BUDGET Fiscal Straits Yesterday, President Obama sent Congress his record setting $3.8 trillion budget plan aimed at tackling the nation's high unemployment, bolstering the middle class, increasing education spending, initiating measures to rein in the federal deficit, giving "tax credits for hiring," and providing "new investments in green jobs and infrastructure projects." However, the federal deficit is expected to reach $1.56 trillion this year while dropping slightly to $1.3 trillion in 2011, "forcing the government to borrow 33 cents of every dollar it spends." At the same time, the plan contains nearly $300 billion devoted to "temporary recovery measures," including $100 billion for middle class tax cuts and jobs. The budget also includes $184 billion in stimulus spending in 2011 and 2012. "I think it's very important to understand," Obama said. "We won't be able to bring down this deficit overnight, given that the recovery is still taking hold and families across the country still need help. We will continue, for example, to do what it takes to create jobs." The White House expects the jobless rate to fall slightly to 9.8 percent by the end of the year and to hover at 8 percent by 2012.
BOOST IN EDUCATION SPENDING: Yesterday in an interview that aired exclusively on YouTube, the President argued that education and a strong economy are interrelated. "I think obviously there's a huge economic component to being well educated. We know that if you've got a college education, you are going to make multiples of what you would make as a high school graduate, much less a high school dropout over the course of a lifetime," Obama said. Indeed, Organization for Economic Co-operation and Development studies have found that a college educated male earns nearly $400,000 more over a lifetime than one who does not attend college and a small jump in student achievement could translate into an estimated economic benefit of $40 billion in GDP by 2090. As such, the President's budget calls for a 9.7 percent increase ($3 billion) in funding for the Education Department. The budget also advocates important education reforms, such as investing in low-performing schools, improving teacher quality, aiding states with pressing needs, and investing in innovation (including an additional $1.35 billion for the Race to the Top Fund). As Center for American Progress Action Fund Senior Fellow Ulrich Boser noted, "The administration's budget goes a long way to improve our nation's education system -- and provides a much needed investment in our economic future."
THE NAGGING DEFICIT: Republicans have been hypocritically attacking Obama for the budget deficit, most of which was created by President Bush. Obama recognizes "that the problem has to be made worse, with intense deficit spending to lower the unemployment rate, before the deficits can come down." The budget does, however, contain significant measures to reduce the deficit over the long term, including imposing new fees on the nation's largest banks, freezing non-security spending for three years, eliminating fossil fuel subsidies, and allowing the Bush tax cuts to expire on those making over $250,000. But if Obama is truly serious about taking on the deficit, the administration cannot exempt defense spending from the planned spending freeze. In fact, this year's deficit will match 11 percent of the nation's entire economic output, a level not seen since World War II. However, in the administration's budget, medium-term deficits stabilize in the range of 3.9 percent of GDP. Acknowledging the budget's red ink, a New York Times editorial noted yesterday that "it is not too much at a time of economic weakness, when deficit spending is needed to boost growth. ... Congress also cannot waste any more time posturing about the deficit rather than doing what is needed to get Americans back to work."
GETTING TO 'PRIMARY BALANCE': The Obama administration is taking other steps to tackle the deficit problem. Last week, the Senate rejected a proposal to create a deficit-reduction task force "after seven Republicans switched positions and voted against it." Sen. George Voinovich (R-OH) chastised his colleagues for voting against the plan, calling their claims that it would be stacked in favor of tax increases "disingenuous." Now, the President will create the panel though executive order with a "medium-term and a long-term objective" of reducing the deficit. The first goal would be to find a path toward "primary balance" -- when revenues and program spending equal each other -- by 2015. This plan closely mirrors a Center for American Progress plan for fiscal balance, which calls for a "primary balance" by 2014 and full balance by 2020. Primary balance, if achieved, would stabilize the debt-to-GDP ratio at an acceptable level and lay the groundwork for full budget balance. "It is clear with all of these changes that the administration is taking deficit reduction seriously," CAP Vice President for Economic Policy Michael Ettlinger said, adding that Obama's budget "shows a commitment to getting the job market back in shape and to make the investments needed for long-term economic growth. It is these investments that are the real story of the budget."
ETHICS -- LOBBYING FIRMS PREPARE TO OFFER JOBS TO RETIRING MEMBERS OF CONGRESS: The last few months have been marked by a series of congressional retirements. To date, 19 members have decided that they will not be seeking reelection this November, including the recent retirement announcements of Sens. Chris Dodd (D-CT) and Byron Dorgan (D-ND). With all of these Capitol Hill veterans soon to be looking for new work, Roll Call reports that "law firms and lobbying shops are preparing for a flood of résumés from soon-to-be unemployed Members." With so many retirements already confirmed -- "and many more likely to come after Election Day -- K Street's top firms will have their pick of the litter." Since 2005, at least 195 members of Congress have crossed over to lobbying, according to Congressional Quarterly. Some of these former lawmakers were instrumental in lobbying against health care reform last year, as "three of every four major health-care firms have at least one former insider on their lobbying payrolls." "Depending on their committee assignments," retiring lawmakers could see "baseline offers as low as $250,000 for part-time gigs, all the way up to $1.25 million salary packages for former chairmen and party leaders." There is no indication, however, that any of the retiring lawmakers have already begun negotiating post-retirement employment. "Both Senators and House Members have to publicly disclose to the Secretary of the Senate and Clerk of the House within three days of starting negotiations with the private sector. None of the retiring Members has made that move yet."
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Goldman Sachs may reduce CEO Lloyd Blankfein's bonus amid uproar over the reported $100 million he is expected to receive. "They have made a number of moves to try to ameliorate the issues," said Alan Johnson, a Wall Street consultant. "I would be shocked if it didn't have an impact on his and everybody else's total." Today, the Senate Armed Services Committee will be holding a hearing on the military's Don't Ask, Don't Tell (DADT) policy, the first such session in 17 years. The Servicemembers Legal Defense Network has announced that DADT discharges for the four branches were down last year, totaling 428 in 2009 compared to 619 in 2008. The organization stressed that 428 is still "too many." The Somali militant group al Shabaab said yesterday that it will ally with al Qaeda. It was the first "explicit" agreement between the two groups, but "it isn't clear whether this new resolution will result in funding or training from al Qaeda, or even if it will lead to an official endorsement from the global terror group." "Virginia's Democratic-controlled state Senate passed measures Monday that would make it illegal to require individuals to purchase health insurance, a direct challenge to the party's efforts in Washington to reform health care." Five Democrats joined with every Republican to support the bills, which are "expected to be approved by the GOP-controlled House of Delegates." Former Alaska governor Sarah Palin is calling on President Obama to fire his chief of staff Rahm Emanuel for using the phrase "f---ing retarded" in a meeting with liberal allies. Writing on Facebook, Palin said, "Rahm's slur on all God's children with cognitive and developmental disabilities -- and the people who love them -- is unacceptable, and it's heartbreaking."
Senate Democrats voted yesterday to begin debate on the confirmation of controversial Labor Department appointee Patricia Smith. A vote on Smith, who has been nominated to be solicitor of the agency, is expected today. President Obama's budget "raises taxes on businesses and upper-income households by $2 trillion over 10 years." The budget calls for allowing the Bush tax cuts to expire, but extends cuts for middle class families and adds "new tax cuts" for job creation. "Banks and multinational corporations would face new fees and levies." Today in New Hampshire, President Obama will propose "using $30 billion from the TARP bank bailout program for a small business lending fund to try to spur job growth in a critical sector of the U.S. economy." The fund would be available to small community banks with $10 billion in assets or less. "These are the small, local banks that work most closely with our small businesses," Obama will say. In mid-March, President Obama and his family will travel to Indonesia, the world's most populous Muslim country. The President is expected to "visit some of the sites of his childhood." Indonesian presidential spokesman Dino Patti Djalal said, "This visit has a sentimental aspect and that's why he's bringing along his two daughters." And finally: Will there be a President Will Smith some day?
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"The polls don't really look good for Obama on [terrorism]. You've got one from Pew Research Center...in mid-January, 33 percent believe that the ability of terrorists to launch a major terror attack on the U.S. is now greater than it was at the time of 9-11."
-- Fox News' Megyn Kelly, 2/01/10
VERSUS
"[Obama] continues to get markedly higher ratings for his handling of the threat of terrorism (51% approve) than for any other issue."
-- Pew Research Center, 1/14/10
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