Morning Bulletin – Tuesday, Feb. 10, 2009
Why Ft. Myers? Like his choice of Elkhart, Ind., yesterday, Mr. Obama will be visiting an area hit hard by job losses. The unemployment rate in and around Ft. Myers jumped from 6 to 10 percent in the past year and has more than tripled in just two years.
The Senate, meantime, is expected to pass its $838 billion version of the stimulus bill today; House and Senate negotiators will then meet this week to work out the differences between their bills.
"After full approval of the package today, the Senate will send its version of the legislation to a conference with the House, which approved its own $819 billion stimulus bill on Jan. 28 with no Republican votes," writes the Washington Post's Paul Kane.
"While the overall dollar amounts are similar in scope, the packages have pronounced differences. The Senate version, for instance, includes $110 billion more in tax cuts. ... Staff from both chambers have begun discussing the differences between the two bills, but the principals have not been in the same room since the most dramatic changes were made.
"Senate Majority Leader Harry M. Reid (D-Nev.) spoke by phone with House Speaker Nancy Pelosi (D-Calif.) on Saturday while Pelosi was leading a three-day retreat for her caucus in Williamsburg. Aides declined to detail the conversation, but it came a day after Pelosi suggested that the Senate cuts in spending, which Reid endorsed, would do 'violence' to struggling families.
"Pelosi and her leadership team have signaled their inclination to fight to restore some spending that the Senate stripped out. In particular, they hope to add money for a program that would help fund construction of or critical repairs to schools, which the Senate centrists opposed. The House version includes $14 billion for that program. The Senate deal also cut in half funding for state governments -- from $79 billion in the House down to $39 billion -- intended to stabilize their budgets and prevent layoffs."
FINANCIAL BAILOUT ANNOUNCEMENT: The much-anticipated announcement from Treasury Secretary Timothy Geithner about how the administration plans to spend the remaining $350 billion of last year's financial bailout package happens at 11am ET.
4788803According to prepared remarks, Geithner will say, "Last fall, as the global crisis intensified, Congress acted quickly and courageously to provide emergency authority to help contain the damage. That vote gave the Administration the authority to act to pull the financial system back from the edge of catastrophic failure. The actions we took were absolutely essential, but they were inadequate. ...
"Our challenge is much greater today because the American people have lost faith in the leaders of our financial institutions, and are skeptical that their government has – to this point -- used taxpayers' money in ways that will benefit them. …I want to be candid: this comprehensive strategy will cost money, involve risk, and take time. We will have to adapt it as conditions change. We will have to try things we've never tried before. We will make mistakes. We will go through periods in which things get worse and progress is uneven or interrupted. But we will be guided by the principles of transparency and accountability…"
According to an administration official, the plan will have four parts:
1.) Instituting "uniform standards to help clean up and strengthen banks, and conduct 'stress tests' to ensure the nation's largest banks can withstand a worsening economy. Those banks that need it will be given a capital buffer to ensure they can keep lending to families and businesses until they can attract additional private capital and weather economic downturns."
2.) "Treasury and the Fed are creating a new consumer business lending initiative to leverage up to $1 trillion dollars to kick start the secondary lending markets, which will bring down borrowing costs for responsible borrowers and help get credit flowing again."
3.) The creation of "a new Public-Private Investment Fund which provide government capital and financing to leverage private capital to buy up the 'toxic assets' that are dragging down lending."
4.) "Treasury will work with the Federal Reserve to commit $50 billion to reduce monthly payments and establish loan modification guidelines for government and private programs."
The Washington Post's David Cho and Lori Montgomery report that the program "may commit up to $1.5 trillion in public and private funds, and possibly more, lawmakers and other officials said.
In announcing the plan, Treasury Secretary Timothy F. Geithner will not ask Congress for more funds than the roughly $350 billion that remain in the Treasury Department's original rescue package for the financial system, though congressional sources said such a request could come later if the new programs are unsuccessful.
"The rest of the money would come from other government agencies, such as the Federal Reserve, as well as private-sector contributions. A senior administration official warned last night that the ultimate cost to taxpayers has not been determined. Several of the programs have not been finalized, and most are designed to ultimately return money to taxpayers."
The Post reports that the "toxic assets" part of the plan "may initially raise $250 billion to $500 billion in public and private funds to offer low-cost financing to encourage investors to buy the toxic assets."
"As for the initiative "aimed at unclogging the markets for auto, student and other consumer loans," it could "expand to as much as $1 trillion, using $100 billion from the Treasury's rescue funds, and include aid for commercial real estate markets." The program directed at helping banks "would come with conditions that would give the firms incentives to pay the money back as soon as possible. The review would determine the ultimate price tag of this program."
"Mr. Geithner ... successfully fought against more severe limits on executive pay for companies receiving government aid. He resisted those who wanted to dictate how banks would spend their rescue money. And he prevailed over top administration aides who wanted to replace bank executives and wipe out shareholders at institutions receiving aid. Because of the internal debate, some of the most contentious issues remain unresolved."
ALSO ON TODAY'S SCHEDULE: After returning from Florida, President Obama will meet with the conservative Blue Dog Democrats at the White House at 5:50pm ET.
Secretary of State Hillary Clinton meets with Czech Foreign Minister Karl Schwarzenberg at 11am ET. She had a breakfast meeting with Vice President Joe Biden this morning.
VP Biden and his wife Jill will host a bipartisan cocktail reception tonight for the new members of the U.S. Senate in the VP's residence at the Naval Observatory.
First Lady Michelle Obama will visit a local D.C. community health center this afternoon.
Former President Clinton and House Speaker Nancy Pelosi will honor Rep. John Dingell, D-Mich., at a Capitol Hill event today. Dingell, who began his House tenure in December 1955, will become the House's longest-serving member in history tomorrow
PRESIDENT'S NEWS CONFERENCE
"The reporters' questions were direct, succinct and restrained, with none of the showmanship that has sometimes marked past news conferences. The journalists stopped short of confrontation, as though they were sobered by the gravity of the financial crisis. Obama made a bit of history by calling on the first blogger at such a session, Sam Stein of the liberal Huffington Post.
"Stein asked about a cause popular on the left, the creation of a truth and reconciliation commission to investigate Bush administration wrongdoing. The president said he hadn't seen the proposal by Sen. Patrick J. Leahy (D-Vt.)."
Wall Street Journal's Laura Meckler and Jonathan Weisman, "Obama Warns of 'Lost Decade'": "President Barack Obama, saying the U.S. faces a "profound economic emergency," prosecuted the case for his economic stimulus plan and left the door open for the government to spend billions more on a controversial bank-bailout plan during a prime-time news conference Monday.
"The president's tones alternated between bipartisan outreach and tough words for Republicans who, he said, backed failed policies that helped drive the country into economic distress. Mr. Obama set benchmarks for his economic recovery plan, saying its success should be judged by whether it creates or saves four million jobs, stabilizes the housing market and gets credit markets operating again."
NY Times' Sheryl Gay Stolberg and Helene Cooper, "Obama Says Failing to Act Could Lead to a 'Catastrophe'": "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."
ECONOMIC STIMULUS
"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."
Politico's Jonathan Martin, "Showdown: Obama warns GOP he's no pushover": "Yes, there will be time to change the politics of Washington and to give people wondrous examples of bipartisanship. But, no, not now, President Barack Obama made clear at his first White House news conference—not if it gets in the way of passing the stimulus bill on which Obama believes the nation's economy and his own presidency will hinge.
"Urgency was the obvious message Obama was trying to convey to millions of Americans in the hour-long session. But to a smaller Washington audience—to both Republicans and skeptics in his own party—there seemed to be an equally unmistakable subtext: He is not a patsy or a pushover.
"He reached out to Republicans in opening weeks and got little support in return. Monday night he instead used his prime-time platform to repeat on several occasions that he was inheriting a mess—both a huge deficit and a failing economy—and that spending some $820 billion was not his own preference for how to launch his presidency but the hand he had been dealt. To the Republicans who oppose his path, he offered a choice. They might be philosophically opposed to government intervention, even if millions are losing jobs and "most economists, almost unanimously" insist it is necessary. Or they might be partisan hypocrites, who did not mind big spending and deficits under the last president but are prepared to let the economy 'continue to tank' rather than work constructively with this one."
NY Times' Sam Dillon, "Trimmed Bill Still Offers Vast Sums for Education"
FINANCIAL BAILOUT
Wall Street Journal, "Banks Seeking Aid to Undergo 'Stress Test'"
NY Times' David Brooks, "Showing Some Discipline"
HHS SECRETARY
Wall Street Journal's Laura Meckler, "HHS Candidate Draws Fire, Fights Back": "Health-care advocates are actively campaigning to persuade Barack Obama to cross a leading candidate off his short-list for secretary of Health and Human Services: Tennessee Democratic Gov. Phil Bredesen.
"And, in an unusual move for an official under consideration, the governor is fighting back publicly. 'Anybody who's got some real scars and experience is going to have their detractors,' the governor said Monday in an interview with The Wall Street Journal. 'People at the White House are smart enough to be able to assess that.' ...
"He has undergone early vetting for the position and is under consideration, according to officials familiar with the process. At issue are cuts Gov. Bredesen engineered to Tennessee's Medicaid program, known as TennCare, removing 168,000 people from the program in an effort to control costs. He says the budget situation he faced left him no choice. Activists say he had many other options but refused to take them."
MINNESOTA SENATE RECOUNT
Minneapolis Star Tribune's Pat Doyle and Kevin Duchschere, "Judges ponder Franken objection"
2010 ELECTIONS
The Hill's Aaron Blake, "Black candidates aim high after Obama's win": "Emboldened by President Obama's win in November, black candidates around the country are taking their shots at the glass ceiling between themselves and top statewide office. Already, six well-known black candidates are set to make runs at high-profile gubernatorial or Senate races. Several others are taking serious looks at Senate campaigns in top races."
Wall Street Journal's Stu Woo, "Meg Whitman Launches Exploratory Committee for California Governor"
ALSO:
LA Times' Peter Nicholas, "Joe Biden, the punch line?": "The two men are quick to praise one another in public. But a few episodes suggest the mutual admiration may have its limits.
"Speaking at a security conference in Munich last week, Biden made a curious comment about the Obama administration's $800-billion-plus stimulus package. At a time when Obama has made the stimulus his central focus, when he is racing around the country, staging campaign-style events to build support for the plan, Biden referred to it as 'our so-called stimulus package.'
"That is not the sort of talking point the White House is putting out these days. Obama and Biden's rapport seems to be a work in progress. The president could barely conceal his annoyance last month when Biden attempted a joke at the expense of Chief Justice John G. Roberts Jr. ...
"A foreshadow of presidential impatience came during the campaign. In October, Biden warned that if Obama went on to win the election, he would face a severe test from hostile interests within six months.
"Obama tried to defuse the warning. 'I think Joe sometimes engages in rhetorical flourishes,' he said. Nothing in the Constitution says the president and vice president have to get along.
"In 1960, then-President Eisenhower was asked to cite an idea adopted by his administration that had come from his vice president, Richard Nixon. At the time, Nixon was running for president. Eisenhower said, 'If you give me a week, I might think of one.'"
Wall Street Journal's Glenn R. Simpson, "Plouffe to Donate Speaking Fee to Pro-Democracy Groups": "President Barack Obama's former campaign manager intends to give away the fee he received from a paid private speech he made Monday in the oil-rich but authoritarian nation of Azerbaijan.
"The speech was arranged by lobbyists working with a group that has ties to the Azerbaijan government, according to people familiar with the matter. But a close associate of David Plouffe said he only learned of their involvement after he had already embarked for the Caspian Sea nation.
"Mr. Plouffe now intends to donate his speaking fee, which the associate said is in the range of $50,000, to groups that advocate democratization in the turbulent post-Soviet states of the region around the Caspian and Caucasus mountain range. Mr. Plouffe also plans to share the contents of the speech with opposition groups."
