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Bush's Red Ink, Obama's Problem

By Dan Froomkin
1:20 PM ET, 06/10/2009

There's some much-needed straight talk about the deficit on the front page of today's New York Times: A reminder that it's mostly George W. Bush's fault -- but that it won't go away until the government raises taxes or cuts spending.

Neither raising taxes nor cutting spending are good medicine in a recession, of course. So the question is: When will it happen? When will President Obama -- and Congress -- summon the political will to do what really needs to be done?

I'm thinking second term.

New York Times business columnist David Leonhardt
writes with admirable succinctness:

There are two basic truths about the enormous deficits that the federal government will run in the coming years.

The first is that President Obama's agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying. The second is that Mr. Obama does not have a realistic plan for eliminating the deficit, despite what his advisers have suggested.

Leonhardt crunches the numbers to track exactly how the Clinton-era predictions of surpluses gave way to prophecies of massive deficits. His analysis places 90 percent of the blame on the business cycle, Bush's policies, and policies from the Bush years that are scheduled to expire but that Obama hasn't tried to snuff out. That leaves Obama responsible for 10 percent of the projected deficits: 7 percent from the stimulus bill -- and only 3 percent Obama's agenda on health care, education, energy and other areas.

Nevertheless, Obama now has 100 percent of the responsibility for fixing this mess, and what is he doing about it? Leonhardt writes that his talk about cutting health care costs is not yet entirely convincing -- and that it's not enough, anyway.

The solution...is no mystery. It will involve some combination of tax increases and spending cuts. And it won't be limited to pay-as-you-go rules, tax increases on somebody else, or a crackdown on waste, fraud and abuse. Your taxes will probably go up, and some government programs you favor will become less generous.

That is the legacy of our trillion-dollar deficits. Erasing them will be one of the great political issues of the coming decade.

Indeed, as Leonhardt suggests, Obama's endorsement yesterday of pay-go is really more nice talk to the Blue Dogs than serious medicine.

Lori Montgomery writes in The Washington Post:

President Obama called on Congress yesterday to enact pay-as-you-go budget rules to help tame a deficit forecast to top $1.8 trillion this year. But even as some Democrats applauded the plan, others complained that it would give a free pass to expensive policies that would sink the nation trillions of dollars deeper into the red over the next 10 years....

Obama would exempt an array of expensive policies currently in effect. For example, lawmakers could extend the tax cuts enacted during the Bush administration past their 2010 expiration date, restrain the growth of the alternative-minimum tax and continue to forestall scheduled payment cuts for Medicare physicians without consequence.

Sheryl Gay Stolberg writes in the New York Times that

the announcement — just one day after Mr. Obama lauded the billions of dollars his administration was spending to save or create what the White House estimated as 600,000 new jobs this summer — quickly turned into Round 2 of an escalating war between the White House and Republicans over Mr. Obama's claims of fiscal responsibility.

"President Obama and Congressional Democrats telling Americans they are committed to budget discipline is like Charles Ponzi telling people to trust him with their money," the Republican National Committee said in a statement to reporters.

Yes, it's going to get really nasty. That's because, as Manu Raju writes for Politico:

Republicans on Capitol Hill think they've finally found Barack Obama's Achilles' heel: rising public concern about government spending and the federal deficit.

While Obama's overall job-approval ratings are up over the past month, a Gallup Poll out this week has a 51 percent majority of Americans disapproving of the president's efforts to control federal spending and a slim 48 percent to 46 percent disapproving of his handling of the federal deficit.

Those are the only areas where Obama has negative approval ratings — Americans approve, by double-digit margins, the way Obama is handling his overall job, foreign affairs, terrorism, the Middle East and North Korea. But the GOP will take what it can get.

At yesterday's East Room event for pay-go, however, Obama was typically unflappable, expressing supreme confidence that he is making the right call now, and will make the right calls later.

The reckless fiscal policies of the past have left us in a very deep hole. And digging our way out of it will take time, patience, and some tough choices. I know that in the face of this historic challenge there are many across this country who are skeptical of our collective ability to meet it. They're not wrong to feel that way. They're not wrong to draw this lesson after years in which we've put off difficult decisions; in which we've allowed our politics to grow smaller as our challenges grew ever more daunting.

But I think everybody understands this is an extraordinary moment, one in which we are called upon not just to restore fiscal responsibility, but to once again live up to the broader responsibilities we have to one another. And I know that we can summon that sense of shared obligation; that we have the capacity to change, and to grow, and to solve even our toughest of problems.

Quick Takes

By Dan Froomkin
12:55 PM ET, 06/10/2009

David Cho writes for The Washington Post: "The Obama administration is set to announce two proposals today that would empower shareholders and the Securities and Exchange Commission to have more oversight over executive compensation at all publicly traded firms, government sources said."

Cho, Binyamin Appelbaum and Zachary A. Goldfarb wrote earlier in The Post: "The Obama administration is pulling back from some of its most ambitious ideas for overhauling the financial system, after determining that the consolidation of power under fewer federal agencies would face grave opposition by lawmakers and regulators, sources familiar with the discussions said....What remains, however, would still be the most sweeping overhaul of financial regulation since the Great Depression."

Michael Muskal writes in the Los Angeles Times: "The Senate Judiciary Committee is to begin hearings on the nomination of Judge Sonia Sotomayor to the Supreme Court on July 13, a victory for the White House, which has been pushing for early consideration of President Obama's nominee. The hearings would come soon enough to probably allow the full Senate to consider the nomination before the summer recess in August....Republicans had suggested delaying hearings until September to allow time to study Sotomayor's record."

Carrie Budoff Brown writes for Politico: "From the White House garden to his picks for top health jobs, Obama is telling America's McDonald's-loving, couch-dwelling, doctor-phobic populace that things are about to change. Don't be fooled by the presidential burger runs. Obama and Congress are moving across several fronts to give government a central role in making America healthier — raising expectations among public health experts of a new era of activism unlike any before." She notes, however: "To some, it smacks of a 'nanny state on steroids'."

Carol E. Lee writes for Politico: "During President Obama's visit to Riyadh last week, the Saudi government lavished such opulent gifts on the traveling White House staff that aides had to turn their presents over to the State Department. Roughly a dozen White House staffers traveling with the U.S. delegation each received an alligator-skin briefcase from the Saudi royal family, according to sources involved. Inside, they found an array of expensive jewels, including rings, necklaces, gemstones and watches."

Talking Points Memo puts together a photo gallery of all the president's czars.

Marc Ambinder blogs for the Atlantic on the six top conservatives Obama listens to.

Thomas L. Friedman writes in his New York Times opinion column that the election in Lebanon "was the real deal, and the results were fascinating: President Barack Obama defeated President Mahmoud Ahmadinejad of Iran."

Washington Post opinion columnist Michael Gerson praises Obama for the "intensity and clarity" of his rejection of Holocaust denial -- but sees it as a rare exception to a "rhetorical universe of mist and fog, divided between gray and deeper gray" in which Obama is apparently willing to split the difference not just between Islam and the West, or the Palestinians and Israel, but also Iran and America. Gerson mocks Newsweek's Evan Thomas for an unfortunately phrased simile, in which he likened Obama's endeavor to bring different sides together to God's -- although God doesn't strike me as a terrible role model in that context. And in his big finish, Gerson accuses Obama of appeasing "some" who "don't merely wish to deny the Holocaust but to finish it."

New York Times opinion columnist Maureen Dowd lashes out at the "fun police" who are savaging Obama for his brief leisurely diversions: "As a taxpayer, I am most happy to contribute to domestic and international date nights. As Arthur Schlesinger noted in his diaries, the White House tends to drive its occupants nuts. So some respite from the pressure is clearly a healthy thing. Not as much respite as W. took, bicycling and vacationing through all the disasters that President Obama is now stuck fixing — spending a total of 490 days in the tumbleweed isolation of Crawford and rarely deigning to sightsee as he traveled the world." She adds: "What a relief to have an urbane, cultivated, curious president who's out and about, engaged in the world. Not dangerously detached, as W. was, or darkly stewing like Cheney."

Incoming: More Torture Documents

By Dan Froomkin
12:30 PM ET, 06/10/2009

Despite the Obama administration's best attempts to block the release of key documents and photographs -- and otherwise stymie investigations into the Bush torture legacy -- it looks like some more significant disclosures are coming down the pike.

Scott Shane writes in the New York Times that

Mr. Obama cannot control the courts, and lawsuits are turning out to be the force driving disclosures about brutal interrogations....

In new responses to lawsuits, the C.I.A. has agreed to release information from two previously secret sources: statements by high-level members of Al Qaeda who say they have been mistreated, and a 2004 report by the agency's inspector general questioning both the legality and the effectiveness of coercive interrogations.

The Qaeda prisoners' statements, made at tribunals at the detention camp at Guantánamo Bay, Cuba, were previously excised from transcripts of the proceedings, but they will be at least partly disclosed by this Friday, according to a court filing. The report by the inspector general, whose secret findings in April 2004 led to a suspension of the C.I.A. interrogation program, will be released by June 19, the Justice Department said in a letter to a federal judge in New York.

It's really hard to overstate how much we still don't know about the post-9/11 abuses of the Bush regime. But every little bit counts. These may be big bits. And as Shane reports, there's yet more on deck.

The releases expected this month will not begin to exhaust the anticipated disclosures on interrogation. The Justice Department's long-awaited ethics report on the lawyers who wrote the interrogation memorandums is set for release this summer. A criminal investigation of the destruction of interrogation videotapes by John H. Durham, a federal prosecutor, is still under way.

Meanwhile, Peter Finn writes in The Washington Post:

The Obama administration pressed ahead yesterday with its plans to close the military prison at Guantanamo Bay, flying a detainee to New York to face federal trial despite bipartisan opposition in Congress to bringing such prisoners to the United States for trial, resettlement or continued detention.

Ahmed Ghailani pled not guilty yesterday to capital charges in the 1998 bombings at U.S. embassies in Tanzania and Kenya. Finn explains:

Human rights groups, which earlier expressed dismay about President Obama's announcement that some suspects would be tried in reformed military commissions, welcomed Ghailani's transfer. But Republicans and some military groups, who were cheered by the prospect of renewed military tribunals, sharply attacked the decision to hold any trials in the United States.

Ray Lilley writes for the Associated Press that the Pacific archipelago of Palau has

agreed to accept 17 Chinese Muslims who have languished in legal limbo at Guantanamo Bay, indicating a resolution to one of the major obstacles to closing the U.S. prison camp....

Two U.S. officials, who spoke on condition of anonymity, said the U.S. was prepared to give Palau up to $200 million in development, budget support and other assistance in return for accepting the Uighurs and as part of a mutual defense and cooperation treaty that is due to be renegotiated this year.

AFP reports:

President Barack Obama risks creating "future Guantanamos" by continuing his predecessor's policy of indefinitely holding Al-Qaeda suspects, a prominent Democrat warned on Tuesday.

Senator Russ Feingold said he was "troubled" by Obama's policies, warning the practice of holding some suspected terrorists indefinitely risked being "effectively enshrined as acceptable in our system of justice."

Feingold warned the current administration risked mimicking the policies of the Bush administration, which "claimed the right" to detain anyone, anywhere, he said....

Speaking during a Senate Judiciary subcommittee hearing on the consequences of "prolonged detention," Feingold said that could set "the stage for future Guantanamos, whether on our shores or elsewhere, with potentially disastrous consequences for our national security."

Daphne Eviatar writes for the Washington Independent:

Witnesses debated the legality of detaining suspected terrorists picked up around the world – as opposed to detaining "combatants" on a clear "battlefield," as international law allows. But much of the hearing's testimony focused on how a policy of indefinite detention of suspects who are presumed "dangerous," yet the United States refuses to try as criminals, will affect the nation's moral standing in the world and its ability to fight al-Qaeda....

The tension between whether the United States is fighting a "war" or trying to track down and prosecute violent criminals has created a rift — with human rights advocates and some military and national security experts on one side, and the Obama administration, which on this issue seems aligned more closely with Congressional Republicans, on the other.

And in a separate story, Eviatar hones in on what I, too, found the most amazing part of the hearing.

[I]t was actually Richard Klingler, a former lawyer in the Office of White House Counsel under President George W. Bush and former general counsel on the National Security Council staff, who presented the dilemma most starkly in his testimony.

Klingler noted that prolonged detention was "already widespread," well beyond Guantanamo, and set to continue "on a wide scale." From his prepared remarks:

The extent of the current Administration's continued use of war powers against terrorist organizations is hard to overstate. The Obama Administration has pursued nearly every aspect the prior Administration's conduct of the war in Iraq and Afghanistan and against terrorist networks globally. As a formal matter, this Administration has embraced nearly all the components of wartime and related Executive powers asserted by its predecessor and then subject to controversy.

His nine-point list is pretty sobering stuff.

In yet more related developments, Perry Bacon Jr. writes in The Washington Post that a Senate provision barring the release of photos showing abuse of detainees has become one of several key issued holding up a bill to fund the wars in Iraq and Afghanistan.

David Corn writes for Mother Jones about the Senate Intelligence Committee's stealth probe into the CIA's detainee and interrogation program and suggests that the committee

is in the position--and perhaps has the obligation--to answer this question: did Cheney tell senior members of Congress the truth about the Bush administration's use of harsh interrogation practices (a.k.a. torture) during hush-hush briefings on Capitol Hill?...

Sen. Dianne Feinstein (D-CA), the current chair of the intelligence committee, is not saying whether her probe will cover Cheney's participation in these briefings.

And Joan Walsh blogs for Salon about her debate with Liz Cheney last night on CNN:

[S]upport for closing Gitmo is bipartisan, I told Liz. It's mainstream opinion. The Cheney family position on Guantánamo is the one that's eccentric and extreme. Let's be clear about that. I think she started yelling at me around then, even though, according to CNN's new "Great Debate" feature, we were both supposed to let each other finish a 30-second opening statement.

Obama Ready to Tax Benefits

By Dan Froomkin
12:00 PM ET, 06/10/2009

Responding to demands that he further explain where the money would come from to pay for his dramatic health-care overhaul, President Obama is said to be on the brink of endorsing the limited taxation of employer-sponsored health benefits -- benefits that have historically been tax free, no matter how generous and regardless of how much employees earns.

Even though Obama's plan would only tax benefits over a certain amount, it would still rate as his biggest reversal yet on domestic policy. During his election campaign, Obama strongly criticized his Republican rival John McCain for his proposal to tax all such benefits.

For comparison purposes, however, what Obama in one campaign commercial dubbed the "McCain Tax" and the "largest middle-class tax hike ever," would have raised $3.6 trillion in taxes over 10 years from people with bare-bones health plans and "Cadillac" plans alike. Congressional estimates suggest that taxing workers for the value of benefits above the current cost of the standard health plan for federal employees -- the plan Obama seems about to support -- would, by contrast, raise $418 billion over 10 years. Applying that cap only to individuals making over $100,000 or couples making over $200,000 would generate $162 billion.

All this is according to CQ. Adriel Bettelheim writes for CQ this morning:

Though the new tax would capture a significant number of middle-class workers, the White House is ready to endorse it, if the majority of lawmakers on the tax-writing committees sign on. And administration officials already are preparing a justification, by arguing that fixing the U.S. health care system is too important to founder on questions about how to finance it, according to officials familiar with the administration’s thinking.

Bettelheim points out that the move "risks triggering a huge political battle with labor unions concerned about losing their bargaining clout" as well as legislators "wary of antagonizing economically stressed middle-class voters." But, she writes:

Obama himself will begin make the case at a series of campaign-style appearances across the country, beginning with a town hall meeting on Thursday in Green Bay, Wis., and in private meetings with lawmakers....

White House officials will repeatedly make the case that the overall savings working Americans obtain from a revamped health system will trump concerns about paying taxes on health benefits.

This argument already has been dubbed “It’s all about the net,” meaning the net annual cost of health coverage, and reflects the administration’s bottom-line rationale for any substantial health care overhaul.

Richard Rubin wrote for CQ Sunday night about the early estimates from the Joint Committee on Taxation. The $418.5 billion in question, he wrote is

not enough to pay the full cost of expanding health insurance to all Americans, but it would make a significant dent in the estimated $1 trillion price....

The estimate assumes that the exclusion cap will be set at the cost of the “standard option” health plan for federal employees and then indexed annually for per-capita medical cost inflation.

Obama told Democratic senators last week that he’d consider taxing such benefits. Ceci Connolly wrote in The Washington Post at the time:

Tax treatment of employer-sponsored health care cuts across party lines: Prominent Republicans such as Sen. Judd Gregg (N.H.) support imposing a tax on certain health plans, while Democrats such as Sen. Sherrod Brown (Ohio) say that a tax would unfairly hurt middle-class workers with good benefits.

Health analysts from across the political spectrum have pressed for changing the tax treatment, arguing in part that the exclusion provides the greatest tax relief to high-salaried workers with generous insurance plans.

But, she wrote,

the issue represents treacherous politics for Obama, given his attacks on Sen. John McCain (R-Ariz.), who advocated a similar approach during the campaign.

"For the first time in American history, he wants to tax your health benefits," Obama said in September. "Apparently, Senator McCain doesn't think it's enough that your health premiums have doubled. He thinks you should have to pay taxes on them, too."

Strongly desiring to declare a health-care victory this year, Obama is now taking a more nuanced approach, aides said. "His style of leadership is to say, let's not get bogged down; let's keep moving forward," said one senior adviser who was in yesterday's meeting. "He's not ruling anybody's ideas out."

Jackie Calmes and Robert Pear wrote in the New York Times last March about his attacks on McCain:

At the time, even some Obama supporters said privately that he might come to regret his position if he won the election; in effect, they said, he was potentially giving up an important option to help finance his ambitious health care agenda to reduce medical costs and to expand coverage to the 46 million uninsured Americans.

Meanwhile, Congress is taking a historic leap into action. Noam N. Levey writes in the Los Angeles Times:

Spurred on by President Obama and an array of businesses, medical providers and consumers clamoring for change, congressional Democrats have begun to lay out specific plans for overhauling the nation's healthcare system -- proposing changes that would affect almost every American, old or young, sick or well, rich, poor or middle-class.

Despite a looming brawl over key details, the Democratic majority is expected to pass a bill that will make ordinary Americans the ultimate stakeholders who must live with the system, adjust to changes and -- one way or another -- absorb the costs....

Though they differ on important details, the Democrats' plans all focus on three broad goals, each of which has contributed to stalemate in the past:

* Improving the quality of care for everyone by encouraging doctors, hospitals and others to adopt the best, most effective courses of treatment....

* Curbing the explosive growth in costs by prodding the medical system to make more cost-effective decisions and to increase efficiency by moving to computerized medical records....

* Making health insurance readily available to the 46 million people who don't have it, as well as more affordable and less burdensome to those who do, and to the employers who still deliver the bulk of medical insurance to workers.

Washington Post blogger Ezra Klein writes:

It's worth taking a step back for a second to consider the weight of the moment. It's been 15 years since Congress last tried, and failed, to reform the American health care system. Fifteen years in which everything has gotten worse. In which health care costs have risen and insurance coverage has contracted. In which individuals have lost their protection and businesses have lost their competitiveness.

It's easy, in the daily jockeying between committees and factions and caucuses, to forget that something pretty big is happening here: Congress is trying to solve, or at least improve, one of the most severe and enduring public policy problems confronting the country. A problem that has resisted the efforts of Franklin Delano Roosevelt, Harry Truman, Lyndon Johnson, Richard Nixon, Jimmy Carter, and Bill Clinton, but is pressing enough that for all its difficulty, it has never dropped from the agenda.

The Washington Post's Shailagh Murray recalls the collapse of "Hillarycare" in the early 1990s and writes:

The great unknown of the health-care debate as it unfolds in the months ahead is whether the current political landscape will prove more hospitable to mandates, cost controls and tax increases -- all measures now on the table that helped doom the Clinton plan.....

Even Republicans concede that Obama enjoys some key advantages the last Democratic president did not.

But Murray sets up what is likely an impossible standard for Obama to meet: "Big, ambitious bills need big, bipartisan margins not only to pass but also to earn credibility with voters," she writes. Then, in the very next sentence she illustrates why that's so unlikely: "Republican lawmakers know that the more GOP votes Obama can secure, the more he will shield Democrats from [an] electoral backlash in 2010."

Cartoon Watch

By Dan Froomkin
9:33 AM ET, 06/10/2009

Jeff Parker on Obama's health-care strategy, Jimmy Margulies on Obama's health-care allies, John R. Rose and Gary Varbel on government spending, Eric Allie on saving or creating jobs, John Cole on Obama as GM's backseat driver, Jim Morin on Obama's ambassador picks, and Tom Toles on Obama's employment plans.

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