Obama 'strengthened America' in first year: White House

The White House Tuesday argued President Barack Obama's "steady diplomacy" had made America stronger and renewed its moral authority despite "unprecedented challenges" in his first year in office.

But the assessment, posted on the White House website, did not dwell on the lack of success garnered by one of Obama's top priority foreign policy drives, peace moves in the Middle East, and reflected a tougher tone on Iran.

"A year later, America is stronger because of the president's leadership," said Ben Rhodes, deputy national security advisor for strategic communications, in a White House blog post.

"The global economy has been pulled back from the brink of catastrophe. We are responsibly winding down the war in Iraq, and increasing our focus on Afghanistan and Pakistan."

Rhodes argued Obama that had quickly got to work refocusing the fight against Al-Qaeda, restoring US alliances, committing the United States to confronting climate change and nuclear proliferation.

He said Obama's 30,000 strong troop surge in Afghanistan proved the strategy and resources were now in place "that this urgent challenge demands" and noted Obama was on track to get combat troops out of Iraq by the end of August.

"By prohibiting torture and working to close the prison at Guantanamo Bay, we are denying Al-Qaeda a recruiting tool," said Rhodes, who has played an instrumental role in many of Obama's biggest foreign policy speeches.

He said domestic terror plots had been disrupted and terrorists had been caught, but added in a reference to the thwarted bid to blow up a US airliner "as we learned over Christmas, more work has to be done."

When he came to office in January 2009, Obama offered a hand of dialogue to Iran but has been rebuffed and now the administration is working with international partners on a toughened sanctions regime over a nuclear showdown.

"After a year of American engagement, the international community is more united than ever before in calling on Iran to live up to its obligations, while Iran is more isolated," he said.

It remains unclear however if permanent five UN Security Council members Russia and China will sign up to tough sanctions being developed for Tehran.

Rhodes drew an analogy between the Iranian and North Korean nuclear crises.

"President Obama continues to present a clear choice: if nations abide by their obligations, the door is open to a better relationship with the international community; if they don't, they will be isolated."

The Obama administration is currently trying to revive its efforts to open peace talks between Israel and the Palestinians, but so far has seen little success, a factor on which Rhodes did not chose to comment.

But he said that Obama's decision to "reset" ties with Russia had enabled the two former Cold War foes to work towards a new nuclear arms reduction treaty.

He also said that Obama's "steady diplomacy" with nations like China and India had helped to convince nations to embrace their responsibilities to cut greenhouse gas emissions at the Copenhagen summit last month.

The treaty however did not forge an agreement for binding deal with legal force.

Obama and the 'Fat Cat Bankers'

Surprise! Banks with government guarantees take the biggest risks, make the most money, and pay the highest bonuses.

By JONATHAN MACEY

President Obama said last month on "60 Minutes" that he "did not run for office to be helping out a bunch of fat cat bankers on Wall Street." This assertion may mollify his constituents, but it is not consistent with his administration's own policies.
We are on the cusp of what is going to be the most highly visible and contentious bank bonus season in history. Bonuses are predicted to run into the billions of dollars, and many of the banks that got the most bailout money are paying the biggest bonuses. The two issues are intimately related—and as long as the administration continues down its too-big-to-fail regulatory path, Mr. Obama will stay in the business of paying huge bonuses to fat cat bankers. Here's how it works.
All of the banks in which the bonus-driven employees work have highly leveraged balance sheets. This leverage greatly magnifies bank profits in good times and causes their losses to mushroom in bad times. The public shareholders of these companies tend to be highly diversified against the risk of failure at any particular financial institution, so they have a strong personal interest in seeing the bankers who manage their leveraged investments swing for the fences.

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Corbis 

 

On the other hand, these institutions are considered vital to the national interest, and therefore can't be allowed to fail because they are allegedly too big or too interconnected. So the managers of these banks are assured that the government will bail them out if they falter.

The bankers, in short, face a massive conflict. They have a great responsibility to the public which arose as soon as the politicians decided to guarantee the survival of their businesses. They also have a legal responsibility to their owner-shareholders, whose diversified investments in these highly levered companies makes them eager to take on as much risk as they possibly can.
It isn't hard to figure out how the bankers are likely to act in the face of this conflict between the government's interest in avoiding future bailouts and the shareholder's interest in the rewards associated with significant risk-taking. They will follow their paychecks.
These paychecks are highly rational from the shareholders' perspective. The basic pay structure is the same at all of these banks. The bankers make relatively modest base salaries and receive most of their compensation in the form of bonuses. The average bonuses will be around $500,000—$595,000 at Goldman Sachs, $463,000 at JP Morgan Chase—but some will make far more (as much as eight figures). These bonuses are big and they are unremittingly linked to performance.Together a mere five banks—Citigroup, Bank of America, Goldman Sachs, JP Morgan Chase and Morgan Stanley, all of which got billions of bailout dollars—have allocated about $90 billion for overall compensation, with bonuses comprising more than half.
What Mr. Obama and others apparently fail to understand is that the banks' own shareholders benefit from these huge performance bonuses. The bonuses are paid to those who make large profits for their employers—that is, they are linked to performance.
In our "heads the shareholders and bankers win, tails the U.S. taxpayers lose" world, neither the public's supplicant pleas for restraint nor the politicians' bursts of outrage is likely to change banker behavior. This is why the banks are doing so little (and most are doing nothing) to reduce the size of their bonuses. On Wall Street the din of populist outrage is drowned out almost entirely by the sonorous jingle of bonus money.
People say that shareholders have no control over executive compensation. In fact, it appears that a clear rule of thumb about executive compensation has emerged on Wall Street. When banks make profits, the managers keep 40%-50% of the take, and the rest goes to the shareholders, either by being re-invested in the company or paid as dividends.
John S. Reed, a former CEO of Citigroup, said a few days ago that the banks won't regain the public's trust until they reduce bonus payments. He contends that the bankers have learned nothing from the crisis, and that "They just don't get it. They are off in a different world."
Mr. Reed is mistaken. It is the government, not that the shareholders, that is incapable of making a win-win deal with our financial institutions. And it is the government, not the banks, that has lost the public's trust. The public has been giving the banks credible and convincing votes of confidence all year by bidding up the value of their shares. It cannot seriously be argued that investors are ignorant of bonus arrangements.
Politicians are frustrated because they are virtually powerless to stop the flow of bonus payments to bankers. Rep. Dennis Kucinich (D., Ohio) thinks that the U.S. should follow the lead of Britain, France and Germany and levy heavy taxes on bonuses. While such action might placate some people, it is the shareholders, not the banks, who will end up paying this tax. Worse, this sort of tax will not affect banker behavior, because it will not reduce (and probably will increase) the government's proclivity to bail out banks that have made bad bets.
There is only one way to resolve the bonus problem. We should continue to let shareholders pay their managers whatever and however they want. But we must get out of the business of guaranteeing against failure. The bankers and the shareholders who enjoy the rewards of risk-taking should be made to act like real capitalists: They should be required to assume the risks that go along with the banks' business activities.
Banks that are considered too big to fail should be dismantled into smaller pieces that the economy can digest. And the government should make it clear that it will allow these institutions to fail. When this happens, the shareholder-owners of these banks will pay their managers much more sensibly—and Mr. Obama will be able to wash his hands of the business of helping out the fat cat bankers on Wall Street.
Mr. Macey is a professor at Yale Law School and a member of the Hoover Institution Task Force on Property Rights.

 

Obama's Fiscal Fantasy World

Spending is up nearly 24% since Bush's last full budget year.

By KARL ROVE

After President Obama devoted much of 2009 to health care and global warming—two issues far down Americans' list of concerns—the White House says he will pivot to jobs and deficit reduction in his State of the Union speech in a few weeks. The White House is considering dramatic gestures, perhaps announcing a spending freeze or even a 2% or 3% reduction in nondefense spending.
But Americans shouldn't be misled by the election year ploy: Mr. Obama rigged the game by giving himself plenty of room to look tough on spending. He did that by increasing discretionary domestic spending for the last half of fiscal year 2009 by 8% and then increasing it another 12% for fiscal year 2010.
So discretionary domestic spending now stands at $536 billion, up nearly 24% from President George W. Bush's last full year budget in fiscal 2008 of $433.6 billion. That's a huge spending surge, even for a profligate liberal like Mr. Obama. The $102 billion spending increase doesn't even count the $787 billion stimulus package, of which $534 billion remains unspent.
Mr. Obama can placate congressional Democrats by arguing that all that extra spending he has already crammed through can cover their spending desires at least through the 2010 congressional elections.

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Mr. Obama is thinking of tapping another pocket of cash. Now that the banks are repaying—with interest and dividends—the $240 billion the Bush administration lent them, the Obama administration is considering recycling those dollars into new spending on "green" technology and more stimulus, despite provisions Congress wrote into the law creating the Troubled Asset Relief Program that requires that repaid TARP funds be used exclusively for deficit reduction.

Meanwhile, defense spending is being flattened: Between 2009 and 2010, military outlays will rise 3.6% while nondefense discretionary spending climbs 12%.
All this leaves Mr. Obama in the enviable position of appearing tough on spending while growing the federal government's share of GDP from its historic post-World War II average of roughly 20% to the target Mr. Obama laid out in his budget blueprint last February of 24%.
There are also those pesky entitlements. This mandatory spending has grown to 66% of the budget, up from 29% in 1965. Serious budgeters understand spending cannot be brought under control unless these mandatory outlays are part of the mix.
One idea on Capitol Hill is to create a commission that would propose a package of entitlement reforms that Congress would have to vote on as a package, up or down, take it or leave it—much like the base closing commission.
The Obama White House likes this idea in part because the proposal calls for including some congressional Republicans but would reserve a majority of the seats on the commission for Democrats. That would put Democrats in charge while also making the GOP share in the political pain that would come with whatever the commission proposes. Conservatives worry, with justification, that a commission's purpose would be to provide Republican cover for tax increases and a permanent increase in the size of the federal government.
What's more, the White House may only be interested in an election-year gesture. White House staff are apparently considering creating a presidential commission that would look like it's working on deficit reduction but that would be established by executive order. Of course, without congressional authorization, there's no way to force Congress to vote on a commission's recommendations.

About Karl Rove

Karl Rove served as Senior Advisor to President George W. Bush from 2000–2007 and Deputy Chief of Staff from 2004–2007. At the White House he oversaw the Offices of Strategic Initiatives, Political Affairs, Public Liaison, and Intergovernmental Affairs and was Deputy Chief of Staff for Policy, coordinating the White House policy-making process.
Before Karl became known as "The Architect" of President Bush's 2000 and 2004 campaigns, he was president of Karl Rove + Company, an Austin-based public affairs firm that worked for Republican candidates, nonpartisan causes, and nonprofit groups. His clients included over 75 Republican U.S. Senate, Congressional and gubernatorial candidates in 24 states, as well as the Moderate Party of Sweden.
Karl writes a weekly op-ed for the Wall Street Journal, is a Newsweek columnist and is the author of the forthcoming book "Courage and Consequence" (Threshold Editions).
Email the author atKarl@Rove.comor visit him on the web atRove.com. Or, you can send a Tweet to @karlrove.

Whatever Mr. Obama says in his State of the Union, Republicans need to be tougher on spending and deficits. Later this month, Senate Republicans are planning to force their colleagues to go on the record on how to spend returned TARP funds by demanding that Democrats vote on the issue. Some House Republicans are also considering calling for a return to the level of discretionary domestic spending that existed when Mr. Obama entered office last January.
Few things focus the attention of politicians as much as approaching elections. Democrats are aware that spending and deficits are big reasons Republicans have a nine-point lead on the Rasmussen Poll's generic ballot.
Independents are particularly sensitive about deficits, spending and taxes, whose growth they see aversely affecting jobs and the economy. They give Mr. Obama only a 21% approval on handling the deficit. Only 10% of independents want to spend unused bank bailout money on other government programs.
At the beginning of his term, Americans believed Mr. Obama would follow through on his campaign promises about "cutting wasteful spending" and going "through the federal budget, line-by-line, ending programs that we don't need" and putting "an end to the run-away spending the record deficits."
After a year of living in his fiscal fantasy world, Americans realize they have a record deficit-setting, budget-busting spender on their hands. Voters are now reading the fine print on all that Mr. Obama proposes and as they do, his credibility, already badly damaged, suffers.
Mr. Rove, the former senior adviser and deputy chief of staff to President George W. Bush, is the author of the forthcoming book "Courage and Consequence" (Threshold Editions).

 

Obama Reneges on Health Care Transparency

President Barack Obama speaks at a town hall meeting on health care reform. As a candidate, Obama promised health care negotiations would take place in the open, and even be broadcast on C-SPAN - a promise that he has not fulfilled.  (AP


(CBS)  President Obama wants the final negotiations on health care reform - a reconciliation of the House and Senate versions of the bill - put on a fast track, even if that means breaking an explicit campaign promise.

"The House and Senate plan to put together the final health care reform bill behind closed doors according to an agreement by top Democrats," House Speaker Nanci Pelosi said today at the White House.

The White House is on board with that, too, reports CBS News political correspondent Chip Reid. Press Secretary Robert Gibbs stressed today that "the president wants to get a bill to his desk as quickly as possible."

Special Report: Health Care Reform

During the campaign, though, candidate Obama regularly promised something different - to broadcast all such negotiations on C-SPAN, putting the entire process of pounding out health care reform out in the open. (That promise applied to the now-completed processing of forging House and Senate bills, too.)

Back when Republicans controlled Congress and George W. Bush was in the White House, it was Democrats who angrily complained about secret backroom deals.

Now the roles are reversed.

"The negotiations are obviously being done in secret and the American people really just want to know what they are trying to hide," said Rep. Tom Price, R-Ga.

Even with no cameras and no Republicans in the room it will be a tall order for the House and Senate to resolve their differences - especially on abortion coverage and how to pay for health reform

Even so, top Democrats in both houses say they hope to have the final bill ready for the president's signature in time for his State of the Union address - less than four weeks from now.

Year One of a President at War with Reality

Just about a year ago, many people here and abroad had very high hopes for our new president and for us. He was going to take on our economic woes, improve our international reputation (as he defined it), and fight a smarter and better war on terrorism. How has the year unfolded?

Using Gallup numbers, President Obama began his administration with a 69 percent approval rating. Today he’s at 49 percent — a 20-point drop. Last January unemployment was at 7.2 percent; today it’s at 10 percent. President Obama came to office criticizing the public debt, and continues to speak of the debt he inherited, but let’s get it right: According to the Heritage Foundation’s Brian Riedl, "President Bush presided over a $2.5 trillion increase in the public debt through 2008. Setting aside 2009 (for which Bush and Obama share responsibility), President Obama’s budget would add $4.9 trillion in public debt from the beginning of this year through 2016." In addition, there is now talk of a second stimulus, and a nearly trillion-dollar health-care plan is in the works.

On the international front, Iran is more threatening and dangerous than ever. President Obama campaigned on a new kind of policy toward Iran, but the only thing new is that the Iranian government has become more aggressive, more brutal, and more contemptuous toward our desire to curb its nuclear ambitions. North Korea has test-fired banned missiles and broken off accords. Russia is as aggressive as ever. We have spurned the Dalai Lama. We have upset Eastern European allies from Poland to the Czech Republic. Israel is more nervous than ever — both about its existence and about the pressure the U.S. is putting on it. Sudan has been appeased further than it was by either of the last two administrations but is no less of a threat to Darfur, where things are getting worse. And in Latin America, the president has received praise from Hugo Chávez and Fidel Castro. Meanwhile, he’s twice gone to Copenhagen and come back empty-handed: once to bring the Olympics to Chicago, once to formulate a climate policy. In neither visit did he get what he set out for.

On Afghanistan, he has finally come out with a policy and committed to sending more troops. His administration’s spokesmen are unclear on what the exit or ramp-down procedures and timelines are, but for now, we can praise the ramp-up. But on the terrorism and war issue more generally, we have seen a backslide. Despite ringing statements that we will close Guantanamo, stop enhanced interrogation, and move detained terrorists like Khalid Sheikh Mohammed into our civil-justice system with a public trial, thus bestowing constitutional rights on those terrorists, an interesting statistic came out last week: More terrorist acts and attempts took place in the United States in 2009 than in any year since 2001. According to the Rand Corporation, there have been 33 terrorism-related events on these shores since 9/11, and 13 of them occurred in 2009.

Meanwhile, President Obama seems to want to take the focus off this threat by changing the language of what we are in — which is a war. He tries to narrow and crib the definition as much as possible: a) by not talking about any of it very much and b) when talking about it, by restricting the discussion to al-Qaeda. He has a genus problem, but really only mentions the species; you never hear him talk about Islam or Islamic terrorism, and he hardly ever uses the word “war."

Barack Obama is president. He asked to be. The complaining, the blaming, and the distracting are not presidential. We need a president who sees the world as it is and rises to the challenges.

"Screw Up"

Christmas incident was "screw up" - Obama said

WASHINGTON, Jan 5 (Reuters) - President Barack Obama told his security chiefs on Tuesday that the botched Christmas Day plane bombing was the result of a screw up by U.S. intelligence and that the country had barely dodged disaster, according to a quotation released by the White House.

"This was a screw up that could have been disastrous," the president said during a meeting in the White House situation room, according to the White House media office. "We dodged a bullet but just barely. It was averted by brave individuals not because the system worked and that is not acceptable. While there will be a tendency for finger pointing, I will not tolerate it."

(Reporting by Patricia Zengerle, editing by Bill Trott) 

Crises to greet Obama return to Washington

 

US President Barack Obama Monday swaps his Hawaiian vacation hideaway for Washington, with resurgent fears of airborne terror and Iran's nuclear defiance darkening his already daunting agenda.

Challenges facing the White House in 2009 -- including the worst economic meltdown in 70 years -- look if anything likely to be trumped by the building crises threatening to rage through 2010.

Hyper-partisan politics will get even more nasty, with Republicans targeting gains in mid-term elections in November -- which normally wound first-term presidents -- and Democrats defending their grip on Congress at all costs.

The thwarted Christmas Day attack on a US airliner reintroduced the terrifying and polarizing spectre of terrorism into American life, just as a wary normality was easing memories of the September 11 attacks in 2001.

Criticism of Obama's handling of the attack is likely to complicate his task of enacting an ambitious domestic program. He will attempt to address what he says are "systemic" US failures over the episode by meeting spy chiefs Tuesday.

Obama's plan to close the Guantanamo Bay camp, already set to miss a one-year deadline, looks in deep peril: nearly half of the remaining 198 detainees are from Yemen, where the Christmas Day attack was planned.

Yemen, with its building Al-Qaeda presence is a widening front for US forces in the global anti-terror struggle, along with Pakistan and Afghanistan.

Iran, beset by its own political turmoil, is meanwhile escalating the showdown over its nuclear program, with Washington seeking tougher sanctions.

Tehran last year spurned Obama's engagement push -- leading the president's foes to brand him as naive.

Recent deaths of seven CIA employees in Afghanistan meanwhile underscored the political risks and deep human cost of the president's 30,000 strong troop surge into Afghanistan.

Fresh global challenges come as Obama faces 10 percent unemployment, which is dampening hopes for economic recovery and his own political prospects.

Republicans are painting Obama as a big spending, big government liberal, and will skewer him with huge joblessness and a budget deficit of over a trillion dollars in 2010.

"The country is in deep, deep trouble," Minnesota governor Tim Pawlenty -- a possible Republican 2012 presidential candidate told Fox News last week.

"People are going to hold office holders and candidates to account."

Amid the gloom, Obama must try to rekindle the theme of change and hope which powered his 2008 election win.

"While 2009 was difficult for many Americans, we must also look back ... with the knowledge that brighter days are ahead of us," he said in his New Year message.

One political triumph -- health care reform -- a task that has confounded generations of Democratic presidents, may be in reach.

A final bill could emerge from Congress within weeks, setting up a historic signing ceremony to boost the president early in 2010.

After nearly a year in power, Obama is grayer, drained by Washington's acrimony and no longer an untested source of hope for millions, but a commander-in-chief who agonized, then escalated the Afghan war.

His once soaring job approval ratings are now around the critical 50 percent threshold though he will be comforted, that unlike many lawmakers, he does not face voters for three more years.

Judged by massive expectations which greeted his election, Obama's first year looks unimpressive, but history may give him more credit.

Despite the economic blight, Obama argues that he stopped a traumatized economy slipping into depression -- and if the US economy shows its historic resilience, he may reap a political benefit.

However, the long fight over health care has delayed much of his domestic agenda and Wall Street is battling to water down a regulatory reform drive.

Obama's hopes of passing a cap-and-trade bill to fight global warming also look increasingly doubtful and dreams of his devotees that he could cleanse Washington's partisan swamp have proven fanciful.

Abroad, the administration's bid to confront Israeli Prime Minister Benjamin Netanyahu now looks clumsy, and the Middle East peace process is stalled.

In Iraq, however things look better: the White House hopes to get US troop numbers down to 50,000 by August.

The administration also hopes to conclude a landmark nuclear deal with Russia in early 2010 and will also seek to build on a tortuous start in engaging China and hopes to ease the North Korea nuclear crisis.