Thursday, January 28, 2010

FACT CHECK: Obama and a toothless commission

By CALVIN WOODWARD, Associated Press Writer Calvin Woodward, Associated Press Writer – Thu Jan 28, 3:12 am ET
WASHINGTON – President Barack Obama told Americans the bipartisan deficit commission he will appoint won't just be "one of those Washington gimmicks." Left unspoken in that assurance was the fact that the commission won't have any teeth.

Obama confronted some tough realities in his State of the Union speech Wednesday night, chief among them that Americans are continuing to lose their health insurance as Congress struggles to pass an overhaul.

Yet some of his ideas for moving ahead skirted the complex political circumstances standing in his way.

A look at some of Obama's claims and how they compare with the facts:


OBAMA: "Starting in 2011, we are prepared to freeze government spending for three years. Spending related to our national security, Medicare, Medicaid, and Social Security will not be affected. But all other discretionary government programs will. Like any cash-strapped family, we will work within a budget to invest in what we need and sacrifice what we don't."

THE FACTS: The anticipated savings from this proposal would amount to less than 1 percent of the deficit — and that's if the president can persuade Congress to go along.

Obama is a convert to the cause of broad spending freezes. In the presidential campaign, he criticized Republican opponent John McCain for suggesting one. "The problem with a spending freeze is you're using a hatchet where you need a scalpel," he said a month before the election. Now, Obama wants domestic spending held steady in most areas where the government can control year-to-year costs. The proposal is similar to McCain's.


OBAMA: "I've called for a bipartisan fiscal commission, modeled on a proposal by Republican Judd Gregg and Democrat Kent Conrad. This can't be one of those Washington gimmicks that lets us pretend we solved a problem. The commission will have to provide a specific set of solutions by a certain deadline. Yesterday, the Senate blocked a bill that would have created this commission. So I will issue an executive order that will allow us to go forward, because I refuse to pass this problem on to another generation of Americans."

THE FACTS: Any commission that Obama creates would be a weak substitute for what he really wanted — a commission created by Congress that could force lawmakers to consider unpopular remedies to reduce the debt, including curbing politically sensitive entitlements like Social Security and Medicare. That idea crashed in the Senate this week, defeated by equal numbers of Democrats and Republicans. Any commission set up by Obama alone would lack authority to force its recommendations before Congress, and would stand almost no chance of success.


OBAMA: Discussing his health care initiative, he said, "Our approach would preserve the right of Americans who have insurance to keep their doctor and their plan."

THE FACTS: The Democratic legislation now hanging in limbo on Capitol Hill aims to keep people with employer-sponsored coverage — the majority of Americans under age 65 — in the plans they already have. But Obama can't guarantee people won't see higher rates or fewer benefits in their existing plans. Because of elements such as new taxes on insurance companies, insurers could change what they offer or how much it costs. Moreover, Democrats have proposed a series of changes to the Medicare program for people 65 and older that would certainly pinch benefits enjoyed by some seniors. The Congressional Budget Office has predicted cuts for those enrolled in private Medicare Advantage plans.


OBAMA: The president issued a populist broadside against lobbyists, saying they have "outsized influence" over the government. He said his administration has "excluded lobbyists from policymaking jobs." He also said it's time to "require lobbyists to disclose each contact they make on behalf of a client with my administration or Congress" and "to put strict limits on the contributions that lobbyists give to candidates for federal office."

THE FACTS: Obama has limited the hiring of lobbyists for administration jobs, but the ban isn't absolute; seven waivers from the ban have been granted to White House officials alone. Getting lobbyists to report every contact they make with the federal government would be difficult at best; Congress would have to change the law, and that's unlikely to happen. And lobbyists already are subject to strict limits on political giving. Just like every other American, they're limited to giving $2,400 per election to federal candidates, with an overall ceiling of $115,500 every two years.


OBAMA: "Because of the steps we took, there are about 2 million Americans working right now who would otherwise be unemployed. ... And we are on track to add another one and a half million jobs to this total by the end of the year."

THE FACTS: The success of the Obama-pushed economic stimulus that Congress approved early last year has been an ongoing point of contention. In December, the administration reported that recipients of direct assistance from the government created or saved about 650,000 jobs. The number was based on self-reporting by recipients and some of the calculations were shown to be in error.

The Congressional Budget Office has been much more guarded than Obama in characterizing the success of the stimulus plan. In November, it reported that the stimulus increased the number of people employed by between 600,000 and 1.6 million "compared with what those values would have been otherwise." It said the ranges "reflect the uncertainty of such estimates." And it added, "It is impossible to determine how many of the reported jobs would have existed in the absence of the stimulus package."


OBAMA: He called for action by the White House and Congress "to do our work openly, and to give our people the government they deserve."

THE FACTS: Obama skipped past a broken promise from his campaign — to have the negotiations for health care legislation broadcast on C-SPAN "so that people can see who is making arguments on behalf of their constituents, and who are making arguments on behalf of the drug companies or the insurance companies." Instead, Democrats in the White House and Congress have conducted the usual private negotiations, making multibillion-dollar deals with hospitals, pharmaceutical companies and other stakeholders behind closed doors. Nor has Obama lived up consistently to his pledge to ensure that legislation is posted online for five days before it's acted upon.


OBAMA: "The United States and Russia are completing negotiations on the farthest-reaching arms control treaty in nearly two decades."

THE FACTS: Despite insisting early last year that they would complete the negotiations in time to avoid expiration of the 1991 Strategic Arms Reduction Treaty in early December, the U.S. and Russia failed to do so. And while officials say they think a deal on a new treaty is within reach, there has been no breakthrough. A new round of talks is set to start Monday. One important sticking point: disagreement over including missile defense issues in a new accord. If completed, the new deal may arguably be the farthest-reaching arms control treaty since the original 1991 agreement. An interim deal reached in 2002 did not include its own rules on verifying nuclear reductions.


OBAMA: Drawing on classified information, he claimed more success than his predecessor at killing terrorists: "And in the last year, hundreds of al-Qaida's fighters and affiliates, including many senior leaders, have been captured or killed — far more than in 2008."

THE FACTS: It is an impossible claim to verify. Neither the Bush nor the Obama administration has published enemy body counts, particularly those targeted by armed drones in the Pakistan-Afghanistan border region. The pace of drone attacks has increased dramatically in the last 18 months, according to congressional officials briefed on the secret program.


Associated Press writers Jim Kuhnhenn, Jim Drinkard, Erica Werner, Robert Burns and Pamela Hess contributed to this report.

Wednesday, January 20, 2010

Geithner's lifelong love of bailouts

Geithner's lifelong love of bailouts

Treasury Secretary Timothy Geithner faces tough hearings next week before the House Oversight and Government Reform Committee. But will any of the Congress members take him to task for his own role in creating last year's financial crisis?

Geithner refuses to take responsibility for "the legacy of crises you've [that is, the Republicans] bequeathed this country," as he told Rep. Kevin Brady (R-Texas) before the Joint Economic Committee in November. He apparently believes that the long string of Wall Street bailouts with which he's been associated -- starting with the Mexican "peso crisis" in 1994 -- had nothing to do with our financial institutions' widespread expectation that Washington would bail them out when they screwed up big-time.

Indeed, Geithner's consistent support for big-bank rescues dooms any real efforts to end "too big to fail." That's why, for the nation to truly move past the crisis, Geithner needs to go.

Although Geithner first came to Treasury in 1988, he didn't hold any leadership positions until 1995. But it was during those early years that he developed his apparent contempt for Congress and representative government.

In 1994, Mexico found itself unable to repay loans to a host of Wall Street investment banks. The Clinton administration pushed legislation to lend Mexico the cash -- but the new Congress voted it down. Geithner, then deputy assistant secretary for international monetary and financial policy, orchestrated back-door assistance to Mexico via Treasury's Exchange Stabilization Fund.

There was a national-interest case for helping out our southern neighbor. But it remains true that Wall Street was a huge beneficiary of that rescue -- it escaped paying a price for tens of billions in foolish lending.

Geithner, meanwhile, soon found himself in the middle of another round of bailouts -- as Treasury Secretary Robert Rubin's point man with the International Monetary Fund on the Asian financial crisis. The claim was that IMF "rescue packages" were needed to stabilize Asian economies -- but US banks again saw their losses reduced as a result.

On leaving Treasury, Geithner soon ended up at the IMF, an organization whose primary purpose seems to be to bail out US and European banks when they suffer losses on their developing-world investments -- a mission Geithner evidently shares.

From 2003 until his 2009 appointment as Treasury secretary, Geithner served as president of the Federal Reserve Bank of New York. The New York Fed's role as the top Wall Street watchdog can't be overstated -- so if regulatory failure contributed to the recent financial crisis, then few regulators contributed more than the New York Fed and its chief, Tim Geithner.

Plus, the New York Fed chief is a permanent member of the Federal Open Market Committee -- the Fed body that determines monetary policy. And Geithner strongly supported the Fed policies of that era -- particularly the overly expansionary monetary policy that directly contributed to the housing bubble.

Yes, the chief blame falls on former Fed Chairman Alan Greenspan (and to a lesser degree with then-Fed governor Ben Bernanke), but Geithner had plenty of chances to voice concerns about the growing housing bubble. He didn't.

Thankfully, Secretary Geithner's efforts to move his financial-regulatory "reforms" through Congress have so far failed. The core of his plan involves giving the Fed permanent bailout authority, which would be an unmitigated disaster: We need to end the cycle of bailouts, not double down on it.

If there's a common thread to almost every bank bailout over the last 15 years, it's that Timothy Geithner was always somewhere in the room. Each of these "rescues" brought short-term stability to our financial markets -- but only at the cost of long-term instability.

Only a handful of individuals could truly be called architects of our financial-regulatory system. Geithner, without a doubt, is one. To pretend he just now arrived on the scene is not only dishonest, it's dangerous. Without an honest assessment of how the long string of bailouts contributed to the current crisis -- an assessment that involves admitting Geithner's role -- we have little hope of avoiding future crises.

Mark A. Calabria is the Cato Institute's director of financial-regulation studies.

Obama's year of foreign-policy fumbles

O's year of foreign-policy fumbles

Let me be clear (as President Obama loves to say): After a year in office, there isn't much for this White House to brag about foreign policy-wise, in spite of rhetorical flourishes and grandiose promises.

Unfortunately, the Obama administration's campaign-style, "biography based" approach to international affairs just isn't making the grade, especially on today's weighty issues.

Iran: Tehran's nuclear (weapons) program advances despite our drawing of a line in the sand, after line in the sand -- after line in the sand. News that Tehran has made strides in developing nuclear weapons, not just enriching uranium, only darkens the outlook.

Obama's response? Keep on threatening tougher sanctions, even though we can't get Moscow or Beijing to agree to them -- while making plans to inevitably accept Tehran into the Mushroom Cloud Club.

And what about his snubbing of Iran's heroic dissident movement? Shameful.

North Korea: Pyongyang remains as troublesome as ever, immune to Obama's charms. It will likely light off another nuke this year -- and shoot more missiles in our direction. The "Norks" won't even return to the negotiating table.

China: The president's trip to Beijing last fall was a flop: He made no progress on opening the Chinese market to ease our $200-plus billion trade deficit, a would-be bennie to our still-stumbling economy.

Nor was Obama's personal intervention enough to get Beijing, the world's largest greenhouse-gas producer, onboard at the Copenhagen climate conference (not that it disappointed those who saw that treaty as an economic-growth killer).

Meanwhile, China's military build-up proceeds apace, scaring neighbors witless -- and now there are reports of Beijing extending its reach with its first permanent military base abroad, this one in the Arabian Sea.

Russia: Washington-Moscow ties are increasingly cold, despite White House affections. Sensing weakness, Russia is now holding America's European, anti-Iran missile-defense system hostage to strategic-arms-control reduction talks -- an Obama priority.

Worse, Washington cuddles with Moscow despite Russia's occupation of Georgia's South Ossetia and Abkhazia; we've even put Georgia's (and Ukraine's) NATO membership on ice to appease the Bear.

Obama's Russia policy has left other former Soviet states nervous, too. Skipping ceremonies on the 20th anniversary of the Berlin Wall's fall only bolstered the sense of indifference New Europe now feels from the New World.

And what exactly is it that we've gotten in return from the Kremlin?

Venezuela: Strongman Hugo Chavez continues to be problematic, cutting deals for Russian nuclear reactors and more arms, allowing narcotics traffickers to cross his country, harboring Colombian FARC terrorists and bankrolling the Latin American, anti-Yanqui Left.

And don't forget Chavez's "axis of unity" with Iranian President Mahmoud Ahmadinejad. Bad actors keep entering the region via regular Venezuela-Syria-Iran flights.

The White House's reaction? We sent our previously expelled ambassador back to Caracas.

But it's not all horrible news.

Iraq: While the situation is fragile and violence persists (at much lower levels), the Bush surge is working. Critical elections come this spring and US combat troops are due out this summer.

Terror: While the "Crotch Bomber" shows the Obama team hasn't improved the homeland-security system, they've maintained the Bush-era Predator drone strikes on al Qaeda overseas -- an approach that's still working.

Unfortunately, Obama's outreach to the Muslim world (e.g., the Cairo speech) basically has had no positive effect.

AfPak: It's too early to give a grade on this with a new strategy just in place, but the fight against the terrorists on both sides of the Afghanistan-Pakistan border remains a challenge. The question is: What will the prez do if he doesn't get his quick victory?

Egged on by media fawning, Obama wrongly assumed he could turn Obama-chic abroad into foreign-policy results. Oops: Turns out countries (and groups like al Qaeda) act to promote their own interests, uninfluenced by anyone's popularity.

The world needs US leadership to deal with big problems. More than that, this country needs traction on these issues -- something, regrettably, that Obama has yet to deliver.

Peter Brookes is a Heritage Foundation senior fellow and former deputy assistant secretary of defense.

Tuesday, January 19, 2010

Obama's Fiscal Fantasy World

After President Obama devoted much of 2009 to health care and global warming—two issues far down Americans' list of concerns—the White House says he will pivot to jobs and deficit reduction in his State of the Union speech in a few weeks. The White House is considering dramatic gestures, perhaps announcing a spending freeze or even a 2% or 3% reduction in nondefense spending.
But Americans shouldn't be misled by the election year ploy: Mr. Obama rigged the game by giving himself plenty of room to look tough on spending. He did that by increasing discretionary domestic spending for the last half of fiscal year 2009 by 8% and then increasing it another 12% for fiscal year 2010.
So discretionary domestic spending now stands at $536 billion, up nearly 24% from President George W. Bush's last full year budget in fiscal 2008 of $433.6 billion. That's a huge spending surge, even for a profligate liberal like Mr. Obama. The $102 billion spending increase doesn't even count the $787 billion stimulus package, of which $534 billion remains unspent.
Mr. Obama can placate congressional Democrats by arguing that all that extra spending he has already crammed through can cover their spending desires at least through the 2010 congressional elections.

Mr. Obama is thinking of tapping another pocket of cash. Now that the banks are repaying—with interest and dividends—the $240 billion the Bush administration lent them, the Obama administration is considering recycling those dollars into new spending on "green" technology and more stimulus, despite provisions Congress wrote into the law creating the Troubled Asset Relief Program that requires that repaid TARP funds be used exclusively for deficit reduction.
Meanwhile, defense spending is being flattened: Between 2009 and 2010, military outlays will rise 3.6% while nondefense discretionary spending climbs 12%.
All this leaves Mr. Obama in the enviable position of appearing tough on spending while growing the federal government's share of GDP from its historic post-World War II average of roughly 20% to the target Mr. Obama laid out in his budget blueprint last February of 24%.
There are also those pesky entitlements. This mandatory spending has grown to 66% of the budget, up from 29% in 1965. Serious budgeters understand spending cannot be brought under control unless these mandatory outlays are part of the mix.
One idea on Capitol Hill is to create a commission that would propose a package of entitlement reforms that Congress would have to vote on as a package, up or down, take it or leave it—much like the base closing commission.
The Obama White House likes this idea in part because the proposal calls for including some congressional Republicans but would reserve a majority of the seats on the commission for Democrats. That would put Democrats in charge while also making the GOP share in the political pain that would come with whatever the commission proposes. Conservatives worry, with justification, that a commission's purpose would be to provide Republican cover for tax increases and a permanent increase in the size of the federal government.
What's more, the White House may only be interested in an election-year gesture. White House staff are apparently considering creating a presidential commission that would look like it's working on deficit reduction but that would be established by executive order. Of course, without congressional authorization, there's no way to force Congress to vote on a commission's recommendations.
About Karl Rove
Karl Rove served as Senior Advisor to President George W. Bush from 2000–2007 and Deputy Chief of Staff from 2004–2007. At the White House he oversaw the Offices of Strategic Initiatives, Political Affairs, Public Liaison, and Intergovernmental Affairs and was Deputy Chief of Staff for Policy, coordinating the White House policy-making process.
Before Karl became known as "The Architect" of President Bush's 2000 and 2004 campaigns, he was president of Karl Rove + Company, an Austin-based public affairs firm that worked for Republican candidates, nonpartisan causes, and nonprofit groups. His clients included over 75 Republican U.S. Senate, Congressional and gubernatorial candidates in 24 states, as well as the Moderate Party of Sweden.
Karl writes a weekly op-ed for the Wall Street Journal, is a Newsweek columnist and is the author of the forthcoming book "Courage and Consequence" (Threshold Editions).
Email the author atKarl@Rove.comor visit him on the web Or, you can send a Tweet to @karlrove.
Whatever Mr. Obama says in his State of the Union, Republicans need to be tougher on spending and deficits. Later this month, Senate Republicans are planning to force their colleagues to go on the record on how to spend returned TARP funds by demanding that Democrats vote on the issue. Some House Republicans are also considering calling for a return to the level of discretionary domestic spending that existed when Mr. Obama entered office last January.
Few things focus the attention of politicians as much as approaching elections. Democrats are aware that spending and deficits are big reasons Republicans have a nine-point lead on the Rasmussen Poll's generic ballot.
Independents are particularly sensitive about deficits, spending and taxes, whose growth they see aversely affecting jobs and the economy. They give Mr. Obama only a 21% approval on handling the deficit. Only 10% of independents want to spend unused bank bailout money on other government programs.
At the beginning of his term, Americans believed Mr. Obama would follow through on his campaign promises about "cutting wasteful spending" and going "through the federal budget, line-by-line, ending programs that we don't need" and putting "an end to the run-away spending the record deficits."
After a year of living in his fiscal fantasy world, Americans realize they have a record deficit-setting, budget-busting spender on their hands. Voters are now reading the fine print on all that Mr. Obama proposes and as they do, his credibility, already badly damaged, suffers.

Mr. Rove, the former senior adviser and deputy chief of staff to President George W. Bush, is the author of the forthcoming book "Courage and Consequence" (Threshold Editions).