Tuesday, June 9, 2009

Obama seeks fiscal responsibility mantle

Obama seeks fiscal responsibility mantle
By Caren Bohan
WASHINGTON (Reuters) - President Barack Obama sought on Tuesday to show he was serious about improving the U.S. budget picture as he called on Congress to pass new limits on tax cuts and spending programs to avoid adding to deficits.
Obama urged passage of so-called "pay-go" legislation that would require any new tax cut or automatic spending program to be paid for within the budget.
"The 'pay as you go' principle is very simple. Congress can only spend a dollar if it saves a dollar elsewhere," Obama said in a speech at the White House attended by several Democratic members of Congress.
"Entitlement increases and tax cuts need to be paid for. They are not free," said Obama, who has been criticized by Republicans for proposing a hefty domestic agenda that includes overhauling the health care system, bolstering education and tackling global climate change.
The White House has forecast a budget deficit for this year of $1.84 trillion, or 12.9 percent of gross domestic product.
Republicans have warned that programs such as the proposed health care plan would add to the budget deficit for years to come and have also criticized Obama's $787 billion stimulus plan, which was passed by Congress in February.
Obama contends that much of the budget deficit was inherited from the Bush administration, which presided over a shift from record surpluses to huge increases in the deficit fueled by the financial crisis and spending for the Iraq war.
"The reckless fiscal policies of the past have left us in a very deep hole," Obama said. "Digging our way out will take time and patience and tough choices."
Obama, who has made the push to revamp healthcare a top domestic priority, has sought to allay the concerns of some Democrats about its impact on the deficit.
Surging deficits have also become an increasing concern for financial markets. Federal Reserve Chairman Ben Bernanke last week issued a warning about risks to the economy of large deficits, which drive up long-term interest rates.
Statutory pay-go has received support from House Democratic leaders like Speaker Nancy Pelosi, but Obama's proposal was met with quick resistance from a key Senate Democrat who could make moving forward difficult since one senator can slow or block legislation.
"Pay-go can only do so much," said Senator Kent Conrad, chairman of the Senate Budget Committee. "It can prevent the passage of new legislation that would worsen the deficit, but it does not address the deficits and debt projected under existing policy."
Rep. Eric Cantor, a Republican of Virginia, said Obama had undertaken "historic spending" during his first five months in office.
"So for us to sit here and listen to the White House say that 'We ought to be responsible, we ought to pay for what we're doing' I think lacks just a little bit of credibility," Cantor said.
(Reporting by Caren Bohan)

Source: Reuters

U.S. missile-defense salvage operations under way

U.S. missile-defense salvage operations under way
By Jim Wolf
WASHINGTON (Reuters) - U.S. missile-defense contractors and their allies are pushing to salvage what they can of prized, multibillion-dollar programs that Defense Secretary Robert Gates is seeking to scrap or cut back.
Amid mounting concern over nuclear and missile programs in North Korea and Iran, Northrop Grumman Corp, for instance, is calling on the Defense Department to rescind a stop work order and carry out a major flight test of its Kinetic Energy Interceptor.
Once valued at $6 billion, KEI is intended to shoot down enemy missiles soon after they are launched. Its "booster flight test" had been scheduled for September. But Gates said the system had very limited capability, cost too much and would have to be fired from what he suggested was perilously close to the target.
Northrop argues it had completed 90 percent of everything needed to do the test when the Pentagon pulled the plug on May 11, part of a restructuring of missile-defense efforts that have cost taxpayers more than $100 billion overall.
"Taxpayers have invested some $1.1 billion in KEI over the last five-plus years," said Bob Bishop, a Northrop spokesman.
"It would be a shame to spend that money without a test to prove whether the technology works and forego an opportunity to gather valuable data on this first-of-a-kind, high-acceleration agile missile."
The Pentagon's Missile Defense Agency is going ahead with plans to launch this summer two Northrop-built prototype satellites designed to track missiles in all phases of flight. Known as the Space Tracking and Surveillance System, it would add a space-based sensor to the layered missile defense system deployed by then-President George W. Bush in 2004.
For the 2010 budget year that starts October 1, President Barack Obama has asked Congress for roughly $7.8 billion to fund ballistic missile defense, a cut of about $1.2 billion from 2009.
The spending plan calls for greater focus on "rogue state" and "theater" ballistic missile threats in line with requests from top U.S. military commanders.
Gates also would terminate Lockheed Martin Corp's Multiple Kill Vehicle, or MKV, on the grounds it was not needed for the limited threat posed by countries such as Iran and North Korea "for the next 10 to 15 years." Under Bush administration plans, the 2010 outlay for MKV was to have been $441 million.
Lockheed spokesman Jeffery Adams, in an email response to a query from Reuters about how the company might leverage the know-how it had gained, said Lockheed "developed some very promising kill vehicle technologies for the Missile Defense Agency to include battle management algorithms, the MKV infrared sensor, and divert and attitude control systems; we would hope that these could apply to next generation kill vehicles."
With an MKV aboard, a land- or sea-based U.S. interceptor would have been meant to destroy not only an enemy warhead but any decoys or other countermeasures deployed to spoof U.S. defenses.
"It was designed to deal with a more complex threat that would have come potentially from either China or Russia," Gates told the House of Representatives Armed Services Committee on May 13.
In a belt-tightening move, Gates recommended sticking with the 30 underground silos for long-range missile interceptors in Fort Greely, Alaska, and Vandenberg Air Force Base, California -- instead of adding 14 more as had been planned.
Boeing Co is the prime contractor of the system, known as the ground-based midcourse defense. Top subcontractors include Northrop Grumman, Raytheon Co, Lockheed Martin and Orbital Sciences Corp. Continued...
Source: Reuters

U.S. envoy assures Israel of strong alliance

U.S. envoy assures Israel of strong alliance
By Jeffrey Heller
JERUSALEM (Reuters) - U.S. envoy George Mitchell assured Israel on Tuesday the United States would remain its close ally despite differences over Jewish settlements and peacemaking with the Palestinians.
Mitchell told President Shimon Peres his goal was to create conditions for "prompt resumption and early conclusion" of talks leading to the establishment of a Palestinian state "side by side in peace and security with the Jewish state of Israel."
U.S. President Barack Obama, who sent Mitchell back to the Middle East, and Prime Minister Benjamin Netanyahu are at odds over settlement expansion in the occupied West Bank and the Israeli leader's reluctance to endorse Palestinian statehood.
"Let me be clear. These are not disagreements among adversaries. The United States and Israel are and will remain close allies and friends," Mitchell said.
Under pressure to soften his positions, Netanyahu is to spell out his policy on peacemaking with the Palestinians in a speech on Sunday. His security cabinet was to meet on Wednesday to consider U.S. calls to ease the blockade of the Gaza Strip.
Netanyahu was to meet later in the day with Mitchell, who will see Palestinian President Mahmoud Abbas on Wednesday.
Abbas has said it would be useless to resume peace talks with Israel unless Netanyahu froze settlement building and accepted a two-state solution to the Israeli-Palestinian conflict.
In an address to the Muslim world in Cairo last week, Obama also called on Israel to stop settlement expansion and accept the right of Palestinians to a state.
Obama spoke to Netanyahu by phone on Monday. The White House said the president "reiterated the principal elements of his Cairo speech, including his commitment to Israel's security."
Echoing Obama, Mitchell said at the meeting with Peres: "I want to begin by stating again clearly and emphatically beyond any doubt that the United States' commitment to the security of Israel remains unshakeable."
Netanyahu has cited Israel's security as paramount in any peace efforts and has said that any self-governing Palestinian entity must be demilitarized and have limited powers of sovereignty.
Mitchell said the United States expected both Israel and the Palestinians to meet their obligations under the U.S.-backed 2003 peace "road map."
The plan calls on Israel to halt settlement activity, including "natural growth," or construction within existing enclaves to accommodate growing families. Netanyahu has said "natural growth" will continue.
Under the road map, the Palestinian Authority is to rein in militants. Obama has praised actions taken by security forces loyal to Abbas to crack down on gunmen in the West Bank. Continued...
Source: Reuters

Republicans to counter Dems' U.S. financial reforms

By Kevin Drawbaugh and Karey Wutkowski
WASHINGTON (Reuters) - Congressional Republicans are close to offering financial regulation reforms that would rein in the Federal Reserve and expand the bankruptcy code, according to a draft staff document obtained by Reuters.
The five-page document, still subject to change, could give political cover to lawmakers from both parties who are skeptical about some of the Obama administration's own reform proposals.
Democrats, in control of the White House and Congress, are setting the reform agenda, with a comprehensive package of reforms expected next week from the Treasury Department in response to the worst financial crisis in generations, according to sources familiar with discussions.
But the Republican package, likely to be unveiled on Thursday, according to congressional aides, may steal some of the Democrats' spotlight and undercut congressional support for the White House program.
For instance, the administration wants to establish a "systemic risk regulator" that would monitor and intervene to address potential financial dangers in the economy.
The Republican draft package opposes giving systemic risk authority to the Federal Reserve, an idea that sources have said the administration favors, but many lawmakers distrust.
Instead, the Republicans call for creating a board of regulators and outside experts, chaired by the Treasury secretary, to study systemic risk and report quarterly. The board would have no enforcement or supervisory powers.
Another high priority of the Obama administration is empowering an agency, probably the Federal Deposit Insurance Corp (FDIC), to seize and unwind troubled non-bank financial institutions. The idea is to avoid on-the-fly bailouts in the future like that of American International Group.
But Republicans, in a sharp repudiation of the bailout policies begun under former President George W. Bush, say in the draft document that they oppose such "resolution authority" and, instead, favor adding a new chapter to bankruptcy law.
The new chapter would specifically address dealing with troubled, large non-bank financial institutions.
On bank regulation, the Republicans call for merging the Office of Thrift Supervision, which regulates mortgage lenders, and the Office of the Comptroller of the Currency, which regulates many of the nation's largest banks.
The resulting single bank regulator would also take on bank supervision duties now held by the Fed and the FDIC, both of which would be refocused on their core jobs -- monetary policy in the Fed's case, and deposit insurance in the FDIC's.
On Fannie Mae and Freddie Mac, Republicans call for phasing out government support for the housing finance giants and converting them to private entities if they are still viable after the housing market stabilizes. If they are not, then the draft calls for putting Fannie and Freddie in receivership.
(Reporting by Karey Wutkowski, Kevin Drawbaugh and John Poirier; editing by Carol Bishopric)

Source: Reuters

U.S. envoy begins new Middle East peace push

U.S. envoy begins new Middle East peace push
JERUSALEM (Reuters) - U.S. President Barack Obama's special Middle East envoy, George Mitchell, began a new push to facilitate Israeli-Palestinian peace talks on Tuesday by opening a series of talks with leaders in the region.
Israeli Prime Minister Benjamin Netanyahu is at odds with Obama over the president's demand to halt Israeli settlement expansion in the occupied West Bank and has not endorsed the creation of a Palestinian state, a cornerstone of U.S. Middle East policy.
Obama spoke to Netanyahu by phone on Monday and the White House said the president "reiterated the principal elements of his Cairo speech, including his commitment to Israel's security."
In his address to the Muslim world in Cairo last week, Obama also called on Israel to freeze settlements.
Netanyahu is to make a major policy speech on Sunday in which a senior official said the Israeli leader would "articulate his vision on how to move forward in the peace process with the Palestinians and with the larger Arab world."
A statement issued by the Netanyahu's office said "President Obama said he was waiting to hear the speech with interest."
Mitchell opened his meetings in Tel Aviv with Israeli Defense Minister Ehud Barak and was later to travel to Jerusalem to meet Netanyahu, Foreign Minister Avigdor Lieberman and President Shimon Peres.
He meets Palestinian President Mahmoud Abbas on Wednesday.
"The president has told me to exert all efforts to create the circumstance when the parties can begin immediate discussions," Mitchell told reporters at a Palestinian donors' conference in Oslo, referring to renewed negotiations that President Barack Obama has pledged to pursue.
(Writing by Ori Lewis; Editing by Matthew Jones)

Source: Reuters

Ailing Kennedy drafts vision of healthcare reform

Ailing Kennedy drafts vision of healthcare reform
By Thomas Ferraro
WASHINGTON (Reuters) - President Barack Obama's quest to overhaul U.S. healthcare rests in part on the frail shoulders of Senator Edward Kennedy, a champion of the cause now in the second year of fighting deadly brain cancer.
A towering figure among Democrats who has called providing health insurance to all Americans "the cause of my life," Kennedy recently floated a bill seen as an first draft of Obama's high-stakes effort.
But whether the Democratic-controlled Congress ultimately passes legislation -- and what it looks like -- may depend on how much time and energy the ailing 77-year-old Kennedy can devote to it in coming months. Conservative Republicans and centrist Democrats are ready to chip away at the more liberal elements of his proposal such as a government-run health plan.
"Kennedy is critical to passage (of healthcare legislation)," said James Thurber of American University's Center for Congressional and Presidential Studies.
"That doesn't mean a bill wouldn't pass without him," Thurber said. "Other people are involved. But he's the key. He knows more about healthcare than anyone else in the Senate, he's widely respected by both parties and is one of the most important senators in history."
Obama has called on Congress to pass legislation by October to create a public insurance program that would compete with private insurers, part of his broader plan to overhaul the $2.5 trillion U.S. healthcare system.
This could be a hurdle for Republicans, who along with some private insurers say Obama is setting the country on the road to a government monopoly on health insurance in his bid to provide cover to an estimated 46 million uninsured Americans.
Democrats may have sufficient votes to ram it through the House of Representatives without any Republican support. But Democrats say they want bipartisan Senate backing. Both chambers must pass a bill before Obama can sign it into law.
Draft legislation by Kennedy's Health, Education, Labor and Pensions Committee would require businesses and individuals to purchase medical coverage and bar insurance companies from refusing to cover anyone because of preexisting conditions.
It would also provide federal subsidies to families buying coverage.
While Kennedy is influential, another player who will determine the final shape of the Democratic health plan is Senate Finance Committee chairman Max Baucus -- who is seen as far more cautious.
With Kennedy largely sidelined by the brain cancer he was diagnosed with 13 months ago, the more moderate Baucus has taken a higher profile on the drive in the past year.
"The end product will likely be 75 percent Kennedy, 25 percent Baucus," said a senior Democratic leadership aide. Others say the final balance may be more 50-50.
But as a congressional analyst put it: "What everyone knows is that when it comes to cutting a deal, they guy who liberal Democrats have confidence in is Kennedy, not Baucus." Continued...
Source: Reuters

U.S. House health bill to include government plan

U.S. House health bill to include government plan
By Donna Smith
WASHINGTON (Reuters) - Democrats in the U.S. House of Representatives are preparing to unveil a proposal for a sweeping healthcare overhaul that includes a new public insurance plan and would require individuals and businesses to obtain coverage, lawmakers said on Monday.
Similar to legislation being developed in the Senate, the House bill would establish an insurance exchange to help people without employer-sponsored insurance find medical coverage. A new government insurance program would be one of the options available, lawmakers said.
"The exchange will be the vehicle in which we would have the public option, and people can go there to go shopping to determine whether you want a private plan or a public plan," House Ways and Means Committee Chairman Charles Rangel told reporters.
The bill also embraces extensive insurance market reforms that would bar insurers from denying coverage to people because of medical history. The House bill also calls for a mandate for individuals and businesses to obtain insurance.
Rangel said the legislation would include incentives for small businesses and penalties should companies fail to offer their workers insurance. Penalties for individuals have yet to be worked out, he said.
The Ways and Means Committee is one of three House committees developing healthcare legislation.
President Barack Obama wants to overhaul the U.S. healthcare system, aiming to cut costs and ensure that millions of Americans now without health insurance get coverage.
Healthcare costs burden many U.S. businesses and families and eat away at federal and state budgets.
Democratic Representative Lloyd Doggett said a new public insurance plan was "an essential" part of the proposal.
Republicans and insurers oppose a new public plan that would compete with insurance companies.
People 65 and older, the disabled and the poor already are eligible for the public Medicare and Medicaid insurance plans.
Some Senate Republicans wrote a letter to Obama on Monday arguing against a new public plan, saying it would lead to "a federal government takeover of our healthcare system."
Obama backs the idea of a public plan, but also has said he wants healthcare legislation by October that enjoys bipartisan support.
Rangel and the heads of the other two committees working on the bill will brief House Democrats on the legislation on Tuesday. Democratic members of the Ways and Means Committee, which is also working on the financing of the plan, are scheduled to meet with President Barack Obama on Tuesday to discuss the proposal.
Lawmakers and a committee aide stressed that what is being discussed was an outline, not the final draft of legislation.
(Editing by Will Dunham)

Source: Reuters

U.S. war funding bill brims with unrelated extras

U.S. war funding bill brims with unrelated extras
By Jeremy Pelofsky
WASHINGTON (Reuters) - A $100 billion bill to fund U.S. wars in Iraq and Afghanistan is rapidly accumulating extra items such as money for military aircraft the Pentagon doesn't want and possibly a scheme to jump-start sagging auto sales.
The cars and planes are not directly linked to the U.S. war effort. But they are typical of Congress' penchant for loading bills with unrelated spending in hopes the funds will sail through on the strength of the main legislation.
President Barack Obama originally sought $83.4 billion for the two wars and more foreign aid for countries like Pakistan.
But then he too sought more -- $4 billion extra to combat H1N1 swine flu and $5 billion to back credit lines to the International Monetary Fund, which is trying to help developing countries weather the global economic downturn.
The unrelated provisions have slowed the bill down, especially for the IMF because Republicans have argued the extra items should be vetted through the normal congressional process rather than jammed into an emergency spending bill.
Fights have also erupted about add-ons for the U.S. prison at Guantanamo Bay, Cuba and an attempt to bar the release of photos of detainee abuse. While Republicans do not have the votes to block the bill, they have said they will oppose it and that forces Democrats to ensure most of their members back it.
"This supplemental was supposed to be about providing funding for our troops," one House Republican aide said. Instead, it has become a mish-mashed, taxpayer funded 'Christmas tree' bill that will propagate bad policies and unnecessary spending."
Some 51 anti-war House Democrats had opposed the bill but now are under pressure to switch to give Obama a victory. But a House Democratic leadership aide said Republicans will have to answer to constituents for opposing a war funding bill.
The House and Senate are working out differences between the two versions of the war funding bill they each approved last month and hope to pass a final, single version this week.
Congress was on the verge of giving Pakistan roughly $1 billion in the bill, but Obama last week sought another $200 million for Islamabad as it fights Taliban militants crossing its border from Afghanistan.
And lawmakers are also considering adding money for a plan to spur domestic car sales by offering up to $4,500 in vouchers for buyers to trade in their less fuel-efficient vehicles for ones that get better mileage, known as "cash for clunkers".
The White House declined to directly address adding in extra provisions, but said officials continue to work with lawmakers "about the core priorities in the legislation and hope that it can get to the president soon."
When the House and Senate originally approved their separate versions of the war bill, the White House praised lawmakers for not inserting their own pet projects in the legislation -- though some pet priorities were included.
Democratic Representative John Murtha, who heads the House Defense Appropriations Subcommittee, managed to get $3.1 billion for eight C-17 and 11 C-130 military transport planes included. However, that has been pared back by four C-130s. Continued...
Source: Reuters

Coup attempt leaves NY state Senate in disarray

By Joan Gralla
NEW YORK (Reuters) - New York state Senate Republicans and two rogue Democrats said they wrested control of the Senate from the Democratic leadership on Monday in an unresolved dispute that had both sides claiming victory.
The chaos threatened to throw a range of pending bills into disarray, including pension reform, New York City's mayoral control of the schools, and gay marriage.
A gay marriage bill has passed the Democrat-led Assembly, but faces a more difficult vote in the Senate regardless of which party is in charge and in spite of Democratic Governor David Paterson's strong support.
The Republicans were attempting to regain control of the state Senate, a last bastion of GOP power in the state of New York that fell into Democratic hands for the first time in decades after the November 2008 elections.
It was part of a larger electoral trend in which the Republicans lost ground in the Northeastern United States in particular.
The drama unfolded as a shouting match erupted on the Senate floor with the Democrats walking out and shutting off the lights and video cameras while the Republicans attempted to replace Democratic Senate Majority Leader Malcolm Smith.
Republicans said a motion to replace Smith won by a vote of 32 to 30, with two Democrats voting with all 30 Republicans to name Republican Senator Dean Skelos to the post.
"A new bipartisan coalition elected today has delivered on the promises for reform that the Senate Democrat leadership failed to keep," Skelos said in a statement, faulting the Democrats for negotiating the state budget in secret and enacting record increases in taxes and spending.
Skelos was the Senate Majority Leader after his predecessor, Joseph Bruno, resigned in the spring of 2008.
Republicans said one of the Democrats who sided with them, Pedro Espada, becomes Senate president pro tempore. The other Democrat was Hiram Monserrate, who said he and Espada had formed a bipartisan coalition and will conference with Democrats. Both men are Latino.
Skelos said the new leadership coalition, which was arranged with the help of millionaire businessman Tom Golisano, would empower the Latino community. Galisano moved to Florida after the Democrats raised income taxes on the rich.
Monserrate has a felony charge pending against him; Espada has been fined for not disclosing campaign contributions.
However, Smith said he was still at the helm, saying the chamber's session was "gaveled out" before the vote.
"This was an illegal and unlawful attempt to gain control of the Senate and reverse the will of the people who voted for a Democratic Majority," Smith said in a statement. Continued...
Source: Reuters