apparent until new guidelines governing what research can qualify for federal support are issued by the National Institutes of Health.

Other important embryonic research is still being hobbled by the so-called Dickey-Wicker amendment. The amendment, which is regularly attached to appropriations bills for the Department of Health and Human Services, prohibits the use of federal funds to support scientific work that involves the destruction of human embryos (as happens when stem cells are extracted) or the creation of embryos for research purposes.

Until that changes, scientists who want to create embryos — and extract stem cells — matched to patients with specific diseases will have to rely on private or state support. Such research is one promising way to learn how the diseases develop and devise the best treatments. Congress should follow Mr. Obama’s lead and lift this prohibition so such important work can benefit from an infusion of federal dollars.

    Science and Stem Cells, 10.3.2009, http://www.nytimes.com/2009/03/10/opinion/10tue1.html






Op-Ed Columnist

The Big Dither


March 6, 2009
The New York Times


Last month, in his big speech to Congress, President Obama argued for bold steps to fix America’s dysfunctional banks. “While the cost of action will be great,” he declared, “I can assure you that the cost of inaction will be far greater, for it could result in an economy that sputters along for not months or years, but perhaps a decade.”

Many analysts agree. But among people I talk to there’s a growing sense of frustration, even panic, over Mr. Obama’s failure to match his words with deeds. The reality is that when it comes to dealing with the banks, the Obama administration is dithering. Policy is stuck in a holding pattern.

Here’s how the pattern works: first, administration officials, usually speaking off the record, float a plan for rescuing the banks in the press. This trial balloon is quickly shot down by informed commentators.

Then, a few weeks later, the administration floats a new plan. This plan is, however, just a thinly disguised version of the previous plan, a fact quickly realized by all concerned. And the cycle starts again.

Why do officials keep offering plans that nobody else finds credible? Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets, often referred to these days as “toxic waste,” are really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, all our troubles would go away.

Thus, in a recent interview Tim Geithner, the Treasury secretary, tried to make a distinction between the “basic inherent economic value” of troubled assets and the “artificially depressed value” that those assets command right now. In recent transactions, even AAA-rated mortgage-backed securities have sold for less than 40 cents on the dollar, but Mr. Geithner seems to think they’re worth much, much more.

And the government’s job, he declared, is to “provide the financing to help get those markets working,” pushing the price of toxic waste up to where it ought to be.

What’s more, officials seem to believe that getting toxic waste properly priced would cure the ills of all our major financial institutions. Earlier this week, Ben Bernanke, the Federal Reserve chairman, was asked about the problem of “zombies” — financial institutions that are effectively bankrupt but are being kept alive by government aid. “I don’t know of any large zombie institutions in the U.S. financial system,” he declared, and went on to specifically deny that A.I.G. — A.I.G.! — is a zombie.

This is the same A.I.G. that, unable to honor its promises to pay off other financial institutions when bonds default, has already received $150 billion in aid and just got a commitment for $30 billion more.

The truth is that the Bernanke-Geithner plan — the plan the administration keeps floating, in slightly different versions — isn’t going to fly.

Take the plan’s latest incarnation: a proposal to make low-interest loans to private investors willing to buy up troubled assets. This would certainly drive up the price of toxic waste because it would offer a heads-you-win, tails-we-lose proposition. As described, the plan would let investors profit if asset prices went up but just walk away if prices fell substantially.

But would it be enough to make the banking system healthy? No.

Think of it this way: by using taxpayer funds to subsidize the prices of toxic waste, the administration would shower benefits on everyone who made the mistake of buying the stuff. Some of those benefits would trickle down to where they’re needed, shoring up the balance sheets of key financial institutions. But most of the benefit would go to people who don’t need or deserve to be rescued.

And this means that the government would have to lay out trillions of dollars to bring the financial system back to health, which would, in turn, both ensure a fierce public outcry and add to already serious concerns about the deficit. (Yes, even strong advocates of fiscal stimulus like yours truly worry about red ink.) Realistically, it’s just not going to happen.

So why has this zombie idea — it keeps being killed, but it keeps coming back — taken such a powerful grip? The answer, I fear, is that officials still aren’t willing to face the facts. They don’t want to face up to the dire state of major financial institutions because it’s very hard to rescue an essentially insolvent bank without, at least temporarily, taking it over. And temporary nationalization is still, apparently, considered unthinkable.

But this refusal to face the facts means, in practice, an absence of action. And I share the president’s fears: inaction could result in an economy that sputters along, not for months or years, but for a decade or more.

    The Big Dither, NYT, 6.3.2009, http://www.nytimes.com/2009/03/06/opinion/06krugman.html






Obama Tries to Start Conversation on Health Care


March 5, 2009
The New York Times
Filed at 3:04 a.m. ET


WASHINGTON (AP) -- President Barack Obama has invited to the White House more than 120 people who hold a wide range of views on how to fix the world's costliest health care system, one that still leaves millions uninsured.

A broad group of doctors, patients, business owners and insurers were to gather for a forum Thursday in hopes of building support for big changes in health care. Republicans are invited, and they're expected to speak up.

''The president wants to engage with Congress in a transparent and bipartisan fashion,'' said Melody Barnes, who heads White House domestic policy.

Among the invitees are some who helped kill the Clinton administration's health care overhaul in the 1990s. Everyone is supposed to be on his best behavior, but will that last?

''This is a different day, '' said Chip Kahn, a hospital lobbyist who opposed President Bill Clinton's plan and was to attend Thursday's gathering. ''I think among most of the stakeholders, everyone wants to see this work. There is a tremendous feeling that it's time.''

Now president of the Federation of American Hospitals, Kahn worked for the insurance industry in the Clinton years.

The difference this time, Obama argues, is that health care costs have become unsustainable, particularly in a sinking economy. The U.S. spends $2.4 trillion a year on health care, yet an estimated 48 million Americans lack coverage. Obama's goal is health coverage for everyone.

Barnes said Obama is determined to pass health care legislation this year, and while he wants it to be bipartisan, he will not be deterred by obstruction from interest groups or ideological partisans.

''The president will make clear this has to be a bipartisan effort,'' Barnes said. ''As for people who are there to set up hurdles, from his perspective that isn't tolerable. It's crucial to families, businesses and our nation's budget that we address the issue of exploding costs.''

Senate Republican leader Mitch McConnell of Kentucky released a letter to Obama, saying his party is ready to work with the administration on health care, but warning that reforms should not lead to a government-run system, and must balance coverage expansions with curbs on costs.

In support of Obama's efforts, liberal activists have mobilized to keep the pressure on Congress to pass legislation this year.

''It would be a mistake to dismiss this as a gabfest,'' Drew Altman, president of the Kaiser Family Foundation, said about Obama's meeting. ''It's an effort to keep the momentum going. The details are not going to be worked in two or three hours at a White House summit.''

There were concerns Wednesday about some of those details.

Senate Finance Committee Chairman Max Baucus, D-Mont., who will play a leading role in writing health care legislation, raised questions about the proposed $634 billion ''down payment'' for expanded coverage that Obama included in the 2010 budget he released last week.


On the Net:

White House: http://www.whitehouse.gov/agenda/health--care/

    Obama Tries to Start Conversation on Health Care, NYT, 5.3.2009, http://www.nytimes.com/aponline/2009/03/05/washington/AP-Health-Care-Overhaul.html






For Young President, Flecks of Gray


March 5, 2009
The New York Times


WASHINGTON — Well, that didn’t take long. Just 44 days into the job, and President Obama is going gray.

It happens to all of them, of course — Bill Clinton still had about half a head of brown hair when he took office but was a silver fox two years later, and George W. Bush went from salt and pepper to just salt in what seemed like a blink of an eye.

But so soon? “I started noticing it toward the end of the campaign and leading up to inauguration,” says Deborah Willis, who, as co-author of “Obama: The Historic Campaign in Photographs,” pored through 5,000 photographs of the first head over the last year.

Mr. Obama’s graying is still of the flecked variety, and appears to wax and wane depending on when he gets his hair cut, which he does about every two weeks. His barber, who goes by only one name, Zariff, takes umbrage with bloggers who alternately claim Mr. Obama, 47, is dyeing his hair gray (to appear more distinguished) or dyeing it black (to appear younger). “I can tell you that his hair is 100 percent natural,” Zariff said. “He wouldn’t get it colored.”

And for all of his 16 years giving Mr. Obama his “quo vadis” haircut — black parlance from the 1960s for close-cut locks — Zariff said he is not about to start ribbing Mr. Obama. “We do not tease about the gray at all,” he said.

For a guy who prides himself on projecting a stress-free demeanor, the changes above his temples are speckled evidence that perhaps the psychological and physical strains of the job — never mind the long process of winning it — are in fact taking something of a toll. (Experts say stress can contribute to whitening locks.)

Mr. Obama seems to have noticed it at least as far back as last summer. “I’ve been running for president for about 19 months now,” he told supporters at a campaign event in Virginia in August. “Folks are noticing that I’ve got a lot more gray hair now than when I started.”

But with the economy struggling, two wars raging and countless other pressures facing him, the president is very likely to see additional signs of wear and tear in the mirror each morning.

“Presidents age two years for every year that they’re in office,” said Dr. Michael F. Roizen, co-founder of RealAge, a Web site that tells you how much older your body really is because of all that smoking and drinking you have been doing.

Rapidly lightening locks are just one sign that the job is getting to America’s presidents. Many of them (Theodore Roosevelt, Woodrow Wilson, Franklin Delano Roosevelt) also developed hypertension. Mr. Clinton had to have heart surgery after leaving office.

Mr. Obama’s aides have not been giving him any grief. But since he has what is probably the most photographed hair in the world right now, noted authorities in coping with his condition are freely offering their advice.

The onetime basketball star Walt Frazier said in a telephone interview on Wednesday that Mr. Obama should start dyeing his hair, as Mr. Frazier does (and as Ronald Reagan was widely assumed to do). Reprising a Just For Men television commercial that featured Mr. Frazier and the former New York Mets star Keith Hernandez doing commentary on a poor graying schlub who gets “Rejected!” when he approaches a woman at a bar, Mr. Frazier had these words for Mr. Obama: “No play for Mr. Gray.”

    For Young President, Flecks of Gray, NYT, 5.3.2009, http://www.nytimes.com/2009/03/05/us/politics/05gray.html?hp






Sharper Downturn Clouds Obama Spending Plans


February 28, 2009
The New York Times


The economy is spiraling down at an accelerating pace, threatening to undermine the Obama administration’s spending plans, which anticipate vigorous rates of growth in years to come.

A sense of disconnect between the projections by the White House and the grim realities of everyday American life was enhanced on Friday, as the Commerce Department gave a harsher assessment for the last three months of 2008. In place of an initial estimate that the economy contracted at an annualized rate of 3.8 percent — already abysmal — the government said that the pace of decline was actually 6.2 percent, making it the worst quarter since 1982.

The fortunes of the American economy have grown so alarming and the pace of the decline so swift that economists are now straining to describe where events are headed, dusting off a word that has not been invoked since the 1940s: depression.

Economists are not making comparisons with the Great Depression of the 1930s, when the unemployment rate reached 25 percent. Current conditions are not even as poor as during the twin recessions of the 1980s, when unemployment exceeded 10 percent, though many experts assert this downturn is on track to be significantly worse.

Rather, economists are using the word depression — a subjective term with no academic definition — to describe a condition of broad and extreme economic distress that remains stubbornly in place for much longer than a typical downturn.

This is more than a matter of semantics. As the government determines its spending plans, readying another infusion of cash for troubled banks while contemplating an additional bailout for the auto industry, the magnitude of those needs will hinge on the extent of the damage.

Mark Zandi, chief economist of Moody’s Economy.com, now places the odds of “a mild depression” at 25 percent, up from 15 percent three months ago. In that view, the unemployment rate would reach 10.5 percent by the end of 2011 — up from 7.6 percent at the end of January — average home prices would fall 20 percent on top of the 27 percent they have plunged already, and losses in the financial system would more than triple, to $3.7 trillion.

Allen Sinai, chief global economist at the research firm Decision Economics, sees a 20 percent chance of “a depressionlike possibility,” up from 15 percent a week ago.

“In the housing market, the financial system and the stock market, we’re already there,” Mr. Sinai said. “It is a depression.”

Yet, in drawing up the budget, the White House assumed the economy would expand by a robust 3.2 percent in 2010, with growth accelerating to 4 percent over the next three years.

“It’s a hope, a wing and a prayer,” Mr. Sinai said. “It’s a return to a sanguine view of the economy that is simply not justified.”

If, as is widely anticipated, the economy grows more slowly than the White House assumes, revenue will be lower, forcing the government to cut spending, raise taxes or run larger deficits.

Economists also criticized as unrealistically hopeful the assumptions by the Federal Reserve as it began so-called stress tests to gauge the health of the nation’s largest banks. In testimony, Ben S. Bernanke, the Fed chairman, said that the nation’s unemployment rate would most likely reach 8.8 percent next year.

“That forecast just doesn’t seem realistic,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington, “and I don’t think it helps the Fed’s credibility to make these sorts of forecasts right now.”

As federal regulators estimate potential losses at banks, the harshest assumptions they are testing entails the unemployment rate topping out at 10.3 percent — the highest level since 1983, but hardly the worst case.

By Mr. Baker’s reckoning, the unemployment rate may exceed 12 percent — the highest level since tracking began in 1948.

“We continue to see across-the-board numbers coming in worse than we expected,” Mr. Baker said.

By Mr. Zandi’s estimation, in the most likely case, the unemployment rate will reach 9.3 percent next year. The distress in the financial system, the job market and real estate have become inextricably intertwined.

As troubled banks remain hesitant to lend, even healthy companies are laying off workers. As more Americans lose jobs, they are cutting spending, depriving businesses of revenue, and falling behind on house, car and credit card payments, multiplying losses in the financial system. As more homes land in foreclosure and would-be buyers fail to secure mortgages, housing prices fall further, adding to the losses of the banks — a downward spiral.

Many economists expect that the labor data to be released next Friday will show that as many as 700,000 jobs disappeared in February, lifting the unemployment rate near 8 percent and pushing total job losses to more than four million since the recession began in December 2007.

Given the brutal forces at play, some experts question the administration’s decision to publicize the bank stress tests, as opposed to conducting them quietly.

“It invited the interpretation that this was the beginning of triage for the banks, that we were going to start lining them up and shooting them,” said Alan S. Blinder, a former vice chairman of the Federal Reserve and a professor at Princeton. “There are some things in the bank supervisor role that you just keep secret.”

Others argue that the tests could sow needed assurance. “The stress test could create transparency,” said Alan D. Levenson, chief economist at T. Rowe Price in Baltimore.

As the gruesome data accumulates, this much is already clear: Transparency is not for the squeamish.

Mr. Levenson noted that the weakening economy was destroying demand for goods and services even faster than the $787 billion stimulus program could replace it.

    Sharper Downturn Clouds Obama Spending Plans, NYT, 28.2.2009, http://www.nytimes.com/2009/02/28/business/economy/28recession.html






With Pledges to Troops and Iraqis, Obama Details Pullout


February 28, 2009
The New York Times


CAMP LEJEUNE, N.C. — President Obama declared Friday that the United States has now “begun the work of ending this war” in Iraq as he announced the withdrawal of most American forces by the summer of next year while leaving behind as many as 50,000 troops for more limited missions.

Nearly six years after American troops crossed the border into Iraq to topple Saddam Hussein, Mr. Obama said “renewed cause for hope” produced by improved security would allow Americans to begin disentangling militarily and turn the country over to the Iraqis themselves.

“Let me say this as plainly as I can,” the president told thousands of Marines stationed here. “By August 31, 2010, our combat mission in Iraq will end.”

The “transitional force” he will leave behind will no longer participate in major combat missions but instead train and advise Iraqi security forces, hunt down terrorist cells and protect American civilian and military personnel working in Iraq. Mr. Obama promised that all of them will leave as well by December 2011 in accordance with a security agreement with Iraq negotiated by President George W. Bush before he left office last month.

At the same time, Mr. Obama vowed to continue the American commitment to building a new Iraqi society and to resettling millions of displaced Iraqis still away from home — elsewhere in their own nation or in neighboring countries. And he promised to escalate diplomatic involvement in the broader region, including new lines of communication with Iran and Syria.

“Every nation and every group must know — whether you wish America good or ill — that the end of the war in Iraq will enable a new era of American leadership and engagement in the Middle East,” the president said. “And that era has just begun.”

The announcement marked a sharp turning point in the American venture in Iraq, one that signaled a shift in the once-fiery political debate at home and in the nation’s priorities abroad. The choice of Camp Lejeune, the largest Marine base on the East Coast, symbolized the transition because 8,000 troops from here will soon ship out to Afghanistan as part of a 17,000-troop buildup ordered by Mr. Obama.

The reaction to the Iraq drawdown plan indicated an emerging consensus in the United States that it is time to begin getting out. While some leading Congressional Democrats grumbled about the size of the residual force, the drawdown largely won support across party lines, including from leading Republicans like Senator John McCain of Arizona, who lost year’s election to Mr. Obama after a fierce debate over Iraq.

Speaking on the Senate floor on Friday before the president’s speech, Mr. McCain credited the opportunity to pull troops out to the surge that Mr. Bush ordered two years ago with his support. But he cautioned that Iraq remains fragile, urging Mr. Obama to remain flexible and listen to military commanders.

“With these factors in mind, I believe the president’s withdrawal plan is a reasonable one,” Mr. McCain said. “Given the gains in Iraq and the requirements to send additional troops to Afghanistan, together with the significant number of troops that will remain in Iraq and the president’s willingness to reassess based on conditions on the ground, I am cautiously optimistic that the plan as laid out by the president can lead to success.”

Former Bush aides also offered support for the plan, calling it the logical next step after the president’s agreement with Iraq to withdraw all forces by the end of 2011. “The specific timing is only slightly different but consistent with the goal of helping Iraq become self sufficient in providing its own security,” Gordon D. Johndroe, who was Mr. Bush’s last national security spokesman, said in an interview. “This is possible because of the success of the surge.”

Mr. Obama called Mr. Bush from a holding room at Camp Lejeune just before going on stage in the base gymnasium to make the announcement, aides said. He called Prime Minister Nuri Kamal al-Maliki of Iraq from Air Force One on the flight from Washington to brief him on the withdrawal plan.

In Baghdad, Yassen Majeed, an adviser to Mr. Maliki, said the prime minister “is very comfortable with the plan.”

“The Prime Minister assured the American president that the security situation in Iraq is stable and his forces are ready to take over all the responsibilities from the American side.”

But others there were more cautious, including Sunni lawmakers worried about their the possible erosion of their influence in the Shiite-dominated government.

Several noted with approval Mr. Obama’s statement that the Iraqi government would only have American support as long as it remained non-sectarian. “All Iraqis want the American to withdraw from Iraq as soon as possible,” said Adnan al-Dulaimi, a senior Sunni politician. “We’re just afraid of the vacuum that this withdrawal may cause.”

During his speech, Mr. Obama credited troops who “got the job done” but gave no credit to the troop surge and associated strategy shift that he opposed in January 2007. He praised Ambassador Ryan Crocker as an “unsung hero” and Gens. David H. Petraeus and Ray Odierno as the “finest generals,” without mentioning Mr. Bush. His only implicit reference to his predecessor came when he said Iraq had taught painful lessons about how and when America should go to war.

“We have learned that we must always weigh the costs of action, and communicate those costs candidly to the American people,” he said. He added: “We must use all elements of American power to achieve our objectives, which is why I am committed to building our civilian national security capacity so that the burden is not continually pushed on to our military. We have learned that our political leaders must pursue the broad and bipartisan support that our national security policies depend upon, which is why I will consult with Congress and in carrying out my plans. And we have learned the importance of working closely with friends and allies, which is why we are launching a new era of engagement in the world.”

To that end, Mr. Obama also introduced Christopher Hill, a veteran diplomat, as his ambassador to Iraq.

The president’s plan to disengage will pull out most of the 142,000 troops in Iraq by August 2010, or 19 months after his inauguration and three months longer than he promised on the campaign trail. From 35,000 to 50,000 troops will remain until December 2011. While the Bush team once envisioned a long-term peacetime presence along the lines of Germany and South Korea, Mr. Obama’s aides rejected that.

“The path we’re on here, the path is not towards any sort of Korea model,” said a senior administration official, briefing reporters under ground rules requiring that he not be identified. “The path is towards reducing, in a fairly substantial way, U.S. forces in 2010 and then down to what’s currently anticipated, down to zero, by the end of 2011.”

Mr. Obama’s withdrawal plan will still leave the vast bulk of American forces in Iraq through the end of this year to let ground commanders have the forces they want to guard against any resurgence of violence surrounding parliamentary elections in December and any subsequent transition of power. The drawdown would then accelerate early next year.

Officials said Mr. Obama agreed to the longer-than-promised timeframe and the gradual approach after consulting military commanders and the Joint Chiefs of Staff. The military presented three options to the president — one that would fulfill his 16-month campaign time frame, a 19-month middle ground, and a 23-month option that General Odierno, the ground commander in Iraq, thought would present the lowest risk.

The administration convened interagency working groups to evaluate the risks and benefits of the different options and ultimately Mr. Obama became convinced by General Odierno that he needed more than 16 months to get through the elections safely. “The president found that very compelling,” a top official said.

At the same time, the Joint Chiefs were concerned about leaving troops there too long because of the strain on the overall armed forces and the need to reinforce the mission in Afghanistan.

The final 19-month plan had the support of all of Mr. Obama’s national security team, officials said, including Defense Secretary Robert M. Gates and Adm. Mike Mullen, the Joint Chiefs chairman, who were both held over from the Bush administration. Officials said Generals Odierno and Petraeus, the Middle East commander, were also comfortable with the plan.

But senior Democrats, while happy that most troops will be withdrawn, are not completely satisfied. Congressional leaders in recent days have criticized the size of the residual force, even though Mr. Obama said consistently during last year’s campaign that he would leave troops behind for limited missions.

Senator Harry Reid of Nevada, the Senate majority leader, who complained Thursday that a 50,000-member residual force was too big, put out a more tempered statement Friday, calling Mr. Obama’s plan "sound and measured," while adding that he still wants to keep "only those forces necessary for the security of our remaining troops and the Iraqi people."

A person briefed on the closed-door White House briefing for Congressional leaders said Representative Nancy Pelosi of California, the House speaker, was particularly upset about the residual force. She kicked off the public criticism on Wednesday by saying she did not understand “the justification” for 50,000 troops staying.

By contrast, Republicans seemed more amenable to the plan. During the Thursday evening session with Mr. Obama, Mr. Gates, Admiral Mullen and Vice President Joseph R. Biden Jr. in the State Dining Room, Mr. McCain said he thought the withdrawal plan was thoughtful and well prepared, according to several people who were present.

Representative John A. Boehner of Ohio, the House Republican leader, and other senior Republicans were likewise generally supportive, while advocating flexibility to preserve security gains of the last two years, according to Congressional aides.

Representative John M. McHugh of New York, the ranking Republican on the House Armed Services Committee, said Mr. Obama had reassured him that he would revisit the plan if circumstances changed.

“The president’s objective to withdraw U.S. combat forces from Iraq is one that we should pray for, plan for and work toward,” Mr. McHugh said. “However, I remain concerned that the security situation in Iraq is fragile, and we should work to mitigate any risks to our troops and their mission.”


Mark Santora contributed reporting from Baghdad.

    With Pledges to Troops and Iraqis, Obama Details Pullout, NYT, 28.2.2009, http://www.nytimes.com/2009/02/28/washington/28troops.html?hp







Obama’s Speech at Camp Lejeune, N.C.


February 27, 2009
The New York Times


Following are the prepared remarks of President Obama about withdrawing from Iraq at Camp Lejeune, N.C., on Feb. 27, 2008, as provided by the White House.


Good morning Marines. Good morning Camp Lejeune. Good morning Jacksonville. Thank you for that outstanding welcome. I want to thank Lieutenant General Hejlik for hosting me here today.

I also want to acknowledge all of our soldiers, sailors, airmen and Marines serving in Iraq and Afghanistan. That includes the Camp Lejeune Marines now serving with – or soon joining – the Second Marine Expeditionary Force in Iraq; those with Special Purpose Marine Air Ground Task Force in Afghanistan; and those among the 8,000 Marines who are preparing to deploy to Afghanistan. We have you in our prayers. We pay tribute to your service. We thank you and your families for all that you do for America. And I want all of you to know that there is no higher honor or greater responsibility than serving as your Commander-in-Chief.

I also want to take this opportunity to acknowledge Ryan Crocker, who recently completed his service as our Ambassador to Iraq. Throughout his career, Ryan always took on the toughest assignments. He is an example of the very best that this nation has to offer, and we owe him a great debt of gratitude. He carried on his work with an extraordinary degree of cooperation with two of our finest Generals – General David Petraeus, and General Ray Odierno – who will be critical in carrying forward the strategy that I will outline today.

Next month will mark the sixth anniversary of the war in Iraq. By any measure, this has already been a long war. For the men and women of America’s armed forces – and for your families – this war has been one of the most extraordinary chapters of service in the history of our nation. You have endured tour after tour after tour of duty. You have known the dangers of combat and the lonely distance of loved ones. You have fought against tyranny and disorder. You have bled for your best friends and for unknown Iraqis. And you have borne an enormous burden for your fellow citizens, while extending a precious opportunity to the people of Iraq. Under tough circumstances, the men and women of the United States military have served with honor, and succeeded beyond any expectation.

Today, I have come to speak to you about how the war in Iraq will end.

To understand where we need to go in Iraq, it is important for the American people to understand where we now stand. Thanks in great measure to your service, the situation in Iraq has improved. Violence has been reduced substantially from the horrific sectarian killing of 2006 and 2007. Al Qaeda in Iraq has been dealt a serious blow by our troops and Iraq’s Security Forces, and through our partnership with Sunni Arabs. The capacity of Iraq’s Security Forces has improved, and Iraq’s leaders have taken steps toward political accommodation. The relative peace and strong participation in January’s provincial elections sent a powerful message to the world about how far Iraqis have come in pursuing their aspirations through a peaceful political process.

But let there be no doubt: Iraq is not yet secure, and there will be difficult days ahead. Violence will continue to be a part of life in Iraq. Too many fundamental political questions about Iraq’s future remain unresolved. Too many Iraqis are still displaced or destitute. Declining oil revenues will put an added strain on a government that has had difficulty delivering basic services. Not all of Iraq’s neighbors are contributing to its security. Some are working at times to undermine it. And even as Iraq’s government is on a surer footing, it is not yet a full partner – politically and economically – in the region, or with the international community

In short, today there is a renewed cause for hope in Iraq, but that hope rests upon an emerging foundation.

On my first full day in office, I directed my national security team to undertake a comprehensive review of our strategy in Iraq to determine the best way to strengthen that foundation, while strengthening American national security. I have listened to my Secretary of Defense, the Joint Chiefs of Staff, and commanders on the ground. We have acted with careful consideration of events on the ground; with respect for the security agreements between the United States and Iraq; and with a critical recognition that the long-term solution in Iraq must be political – not military. Because the most important decisions that have to be made about Iraq’s future must now be made by Iraqis.

We have also taken into account the simple reality that America can no longer afford to see Iraq in isolation from other priorities: we face the challenge of refocusing on Afghanistan and Pakistan; of relieving the burden on our military; and of rebuilding our struggling economy – and these are challenges that we will meet.

Today, I can announce that our review is complete, and that the United States will pursue a new strategy to end the war in Iraq through a transition to full Iraqi responsibility.

This strategy is grounded in a clear and achievable goal shared by the Iraqi people and the American people: an Iraq that is sovereign, stable, and self-reliant. To achieve that goal, we will work to promote an Iraqi government that is just, representative, and accountable, and that provides neither support nor safe-haven to terrorists. We will help Iraq build new ties of trade and commerce with the world. And we will forge a partnership with the people and government of Iraq that contributes to the peace and security of the region.

What we will not do is let the pursuit of the perfect stand in the way of achievable goals. We cannot rid Iraq of all who oppose America or sympathize with our adversaries. We cannot police Iraq’s streets until they are completely safe, nor stay until Iraq’s union is perfected. We cannot sustain indefinitely a commitment that has put a strain on our military, and will cost the American people nearly a trillion dollars. America’s men and women in uniform have fought block by block, province by province, year after year, to give the Iraqis this chance to choose a better future. Now, we must ask the Iraqi people to seize it.

The first part of this strategy is therefore the responsible removal of our combat brigades from Iraq.

As a candidate for President, I made clear my support for a timeline of 16 months to carry out this drawdown, while pledging to consult closely with our military commanders upon taking office to ensure that we preserve the gains we’ve made and protect our troops. Those consultations are now complete, and I have chosen a timeline that will remove our combat brigades over the next 18 months.

Let me say this as plainly as I can: by August 31, 2010, our combat mission in Iraq will end.

As we carry out this drawdown, my highest priority will be the safety and security of our troops and civilians in Iraq. We will proceed carefully, and I will consult closely with my military commanders on the ground and with the Iraqi government. There will surely be difficult periods and tactical adjustments. But our enemies should be left with no doubt: this plan gives our military the forces and the flexibility they need to support our Iraqi partners, and to succeed.

After we remove our combat brigades, our mission will change from combat to supporting the Iraqi government and its Security Forces as they take the absolute lead in securing their country. As I have long said, we will retain a transitional force to carry out three distinct functions: training, equipping, and advising Iraqi Security Forces as long as they remain non-sectarian; conducting targeted counter-terrorism missions; and protecting our ongoing civilian and military efforts within Iraq. Initially, this force will likely be made up of 35-50,000 U.S. troops.

Through this period of transition, we will carry out further redeployments. And under the Status of Forces Agreement with the Iraqi government, I intend to remove all U.S. troops from Iraq by the end of 2011. We will complete this transition to Iraqi responsibility, and we will bring our troops home with the honor that they have earned.

As we responsibly remove our combat brigades, we will pursue the second part of our strategy: sustained diplomacy on behalf of a more peaceful and prosperous Iraq.

The drawdown of our military should send a clear signal that Iraq’s future is now its own responsibility. The long-term success of the Iraqi nation will depend upon decisions made by Iraq’s leaders and the fortitude of the Iraqi people. Iraq is a sovereign country with legitimate institutions; America cannot – and should not – take their place. However, a strong political, diplomatic, and civilian effort on our part can advance progress and help lay a foundation for lasting peace and security.

This effort will be led by our new Ambassador to Iraq – Chris Hill. From his time in the Peace Corps, to his work in Kosovo and Korea, Ambassador Hill has been tested, and he has shown the pragmatism and skill that we need right now. He will be supported by the courageous and capable work of so many American diplomats and aid workers who are serving in Iraq.

Going forward, we can make a difference on several fronts. We will work with the United Nations to support national elections, while helping Iraqis improve local government. We can serve as an honest broker in pursuit of fair and durable agreements on issues that have divided Iraq’s leaders. And just as we will support Iraq’s Security Forces, we will help Iraqi institutions strengthen their capacity to protect the rule of law, confront corruption, and deliver basic services.

Diplomacy and assistance is also required to help the millions of displaced Iraqis. These men, women and children are a living consequence of this war and a challenge to stability in the region, and they must become a part of Iraq’s reconciliation and recovery. America has a strategic interest – and a moral responsibility – to act. In the coming months, my administration will provide more assistance and take steps to increase international support for countries already hosting refugees; we’ll cooperate with others to resettle Iraqis facing great personal risk; and we will work with the Iraqi government over time to resettle refugees and displaced Iraqis within Iraq – because there are few more powerful indicators of lasting peace than displaced citizens returning home.

Now, before I go any further, I want to take a moment to speak directly to the people of Iraq.

You are a great nation, rooted in the cradle of civilization. You are joined together by enduring accomplishments, and a history that connects you as surely as the two rivers carved into your land. In years past, you have persevered through tyranny and terror; through personal insecurity and sectarian violence. And instead of giving in to the forces of disunion, you stepped back from a descent into civil war, and showed a proud resilience that deserves respect.

Our nations have known difficult times together. But ours is a bond forged by shared bloodshed, and countless friendships among our people. We Americans have offered our most precious resource – our young men and women – to work with you to rebuild what was destroyed by despotism; to root out our common enemies; and to seek peace and prosperity for our children and grandchildren, and for yours.

There are those who will try to prevent that future for Iraq – who will insist that Iraq’s differences cannot be reconciled without more killing. They represent the forces that destroy nations and lead only to despair, and they will test our will in the months and years to come. America, too, has known these forces. We endured the pain of Civil War, and bitter divisions of region and race. But hostility and hatred are no match for justice; they offer no pathway to peace; and they must not stand between the people of Iraq and a future of reconciliation and hope.

So to the Iraqi people, let me be clear about America’s intentions. The United States pursues no claim on your territory or your resources. We respect your sovereignty and the tremendous sacrifices you have made for your country. We seek a full transition to Iraqi responsibility for the security of your country. And going forward, we can build a lasting relationship founded upon mutual interests and mutual respect as Iraq takes its rightful place in the community of nations.

That leads me to the third part of our strategy –comprehensive American engagement across the region.

The future of Iraq is inseparable from the future of the broader Middle East, so we must work with our friends and partners to establish a new framework that advances Iraq’s security and the region’s. It is time for Iraq to be a full partner in a regional dialogue, and for Iraq’s neighbors to establish productive and normalized relations with Iraq. And going forward, the United States will pursue principled and sustained engagement with all of the nations in the region, and that will include Iran and Syria.

This reflects a fundamental truth: we can no longer deal with regional challenges in isolation – we need a smarter, more sustainable and comprehensive approach. That is why we are renewing our diplomacy, while relieving the burden on our military. That is why we are refocusing on al Qaeda in Afghanistan and Pakistan; developing a strategy to use all elements of American power to prevent Iran from developing a nuclear weapon; and actively seeking a lasting peace between Israel and the Arab world. And that is why we have named three of America’s most accomplished diplomats – George Mitchell, Dennis Ross and Richard Holbrooke – to support Secretary Clinton and me as we carry forward this agenda.

Every nation and every group must know – whether you wish America good or ill – that the end of the war in Iraq will enable a new era of American leadership and engagement in the Middle East. And that era has just begun.

Finally, I want to be very clear that my strategy for ending the war in Iraq does not end with military plans or diplomatic agendas – it endures through our commitment to uphold our sacred trust with every man and woman who has served in Iraq.

You make up a fraction of the American population, but in an age when so many people and institutions have acted irresponsibly, you did the opposite – you volunteered to bear the heaviest burden. And for you and for your families, the war does not end when you come home. It lives on in memories of your fellow soldiers, sailors, airmen and Marines who gave their lives. It endures in the wound that is slow to heal, the disability that isn’t going away, the dream that wakes you at night, or the stiffening in your spine when a car backfires down the street.

You and your families have done your duty – now a grateful nation must do ours. That is why I am increasing the number of soldiers and Marines, so that we lessen the burden on those who are serving. And that is why I have committed to expanding our system of veterans health care to serve more patients, and to provide better care in more places. We will continue building new wounded warrior facilities across America, and invest in new ways of identifying and treating the signature wounds of this war: Post-Traumatic Stress Disorder and Traumatic Brain Injury, as well as other combat injuries.

We also know that service does not end with the person wearing the uniform. In her visits with military families across the country, my wife Michelle has learned firsthand about the unique burden that your families endure every day. I want you to know this: military families are a top priority for Michelle and me, and they will be a top priority for my administration. We’ll raise military pay, and continue providing quality child-care, job-training for spouses, and expanded counseling and outreach to families that have known the separation and stress of war. We will also heed the lesson of history – that those who fight in battle can form the backbone of our middle class – by implementing a 21st century GI Bill to help our veterans live their dreams.

As a nation, we have had our share of debates about the war in Iraq. It has, at times, divided us as a people. To this very day, there are some Americans who want to stay in Iraq longer, and some who want to leave faster. But there should be no disagreement on what the men and women of our military have achieved.

And so I want to be very clear: We sent our troops to Iraq to do away with Saddam Hussein’s regime – and you got the job done. We kept our troops in Iraq to help establish a sovereign government – and you got the job done. And we will leave the Iraqi people with a hard-earned opportunity to live a better life – that is your achievement; that is the prospect that you have made possible.

There are many lessons to be learned from what we’ve experienced. We have learned that America must go to war with clearly defined goals, which is why I’ve ordered a review of our policy in Afghanistan. We have learned that we must always weigh the costs of action, and communicate those costs candidly to the American people, which is why I’ve put Iraq and Afghanistan into my budget. We have learned that in the 21st century, we must use all elements of American power to achieve our objectives, which is why I am committed to building our civilian national security capacity so that the burden is not continually pushed on to our military. We have learned that our political leaders must pursue the broad and bipartisan support that our national security policies depend upon, which is why I will consult with Congress and in carrying out my plans. And we have learned the importance of working closely with friends and allies, which is why we are launching a new era of engagement in the world.

The starting point for our policies must always be the safety of the American people. I know that you – the men and women of the finest fighting force in the history of the world – can meet any challenge, and defeat any foe. And as long as I am your Commander-in-Chief, I promise you that I will only send you into harm’s way when it is absolutely necessary, and provide you with the equipment and support you need to get the job done. That is the most important lesson of all – for the consequences of war are dire, the sacrifices immeasurable.

You know because you have seen those sacrifices. You have lived them. And we all honor them.

“Semper Fidelis” – it means always being faithful to Corps, and to country, and to the memory of fallen comrades like Corporal Jonathan Yale and Lance Corporal Jordan Haerter. These young men enlisted in a time of war, knowing they would face great danger. They came here, to Camp Lejeune, as they trained for their mission. And last April, they were standing guard in Anbar. In an age when suicide is a weapon, they were suddenly faced with an oncoming truck filled with explosives. These two Marines stood their ground. These two Marines opened fire. And these two Marines stopped that truck. When the thousands of pounds of explosives detonated, they had saved fifty Marines and Iraqi police who would have been in the truck’s path, but Corporal Yale and Lance Corporal Haerter lost their own lives. Jonathan was 21. Jordan was 19.

In the town where Jordan Haerter was from, a bridge was dedicated in his name. One Marine who traveled to the ceremony said: “We flew here from all over the country to pay tribute to our friend Jordan, who risked his life to save us. We wouldn’t be here without him.”

America’s time in Iraq is filled with stories of men and women like this. Their names are written into bridges and town squares. They are etched into stones at Arlington, and in quiet places of rest across our land. They are spoken in schools and on city blocks. They live on in the memories of those who wear your uniform, in the hearts of those they loved, and in the freedom of the nation they served.

Each American who has served in Iraq has their own story. Each of you has your own story. And that story is now a part of the history of the United States of America – a nation that exists only because free men and women have bled for it from the beaches of Normandy to the deserts of Anbar; from the mountains of Korea to the streets of Kandahar. You teach us that the price of freedom is great. Your sacrifice should challenge all of us – every single American – to ask what we can do to be better citizens.

There will be more danger in the months ahead. We will face new tests and unforeseen trials. But thanks to the sacrifices of those who have served, we have forged hard-earned progress, we are leaving Iraq to its people, and we have begun the work of ending this war.

Thank you, God Bless you, and God Bless the United States of America. Semper Fi.

    Obama’s Speech at Camp Lejeune, N.C., NYT, 27.2.2009, http://www.nytimes.com/2009/02/27/us/politics/27obama-text.html






Indictment of Enemy Combatant Is Unsealed


February 27, 2009
Filed at 2:09 p.m. ET
The New York Times


WASHINGTON (AP) -- Federal authorities have unsealed an indictment against alleged al-Qaida sleeper agent Ali al-Marri, moving him into the civilian court system as the Obama administration considers a new strategy for handling terror suspects.

Al-Marri has been held in a Navy brig outside Charleston, S.C. for more than five years since President George W. Bush declared him an enemy combatant.

He will now be transferred to Peoria, Ill., to face trial in a civilian court on a charge of providing material support to al-Qaida and a related conspiracy count. The charges carry a maximum prison sentence of 15 years each.

Al-Marri has a case before the Supreme Court challenging the president's authority to arrest terror suspects in the United States and hold them indefinitely without charges.

Now that he has been indicted, Justice Department officials said they would ask to have the Supreme Court case dismissed.

Al-Marri's transfer is the first signal of how the Obama administration is likely to handle accused terrorists, a significant shift from the strategy of the Bush administration.

Since shortly after the Sept. 11, 2001, terror attacks, government lawyers argued that the president has the wartime authority to send the military into any U.S. neighborhood, capture a citizen -- or legal resident like al-Marri -- and hold him in prison without charge, indefinitely.

With al-Marri's indictment, President Barack Obama ordered the military to turn al-Marri over to the Justice Department, when requested by Attorney General Eric Holder. It was not immediately clear when that handover would take place.

Holder said in a statement the charges show the government's ''resolve to protect the American people and prosecute alleged terrorists.''

The attorney general said the Obama administration ''will hold accountable anyone who attempts to do harm to Americans, and we will do so in a manner consistent with our values.''

The government has said al-Marri is an al-Qaida sleeper agent who has met Osama bin Laden and spent time at a terrorist training camp in Afghanistan.

A legal U.S. resident when he was arrested, al-Marri has been held in solitary confinement at the brig since 2003.

Al-Marri was arrested in late 2001 as part of the FBI's investigation of the Sept. 11 attacks. Prosecutors at first indicted him on charges of credit card fraud and lying to the FBI, not terror charges.

In June 2003, Bush said al-Marri had vital information about terror plots, declared him an enemy combatant and ordered him transferred to military custody.

    Indictment of Enemy Combatant Is Unsealed, NYT, 27.2.2009, http://www.nytimes.com/aponline/2009/02/27/washington/AP-Enemy-Combatant.html?hp






Economic Scene

Obama’s Budget Plan Sweeps Away Reagan Ideas


February 27, 2009
The New York Times


The budget that President Obama proposed on Thursday is nothing less than an attempt to end a three-decade era of economic policy dominated by the ideas of Ronald Reagan and his supporters.

The Obama budget — a bold, even radical departure from recent history, wrapped in bureaucratic formality and statistical tables — would sharply raise taxes on the rich, beyond where Bill Clinton had raised them. It would reduce taxes for everyone else, to a lower point than they were under either Mr. Clinton or George W. Bush. And it would lay the groundwork for sweeping changes in health care and education, among other areas.

More than anything else, the proposals seek to reverse the rapid increase in economic inequality over the last 30 years. They do so first by rewriting the tax code and, over the longer term, by trying to solve some big causes of the middle-class income slowdown, like high medical costs and slowing educational gains.

After Mr. Obama spent much of his first five weeks in office responding to the financial crisis, his budget effectively tried to reclaim momentum for the priorities on which he campaigned.

His efforts would add to a budget deficit already swollen by Mr. Bush’s policies and the recession, creating the largest deficit, relative to the size of the economy, since World War II. Erasing that deficit will require some tough choices — about further spending cuts and tax increases — that Mr. Obama avoided this week.

But he nonetheless made choices.

He sought to eliminate some corporate subsidies, for health insurers, banks and agricultural companies, that economists have long criticized. He proposed putting a price on carbon, to slow global warming, and then refunding most of the revenue from that program through broad-based tax cuts. He called for roughly $100 billion a year in tax increases on the wealthy — mostly delayed until 2011, when the recession will presumably have ended — and $50 billion a year in net tax cuts for the nonwealthy.

The history of the United States economy over the last 70 years can be roughly divided into two periods: the decades immediately after World War II, when inequality plummeted, and the past three decades, when global economic forces and government policies caused it to soar. Mr. Obama is setting out to begin a third period that looks more like the first than the second.

That agenda starts with taxes. Over the last three decades, the pretax incomes of the wealthiest households have risen far more than they have for other households, while the tax rates for top earners have fallen more than they have for others, according to the Congressional Budget Office.

As a result, the average post-tax income of the top 1 percent of households has jumped by roughly $1 million since 1979, adjusted for inflation, to $1.4 million. Pay for most families has risen only slightly faster than inflation.

Before becoming Mr. Obama’s top economic adviser, Lawrence H. Summers liked to tell a hypothetical story to distill the trend. The increase in inequality, Mr. Summers would say, meant that each family in the bottom 80 percent of the income distribution was effectively sending a $10,000 check, every year, to the top 1 percent of earners.

Mr. Obama’s budget reflects that sensibility. Budget experts were still sorting through the details on Thursday, but it appeared that various tax cuts and credits aimed at the middle class and the poor would increase the take-home pay of the median household by roughly $800.

The tax increases on the top 1 percent, meanwhile, will most likely cost them $100,000 a year.

“The tax code will become more progressive, with relatively higher rates on the rich and relatively lower rates on the middle class and poor,” said Roberton Williams, a senior fellow at the Tax Policy Center in Washington. “This is reversing the effects of the Bush policies,” he added, and then going even further.

And just as Franklin D. Roosevelt’s tax increases on the wealthy followed a stock market crash, which had already depressed their incomes, Mr. Obama’s proposals — if they become law — would too. The combination has the potential to reverse a significant portion of the inequality trends of the last few decades.

But for the country to repeat the post-World War II pattern, the incomes of most families would also have to begin rising at a faster rate than they have since the 1970s. That outcome remains deeply uncertain. Economists who study economic growth say the American economy is unlikely to grow nearly as fast in coming years as in the 1950s and ’60s.

Mr. Obama would try to lift the incomes of the middle class and poor through two main channels, administration officials said. The first is an overhaul of health care, meant to reduce the insurance premiums now taking a large bite out of many families’ paychecks.

The details remain vague, but the budget begins paying for investments that would eventually allow Medicare officials to refuse to pay for medical treatment that does not show evidence of improving health. If successful, that change would vastly reduce the government’s long-term budget deficit. It is also likely to bring down private health costs, since insurers typically follow Medicare’s lead.

The other channel is education. Over the last three decades, the pay of college graduates has risen significantly faster than the pay of less-educated workers. Mr. Obama aims to move workers into the first category by increasing federal financial aid and simplifying the myriad of aid programs. In recent years, the United States has lost its standing as the country in which the largest share of young adults graduates from college.

“Low- and middle-income kids often don’t aspire to college,” Peter Orszag, director of the Office of Management and Budget, said Thursday. “They hear ‘$40,000 tuition’ and think that’s impossible.”

There are still many outstanding questions about Mr. Obama’s efforts, starting with whether Congress will pass a budget that looks anything like his.

His proposals on health care are likely to meet stiff opposition from some doctors and insurers. Spending more money on financial aid — absent other changes to the education system — may not lift the graduation rate very much. And if the economy remains weak into next year, as many forecasters expect, Congressional Republicans will try to pin the blame on the looming tax increases on the affluent.

Whatever happens, though, it has been a long time since any president has tried to use his budget to shape the government and the economy quite as much as Mr. Obama did on Thursday. On that score, he and President Reagan have something in common.

    Obama’s Budget Plan Sweeps Away Reagan Ideas, NYT, 27.2.2009, http://www.nytimes.com/2009/02/27/business/economy/27policy.html






Obama Plans Major Shifts in Spending


February 27, 2009
The New York Times


President Obama’s new budget blueprint estimates a stunning deficit of $1.75 trillion for the current fiscal year, which began five months ago, then lays out a wrenching change of course as he seeks to finance his own priorities while stanching the flow of red ink.

By redirecting enormous streams of deficit spending toward programs like health care, education and energy, and paying for some of it through taxes on the rich, pollution surcharges, and cuts in such inviolable programs as farm subsidies, the $3.55 trillion spending plan Mr. Obama is undertaking signals a radical change of course that Congress has yet to endorse.

The deficit he inherited, a shortfall of more than $1 trillion as the current fiscal year began, has continued to swell in recent months with additional bank bailouts, the first wave of spending from a newly enacted stimulus plan and the continuing costs of the wars in Iraq and Afghanistan.

The administration, as it had announced, will try to cut that amount sharply by 2013, when Mr. Obama’s first term ends, to $533 billion, even as it escalates spending on crucial priorities.

“There are times when you can afford to redecorate your house,” Mr. Obama said on Thursday morning as he released an outline of the budget for the next fiscal year, which begins in October, “and there are times when you have to focus on rebuilding its foundation.”

His administration will attempt to close the large fiscal gap even while starting a major health-care initiative intended to substantially extend coverage; to do so, it foresees increasing taxes on the wealthiest Americans and using revenue from a new program: selling carbon credits to manufacturers as part of a cap-and-trade plan meant to slow climate change.

Further savings would come from such items as a proposal to phase out government payments to crop producers making more than $500,000. Additional revenues are posited from a tightening of tax-code enforcement.

"Having inherited a trillion-dollar deficit that will take a long time for us to close, we need to focus on what we need to move the economy forward, not on what’s nice to have," Mr. Obama said. The budget plan projects the deficit falling to $1.17 trillion in 2010 and down to Mr. Obama’s goal of $533 billion in 2013, then increasing again to $712 billion by 2019. Mr. Obama takes credit for $2 trillion in deficit reduction over 10 years, three quarters of which comes from lower expenses in Iraq and Afghanistan and most of the rest from tax increases on the wealthy and revenues from a market-based cap on greenhouse gas emissions.

The forecasts are also founded on optimistic assumptions that the recession will end by next year and quickly produce stronger growth than was seen in the last decade. After the economy shrinks this year, the Obama team assumes that the gross domestic product adjusted for inflation will increase by 3.2 percent next year and then 4 percent or more the following three years, a rate nearly twice the average of the Bush years.

The budget projects slightly lower spending on the Iraq and Afghanistan wars to $130 billion in the 2010 fiscal year, then a much larger drop beginning in fiscal 2011, when Mr. Obama wants to have combat forces out of Iraq. The basic military budget in 2010 would be $534 billion in 2010.

Mr. Obama promised to include the full costs of the wars in all his budgets, saying that because of “dishonest accounting” past budgets have “not told the whole truth about how precious tax dollars are spent. Large sums have been left off the books, including the true cost of fighting in Iraq and Afghanistan.”

The deficit, which at 12.3 percent of gross domestic product is expected to touch its highest level since 1945, could grow this year if the economy worsens significantly and a new infusion of capital into distressed banks is ordered; the administration has estimated that this might call for adding $250 billion to the cost of the bailout already approved by Congress.

"No part of my budget will be free from scrutiny or untouched by reform," Mr. Obama said, in a nod to critics who have suggested that the economic rescue package includes runaway waste.

"I don’t think that we can continue on our current course," he added.

Republicans quickly signaled deep skepticism about President Obama’s approach. Representative Eric Cantor of Virginia, the House Republican whip, said Democrats should not “spend imaginary money” or increase taxes at a difficult moment.

“It is not just misguided but dangerous to raise taxes on small businesses and families that can’t afford to pay them,” Mr. Cantor said. “In fact, a majority of those penalized by the proposed tax increase in this budget are small businesses.”

The new proposal for the coming fiscal year and beyond includes many ambitious and costly programs that would have to be approved by Congress, including some that Republicans and fiscal hawks are likely to oppose.

The tax proposal to help pay for health care, coming after recent years in which wealth has become more concentrated at the top of the income scale, introduces a politically volatile edge to the Congressional debate over Mr. Obama’s domestic priorities.

The president also proposed, in the 10-year budget outline he released Thursday, to use revenues from the centerpiece of his environmental policy — a plan under which companies must buy permits to exceed pollution emission caps — to pay for an extension of a two-year tax credit that benefits low-wage and middle-income people.

The combined effect of the two revenue-raising proposals, on top of Mr. Obama’s existing plan to roll back the Bush-era income tax reductions on households with income exceeding $250,000 a year, would be a pronounced move to redistribute wealth by reimposing a larger share of the tax burden on corporations and the most affluent taxpayers.

Universal health care is worth that price, Mr. Obama said.

"We must make it a priority to give every single American quality, affordable health care," he said. "With this budget we are making a historic commit to comprehensive health-care reform."

The officials said the increase in revenues, estimated at $318 billion over 10 years, would account for about half of a $634 billion “reserve fund” that Mr. Obama will set aside in his budget to address changes in the health care system. The other half would come from proposed cost savings in Medicare, Medicaid and other health programs.

In a document summarizing its proposals, the White House said it would finance coverage for the uninsured in part by “rebalancing the tax code so that the wealthiest pay more.”

To narrow the deficits, the president proposed $636.7 billion in tax increases on the wealthy over the next 10 years, largely by reversing tax cuts passed by President George W. Bush on taxpayers who make $200,000 or more, or $250,000 for married couples. The top income tax bracket would return to 39.6 percent from 36 percent and capital gains and dividends for those over the income limits would be taxed at 20 percent.

The White House also proposed tax provisions that would raise $353.5 billion over 10 years by repealing credits and reductions for oil and gas companies, toughening tax collections and other changes in tax law.

On the other side of the ledger, Mr. Obama would cut taxes for lower- and middle-class Americans by $770.1 billion over 10 years and for businesses by $149.4 billion.

Among the most challenging areas for reducing spending are in the Pentagon’s accounts, which have been running at record levels as the wars continue, the military expands, and the costs of building new weapons escalates.

While the budget outline requests a small increase in basic military spending, the Obama administration has made it clear that it intends to shift some of the money from huge cold war-style weapons systems to smaller programs focused on fighting insurgents in Iraq and Afghanistan and new threats to the nation’s cybersecurity.

Internal debate over which programs to cut is still so intense that Defense Secretary Robert M. Gates has taken the unusual step of requiring even the members of the Joint Chiefs of Staff to sign agreements not to leak the details. But some clues have emerged, and military consultants say it seems clear that expensive missile defense systems and parts of the Army’s vast modernization effort will be cut back. Some also say that plans for a new Navy destroyer are likely to be scrapped.

In the short term, the White House said it would ask Congress in coming weeks for another $75.5 billion for the wars on top of the $65.9 billion already approved to get through the rest of the current fiscal year. It builds $130 billion in expenses for the wars into the 2010 fiscal plan but keeps it separate from the base Pentagon budget.

Beyond the assumption that cost of the wars fall over the next decade, the budget blueprint outlines few cuts in big-ticket spending. The most significant involve paring agricultural subsidies for wealthier farmers and eliminating intermediary costs for student loan programs. The blueprint also projects $316 billion in savings over 10 years from increasing efficiency and competitive bidding in Medicare and Medicaid programs.

Few individual departments, though, will see their budgets actually go down in 2010. Just 3 of the 15 cabinet departments will be cut from 2009 to 2010 — Energy, Health and Human Services and Justice. But energy and health are also getting huge infusions of money from the $787 billion economic recovery legislation just signed into law.

The State Department gets the biggest increase, rising from $36.7 billion this year to $51.7 billion next year, although Mr. Obama will not be able to keep his promise to double foreign aid.

The Obama budget promises a comprehensive effort to address global warming, slash oil imports and create a new “green” economy that produces millions of new jobs. The White House estimates that the effort, built around a cap-and-trade program to limit greenhouse gas emissions, will produce $150 billion over 10 years beginning in 2012 to finance renewable energy projects and potentially hundreds of billions of dollars more that will be returned to families, communities and businesses that suffer hardship as the result of higher energy prices.

However, Congress is in the early stages of debating global warming legislation program, and any revenue from it is still largely speculative.

The Department of Energywill have much more to spend, thanks in part to money from the stimulus package for research, weatherization programs and modernization of the electric grid this year and beyond. Also included in the current year are several billion dollars in aid for American automakers to design and build high-mileage cars. The Department of Interior budget grows slowly, with new money for park maintenance, endangered species protection and renewable energy projects.

At the Environmental Protection Agency, the budget projects a 34 percent spending increase for 2010, with much of the money devoted to clean water projects, a Great Lakes restoration program and across-the-board increases for regulation, research and enforcement.

Because utilities and other businesses would presumably pass on the costs of carbon payments to customers, Mr. Obama will propose to use most of the revenue from the greenhouse gas emission permits to finance an extension of the new “Making Work Pay” tax credit beyond the two years covered in the economic recovery plan.

That tax relief, the administration will argue, will offset households’ higher costs for utilities and other products and services from businesses’ passing on their permit expenses.

That tax credit will annually provide $400 to low-wage and middle-income workers or $800 to couples; Mr. Obama would like to increase those figures to $500 and $1,000. The credit phases out for those with incomes above $75,000 a year and for couples with incomes of more than $150,000; no benefit would go to individuals with more than $100,000 income and couples with $200,000.

The tax credit will begin showing up in the form of lower withholding for eligible workers beginning April 1.

The remainder of the projected revenue from the permits will finance Mr. Obama’s campaign promise to provide $15 billion a year over 10 years to subsidize research and development of alternative energy sources, officials said. The stimulus package included a multibillion-dollar down payment to develop a national electricity grid to harness and distribute energy from such sources, including wind farms.

Behind the numbers in Mr. Obama’s first budget is one of the most far-reaching domestic agendas in years, and at a time when the president and Congress are already grappling with an economic crisis worse than any in decades. The environmental permits would not take effect until 2012, at which point the administration expects the economy to have recovered. Similarly, some of the tax increases would not take effect until 2011.

Peter Baker, John M. Broder and Brian Knowlton contributed reporting from Washington, and Christopher Drew from New York.

    Obama Plans Major Shifts in Spending, NYT, 27.2.2009, http://www.nytimes.com/2009/02/27/us/politics/27web-budget.html

    Related > http://graphics8.nytimes.com/packages/pdf/politics/fy10-overview.pdf






Obama Seeks Higher Taxes on Rich to Pay for Plan


February 26, 2009
Filed at 2:16 a.m. ET
The New York Times


WASHINGTON (AP) -- President Barack Obama is asking Congress to raise taxes on the wealthy and cut Medicare costs to provide health care for the uninsured while making the just-enacted $400 tax cut for most workers permanent.

In a budget blueprint easily exceeding $3 trillion for 2010, Obama proposes setting aside $634 billion over the next decade to expand government subsidized health coverage -- a little more than half the money needed to ensure that every American gets medical care.

Obama is also expected to ask Congress for an additional $75 billion to cover the costs of wars in Iraq and Afghanistan through September.

The disclosures came from three administration officials, who spoke on condition of anonymity because the budget won't be made public until Thursday.

All told, the deficit for the ongoing 2009 budget year would reach $1.75 trillion, up from a $1.5 trillion estimate revealed just days ago by the White House. The increase seems to reflect concerns that more money may be needed to rescue banks and other companies.

Obama's budget proposal would effectively raise income taxes and curb tax deductions on couples making more than $250,000 a year, beginning in 2011. By not extending former President George W. Bush's tax cuts for such wealthier filers, Obama would allow the marginal rate on household incomes above $250,000 to rise from 35 percent to 39.6 percent, said an administration official. Individuals making more than $200,000 would pay the higher rate.

The plan also contains a contentious proposal to raise hundreds of billions of dollars by auctioning off permits to exceed carbon emissions caps Obama wants to impose on users of fossil fuels to address global warming. Some of the revenues from the pollution permits would be used to extend the ''Making Work Pay'' tax credit of $400 for individuals and $800 for couples beyond 2010 as provided in the just-passed economic stimulus bill.

About half of what officials characterized as a $634 billion ''down payment'' toward health care coverage for every American would come from cuts in Medicare. That is sure to incite battles with doctors, hospitals, health insurance companies and drug manufacturers.

Some of the Medicare savings would come from scaling back payments to private insurance plans that serve older Americans, which many analysts believe to be inflated. Other proposals include charging upper-income beneficiaries a higher premium for Medicare's prescription drug coverage.

To raise the other half, Obama wants to reduce the rate by which wealthier people can cut their taxes through deductions for mortgage interest, charitable contributions, local taxes and other expenses to 28 cents on the dollar, rather than the 35 cents they can claim now. Even more money would be raised if the top rate reverts to 39.6 percent as Obama wants.

That proposal is deeply controversial, particularly with colleges and nonprofit institutions that depend on wealthy donors and with lawmakers representing high-tax states such as New York and New Jersey.

And Obama's promise to phase out direct payments to farming operations with revenues above $500,000 a year is sure to cause concerns among rural Democrats.

Even after all those difficult choices -- cutting about $2 trillion from the deficit over 10 years, administration officials say -- Obama's budget still would leave the federal government heavily in the red, with deficits remaining above $500 billion over the second half of the decade.

The budget deficit for 2010 would hit $1.2 trillion and gradually ease to $533 billion by 2013, administration officials say. That's about 3 percent of the size of the economy, a level the administration says it can maintain through the second half of the decade.

''I think they make pretty good progress the first five (years) given where we are,'' said Senate Budget Committee Chairman Kent Conrad, D-N.D. ''Then they kind of are stuck at 3 percent of GDP.''

Sen. Max Baucus, D-Mont., chairman of the Finance Committee, called Obama's proposal to tax the wealthy to finance health care reform a starting point. But he wants to also examine taxing as people's income some of health insurance benefits provided by employers -- an idea rejected by Obama in last year's presidential campaign.

Obama's $634 billion head start on health care could easily double as lawmakers flesh out details in coming months on how to provide medical coverage to all of the 48 million Americans now uninsured while also trying to slow increases in health care costs. Those costs now total $2.4 trillion a year and keep rising even as the economy is shrinking.

Independent experts say providing coverage for all could easily cost more than $1 trillion over 10 years, a figure the Obama administration does not dispute.

But the administration also is demanding that any further costs be offset with tax hikes or further spending cuts under stricter pay-as-you-go budget rules.

Budget documents provided to The Associated Press show that Obama will not lay out a detailed blueprint for a health care overhaul, but a set of broad policy principles and some specific ideas for how to raise a big chunk of the money.

The principles include guaranteeing people a choice of insurance plans and doctors and continuing employer-based coverage. Americans also should be able to take their health care benefits with them when they change jobs, an administration official said.

The budget plan also recommends a long-term fix to update the alternative minimum tax for inflation. That could add $150 billion to the deficit by 2013, according to congressional estimates. The AMT was originally designed to make sure the wealthy paid at least some taxes, but it threatens to ensnare some 24 million middle- to upper-income taxpayers next year.

The budget would freeze the estate tax at current levels rather than allowing it to permanently expire next year. That would exempt individuals' estates of $3.5 million or less from the 45 percent estate tax rate, with a $7 million exemption for couples.

Obama is also expected to seek about $534 billion for the Defense Department, administration officials said, an increase over this year's base figure of $513 billion.

Neither figure includes the full cost of fighting the wars in Iraq and Afghanistan.


Associated Press writer Anne Gearan contributed to this report.

    Obama Seeks Higher Taxes on Rich to Pay for Plan, NYT, 26.2.2009, http://www.nytimes.com/aponline/2009/02/26/washington/AP-Obama-Budget.html






Obama's gamble: Big plans have big risks


24 February 2009
USA Today
By Richard Wolf


WASHINGTON — Until Tuesday, President Obama was already dealing with the worst economy since the Depression: failing industries, teetering banks, a stock market sliced in half and millions of people losing their homes.

Now he's added overhauling the nation's health care system to his to-do list — a challenge that has vexed presidents from Harry Truman to Bill Clinton. Not to mention weaning America off Middle East oil, fixing its schools, bolstering Social Security and declaring war on deficits and debt.

"The only way this century will be another American century is if we confront at last the price of our dependence on oil and the high cost of health care, the schools that aren't preparing our children and the mountain of debt they stand to inherit," Obama said in his first address to Congress Tuesday. "That is our responsibility."

It's a high-risk strategy, doing everything at once. Obama is doing it for two reasons: The economy is in free fall, and the voters gave him a sizeable mandate in November.

"We've never seen an administration get out of the starting blocks as rapidly or try to clear as many hurdles in the first 50 yards," says Robert Reischauer, president of the Urban Institute and former director of the Congressional Budget Office. "But moving at a more moderate pace I don't think decreases the risk appreciably, because then you're going to be driven by events, reacting to crises. He is trying to be proactive."

That won praise even from Republicans on Tuesday. "The president deserves much credit for his willingness to tackle health care reform, the budget deficit, Social Security and the recession all at once," said Rep. Dave Camp, R-Mich., while warning against tax increases.

The challenge for Obama is all the greater because he's presiding over an incomplete government. Nearly all departments and agencies are without key political appointees who will design and implement policy, because they've yet to be nominated or confirmed.

Three Cabinet-level departments still lack leaders, including the Department of Health and Human Services following the withdrawal of former Senate Democratic leader Tom Daschle over personal tax problems. The White House has slowed the nomination process and stepped up its vetting of candidates to avoid additional public relations calamities.

On the other hand, Obama is helped by his willingness to name many veterans of the Clinton administration to his top echelon of advisers. And if he needs advice on the pitfalls of overhauling health care, Hillary Rodham Clinton is down the street at the State Department.

Her advice could come in handy on what not to do. Her health care effort failed in 1994 due largely to the Clinton administration's decision to craft its own plan, rather than work with Congress. It took most of 1993 to do that, delaying the legislative process well beyond President Clinton's honeymoon period.

The last three presidents who represented a party that reclaimed the White House used their first budgets to make major changes, something Obama hopes to do in the budget outline he unveils Thursday. Republican Ronald Reagan cut spending and taxes. Democrat Bill Clinton pushed through a major deficit-reduction deal that helped lead to budget surpluses. Republican George W. Bush focused almost single-mindedly on his massive tax cuts.

"History suggests that particularly when the White House changes parties … the president has a window to make bigger changes than he may be able to get later in his term," says Robert Greenstein, founder of the liberal Center on Budget and Policy Priorities.

With the country in economic crisis, Obama is betting that Americans are more prepared to fix the nation's problems than they have been: 46 million people uninsured and soaring costs for others, dependency on fossil fuels from foreign lands, a debt approaching $11 trillion due to unsustainable government benefits.

The risk is obvious: failing.

"Clinton paid a price for not succeeding on health care," says Steve Elmendorf, who was chief of staff to former House Democratic leader Richard Gephardt. "So if you go out and announce, 'I'm going to do X on health care' and you don't succeed, you pay a price."

    Obama's gamble: Big plans have big risks, UT, 24.2.2009, http://www.usatoday.com/news/washington/2009-02-24-analysis_N.htm






Remarks of President Obama to Congress


24 February 2009
USA Today


Madame Speaker, Mr. Vice President, members of Congress, and the first lady of the United States:
I've come here tonight not only to address the distinguished men and women in this great chamber, but to speak frankly and directly to the men and women who sent us here.

I know that for many Americans watching right now, the state of our economy is a concern that rises above all others. And rightly so. If you haven't been personally affected by this recession, you probably know someone who has — a friend; a neighbor; a member of your family. You don't need to hear another list of statistics to know that our economy is in crisis, because you live it every day. It's the worry you wake up with and the source of sleepless nights. It's the job you thought you'd retire from but now have lost; the business you built your dreams upon that's now hanging by a thread; the college acceptance letter your child had to put back in the envelope. The impact of this recession is real, and it is everywhere.

But while our economy may be weakened and our confidence shaken; though we are living through difficult and uncertain times, tonight I want every American to know this:

We will rebuild, we will recover, and the United States of America will emerge stronger than before.

The weight of this crisis will not determine the destiny of this nation. The answers to our problems don't lie beyond our reach. They exist in our laboratories and universities; in our fields and our factories; in the imaginations of our entrepreneurs and the pride of the hardest-working people on Earth. Those qualities that have made America the greatest force of progress and prosperity in human history we still possess in ample measure. What is required now is for this country to pull together, confront boldly the challenges we face, and take responsibility for our future once more.

Now, if we're honest with ourselves, we'll admit that for too long, we have not always met these responsibilities — as a government or as a people. I say this not to lay blame or look backwards, but because it is only by understanding how we arrived at this moment that we'll be able to lift ourselves out of this predicament.

The fact is, our economy did not fall into decline overnight. Nor did all of our problems begin when the housing market collapsed or the stock market sank. We have known for decades that our survival depends on finding new sources of energy. Yet we import more oil today than ever before. The cost of health care eats up more and more of our savings each year, yet we keep delaying reform. Our children will compete for jobs in a global economy that too many of our schools do not prepare them for. And though all these challenges went unsolved, we still managed to spend more money and pile up more debt, both as individuals and through our government, than ever before.

In other words, we have lived through an era where too often, short-term gains were prized over long-term prosperity; where we failed to look beyond the next payment, the next quarter, or the next election. A surplus became an excuse to transfer wealth to the wealthy instead of an opportunity to invest in our future. Regulations were gutted for the sake of a quick profit at the expense of a healthy market. People bought homes they knew they couldn't afford from banks and lenders who pushed those bad loans anyway. And all the while, critical debates and difficult decisions were put off for some other time on some other day.

Well that day of reckoning has arrived, and the time to take charge of our future is here.

LIVE BLOG: Obama addresses Congress, nation
Now is the time to act boldly and wisely — to not only revive this economy, but to build a new foundation for lasting prosperity. Now is the time to jumpstart job creation, re-start lending, and invest in areas like energy, health care, and education that will grow our economy, even as we make hard choices to bring our deficit down. That is what my economic agenda is designed to do, and that's what I'd like to talk to you about tonight.

It's an agenda that begins with jobs.

As soon as I took office, I asked this Congress to send me a recovery plan by President's Day that would put people back to work and put money in their pockets. Not because I believe in bigger government — I don't. Not because I'm not mindful of the massive debt we've inherited — I am. I called for action because the failure to do so would have cost more jobs and caused more hardships. In fact, a failure to act would have worsened our long-term deficit by assuring weak economic growth for years. That's why I pushed for quick action. And tonight, I am grateful that this Congress delivered, and pleased to say that the American Recovery and Reinvestment Act is now law.

Over the next two years, this plan will save or create 3.5 million jobs. More than 90% of these jobs will be in the private sector — jobs rebuilding our roads and bridges; constructing wind turbines and solar panels; laying broadband and expanding mass transit.

Because of this plan, there are teachers who can now keep their jobs and educate our kids. Health care professionals can continue caring for our sick. There are 57 police officers who are still on the streets of Minneapolis tonight because this plan prevented the layoffs their department was about to make.

Because of this plan, 95% of the working households in America will receive a tax cut — a tax cut that you will see in your paychecks beginning on April 1st.

Because of this plan, families who are struggling to pay tuition costs will receive a $2,500 tax credit for all four years of college. And Americans who have lost their jobs in this recession will be able to receive extended unemployment benefits and continued health care coverage to help them weather this storm.

I know there are some in this chamber and watching at home who are skeptical of whether this plan will work. I understand that skepticism. Here in Washington, we've all seen how quickly good intentions can turn into broken promises and wasteful spending. And with a plan of this scale comes enormous responsibility to get it right.

That is why I have asked Vice President Biden to lead a tough, unprecedented oversight effort — because nobody messes with Joe. I have told each member of my Cabinet as well as mayors and governors across the country that they will be held accountable by me and the American people for every dollar they spend. I have appointed a proven and aggressive Inspector General to ferret out any and all cases of waste and fraud. And we have created a new website called recovery.gov so that every American can find out how and where their money is being spent.

So the recovery plan we passed is the first step in getting our economy back on track. But it is just the first step. Because even if we manage this plan flawlessly, there will be no real recovery unless we clean up the credit crisis that has severely weakened our financial system.

I want to speak plainly and candidly about this issue tonight, because every American should know that it directly affects you and your family's well-being. You should also know that the money you've deposited in banks across the country is safe; your insurance is secure; and you can rely on the continued operation of our financial system. That is not the source of concern.

The concern is that if we do not re-start lending in this country, our recovery will be choked off before it even begins.

You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education; how stores stock their shelves, farms buy equipment, and businesses make payroll.

But credit has stopped flowing the way it should. Too many bad loans from the housing crisis have made their way onto the books of too many banks. With so much debt and so little confidence, these banks are now fearful of lending out any more money to households, to businesses, or to each other. When there is no lending, families can't afford to buy homes or cars. So businesses are forced to make layoffs. Our economy suffers even more, and credit dries up even further.

That is why this administration is moving swiftly and aggressively to break this destructive cycle, restore confidence, and re-start lending.

We will do so in several ways. First, we are creating a new lending fund that represents the largest effort ever to help provide auto loans, college loans, and small business loans to the consumers and entrepreneurs who keep this economy running.

Second, we have launched a housing plan that will help responsible families facing the threat of foreclosure lower their monthly payments and re-finance their mortgages. It's a plan that won't help speculators or that neighbor down the street who bought a house he could never hope to afford, but it will help millions of Americans who are struggling with declining home values — Americans who will now be able to take advantage of the lower interest rates that this plan has already helped bring about. In fact, the average family who re-finances today can save nearly $2000 per year on their mortgage.

Third, we will act with the full force of the federal government to ensure that the major banks that Americans depend on have enough confidence and enough money to lend even in more difficult times. And when we learn that a major bank has serious problems, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.

I understand that on any given day, Wall Street may be more comforted by an approach that gives banks bailouts with no strings attached, and that holds nobody accountable for their reckless decisions. But such an approach won't solve the problem. And our goal is to quicken the day when we re-start lending to the American people and American business and end this crisis once and for all.

I intend to hold these banks fully accountable for the assistance they receive, and this time, they will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer. This time, CEOs won't be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet. Those days are over.

Still, this plan will require significant resources from the federal government — and yes, probably more than we've already set aside. But while the cost of action will be great, I can assure you that the cost of inaction will be far greater, for it could result in an economy that sputters along for not months or years, but perhaps a decade. That would be worse for our deficit, worse for business, worse for you, and worse for the next generation. And I refuse to let that happen.

I understand that when the last administration asked this Congress to provide assistance for struggling banks, Democrats and Republicans alike were infuriated by the mismanagement and results that followed. So were the American taxpayers. So was I.

So I know how unpopular it is to be seen as helping banks right now, especially when everyone is suffering in part from their bad decisions. I promise you — I get it.

But I also know that in a time of crisis, we cannot afford to govern out of anger, or yield to the politics of the moment. My job — our job — is to solve the problem. Our job is to govern with a sense of responsibility. I will not spend a single penny for the purpose of rewarding a single Wall Street executive, but I will do whatever it takes to help the small business that can't pay its workers or the family that has saved and still can't get a mortgage.

That's what this is about. It's not about helping banks — it's about helping people. Because when credit is available again, that young family can finally buy a new home. And then some company will hire workers to build it. And then those workers will have money to spend, and if they can get a loan too, maybe they'll finally buy that car, or open their own business. Investors will return to the market, and American families will see their retirement secured once more. Slowly, but surely, confidence will return, and our economy will recover.

So I ask this Congress to join me in doing whatever proves necessary. Because we cannot consign our nation to an open-ended recession. And to ensure that a crisis of this magnitude never happens again, I ask Congress to move quickly on legislation that will finally reform our outdated regulatory system. It is time to put in place tough, new common-sense rules of the road so that our financial market rewards drive and innovation, and punishes short-cuts and abuse.

The recovery plan and the financial stability plan are the immediate steps we're taking to revive our economy in the short-term. But the only way to fully restore America's economic strength is to make the long-term investments that will lead to new jobs, new industries, and a renewed ability to compete with the rest of the world. The only way this century will be another American century is if we confront at last the price of our dependence on oil and the high cost of health care; the schools that aren't preparing our children and the mountain of debt they stand to inherit. That is our responsibility.

In the next few days, I will submit a budget to Congress. So often, we have come to view these documents as simply numbers on a page or laundry lists of programs. I see this document differently. I see it as a vision for America — as a blueprint for our future.

My budget does not attempt to solve every problem or address every issue. It reflects the stark reality of what we've inherited — a trillion dollar deficit, a financial crisis, and a costly recession.

Given these realities, everyone in this chamber — Democrats and Republicans — will have to sacrifice some worthy priorities for which there are no dollars. And that includes me.

But that does not mean we can afford to ignore our long-term challenges. I reject the view that says our problems will simply take care of themselves; that says government has no role in laying the foundation for our common prosperity.

For history tells a different story. History reminds us that at every moment of economic upheaval and transformation, this nation has responded with bold action and big ideas. In the midst of civil war, we laid railroad tracks from one coast to another that spurred commerce and industry. From the turmoil of the Industrial Revolution came a system of public high schools that prepared our citizens for a new age. In the wake of war and depression, the GI Bill sent a generation to college and created the largest middle-class in history. And a twilight struggle for freedom led to a nation of highways, an American on the moon, and an explosion of technology that still shapes our world.

In each case, government didn't supplant private enterprise; it catalyzed private enterprise. It created the conditions for thousands of entrepreneurs and new businesses to adapt and to thrive.

We are a nation that has seen promise amid peril, and claimed opportunity from ordeal. Now we must be that nation again. That is why, even as it cuts back on the programs we don't need, the budget I submit will invest in the three areas that are absolutely critical to our economic future: energy, health care, and education.

It begins with energy.

We know the country that harnesses the power of clean, renewable energy will lead the 21st century. And yet, it is China that has launched the largest effort in history to make their economy energy efficient. We invented solar technology, but we've fallen behind countries like Germany and Japan in producing it. New plug-in hybrids roll off our assembly lines, but they will run on batteries made in Korea.

Well I do not accept a future where the jobs and industries of tomorrow take root beyond our borders — and I know you don't either. It is time for America to lead again.

Thanks to our recovery plan, we will double this nation's supply of renewable energy in the next three years. We have also made the largest investment in basic research funding in American history — an investment that will spur not only new discoveries in energy, but breakthroughs in medicine, science, and technology.

We will soon lay down thousands of miles of power lines that can carry new energy to cities and towns across this country. And we will put Americans to work making our homes and buildings more efficient so that we can save billions of dollars on our energy bills.

But to truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy. So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America. And to support that innovation, we will invest fifteen billion dollars a year to develop technologies like wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient cars and trucks built right here in America.

As for our auto industry, everyone recognizes that years of bad decision-making and a global recession have pushed our automakers to the brink. We should not, and will not, protect them from their own bad practices. But we are committed to the goal of a re-tooled, re-imagined auto industry that can compete and win. Millions of jobs depend on it. Scores of communities depend on it. And I believe the nation that invented the automobile cannot walk away from it.

None of this will come without cost, nor will it be easy. But this is America. We don't do what's easy. We do what is necessary to move this country forward.

For that same reason, we must also address the crushing cost of health care.

This is a cost that now causes a bankruptcy in America every thirty seconds. By the end of the year, it could cause 1.5 million Americans to lose their homes. In the last eight years, premiums have grown four times faster than wages. And in each of these years, one million more Americans have lost their health insurance. It is one of the major reasons why small businesses close their doors and corporations ship jobs overseas. And it's one of the largest and fastest-growing parts of our budget.

Given these facts, we can no longer afford to put health care reform on hold.

Already, we have done more to advance the cause of health care reform in the last thirty days than we have in the last decade. When it was days old, this Congress passed a law to provide and protect health insurance for eleven million American children whose parents work full-time. Our recovery plan will invest in electronic health records and new technology that will reduce errors, bring down costs, ensure privacy, and save lives. It will launch a new effort to conquer a disease that has touched the life of nearly every American by seeking a cure for cancer in our time. And it makes the largest investment ever in preventive care, because that is one of the best ways to keep our people healthy and our costs under control.

This budget builds on these reforms. It includes an historic commitment to comprehensive health care reform — a down payment on the principle that we must have quality, affordable health care for every American. It's a commitment that's paid for in part by efficiencies in our system that are long overdue. And it's a step we must take if we hope to bring down our deficit in the years to come.

Now, there will be many different opinions and ideas about how to achieve reform, and that is why I'm bringing together businesses and workers, doctors and health care providers, Democrats and Republicans to begin work on this issue next week.

I suffer no illusions that this will be an easy process. It will be hard. But I also know that nearly a century after Teddy Roosevelt first called for reform, the cost of our health care has weighed down our economy and the conscience of our nation long enough. So let there be no doubt: health care reform cannot wait, it must not wait, and it will not wait another year.

The third challenge we must address is the urgent need to expand the promise of education in America.

In a global economy where the most valuable skill you can sell is your knowledge, a good education is no longer just a pathway to opportunity — it is a pre-requisite.

Right now, three-quarters of the fastest-growing occupations require more than a high school diploma. And yet, just over half of our citizens have that level of education. We have one of the highest high school dropout rates of any industrialized nation. And half of the students who begin college never finish.

This is a prescription for economic decline, because we know the countries that out-teach us today will out-compete us tomorrow. That is why it will be the goal of this administration to ensure that every child has access to a complete and competitive education — from the day they are born to the day they begin a career.

Already, we have made an historic investment in education through the economic recovery plan. We have dramatically expanded early childhood education and will continue to improve its quality, because we know that the most formative learning comes in those first years of life. We have made college affordable for nearly seven million more students. And we have provided the resources necessary to prevent painful cuts and teacher layoffs that would set back our children's progress.

But we know that our schools don't just need more resources. They need more reform. That is why this budget creates new incentives for teacher performance; pathways for advancement, and rewards for success. We'll invest in innovative programs that are already helping schools meet high standards and close achievement gaps. And we will expand our commitment to charter schools.

It is our responsibility as lawmakers and educators to make this system work. But it is the responsibility of every citizen to participate in it. And so tonight, I ask every American to commit to at least one year or more of higher education or career training. This can be community college or a four-year school; vocational training or an apprenticeship. But whatever the training may be, every American will need to get more than a high school diploma. And dropping out of high school is no longer an option. It's not just quitting on yourself, it's quitting on your country — and this country needs and values the talents of every American. That is why we will provide the support necessary for you to complete college and meet a new goal: by 2020, America will once again have the highest proportion of college graduates in the world.

I know that the price of tuition is higher than ever, which is why if you are willing to volunteer in your neighborhood or give back to your community or serve your country, we will make sure that you can afford a higher education. And to encourage a renewed spirit of national service for this and future generations, I ask this Congress to send me the bipartisan legislation that bears the name of Senator Orrin Hatch as well as an American who has never stopped asking what he can do for his country — Senator Edward Kennedy.

These education policies will open the doors of opportunity for our children. But it is up to us to ensure they walk through them. In the end, there is no program or policy that can substitute for a mother or father who will attend those parent/teacher conferences, or help with homework after dinner, or turn off the TV, put away the video games, and read to their child. I speak to you not just as a President, but as a father when I say that responsibility for our children's education must begin at home.

There is, of course, another responsibility we have to our children. And that is the responsibility to ensure that we do not pass on to them a debt they cannot pay. With the deficit we inherited, the cost of the crisis we face, and the long-term challenges we must meet, it has never been more important to ensure that as our economy recovers, we do what it takes to bring this deficit down.

I'm proud that we passed the recovery plan free of earmarks, and I want to pass a budget next year that ensures that each dollar we spend reflects only our most important national priorities.

Yesterday, I held a fiscal summit where I pledged to cut the deficit in half by the end of my first term in office. My administration has also begun to go line by line through the federal budget in order to eliminate wasteful and ineffective programs. As you can imagine, this is a process that will take some time. But we're starting with the biggest lines. We have already identified two trillion dollars in savings over the next decade.

In this budget, we will end education programs that don't work and end direct payments to large agribusinesses that don't need them. We'll eliminate the no-bid contracts that have wasted billions in Iraq, and reform our defense budget so that we're not paying for Cold War-era weapons systems we don't use. We will root out the waste, fraud, and abuse in our Medicare program that doesn't make our seniors any healthier, and we will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas.

In order to save our children from a future of debt, we will also end the tax breaks for the wealthiest 2% of Americans. But let me perfectly clear, because I know you'll hear the same old claims that rolling back these tax breaks means a massive tax increase on the American people: if your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime. In fact, the recovery plan provides a tax cut — that's right, a tax cut — for 95% of working families. And these checks are on the way.

To preserve our long-term fiscal health, we must also address the growing costs in Medicare and Social Security. Comprehensive health care reform is the best way to strengthen Medicare for years to come. And we must also begin a conversation on how to do the same for Social Security, while creating tax-free universal savings accounts for all Americans.

Finally, because we're also suffering from a deficit of trust, I am committed to restoring a sense of honesty and accountability to our budget. That is why this budget looks ahead ten years and accounts for spending that was left out under the old rules — and for the first time, that includes the full cost of fighting in Iraq and Afghanistan. For seven years, we have been a nation at war. No longer will we hide its price.

We are now carefully reviewing our policies in both wars, and I will soon announce a way forward in Iraq that leaves Iraq to its people and responsibly ends this war.

And with our friends and allies, we will forge a new and comprehensive strategy for Afghanistan and Pakistan to defeat al Qaeda and combat extremism. Because I will not allow terrorists to plot against the American people from safe havens half a world away.

As we meet here tonight, our men and women in uniform stand watch abroad and more are readying to deploy. To each and every one of them, and to the families who bear the quiet burden of their absence, Americans are united in sending one message: we honor your service, we are inspired by your sacrifice, and you have our unyielding support. To relieve the strain on our forces, my budget increases the number of our soldiers and Marines. And to keep our sacred trust with those who serve, we will raise their pay, and give our veterans the expanded health care and benefits that they have earned.

To overcome extremism, we must also be vigilant in upholding the values our troops defend — because there is no force in the world more powerful than the example of America. That is why I have ordered the closing of the detention center at Guantanamo Bay, and will seek swift and certain justice for captured terrorists — because living our values doesn't make us weaker, it makes us safer and it makes us stronger. And that is why I can stand here tonight and say without exception or equivocation that the United States of America does not torture.

In words and deeds, we are showing the world that a new era of engagement has begun. For we know that America cannot meet the threats of this century alone, but the world cannot meet them without America. We cannot shun the negotiating table, nor ignore the foes or forces that could do us harm. We are instead called to move forward with the sense of confidence and candor that serious times demand.

To seek progress toward a secure and lasting peace between Israel and her neighbors, we have appointed an envoy to sustain our effort. To meet the challenges of the 21st century — from terrorism to nuclear proliferation; from pandemic disease to cyber threats to crushing poverty — we will strengthen old alliances, forge new ones, and use all elements of our national power.

And to respond to an economic crisis that is global in scope, we are working with the nations of the G-20 to restore confidence in our financial system, avoid the possibility of escalating protectionism, and spur demand for American goods in markets across the globe. For the world depends on us to have a strong economy, just as our economy depends on the strength of the world's.

As we stand at this crossroads of history, the eyes of all people in all nations are once again upon us — watching to see what we do with this moment; waiting for us to lead.

Those of us gathered here tonight have been called to govern in extraordinary times. It is a tremendous burden, but also a great privilege — one that has been entrusted to few generations of Americans. For in our hands lies the ability to shape our world for good or for ill.

I know that it is easy to lose sight of this truth — to become cynical and doubtful; consumed with the petty and the trivial.

But in my life, I have also learned that hope is found in unlikely places; that inspiration often comes not from those with the most power or celebrity, but from the dreams and aspirations of Americans who are anything but ordinary.

I think about Leonard Abess, the bank president from Miami who reportedly cashed out of his company, took a $60 million bonus, and gave it out to all 399 people who worked for him, plus another 72 who used to work for him. He didn't tell anyone, but when the local newspaper found out, he simply said, "I knew some of these people since I was 7 years old. I didn't feel right getting the money myself."

I think about Greensburg, Kansas, a town that was completely destroyed by a tornado, but is being rebuilt by its residents as a global example of how clean energy can power an entire community — how it can bring jobs and businesses to a place where piles of bricks and rubble once lay. "The tragedy was terrible," said one of the men who helped them rebuild. "But the folks here know that it also provided an incredible opportunity."

And I think about Ty'Sheoma Bethea, the young girl from that school I visited in Dillon, South Carolina — a place where the ceilings leak, the paint peels off the walls, and they have to stop teaching six times a day because the train barrels by their classroom. She has been told that her school is hopeless, but the other day after class she went to the public library and typed up a letter to the people sitting in this room. She even asked her principal for the money to buy a stamp. The letter asks us for help, and says, "We are just students trying to become lawyers, doctors, congressmen like yourself and one day president, so we can make a change to not just the state of South Carolina but also the world. We are not quitters."

We are not quitters.

These words and these stories tell us something about the spirit of the people who sent us here. They tell us that even in the most trying times, amid the most difficult circumstances, there is a generosity, a resilience, a decency, and a determination that perseveres; a willingness to take responsibility for our future and for posterity.

Their resolve must be our inspiration. Their concerns must be our cause. And we must show them and all our people that we are equal to the task before us.

I know that we haven't agreed on every issue thus far, and there are surely times in the future when we will part ways. But I also know that every American who is sitting here tonight loves this country and wants it to succeed. That must be the starting point for every debate we have in the coming months, and where we return after those debates are done. That is the foundation on which the American people expect us to build common ground.

And if we do — if we come together and lift this nation from the depths of this crisis; if we put our people back to work and restart the engine of our prosperity; if we confront without fear the challenges of our time and summon that enduring spirit of an America that does not quit, then someday years from now our children can tell their children that this was the time when we performed, in the words that are carved into this very chamber, "something worthy to be remembered."

Thank you, God Bless you, and may God Bless the United States of America.

    Remarks of President Obama to Congress, UT, 24.2.2009, http://www.usatoday.com/news/washington/2009-02-24-obamaspeechtext_N.htm






Obama Stressing Fiscal Responsibility on Budget


February 23, 2009
Filed at 8:12 a.m. ET
The New York Times


WASHINGTON (AP) -- President Barack Obama is bringing together dozens of advisers and adversaries to discuss how to curb a burgeoning federal deficit laden with Social Security, Medicare and Medicaid obligations.

Obama's summit at the White House on Monday is the first meeting toward a strategy to address the long-term fiscal health of the nation. The gathering also comes as Obama prepares ambitious plans to cut the federal deficit by half within four years.

''It will require doing all we can to get exploding deficits under control as our economy begins to recover,'' Obama said in his weekend Internet and radio address. ''That work begins on Monday, when I will convene a fiscal summit of independent experts and unions, advocacy groups and members of Congress to discuss how we can cut the trillion-dollar deficit that we've inherited.''

Even before it began, some of its 130 invited participants cautioned against overinflated expectations.

''It can either be a nice press event. Or it can be a substantive event,'' said Republican Sen. Judd Gregg, whom Obama appointed as commerce secretary before the New Hampshire lawmaker balked. ''History tells us it will be the first. We've had these meetings before. There's always a lot of people willing to point out the problem.''

Yet, he said, there is seldom anyone willing to make the difficult decisions to solve those problems.

As the nation's economy continues its downward spiral, Obama's advisers are keeping their focus on the broader fiscal troubles that have sent millions to unemployment rolls. Taken in context, the summit is but one part of the White House's larger approach to the coming weeks focused on Obama's priorities for a first term, including a State of the Union-style address on Tuesday.

That speech is not likely to include plans to deal with long-crumbling entitlement programs.

The Senate's top Republican, Mitch McConnell of Kentucky, said a solution already exists in legislation written by Gregg and his Democratic counterpart on the Budget Committee, Sen. Kent Conrad of North Dakota.

Their measure would create a bipartisan commission to deal with Social Security, Medicare and Medicaid. The entitlement programs face eventual bankruptcy, although experts differ on how urgently each is threatened.

Many House Democrats, however, remain opposed to a commission, including Speaker Nancy Pelosi. Obama has indicated he's open to the idea -- and many others -- as a way to move toward a viable solution.

McConnell said any movement would be a step toward getting a handle on the unfunded liabilities.

''So I hope what the meeting at the White House is about tomorrow is about sobering up here and beginning to rethink the kind of debt that we're laying on future generations,'' McConnell told CNN's ''State of the Union'' program on Sunday.

That comes hand-in-hand with the president's plans to deal with the deficit.

Obama plans to cut the federal deficit in half by the end of his first term, mostly by scaling back Iraq war spending, raising taxes on the wealthiest and streamlining government. The goal is to halve the federal deficit to $533 billion by the time his first term ends in 2013.

He inherited a deficit of about $1.3 trillion from his predecessor, President George W. Bush.

Meanwhile, Peter Orszag, director of the federal Office of Management and Budget, said Monday he believes the new fiscal plan will lure some Republican support -- in contrast to the stimulus bill that got only three GOP votes in Congress.

He said he thinks some Republicans will back the plan because of proposals to overhaul the expensive U.S. health care system.

''Health care clearly is the key to our fiscal future,'' he said on CNN, ''so we need to get health care costs u nder control and we want to do that this year.''

    Obama Stressing Fiscal Responsibility on Budget, NYT, 23.2.2009,http://www.nytimes.com/aponline/2009/02/23/washington/AP-Obama-Economy.html







Mr. Obama’s Foreclosure Plan


February 19, 2009
The New York Times


The anti-foreclosure plan announced by President Obama on Wednesday is a decisive break from the Bush administration’s disastrous protect-the-banks-but-not-the-homeowners policy. The president has promised that it will help as many as nine million American families refinance their mortgages or avoid foreclosure. That’s a good start, but given the dire state of the economy, we fear it still may not be enough.

For two years, while house prices cratered and mortgage defaults soared, the Bush administration stubbornly refused to compel the mortgage industry to clean up the bad loans that had been made so recklessly; it even refused to give banks any incentives to do so. Some two million families lost their homes to foreclosure.

The Obama plan will provide up to $75 billion, mostly from the bank bailout fund, to help lenders and borrowers come to new terms. That could allow up to four million at-risk homeowners stay in their homes.

Most of the money will go for incentive payments to encourage lenders to modify troubled loans and for subsidizing lower interest rates to reduce borrowers’ monthly payments. (After five years, the interest rate will begin to gradually adjust upward again.)

Equally important, Mr. Obama is coupling the incentives to bankers with a big stick — support for a change in the law that would allow bankrupt homeowners who cannot come to new affordable terms with a lender to have their mortgages modified under court protection. Mr. Bush stubbornly opposed that idea, too.

The plan will also provide help for homeowners who may be struggling, but not delinquent, making it easier for them to refinance their loans to lower rates. Loans that are owned or backed by Fannie Mae and Freddie Mac — about half of all mortgages — will be eligible for refinancing even for homeowners who have less than 20 percent equity in their homes.

That will allow up to an estimated five million homeowners to trade their current mortgages for loans with lower rates, making repayments easier and possibly heading off future defaults.

The truly worrisome part of the Obama plan is that it does not forcefully address the fact that some 13.6 million homeowners — and counting — are stuck in mortgages that have balances that are higher than the value of their properties.

Reducing the interest rates on the loans may make their mortgages affordable — for now. But if a family has a setback, like unemployment or illness, even the new lower payment may prove too onerous. Without an equity cushion to fall back on, default and foreclosure may be impossible to avoid. Similarly, if the family has a big expense — for a new roof or new plumbing — it would not make sense to plow more money into a home in which they have no equity. In those circumstances, declaring bankruptcy may be a homeowner’s only option.

Mr. Obama must fight for bankruptcy reform legislation that is expansive enough to accommodate borrowers who cannot make payments for reasons beyond their control. It will be a tough fight. The mortgage industry — which has carefully cultivated friends on both sides of the political aisle — will press for a bill that makes it as difficult as possible for borrowers to seek bankruptcy protection. Mr. Obama must not back down.

    Mr. Obama’s Foreclosure Plan, NYT, 19.2.2009, http://www.nytimes.com/2009/02/19/opinion/19thu1.html






Recovery Measure Becomes Law and Partisan Fight Endures


February 18, 2009
The New York Times


DENVER — President Obama signed the $787 billion stimulus bill into law on Tuesday as leaders of both parties moved to position themselves for a political battle over who was responsible for the economy’s problems and whether the legislation was the solution.

In his second consecutive week of taking to the road for campaign-style appearances to build support for his agenda, Mr. Obama signed the measure here in the city where he was nominated, and delivered a speech that signaled in part the White House effort to gain political advantage. He listed initiatives in the bill, focusing on education and energy conservation, and offered examples of spending that would help specific states.

“Now,” he said, “I don’t want to pretend that today marks the end of our economic problems. Nor does it constitute all of what we’re going to have to do to turn our economy around.

“But today does mark the beginning of the end: the beginning of what we need to do to create jobs for Americans scrambling in the wake of layoffs, the beginning of what we need to do to provide relief for families worried they won’t be able to pay next month’s bills, the beginning of the first steps to set our economy on a firmer foundation, paving the way to long-term growth and prosperity.”

Even as Mr. Obama was signing the bill, Republicans were denouncing it as a waste of money. They asserted that it would not turn the economy around and that they were unified in “disagreement with Congressional Democrats and President Obama,” in the words of Michael Steele, the Republican national chairman.

The division between the two parties over the bill’s political repercussions was almost as stark as that over its substance. Leaders of the Democratic Senate and House campaign committees said in interviews that they would try to ensure that Republicans paid a price in 2010 for having opposed the measure. Not a single Republican in the House voted for the bill, and only three Republicans backed it in the Senate.

Over the next few days, 30 first-term House Democrats will hold events in their districts highlighting how spending there can protect and create jobs and otherwise benefit those harmed by the downturn.

Representative Chris Van Hollen of Maryland, chairman of the Democratic Congressional Campaign Committee, said of the Republicans: “Who am I to give these guys advice? But I do think they made a mistake. From our perspective, we are investing in confidence and success, and they are banking on fear and failure. I think that is a dichotomy that does not work for them.”

Rahm Emanuel, Mr. Obama’s chief of staff, said Republicans had undercut themselves with the vote.

“This is the party that just decided to vote against tax cuts,” Mr. Emanuel said. “You have a lot of members on the line who voted against tax cuts, and they also voted against important measures on health care and energy, and we know both areas are highly valued by the American public. If you are the party of action versus the party of inaction, the party of action wins.”

Republican leaders moved just as quickly to portray the bill as a boondoggle. Republican aides said they would seize on every instance of potential abuse as a way of stirring public doubt about the measure.

Mr. Steele said that he foresaw a “slight bump” in the economy because of the enormous amount of money to be spent, but that he did not expect it to be lasting. He disputed Mr. Van Hollen’s argument that Republicans would be in political trouble if the economy improved.

“I’m telling the party leadership around the country, don’t believe the hype,” he said. “There will be a slight uptick, it will flat-line, and it will continue to go down.”

At least some Republicans have calculated that if the Obama plan does not work, they will be able to say they warned against it. And if it does, they can hope that voters will have moved on to other issues before the next Congressional elections, in less than two years.

“The American public,” said the House Republican whip, Representative Eric Cantor of Virginia, “is not going to be waking up one morning four years from now and say: ‘What a great economy! It all goes back to that vote that the Democrats passed on the stimulus bill.’ ”

In the meantime, Republicans argued, their nearly unanimous opposition to the bill has helped them reconnect with their identity as a party of limited government after years of what even Mr. Steele described as excessive spending under President George W. Bush.

Ed Rogers, a Republican lobbyist and former White House official, said his party benefited in particular because the administration had never effectively tied the legislation to Mr. Obama’s popularity, instead allowing it to be defined as a product of Congressional Democrats doling out wasteful spending.

“From the Republican point of view,” Mr. Rogers said, “there was never anything other than the House Democrat wish list tinkered with by the Senate. It was never the Obama Recovery Act.”

Mr. Obama used the Denver appearance to invoke the themes of hope and opportunity that he effectively employed during the presidential campaign.

“Our American story is not, and has never been, about doing easy things,” he said. “It’s about rising to the moment when the moment is hard.”

Sheryl Gay Stolberg reported from Denver, and Adam Nagourney from Washington. Peter Baker contributed reporting from Washington.

    Recovery Measure Becomes Law and Partisan Fight Endures, NYT, 18.2.2009, http://www.nytimes.com/2009/02/18/us/politics/18obama.html?hp






Congress, White House Near Final Deal on Stimulus


February 11, 2009
Filed at 12:25 p.m. ET
The New York Times


WASHINGTON (Reuters) - U.S. lawmakers and the White House were moving toward a final deal on Wednesday for what could be a stimulus plan of under $800 billion that Democrats say is crucial to rescuing the struggling U.S. economy.

"We're close. I expect to have it done by 3 p.m. (2000 GMT)," said Senator Max Baucus, one of the negotiators on the package of tax cuts and government spending designed to pull the U.S. economy out of its deep recession.

Senator Arlen Specter, a moderate Republican whose support is key to passage, said $789 billion "sounds pretty close" to the overall price tag, while Democratic Senator Ben Nelson added, "The target was actually lower than that."

House and Senate negotiators were expected to emerge from closed-door meetings later on Wednesday and gather in a public session to sign off on a compromise bill that would then be sent to the full House and Senate for final passage.

Once that happens, possibly by week's end, President Barack Obama would promptly sign the legislation into law.

"I've heard white smoke is imminent but I haven't seen it yet," said Senate Republican leader Mitch McConnell.

McConnell has been an outspoken critic of the bill, saying it contains too much government spending that would not stimulate the economy.

But Democrats who control both houses of Congress have mostly rebuffed Republicans, saying the combination of tax cuts and spending to rebuild roads, bridges and other projects in the bill would create or save up to 4 million jobs.

Democrats are working with three moderate Republican senators so that the bill could speed through the Senate.

Alone, the stimulus package is unlikely to fix the U.S. economy because it does not address financial sector problems. As long as banks face losses and struggle to raise money, lending and growth will suffer.

The Obama administration hopes to address this through a bank rescue program unveiled by Treasury Secretary Timothy Geithner on Tuesday. Wall Street plunged as traders expressed disappointment there were not more details.


Nelson said he thought some money for education had been increased in the stimulus compromise, adding that lawmakers were scaling back money for tax incentives to encourage auto and home buying.

Sen. Susan Collins, a Maine Republican, said lawmakers intended to keep in a one-year fix to a quirk in the tax law that threatens to ensnare the middle class in a tax intended for the richest. Other specifics were not yet available.

One House Democratic aide said the sides were finding it easier to agree on tax cuts than on the more complicated list of spending priorities contained in the legislation.

The House has passed a bill costing about $820 billion, while the Senate's version will cost $838 billion.

House Speaker Nancy Pelosi says her chamber's legislation would create more jobs, fulfilling Obama's pledge to create or save up to 4 million jobs through construction and investment projects and tax cuts to put money in consumers' hands.

But Senate Majority leader Harry Reid, hamstrung by more difficult Senate procedures, cut out some spending that Republicans objected to in order to get the required 60 votes.

Apart from three senators, all Republican lawmakers have opposed the bills as written so far. Democrats had scant hopes of attracting many more of their votes for a bill Obama says needs to be enacted quickly to avert a "catastrophe."

Various business groups support the Democratic-written legislation. The U.S. Chamber of Commerce, for example, supports "many of the pro-growth tax initiatives in the bill, as well as the spending-side provisions to provide stimulus, create jobs and get Americans back to work."

(Editing by Alan Elsner)

    Congress, White House Near Final Deal on Stimulus, NYT, 11.2.2009, http://www.nytimes.com/reuters/2009/02/11/business/business-us-usa-stimulus.html






News Analysis

Taking on Critics, Obama Puts Aside Talk of Unity


February 10, 2009
The New York Times


WASHINGTON — President Obama has made a show of reaching across the aisle since taking office, inviting three Republicans into his cabinet and wining and dining other opposition leaders. But by Monday, he sounded like a candidate back on the trail, railing against the status quo and dismissing critics as apostles of a failed philosophy.

Three weeks into his tenure, Mr. Obama acknowledged that his effort to change the political climate in Washington had yielded little. He made clear that he had all but given up hope of securing a bipartisan consensus behind his $800 billion economic recovery package, arguing that the urgency of the economic crisis had at least for now outweighed the need for unity.

“I’m happy to get good ideas from across the political spectrum, from Democrats and Republicans,” he said at the Monday night news conference. “What I won’t do is return to the failed theories of the last eight years that got us into this fix in the first place, because those theories have been tested and they have failed. And that’s part of what the election in November was all about.”

The sharp tone at the news conference and at a whooping election-style rally in Indiana earlier in the day signaled a shift by the White House in the fractious debate over his package of spending and tax breaks.

With no Republicans in the House voting for the economic plan and just three in the Senate, Mr. Obama on Monday began a week of barnstorming stops that will also take him to Florida and Illinois to create momentum behind his program.

Gone were the soothing notes of the last three weeks. Authoritative and unsmiling, gloomy rather than inspirational, Mr. Obama cast the nation’s economy in dire light and offered a barbed point-by-point critique of the Republican argument that his plan would just create more government jobs and authorize a raft of new wasteful spending.

“It’s a little hard for me to take criticism from folks about this recovery package after they presided over a doubling of the national debt,” he said at the news conference. “I’m not sure they have a lot of credibility when it comes to fiscal responsibility.”

As Air Force One took him to Elkhart, Ind., where the unemployment rate has tripled to more than 15 percent in the last year, Mr. Obama and his aides sought again to reclaim the mantle of change, a theme central to his election victory.

His advisers depicted the president as the champion of people neglected by Washington politics.

“One thing that we learned over two years is that there’s a whole different conversation in Washington than there is out here,” said David Axelrod, the president’s senior adviser. “If I had listened to the conversation in Washington during the campaign for president, I would have jumped off a building about a year and a half ago.”

Robert Gibbs, the White House press secretary, decried what he called a “myopic viewpoint in Washington,” disconnected from the troubles of the country.

“It’s illuminating because it may not necessarily be where cable television is on all of this,” Mr. Gibbs said. “But you know, we’re sort of used to that. We lost on cable television virtually every day last year. So you know, there’s a conventional wisdom to what’s going on in America via Washington and there’s the reality of what’s happening in America.”

In case Republicans doubted who was in charge, Mr. Obama wrapped himself in the mantle of his election victory. At Concord High School in Elkhart, he basked in the roar of a crowd that chanted, “Obama, Obama.” To Obama aides nostalgic for the simpler days of the campaign trail, it had a familiar feel, even if the music had changed from Stevie Wonder to “Hail to the Chief.”

The point was reinforced when the White House distributed poll numbers indicating that twice as many Americans support Mr. Obama on the economy as they do Congressional Republicans.

But Mr. Obama’s aides disregarded other surveys showing that a bare majority approves of the package of spending and tax breaks. Republicans pointed to their alternative call for deeper tax cuts as a more effective way to get money quickly into the economy.

“It is not too late to craft a bipartisan plan that creates more jobs and helps get our economy back on track, and Republicans stand ready to work with the president to do this,” Representative John A. Boehner of Ohio, the House Republican leader, said after the news conference.

For his part, though, Mr. Obama seemed to suggest it was too late, and that the time for bipartisanship lay further down the road. He said he recognized that some Republicans had good-faith doubts about his program, but he also characterized some of the opposition as an effort to “test” the new president.

He vowed to continue trying to build alliances with the other party in the hope that it “will pay some dividends over the long term,” and added: “As I continue to make these overtures, over time, hopefully that will be reciprocated.”

    Taking on Critics, Obama Puts Aside Talk of Unity, NYT, 10.2.2009, http://www.nytimes.com/2009/02/10/us/politics/10assess.html?hp






Obama Warns of ‘Catastrophe’ Unless Bill Passed


February 10, 2009
The New York Times


WASHINGTON — President Obama took his case for his $800 billion economic recovery package to the American people on Monday, as the Senate cleared the way for passage of the bill and the White House prepared for its next major hurdle: selling Congress and the public on a fresh plan to bail out the nation’s banks.

Warning that a failure to act “could turn a crisis into a catastrophe,” Mr. Obama used his presidential platform — a prime-time news conference, the first of his presidency, in the grand setting of the White House East Room — to address head on the concerns about his approach, which has by and large failed to win the Republican support he sought.

“The plan is not perfect,” Mr. Obama said in an eight-minute speech before taking reporters’ questions. “No plan is. I can’t tell you for sure that everything in this plan will work exactly as we hope, but I can tell you with complete confidence that a failure to act will only deepen this crisis.”

The news conference was the centerpiece of an intense and highly orchestrated campaign by the administration to wrest control of the stimulus debate from Republicans and reframe it on Mr. Obama’s terms.

Earlier Monday, the president took his message on the road, traveling to one of the most economically distressed corners of the nation, Elkhart, Ind. — a city whose hard luck story, including an unemployment rate of 15.3 percent, he invoked hours later at the White House as he sought to highlight the severity of problems facing ordinary Americans.

“If there’s anyone out there who still doesn’t believe this constitutes a full-blown crisis,” Mr. Obama said, “I suggest speaking to one of the millions of Americans whose lives have been turned upside down because they don’t know where their next paycheck is coming from.”

As he has since the outset of his presidency, Mr. Obama sought to draw sharp distinctions between himself and his predecessor, on both domestic and foreign affairs.

He took a swipe at the economic policy championed by George W. Bush through good times and bad, saying that “tax cuts alone can’t solve all of our economic problems.” He also criticized President Hamid Karzai of Afghanistan, a close ally of Mr. Bush. Yet he echoed Mr. Bush when he said the most “sobering moment” of his adaptation to the presidency has been writing letters to families of fallen troops.

Mr. Obama’s tone was for the most part serious and businesslike, and he was pointed in rebutting Republican criticisms of his economic plan, saying he was not willing to take advice from “the folks who presided over a doubling of the national debt.”

And while his answers were frequently lengthy, he steered clear of disclosing any details of the forthcoming bank bailout and housing plans or foreign policy initiatives.

On Monday evening, the stimulus bill advanced in the Senate by a vote of 61 to 36; three centrist Republicans and two Independents joined 56 Democrats to move the legislation forward, with a vote on final passage expected Tuesday. But the bill passed by the Senate differs substantially from its counterpart in the House, and the two versions will have to be reconciled before Mr. Obama can sign the legislation into law.

“There have been a lot of bad habits built up here in Washington,” Mr. Obama said, explaining why he thought so few Republicans have voted for the plan, despite overtures that included inviting them to the White House and putting three Republicans in his cabinet.

The past few weeks have been rocky ones for the fledgling Obama administration, as Republicans have successfully cast the stimulus plan as an exercise in pork-barrel spending. The news conference and presidential road trips were an effort by the White House to tap into Mr. Obama’s considerable rhetorical skills, in effect putting him back onto the campaign trail.

In Indiana on Monday, Mr. Obama sounded as much like a candidate as a president, scolding what he said were greedy Wall Street bankers and taking aim at the Republicans whose support he was still trying to attract, even as he conceded he was not 100 percent certain that every single item in his plan would create jobs.

“We can’t posture and bicker and resort to the same failed ideas that got us into this mess in the first place,” Mr. Obama told the enthusiastic crowd that packed into a high school gymnasium, where he took questions from the crowd that he said had not been screened. He added: “You didn’t send us to Washington because you were hoping for more of the same. You sent us there to change things.”

Leading Democrats said Monday that it was critical for the new president to take back the debate.

Senator Kent Conrad, Democrat of North Dakota and chairman of the Senate Budget Committee, said Mr. Obama had to persuade Americans that the recession is “substantially more serious” than was apparent even a few weeks ago and that “it is going to take a series of steps, not just one economic recovery package” to survive it.

To that end, Mr. Obama began Monday’s news conference by laying out the stark economic facts facing the country, beginning with the 598,000 jobs lost last month alone — a figure, Mr. Obama said, that is ‘’nearly the equivalent of losing every job in the state of Maine.”

At several points, Mr. Obama made clear that more action would be needed in the future — starting with the next steps to bail out ailing financial institutions, and with unknown measures yet to come. Mr. Obama’s treasury secretary, Timothy F. Geithner, is set to introduce the next $350 billion installment of the financial rescue package on Tuesday, but Mr. Obama said he could not yet estimate how much more money might be needed to get the credit markets operating smoothly again.

“We don’t know yet whether we’re going to need additional money, or how much additional money we’ll need,” he said. Saying he had not come to Washington “ginned up” to spend billions of taxpayer dollars, the president said that pushing a stimulus package “wasn’t how I envisioned my presidency beginning.”

But he said his first priority was to arrest a downward economic spiral and put an end to what he called Wall Street’s profligate ways.

“The party is now over,” he said.

He said he had a fundamental disagreement with those Republicans who argued that government could not solve the economic crisis.

On foreign affairs, Mr. Obama took aim at Mr. Karzai, who administration officials have been criticizing more strongly — and publicly — of late for failing to crack down on corruption and drug trafficking, which they say is fueling the Taliban insurgency. Afghanistan’s “national government,” Mr. Obama said, “seems very detached from what’s going on in the surrounding community.”

He also said that he was reviewing a Bush policy that barred the news media from or photographing the coffins of soldiers killed in Iraq and Afghanistan, but that he had not yet determined whether to lift it.

On Iran, a nation Mr. Bush labeled a rogue state, Mr. Obama said he was “looking at areas where we can have constructive dialogue where we can directly engage with them.”

“My expectation,” he said, “is that in the coming months we will be looking for openings that can be created where we can start sitting across the table face to face.”

Peter Baker contributed reporting from Elkhart, Ind.

    Obama Warns of ‘Catastrophe’ Unless Bill Passed, NYT, 10.2.2009, http://www.nytimes.com/2009/02/10/us/politics/10obama.html?hp






President Seeks Grass-Roots Support for Stimulus


February 9, 2009
Filed at 8:59 a.m. ET
The New York Times


WASHINGTON (AP) -- President Barack Obama faces a barrage of questions on his plans to reinvigorate the economy with a massive stimulus bill and additional billions in bailout money for the financial markets.

Trips Monday and Tuesday to cities hurting under the economic meltdown and a prime-time news conference Monday night show that Obama and his advisers are worried about a looming Senate vote on the stimulus bill, which failed to gather meaningful Republican support during rare weekend debate. The question-and-answer sessions with citizens and later with news reporters will allow Obama to appeal directly for grass-roots backing of his plans.

Both trips were added to Obama's schedule as difficulties with the legislation on Capitol Hill increased. Originally, aides had insisted his time would be better spent in Washington to shepherd the bill rather than traveling the more traditional presidential route around the country, pressuring lawmakers from his bully pulpit.

The $827 billion Senate version of the plan was expected to pass the Senate on Tuesday. However, it must be reconciled with the House version, which totaled $820 billion in spending and tax cuts. With Senate and House negotiators preparing to deal, Obama is likely to push for a bill on his desk for his signature by mid-month.

To focus on the stimulus bill, the Obama administration postponed to Tuesday the unveiling of the second part of the $700 billion bailout of the financial industry. Instead, Obama focused on campaigning for the stimulus bill with his trips to areas hit hard by the economic crisis.

Two key players in crafting the version now before the Senate -- Maine Republican Susan Collins and Nebraska Democrat Ben Nelson -- said Monday morning they believe this is the best that can be achieved in the current circumstances.

''This bill is not perfect,'' Collins acknowledged in a nationally broadcast interview. ''We're not claiming that. But in fact I think this bill will help to create 3.5 million jobs. ... We're facing a crisis and it makes no sense to have a partisan divide.''

She said the measure on balance is ''a good bill. It is needed and I think it will make a difference.''

Appearing with Collins on NBC's ''Today'' show, Nelson said, ''I think the things we have focused on will help turn this economy around.''

The House and Senate bills overlap in many ways, but the Senate bill has a greater emphasis on tax cuts, while the House bill devotes more money to states, local governments and schools. The differences are likely to mean difficult negotiations when House and Senate conferees meet later in the week to try to reconcile the two measures.

The Senate stripped $108 billion in spending, including $40 billion in aid to state governments for education and other programs. The bill retained items that also probably won't do much for the economy, such as spending $1 billion to fix problems with the 2010 Census.

Still, the bill retained the core of Obama's plan to combine hundreds of billions of dollars in spending to boost consumption by the public sector with tax cuts designed to increase consumer spending. Much of the new spending would be for victims of the recession, in the form of extending unemployment insurance through the end of the year and increasing benefits by $25 a week, free or subsidized health care, and increased food stamp payments.

''The president's top man on the economy is the president,'' Larry Summers, the chairman of the White House National Economic Council, said on ''Fox News Sunday.'' Summers added: ''He listens to advice from all of us, and he sets his direction.''

For his first direct pitch to citizens, Obama scheduled a town hall meeting in Elkhart, Ind. He was to return to Washington for the news conference Monday night. On Tuesday he plans to visit Fort Myers, Fla., an area hit hard by foreclosures.

''Americans across this country are struggling, and they are watching to see if we're equal to the task before us. Let's show them that we are. And let's do whatever it takes to keep the promise of America alive in our time,'' Obama said in his weekly radio and Internet address.

The Elkhart-Goshen region in northern Indiana saw its unemployment rate soar to 15.3 percent in December, up a whopping 10.6 percentage points from December 2007. The region has been bruised by layoffs in the recreational vehicle industry. Hundreds of workers have lost their jobs at RV makers such as Monaco Coach Corp., Keystone RV Co. and Pilgrim International.

White House spokesman Robert Gibbs said the meeting would give the president a chance to hear Americans' concerns about the bill, which was set to have a key vote in the Senate on Monday afternoon.

''I think this is another chance for the president to talk directly to the American people about what he thinks is at stake,'' Gibbs said. ''Watching millions lose their jobs, and having in front of Congress -- and hopefully in front of him soon -- a plan to save or create millions more jobs and get people back to work, putting money in people's pockets, getting help for state and local governments so they don't have to lay off firefighters or teachers or police officers.''

    President Seeks Grass-Roots Support for Stimulus, NYT, 9.2.2009, http://www.nytimes.com/aponline/2009/02/09/washington/AP-Obama-Economy.html






U.S. Plans to Curb Executive Pay for Bailout Recipients


February 4, 2009
The New York Times


WASHINGTON — The Obama administration is expected to impose a cap of $500,000 for top executives at companies that receive large amounts of bailout money, according to people familiar with the plan.

Executives would also be prohibited from receiving any bonuses above their base pay, except for normal stock dividends.

President Obama and Treasury Secretary Timothy F. Geithner plan to announce the executive compensation plan on Wednesday morning at the White House.

The new rules would be far tougher than any restrictions imposed during the Bush administration, and they could force executives to accept deep reductions in their current pay. They come amid rising public fury about huge pay packages for executives at financial companies being propped up by federal tax dollars.

Executives at companies that have already received money from the Treasury Department would not have to make any changes. But analysts and administration officials are bracing for a huge wave of new losses, largely because of the deepening recession, and many companies that have already received federal money may well be coming back.

Crucial details remained unclear on Tuesday night, including whether the restrictions would apply to all companies that receive money under the so-called Troubled Asset Relief Program, or TARP, or whether they would apply only to the “exceptional” companies that were being rescued from collapse.

Under the Treasury’s $700 billion rescue program, most companies that have received money so far have been considered “healthy” rather than on the brink of collapse.

But five of the biggest companies to get help — Citigroup, Bank of America and the American International Group, General Motors and Chrysler — were all facing acute problems. And top executives at those companies made far more than $500,000 in recent years.

Kenneth D. Lewis, the chief executive of Bank of America, took home more than $20 million in 2007. Of that, $5.75 million was in salary and bonuses.

Vikram Pandit, who became chief executive of Citigroup in December of 2007 and previously held other senior positions at the bank, made $3.1 million.

Richard Wagoner, the chief executive of General Motors, made $14.4 million, much of it in stock, options and other non-cash benefits. He earned a $1.6 million salary.

“That is pretty draconian — $500,000 is not a lot of money, particularly if there is no bonus,” said James F. Reda, founder and managing director of James F. Reda & Associates, a compensation consulting firm. “And you know these companies that are in trouble are not going to pay much of an annual dividend.”

Mr. Reda said only a handful of big companies pay chief executives and other senior executives $500,000 or less in total compensation. He said such limits will make it hard for the companies to recruit and keep executives, most of whom could earn more money at other firms.

“It would be really tough to get people to staff” companies that are forced to impose these limits, he said. “I don’t think this will work.”

President Obama last week branded Wall Street bankers “shameful” for giving themselves nearly $20 billion in bonuses as the economy was deteriorating and the government was spending billions to bail out some of the nation’s most prominent financial institutions.

“If the taxpayers are helping you, then you have certain responsibilities to not be living high on the hog,” Mr. Obama said Tuesday, in an interview with “NBC Nightly News.”

Mr. Obama’s new rules are coming just as he is expected to ask for additional sums of money, beyond the $700 billion already authorized, to prop up the financial system, even as he pushes Congress to move quickly on a separate economic stimulus package that could cost taxpayers as much as $900 billion.

If the new pay limit applies to all companies that receive Treasury money, it would be almost as tough as a $400,000 limit proposed last week by Senator Claire McCaskill, Democrat of Missouri.

Senator McCaskill, reacting to reports of extravagant perks and bonuses at companies like Merrill Lynch and Citigroup, had blasted Wall Street executives as “a bunch of idiots” who were “kicking sand in the face of the American taxpayer.”

The banks that have received bailout funds already are subject to limits on compensation, but the Bush administration intentionally left them lax. The top five executives at banks that get an equity infusion from the government are restricted from offering golden parachutes, as rich severance packages are called, and any compensation above $500,000 is not tax deductible to the company.

Companies that received emergency money, like Citigroup, faced somewhat tougher restrictions, including a requirement to reduce the bonus pool for the top 50 executives by 40 percent. But even those restrictions come nowhere near the $500,000 cap.

In a letter to Congress last month, Lawrence H. Summers, director of Mr. Obama’s National Economic Council, suggested that the new pay restrictions would apply to all companies that get Federal help.

Without mentioning a particular dollar limit, Mr. Summers wrote that “executive compensation above a specified threshold amount be paid in restricted stock or similar form that cannot be liquidated or sold until the government has been repaid.”

Eric Dash contributed reporting.

    U.S. Plans to Curb Executive Pay for Bailout Recipients, NYT, 4.2.2009, http://www.nytimes.com/2009/02/04/business/04pay.html






Obama Seeks to Weather Fallout of Nomination Woes


February 4, 2009
Filed at 4:08 a.m. ET
The New York Times


WASHINGTON (AP) -- His infant presidency already shaped by mounting national troubles, President Barack Obama now faces an added challenge: weathering the fallout of a spate of nomination glitches.

''I screwed up,'' Obama said repeatedly after two top nominees withdrew their names from consideration, saying they wanted to avoid becoming distractions for the president as he seeks to move ahead with an ambitious agenda. ''I'm frustrated with myself, with our team.''

In a series of Oval Office interviews with TV network anchors Tuesday, he took the blame for the nomination missteps and vowed to live up to the new era of responsibility he mapped out during his inauguration speech just two weeks ago.

Earlier, over the course of a few hours, Obama's close friend Tom Daschle abandoned his bid to become health and human services secretary and the administration's point man on reforming health care, and another high-profile nominee -- Nancy Killefer -- stepped down from a newly created position charged with eliminating inefficient government programs.

Personal tax failures dogged both, and Daschle's woes only grew over the past five days; he also faced questions about potential conflicts of interest related to his work with health care interests. All that set the stage for potentially difficult Senate confirmation battles that could further damage and embarrass Obama

Daschle and Killefer were only the latest nomination woes for the president.

Treasury Secretary Timothy Geithner had tax troubles, too, but the Senate ultimately confirmed him. And, last month, Obama's initial choice for Commerce secretary, Bill Richardson, stepped aside amid a grand jury investigation into a state contract awarded to his political donors. The president named Sen. Judd Gregg, R-N.H., to the post Tuesday.

Taken together, the problems called into question the thoroughness of Obama's vetting process as the Democrat's team pushed to put his Cabinet and White House team in place at a lightning-quick pace after last fall's election. The problems also threatened to undercut Obama's promise to change business as usual in Washington; previous presidents have faced similar problems with their nominees.

Even as he works to stabilize the rapidly worsening economy and plan for a troop decrease in Iraq and increase in Afghanistan, Obama's most immediate objective now is to move on from what the White House called an ''embarrassment.''

He must quickly find someone with Daschle's health care expertise and Washington connections who can sail through the confirmation process and make good on the president's pledge to move toward universal health care coverage in his first 100 days.

That certainly won't be easy given that Daschle is considered a major authority on the issue and has spent some three decades in Washington, most in the Senate, where he once was majority leader. He was going to have played two roles for Obama as the White House health czar, with a West Wing office, and as the secretary of the Health and Human Services Department.

Among possible options: Kansas Gov. Kathleen Sebelius and others with state and national leadership credentials, including Howard Dean, the physician and former Vermont governor who just stepped down as the national Democratic Party chairman, Pennsylvania Gov. Ed Rendell and Ohio Gov. Ted Strickland.

Despite the loss, the White House promised to move ahead with health care reform. It was set to showcase a first step Wednesday when Obama signs legislation to expand health coverage for uninsured children of low-income working parents.

''We'll miss Sen. Daschle's leadership,'' said White House senior adviser David Axelrod, ''but this issue has great power of its own.''

''I don't think the effort slows down for health care reform, and I think Sen. Daschle and others would admit that the effort is far bigger than any one individual,'' added presidential spokesman Robert Gibbs. He said that work on reforming health care already is under way by many people in the administration and it won't stop while a replacement nominee is sought.

Democratic leaders in Congress also promised to push forward.

''We're going to do health care reform,'' Senate Majority Leader Harry Reid, D-Nev., said flatly after the nomination withdrawal. Still, his No. 2 in the Senate, Illinois' Dick Durbin, said, ''It really sets us back a step.''

    Obama Seeks to Weather Fallout of Nomination Woes, NYT, 4.2.2009, http://www.nytimes.com/aponline/2009/02/04/business/AP-Obama-Failed-Nominees.html