The White House on Sunday defended its projection that the economy will rebound by 2010, as a host of Republicans seized on new estimates from the Congressional Budget Office that provided a less optimistic forecast. The AP reports congressional Republicans "on Sunday predicted a doomsday scenario of crushing debt and eventual federal bankruptcy if President Barack Obama's massive spending blueprint wins passage." However, White House economic adviser Christina Romer "dismissed the negative assessments, saying she is 'incredibly confident' that the president's policies will 'do the job' for the economy." And "in a TV interview, Obama himself laughed when discussing the dire state of parts of the economy -- and ascribed his laughter to 'gallows humor.'"
Asked on Fox News Sunday about the CBO projections that show the national deficit will be $9.3 trillion over the next ten years, Romer said, "There are actually some questions about the numbers, right? When you actually say, 'Why are the Congressional Budget Office numbers different from ours,' a big part of that is their estimates of long-run growth. When you get out five, 10 years, they're assuming that real GDP is only going to grow about 2.2 or 2.3 percent a year, and that's just lower than private forecasters. It's lower than the Federal Reserve. And we think it's just too pessimistic."
The New York Times reports the Administration's "sunny outlook was not shared by Senator Judd Gregg of New Hampshire, the senior Republican on the Senate Budget Committee, and Senator Richard Shelby of Alabama, top Republican on the Senate Banking Committee." The Washington Times says "Republican lawmakers have become increasingly skeptical of Democratic spending plans, presenting some of their most dire forecasts Sunday." On Fox News Sunday, Shelby said, "We're on the fast road to financial destruction, and I see a $20 trillion deficit in the few years to come." Gregg, on CNN's State of the Union said, "If we maintain the proposals which are in this budget over the 10-year period that this budget covers, this country will go bankrupt."
On ABC's This Week, Sen. Susan Collins Obama's proposed budget "poses a threat to the basic health of our economy." Rep. Mike Pence added, "The President's budget...spends too much, taxes too much and it borrows too much." Democratic Sen. Kent Conrad said, "We have got to have added deficits and debt to give lift to this economy, but longer term we have got to pivot."
Howard Fineman, in his column for Newsweek, notes that even as White House chief of staff Rahm Emanuel "met with Speaker Nancy Pelosi and other House Democrats...officials elsewhere on the Hill were issuing grim new predictions about federal deficits five years hence. To which Emanuel, I am told by a source in the leadership, had a characteristically scatological response, involving an anatomically impossible sex act. Rahm denied the remark, but not the sentiment. 'Now is not the time to pull back,' he said to me. 'Those long-term predictions are meaningless -- and usually wrong.'"
President Obama's reservations about the House bill designed to "claw back" the controversial $165 million AIG bonuses, echoed by aides on the Sunday talk shows, were noted by print and TV sources. Asked on CBS's 60 Minutes if he is certain the bill passed by Congress in an effort to recoup the AIG bonuses is constitutional, Obama said, "I think that as a general proposition, you don't want to be passing laws that are just targeting a handful of individuals." Obama added, "We're going to have to take a look at this legislation carefully." The Wall Street Journal reports President Obama "expressed doubt about the constitutionality" of the bill.
ABC World News reported the White House "must walk a fine line, because a plan in Congress to tax 90% of the AIG bonuses could scare off the very investors the government needs to make the next phase of the recovery plan work." The Politico reports the Obama Administration "appears to be dialing back its support for the bonus tax legislation generally, and particularly the bill passed by the House last week." The Washington Post reports in a front page story that some of the Obama Administration's "leading economic officials reacted coolly to congressional actions to recoup bonuses from financial firms through targeted taxes, with one adviser saying the approach may be a 'dangerous way to go.'"
Senate GOP Targets Democrats Over AIG Roll Call reports, "In a tactical shift aimed at capitalizing on the" AIG "scandal, Senate Republicans are moving beyond policy critiques of President Barack Obama to charges of incompetence and mismanagement on the economy." Top Senate Republicans "played the competence card, signaling a broader case they intend to make against" Obama and Hill Democrats "as midterm elections near."
Roll Call reports the National Republican Senatorial Committee "on Friday posted a new Web ad attacking [Senate Majority Leader Harry] Reid for assigning himself as a conferee to the committee that crafted the" $787 billion economic stimulus "bill, which bears responsibility for the provision that allowed executives at" AIG "to receive millions in bonuses." The Washington Times reports, "If Republicans have their way, AIG will remain a household name through the 2010 congressional elections - and possibly beyond."
Geithner Response To AIG Flap Criticized Bill Saporito, in a cover story for Time, writes that the "fact that AIG was in Washington long before the current Administration hasn't spared the Obama team from criticism over the recent bonus payouts. The main target for the opprobrium is Geithner. ... He has not been a strong public face for a government that needs to project confidence. He has been slow to staff his department, hampering the Administration's ability to react to the crisis - and possibly helping explain Treasury's leaden-footed reaction to the AIG bonuses, which were first reported in January."
Newsweek, meanwhile, reports that "hundreds of top government posts stand empty. One reason: over-the-top ethics rules are disqualifying or driving away some of the best and the brightest."
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Treasury Secretary Geithner today will unveil his plan to deal with the US financial industry's so-called toxic assets. The story was the lead on both network newscasts last night (CBS didn't air), and appears on the front pages of major newspapers this morning. The overall tenor of the media coverage ranged from skeptical to dismissive.
NBC Nightly News reported, "The White House will announce tomorrow how it plans to rescue the nation's banks, but it is also trying to figure a way to keep those banks and other institutions in line and appease taxpayers unhappy about how their bailout dollars have so far been spent." ABC World News reported, "The Administration is already tamping down Wall Street expectations."
The AP reports the Obama Administration's "latest attempt to tackle the banking crisis and get loans flowing to families and businesses will create a new government entity, the Public-Private Investment Program, to help purchase as much as $1 trillion in toxic assets on banks' books." In a Wall Street Journal op-ed, Secretary Geithner notes the efforts the Administration has taken so far to stabilize the financial markets, and he outlines the program's key features, adding, "The new Public-Private Investment Program will initially provide financing for $500 billion with the potential to expand up to $1 trillion over time, which is a substantial share of real-estate related assets originated before the recession that are now clogging our financial system."
The Wall Street Journal (3/23, Solomon) reports Treasury Secretary Geithner "said the only way to remove troubled assets clogging banks' balance sheets -- which lie at the heart of the financial crisis -- is to work with the private sector, even at a time when Wall Street moneymakers are being vilified by the public and politicians." Stocks "rallied 2% in Tokyo in early trading Monday, on expectations of the Geithner bank plan's announcement."
The Financial Times reports the Obama Administration "faces its latest moment of truth on Monday." In a second story, the Financial Times reports if Geithner's plan "fails to win the confidence of private investors," he "will have to go back to the drawing board, in addition to fending off even shriller calls for his resignation." The New York Times reports in a front page story that Obama Administration officials "worked Sunday to persuade reluctant private investors to buy as much as $1 trillion in troubled mortgages and related assets from banks, with government help."
The AP reports the Obama Administration's "latest plan to help banks get credit flowing again is drawing a tepid reaction from investors and academics, who say the proposal comes with too many strings attached and is unlikely to stimulate lending industrywide."
Krugman Blasts Bank Rescue Plan In his New York Times column, Paul Krugman says if reports about the Obama Administration's bank rescue plan "are correct," Secretary Geithner "has persuaded President Obama to recycle Bush administration policy - specifically, the 'cash for trash' plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson." Krugman adds, "This is more than disappointing. In fact, it fills me with a sense of despair."
In an interview on CBS' 60 Minutes, President Obama said the US mission in Afghanistan ought to be "making sure that al Qaeda cannot attack the US homeland and US interests and our allies. That's our number one priority." Obama added, "What we're looking for is a comprehensive strategy. And there's got to be an exit strategy. There's got to be a sense that this is not perpetual drift."
Later in the 60 Minutes interview, Obama said the decision to send 17,000 more troops to Afghanistan was his hardest decision to make so far in his administration. Obama commented, "I think it's the right thing to do. But it's a weighty decision because we actually had to make the decision prior to the completion of a strategic review that we were conducting."
The New York Times reports President Obama said the US "must look for a way out of the war in Afghanistan" in a "signal that the military build-up" in that country "will not be open-ended and will lead to the eventual withdrawal of American and NATO troops from the country." Obama "also signaled that the United States was redefining its mission in Afghanistan, away from the Bush administration's broader strategy of promoting democracy, civil society and governance in Afghanistan and toward getting the country to a point where it is not used to start attacks on the United States."
The AP says Obama's comments "were a prelude to a revamped plan for fighting insurgents in Afghanistan and Pakistan, which is expected to be announced this week." But ABC World News reported that the "mission" of the "17,700 new US troops going into Afghanistan...will be, and you will see this rolled out this week by the Obama Administration, to go after al Qaeda. To make sure al Qaeda does not have a stronghold in Afghanistan."
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The AP reported, "Chicago Mayor Richard Daley says the" DNC "has reimbursed the city for the cost of President Barack Obama's $1.74 million election night rally. DNC spokesman Brad Woodhouse says the payment was made recently. He attributes the five-month delay to complex issues that needed to be worked out with the city."
The Politico reported, "In the wake of the" Democratic National Committee's "surprisingly weak" February fundraising, "Democratic insiders are questioning the unusual arrangement that has Virginia Gov. Tim Kaine serving as a part-time chairman until his term as governor ends next January."
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Roll Call reports, "By the end of February, the" National Republican Senatorial Committee "had nearly cut in half the $5 million in debt that it carried over from the 2008 cycle, while" the Democratic Senatorial Campaign Committee "had paid off hardly any of the near $11 million that it owed at the end of last year." The Democratic Congressional Campaign Committee, for its part, "had $2.9 million in available cash but was carrying $15 million in debt [at the end of February]," which was "$1 million less debt than the committee reported at the end of January." Through the same period, the National Republican Congressional Committee reported "more than $1.8 million in cash on hand and [was] still carrying a debt of $6.4 million from last cycle."
The Minneapolis Star Tribune reported that in the Minnesota Senate contest, Nom Coleman (R) lead attorney Joe Friedberg expects Coleman "eventually will win," but on appeal, not in the current trial, telling a local TV station the Coleman team "had tried the case 'with the appeal record in mind, and that's where we're going, and it's going to be a very quick appeal and then I'll know whether or not it worked.'"
The Wall Street Journal reports that Pennsylvania Sen. Arlen Specter (R) "could be in for the political fight of his career in 2010," as he "faces primary challenges from the conservative wing of the" GOP "angered by his support of President Barack Obama's $787 billion stimulus package" and the Democrats "gearing up for a general-election battle."
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The AP reported that in the NY20 special election battle, Assemblyman Jim Tedisco (R) and venture capitalist Scott Murphy "battle daily over the economic stimulus package in congressional race that's seen as a referendum on President Barack Obama's policies and a test of GOP strength."
The Sioux Falls Argus Leader reports that SD-AL Rep. Stephanie Herseth Sandlin (D) "said she will chart her next political move by the end of the summer," and while it is possible she could challenge Sen. John Thune (R), it is most likely she will seek re-election instead.
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Jay Leno: Referring to Sen. Chris Dodd, "Do you know about this? Senator...Chris Dodge, as they're calling him now, after first denying it, now admits he's the one who eliminated the provision in the stimulus package that outlawed excessive bonuses. And coincidentally, he just happened to receive $280,000 from AIG in campaign contributions. What are the odds of that? Man, that's like putting Chris Brown in charge of the...battered women's shelter."
Jay Leno: "Hey, did you see this? You see this on the news? Two drug-smuggling suspects were being pursued by police on the freeway...in San Diego. They were throwing money out the window. Just throwing cash, like $17,000 in cash, out the window. At first people thought it was, you know, President Obama's stimulus package. They didn't realize."
Jimmy Fallon: "Last night, President Obama's appearance on 'The Tonight Show' got huge ratings. So to promote his upcoming book," former President George W. Bush "will appear on 'The Biggest Loser.'"
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