Days 21-30
- Day 21: President Obama Stimulus Bill Wins in Senate with
Spending and Tax Cuts - Day 22: Senate Passes Economic Recovery Bill; Senate and
House Must Agree on Final Package - Day 23: Obama seeks to modernize collection and use of health information
- Day 24: Republican Judd Gregg Quits over “irresolvable conflicts”
with Obama Administration - Day 25: Fears of International Trade War Forces Revisions to
Parts of Buy American - Day 26: Obama Administration Claims Stimulus Bill Advances
Health Care Reform - Day 27: Creation of jobs is ‘Job One’ for U.S. Economic Recovery
- Day 28: Critics Concerned that Tax Cuts Alone will not Spur Consumer Spending
- Day 29: Afghanistan Gets More U.S. Personnel for Security and Training
- Day 30: President Obama calls the housing meltdown a
"crisis unlike we've ever known"
- Obama Announces $75 Billion Foreclosure Prevention Plan
The plan to stem the housing crisis that President Obama released today is broader and costlier than originally thought.
President Obama presented a $75 billion plan designed to keep as many as 9 million families in their homes. It is intended to help homeowners who owe more on their mortgages than their homes are worth and borrowers who are close to foreclosure.
Obama said: "In the end, all of us are paying a price for this home mortgage crisis. And all of us will pay an even steeper price if we allow this crisis to continue to deepen -- a crisis which is unravelling homeownership, the middle class, and the American dream itself. But if we act boldly and swiftly to arrest this downward spiral, then every American will benefit."
The money for the Foreclosure Prevention Program is coming from existing bailout funds of $50 billion and both Fannie Mae and Freddie Mac will be required to contribute $25 billion.
The Plan contains two specific requirements: Fannie Mae and Freddie Mac are to (1) automatically approve refinancing at current rates.
This change is expected to give 4-5 million people an immediate reduction in their mortgage payments; (2) make funds available to modify at-risk mortgages to lower down payments. Lenders will have to reduce monthly payments to 38 percent of the borrower's income with an additional 7% reduction guaranteed by the government. For many, a 31% decrease will be a welcomed savings.
"This plan will not save every home," the President admitted`. "But it will give millions of families resigned to financial ruin a chance to rebuild."
- Goal is to have enough troops to "seize and hold" territory, maintain security
- Troops will train Afghan units, set up bases and smaller combat outposts
President Barack Obama has made the decision to send more troops to Afghanistan according to the Pentagon today. The President agrees with military leaders who say al Qaeda jeopardizes the U.S. from the from the Afghan-Pakistani border.
The Obama administration has been immersed in discussions over U.S. policy in Afghanistan and it has a reviewed report by Gen. David Petraeus, the commander in the region. General David McKieman, the top commander in Afghanistan had requested that the Pentagon send an additional 30,000 troops.
At this point, 12,000 additional personnel have been approved to join the 38,000 troops already in the region. Another 5,000 troops will be deployed at a later date to support combat troops, bringing the total to 17,000 the Defense Department said. A senior administration official confirmed the total.
Part of the mission is to help train Afghan forces develop their own defence units. The main objective at this point is for American troops to ``seize and hold`` the regions already under allied control. Small bases and small combat outposts will be set up to move around in smaller units to ferret out and fight counterterrorism, in particular the Taliban.
Can tax cuts spur immediate consumer spending
The debates on many elements of the Stimulus Plan continue with only one day left before President Obama signs the bill. But there is increasing concern among some lawmakers that the tax cuts for individuals may not be enough to encourage spending.
The stimulus plan would give a $400 tax cut to individuals and an $800 cut to couples. It means an extra $13 a week for most workers starting in June. Next January that amount drops to around $8 extra per week.
Consumer spending represents about two-thirds of the economy. Much of the success of Obama’s Plan depends on consumer’s buying habits in the immediate future.
Democrats insist that their tax cut proposal is a more effective stimulus than the Bush one time lump sum introduced last spring.
Democratic Senator Charles Schumer (NY) supports Obama’s policy saying: "Instead of giving one pay check at once, which George Bush did, and it really didn't stimulate the economy, the economists said 'stretch it out and people are more likely to put it into economy and get our economy going.”
Small business in the U.S. creates around three-quarters of all new jobs. While the tax benefits for business were eroded by millions of dollars during compromise sessions of the bill, it remains to be seen if small business can revive enough to make a difference in the job-less rate and in turn consumer spending.
- Infrastructure Projects High On Obama’s Agenda
- Stimulus Plan allots $4 million for Cleaning Up Mines
Infrastructure Projects High on Obama’s Agenda
'Shovel Ready' is the new term coined for infrastructure projects that will create jobs on a fairly immediate basis as a result of the capital infusion pledged by the rescue package. “Some projects are ready to begin as soon as President Obama signs the $787 billion stimulus bill on Tuesday”, said David Alexrod today.
David Axelrod, Obama’s senior advisor says: "There will be signs of activity very quickly. "It's going to take time that to show up in the stats. Without this program, it could be much much worse and so I don't expect the arrow to bend down by the end of the year, but I do expect the rise in unemployment to be retarded by the things that were done this week."
Axelrod said that it is expected that unemployment will rise before the current rate of 7.6% starts to come down as a result of stimulus activity. The White House estimates that the rescue package will save or create 3.5 million jobs.
Stimulus Package Includes Cash for Mines Cleanup
The Bureau of Land Management will receive millions of dollars to clean up toxic abandoned mines that are on public land. The final bill allots more than $1.5 billion for construction and maintenance projects in the Bureau of Land Management, the National Park Service and the Forest Service. The mandate is to clean up the many mine sites that pose safety hazards to humans and wildlife.
There are thousands of old mines from California to Montana to Alaska, some dating back to the 19th century, that are on Park Service land and are exposing people to dangerous contaminants such as arsenic, lead and mercury. Other dangers include deadly gases, collapsing mine walls and explosive chemicals.
An environmental group focused on mining issues, Earthworks, said through their spokesperson, Lauren Pagel: "These much needed funds will create thousands of jobs, reduce water pollution, eliminate public safety threats, and restore fish and wildlife habitat in rural communities across the country."
Congress approved $19 Billion for Electronic Medical Records Project
- Medical Treatment Research Gets $1.1 Billion
The approved Senate version of the Stimulus Bill is seen by many as an advance into the 21st century for the collection and use of private medical information. The government already spends hundreds of millions of dollars on medical research and positive health outcomes when there is appropriate medical care.
Both presidential candidates, McCain and Obama agreed on comparative health research. They also stressed the need to electronically store patient records on a computer system rather than paper charts as has been the practice up until now.
Democrats have increased that spending, but at the same time a watch-dog group will be formed through a 15-member council. The council will be required to report every year on the state of comparative effectiveness research and it will be their job to make recommendations to improve the system.
The bill calls for $17 billion in higher government health insurance payments for doctors and hospitals, beginning in 2011, when they adopt electronic health records.
Administration officials said the money for prevention programs will not only save lives but will also help stimulate the economy when more workers are hired to provide medical testing and for access to preventative measures for stop smoking campaigns and avoiding complications from diabetes, heart disease and obesity.
The bill also sets aside $500 million to provide incentives for physicians, dentists and nurses to practice in communities where there is limited access to health care. The federal government provides scholarships and grants and helps people pay off their student loans if they agree to work in certain communities where there's a shortage of health care providers.
Concern has been voiced by drug makers and medical-device manufacturers that the council would negatively affect demand for some of their products if they are found not to be any more effective than cheaper alternatives. If that happens, private insurers will not be far behind in denying access to payment of some services.
To address concerns from opponents, lawmakers say the bill does not provide for the council to mandate coverage, reimbursement, or other policies for any public or private insurers.
"Don't we want to be spending our resources on what will improve care and what will help treatment?" a supporter said. "There's widespread agreement on the need for comparative effectiveness. It's not a partisan thing."
- Buy American Policy Attracts International Pressure
The Protectionist Measure as currently written in the economic rescue plan is serious enough for U.S. trading partners to suggest legal action against the U.S. for breaking international trade agreements. The Buy American measure contravenes an agreement by the leaders of major economies not to resort to protectionism during a world economic downturn.
During last year’s campaign, Obama questioned whether U.S. trade agreements offered enough protection for labour and environmental standards. But seeing the global reaction over the passage of the Stimulus Package he is mindful not to antagonize trading partners though he has clearly conveyed that the whole rescue package was desperately needed to save the U.S. economy even if particular measures had to be ironed out after the fact.
Obama has said the stimulus package should not include protectionist language that could spark a trade war. The measures do give the administration discretion about how to implement spending decisions, while still meeting trade obligations.
Of course, U.S. labour groups are pleased that the administration has promised that U.S. Treasury money will be used effectively to support domestic job creation. Industry groups on the other hand are predicting that companies in businesses in will be negatively affected.
One hundred business groups and companies, including major construction, defense and high-tech companies have appealed to Senate leaders with the message the provision "will harm American workers and companies across the entire U.S. economy, undermine U.S. global engagement and result in mirror-image trade restrictions abroad that would put at risk huge amounts of American exports."
It’s a tough balance for Obama in a world that is so closely tied to the U.S. on trade and many other international issues. He’s got 65 more days in his first 100 and they will be tough times for sure.
- Republican Gregg Accepts Secretary of Commerce post
- Secretary of Commerce Not a Good Fit for Gregg
President Obama was obviously pleased when GOP Senator Judd Gregg accepted the Secretary of Commerce position. To many observers, the appointment appeared to be a sign of good will from the Republican side of Congress.
Obama said of the appointment: “Clearly, Judd and I don't agree on every issue, most notably who should've won the [presidential] election," Obama joked, "but we do agree on the urgent need to get American businesses and families back on their feet."
Gregg will be an "able, persuasive ambassador for industry" because he is a skilled negotiator and a "master of reaching across the aisle to get things done," Obama said.
Senator Gregg who had chaired a top level Senate commerce committee, stated: "We are ... in the middle of a very difficult economic time.” Gregg is an outspoken fiscal conservative and thanked the President for the "rather extraordinary step of asking me to join your administration." He commended Obama’s "bold and aggressive, effective and comprehensive plan for how we can get this country moving."
Secretary of Commerce Not a Good Fit for GOP Senator Gregg
Much to the surprise of the White House Republican Sen. Judd Gregg has decided that that it would be inappropriate to take the post because of "irresolvable conflicts" over the administration's stimulus bill and the upcoming 2010 census. Gregg calls it a “mistake” to have signed on for the post even though it was Gregg who had originally put his name forward as a possible candidate.
Senator Gregg went on to say that: "I realize that to withdraw at this point is really unfair in many ways. But to go forward and take this position and then find myself sitting there and not being able to do the job the way it should be done on behalf of the president, 100 percent, that would have been an even bigger mistake."
Gregg said The President has been "incredibly gracious" during the process.
- Stimulus Bill Sparks Health Information Debate
A clause in the economic recovery package would give the federal government too much control over health care information and medical outcomes according to some critics of the clause.
Several billions have been earmarked for digitizing medical records and would allow for a new role in government, a "National Coordinator for Health Information Technology". The job involves providing information to “help guide medical decisions at the time and place of care."
Betsy McCaughey, the former lieutenant governor of New York said it would allow the federal government to give information to doctors and influence decisions about a patient’s care.
"The language of the bill is very troubling,” according to Betsy McCaughey, former Lieutenant Governor of New York. “This is going to be a two-way system. Your medical treatment will be stored in the database, but the government will also be communicating with your doctor at the time and place of care," she said.
But Ms. McCaughey has her own critics who say that recognizing and acting upon the disconnect between medical information and positive health outcomes is a welcome and needed change in the current health care system.
Democratic Senator Ben Cardin believes the clause can help improve medical efficiency and by extension a healthier population. "What this bill is doing is getting us out of the dark ages when we deal with medical records to provide for a more efficient system. There is nothing in this legislation that interferes with a doctor making the decision with the patient about what is appropriate care."
House Speaker Nancy Pelosi's office has also dismissed the claims of McCaughey and the Senate Committee on Finance released a statement assuring that the IT director would "absolutely not" have influence the decisions doctors and patients make about medical care.
- Senate and House Bills Must Now be Melded Into One
- Clinton Has Tough Agenda in talks with Iran
Senate Passes Economic Recovery Plan
President Obama must have breathed a sigh of relief when the Senate approved an $838 billion economic recovery package bill today. Obama said it’s: “...good news. ... It's a good start."
The bill passed as expected with a clear majority of 61-37. Three Republicans joined Democrats in pushing the bill through. Majority Leader Harry Reid, D-Nev., says a final version of the bill will hit Obama’s desk "as soon as possible."
Negotiations will begin right away for the House and Senate to come together to iron out the differences in the bills they each passed. The negotiations must close the gap between the Senate version of $838 billion and the House version which calls for $819 billion to be spent. It could take several days for the talks to take place, perhaps falling short of President Obama’s signing deadline of February 16th.
The gigantic package is a mix of spending, tax cuts and incentives that both the administration and Democrats in Congress hope will create jobs and stimulate the economy. Republican lawmakers continue to oppose it saying it is mired in wasteful spending. No Republicans supported the House version of the package two weeks ago. From the Senate perspective, the conference will be very much driven by the moderates who are supporting the compromise.
One of the key sticking points is that the Alternative Minimum Tax fix, which is designed to help the middle class avoid paying higher taxes. The AMT fix was struck late in negotiations and costs about $70 billion. It is aimed at keeping the wealthy from avoiding appropriate taxes.
Clinton Seeks Opportunity for 'Serious and Responsible' Talks with Iran
It’s an understatement when Secretary of State Hillary Clinton says the Obama administration hopes the two nations can work out "a better understanding of one another."
Clinton told reporters at the State Department that the U.S. opposition to nuclear weapons in Iran remains firm. "There is an opportunity for the Iranian government to demonstrate a willingness to unclench their fist and to begin a serious and responsible discussion about a range of matters.” Iran and the U.S. have not had diplomatic relations for nearly 30 years.
It is up to Iran to change its direction on the development of missiles and nuclear weapons; then says Clinton the U.S. "...will reconsider where we stand. But we are a long, long way from seeing any evidence of a behavior change."
- Senate Approves Version of Recovery Plan
The U.S. Senate approved its version of the rescue plan that President Obama has offered up to the nation to repair the economy with a combination of government spending and tax cuts and credits. The Senate vote was 60-38.
The plan allots $120 billion for infrastructure projects such as repairing bridges, roads and highways; more than $100 billion for education and $30 billion on energy-related projects that will generate what Obama calls "green jobs." Over $212 billion is for tax breaks for individuals and businesses; and $267 billion is in direct spending social assistance programs like food stamps and unemployment benefits. The Congressional Budget Office predicts new growth in jobs, between 1 million and 3 million jobs.
Most individuals will get a $400 tax credit, and couples will get $800. Many students will get a $2,500 tuition tax credit. First-time home buyers may qualify for a tax credit of up to $8,000. People who receive Social Security will get a one-time payment of $250.
The overall package is estimated to be 35 percent tax cuts and 65 percent spending, Democratic sources said. Most lawmakers have expressed hope for the stimulus plan and that the economy can now start to mend. "We know this bill alone will not solve all of our economic woes overnight. We know that the road back to economic stability and prosperity will require hard work over time," said Rep. Ed Perlmutter, D-Colorado. "But this bill is the right size and scope necessary to truly help us turn things around."
