Obama, Lee say North Korea brinkmanship won't work

N. Korea's anti-sanctions rally
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By Doug Palmer and Matt Spetalnick
WASHINGTON (Reuters) - U.S. President Barack Obama and South Korean President Lee Myung-bak presented a united front to North Korea on Tuesday, saying Pyongyang must abandon its nuclear weapons program and will not be rewarded for provoking a crisis.
With Lee at his side in the White House Rose Garden, Obama said a nuclear-armed North Korea would pose a "grave threat" to the world and vowed that new U.N. sanctions against the reclusive communist-ruled nation would be strictly enforced.
"Given the belligerent manner in which they are constantly threatening their neighbors, I don't think there's any question that that would be a destabilizing situation that would be a profound threat to not only the United States' security, but to world security," Obama said.
He promised to end a cycle of allowing impoverished North Korea to create a crisis, then be granted concessions in the form of food, fuel and other incentives to back down, only to renege on its promises.
"This is a pattern they've come to expect," Obama said. "We are going to break that pattern."
While talking tough, Obama -- who took office in January pledging a new approach of talking to America's enemies -- also extended an olive branch.
"I want to be clear that there is another path available to North Korea ... including full integration into the community of nations," Obama said. "That destination can only be reached through peaceful negotiations that achieve the full and verifiable denuclearization of the Korean peninsula."
North Korea, which last month conducted a nuclear explosion and missile tests in defiance of international pressure, said at the weekend it would start a uranium enrichment program and weaponize all its uranium in response to new U.N. sanctions.
Lee said the UN Security Council's vote last week to expand sanctions on North Korea showed the global community's firm resolve.
"The North Koreans will come to understand that this is different, that they will not be able to repeat the past or their past tactics and strategies," Lee said.
The South Korean leader has followed a tough line on North Korea, even before Pyongyang raised tensions in recent weeks by test-firing missiles, restarting a plant to produce arms-grade plutonium and holding a nuclear test on May 25.
NORTH KOREAN HEIR?
Japan's Asahi newspaper reported on Tuesday that the youngest son of North Korean leader Kim Jong-il secretly visited China last week and his hosts were told he had been appointed heir to the ruling family dynasty,
The report, citing unidentified informed sources, said Kim Jong-un met Chinese President Hu Jintao and other leaders of the ruling Communist Party when he flew to Beijing around June 10.
Analysts have said North Korea's recent nuclear test and other belligerent acts may be aimed at a domestic audience, with the elder Kim trying to bolster his position at home to secure the succession of his youngest son. The 67-year-old leader is believed to have suffered a stroke last year. Continued...
Source: Reuters

North Korea worries overshadow trade as Obama, Lee meet

By Doug Palmer
WASHINGTON (Reuters) - President Barack Obama and South Korean President Lee Myung-bak are expected to show a united front against North Korea when they meet on Tuesday, but they may not make much progress on free trade pact that has been stalled for two years.
"I don't think you'll see any daylight between President Lee and President Obama in terms of North Korea," said Victor Cha, who was a White House adviser on North Korean issues to former President George W. Bush.
The South Korean leader has followed a tough line on North Korea, even before Pyongyang raised tensions in recent weeks by test-firing missiles, restarting a plant to produce arms-grade plutonium and holding a May 25 nuclear test.
Lee's insistence that any new aid to Pyongyang depends on impoverished North Korea making progress in six-party nuclear disarmament talks shows how close Washington and Seoul are now aligned on that issue, Cha said.
But a free trade pact signed in June 2007 under Bush and late President Roh Moo-hyun and worth billions of dollars in new trade to each country could be the awkward "elephant in the room" when Obama and Lee meet, said Steven Schrage at the Center for Strategic and International Studies.
During last year's election campaign, Obama said the accord's auto and other manufacturing provisions favored South Korea too much and he urged Bush to renegotiate it.
MARKET BARRIERS
Since taking office, Obama has directed U.S. trade officials to work with Seoul to resolve concerns over barriers to South Korea's market while also committing tens of billions of dollars in U.S. taxpayer money to prop up Chrysler and GM.
The U.S. International Trade Commission in 2007 estimated the pact would boost U.S. exports about $10 billion to $11 billion and have a negligible impact on the U.S. auto industry because increased imports from South Korea would mostly displace other suppliers.
Lee has enthusiastically embraced the deal and met with U.S. Trade Representative Ron Kirk on Monday to discuss it.
But Seoul has refused to renegotiate the auto provisions that many U.S. lawmakers find objectionable, saying it made significant concessions in the original deal.
Lee also faces problems at home winning approval for the pact. Opposition lawmakers are blocking parliament from meeting until Lee apologizes for a corruption probe that appears to have prompted Roh to commit suicide last month.
U.S. lawmakers have indicated that healthcare reform and energy legislation with take precedence this year over pending trade deals with South Korea, Colombia and Panama.
"I wouldn't expect much more than a statement (from Obama and Lee) on the FTA's importance and the need to get it done in a reasonable time frame," said Troy Stangarone, congressional affairs director at the Korea Economic Institute.
The White House meeting follows North Korea's announcement on Saturday that it would start an uranium enrichment program and weaponize all its plutonium in response to fresh UN sanctions. Pyongyang also threatened military action if Washington and its allies tried to isolate it. Continued...
Source: Reuters

Obama troubled by Iran post-election violence

By Jeff Mason
WASHINGTON (Reuters) - President Barack Obama said on Monday he was deeply troubled by post-election violence in Iran and urged the Islamic republic to investigate voting irregularities in a way that would not result in bloodshed.
Obama said he would continue pursuing tough, direct dialogue with Tehran despite deep differences with incumbent President Mahmoud Ahmadinejad, who was officially declared the winner of last Friday's vote.
"I am deeply troubled by the violence that I've been seeing on television," Obama told reporters after talks with Italian Prime Minister Silvio Berlusconi at the White House.
"The democratic process, free speech, the ability of people to peacefully dissent -- all those are universal values and need to be respected," he said.
Obama stressed that the United States respected Iran's sovereignty and could not judge how the election was run because neither U.S. nor international observers were present.
"The Iranian government says that they are going to look into irregularities that have taken place," Obama said.
"It's important that moving forward, whatever investigations take place are done in a way that is not resulting in bloodshed and is not resulting in people being stifled in expressing their views."
Obama said the world was inspired by Iranian demonstrators who marched against what they say was a rigged election.
"To those people who put so much hope and energy and optimism into the political process, I would say to them that the world is watching and inspired by their participation, regardless of what the ultimate outcome of the election was," Obama said.
Obama, a Democrat who has taken criticism from his Republican opponents for trying to engage with U.S. foes, said the election results did not alter his desire for direct diplomacy with Tehran.
"We will continue to pursue a tough, direct dialogue between our two countries and we'll see where it takes us," Obama said.
"The use of tough, hard-headed diplomacy -- diplomacy with no illusions about Iran and the nature of the differences between our two countries -- is critical when it comes to pursuing a core set of our national security interests."
(Reporting by Jeff Mason; Editing by Eric Beech)

Source: Reuters

N. Korea worries overshadow trade as Obama, Lee meet

By Doug Palmer
WASHINGTON (Reuters) - President Barack Obama and South Korean President Lee Myung-bak are expected to show a united front against North Korea when they meet on Tuesday, but they may not make much progress on free trade pact that has been stalled for two years.
"I don't think you'll see any daylight between President Lee and President Obama in terms of North Korea," said Victor Cha, who was a White House adviser on North Korean issues to former President George W. Bush.
The South Korean leader has followed a tough line on North Korea, even before Pyongyang raised tensions in recent weeks by test-firing missiles, restarting a plant to produce arms-grade plutonium and holding a May 25 nuclear test.
Lee's insistence that any new aid to Pyongyang depends on impoverished North Korea making progress in six-party nuclear disarmament talks shows how close Washington and Seoul are now aligned on that issue, Cha said.
But a free trade pact signed in June 2007 under Bush and late President Roh Moo-hyun and worth billions of dollars in new trade to each country could be the awkward "elephant in the room" when Obama and Lee meet, said Steven Schrage at the Center for Strategic and International Studies.
During last year's election campaign, Obama said the accord's auto and other manufacturing provisions favored South Korea too much and he urged Bush to renegotiate it.
MARKET BARRIERS
Since taking office, Obama has directed U.S. trade officials to work with Seoul to resolve concerns over barriers to South Korea's market while also committing tens of billions of dollars in U.S. taxpayer money to prop up Chrysler and GM.
The U.S. International Trade Commission in 2007 estimated the pact would boost U.S. exports about $10 billion to $11 billion and have a negligible impact on the U.S. auto industry because increased imports from South Korea would mostly displace other suppliers.
Lee has enthusiastically embraced the deal and met with U.S. Trade Representative Ron Kirk on Monday to discuss it.
But Seoul has refused to renegotiate the auto provisions that many U.S. lawmakers find objectionable, saying it made significant concessions in the original deal.
Lee also faces problems at home winning approval for the pact. Opposition lawmakers are blocking parliament from meeting until Lee apologizes for a corruption probe that appears to have prompted Roh to commit suicide last month.
U.S. lawmakers have indicated that healthcare reform and energy legislation with take precedence this year over pending trade deals with South Korea, Colombia and Panama.
"I wouldn't expect much more than a statement (from Obama and Lee) on the FTA's importance and the need to get it done in a reasonable time frame," said Troy Stangarone, congressional affairs director at the Korea Economic Institute.
The White House meeting follows North Korea's announcement on Saturday that it would start an uranium enrichment program and weaponize all its plutonium in response to fresh UN sanctions. Pyongyang also threatened military action if Washington and its allies tried to isolate it. Continued...
Source: Reuters

Obama lobbies U.S. doctors on healthcare reforms

Obama lobbies doctors
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By David Alexander
CHICAGO (Reuters) - President Barack Obama on Monday warned doctors the U.S. healthcare system was a ticking time bomb and urged them to support his overhaul plan, which includes a public insurance program that many of them view with skepticism.
Obama took his healthcare campaign to the annual meeting of the influential American Medical Association in Chicago, where he likened the U.S. healthcare system to struggling General Motors, which has filed for bankruptcy protection.
"If we do not fix our healthcare system, America may go the way of GM; paying more, getting less, and going broke," he said.
"Make no mistake: the cost of our healthcare is a threat to our economy," said Obama, who wants a healthcare reform bill on his desk by October. "It is a ticking time bomb for the federal budget. And it is unsustainable for the United States of America."
The president's speech comes as debate sharpens over elements of the healthcare overhaul being drafted by Congress, including how to pay for the plan and whether it should include a public insurance program to compete with private insurers.
Many opposition Republicans reject a public plan and say there is not enough support in Congress for it. They argue it would ultimately drive private insurers out of business.
The AMA also has expressed doubts about any public plan that would be similar to the Medicare program for the elderly. But the group said last week it was willing to consider other public options being considered by Congress, including member-owned cooperatives.
The U.S. healthcare industry costs about $2.5 trillion annually but leaves 46 million Americans uninsured and with little access to medical care. Despite the cost, the U.S. system consistently ranks worse than other developed countries on many key measures.
MORE COMPETITION
Obama said a public healthcare plan would "inject competition into the healthcare market that forces waste out of the system and keeps the insurance companies honest."
He acknowledged that expanding coverage to all Americans would have a short-term cost but stressed it would be deficit neutral in the next decade.
With some estimates putting the cost of healthcare reform at $1.2 trillion, critics say the reforms will only add to the country's growing mountain of debt.
"There are already voices saying the numbers don't add up. They are wrong," Obama said, outlining how he planned to pay for the reforms, including tax increases on wealthier Americans and savings in spending cuts.
He took a swipe at Republicans and others who accuse him of trying to create a single, government-controlled healthcare system, accusing them of "fear-mongering."
"They'll give dire warnings about socialized medicine and government takeovers, long lines and rationed care, decisions made by bureaucrats and not doctors," he said. "We've heard it all before and because these fear tactics have worked, things have kept getting worse." Continued...
Source: Reuters

California to miss budget deadline, "meltdown" nears

SACRAMENTO, California (Reuters) - California lawmakers were poised to miss their constitutional deadline on Monday for a state budget, bringing the state's government closer to running out of cash.
Democrats and Republicans in the legislature's budget conference committee worked through Monday afternoon on a variety of proposals addressing Gov. Arnold Schwarzenegger's plan to close a $24.3 billion budget shortfall, but they failed to find common ground on its most dramatic proposal: eliminating the state's welfare system.
"This meeting is not headed in that direction," Republican Assemblyman Roger Niello said.
California's revenues are plunging amid recession, rising unemployment and the prolonged housing crisis, and the state is unable to borrow its way out of its immediate financial trouble by issuing debt at low cost because of its budget gap.
It will run out of cash within weeks if it does not balance its books, leaving it little option but to postpone a variety of payments, according to State Controller John Chiang, who estimated last week that California was "less than 50 days away from a meltdown of state government."
Democrats, who control California's legislature, said their aim is to cut spending, but to maintain a base of government programs, including many for the needy.
Republicans countered that only dramatic cuts will balance California's budget for its next fiscal year, which begins in July.
Some state Assembly Democrats have talked about the possibility of increasing some taxes to raise revenues, but both Schwarzenegger and Republicans said no.
Republicans have enough votes to block budgets from passing and have used the power in previous years to delay spending plans from reaching the governor's desk.
In fact, the legislature has missed its constitutional budget deadline for more than 20 years running. It is not unusual for the government of the most populous U.S. state to begin its new fiscal year without a spending plan in place which is one reason why California has the lowest credit rating of any U.S. state.
In most years, California officials have been able to rely on the state's growing economy to fill the state's government's coffers -- even as the bickered over budget plans.
The sooner California has a budget, the sooner it will be able to approach Wall Street to sell short-term debt in the form of revenue anticipation notes to help smooth out its near term finances, according to the state treasurer's office.
(Reporting by Jim Christie, editing by Leslie Gevirtz)

Source: Reuters

Kennedy health plan estimated to cost $1 trillion

By Richard Cowan
WASHINGTON (Reuters) - A U.S. Senate panel proposal to expand healthcare coverage would increase the federal deficit by about $1 trillion over 10 years and still leave millions without insurance, a congressional analysis said on Monday.
The Congressional Budget Office (CBO) said its calculations were preliminary and stressed that the Democratic-sponsored legislation was still being drafted.
But its estimates could fuel opposition to President Barack Obama's drive for healthcare reform, which critics fear would result in an expensive government takeover of the U.S. healthcare system.
There are now an estimated 46 million people in the United States without any health insurance, and devising a way to get them coverage has become a major goal of Obama's presidency.
In a letter to Senator Edward Kennedy, chairman of the Senate's Health, Education, Labor and Pensions Committee and author of the plan, the non-partisan CBO estimated that once the reform plan was fully implemented about 39 million people would get coverage through new insurance exchanges -- a kind of clearinghouse for medical plans.
Individuals and small businesses would be able to shop in the exchanges for policies offered by insurance companies. Obama and fellow Democrats hope that a new, government-run plan would be one of those options.
But the CBO also said the number of people who receive coverage through an employer, currently the main provider for health benefits for most Americans, would fall by about 15 million, or 10 percent. And the number of people covered by government programs would fall about eight million as they move into policies offered through exchanges, the CBO said.
SHORT OF OBAMA'S GOAL
The CBO concluded that under the Kennedy plan, "the net decrease in the number of uninsured people would be about 16 million" -- far short of Obama's goal to provide healthcare coverage to all Americans.
Kennedy spokesman Anthony Coley said in a release: "As the CBO letter indicates, this is an incomplete statement of an incomplete bill. We look forward to a complete CBO estimate of a complete bill."
The CBO analyzed only the provisions of Kennedy's proposal, unveiled just last week. The Senate Finance Committee, however, is charged with finding ways to pay for it and is still developing proposals.
Obama has said any healthcare reform bill that Congress sends him must be fully paid for and not increase the deficit. One revenue-raising proposal being considered would tax some of the health insurance provided to workers by their employers.
While the CBO estimated the $1 trillion pricetag over 10 years, it cautioned that the impact of a number of provisions remained uncertain.
Meanwhile, the House of Representatives Ways and Means Committee, one of several congressional committees drafting legislation, said its proposal would change the way doctors are reimbursed under the Medicare program for the elderly, something physicians' associations have been pushing for.
The committee said its new formula would dramatically alter the way most doctors are reimbursed and would cost the federal government less than $300 billion over 10 years. Continued...
Source: Reuters

Obama: Italy agrees to take 3 Guantanamo inmates

WASHINGTON (Reuters) - President Barack Obama won agreement from Italian Prime Minister Silvio Berlusconi on Monday to accept three prisoners held at the U.S. military prison at Guantanamo Bay in Cuba.
Obama made the announcement after talks with Berlusconi as the U.S. leader pressed efforts to move inmates from Guantanamo, which houses foreign terrorism detainees and has drawn international criticism, to other countries as part of his plan to close the prison by January.
"I ... thanked the prime minister for his support of our policy of closing Guantanamo," Obama said after White House talks with Berlusconi. "This is not just talk. Italy has agreed to accept three specific detainees."
The European Union said earlier on Monday its member states were ready to help resettle detainees freed from the detention center at the U.S. Naval base in Cuba.
Three Guantanamo detainees were transferred to Saudi Arabia "under appropriate security measures" last week, the U.S. Justice Department said on Friday.
The Saudi transfers followed the transfer of six other detainees last week -- four Chinese members of the Uighur ethnic group were released in Bermuda, and one detainee from Iraq and another from Chad were sent to their home countries.
Within days of taking office on January 20, Obama set a one-year deadline for closing the prison, which now holds more than 220 detainees, as part of his effort to repair the United States' tarnished image abroad.
The Guantanamo prison, opened under former President George W. Bush after the September 11, 2001, attacks, drew international criticism for holding prisoners indefinitely, many without charges. Human rights groups accused the Bush administration of condoning the torture of inmates held there.
Obama is seeking help from U.S. allies in resettling Guantanamo inmates as he faces strong opposition in Congress to sending them to prisons in the United States. He has insisted, however, that some prisoners will be jailed on U.S. soil.
(Editing by Patricia Zengerle)

Source: Reuters

Obama officials lobby lawmakers to approve IMF money

By Susan Cornwell
WASHINGTON (Reuters) - Senior Obama administration officials are lobbying Congress hard to approve $108 billion for the International Monetary Fund ahead of a vote expected this week, according to documents that emerged on Monday.
The U.S. credit for the IMF is attached to a bill funding the Iraq and Afghan wars and is moving to the floor of the House of Representatives, prompting an uproar among Republicans and some Democrats who say they will not vote for IMF funding tagged onto an unrelated bill.
Secretary of State Hillary Clinton and Defense Secretary Robert Gates, along with National Security Adviser Jim Jones, wrote Congress saying the IMF needs the money to confront the global financial crisis, said the Washington-based Center for Economic and Policy Research, which released a copy of the letter.
Their letter noted the IMF had been able to act swiftly to avoid crises in Pakistan and other countries and was supporting U.S. allies like Mexico, Poland and Colombia.
"With adequate funding, the IMF will strengthen our national security by mitigating the economic crisis and inhibiting the growth of terrorist networks," the June 10 letter to congressional leaders of both parties said.
The Treasury Department sent U.S. lawmakers fact sheets to demonstrate why it considers the IMF funding critical, according to the Center.
Failure to pass the IMF legislation would be a major setback for President Obama, who pledged the IMF funds at a meeting of G20 leaders in early April. At that gathering, the G20 committed to tripling IMF resources with a $500 billion boost as more countries hit by the global financial crisis turn to it for emergency loans.
IMF Managing Director Dominique Strauss-Kahn said last week that the IMF had collected nearly all the money pledged to it by the G20 member nations, but he was assuming the U.S. portion would pass.
The U.S. war funding measure will provide a $100 billion credit line to the IMF, increase the U.S. member contribution to the IMF by another $8 billion and authorize the United States to back the IMF's plan to sell 400 tonnes (12.97 million ounces) of gold.
U.S. officials have said the $108 billion package will cost taxpayers $5 billion because it is largely a credit line.
The Center did a study last month disputing this. It estimated the IMF contribution would cost between $16.6 and $26.3 billion, which it calls a conservative estimate that assumed there was no risk of default.
Clay Lowery, former U.S. assistant secretary of Treasury during Bush administration, said while he was not a fan of attaching the IMF legislation to a war funding bill, Republicans should support it.
"I do believe that the substance behind the Obama administration's IMF request is correct," Lowery said in a letter published in the Wall Street Journal on Monday.
"As an assistant secretary of Treasury under a Republican president, I am of the firm belief that Republicans should help the Obama administration show international leadership by supporting the content of the proposal," he wrote.
The Treasury fact sheet sent to lawmakers argued that more loans to the IMF may make money for taxpayers through interest earned on the credit. Continued...
Source: Reuters

Obama reform plans target banks, securitization

By Kevin Drawbaugh
WASHINGTON (Reuters) - The Obama administration will target critical weaknesses in the troubled U.S. financial system, such as thin bank capital cushions and eroded lending standards, when it proposes an overhaul of financial regulation this week, two senior officials said on Monday.
In the fullest summary to date of the administration's reform plan, Treasury Secretary Timothy Geithner and White House economic adviser Lawrence Summers urged stronger consumer and investor protections, new "systemic risk" policing powers for the Federal Reserve, and less reliance on credit ratings.
The plan was outlined by the officials in The Washington Post ahead of the release on Wednesday of a detailed package of proposals that has been under discussion for six months.
President Barack Obama will speak on Wednesday on his "new rules of the road for the financial industry," a White House official said. Geithner will joint him at the event.
Obama has said he wants to enact changes into law by the end of the year. Several more months of debate lie ahead in Congress, with Democrats widely supportive of the president's plan. A group of U.S. House of Representatives Republicans last week unveiled a rival package of more modest proposals.
"The White House plan is similar to the House Republican regulatory reform legislation in some ways," House Republican Leader John Boehner said in a statement. "But it also includes a provision that would allow government bureaucrats to continue deciding behind closed doors who gets taxpayer funds."
In a sharp repudiation of government bailouts launched last year under the Republican Bush administration, some congressional Republicans are now making the slogan "no more bailouts" the centerpiece of their reform strategy.
Committees of the U.S. Congress have scheduled more than a dozen hearings between now and mid-July on financial reforms, congressional aides told Reuters on Monday.
At the same time, the powerful financial services industry is pushing to water down the Obama plan, with time on the side of the status quo, especially if the economy keeps improving and public outrage over the financial crisis fades.
RULES REWRITE SOUGHT
Administration officials have argued that a rewrite of U.S. financial rules is needed to prevent future crises like the one that has been hammering world economies since early 2008.
The Geithner-Summers outline offered few new details not already known and it sidestepped questions about streamlining bank supervision and regulating over-the-counter (OTC) derivatives.
But it did clearly underline the administration's determination to give the Federal Reserve a central role, and to create a new way for the government to handle troubled, large, non-bank firms whose failure could pose a risk to the economy.
Geithner and Summers said a key goal will be "raising capital and liquidity requirements for all institutions," with tighter standards for the biggest, most interconnected firms.
In addition, they said, the big firms whose failure could threaten the entire system "will be subject to consolidated supervision by the Federal Reserve, and we will establish a council of regulators with broader coordinating responsibility across the financial system." Continued...
Source: Reuters

Obama lobbies doctors on healthcare reforms

By David Alexander
CHICAGO (Reuters) - President Barack Obama on Monday warned doctors the U.S. healthcare system was a ticking time bomb and urged them to support his overhaul plan, which includes a public insurance program that many of them view with skepticism.
Obama took his healthcare campaign to the annual meeting of the influential American Medical Association in Chicago, where he likened the U.S. healthcare system to struggling General Motors, which has filed for bankruptcy protection.
"If we do not fix our healthcare system, America may go the way of GM; paying more, getting less, and going broke," he said.
"Make no mistake: the cost of our healthcare is a threat to our economy," said Obama, who wants a healthcare reform bill on his desk by October. "It is a ticking time bomb for the federal budget. And it is unsustainable for the United States of America."
The president's speech comes as debate sharpens over elements of the healthcare overhaul being drafted by Congress, including how to pay for the plan and whether it should include a public insurance program to compete with private insurers.
Many opposition Republicans reject a public plan and say there is not enough support in Congress for it. They argue it would ultimately drive private insurers out of business.
The AMA also has expressed doubts about any public plan that would be similar to the Medicare program for the elderly. But the group said last week it was willing to consider other public options being considered by Congress, including member-owned cooperatives.
The U.S. healthcare industry costs about $2.5 trillion annually but leaves 46 million Americans uninsured and with little access to medical care. Despite the cost, the U.S. system consistently ranks worse than other developed countries on many key measures.
MORE COMPETITION
Obama said a public healthcare plan would "inject competition into the healthcare market that forces waste out of the system and keeps the insurance companies honest."
He acknowledged that expanding coverage to all Americans would have a short-term cost but stressed it would be deficit neutral in the next decade.
With some estimates putting the cost of healthcare reform at $1.2 trillion, critics say the reforms will only add to the country's growing mountain of debt.
"There are already voices saying the numbers don't add up. They are wrong," Obama said, outlining how he planned to pay for the reforms, including tax increases on wealthier Americans and savings in spending cuts.
He took a swipe at Republicans and others who accuse him of trying to create a single, government-controlled healthcare system, accusing them of "fear-mongering."
"They'll give dire warnings about socialized medicine and government takeovers, long lines and rationed care, decisions made by bureaucrats and not doctors," he said. "We've heard it all before and because these fear tactics have worked, things have kept getting worse." Continued...
Source: Reuters

U.S. financial regulation reforms outlined

By Kevin Drawbaugh
WASHINGTON (Reuters) - The Obama administration will target critical weaknesses in the troubled U.S. financial system, such as thin bank capital cushions and eroded lending standards, when it proposes an overhaul of financial regulation this week, two senior officials said on Monday.
In the fullest summary to date of the administration's reform proposal, Treasury Secretary Timothy Geithner and White House economic adviser Lawrence Summers said the plan will also urge stronger consumer and investor protections and new powers for the Federal Reserve.
The two officials outlined the plan in The Washington Post ahead of the release on Wednesday of a detailed package of proposals that has been under discussion for six months.
Months of debate in Congress over the plan lie ahead, with time on the side of the status quo, especially if the economy continues to improve and public outrage at the banks begins to fade. Administration officials have argued a rewrite of U.S. financial rules is needed to prevent future crises.
The outline offered few new details on elements of the plan that were already known and sidestepped unanswered questions about streamlining bank supervision, restraining executive pay and regulating over-the-counter (OTC) derivatives.
But it did clearly underline the administration's determination to give the Fed a central role, and to create a new way for the federal government to handle troubled firms whose failure could pose a risk to the economy.
President Barack Obama will make remarks on Wednesday on "his comprehensive plan for new rules of the road for the financial industry," a White House official said. Geithner will joint him at the event.
The Treasury secretary and Summers said that a key administration goal will be "raising capital and liquidity requirements for all institutions, with more stringent requirements for the largest and most interconnected firms."
In addition, they said, large and interconnected firms whose failure could threaten the stability of the system "will be subject to consolidated supervision by the Federal Reserve, and we will establish a council of regulators with broader coordinating responsibility across the financial system."
These dual proposals -- making the Fed a "systemic risk" regulator and creating a related inter-agency council in the same area -- come amid concerns by some lawmakers and other regulators about the Fed getting too much power.
NEW RULES FOR SECURITIZED PRODUCTS
The officials said the plan will propose new reporting requirements for issuers of asset-backed securities, as well as a rule saying that securitizers must "retain a financial interest" in the performance of the asset-backed securities they are involved in issuing.
Securitization, or the packaging and selling of loans as securities, has been blamed by critics for eroding lending standards in the mortgage business.
A Treasury spokesman said the administration would propose requiring lenders to retain 5 percent of the risk they securitize. A bill to do this was approved in May by the U.S. House of Representatives, but is languishing in the Senate.
Addressing another market implicated in the crisis, the officials said the Obama plan will urge oversight of OTC derivatives. It will call for unspecified "harmonizing" of futures and securities regulation, and stronger payment and settlement systems, they said. Continued...
Source: Reuters

Senate GOP launches health care attack

POLITICO (Washington) - As President Barack Obama tried to sell the American Medical Association today on his health care overhaul, the top Senate Republicans launched a familiar line of attack.
They warned of rationed medical care, lack of patient control and government bureaucracy.
"The American people will not stand for rationed health care," Senate Minority Whip Jon Kyl said Monday. "We believe that a one size fits all approach is the wrong approach."
Senate Minority Leader Mitch McConnell, in a floor speech scheduled for this afternoon warned that what Americans "don't want is a Washington takeover of health care along the lines of what we've already seen with banks, insurance companies, and the auto industry. Americans don't want a government-run system that puts bureaucrats between patients and doctors."
Kyl and McConnell introduced a bill today that would bar the federal government from using "comparative effectiveness research" — which, Kyl charged in a news conference timed to coincide with Obama's AMA speech in Chicago, would lead to rationing of care.
Kyl said that the research would result in the delaying of health care treatment to a patient based on cost, which he believes would weaken the quality of care.
"I don't want America to begin rationing care to their citizens in the way these other countries do," Kyl said.
The GOP offensive comes as Obama began his most forceful push yet for a health care overhaul. At the center of the plan Obama outlined in his speech Monday is a vast expansion of a public option for patients. Obama has faced resistance from moderates in his own party, and from Republicans, who worry about the costs associated with a public option. Last week, Obama proposed $313 billion in savings to help pay for the overhaul.
But Kyl said today that a government-run plan would inevitably lead to poorer care for patients, and he was quick to point out that the AMA had been skeptical of Obama's call for a government insurance plan.
"No one should go without care and no one should go without quality care," Kyl said. "No one wants their care rationed by the insurance companies or the federal government."
Kyl also accused Obama of trying to ram a health care reform bill through Congress before the August recess before Americans fully understood the details of what he was proposing.
"It should be the American people listening to what Washington is proposing and then giving us their feedback," Kyl said.
Republicans have been criticized for not producing serious alternatives to the Democratic health care plan, but House GOP Conference Chairman Mike Pence told reporters today that Republicans in the lower chamber would begin bringing their alternatives to the fold in the days ahead.
"You're going to see Republicans in the coming days bringing forward policies for health care reform," Pence told reporters Monday afternoon, noting that the party rank-and-file believed a government plan would result in people losing their insurance.
Senate GOP Conference Chairman Lamar Alexander (R-Tenn.) predicted that Americans would begin to sour on President Barack Obama's call for a public option.
"Washington takeover are two words we've been hearing a lot from the Obama Administration these days," said Alexander. "That's a different direction that Republicans want to go." Continued...
Source: Reuters