Thursday, June 11, 2009

Obama presses healthcare overhaul in U.S. heartland

Obama presses healthcare overhaul in U.S. heartland
By Doug Palmer
GREEN BAY, Wisconsin (Reuters) - President Barack Obama took his push for healthcare overhaul to the U.S. heartland on Thursday, calling the current system unsustainable and vowing not to tolerate "endless delay" before acting to fix it.
Hosting a townhall-style meeting, Obama stuck to his view that a government-sponsored insurance plan must be part of a healthcare revamp, despite opposition to the idea from Republicans, private insurers and even the influential American Medical Association doctors' group.
"We have reached a point where doing nothing about the cost of health care is no longer an option. The status quo is unsustainable," the Democratic president said. He insisted, however, he was not seeking a "government takeover" of the troubled system.
Obama's drive on healthcare comes as lawmakers seek to craft a bill and pass it through the Senate before their summer break. Democratic leaders in the House of Representatives also hope to pass legislation by August.
"As Congress moves forward on healthcare legislation in the coming weeks, I understand there will be different ideas and disagreements ... I welcome those ideas," he said. "But what I will not welcome is endless delay."
Underscoring a sense of urgency, he said, "If we don't get it done this year, we're probably not going to get it done."
COSTS
Obama acknowledged public concerns about the cost of extending coverage to tens of millions of people who do not have health insurance at time when the government is spending heavily on economic recovery programs and financial bailouts.
"That's why I have already promised that reform will not add to our deficit over the next 10 years," he said.
"To make that happen, we have already identified hundreds of billions worth of savings in our budget -- savings that will come from steps like reducing Medicare overpayments to insurance companies and rooting out waste, fraud and abuse in both Medicare and Medicaid," he said. "I will be outlining hundreds of billions more in savings in the days to come."
But with some estimates putting the cost of healthcare reform at $1.2 trillion, Obama conceded those savings will not be enough.
"That's why I've proposed that we scale back how much the highest-income Americans can deduct on their taxes back to the rate that existed under the Reagan years and we can use that money to help finance health care," he said.
Back in Washington, the Senate Health, Education, Labor and Pensions Committee was scheduled to hold a hearing on a plan that would prohibit insurers from denying coverage or charging more due to medical history.
Many congressional Republicans have criticized Democratic proposals for including a public insurance program that would compete with private insurers.
Defending that idea, Obama said, "The reason is not because we want a government takeover of health care ... But we want some competition. If the private insurance companies have to compete with a public option, it will keep them honest and help keep prices down."
(Writing by Matt Spetalnick; Editing by Anthony Boadle)

Source: Reuters

McCain urges Obama to classify detainee photos

By Steve Holland
WASHINGTON (Reuters) - Republican Senator John McCain urged President Barack Obama Thursday to classify photographs said to depict the abuse of terrorism suspects to ensure they do not become public.
Obama is fighting release of the photos in the courts but has not declared them secret.
"All he has to do today is use an executive order to declare these photos classified material," said McCain who lost the 2008 presidential election to Obama.
"That's all he has to do," he told Reuters in a telephone interview.
The photos, taken by U.S. personnel, are at the heart of a political debate in Washington. Some Democrats want them released as a way to close the books on Bush-era harsh interrogation practices that Obama has banned.
Obama, after initially agreeing to release them in response to a court order in a lawsuit brought by the American Civil Liberties Union, last month reversed himself.
The president sided with military commanders who want to avoid making them public fearing they would unleash a backlash against U.S. troops in Iraq and Afghanistan.
The issue has gotten caught up in the Democratic-controlled U.S. Congress, where Democrats and Republicans have battled over whether to create a "truth commission" to investigate the treatment of terrorism suspects.
Two of McCain's Senate allies, Joe Lieberman, an independent, and Lindsey Graham, a Republican, attempted to include a provision in a spending bill that would prohibit for three years the disclosure of images of abused prisoners photographed from September 11, 2001, to January 22, 2009.
Democrats in the House of Representatives, want to cut the provision as a way to induce enough Democratic votes to pass the $100 billion spending bill.
McCain said an executive order from Obama ordering them classified "would give Congress time to act to make sure that the photos are not released."
McCain cited comments from General Ray Odierno, U.S. commander in Iraq, and General David Petraeus, head of U.S. Central Command that oversees military operations in the Middle East, in opposing release of the photos.
"Releasing the photos would not supply new information about the issue of detainee abuse, but rather expose graphic evidence of past wrongdoing and put our fighting men and women in greater danger," he said.
(Editing by Alan Elsner)

Source: Reuters

U.S. sees big obstacles to F-22 exports

U.S. sees big obstacles to F-22 exports
By Andrea Shalal-Esa
WASHINGTON (Reuters) - U.S. Air Force Chief of Staff General Norton Schwartz cited on Thursday "very substantial" legal, technical and timing obstacles to future exports of the radar-evading F-22 fighter jet, built by Lockheed Martin Corp.
Senator Daniel Inouye, head of the Senate Appropriations Committee, and other lawmakers have revived discussions about possible exports to extend the F-22 production line, given that Defense Secretary Robert Gates has decided to end U.S. production of the sophisticated fighter at 187 planes.
Inouye supports possible export of the fighter to Japan, which for years has expressed interest in buying the fighter.
Schwartz has testified to Congress that the military requirement for the F-22 remains at 243, but he told a Heritage Foundation event on Thursday that a smaller fleet of 187 would be "sufficient" and "adequate" for the U.S. Air Force to fulfill its mission of securing the skies.
Schwartz said there are substantial obstacles to exports, including a legal ban on F-22 sales overseas; technical issues that make revamping the airplane for export very expensive; and the issue of whether the production line would still be open by the time any exports were approved.
He said Gates has been very clear about his opposition to exports, even to trusted allies, and he doubts that position will change.
"The pragmatic obstacles are very substantial," Schwartz said. "The technical, legal and timing aspects of this are very significant."
Schwartz said the plan is for F-22s to operate in tandem with a much larger fleet of F-35 fighters, also built by Lockheed and eight international partners.
To make that program successful, it would be vital to reach high enough production rates of F-35 fighter planes to keep the price of the new aircraft competitive for the U.S. military services and foreign partners involved in its development.
He said annual production of the new fighters needs to climb to at least 80 airplanes, and ideally as high as 110, to replace aging U.S. fighters and keep costs low.
Schwartz also said he opposes any move to beef up current fourth-generation fighters such as the Boeing Co F-15 as a bridge to the fifth generation F-35, citing the need to "make the leap" to the new plane and keep the unit cost for those airplanes competitive.
Foreign sales of the F-22 fighter are banned under an amendment by House Appropriations Committee Chairman David Obey that was first passed in 1998; but recent North Korean missile launches and continued interest by Japan in buying the F-22 may be softening congressional opposition, particularly since the F-22 production line is now nearing a shutdown.
(Reporting by Andrea Shalal-Esa, editing by Gerald E. McCormick)

Source: Reuters

Russia snubs U.S. call to consider hosting radar

Russia snubs U.S. call to consider hosting radar
By Conor Sweeney
MOSCOW (Reuters) - Russia on Thursday spurned an offer from the United States to participate closely in its planned European anti-missile system, instead urging Washington to drop its proposals and start afresh.
U.S. Defense Secretary Robert Gates said on Tuesday he was hopeful Moscow might consider hosting either radars or a data exchange center as it recognized the growing threat from Iran.
But Russia's Foreign Ministry spokesman said on Thursday that Moscow would not entertain any novel ideas until Washington dropped its intention to place ten interceptor missiles in Poland and a radar station in the Czech Republic.
"Only a rejection by the United States of plans to create a ... missile Defense system in Europe could lay the groundwork for our fully fledged dialogue on questions of cooperation in reacting to potential missile risks," Russian Foreign Ministry spokesman Andrei Nesterenko told reporters.
Moscow has protested against the anti-missile system, which it perceives as a threat to its own security and has also linked the scheme to negotiations on a new treaty to curb strategic nuclear weapons.
Nesterenko added that Moscow still hoped to find a way to reach a compromise with Washington.
U.S. officials have consistently stated that the planned deployment is aimed at preventing potential attacks from countries like Iran. Gates went further at a U.S. Senate hearing on June 9, saying Russia increasingly shared this view.
"The Russians have come back to us and acknowledged that (we) were right in terms of the nearness of the Iranian missile threat," Gates told a senate appropriations hearing, according to the U.S. Federal News Service transcript.
"And we've made a number of offers in terms of how to partner, and I think there are still some opportunities -- for example, perhaps putting radars in Russia, having data exchange centers in Russia," Gates was quoted as saying.
Gates said he hoped there could be progress on this topic when U.S. President Barack Obama travels to Moscow from July 6-8, where he hopes to build on repeated calls from both capitals to 'reset' relations.
(Reporting by Conor Sweeney; editing by Philippa Fletcher)

Source: Reuters

Egypt's Mubarak says Obama has new approach to Islam

CAIRO (Reuters) - Barack Obama has presented a fresh understanding of Islam not shown by predecessors, Egyptian President Hosni Mubarak said in his first interview since the U.S. president addressed the Muslim world from Cairo.
Obama called for a "new beginning" in ties between the United States and Muslims, many of whom felt targeted by the "war against terror" launched by former President George W. Bush after the September 11, 2001 attacks, and his wars in Afghanistan and Iraq.
"Under the past administration, there was a feeling that the Islamic world was a group of terrorists, Islam was hated and Muslims should be watched, and that the previous administration was scared of any Muslim," Mubarak said.
"But Obama came and said we will not fight Muslims and Islam. He is a sympathetic man, and says the United States will not fight Islam because Islam is a heavenly religion," he told state television in an interview broadcast late Wednesday.
Obama told Muslims in his June 4 speech that violent extremists had exploited tensions between Muslims and the West and that Islam was not part of the problem.
His speech was welcomed by many Muslims, though some said they wanted him to spell out specific actions to resolve long-running problems like the Palestinian-Israeli conflict.
Mubarak said he discussed the Palestinian issue with the U.S. president after telling Israeli Prime Minister Benjamin Netanyahu, on a visit to Egypt prior to Obama's, that Israel needed to stop building settlements.
"Obama understands this issue well," Mubarak said.
"Obama wants to solve the issue (of the Palestinian-Israeli conflict) and wants to do something, but we must help him on how to solve it ... and the Israelis must help him."
In his speech, Obama told both sides they had to declare publicly the realities he said they accept in private, a blunt message for a new U.S. president; his predecessors waited longer in office before tackling the thorny issue of Middle East peace.
Obama also said he would "personally pursue" a drive to set up a Palestinian state alongside Israel, a solution backed by Mubarak and other Arab states but not by Netanyahu.
(Writing by Edmund Blair, Editing by Lin Noueihed)

Source: Reuters

California nears financial "meltdown" as revenues tumble

California nears financial meltdown as revenues tumble
By Jim Christie
SAN FRANCISCO (Reuters) - California's government risks a financial "meltdown" within 50 days in light of its weakening May revenues unless Governor Arnold Schwarzenegger and lawmakers quickly plug a $24.3 billion budget gap, the state's controller said on Wednesday.
Underscoring the severity of California's cash crisis, Controller John Chiang, who has previously warned the state's government risks running out of cash without a budget deal, said revenues in May fell by $1.14 billon, or 17.7 percent, from a year earlier.
Additionally, the revenues of the government of the most populous U.S. state fell short of estimates in Schwarzenegger's budget plan by $827 million, Chiang said.
He warned California's state government is speeding toward a financial disaster unless officials act urgently to balance its books.
"Without immediate solutions from the governor and legislature, we are less than 50 days away from a meltdown of state government," Chiang said in a statement.
California's revenues have been on a dramatic slide as a result of recession, rising unemployment and its lengthy housing downturn.
The state's revenues from personal income taxes tumbled by 39.3 percent in May from a year earlier while revenues from corporate taxes fell by 52.1 percent and revenues from sales taxes sagged by 7.6 percent, according to a report released by Chiang's office.
"A truly balanced budget is the only responsible way out of the worst cash crisis since the Great Depression," Chiang, a Democrat, said.
DUELING BUDGET CONCEPTS
Schwarzenegger, a Republican, has proposed filling the state's budget gap with deep spending cuts, borrowing from local governments and by scrapping some state programs, including its welfare program.
Democrats who control the legislature are crafting a rival budget plan that includes spending cuts and saves programs Schwarzenegger has proposed eliminating. They instead would use reserves estimated in his budget to narrow the budget gap.
State Senate President Pro Tem Darrell Steinberg said on Tuesday he wants a budget agreement by the end of this month.
California's new fiscal year begins on July 1. The sooner the state has a budget the better poised it will be to raise short-term cash to fund its operations by selling revenue anticipation notes, or RANs, on the municipal debt market.
If pressed, California could sell revenue anticipation warrants, or RAWs, an idea floated by Schwarzenegger when he unveiled his budget plan last month. But he quickly shelved it amid opposition from lawmakers.
"No one wants to issue RAWs for our cash-flow borrowing," said Tom Dresslar, a spokesman for State Treasurer Bill Lockyer. "Everyone would prefer to issue RANs for the obvious reason: It costs less." Continued...
Source: Reuters

California nears financial "meltdown" as revs tumble

California nears financial meltdown as revs tumble
By Jim Christie
SAN FRANCISCO (Reuters) - California's government risks a financial "meltdown" within 50 days in light of its weakening May revenues unless Governor Arnold Schwarzenegger and lawmakers quickly plug a $24.3 billion budget gap, the state's controller said on Wednesday.
Underscoring the severity of California's cash crisis, Controller John Chiang, who has previously warned the state's government risks running out of cash without a budget deal, said revenues in May fell by $1.14 billon, or 17.7 percent, from a year earlier.
Additionally, the revenues of the government of the most populous U.S. state fell short of estimates in Schwarzenegger's budget plan by $827 million, Chiang said.
He warned California's state government is speeding toward a financial disaster unless officials act urgently to balance its books.
"Without immediate solutions from the governor and legislature, we are less than 50 days away from a meltdown of state government," Chiang said in a statement.
California's revenues have been on a dramatic slide as a result of recession, rising unemployment and its lengthy housing downturn.
The state's revenues from personal income taxes tumbled by 39.3 percent in May from a year earlier while revenues from corporate taxes fell by 52.1 percent and revenues from sales taxes sagged by 7.6 percent, according to a report released by Chiang's office.
"A truly balanced budget is the only responsible way out of the worst cash crisis since the Great Depression," Chiang, a Democrat, said.
DUELING BUDGET CONCEPTS
Schwarzenegger, a Republican, has proposed filling the state's budget gap with deep spending cuts, borrowing from local governments and by scrapping some state programs, including its welfare program.
Democrats who control the legislature are crafting a rival budget plan that includes spending cuts and saves programs Schwarzenegger has proposed eliminating. They instead would use reserves estimated in his budget to narrow the budget gap.
State Senate President Pro Tem Darrell Steinberg said on Tuesday he wants a budget agreement by the end of this month.
California's new fiscal year begins on July 1. The sooner the state has a budget the better poised it will be to raise short-term cash to fund its operations by selling revenue anticipation notes, or RANs, on the municipal debt market.
If pressed, California could sell revenue anticipation warrants, or RAWs, an idea floated by Schwarzenegger when he unveiled his budget plan last month. But he quickly shelved it amid opposition from lawmakers.
"No one wants to issue RAWs for our cash-flow borrowing," said Tom Dresslar, a spokesman for State Treasurer Bill Lockyer. "Everyone would prefer to issue RANs for the obvious reason: It costs less." Continued...
Source: Reuters

Senators mull potential healthcare compromise

Senators mull potential healthcare compromise
Lining up for free healthcare
Play Video
By Donna Smith
WASHINGTON (Reuters) - U.S. senators considering sweeping changes to the U.S. healthcare system on Wednesday floated a proposal they say could bridge the divide over the government's role in providing affordable medical insurance to millions of uninsured Americans.
The measure offered by Democratic Senator Kent Conrad would create nonprofit cooperatives, owned and operated by their members, to compete with private insurers to provide healthcare to individuals and small businesses.
Senate Finance Committee Chairman Max Baucus, who has a lead role in writing healthcare reform legislation, said it could allay Republican concerns about expanding the role of government in healthcare while addressing Democratic demands for a plan that would inject more competition into the insurance market.
"It's a live option at the moment," Baucus told reporters following a meeting with committee members to discuss the idea. He said the proposal was discussed with President Barack Obama at a White House meeting earlier in the day.
Obama wants Congress to enact by October a measure that reins in soaring costs and provides coverage for an estimated 46 million uninsured Americans.
Obama backs a new government plan to compete with insurance companies to provide medical coverage to individuals and small businesses.
Republicans and insurance companies oppose it, arguing it would drive companies out of business and lead to a government-controlled health insurance system.
Baucus said cooperatives might satisfy both sides but that details had to be fleshed out.
Some Democrats, though, are cool to the idea.
"A public plan option that competes with private insurance and follows the same rules as private insurance is the only real way to give every American access to good, affordable health insurance," said Senator Jay Rockefeller, a Democrat who has offered his own version of a public insurance plan.
Senator Charles Grassley, the top Republican on the Senate Finance Committee, said the proposal had "possibilities."
But he told reporters that any federal money used to set up what likely would be state and regional health cooperatives would have to be in the form of loans and that the government should have no role in their operation.
Cooperatives have been used to set up electrical services in rural areas and at least one health cooperative operates in Washington state, Conrad said.
(Editing by Xavier Briand)

Source: Reuters

New U.S. commander in Afghanistan approved by Senate

New U.S. commander in Afghanistan approved by Senate
By Thomas Ferraro
WASHINGTON (Reuters) - Stanley McChrystal won Senate confirmation on Wednesday as an Army general and U.S. commander in Afghanistan after a plea for Republicans to end procedural delays and let him start overseeing the war.
The Senate approved President Barack Obama's nomination of McChrystal on a voice vote after Democratic Majority Leader Harry Reid complained the former Green Beret was among 20 nominees who had been stalled by Republicans, one dating back to mid-March.
Senate Republicans have been in a number of disputes with Democrats and have frequently refused to provide the unanimous consent needed to move quickly on legislation and nominees.
Speaking on the Senate floor, Reid said he had received a telephone call from Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, asking for prompt action on McChrystal, who was approved by a Senate committee last week.
Reid quoted Mullen as saying: "Senator, there is a sense of urgency that General McChrystal be able to go to Afghanistan tonight. There is no commander in Afghanistan. ... McChrystal is literally waiting by an airplane."
Reid added, "Let's get the man approved tonight so he can go."
Senate Republicans then moved to confirm McChrystal, who had been a lieutenant general until his promotion, and two other military nominees.
Army General David McKiernan was dismissed last month as the top U.S. commander in Afghanistan and McChrystal was picked to replace him to oversee Obama's strategy against a growing Taliban insurgency.
Violence in Afghanistan has surged to its highest levels since the 2001 U.S. invasion toppled the Taliban, which had harbored the al Qaeda militant network responsible for the September 11 attacks on the United States.
McChrystal will take over command of the 45,000 U.S. troops and 32,000 forces from other NATO countries now in Afghanistan.
In June 2006, then-President George W. Bush offered public congratulations to McChrystal, whose secret unit had tracked down Abu Musab al-Zarqawi -- the head of al Qaeda in Iraq who was killed in an Air Force bombing raid.
(Additional reporting by David Morgan; Editing by Peter Cooney)

Source: Reuters

Democrats to let detainees in U.S. for trial: aides

Democrats to let detainees in U.S. for trial: aides
By Jeremy Pelofsky
WASHINGTON (Reuters) - In a partial reprieve for President Barack Obama, congressional Democrats plan to allow detainees held in the U.S. prison at Guantanamo Bay, Cuba, to be brought onto U.S. soil for trial, two congressional aides said on Wednesday.
The House of Representatives last month had approved a bill to permit transferring the detainees here only after a risk analysis was given to Congress and barred releasing them into the United States through September 30. A Senate measure also banned them from U.S. soil through September 30.
The Democratic compromise would permit detainees to be brought to the United States for trial but not permanent detention, the aides said, declining further identification because the details were not yet formally released.
The deal would also bar releasing any of the detainees into the United States through September 30, one of the aides said.
The Obama administration earlier this week brought the first detainee from the prison in Cuba to New York for trial, Ahmed Khalfan Ghailani, a Tanzanian accused of being involved in the bombing of U.S. embassies in Africa in 1998. Current laws do not address the disposition of Guantanamo detainees.
Democrats, who control the House and Senate, plan to include the provisions in a compromise $100 billion bill to fund the wars in Iraq and Afghanistan, which they hope to push through the two chambers by next week.
The two chambers approved different versions of the war-funding legislation and have been trying for weeks to hammer out a compromise package but have been stymied by issues like the Guantanamo Bay, Cuba prison.
Obama has pledged to close the controversial prison by early 2010 and asked for $80 million in the legislation to begin that process. However, lawmakers had rejected his request and demanded a plan before allowing the detainees to be moved.
The war-funding measure has grown significantly over the past few weeks, adding more foreign aid for Pakistan, up to $7.65 billion to fight the H1N1 flu virus and extending a $100 billion credit line to the International Monetary Fund as it tries to help countries weather the global economic downturn.
House Republicans originally supported the war funding bill but now oppose it because of the IMF credit line, arguing it should be considered on its own merits. That has forced House Democratic leaders to reach out to the anti-war members of their party to beseech them to now support passing the bill.
But that faction, which originally opposed the measure, refused unless they removed another provision that bars releasing photos of prisoners abused at U.S. facilities in Iraq. The American Civil Liberties Union has sued for their release.
Democratic Representative Louise Slaughter said she believed the IMF money would stay in the bill but that the photos language would be removed, clearing the way for Democrats to have enough votes to pass the bill.
One congressional aide said the legislation also includes $1 billion for a new program aimed at getting older, less fuel-efficient vehicles off the road in exchange for ones that get better mileage. The House approved a separate bill to offer vouchers of up to $4,500.
(Editing by Todd Eastham)

Source: Reuters

Obama envoy says Palestinian statehood only option

Obama envoy says Palestinian statehood only option
By Mohammed Assadi
RAMALLAH, West Bank (Reuters) - U.S. envoy George Mitchell assured the Palestinians on Wednesday of Washington's commitment to a state of their own, calling its establishment the only viable solution to their conflict with Israel.
Mitchell, speaking after talks with Palestinian President Mahmoud Abbas, urged both sides to meet their obligations under a 2003 peace "road map" that commits Israel to halting settlement expansion and Palestinians to reining in militants.
U.S. President Barack Obama had made it clear "the only viable resolution to this conflict is for the aspirations of both sides to be met through two states," Mitchell said.
His comments highlighted a rare rift in U.S.-Israeli relations. Israeli Prime Minister Benjamin Netanyahu has not publicly endorsed Palestinian statehood and has said construction will continue in existing settlements in the occupied West Bank.
Reiterating remarks he made in talks with Israeli leaders on Tuesday, Mitchell said in the West Bank city of Ramallah that Washington was seeking "prompt resumption and early conclusion" of Israeli-Palestinian peace talks.
"We are now engaged in serious discussions with Israelis, Palestinians and other regional partners to support this effort," he added, before continuing the latest leg of his mission on a tour taking him to Jordan, Lebanon, Syria and Egypt.
Speaking later after meeting Israeli opposition leader Tzipi Livni, Mitchell said Washington sought "a comprehensive regional peace which not only involves Israel and the Palestinians, but Syrians, the Lebanese and all the surrounding countries."
Obama continued to press the issue on Wednesday from Washington. Ahead of Mitchell's scheduled visit to Amman on Thursday, Obama called Jordan's King Abdullah to discuss his recent trip to Riyadh and Cairo, where he issued his call for a new U.S. relationship with the Muslim world.
"The president reiterated his commitment to work hard to resolve the Israeli-Palestinian conflict through a two-state solution, as he underscored in his speech in Cairo," the White House said in a statement on Obama's call to Abdullah.
"They discussed ways of ensuring that all parties fulfill their obligations and responsibilities to ensure that negotiations toward a two-state solution have the best chance to succeed," the statement said.
SETTLEMENT FREEZE
Abbas, after his talks with Mitchell, made no comment to reporters. The Palestinian leader has said talks with Israel will be useless unless Netanyahu accepts a two-state solution and freezes settlements.
Palestinian negotiator Saeb Erekat said in a statement the United States had "made clear its intention to reinvigorate Middle East peace talks, as well as its expectation that both parties implement their obligations under the road map."
He said Israel's failure to fulfill its obligations under existing agreements had undermined the credibility of the peace process.
Obama's emphasis on meeting obligations was "an important litmus test of fairness and balance," Erekat said. Continued...
Source: Reuters

Obama focus on coalitions may aid arms sales

Corrects 12th paragraph to make clear that international sales did not grow 20 percent but rather accounted for 20 percent of global sales
By Andrea Shalal-Esa
WASHINGTON (Reuters) - The Obama administration's focus on building coalitions may spur more global arms sales for the world's leading weapons exporter, a welcome prospect for U.S. defense contractors facing a shrinking defense budget at home.
The global recession may dampen or delay the foreign appetite for weapons orders somewhat, but many countries' arsenals are in urgent need of modernization.
Even in tough economic times, countries generally view defense accounts as a top priority, particularly given mounting concerns about enemy missile attacks and other threats, said Eric Edelman, who served as undersecretary of defense for policy during the Bush administration.
Edelman, a former U.S. ambassador to Turkey and Finland, said demand would likely remain high for cutting-edge U.S. products such as precision munitions, unmanned aerial vehicles and missile defense capabilities.
"A lot of countries are going to be looking for American goods and services," said Edelman, a fellow at the Center for Strategic and Budgetary Assessments. "There is a good market out there."
U.S. defense cuts announced by Defense Secretary Robert Gates in April are also spurring American companies to pursue foreign orders more aggressively, he said.
BIG-TICKET COMPETITIONS
U.S. companies are already vying for huge fighter and helicopter orders from India, helicopter work in Australia and shipbuilding work for Saudi Arabia and others.
Exports should also be buoyed as orders materialize from Britain, Italy, the Netherlands, Turkey, Canada, Australia, Denmark and Norway -- the partner countries helping to develop Lockheed Martin Corp's F-35 fighter jet. The radar-evading plane is the world's biggest weapons program, valued at over $200 billion.
Israel, Singapore, Japan and Spain were also interested in ordering the fighter, said Marine Corps Brigadier General David Heinz, head of the F-35 program. Work could start on pricing airplanes for Israel by the end of the year, he said.
Some lawmakers, keen to maintain production of the F-22 fighter, also built by Lockheed, have revived the idea of exporting that fighter to a select few allies, such as Japan.
At the same time, Lockheed's C-130 transport plane and Boeing Co's C-17 could pick up extra orders in Europe, given delays in the A400M plane developed by EADS.
Raytheon Co, which says big demand for Patriot missiles from the United Arab Emirates, Kuwait and Taiwan helped global sales account for 20 percent of total revenues last year, forecasts they will comprise 22 percent to 24 percent in 2009.
U.S. arms deals soared nearly 50 percent to $24.8 billion in 2007, accounting for 41.5 percent of all such agreements. The top five buyers were Australia, Turkey, Egypt, the United Arab Emirates and Iraq, according to the nonpartisan Congressional Research Service. Continued...
Source: Reuters

California near "meltdown" as revenues fall: official

California near meltdown as revenues fall: official
SAN FRANCISCO (Reuters) - California's government risks a financial "meltdown" within 50 days in light of its weakening May revenues unless Governor Arnold Schwarzenegger and lawmakers quickly plug a $24.3 billion budget gap, the state's controller said on Wednesday.
Controller John Chiang, who has previously warned that California risks running out of cash without a budget deal, said revenues in May fell by $1.14 billon, or 17.7 percent, from a year earlier.
The revenues of the government of the most populous U.S. state fell short of estimates in Schwarzenegger's budget plan by $827 million, Chiang said.
"Without immediate solutions from the governor and legislature, we are less than 50 days away from a meltdown of state government," Chiang said in a statement.
"A truly balanced budget is the only responsible way out of the worst cash crisis since the Great Depression," Chiang said.
California's revenues have been on a dramatic slide as a result of recession, rising unemployment and its lengthy housing downturn.
The state's revenues from personal income taxes tumbled by 39.3 percent in May from a year earlier while revenues from corporate taxes fell by 52.1 percent and revenues from sales taxes sagged by 7.6 percent, according to a report released by Chiang's office.
Schwarzenegger, a Republican, has proposed filling the state's budget gap with deep spending cuts, borrowing from local governments and by scrapping some state programs, including its welfare program.
Democrats who control the legislature are crafting a rival budget plan that includes spending cuts and saves programs Schwarzenegger has proposed eliminating. They instead would use reserves estimated in Schwarzenegger's budget to narrow the state's shortfall.
State Senate President Pro Tem Darrell Steinberg said on Tuesday he wants a budget through the legislature by the end of this month.
California's new fiscal year begins on July 1. The sooner the state has a budget signed into law the better poised it will be to raise short-term funds to fund its operations through the sale of revenue anticipation notes on the municipal debt market.
(Reporting by Jim Christie; Editing by Diane Craft)

Source: Reuters

Senators seek answers on U.S. stakes in GM and Chrysler

By John Crawley
WASHINGTON (Reuters) - The Obama administration must provide a clear explanation to Congress of how it plans to extricate the government from ownership stakes in General Motors Corp and Chrysler Group LLC, Senate Banking Committee leaders said on Wednesday.
"My hope is whatever we like or dislike about the present configuration, I want to see us get out of this business as quickly as we can," Christopher Dodd, the panel's Democratic chairman, said at a hearing.
Richard Shelby, the committee's top Republican, asked whether taxpayers will make money and if nearly $20 billion in government writeoffs of GM debt so far foreshadow more losses.
Dodd and Shelby's comments represent the first formal public questioning of the administration's rescue of GM and Chrysler.
The U.S. government has taken an 8 percent stake in Chrysler, which is exiting Chapter 11 in an alliance with Italy's Fiat SpA, and a 60 percent investment in GM, which entered Chapter 11 on June 1.
Government aid dedicated to Chrysler totals more than $12 billion while GM has received $50 billion. Billions more in taxpayer funds have been spent to help for affiliated finance companies and suppliers.
Ron Bloom, a senior member of the administration's auto task force responsible for overhauling the companies, said there will be no specific blueprint for shedding ownership because such a strategy could disrupt markets.
"There is no perfect system. It is our judgment at this point that a prearranged time schedule will create more problems than it solves," he told lawmakers.
Bloom said President Barack Obama wants to get out of the auto business "as soon as practicable" but not before GM and Chrysler can demonstrate viability. An exit plan will depend on how GM and Chrysler perform as well as overall economic factors and industry sales.
While there is no guarantee that both automakers will fully repay the government, Bloom said there were "reasonable scenarios" in which taxpayers could recover a substantial portion of their investment down the road.
Senator Jim Bunning said that for taxpayers to break even on GM, its market capitalization would have to reach $70 billion or 15 percent higher than its all-time high at the height of the sport utility sales boom of the late 1990s and first half of this decade.
"It seems pretty clear to me that taxpayers will never get back their money," said Bunning, a Republican from Kentucky.
Bloom said GM's capital structure will be conservative once it is out of bankruptcy, with more room for equity and fewer deductions for debt and other liabilities.
(Reporting by John Crawley, Karey Wutkowski and Mari Saito, editing by Gerald E. McCormick and Tim Dobbyn)

Source: Reuters

NY state Senate in "diabolical" leadership spat: Governor

NY state Senate in diabolical leadership spat: Governor
By Joan Gralla
NEW YORK (Reuters) - New York's legislative session may have to be extended due to a "diabolical situation" that has Democrats and Republicans both claiming to lead the state Senate, Governor David Paterson said on Wednesday.
Lawmakers were due to adjourn in less than two weeks but many issues, from gay marriage to the state's property tax relief plan, are all hanging in the balance due to the political impasse, the Democrat told Albany reporters.
Paterson urged the Senate to hold another leadership vote or get the courts to settle the matter.
The Senate Democrats said they will ask a court to stop the GOP from putting their "purported coup" into effect, which could further delay the resolution of many pending issues.
The Democrats in January named their first Senate majority leader in four decades after gaining a majority in November's elections. But on Monday, two dissident Democrats said they would conference with the Republicans and helped re-elect former Republican Senate Majority Leader Dean Skelos to run the chamber.
A spokesman for Democratic Senate Majority Leader Malcolm Smith said the GOP coup had broken Senate rules and state law by usurping a public officer, Smith. In a statement, he said Smith vowed not to re-enter the chamber "to be governed by unlawful rules."
Smith ruled the chamber by a 32 to 30 majority until he lost two members of his conference. "We plan to file an action for a temporary injunction to enjoin the Republicans from illegitimately usurping authority from the people of New York," his spokesman added.
Senate Democrats have locked the chamber, and Paterson said he would not force the doors open because that would interfere in the "elective process."
Referring to the agency that runs state offices, he said: "We could bring in the Office of General Services and Homeland Security to blast through the Senate but this is getting a little ridiculous; they've got to act like adults."
Skelos, who hailed his new leadership accord as a bipartisan reform coalition, said he and the Senate's new Democratic president, Pedro Espada, would take up a host of bills, many of which affect cities, counties and towns around the state.
Their list includes, for example, normal extensions often seen near the end of legislative sessions, such as allowing the City of Yonkers to continue collecting a mortgage recording tax that otherwise will expire.
Skelos' choice of Espada as Senate president raised ethics concerns because he is being probed by the state attorney general over a non-profit group he ran. The second Democrat who broke ranks, Senator Hiram Monserrate, faces felony charges for allegedly assaulting his girlfriend.
Monserrate later said the coalition was trying to win over more Democrats and had postponed the session until Thursday.
Asked why he had not brokered a deal between the warring parties, as former Republican Governor Nelson Rockefeller did in a similar fix, Paterson said: "I don't know if that was for the good of the process or what Rockefeller wanted."
(Additional reporting by Elizabeth Flood Morrow in Albany; Editing by Dan Grebler)

Source: Reuters

Obama team appears bullish on arms exports: Boeing

Obama team appears bullish on arms exports: Boeing
By Jim Wolf
WASHINGTON (Reuters) - President Barack Obama's administration appears even more disposed to permit exports of advanced U.S. arms than that of President George W. Bush, a senior Boeing Co executive said Wednesday.
"I think we see a more active discussion on those things," Chris Raymond, vice president of business development for Boeing's military arm, told a briefing ahead of next week's Paris Air Show.
The Obama administration's interest in building the military capabilities of potential coalition partners seems to be "more of a conscious thought and discussion right now than maybe it has been in the past," Raymond said.
"So I think that all bodes well for our allies and the discussions that would take place on things they'd like to have -- on releasability around some of those things," he added.
Under Bush, the value of worldwide U.S. government-to-government arms agreements rose nearly 50 percent to $24.8 billion in 2007 -- accounting for 41.5 percent of all such deals.
The top five buyers were Australia, Turkey, Egypt, the United Arab Emirates and Iraq, according to a report on October 23, 2008 by Richard Grimmett of the nonpartisan Congressional Research Service.
U.S. arms sales involve complex tradeoffs. Among issues weighed by the administration and Congress are regional stability calculations, U.S. business interests and keeping cutting-edge military knowhow from leaking to third parties.
Michele Flournoy, the new undersecretary of defense for policy, underscored the administration's commitment to concerted action last month.
Washington could use targeted arms sales to help partners boost their capacity to deal with perceived threats such as Iran's missile program, she said.
"When we look at the full range of security challenges that we face -- terrorism, proliferation, economic security issues, climate change -- there is not a single one that the United States alone can deal with effectively," Flournoy said.
"You need coalitions and partners to deal with these challenges."
GREAT TIME FOR FIGHTER BUSINESS
Boeing's Integerated Defense Systems -- the top U.S. exporter's military business -- expects to report revenue of $34 billion in 2009, up from about $32 billion in 2008, Raymond said.
This would remain about 50 percent of Boeing's total revenue, with commercial aircraft making up the other half.
Bob Gower, manager of Boeing's F/A-18 fighter program, said this was a "great time" to be in the fighter business. Continued...
Source: Reuters
 

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