Morning Bulletin – Thursday, Feb. 26, 2009
A roundup of news, schedules, and key stories from CBS News Political Director Steve Chaggaris:
Overall, the massive spending plan is built on the assumption that lawmakers can resolve some hugely contentious issues -- and it relies on a few well-worn budget tricks," reports the Washington Post's Lori Montgomery.
"The request Obama will deliver to Congress today proposes to provide what administration officials are calling a 'down payment' on a major expansion of health care coverage for the uninsured. It identifies $634 billion in tax increases and spending cuts to cover the cost of part of the program, but does not say how the administration hopes to raise the rest of the money -- hundreds of billions of dollars more.
"'TBD' has been penciled into categories for cost savings and benefit reductions. Obama's budget also would make permanent a tax cut for the middle class enacted in the recent stimulus package. But to pay for it, the president counts on a big infusion of cash from a politically controversial cap-and-trade system, which would force companies to buy allowances to exceed pollution limits. Even if that plan is approved, some lawmakers have other ideas about how to spend the money.
"White House officials said the addition of another $250 billion in the budget to shore up banks is considered a 'placeholder,' which the administration hopes not to have to spend, at least not in its entirety. "But Obama made clear in his nationally televised address to a joint session of Congress Tuesday night that at least some additional funds will be necessary. Aides say the government money would leverage additional funds in private investment.
"And though Obama told Congress on Tuesday that his budget team has 'already identified $2 trillion in savings' to help tame record budget deficits, about half of those 'savings' are actually tax increases, administration officials said. A big chunk of the rest of the savings comes from measuring Obama's plans against an unrealistic scenario in which the Iraq war continues to suck up $170 billion a year forever."
Politico's Jonathan Martin, Carrie Budoff Brown and Chris Frates detail the president's health care program: "The Obama administration will announce a 10-year, $634 billion reserve fund Thursday aimed at expanding health care coverage – and will pay for half the plan with a new tax hike on wealthy Americans that surprised health care advocates and angered Republicans.
"Ahead of Thursday's budget release, administration officials said Obama will adhere to eight principles to guide his health reform effort, including allowing patients to maintain their choice of insurers and doctors, POLITICO has learned. The officials, speaking on a conference call Wednesday to health-care insiders, described Obama's plan as a 'down-payment' on a covering all Americans.
"In fact, the Obama team is coining a new phrase – that he'll 'aim for universality,' without offering specifics of how he would reach that goal, or when. He wants Congress to fill in the details. 'The goal is still to bring down the cost of care and to get universal coverage,' said an administration source. In the conference call, White House health care officials repeatedly stressed how critical the budget was to the larger health care reform effort. ...
"And he'll pay for half his plan — $318 billion over 10 years – with new tax hike on Americans making more than $250,000. Obama had pledged throughout his campaign to roll back Bush tax cuts for Americans making more than $250,000 a year in fiscal year 2011 – a plan that also will be included in Thursday's budget — but this is different, aimed at reducing the itemized deduction rate for those taxpayers."
"The move would reverse a course set by former President George W. Bush of lowering taxes for high-income people, the cornerstone of his administration's economic program," writes Bloomberg News' Ryan Donmoyer and Alisa Marcus.
"'It's a clear repudiation of Bush's policy,' said Peter Morici, an economist at the University of Maryland. 'It's more Obama Robin Hood.'"
The New York Times' Jackie Calmes and Robert Pear detail the tax hike.
As for tax cuts, the Associated Press Martin Crutsinger adds, "The president wants Congress to extend the $400 annual tax cut due to start showing up in workers' paychecks in April, and it extends the tax cuts passed in 2001 and 2003 for couples earning less than $250,000 per year. Those tax cuts were due to expire at the end of 2010."
On war funding: "Obama also will ask for an additional $75 billion to cover the costs of wars in Iraq and Afghanistan through September, the end of the current budget year. That would be on top of the $40 billion already appropriated by Congress, the administration official said. The administration will also ask for $130 billion for Iraq and Afghanistan in 2010 and will budget the costs of operations in Iraq and Afghanistan at $50 billion annually over the next several years."
"Two problems already are apparent if Obama is to cut the $1.3-trillion deficit to $533 billion. First, many methods he says he will use have fallen short in the past -- cutting waste, imposing new budget rules, curbing defense outlays and raising taxes on the affluent.
"Second and potentially harder to overcome is fresh evidence that, for all the talk of fiscal responsibility, Congress is not ready to mend its free-spending ways.
"Exhibit A: The House on Wednesday passed a huge spending bill left over from last year that increased expenditures by 8%. And it's laden with thousands of pet projects inserted by individual lawmakers, both Democrats and Republicans.
"Even before the details of Obama's budget were released, his deficit-reduction target has been viewed with skepticism in a variety of quarters. It has been criticized as relying on overly optimistic assumptions, as failing to be sufficiently ambitious, and as creating a marker that will be used against him in four years if he fails.
"'It's going to be very tough,' said Robert D. Reischauer, former director of the Congressional Budget Office. 'It's going to require either some significant cutbacks in low-priority programs or a failure to enact some of his signature programs.'
"'I don't see how he can do it,' said William G. Gale, a tax policy expert at the Brookings Institution whose analysis has found that even with the most optimistic assumptions, he would expect the deficit to be $850 billion in 2013. He believes that is almost surely an underestimate because his calculations assume that the economy will not worsen and another stimulus bill will not be needed.
"And the experience of Obama's predecessor offers a cautionary tale: In 2004, President Bush vowed to halve the deficit by 2009 -- and failed spectacularly, owing in substantial part to the economic downturn and bipartisan spending on Capitol Hill."
"It amounts to a long work order for a legislature that has seen its productivity sag in recent years. Mired in partisan divisions, Congress has produced few bills of sweeping impact since the end of President George W. Bush's first term. Now Obama is asking lawmakers to deliver legislation on the scale of the No Child Left Behind education bill or the Medicare prescription drug benefit -- two of Bush's signature achievements -- roughly once a month."
Reuters suggests the "winners and losers" in the president's budget. Winners: the banking industry, climate change policy, health care reform, public works and the middle class. Losers: defense spending, the wealthy, "big agribusiness."
IRAQ: Tomorrow, President Obama heads to Came Lejeune, N.C. to unveil his Iraq drawdown plan.
"President Obama's planned Iraq troop drawdown would leave the bulk of American forces in place until early next year while some combat units would remain in place in new roles even beyond a declared August 2010 target for withdrawal, administration officials said Wednesday," report the New York Times' Peter Baker and Thom Shanker.
"The plan would maintain relatively high troop levels through Iraq's parliamentary elections, to be held in December, before beginning in earnest to meet the August 2010 target for removing combat forces, the officials said.
"Even after August 2010, as many as 50,000 of the 142,000 troops now in Iraq would remain, including some combat units reassigned as 'Advisory Training Brigades' or 'Advisory Assistance Brigades,' the administration and Pentagon officials said.
"Mr. Obama consistently said during his campaign that he would leave a residual force for training, protection and counterterrorism missions. But the gradual pace of his withdrawal — spread out over 19 months, instead of the 16 months he promised during the campaign — and the possible size of the remaining force left some Democrats discouraged, while some Republicans cautioned against moving too quickly. The administration intends to call those remaining troops a 'transition force.'"
ALSO TODAY: President Obama holds closed meetings with the Congressional Black Caucus, Treasury Secretary Tim Geithner, Secretary of State Hillary Clinton and the Chicago Bulls.
First Lady Michelle Obama continues her tour of federal agencies with a stop at the Environmental Protection Agency.
Secretary of State Hillary Clinton will make an announcement re: North Korea at 12:45pm ET.
The three-day Conservative Political Action Conference gets underway this morning in Washington, D.C. Today's high-profile speakers include former U.S. Ambassador to the U.N. John Bolton, former Gov. Mike Huckabee, R-Ark., and new Republican National Committee chairman Michael Steele.
FEDERAL BUDGET / ECONOMY
4793419Associated Press' Matt Apuzzo and Eileen Sullivan, "Recession, bailout, stimulus: US security threats?": "Trillions of dollars in government spending might stabilize the economy, but for now it may have weakened some U.S. security interests abroad and hampered the nation's ability to respond financially to an attack at home.
"That curious conclusion by security and financial analysts reveals one of the unexpected consequences that could emerge from the government's bailout and stimulus plans. It also shows how intertwined the economy and national security have become. The top U.S. intelligence official, Dennis Blair, recently said the economy was the nation's foremost security concern.
"'We have set the stage for a catastrophe,' said James Rickards, a financial consultant at the research firm Omnis Inc. of McLean, Va., who provides security research for the Pentagon and others in the intelligence field."
Politico's Andie Coller, "Arguments lost in blizzard of billions": "A billion here, a billion there, pretty soon you're talking about — well, pretty soon no one has a clue what you're talking about. And as President Barack Obama prepares to unveil his 2010 budget, that's becoming a daily headache for Republicans."
The Hill's Walter Alarkon, "Top Democrats brush off the president on earmarks": "Leading Democrats on Wednesday appeared to brush aside President Obama's suggestion that they sacrifice earmarks in the federal budget, arguing Congress knows better than "faceless bureaucrats" how to spend taxpayer money. The pushback came just hours after the president, during his address to a joint session of Congress, implored lawmakers to help put the nation back on a path to fiscal health."
Bloomberg News' Roger Runningen and Brian Faler, "Obama's Budget Proposes Up to $750 Billion More Bank-Rescue Aid"
Washington Post's Juliet Eilperin and Steven Munson, "Budget Expects Revenue From Limits on Emissions"
Wall Street Journal's Henry J. Pulizzi, "Obama's Budget Includes $250 Billion Placeholder for Bank Rescue"
NY Times' Robert Pear, "House Passes Spending Bill, and Critics Are Quick to Point Out Pork"
LA Times' Greg Miller, "Obama begins getting daily CIA report on economic crisis"
Washington Post's Max Stier, "Serious Shortcomings in Obama's Oversight of Stimulus Spending"
Wall Street Journal's Greg Hitt, "Fight Looms Over Bankruptcy Plan in Bill to Stem Foreclosures"
FINANCIAL BAILOUT
Wall Street Journal's Deborah Solomon and Jon Hilsenrath, "Bank Capital Gets Stress Test"
Wall Street Journal's David Enrich, Heidi N. Moore and Joann S. Lublin, "Citi Confronts Global Fallout as U.S. Nears Deal on Stake"
FOREIGN POLICY
Washington Times' Dale Gavlack, "Clinton to press Israel on Gaza as children suffer"
SEN. ROLAND BURRIS
Politico's Manu Raju, "Burris staffs up, sends message"
MINNESOTA SENATE RECOUNT
Minneapolis Star Tribune's Kevin Duchschere, "Senate recount trial dustup du jour: Testimony disallowed"
The Hill's Michael O'Brien, "Coleman lawyer: Recount could be 'fatally flawed'"
FUTURE RACES
IL-5 special election (Emanuel open seat): Associated Press' Deanna Bellandi, "Ill. voters have primary to winnow field to replace Emanuel ahead of April 7 special election"
NY-20 special election (Gillibrand open seat): Washington Post's Keith B. Richburg, "Independents Key As New York GOP Seeks House Seat"
NYC Mayor 2009: NY Daily News' Adam Lisberg, "Mayor Mike Bloomberg woos local Republicans, but no line on party nod"
NM Governor 2010: Politico's Ted Johnson, "Kilmer pursues role of governor"
KY Senate 2010: Associated Press' Mary Clare Jalonick, "Kentucky senator battles his own party"
NY Senate 2010: Newsday's Tom Brune, "In turnaround, Gillibrand backs key gun-control issue"
ALSO:
NY Times' Shaila Dewan, "Governor Jindal, Rising G.O.P. Star, Plummets After Speech"