In his weekly address, President Obama announced that the economic stimulus bill—officially known as the American Recovery and Reinvestment Act—will have an impact on taxpayers by April 1, making it the quickest and broadest tax cut in history.
The Treasury Department has directed its employees to reduce the amount of taxes withheld from paychecks. A typical family will now start keeping an extra $65 each month.
According to Obama, 95 percent of all working families will get a tax cut, in keeping with a campaign promise. The $400 credit for individuals, and $800 for couples, will be handed out over the rest of the year. Most workers will have an extra $13 per week in take-home pay.
Opponents will argue that an extra $65 a month will not make much of a difference, given the cost of recent government expenditures. Since December 2007, the federal government has spent $7.2 trillion on bailouts, and that number is rapidly approaching the $8 trillion mark. To put it in perspective, $8 trillion is 57 percent of the U.S.’s $14 trillion Gross Domestic Product (GDP).
The projected 2010 – 2017 budget deficit of the Obama administration including the stimulus bill is $8.4 trillion. Obama has promised to take on the nation’s massive debt. On Monday, the President will hold a fiscal summit to discuss the trillion-dollar national debt and plans for fiscal responsibility.
The Obama administration conceived of the stimulus plan as an emergency lifeline to save the nation during a crisis, but governors around the country aren’t so sure that the plan will stabilize the economy and create jobs.
South Carolina Gov. Mark Sanford has criticized the plan, stating that it will only deepen the nation’s debt without stimulating the economy. Gov. Bobby Jindal of Louisiana announced Friday that he would reject part of the stimulus plan aimed at expanding state unemployment insurance coverage. No other governor has rejected stimulus funding.
Sunday, February 22, 2009
Obama's Administration Amasses Huge Deficit Early On
President Obama recently criticized Republicans as the “folks who presided over a doubling of the national debt,” but the cost of Tuesday’s bank bailout alone equals about 75 percent of the total $3.35 trillion in deficits amassed by the Bush administration between 2002 and 2009.
The projected 2010 – 2017 budget deficit of the Obama administration including the stimulus bill is $8.4 trillion—2.5 times the size of President Bush’s deficit over an equivalent period.
The $2.25 trillion bailout announced by Treasury Secretary Timothy Geithner on Tuesday dwarfs the $787 billion stimulus bill. A central part of the bailout plan involves spending up to $1 trillion to purchase toxic assets, and last week some estimated that the total cost could top $3 – 4 trillion.
Senator Richard Shelby (R-Al.), the top Republican on the Senate Banking Committee, said on Wednesday that Geithner “wasted” the Senate’s time by omitting details from the bailout plan. The plan’s lack of specifics caused financial markets to tank, sending the Dow Jones industrial average plunging by 382 points Tuesday.
Obama has scheduled a “fiscal-responsibility summit” for Feb. 23 and will unveil a budget blueprint three days later, designed to pressure politicians to address the country’s rising debt.
On Friday the president defended the cost of the stimulus plan, but he recognized the need to think in the long term. “We’re going to have to have fiscal discipline,” he said. “We are not going to be able to perpetually finance the levels of debt that the federal government is currently carrying.”
The projected 2010 – 2017 budget deficit of the Obama administration including the stimulus bill is $8.4 trillion—2.5 times the size of President Bush’s deficit over an equivalent period.
The $2.25 trillion bailout announced by Treasury Secretary Timothy Geithner on Tuesday dwarfs the $787 billion stimulus bill. A central part of the bailout plan involves spending up to $1 trillion to purchase toxic assets, and last week some estimated that the total cost could top $3 – 4 trillion.
Senator Richard Shelby (R-Al.), the top Republican on the Senate Banking Committee, said on Wednesday that Geithner “wasted” the Senate’s time by omitting details from the bailout plan. The plan’s lack of specifics caused financial markets to tank, sending the Dow Jones industrial average plunging by 382 points Tuesday.
Obama has scheduled a “fiscal-responsibility summit” for Feb. 23 and will unveil a budget blueprint three days later, designed to pressure politicians to address the country’s rising debt.
On Friday the president defended the cost of the stimulus plan, but he recognized the need to think in the long term. “We’re going to have to have fiscal discipline,” he said. “We are not going to be able to perpetually finance the levels of debt that the federal government is currently carrying.”
Democrats Signal Possible Bank Nationalization
Leading Democrats have signaled further government aid to failing banks in the near future, possibly including increased nationalization.
Treasury Secretary Timothy Geithner will outline the Obama administration’s new proposal to aid the banking sector in a speech at noon on Monday. After a three-day retreat with a briefing from Geithner, Speaker Nancy Pelosi (D-Calif.) indicated on Saturday that lawmakers will place strict requirements on any new aid to banks.
Obama administration officials say they have rejected nationalizing institutions by taking large ownership stakes, and Geithner has previously stated that he wants to avoid completely nationalizing banks, if possible.
To some extent, however, nationalization has already happened. Taxpayers are now the biggest shareholders in Bank of America, with about 6 percent of the stock, and in Citigroup, with 7.8 percent, according to the New York Times.
The cost could increase if the government sets up a “bad bank” to pay for these banks’ most toxic assets, which could cost hundreds of billions of dollars.
Sources told the Wall Street Journal in January that such a bailout could cost $2 trillion. Senator Chuck Schumer later revealed that the government might have to pay $3 to $4 trillion to private banks to take bad debt off their hands.
Despite the cost, not all lawmakers are opposed to such a scheme. “Well, whatever you want to call it,” said Pelosi in January. “If we are strengthening them, then the American people should get some of the upside of that strengthening. Some people call that nationalization.”
Adam S. Posen, the deputy director of the Peterson Institute for International Economics, told the New York Times that Obama and Geithner will have to “bite the bullet” on the issue of nationalization. We have yet to see exactly what that will look like.
Treasury Secretary Timothy Geithner will outline the Obama administration’s new proposal to aid the banking sector in a speech at noon on Monday. After a three-day retreat with a briefing from Geithner, Speaker Nancy Pelosi (D-Calif.) indicated on Saturday that lawmakers will place strict requirements on any new aid to banks.
Obama administration officials say they have rejected nationalizing institutions by taking large ownership stakes, and Geithner has previously stated that he wants to avoid completely nationalizing banks, if possible.
To some extent, however, nationalization has already happened. Taxpayers are now the biggest shareholders in Bank of America, with about 6 percent of the stock, and in Citigroup, with 7.8 percent, according to the New York Times.
The cost could increase if the government sets up a “bad bank” to pay for these banks’ most toxic assets, which could cost hundreds of billions of dollars.
Sources told the Wall Street Journal in January that such a bailout could cost $2 trillion. Senator Chuck Schumer later revealed that the government might have to pay $3 to $4 trillion to private banks to take bad debt off their hands.
Despite the cost, not all lawmakers are opposed to such a scheme. “Well, whatever you want to call it,” said Pelosi in January. “If we are strengthening them, then the American people should get some of the upside of that strengthening. Some people call that nationalization.”
Adam S. Posen, the deputy director of the Peterson Institute for International Economics, told the New York Times that Obama and Geithner will have to “bite the bullet” on the issue of nationalization. We have yet to see exactly what that will look like.
STD Prevention in Stimulus Bill
President Obama urged members of the GOP to put aside party politics on the economy this week. Behind the scenes, however, Obama’s party put money for STD prevention into the stimulus bill.
The House voted this week to include $335 million for STD prevention in its bill. The Senate, however, upped the ante to $400 million in STD spending on page 138 of the 438-page measure. Nancy Pelosi, Speaker of the House, tried to explain how STD prevention was vital to stimulating the economy on CBS this week, but she stumbled over her words.
News of the House funds drew criticism from Republicans who said the money did not belong in an $819 billion bill designed to help the economy.
“Senate big spenders will never be underbid in wasting tax dollars. But how in the world does STD research create jobs? Wait. ... Don’t answer that I don't want to know,” said Wesley Denton, an aide to Sen. Jim DeMint, South Carolina Republican.
The bill, which passed in the House by a 244-188 vote Wednesday evening, also allocated $75 million for smoking cessation and $870 million to prepare for a pandemic influenza outbreak.
The House voted this week to include $335 million for STD prevention in its bill. The Senate, however, upped the ante to $400 million in STD spending on page 138 of the 438-page measure. Nancy Pelosi, Speaker of the House, tried to explain how STD prevention was vital to stimulating the economy on CBS this week, but she stumbled over her words.
News of the House funds drew criticism from Republicans who said the money did not belong in an $819 billion bill designed to help the economy.
“Senate big spenders will never be underbid in wasting tax dollars. But how in the world does STD research create jobs? Wait. ... Don’t answer that I don't want to know,” said Wesley Denton, an aide to Sen. Jim DeMint, South Carolina Republican.
The bill, which passed in the House by a 244-188 vote Wednesday evening, also allocated $75 million for smoking cessation and $870 million to prepare for a pandemic influenza outbreak.
Obama Expands State Children’s Health Insurance Program (SCHIP)
Despite tough talk for lobbyists in Washington, Congress is working on a bill that will benefit a powerful lobby—the hospital industry. A bill designed to reauthorize the State Children’s Health Insurance Program (SCHIP) is intended to provide health coverage for children, but it includes a section that bans physicians from owning hospitals.
This section of SCHIP, supported by lobbyists for major hospital groups, would effectively put an end to specialty hospitals, which are a source of competition. These medical centers focus on specific areas of the body or diseases and often provide higher quality care than general hospitals. There are over 200 specialty hospitals in the United States, out of about 6,000 hospitals overall.
During his election campaign, Obama vowed to expand access to health care, suggesting a national health insurance exchange for those who can’t get insurance thorough employer plans. Under Obama’s plan, larger employers that don’t offer employee health benefits will pay a tax to help fund federal coverage.
The expansion of SCHIP is a pillar of Obama’s plan that would provide health coverage for children whose parents are ensured but don’t qualify for Medicare. On Wednesday the House moved to expand coverage to 4 million more children, and the Senate will address the issue next week.
The expansion bill passed in the House would cost $32 billion over four and a half years, funded by a new 61 cent cigarette tax.
Opponents of the ban argue that it is foolish for Congress to consider destroying a medical industry that provides over 55,000 jobs nationally in a time when unemployment is high and quality health care is hard to come by.
http://www.forbes.com/businessinthebeltway/2009/01/15/obama-hospitals-schip-biz-healthcare-cz_dw_0115schip.html
http://www.modernhealthcare.com/article/20090123/REG/301239978
http://www.forbes.com/forbes/2008/0310/086.html
http://www.washingtonpost.com/wp-dyn/content/article/2009/01/20/AR2009012001310.html
This section of SCHIP, supported by lobbyists for major hospital groups, would effectively put an end to specialty hospitals, which are a source of competition. These medical centers focus on specific areas of the body or diseases and often provide higher quality care than general hospitals. There are over 200 specialty hospitals in the United States, out of about 6,000 hospitals overall.
During his election campaign, Obama vowed to expand access to health care, suggesting a national health insurance exchange for those who can’t get insurance thorough employer plans. Under Obama’s plan, larger employers that don’t offer employee health benefits will pay a tax to help fund federal coverage.
The expansion of SCHIP is a pillar of Obama’s plan that would provide health coverage for children whose parents are ensured but don’t qualify for Medicare. On Wednesday the House moved to expand coverage to 4 million more children, and the Senate will address the issue next week.
The expansion bill passed in the House would cost $32 billion over four and a half years, funded by a new 61 cent cigarette tax.
Opponents of the ban argue that it is foolish for Congress to consider destroying a medical industry that provides over 55,000 jobs nationally in a time when unemployment is high and quality health care is hard to come by.
http://www.forbes.com/businessinthebeltway/2009/01/15/obama-hospitals-schip-biz-healthcare-cz_dw_0115schip.html
http://www.modernhealthcare.com/article/20090123/REG/301239978
http://www.forbes.com/forbes/2008/0310/086.html
http://www.washingtonpost.com/wp-dyn/content/article/2009/01/20/AR2009012001310.html
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