Morning Bulletin – Wednesday, Feb. 11, 2009
A roundup of news, schedules, and key stories from CBS News Political Director Steve Chaggaris:
"Scaling the package back to $790 billion to $800 billion with the goal of still generating 3.5 million jobs is part of the discussions. One option would be to reduce Obama's signature 'Making Work Pay' tax break to $400 for individuals and $800 for couples—down from $500 and $1000 respectively," reports Politico's David Rogers.
"Senate Finance Committee Chairman Max Baucus (D., Mont.) said it is now 'very possible' that an agreement could be reached [today]."
Vice President Joe Biden heads out of town to pitch the plan; he'll head to Carlisle, Pa., with Gov. Ed Rendell, D-Pa., to check out a bridge that's at the top of Pennsylvania's replacement list. Following his tour, Mr. Biden will speak at the state capitol in Harrisburg, Pa.
The Los Angeles Times' James Oliphant lays out the challenges facing Congress as they try to work the stimulus plan out. "It will be anything but easy. There are significant differences in the bill the Senate passed Tuesday and the one the House approved last month, not the least of which are the price tags.
"The House version is $819 billion. Beyond that, there is a clash in approaches. The Senate bill places more emphasis on tax cuts to jump-start the economy, whereas the House bill relies on more government spending in an effort to create more jobs.
"Once a final deal is struck, the bill has to pass both houses of Congress again. That means that the legislation must satisfy a variety of voting blocs: the moderate Republicans in the Senate who broke with the party to ensure the bill's passage, the conservative Democrats in the House who may favor elements of the Senate bill, and more liberal members of the House who don't want to see the bill's commitments to funding for state budgets and education sacrificed. And, of course, the White House will be weighing in as well."
"Among the differences to be resolved were proposals in the House bill to subsidize private health coverage for the unemployed and to offer temporary Medicaid coverage for those who cannot retain private insurance," reports the New York Times' David M. Herszenhorn and Jeff Zeleny.
"The Senate bill provides $10 billion less in subsidies and does not offer expanded Medicaid. The Senate cuts were likely to be part of the final bill. Over all, the bills reflect differences of tens of billions of dollars in spending priorities. ... Administration officials said that one priority would be to restore Mr. Obama's middle-class tax cut to its original size. The Senate, trying to lower the cost of the plan, had trimmed it by more than $2 billion. Congressional leaders have said they want the bill on Mr. Obama's desk by Monday, and Ms. Pelosi has said Congress would not recess next week unless the bill was done."
"To make room for added spending, the White House, joined by House Democratic leaders, is pressing to scale back certain Senate-passed tax breaks, including measures intended to boost auto and home sales," write the Wall Street Journal's Greg Hitt and Jonathan Weisman.
"White House officials said they can hold on to support for the package, even if spending is increased as a share of the total plan. 'We don't think it's that precarious,' one administration official said.
"But in pushing for more generous spending, the White House risks alienating moderate Republicans and Democrats in the Senate, who supported the package only after more than $110 billion was trimmed from it. Sens. Ben Nelson (D., Neb.) and Susan Collins (R., Maine) are insisting that the tab for the final package come in near $800 billion, and aides in both the House and Senate, as well as lawmakers, suggested that is the target for the negotiations. 'That's in the ballpark,' said Senate Finance Chairman Max Baucus (D., Mont.)."
Meantime, the pro-labor Americans United for Change and the AFSCME union are running radio and TV ads beginning today slamming Congressional Republicans for not supporting the stimulus. "Our economy in crisis. Millions out of work. That's why 80 percent of Americans support a plan like President Obama's to create jobs. But Republican leaders? They're 'just saying no,'" the TV ad says. "No to changing the failed economic policies of the past 8 years. We're in an economic crisis and Republican leaders are playing politics instead of doing what's right."
"Obama officials called the minimal details given Tuesday intentional and said they will work with both Congress and the public to fully develop their plans. In part, the Treasury was trying to avoid a repeat of the experience of former Treasury Secretary Henry Paulson, who was faulted last fall for shifting gears and not consulting Congress about changes to his rescue plan.
"At the same time, the administration was under pressure to get something out quickly, despite limited manpower less than a month after the inauguration. There were also political calculations, including a decision made early to not consult heavily with Mr. Paulson's team, according to people familiar with the situation. The Obama team spent weeks wrestling with many of the same issues that bedeviled Mr. Paulson's efforts, including how to deal with bad assets."
"Basic questions about how the various parts of the program would work, especially those involving the unsellable mortgages that banks are holding and preventing home foreclosures, were left for another day. Some Wall Street experts criticized the plan for relying too heavily on the same vague solutions proposed by the Bush administration," write the New York Times' Edmund L. Andrews and Stephen Labaton.
The Washington Post's David Cho and Lori Montgomery report, "Minutes after the plan was made public, stock markets plummeted. The Dow Jones industrial average ended the day down 4.6 percent. The Standard and Poor's 500-stock index, a broader measure, fell 4.9 percent.
"Lawrence H. Summers, director of the National Economic Council, said the reaction by the stock markets should not be a black mark on the administration's rescue plan. 'You cannot judge policy by market responses. It's the wrong objective. It's the wrong measure,' Summers said in an interview.
"'The president has made it clear that the focus of our economic policies is on financial and economic performance over time, not day-to-day fluctuations in markets.' In unveiling his plan, Geithner did not ask Congress for more than the roughly $320 billion that remains in the Treasury's initial rescue package for the financial system, known as the Troubled Assets Relief Program, or TARP. For now, the balance of the money to fund the new effort, called the Financial Stability Plan, would come from the Federal Reserve and other government agencies, as well as private-sector contributions. But in a hearing before the Senate Banking Committee, Geithner indicated that such a request may be on its way."
"But members of both political parties have been smarting over the implementation of the $700 billion financial package, which started under President Bush and now is in the hands of the Obama administration. The lingering suspicions present one of President Barack Obama's biggest obstacles as he attempts the dual challenge of prodding the financial sector to ease credit while aiming to create jobs with an economic stimulus package.
"Last year, Congress gave an infamous grilling to auto executives when they flew into Washington in private jets to request a taxpayer bailout for their ailing industry. But most of these bankers didn't beg for their money. They were selected because they were relative healthy banks that could spur more banking activity and eliminate the stigma of taking taxpayer money for other financial institutions. Two of the banks — Citigroup and Bank of America — later became less stable and the Treasury sent more targeted funds their way."
ALSO ON TODAY'S SCHEDULE: President Obama will meet with Defense Secretary Robert Gates in the Oval Office at 3pm ET.
First Lady Michelle Obama delivers a speech to the Howard University business school in Washington, D.C. at 11am ET.
Katie Couric interviews House Speaker Nancy Pelosi for tonight's CBS Evening News.
ECONOMIC STIMULUS
"Biden said he understands why many Republicans might want to 'wait and see what is in the final version' rather than be 'the first to jump in the pool.' But he said he thinks that 'there are a couple dozen [Republicans] who would not have voted no if their votes had decided' the fate of the legislation.
"And Biden applauded the Senate for writing in changes that 'make it much more palatable to Republicans.' His remarks seemed to challenge the views of some liberal members of the House and commentators on the left who argue that President Obama has made too many concessions to the Republicans by limiting the size of the stimulus bill and allowing much of it to take the form of tax cuts. 'The House guys complain that you [in the administration] are rolling us,' Biden said.
"'We're not rolling anyone. We're looking to get 60 votes,' the minimum needed to avoid a Senate filibuster on final passage of the conference report. His comments set the stage for what may be the first bruising intraparty fight of the new administration."
Wall Street Journal's Naftali Bendavid, "Party-Line Vote on Stimulus Poses Risks for Both Sides": "The gamble would seem to be bigger for Republicans, since most Americans currently support Mr. Obama and his efforts to push through the stimulus, as reflected in three polls released shortly before the president's prime-time news conference Monday evening. ... David Axelrod, Mr. Obama's top political adviser, said the public is not overly immersed in the details of the versions of the plan, but simply wants action quickly. ... Republicans have made a different political calculation. Voters are worried by the $800 billion-plus size of the package, they think, as well as some dubious items in it, and will reward the GOP for trying to act as wise fiscal stewards."
NY Times' Carl Hulse, "Maine Senators Break With Republican Party on Stimulus": "Much to the dismay of their fellow Republicans and to loud applause from Democrats, the two senators from Maine have put President Obama on the precipice of winning passage of an $800-billion-plus economic recovery plan rejected by almost everyone else in Congress who shares their party affiliation.
"On one of the biggest bills ever to confront lawmakers, the two senators, surviving members of the vanishing breed of New England Republicans, are wielding outsize power. Along with Senator Arlen Specter of Pennsylvania, the third Republican who broke from the pack and provided a crucial vote for initial passage on Tuesday, the two Mainers find themselves holding virtual veto control over the legislation as it enters crucial negotiations between the House and Senate."
Washington Post's Peter Slevin and Keith B. Richburg, "States Counting on Stimulus Aid to Balance Budgets": "The two chambers began to resolve their differences yesterday on how much money to send to states and other sticking points, after the Senate passed an $838 billion stimulus package. Senate and House leaders played down discrepancies between the two versions, saying that both would provide a boost to the economy and that an agreement on a final bill could come as soon as the end of the week.
"But for states, the differences are potentially enormous. The House included $79 billion in direct aid to states, $40 billion more than the Senate, and governors are counting on that money to help balance budgets that are billions in the red."
Wall Street Journal's Cam Simpson and Brody Mullins, "Handful of Firms Benefit in Senate Bill": "The stimulus package the Senate approved Tuesday may technically be free of "earmarks," but it nonetheless includes several provisions that would likely benefit only a handful of specific corporations.
"President Barack Obama said in his news conference Monday that the legislation contains no earmarks, the funds for pet projects that lawmakers often slip into bills -- and which were a big issue during the presidential campaign. But several sections of the Senate bill direct billions of dollars in spending that would benefit a limited number of big firms.
"Such items could be a source of friction as Senate and House leaders negotiate a compromise package, and some targeted provisions may be cut. Some House Democrats are angry about cuts to infrastructure projects in their version of the legislation, including school construction."
FINANCIAL BAILOUT
Wall Street Journal's Michael R. Crittenden, "Treasury Secretary Gets a Chilly Reception"
NY Times' Jackie Calmes, "For Geithner's Debut, a Lukewarm Reception"
FOREIGN POLICY
Washington Post's Glenn Kessler and Griff Witte, "In Israeli Vote Results, a Setback for Obama": "President Obama's ambition to move quickly on Israeli-Palestinian peace suffered a significant setback yesterday with the rightward shift apparent in nearly complete Israeli election results, analysts said.
"While the centrist Kadima party appeared to eke out a victory, the right-wing Likud party more than doubled its seats and an ultra-nationalist party made big gains, increasing the prospect that a government uninterested in peace talks will emerge from the post-election efforts to form a governing coalition.
"Even if Tzipi Livni, the head of Kadima who has vowed to negotiate peace with the Palestinians, manages to cobble together a coalition after weeks of negotiations, many experts predict she will be hamstrung by her coalition partners."
Washington Post's Karen De Young, "Pakistan Wants More From U.S.": "Inside the warm welcome and promises of a "new beginning" that Pakistan extended U.S. special envoy Richard C. Holbrooke yesterday was a warning that Pakistan expects more from the United States in return for its cooperation against al-Qaeda and the Taliban.
"Statements issued by Pakistani President Asif Ali Zardari and Prime Minister Yousaf Raza Gillani after meeting with the envoy, who is in Islamabad on the first stop of a regional tour, emphasized the need to 'expedite' a new, multi-billion dollar U.S. aid package, and 'the importance of enhanced cooperation in defense and intelligence sharing.' Holbrooke said only that he was there 'to listen and learn the ground realities of this critically important country.'"
NY Times' Mark Landler, "U.S. Prepares to Broach Hard Issues With China": "The Obama administration plans to realign the United States' relationship with China by putting more emphasis on climate change, energy and human rights, widening the focus beyond the economic concerns of the Bush years, according to senior administration officials.
"With Secretary of State Hillary Rodham Clinton scheduled to visit Beijing next week as part of her first foreign trip in her new job, the administration is said to believe that a broader relationship with the Chinese could create opportunities for collaboration — not only on a response to the global economic crisis, but also on the environment and on security issues like the North Korean and Iranian nuclear programs.
"Yet the new focus, which is being championed by Mrs. Clinton, carries risks, experts said, because it could aggravate tensions on delicate issues like China's repression of Tibet and its position as the world's leading emitter of greenhouse gases. An added hurdle for Mrs. Clinton, these experts said, is that the United States urgently needs China's support on the economic front. Putting new issues on the table now may complicate efforts to seek Beijing's help in areas like financial regulation and stimulus campaigns."
LOBBYIST INVESTIGATION
3994737NY Times' David D. Kirkpatrick, "Lobbyist Inquiry Appears to Be Widening": "Federal prosecutors are looking into the possibility that a prominent lobbyist may have funneled bogus campaign contributions to his mentor, Representative John P. Murtha, as well as other lawmakers, two people familiar with the investigator's questions said Tuesday.
"Employees of the PMA Group, the firm founded by the lobbyist, Paul Magliocchetti, have given a total of more than $1 million to political campaigns over the last three election cycles, according to the nonpartisan Center for Responsive Politics. In the first half of 2007, the PMA Group and its clients contributed more than $500,000 to three congressmen, Mr. Murtha, the Pennsylvania Democrat who is chairman of the House defense appropriations subcommittee, and his close allies on the panel, Representative James P. Moran of Virginia and Representative Peter J. Visclosky of Indiana.
"The lawmakers, meanwhile, earmarked more than $100 million in defense spending for PMA clients in the appropriations bills for 2008, according to a study by Taxpayers for Common Sense, which tracks earmarks."
Washington Post's Carol D. Leonnig and Paul Kane, "Raided Firms Have Murtha Ties": "Sources familiar with the probes say the FBI is looking at whether the PMA Group, a lobbying firm founded by a former Murtha aide, arranged contributions to Murtha and other House Democrats that may have violated federal election laws. In the January raid at the offices of Kuchera Industries, sources said, investigators requested a broad range of documents from the company and its sister firms, and are examining the possible improper use of federal money at a hunting club owned by the company's co-founder. Murtha's spokesman said the congressman has not been contacted by investigators and has no reason to believe that the raids are related to him. Murtha, a powerful member of the House Appropriations Committee, arranged hundreds of millions of dollars in earmarks for defense firms, which have donated generously to him."
The Hill's Susan Crabtree, "Dems' ethical troubles reminiscent of GOPers' headaches as majority": "Despite President Obama's repeated pledge to usher in a new, more ethical climate in Washington, House Democrats' ethical troubles have begun to resemble those the GOP had when it occupied the majority just three years ago. In many ways, the developments are more difficult for Democrats because they rose to power, at least in part, by vowing to right the ethical wrongs of the past. And now Democratic leaders are facing new ethics questions as a senior Democrat is under fire for his ties to two firms under FBI investigation. The FBI raided the offices of a lobbying firm and a defense firm with close ties to Rep. John Murtha (D-Pa.). News broke Monday night about one of the raids, which took place at a lobbying firm's Virginia headquarters in November. All day Tuesday Democratic leaders were asked whether Murtha should step down as chairman of the powerful defense subcommittee of the House Appropriations panel."
MINNESOTA SENATE RECOUNT
Minneapolis Star Tribune's Pat Doyle and Kevin Duchschere, "Judges add 23 to Franken's count, but it's far from over"
ALSO:
"He said he was ordering a review of the military policy that bars photographers from taking pictures of the return of the coffins, most of which go through Dover Air Force Base in Delaware, and set a 'short deadline' for a decision. The military has said the policy is meant to protect the privacy of the families of the dead soldiers and maintain dignity.
"But skeptics, who include some families as well as opponents of the war in Iraq, say that the bodies in the returning coffins are not publicly identified, so privacy is not an issue, and that barring photographers is a political maneuver meant to sanitize the war. ...
"His comments followed those of President Obama, who said at his news conference Monday night that 'we are in the process of reviewing those policies in conversations with the Department of Defense.' Mr. Obama did not indicate whether he favored a change in the policy, saying, 'I don't want to give you an answer now before I've evaluated that review and understand all the implications involved.'"
Politico, "For senators, tax questions are taxing": "Last week, Politico asked the offices of all 99 sitting senators to say who prepares their taxes, whether they or the Internal Revenue Service has ever discovered an error on returns they've filed, and whether they've ever had to pay back taxes. Of the 56 senators who have responded to the survey, eight said that mistakes have been made on their tax returns, and six said they have paid back taxes. Thirty senators said that no mistakes have been discovered on their returns and that they've never paid back taxes — at least to the best of their recollection. Full survey
USA Today's Traci Watson, "Salazar slows offshore-drilling plan": "The Bush administration's controversial plan to expand offshore oil and gas drilling was delayed at least six months by the Obama administration. Interior Secretary Ken Salazar suggested that some drilling will eventually be allowed. But he said the agency will give the public until Sept. 23 to comment, instead of the Bush administration's deadline of March 23. The agency will hold public meetings before a decision is made."