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Think Progress

February 24, 2009

by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Benjamin Armbruster, Ali Frick, and Ryan Powers

ECONOMY

The Bush Deficit

Tonight, in his first address to a joint session of Congress, President Obama is expected to lay out his plan to slash the federal deficit in half by the end of his term. The reduction would come in large part from drawing down in Iraq and allowing the Bush tax cuts to expire by 2010. On Thursday, Obama will release his first budget outline and "confirm his intention to deliver this year on ambitious campaign promises on health care and energy policy," which will help alleviate budget deficits and bring growth to the economy. And in recent days, the White House has also said that it is prepared to make "tough choices" on the budget. This fiscal situation is not a recent creation. As White House Press Secretary Robert Gibbs explained yesterday, the enormous deficit Obama has to grapple with was inherited "before the stimulus." "This administration has inherited a $1.3 trillion deficit -- the largest in our nation's history," Obama reiterated.

INHERITING RECKLESSNESS: "Reagan proved deficits don't matter," Vice President Cheney said in 2002 when pushing for a fresh round of tax cuts. With this attitude in hand, Bush passed on a budgetary nightmare to his successor. Bush came into office with an advantage few presidents have enjoyed -- a $230 billion surplus. But due to a $1.35 trillion tax cut in 2001, a $1.5 trillion tax cut in 2003, and a massive defense buildup through the Iraq and Afghanistan wars, Bush quickly blew through that surplus. The next president will "inherit a fiscal meltdown," Senate Budget Committee Chairman Kent Conrad (D-ND) warned in February 2008, as the Bush administration projected a budget deficit of $400 billion. After the financial crisis emerged last fall and the ensuing bailouts, Bush's budget deficit ballooned to over $1 trillion. As Center for American Progress Vice President for Economic Policy Michael Ettlinger explained, budget deficits swelled under Bush because his supply-side tax policies slashed revenues while failing to deliver strong economic performance.

SIMPLE HONESTY: Obama has already made a departure from the Bush budget legacy by instilling new openness and transparency. Last week, the New York Times reported that Obama will reject "four accounting gimmicks that President George W. Bush used to make deficit projections look smaller." In 2005, the Washington Post editorial board called Bush's budget proposal a "farce" for using accounting tricks. Obama's changes include accounting for the Iraq and Afghanistan wars (Bush relied on "emergency supplemental" war spending), assuming the Alternative Minimum Tax will be indexed for inflation, accounting for the full costs of Medicare reimbursements, and anticipating inevitable expenditures for natural disaster relief.  The result of Obama's openness is a budget that is $2.7 trillion "deeper in the red over the next decade than it would otherwise appear." As The Wonk Room explained, "that debt was always there. It was just being hidden." "For too long, our budget process in Washington has been an exercise in deception -- a series of accounting tricks to hide the extent of our spending," Obama remarked yesterday.

THE NEW FISCAL HAWKS: While purporting to be deficit hawks, the Republican-led Congresses from 2001 to 2006 rubber-stamped the Bush agenda that created the current fiscal crisis. "[W]e're hopeful...that eventually the Democrats will decide...to move aside and let Republicans govern in the way that President Bush has led us to do," said former senator Rick Santorum in September 2006. The Congress shuttled through pork-stuffed legislation, massive tax cuts, and huge increases in defense spending. Yet those same members are trying to stifle the Obama agenda with concerns about the budget -- even as they proposed a $3.5 trillion tax-cut-only recovery package. The recovery package "spends far too much," Sen. Lindsey Graham (R-SC) said recently. Sen. Jon Kyl (R-AZ) remarked, "It's very wasteful...if you throw in the interest it's about $1.3 trillion." Yet many of the same Republicans eagerly supported Bush's $1.35 trillion tax cuts in 2001. Influential Republicans in Congress have also indicated that they may oppose Obama's housing plan because it is allegedly too expensive.

UNDER THE RADAR

HEALTH CARE -- REPORT: FAMILY PLANNING FUNDING SAVES BILLIONS OF DOLLARS AND LOWERS ABORTION RATE: Nearly two million unintended pregnancies and 800,000 abortions have been prevented -- and billions of dollars have been saved -- through increased federal funding for family planning, according to a new study from the Guttmacher Institute. Using statistical projections, the report determines that the abortion rate would be two-thirds higher overall, and twice as high among poor women, without the current family planning funding allotted under Title X. Adam Sonfield, a Guttmacher policy expert said, "Family planning should be noncontroversial. In this economic climate, it's so important in terms of ability to get an education, to stay in the work force." The Guttmacher Institute, which is "generally respected even by experts and activists who don't share its advocacy of abortion rights," determines that for every tax dollar spent on family planning funding, the average taxpayer saves $4. Last month, House Democrats lost a battle to include increased family planning funds in the recovery bill. Undeterred, they are working with President Obama on "broader legislation...to reduce the number of unintended pregnancies," likely by increasing Title X funding . Rep. Diana DeGette (D-CO), who is leading the charge to expand Title X, calls this report evidence that family planning funding can "not only save taxpayers money, but also promote public health."

JUSTICE -- ROVE IGNORES HOUSE JUDICIARY COMMITTEE SUBPOENA: Last month, House Judiciary Committee Chairman John Conyers (D-MI) issued a second subpoena in his efforts to compel former White House adviser Karl Rove to testify about "allegations that the Bush administration improperly politicized the Justice Department." Rove was supposed to appear before the committee yesterday, but he was a no show. Contacted by The Progress Report, the House Judiciary Committee confirmed the report of Rove's absence. Raw Story noted that instead of appearing before Congress, Rove attended a scheduled fundraiser in suburban Illinois. Rove's refusal to appear before Congress does not come as a surprise. As TPMmuckraker noted, "after getting the deadline pushed back, Rove had already publicly indicated he didn't plan on being there, citing President Bush's claim of executive privilege."  Days before leaving office, White House Counsel Fred Fielding sent letters to top-level aides, including Rove, instructing them to continue to ignore congressional demands for information about anything they did while at the White House." The Obama White House is urging Rove and the House Judiciary Committee to cut a deal, but Rove and his lawyer, Robert Luskin, have said that it is up to White House to assert executive privilege or not. This means that the next major development will be on March 4, "when the Obama administration is scheduled to file a motion in federal appeals court laying out its position on the issue."

HEALTH CARE -- REPORT: INDIVIDUAL HEALTH CARE COSTS WILL TOP $8,000 THIS YEAR: The Department of Health and Human Services is expected to release a report today that offers grim news on the cost of health care in America. According to the report, "health care costs will top $8,000 per person this year." Additionally, as the recession cuts into tax receipts, "Medicare's giant hospital trust fund is running out of cash more rapidly, and could become insolvent as early as 2016" -- three years sooner than previously forecast. The HHS report found that "health care costs will average $8,160 this year for every man, woman and child, an increase of $356 per person from last year," and costs "will reach $13,100 per person in 2018, accounting for $1 out of every $5 spent in the economy." The ballooning costs will impact how the government spends money, as spending on health care "is expected to jump 7.4% to $1.191 trillion this year as the recession curbs private health-care spending and swells the rolls of Medicaid and other government programs." In total, the nation's overall health care expenditures are expected to reach $2.510 trillion, a 5.5 percent increase from 2008.


THINK FAST

President Obama will appoint "a full-time, high-level envoy" to Sudan to deal with the Darfur genocide, actor George Clooney said after meeting with Obama and Vice President Biden at the White House last night. "The administration has assured me that Darfur is one of a small handful of foreign policy reviews being undertaken at the [most senior] level," Clooney said, adding that "they assured me this is high on their agenda."

The government is facing "mounting pressure" to invest billions more in "some of the nation's biggest banks, two of the biggest automakers and the biggest insurance company." AIG "indicated on Monday it was now negotiating for tens of billions of dollars in additional assistance," while Citigroup "could raise the government's stake...to as much as 40 percent." Additionally, Ford and Chrysler are seeking $22 billion.

Secretary of State Hillary Clinton has tapped veteran diplomat Dennis Ross as her special adviser on the Persian Gulf region. Ross, who worked on the Middle East peace process for Presidents George H.W. Bush and Bill Clinton, "will be asked to provide Clinton with assessments, strategic advice and perspective."

President Obama is expected to announce former Democratic Washington governor Gary Locke as his choice to lead the Commerce Department. Locke was the first -- and only -- Chinese-American to ever be elected governor of a state, serving from 1997-2005. In 2003, Locke gave the Democratic response to President Bush's State of the Union address.

President Obama also tapped Harvard physicist Ashton Carter yesterday to be the Pentagon's top weapons buyer. Due to his scientific background, Carter is expected to "be a whiz at the technical aspects of his new job." The choice of Carter is drawing criticism, however, from "defense insiders" who say "he lacks experience dealing with the industry he'll work closely with."

Former CNN and MSNBC conservative anchor Tucker Carlson is joining the libertarian CATO Institute as a senior fellow. "I've admired the Cato Institute since I first read its publications," he said. Carlson will write a book on the state of the American political system.

58 percent: Americans who favor voting rights in the House for D.C. residents, according to a new ABC News/Washington Post poll. The bill passed a Senate committee on Feb. 11, and is up for a procedural vote in the full chamber today. Senate Minority Leader Mitch McConnell (R-KY), who led opposition to the bill in 2007, now says he expects the measure to pass.

And finally: Some lawmakers are already planning to stake out prime spots in the chamber tonight for President Obama's address. The Hill writes that there will likely be a "wave of members of the Congressional Black Caucus" in key spots, including Reps. Sheila Jackson Lee (D-TX) and Jesse Jackson, Jr. (D-IL). In the past, Rep. Ileana Ros-Lehtinen (R-IL) "became annoyed when a colleague stole her seat" and cursed about it, according to a cameraman within earshot. However, don't expect Rep. Michele Bachmann (R-MN) to be angling for a kiss from the President this year.



GOOD NEWS

The national board of the NAACP yesterday announced "support of measures before the California legislature challenging Proposition 8, which altered the California Constitution to deny same-sex couples the freedom to marry and equal protection under the law."

BLOG WATCH

THINK PROGRESS: CNBC's Rick Santelli baselessly claims the White House is threatening him: "My kids are nervous to go to school."
Roosevelt caused the Great Depression.

WONK ROOM: Report: The Washington Post should correct George Will's column.

YGLESIAS: Newt Gingrich leading insane conservative effort to close deficit by reducing revenues.

SHOW ME PROGRESS: Rep. Roy Blunt (R-MO) falsely claims that Franklin

STATE WATCH

MINNESOTA: Gov. Tim Pawlenty (R) says Minnesota's lone representation in the Senate is hurting the state.

ARIZONA: County judge refuses to halt state layoffs, "denying a Service Employees International Union request for an emergency order."

ENVIRONMENT: Momentum for imposing fees and limits on shopping bags faces resistance during tough economic times.

DAILY GRILL

Q: Does the GOP need to do a better job of reaching out to people who [support abortion and gay rights]?
STEELE: I think -- I think that's an important opportunity for us, absolutely.
--
RNC Chairman Michael Steele, 02/01/09

VERSUS

Q: Do you favor civil unions?
STEELE: No, no no. What would we do that for? What are you, crazy? No.
-- Steele, 02/23/09

INTERNSHIPS

The research team that brings you The Progress Report and ThinkProgress.org needs summer interns! Click here for more information.


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