The non-partisan Congressional Budget Office (CBO) dealt a bad blow to the Obama administration's budget today, releasing projections that show the expected 10-year deficit to hit $9.3 trillion -- that's $2.3 trillion more than the White House's budget estimated last month.
In the age of trillion-dollar financial bailouts, one might ask, what's a couple of more trillions between friends? It means a lot to congressional Democrats, who are preparing to release their own budget outlines next week and need a large new deficit figure like they need a hole in the head.
To get an idea of the kind of heated (and rather hypocritical, coming from George W. Bush's party) rhetoric that's already coming out from GOPers on this issue, listen to Sen. Chuck Grassley (R-IA):
CBO's word is the gospel. Congress and the administration need to get the message. The buck stops with the American taxpayer. People can afford only so much government spending, even for the worthiest-sounding causes.
And here's how House Minority Leader John Boehner (R-OH) put it:
This report should serve as the wake-up call this administration needs. We simply cannot continue to mortgage our children and grandchildren's future to pay for bigger and more costly government.
To some extent, this is nothing new. Former President Clinton took a similar hammering in 1995 from then-GOP House leader Newt Gingrich when the Congressional Budget Office (CBO) came out with numbers that differed sharply from the White House's.
And that tale had at least a quasi-happy ending, with the nation heading into the black by the time Clinton left office. But in these recessionary times, the best President Obama can hope for is keeping his promise to halve the budget deficit over the next five years.
For a taste of how Democrats aim to counter-punch in the coming clash over the budget, check out the White House's official talking points on the new CBO figures. TPMDC has obtained a copy, which is posted after the jump.
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Sen. Chris Dodd (D-CT) just spoke to home-state voters about his sudden emergence as the scapegoat for the watering-down of his executive pay amendment to the stimulus bill -- and the Banking Committee chairman was openly angry with the Treasury Department for not owning up to its role in the flap earlier this week.
Dodd defended his role in ensuring that Wall Street compensation limits made it into the stimulus. The senator expressed disappointment that Treasury let him twist in the wind until yesterday evening, when Secretary Tim Geithner admitted that officials from his department requested that Dodd's amendment be changed to grandfather in existing bonus contracts.
We'll have the video of Dodd's comments for you soon, but here's his key quote:
I wouldn't go around and change my own amendment within days of that if I didn't think it was merely technical in nature.
And so I'm angry about it and angry that, in a sense, I've been held up as sort of responsible for all of this, when, in fact, I responded to what I thought was a reasonable request at the time [from Treasury] ... it turned out to be far more than that.
But this back-and-forth over the executive pay amendment isn't the only issue that could put Dodd at odds with Geithner and White House economic adviser Larry Summers.
As I mentioned earlier today, Dodd has been openly skeptical of consolidating future financial regulatory power at the Federal Reserve, preferring to run broader regulation out of the FDIC -- and that position may not sit well with Geithner, the former head of the New York Fed, as well as Summers, who is widely tipped to be the next Fed chairman.
Michael Steele will be speaking tonight to the Colorado Republican Party -- his first public appearance since he stopped doing interviews amid a series of gaffes about:
â¢ Calling Rush Limbaugh an "entertainer" whose rhetoric is "incendiary" and "ugly" -- and then apologizing to Rush and praising his leadership.
â¢ Declaring that he was "in the business of ticking people off."
â¢ Saying in the GQ interview that abortion is an individual choice, then quickly backing off after it was published. This one really got the base angry -- for example, his former RNC rival (and then a supporter) Ken Blackwell said Steele needed to re-read the Bible.
â¢ And just for extra comedic value, Steele said he was a fan of Frank Sinatra and the "Pack Rats."
Dick Wadhams, the chairman of the Colorado GOP, told the Denver Post that Steele's comments about abortion being an individual choice "have been a topic of conversation," but that he hasn't gotten any "angry phone calls" about it. "I think he was real quick to clarify what he said," said Wadhams.
The question that many people will be looking out for: Will Steele end up clarifying anything he says tonight?
On CNBC this morning, host Mark Haines -- who is catching heat this morning for arguing that Wall Street can't "be run well" by anyone making under $250,000 -- was at it again defending the need for high executive bonuses in order to keep Wall Street running.
When Sherman observed that "most people on Main Street do not" agree that AIG can't be put into government receivership (an assertion supported by recent polling on nationalization), Haines replied: "And what do the people on Main Street know about running a financial system?"
To which Sherman quipped: "What do AIG executives know about running a financial system? They only know how to destroy one."
Video of the exchange is below, and a full transcript is posted after the jump.
As frustration with Sen. Chris Dodd (D-CT) reaches a fever pitch, both on the Hill and among his home-state voters, it's worth taking a step back and asking why some fellow Democrats left him to flail this week while they scrambled for cover from AIG anger.
Here's one potential answer, gleaned from months of watching the still-evolving debate over broader financial regulatory reform: depleting Dodd's political capital positions the Federal Reserve for a major increase in power by next year -- handing a plum position to Larry Summers, who has long been tipped as the next Fed chairman. As the WSJ put it:
Mr. Summers is widely seen as having ambitions beyond his current job. He originally wanted to be Treasury secretary, several Democrats say. He has long been described as a possible chairman of the Federal Reserve -- a job that could come open as soon as 2010, if Mr. Obama chose not to reappoint Ben Bernanke when his term runs out.
But why would kneecapping Dodd help those in D.C. who want regulatory power consolidated at the Fed?
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Two days ago, lead Coleman lawyer Joe Friedberg appeared on a local talk-radio show in Minnesota, for a wide-ranging interview on everything from criminal defense to college football -- and oh yeah, that his client is going to lose the trial and then appeal:
Friedberg: We've been trying this case with the appeal record in mind, and that's where we're going. And it's gonna be a very quick appeal, and then I'll know whether or not it worked.
Rosenbaum: Well, when you say a quick appeal, are you confident that you're gonna lose the case in front of the three-judge panel? By losing the case, I mean Norm ends up with less votes.
Friedberg: I think that's probably correct -- that Franken will still be ahead, and probably by a little bit more. But our -- you know, our whole argument was a constitutional argument. And it's an argument which is really suited for the Minnesota Supreme Court, not for the trial court. So we'll see whether we were right or not.
On the bright side, the normally Democratic Friedberg did say that he promised Norm Coleman that in case there's a new election, he will vote for Norm this time.
Late Update: Professor Rick Hasen from Loyola Law School has this review of the Coleman legal argument: "In the end, Coleman doesn't have a strong equal-protection argument. Then again, most of us thought George W. Bush didn't, either."
It seems that House Democratic leaders have settled on an interesting compromise in the debate over whether to use budget reconciliation rules to pass health care reform -- effectively shielding any future bill from a Senate filibuster.
The House budget will include a filibuster-proofing rule that only kicks in if Dems and the GOP cannot reach a health reform compromise by the time Congress breaks for its month-long August recess, the WaPo reports this morning.
That means that if Republicans can make good on their kumbaya rhetoric and reach common ground with the president's party by August, a longer debate and the ability to attempt a filibuster would be within their reach. But the House's intriguing plan might be a moot point if the Senate doesn't agree, since both chambers need to agree on a budget plan by next month.
And with Senate Budget Committee Chairman Kent Conrad (D-ND) openly pooh-poohing the reconciliation option, that agreement on filibuster-proofing is anything but a foregone conclusion.
Obama Reaches Out To Iran In New Video
President Obama has posted this new video, reaching out to the people of Iran in celebration of Nowruz, the Iranian New Year:
"So on the occasion of your New Year, I want you, the people and leaders of Iran, to understand the future that we seek," Obama says. "It's a future with renewed exchanges among our people, and greater opportunities for partnership and commerce. It's a future where the old divisions are overcome, where you and all of your neighbors and the wider world can live in greater security and greater peace."
Obama's Day Ahead: Discussing Stimulus With Top State And Local Officials
President Obama and Vice President Biden are speaking at 12:35 p.m. ET today to representatives from the National Conference of State Legislatures, about oversight and transparency in the implementation of the stimulus program. At 2:15 p.m., Obama will be meeting with Arnold Schwarzenegger, Ed Rendell and Mike Bloomberg. At 2:45 p.m. ET, the President and First Lady will attend a reception of the National Newspaper Publisher Association, where they will be presented a Newsmaker of the Year award.
President Obama has just released this statement on the House's passage of the bonus tax:
"Today's vote rightly reflects the outrage that so many feel over the lavish bonuses that AIG provided its employees at the expense of the taxpayers who have kept this failed company afloat. Now this legislation moves to the Senate, and I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated.
In the end, this is a symptom of a larger problem - a bubble and bust economy that valued reckless speculation over responsibility and hard work. That is what we must ultimately repair to build a lasting and widespread prosperity."