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Speaker John A. Boehner said Monday that Republicans would insist on trillions of dollars in federal spending cuts in exchange for their support of an increase in the federal debt limit sought by the Obama administration to prevent a government default later this year.

In his most specific statement to date on what Republicans will demand in the debt ceiling fight, Mr. Boehner told the Economic Club of New York that the level of spending reductions should exceed the amount of the increase in borrowing power.

“Without significant spending cuts and changes to the way we spend the American people’s money, there will be no debt limit increase,” Mr. Boehner told members of New York’s business and finance community. “And cuts should be greater than the accompanying increase in debt authority the president is given.” Mr. Boehner said those cuts should be in the trillions of dollars, not billions.

In the speech, delivered ahead of a second round of debt limit negotiations with the White House and Senate Democrats on Tuesday, Mr. Boehner did not provide a timeframe for when the spending reductions would have to be imposed.

His address came after a leading Senate Democrat, Senator Charles E. Schumer of New York, accused Mr. Boehner of “playing with fire” by holding the debt limit increase hostage to a push for spending cuts and budget restrictions.

“The idea of refusing to raise the debt ceiling should be taken off the table,” Mr. Schumer said in a conference call with reporters before the speech. Mr. Schumer also said he believed that the debt limit increase should be approved by mid-July to reassure nervous credit markets, though the administration has said it can push the deadline into early August.

In his remarks, the speaker expressed strong resistance to the effort by some Senate Democrats and President Obama for an alternative to enacting specific spending cuts as the price for increasing the debt limit: “triggers” that prompt automatic spending reductions and perhaps tax increases if Congress and the White House do not meet targets for lowering the deficit in coming years. That idea has emerged as providing the potential for compromise over the debt increase.

Mr. Boehner said the reductions should be “actual cuts and program reforms, not broad deficit or debt targets that punt the tough questions to the future. And with the exception of tax hikes — which will destroy jobs — everything is on the table.”

Acknowledging that many in the financial world are uneasy about the prospect that the government might not be able to make good on its financial obligations, Mr. Boehner said it would be more damaging to the nation if Congress granted the administration’s request without taking steps to curb deficit spending and bring down the federal debt.

“It would send a signal to investors and entrepreneurs everywhere that America still is not serious about dealing with our spending addiction,” Mr. Boehner said. “It would erode confidence in our economy and reduce the certainty for small businesses. And frankly I think it would kill even more American jobs.”

The administration has not specified the amount of the increase it is seeking in the $14.3 trillion debt limit, but the previous increase in 2010 was just under $2 trillion, and estimates are that a similar amount would be required to avoid a second politically charged vote on the debt limit before the 2012 elections.

Mr. Boehner also said the debt talks should include “honest conversations” about how to rein in the costs of the Medicare program, and he advocated fundamental changes. Other senior Republicans acknowledged last week that any changes to the health insurance program for older Americans are unlikely to incorporate the party’s proposal to begin providing private insurance subsidies for future retirees.

The speaker managed his party’s negotiations with the White House and Senate Democrats this year over current spending and pushed his demands for cuts to the final hours, when a last-minute deal for about $38 billion in cuts avoided a federal government shutdown shortly before midnight on April 8. Asked by an audience member whether he would entertain a short-term increase in the debt limit if no deal was reached, Mr. Boehner was noncommittal.

Mr. Schumer and Roger C. Altman, an investment banker and former Clinton administration Treasury official, said the consequences for the nation’s economy could be dire if the government defaulted for the first time in its history or if the debt-ceiling talks were pushed to the brink.

“If America were to default, even for 24 hours, that would have an unprecedented and a catastrophic impact on global financial markets and on American markets,” Mr. Altman said.

But Mr. Boehner said the debt limit fight provided a unique opportunity. “I don’t want to allow this moment that we have in our history to pass without real action to solve our long-term economic problems,” he said.
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Source: The New York Times

In a new effort to increase access to health care for poor people, the Obama administration is proposing a rule that would make it much more difficult for states to cut Medicaid payments to doctors and hospitals.

The rule could also put pressure on some states to increase Medicaid payment rates, which are typically lower than what Medicare and commercial insurance pay.

Federal officials said Monday that the rule was needed to fulfill the promise of federal law, which says Medicaid recipients should have access to health care at least to the same extent as the general population.

“We have a responsibility to ensure sufficient beneficiary access to covered services,” the administration said in issuing the proposal, to be published Friday in the Federal Register.

In many parts of the country, Medicaid recipients have difficulty finding doctors who will take them because Medicaid payment rates are so low.

Faced with huge financial problems, many states have frozen or reduced Medicaid payments to health care providers, and governors of both parties have proposed additional cuts this year. Medicaid recipients and health care providers have sued state officials to block such cuts, and one case, from California, is pending in the United States Supreme Court.

“Tight state budgets, coupled with increased demand for services during the recession, have led many states to propose reductions in Medicaid provider payments, without clear federal guidance on how to assure access,” said Cindy Mann, the federal official in charge of Medicaid.

The new rule provides that guidance, but several state officials expressed concerns.

Dennis G. Smith, secretary of the Wisconsin Department of Health Services, described the proposal as “a federal power grab.”

“The administration talks about flexibility and working with states, but continues to take actions such as this that are contrary to the partnership,” Mr. Smith said. “Putting states in jeopardy, by inventing a new meaning for a longstanding statutory provision, is another example of how distant and disconnected the administration is from what is happening across the country.”

Medicaid is financed jointly by the federal government and the states. Even before the recent recession, it was one of the fastest-growing items in most state budgets.

Douglas Porter, the Medicaid director in Washington State, said: “The intent of the proposed regulation is reasonable. But the administration has gone overboard, creating a system of access review that is far too complex, elaborate and burdensome.”

Bruce D. Greenstein, secretary of the Louisiana Department of Health and Hospitals, said: “The proposal leaves too much discretion with the federal government. It does not clearly enunciate the criteria to be used in measuring access to care.”

The new initiative comes as federal and state officials prepare for a huge expansion of Medicaid eligibility, scheduled to occur in 2014 under the new health care law.

About half of the 34 million uninsured people who are expected to gain coverage under the law will get it through Medicaid.

The proposed rule generally prevents states from cutting Medicaid payments to providers unless they can show that Medicaid recipients will have “sufficient access” to care after the cuts.

Regardless of whether they want to cut payment rates, states must continually monitor Medicaid recipients’ access to care and develop plans to fix any problems they discover, the rule says.

Under the rule, states must measure and document access to “each covered benefit” at least once every five years. Data from such reviews could provide doctors, hospitals and nursing homes with powerful new tools to lobby for higher reimbursement.

States set Medicaid payment rates within broad federal guidelines. Federal law has long said that states must “enlist enough providers” to make sure Medicaid recipients have access to care equivalent to that of other people in the area.

Under presidents of both parties, federal officials have often disregarded this requirement, approving cuts in Medicaid payment rates that discouraged doctors from accepting Medicaid patients.

In an effort to rein in costs, states have increasingly turned to health maintenance organizations and other types of managed care. The new rule does not apply to managed care. But the Obama administration said it was “considering future proposals” to guarantee access to care for Medicaid recipients in such private health plans.

Under the proposal being issued this week, “beneficiary access must be considered in setting and adjusting” Medicaid payments to doctors, dentists, psychologists, hospitals, clinics, pharmacies, nursing homes and suppliers of medical equipment.

States must consult Medicaid recipients because, the rule says, their experience is “the most important indicator of whether access is sufficient.” Federal officials suggested that states survey Medicaid recipients to see how much difficulty they had in scheduling doctor’s appointments.

In addition, the rule says, states should compare Medicaid payment rates with the amounts paid by Medicare or commercial insurers, with providers’ costs or with their customary charges. Another important factor, it said, is the number and percentage of doctors who accept new Medicaid patients.
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Source: The New York Times

The White House is warning that catastrophe will strike if Congress fails to raise the limit on the national debt: With too little cash to pay creditors, the U.S. government would default. Interest rates would skyrocket. And the economic recovery would collapse.

But behind the scenes, Treasury Secretary Timothy F. Geithner has already begun juggling the books to conserve cash, draining a special account at the Federal Reserve. And with the debt forecast to hit the legal limit of $14.3 trillion in just a few weeks, he has a range of tools at his disposal, including borrowing money from a pension fund for federal workers.

Geithner also has authority to pay investors first for interest they’re owed on the debt, according to a decades-old legal opinion. A growing number of conservatives argue that by making interest payments first, the government could avoid default and the Obama administration’s predictions of economic Armageddon.

But the nation could pay a substantial price in the form of higher interest rates if it relied for long on such evasive maneuvers, the Government Accountability Office said in a recent study. And financial analysts say market confidence could be shattered if Geithner had to cut off pay to combat troops or stop writing Social Security checks — even if he never missed an interest payment.

“I think the failure to meet any commitment would be viewed by the markets as default and would be deeply unnerving,” said Robert Rubin, who, as Treasury secretary in the mid-1990s, prevented the debt from breaching the limit during the longest battle over the issue on record.

“We don’t know” what would happen in the event of default, Rubin said. “But I think it is totally irresponsible to take the risk of trying to find out.”

Markets are already uneasy about the looming battle over the debt ceiling, which promises to consume Congress when lawmakers return next week from their Easter break. Republican leaders are demanding strict controls on spending as a condition for raising the ceiling; Demo­cratic leaders want a deficit-reduction trigger, which would automatically cut outlays and raise taxes if certain budget goals aren’t met.

The debt is forecast to hit the limit in mid-May. Geithner has said he can keep the wolf from the door until early July.

So far, the Treasury has nearly drained a $200 billion cash-management account at the Fed, providing a cushion of money to pay bills without new borrowing. Next, Geithner is likely to take a series of “extraordinary actions,” such as suspending the issuance of special securities that help state and local governments manage their own finances. Once the debt hits the limit, Geithner may declare a “debt issuance suspension period,” permitting him to borrow from the pension fund for federal workers.

Rubin pioneered these strategies in 1995, at the start of the budget battles between President Bill Clinton and Republicans led by House Speaker Newt Gingrich (R-Ga.). As the fight dragged on through two government shutdowns, Rubin had to juggle the nation’s bills for 135 days. Finally, Clinton threatened to delay Social Security checks, spurring Congress to approve more borrowing to make sure the checks went out on time.

Then, as now, a new GOP House majority was pressing a Democratic president to shrink the government. Congress grudgingly raised the debt limit six times between 1995 and the loss of GOP control in 2007, while the Treasury repeatedly resorted to extraordinary measures.

Geithner can use the same tactics, Rubin said, but “the trouble is the numbers are much bigger this time.” In November 1995, the debt stood just under $5 trillion, and the government was spending less than half what it does today. The measures Rubin used to stay under the debt limit for more than four months would now last “a few days to a few weeks,” according to GAO auditors.

The Treasury also has on occasion curbed borrowing to stay under the debt limit, postponing scheduled auctions of government bonds and trimming the total value sold.

The GAO found that “general uncertainty” forced the Treasury to pay millions of dollars in higher interest rates in the months leading up to debt-limit increases in the early 2000s and again last year.

As Geithner readies his cash-management tools, some Republicans are pressing him to prepare for a lengthy battle that could force Treasury for the first time since the debt limit was established in 1917 to stop borrowing and make do with tax revenue. The government is forecast to collect $2.2 trillion in taxes this year and obligated to spend $3.7 trillion. That means Geithner could cover about 60 percent of the bills.

Last month, all 47 Senate Republicans voted for a measure sponsored by Sen. Patrick J. Toomey (R-Pa.) that would require Geithner to pay interest on the debt first. At $225 billion this year, the payments would be easily affordable, said Toomey, a former bond trader who headed the anti-tax Club for Growth until his election last year. While it would be “traumatic” to slash other obligations, Toomey said, keeping interest payments current would avoid default and preserve the nation’s sterling credit rating.

“The administration has been exaggerating the consequences of all this,” Toomey said in an interview. “If we didn’t raise the debt limit when we reached it, we’d have the equivalent of a partial government shutdown, and the market knows very well that furloughing workers and suspending purchases of materials are not the same thing as defaulting on our bonds.”

During a 1985 debt-limit fight, the GAO concluded that the Treasury secretary “does have the authority to choose the order in which to pay obligations of the United States.” But Treasury officials, who declined to comment on the record for this story, have discouraged talk about prioritizing the nation’s expenses.

In addition to being politically risky, the task presents huge logistical challenges. The Treasury makes hundreds of thousands of payments each day, most processed automatically by the Federal Reserve. Interrupting payments to manage daily cash flow would be far more complex than simply cutting off, say, payments to education programs.

More to the point, Treasury officials say, prioritizing payments would not avoid default. In a January blog post, Deputy Treasury Secretary Neal S. Wolin argued that failing to meet any obligation — whether interest payments or Medicare bills — would trigger a loss of market confidence. “Adopting a policy that payments to investors should take precedence over other U.S. legal obligations would merely be default by another name,” Wolin wrote.

What are the consequences of default? There’s disagreement about that, too.

Last week, in a paper titled “The Case for Default,” a Bank of America-Merrill Lynch analyst argued that hitting the debt limit might actually be a good thing, especially if the suspension of borrowing were brief and the political battle produced a plan to balance the nation’s books.

But most analysts take a darker view. Bill Gross, who runs Pimco, the world’s biggest bond fund, said in an e-mail that failure to raise the debt ceiling would be “catastrophic — global investors would move money at the margin to countries which have their act together, interest rates might rise by 50 basis points overnight, the stock market would plunge.”

Already, some traders have begun hoarding Treasury bills and other short-term assets in case the government stops issuing new debt. For now, such “disruptions” are minor but noticeable, said Karen Shaw Petrou, managing partner of the research firm Federal Financial Analytics.

“It’s like before a thunderstorm,” she said. “The birds are quiet in the trees, and there’s a very weird mood in the market. But it hasn’t yet started to rain.”
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Source: The Washington Post

Investigations have concluded that President Obama was, in fact, born in Hawaii in 1961, as he has always said.

Just this week, on the news program “Good Morning America” on ABC, George Stephanopoulos produced a copy of the president’s Certification of Live Birth, causing a potential presidential aspirant, Michele Bachmann, the Republican congresswoman from Minnesota, to say that the issue appeared settled. In 2008, the Supreme Court declined to hear a case challenging that proof.

But the so-called birther controversy stubbornly refuses to go away.

The issue, which has simmered at the fringes of the nation’s political discourse for years, even got a recent burst of attention when it was adopted as a talking point by Donald Trump, a potential Republican presidential candidate.

The result is that what had been a wispy tale of purportedly buried documents and cover-ups designed to hide the president’s supposed birth in Kenya — a tale that has been dismissed by most mainstream members of both political parties — now appears to have staying power as the political season lurches toward 2012.

A New York Times/CBS News Poll released Thursday found that 57 percent of adults surveyed nationwide said they thought Mr. Obama was born in the United States, versus 25 percent who said he was born elsewhere.

But digging deeper into the numbers shows striking disparities along party lines and regions of the country. Among Republicans, for instance, 33 percent said they thought Mr. Obama was born in America, while 45 percent said his birth occurred in another country. The nationwide telephone poll, conducted April 15-20 with 1,224 adults and a margin of sampling error of plus or minus three percentage points, said that majorities in all regions of the nation think the president was born in the United States, but that those majorities were smaller in the South and Midwest than in the Northeast and Far West.

Around the country, the issue has proved to be a sure winner for the conservative base, with bills popping up in more than a dozen state legislatures to force future presidential candidates to prove their citizenship. Those legislatures, though, have been much more reluctant to turn this issue into concrete law.

Birther bills have foundered or fallen dormant in at least five states and are still being debated in more than a half-dozen others. In Arizona, where both legislative chambers passed one such bill, Gov. Jan Brewer, a Republican, vetoed it this week, calling it “a bridge too far.”

But now, Oklahoma, a deeply conservative state, could be the first to put its doubts into law, through a bill that would require all candidates, from town council hopeful on up, to prove that they meet the legal requirements for office. Those requirements vary by office, but presidential aspirants would need to, among things, file certified proof that they were born in the United States. The bill does not specify what documents would need to be filed. A vote was expected by next week.

Supporters of the measure, and others like it from Georgia to Montana, protest that they are not birthers, as doubters of Mr. Obama’s country of birth have been called, sometimes derisively. They say that they simply want to clarify the status of all candidates and that Mr. Obama’s case has only sharpened the issue and illuminated what they call a glaring hole in statutes governing eligibility to run for office.

“It’s not a birther bill, it’s a common-sense bill,” said a lead sponsor, State Senator Rick Brinkley, a Republican from suburbs of Tulsa. “If you’re going to file for office, you should be willing to substantiate that you meet the qualifications.”

In state capitols, the debates have been reframed in the dry language of good government — a simple effort to clear the air, supporters say, for confused voters. And because many of the bills failed this year, supporters are renewing their legislative battle plans for next year, in the heart of a presidential campaign.

Meanwhile, even beyond Mr. Trump, divergent views among Republican governors have heightened a new sense that the debate over the issue remains unresolved. After Ms. Brewer vetoed the Arizona bill, for example, Gov. Bobby Jindal of Louisiana, a Republican, said he would enthusiastically sign a similar bill, should it reach his desk.

Here in Oklahoma, where Mr. Obama won just over a third of the vote in 2008 — one of his worst state losses — Senate Bill 91 passed last month with overwhelming and even bipartisan support. People in both parties said they were confident that the House would do the same by the deadline next week (the bill would have to return to the Senate for a procedural vote). Lawmakers said they assumed that Gov. Mary Fallin, a Republican, would sign it.

A spokesman said Ms. Fallin would not comment until the bill was on her desk and she had a chance to review it.

Legislators backing credentials bills in other states are closely watching what happens here.

“If one state passes, and the Obama administration basically ignores the requirement and does not qualify for the ballot in that state, that would send a very strong signal that we have a situation in the United States where someone who is not eligible is occupying the White House,” said Mark Hatfield, a Republican state representative in Georgia whose own ballot bill failed to get through. If Oklahoma does not go forward, and an override of Ms. Brewer’s veto in Arizona does not materialize, Mr. Hatfield said, “then other states, including Georgia, have a duty to step up.”

Opponents of the birther bills say they are unnecessary and are designed to score political points more than safeguard democracy, certainly in Mr. Obama’s case.

Still, Democrats in Oklahoma were divided. For example, the minority floor leader in the House, Chuck Hoskin, said he would probably vote yes. Asked in an interview whether he was concerned about embarrassing the leader of his own party, Mr. Hoskin said he thought Mr. Obama’s failure to win over Oklahomans in 2008 was the real embarrassment.

But down the hall, an assistant Democratic floor leader in the House, Al McAffrey, said the bill was the embarrassment. “But this is Oklahoma — we embarrass ourselves all the time,” he said.

Some lawmakers in other states said the fight to clarify the rules, whether sparked by birther talk or not, was overdue. But even some Republicans who have backed certification bills said they had no doubts about the president’s birthplace.

“Barack Obama is a natural citizen, born in Hawaii,” said Mike Kelley, a Republican representative in the Missouri House and a co-sponsor of a candidate certification bill that he said looked doomed for 2011. “I know there are people out there who don’t believe he is — this is about trying to calm those people down.”
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Source: The New York Times

As more details of the budget deal between President Obama and Congressional leaders trickled out on Sunday, lobbyists and lawmakers stepped up their efforts to secure or kill specific provisions benefiting wolf hunters in Montana, profit-making colleges and various public works projects.

Mr. Obama, Speaker John A. Boehner and the Senate majority leader, Harry Reid, reached the agreement late Friday, just hours before the government would have shut down for lack of spending authority to cover the remainder of the fiscal year.

But it became evident on Sunday that they had yet to work out the details of the agreement, which would cut roughly $38 billion from a federal budget expected to exceed $3.7 trillion this year.

“You may not be surprised to hear this, but they’re still sifting through the areas where they are going to make cuts,” Representative Chris Van Hollen of Maryland, the senior Democrat on the House Budget Committee, said Sunday on the ABC News program “This Week.”

A Republican Congressional aide said on Sunday night that the House and Senate Appropriations Committees were still working on the fine points, since “thousands of budget line items have to be negotiated.”

The agreement would cut $13 billion from programs at the Departments of Labor, Education and Health and Human Services and would extract $1 billion more in an across-the-board cut from domestic agencies. There will also be reductions to housing assistance programs and some health care programs, along with $8 billion in cuts to the State Department and foreign aid, said Dan Pfeiffer, the White House communications director.

White House officials and Congressional Republicans were still fighting Sunday over a proposal to block Obama administration rules that would establish tight standards for profit-making colleges and vocational schools.

Education Secretary Arne Duncan has said that many profit-making schools do not equip students to obtain “gainful employment” but leave them saddled with debt. The rules, he said, are needed to protect students and taxpayers against “wasteful spending on educational programs of little or no value.”

Profit-making colleges mobilized support over the weekend for a Republican amendment to the spending bill that would delay the rules for at least six months.

In an e-mail to his members, Harris N. Miller, the president of the industry’s trade group, the Association of Private Sector Colleges and Universities, made an “urgent request,” saying, “We need you to make calls this weekend!”

The status of the “gainful employment” rule is not settled, Mr. Miller said, and he warned that tens of thousands of students could find themselves without federal aid if the rule took effect.

Montana hunters appear to have been more successful in their bid to influence the legislation.

Senator Jon Tester, Democrat of Montana, said the budget bill included his proposal to remove gray wolves in Montana and Idaho from the federal list of endangered species. This would enable the two states to manage their wolf populations and to allow hunting of the animals if they choose.

“This wolf fix isn’t about one party’s agenda,” Mr. Tester said. “It’s about what’s right for Montana and the West.”

Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee, had urged Mr. Obama to remove the gray wolf from the list as part of any budget agreement.

“Montanans don’t need D.C. bureaucrats telling us how to manage wolves in our state,” Mr. Baucus said.

Rodger Schlickeisen, president of Defenders of Wildlife, strongly objected to the change.

“In all the decades of the Endangered Species Act,” Mr. Schlickeisen said, referring to the 1973 law, “Congress has never legislatively removed protections for any species. It’s bad to do it for the wolf, and it could set a very bad precedent, replacing scientific determinations with politics.”

Montana officials want to conduct a regulated hunt of wolves, which prey on elk and other big game in the western part of the state.

The budget agreement also takes aim at two provisions of the new health care law. It would cut more than $2 billion set aside for the creation of private nonprofit health insurance cooperatives.

It also eliminates a program that would have allowed hundreds of thousands of lower-income workers to opt out of employer-sponsored health plans and use the employer’s contribution to buy coverage on their own, through new insurance exchanges.

Senator Ron Wyden, Democrat of Oregon, the architect of this provision, lamented its demise.

“Publicly,” Mr. Wyden said, “both parties say they are champions of choice and competition and making health insurance more affordable for everyone. But then behind closed doors they kill a program that does exactly that. This seems like a victory for special interests.”

Many employers had objected to the Wyden provision, saying it would increase their costs by allowing younger and healthier entry-level employees to opt out of employer-sponsored plans.
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Source: The New York Times

A month-and-a-half after the White House announced its plan to wind down Fannie Mae and Freddie Mac, House Republicans on Tuesday plan to introduce their own.

According to congressional sources familiar with the matter, a series of eight bills by Republicans will call for hiking fees charged to borrowers in two years and taking other steps to shrink the companies’ footprint in the housing market.

The bills will call on Fannie and Freddie to begin to sell their massive portfolios of mortgage investments, which keep rates low, and would take away other advantages enjoyed by the companies that banks and private-sector firms don’t have.

They would also formally end requirements that Fannie and Freddie direct a portion of their business to low- and moderate-income housing (these have been suspended for several years) and pay the employees of the companies only what counterparts in the federal government earn.

What’s striking about the new GOP plan is that in many ways it mirrors the Obama administration’s approach to shutting down the taxpayer-backed mortgage giants but only on a faster timetable.

What’s also notable is that neither the administration nor the GOP is prepared to endorse a long-term model to replace Fannie and Freddie, which together with the Federal Housing Administration guarantee more than 90 percent of new mortgage loans.

The piecemeal approach could raise the prospect of government action on housing-finance overhaul this year, with some details to be worked out about timing. The administration’s white paper on the subject, released last month, called for hiking fees and requiring larger downpayments.

To some degree, the GOP is backing away from calls from some of the party’s members for a rapid elimination of Fannie and Freddie. The Republicans gave an overview of their principles for withdrawing support for the companies as far back as March 2010.

Many Republicans view the companies as primary instigators of the financial crisis, faulty instruments of federal housing policy that helped fuel risky lending practices.

The proposals they intend to release Tuesday will make it more expensive for Fannie and Freddie to do business, costs that will be passed on to borrowers. Republicans hope that banks will find less-expensive alternatives, which will attract consumers and reduce Fannie and Freddie’s role in the market.

The Obama administration mostly agrees with the GOP assessment that it is necessary to increase the costs of obtaining Fannie- and Freddie-backed mortgages to bring private-sector firms back into the market.

But it worries that moving too fast to withdraw Fannie and Freddie’s support for housing could further destabilize an already struggling housing market. Fannie, Freddie and the FHA have helped keep the market alive in the past few years.

The Republicans are not prepared Tuesday to make a proposal for a long-term solution. The administration also avoided commiting to a new approach, instead suggesting three options. All of them do away with Fannie and Freddie. One of them replaces the companies with nothing. Another retains a big presence for the government in the housing market.

The first of the eight bills to be presented Tuesday will increase the authority of the inspector general of the Federal Housing Finance Agency, which oversees Fannie and Freddie. The second will require Fannie and Freddie employees to be subject to the federal payscale.

A third would hike fees over two years, while a fourth would prohibit the firms from entering any new lending markets.

A fifth will require the Treasury to approve any new debt issuance by Fannie and Freddie, and a sixth eliminates the affordable-housing goals.

Finally, a seventh would cap Fannie and Freddie’s portfolios at $250 billion in five years (both portfolios are now nearly around $1 trillion), and an eighth would prohibit mortgages guaranteed by Fannie and Freddie from being exempted from new rules that would require mortgage lenders to take a financial interest in home loans they make.
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Source: The Washington Post

President Obama plans to discuss gasoline prices at a news conference Friday morning and will likely take questions about the Middle East crisis, the budget stalemate in Washington and the massive damage caused by a earthquake and tsunami in Japan.

The news conference, to be held in the South Court Auditorium of the White House complex, is scheduled to begin at 12:30 p.m.

Aides announced the news conference late Thursday following what appears to be a new willingness to have the president face reporters more frequently. White House officials said president would talk about “rising energy prices among other issues.”

The cost of gasoline has been rising steadily as the turmoil in Libya and other Middle East countries has caused worldwide concern about the availability of oil. As of this week, the average cost of a gallon of gasoline in the United States was $3.52 cents.

That increase has prompted a new round of political hand-wringing about the impact of the rising gasoline prices on individuals and the overall economy. It also renewed a debate over domestic drilling that last flared during the summer of 2008, when gas prices soared past $4 a gallon.

On Thursday, Congressional Republicans said that they plan to introduce legislation that would increase the domestic production of oil. At a news conference, House Speaker John A. Boehner of Ohio blamed the president for obstructing increased drilling.

“The Obama administration has consistently blocked American energy production that would lower costs and create jobs in our country,” Mr. Boehner said “They’ve canceled new leases for exploration, jeopardized our nuclear energy industry, and imposed a de-facto moratorium on future drilling in our country. They’ve even pushed a cap-and-trade energy tax that the president himself admitted would cause the price of energy to skyrocket.”

Jay Carney, the White House press secretary, later rejected that criticism.

“How could that be, since domestic oil production is higher — was higher last year than in any year since 2003?” Mr. Carney said. “This president is committed to responsible production of energy, including oil, in this country.”

On the earthquake and tsunami near Japan, Mr. Obama issued a statement early Friday morning offering “our deepest condolences to the people of Japan, particularly those who have lost loved ones in the earthquake and tsunamis. The United States stands ready to help the Japanese people in this time of great trial.”

The president will likely receive questions from reporters about the tsunami’s impact on Hawaii and the West Coast of the United States. Strong waves reached the American coastline Friday morning.

The news conference will also give reporters an opportunity to question Mr. Obama about the latest events in Libya and whether the United States plans to launch a no-fly zone over the country.

In the last several days, the Obama administration has tried to steer a pragmatic course in their response to Libya. The White House has said sanctions are applying great pressure on the Libyan leader, but administration officials are being cautious about the possibility of greater direct involvement by the United States in driving him out of the country.

In Washington, the budget dispute between Democrats and Republicans continues, with the government’s authority to spend money set to run out again on March 18. Lawmakers could extend that deadline with another short-term extension.

The president has been under fire from Republicans for not being willing to cut more deeply in the current budget, and from Democrats who accuse him of failing to show leadership in the budget dispute.
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Source: The New York Times

A coalition of liberal groups Thursday will call for the Obama administration to put out a detailed plan to create jobs and urge both parties to stop focusing so much on the federal budget deficit.

At a conference dubbed the “Summit on Jobs and America’s Future,” liberal leaders such as AFL-CIO head Richard Trumka, U.S. Rep. George Miller (D-Calif.) and Los Angeles Mayor Antonio Villaraigosa plan to speak about the continued high unemployment rate and urge more government spending to reduce it.

“Washington is focused on draconian cuts that will hurt the recovery,” said Roger Hickey, head of the liberal group the Campaign for America’s Future, which is sponsoring the conference. “The immediate crisis is jobs.”

Hickey, in an interview, acknowledged Republicans in the House would oppose virtually any kind of plan that would call for increased spending to spur economic growth. And he said officials in the Obama administration had bluntly told him “there is no jobs bill they can get out of the Republican Congress.”

But Hickey argues Democrats should call for more spending anyway. Even if Republicans block a stimulus-style bill, voters in 2012 would know Democrats tried to push an ambitious plan.

Hickey’s message is likely to fall on deaf ears. The administration, for now, has decided its best course is a protracted budget debate with Congressional Republicans over how much government spending to reduce and is showing little desire for more ambitious legislation to create jobs.

“There will be some occasions where Democratic constituencies aren’t happy with us because we’re having to rationalize government,” Obama told a group of liberal donors at fundraiser for congressional Democrats on Tuesday night in Boston. “But it’s necessary. ”
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Source: The Washington Post

The Senate on Wednesday resoundingly dismissed competing plans to impose new spending cuts and fund the government through Sept. 30, forcing top lawmakers and the Obama administration back into negotiations to resolve a budget stalemate.

In a stark illustration of the difficulties lawmakers face in reaching a compromise, neither a plan by House Republicans to slash $61 billion in spending or a much more modest Democratic alternative could attract even a simple 50-vote majority in the Senate, let alone the 60 that were required for approval.

The Democratic proposal received just 42 votes; the Republican proposal 44. Fourteen senators opposed both.

Senate leaders said the outcome should prompt a quick return to negotiations that should reach beyond the search for a short-term resolution.

“We should approach the talks with fresh eyes and a new mindset,” Senator Charles E. Schumer of New York, the No. 3 Senate Democrat, said.

Despite the sharp defeat of the two measures, lawmakers in both parties said the outcome could open the door to a compromise by showing that neither side holds the ability to push through a plan. They said the result could be used by Speaker John A. Boehner of Ohio to try to persuade House Republicans – particularly the 87 new freshmen – that they will have to give some ground from their $61 billion in cuts if they hope to adopt a budget and avoid shutting down the government.

As the Senate headed toward the votes, Democrats said the cuts in the House measure were too severe and ideologically driven as Republicans sought to fulfill a campaign pledge to pare spending. Republicans said the Democratic plan was far too modest and showed that lawmakers refused to grasp the severity of the nation’s fiscal problems.

“We are living in a fantasy world if we think we can’t find $61 billion to reduce out of more than $1 trillion,” Senator Jeff Sessions of Alabama, the senior Republican on the Budget Committee, said.

Some lawmakers assailed both plans.

“One bill cuts too little,” said Senator Ben Nelson, Democrat of Nebraska. “The other has too much hate.”

In a sign of Republican unity, all centrist party members endorsed the Republican cuts despite expressing reservations, with only Republican conservatives who favored deeper reductions opposing the measure already passed by the House. At the same time, all Senate Democrats stood firm against the Republican plan even as 11 opposed their own party’s proposal.
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Source: The New York Times

White House officials warned Monday against dragging out the budget fight into a series of continuing resolutions instead of reaching a long-term agreement.

White House Press Secretary Jay Carney said the administration was “pleased” with progress on Capitol Hill toward a stopgap measure that would fund the government through March 18, but did not want that to become a precedent for more temporary measures.

“If we keep returning to this process every couple of weeks, that will be bad for the economy because of the uncertainty it creates and the tension around that,” Carney said in a briefing with reporters.

His comments were the latest by the administration to suggest a government shutdown would be perilous to the economy. Both parties are painting apocalyptic scenarios if they don’t win the budget fight; Democrats warning of an economic collapse if the two sides can’t reach
an agreement; the GOP raising the specter of a Greece-style meltdown if America cannot reduce its debt.
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Source: The Washington Post